If you are thinking of buying a painting franchise, stop right now.
I’m going to break down the fundamental problems with buying a painting franchise, and the alternative options you have to start a painting company.
This is based on my experience growing a multi-state, multi-million-dollar painting business where we considered becoming a franchise but opted for a partnership setup instead.
I’m also pulling from my experience helping thousands of painting business owners start and grow their painting businesses through Painting Business Pro.
And, I work with several national franchises through our marketing program, Painter Choice. I hear the struggles of franchisee’s constantly, and I feel for them.
I don’t want you to end up in the same position that many franchisees find themselves in.
There is a better way! We will start with the problems of a franchise, then we’ll get into solutions.
Problem #1: The REAL Cost of a Painting Franchise
These franchises range from $10,000-$40,000 in franchise fees just for the right to the franchise in a limited number of zip codes where you can operate your franchise.
They also take 6-9% as an ongoing royalty… forever.
If you are in business for 10 years and you generate $5,000,000 in revenue, this franchise ends up costing you upwards of $500,000. That’s a steep price to pay.
And of course you get some support and business systems, but everything that a franchise provides can be acquired through other avenues for much less than $500,000.
Problem #2: How Franchises Screw Your Ability to Grow Your Business
When you buy a franchise you are buying the rights to that business in a set territory. You are assigned a small number of zip codes where you have the rights to the business.
This is a HUGE problem. The easiest way to grow and expand a painting business is by expanding geographically. Franchises take away this right.
Painter Choice is our marketing company. We work with franchisees all over the country. I always feel terrible for these business owners because they have such a hard time generating business.
A typical company in Atlanta, for example, can utilize our lead service in North Atlanta to generate 20-30 leads per month.
But a franchisee in North Atlanta who only owns the rights to 7-8 zip codes can only generate 5-7 leads per month from our lead service.
In other words, if those franchisees had their own business, they could immediately increase their business 3-5 times! In other terms, that means an increase from $500,000 to $2,000,000. This is a massive limitation on your potential business growth.
As a franchisee, your only option is to purchase more territory, or such it up and keep your business small.
But if someone else already owns the nearby territory, you don’t have that option.
Problems #3: Do They Really Care About What You Care About?
Fundamentally, franchisees and the franchisor have misaligned incentives. The franchisor wants to generate as much revenue as possible because they get paid a set percent of revenue.
But as the business owner, your goal is to maximize profit.
I’m a big believer in aligning incentives, and in this case, incentives are not aligned. They are playing a different game than you are. They want to maximize revenue in all of their territories, and sell as many franchises as they can.
Problem #4: You’re Buying a Job, Not a Business
You’re buying a job. Let me show you why.
Because of royalties, your margins end up being around 10%-12% after all business expenses.
In order to make $100k/year you’d have to have a $1,000,000 business.
But you can’t have a $1,000,000 business in the small territory. And even if you can, you’re stuck at a maximum of $100,000 for yourself. You’re paying $70k-$100k/year in royalties for what?
That’s a ludicrous amount of money to pay your franchise… the same company that has an agreement that they hold over your head not allowing you to grow your business geographically.
They’ve got you by the balls.
Or, you can buy another territory to grow. But again…. I’d rather not have to pay for the right to grow my business. That’s absurd.
Most franchises end up in the $500,000-$600,000 range. You can probably make $80,000-$110,000, sure. But you also don’t ever have enough margin to hire other people to run the whole business, which is one of the greatest benefits to building a company.
You probably aren’t generating enough revenue to even hire really strong employees. In our company, we pay about 5-6% to our production manager who oversees $1,000,000 in production. That’s $50,000-$60,000 per year for the manager. But if you are only doing $500,000 a year in revenue, you can pay 5% ($25,000) to your production manager, which is not enough money for a strong employee.
Your options are to pay a higher percentage (killing your profit margin), or do the job yourself (killing your lifestyle). Both of which are not very attractive options.
You pay a lot of money to limit your growth, you don’t get to build your own thing, and if you want to grow geographically you need to pay for the rights to do so… assuming nobody else already owns the rights to the territory you are trying to buy.
Due to your limitations, and the high royalty fee, you are significantly limited in your ability to grow your revenue, build a strong team, and build a large business.
With All These Problems… Why do People do It?
#1 – They do it for the solid business plan
#2 – They do it for the support and training provided by the franchise
#3 – They do it for the community of other franchisees so they aren’t alone
#4 – They do it out of fear of failure
Now, let’s look at solutions. How can you get all the benefits without paying the steep price of a franchise?
Benefit #1: They Do It for the Solid Business Plan
For 1/10th of the cost of a franchise, you can purchase my business system. This is the exact business system we use and follow in our business, which did over $3,000,000 in revenue in 2016.
Benefit #2: They Do It for the Support and Training Provided
My course includes training and support. When you get started with Painting Business Pro, you get access to the entire business system and all of the training that goes along with that system.
Benefit #3: They Do It for the Community so They Aren’t Alone
When you join Painting Business Pro, you also join our private members-only Facebook group. We have dozens of questions asked every day from our members.
Our community is highly engaged and active.
People in our community even share their successes. Just the other day someone shared a Facebook marketing strategy, word for word, that’s killing it for their business.
Benefit #4: They Do It Out of Fear of Failure
Paying more money does not remove the fear of failure. With Painting Business Pro, you can get access to a solid business plan, business training, and all of the done-for-you forms and systems that are proven to build a million-dollar painting business.
You also get access to the amazing community of like-minded entrepreneurs doing the same thing as you that we talked about earlier. While you do pay 1/10th of the cost up front (on the high end), you have NO royalties to pay after that.
The likelihood of failure is the same whether you are in a franchise or running your own business. However, when you buy a franchise, you are taking a bigger risk, meaning there’s a bigger failure if you do fail.
So what now?
Before you invest in a franchise and throw thousands of dollars down the toilet for a proven system, you might want to check out Painting Business Pro.
Painting Business Pro is also a proven system to build a million-dollar painting company, with a community of hundreds of others. In addition, there is no ongoing royalty, and no geographical limitations to growth.
Get all of the benefits of a franchise for a fraction of the price. Check the course out here and contact me if you have any questions.
The painting business is a great business to be in! I hope you’ll be a part of it soon.