One franchise brand runs a tree service company. Here it is beside the independent version of the same business, with its fees as the brand publishes them and worked out in dollars. A brand can bring customers an independent has to earn one by one. The question is whether it brings in more than it costs.
Typical for a tree service company: $400k to $1.2M in sales, and the owner keeps 10% to 18% after paying for its own marketing. Change either to your own numbers.
Work each brand out at
How the two sides are counted
Sales. A brand’s name brings customers an independent wins one at a time, so each brand is worked out at the sales it reports where we have them, and at yours where we don’t.
Marketing. On your own you pay for all of it, about 3% of sales here (the SBA’s usual range for ongoing marketing). The ad fund does part of that job, so it is counted once, not twice.
Survival. New franchised businesses were about 5 to 6 points more likely to make it through their first two years in Census data, and about half of all new businesses close within five years. It is not in the dollars; each brand’s details give the sources.
Your own tree service company and each brand, side by side
The independent version
Your own tree service company
Built and run under your own name
Cost to open
$125k to $458k
Annual sales
$690ktypical
Franchise fee
None
Royalty + ad fund
Noneall marketing is yours
$96,600
The owner keeps in a year, after about $21k of marketing
Taking new owners
Monster Tree Service
Tree care and removal
Total investment
$416k to $535k
Avg. annual sales
$506k to $523k
Franchise fee
$50k
Royalty + ad fund
3.5% to 6.5% + 1% of sales
$39k to $54k
The owner keeps in a year at $514k in sales (what it reports), after $23k to $39k to the brand
$43k to $58k less a year than on your own
Before you sign: what to read in the disclosure document
Every franchisor must give you its Franchise Disclosure Document at least 14 days before you sign or pay. These are the parts that answer the questions above.
Items 5 to 7, the fees and the investment. The franchise fee, every other fee (technology, training, transfer, renewal), and the full opening budget, including working capital.
Item 19, what owners earn. Whether the brand states owner sales or earnings at all, and for which units. Put its figures in the boxes above in place of the typical ones.
Item 20, units opened, closed and sold. How many owners left in each of the last three years, and a list of current and former owners you can call.
Item 12, the territory. Whether you get a protected area, and what the brand can open or sell inside it.
Item 21, the franchisor’s own finances. Whether the company behind the brand is in good health.
smbnest is a self-assessment tool, not individualized advice. Fees are as each brand publishes them on its franchising page and in its disclosure document, reviewed in the month shown, and change; the figures in dollars are worked out at the sales you enter and are not a forecast. We never take a cut of your deal or a fee from a franchisor. Before you sign, speak with a franchise attorney and a qualified financial adviser, and call owners from the disclosure document.
Your guidesmbnest
The guide is an automated assistant. Answers come from this business’s model, its sources and your plan; they are general information, not legal, tax or financial advice. Talk to a person