|
According
to an article in The Wall Street Journal, the average
small business owner salary in 2006 was $233,600.
(source: http://online.wsj.com/article/S61019MEMOS.html)
How
much does a CertaPro franchisee make?
How does $7.21 per hour sound?
(Current
federal minimum wage: $7.25 per hour.)
According
to information from CertaPro's 2010 FDD, the median
(half make more, half make less) gross revenue for CertaPro
franchisees was about $282,000. These numbers are from
the year 2009.
Expenses
which are deducted from gross sales include royalty,
advertising, wages, paint, supplies, insurance and other
business expenses, etc.
The
average CertaPro franchisee's discretionary profit::
8.7% of sales.
(Unclear: Whether or not these figures include "debt
service"--paying taxes, your loans and credit card
debt.)
Let's look at a couple of examples, assuming disposable
income at 9% of sales::
Sales:
$250,000 (CertaPro's first-year "goal")
Income: $22,500
Sales: $400,000 (CertaPro's
second-year "goal")
Income: $36,000
Especially in the early years, you might work 60-70
hour weeks, and, there are variables which can affect
your profitability, such as your painters' skills, direct
mailings and any damages you'll have to pay for (e.g.,
replacing a customer's trampled bushes or broken coffee
table).
How Much?
Based on a 60-hour work week, at $250,000 sales, it's
about $7.21 per hour.
at $400,000 sales, it's about $12.98 per hour.
It could be less, and you could also lose money.
Median hourly wage for a painter in 2008: $15.85 (source:
Bureau
of Labor Statistics)
You could spend $150,000 to earn less, hourly, than
your painters.
A big difference: The painters won't have "minimum
annual franchise fees" to pay.
Notes:
According to an independent franchisee survey by Gary
Kowalski, CertaPro Painters franchisees reported working
the following number of hours:
| |
| Hours worked |
Cumulative average |
| Less than 40 |
18% |
| 40-50 |
28% |
| 51-60 |
26% |
| More than 60 |
26% |
| Passive Investment |
1% |
|
|
The number in the far left column shows each franchisee's
gross revenue.
The colored columns to the right show how many franchisees
do NOT make the minimum
of $400K, $450K, $500K and $650K.
Note: These numbers are from CertaPro's 2010
FDD.
Some of these franchisees own multiple territories,
which means
their minimum is greater.
(Number of territories) X (Minimum sales required).
|
Minimums
are based on CertaPro's 2011 Franchise Agreement:
From
subsection 2.3 (minimum franchise fee) and
subsection 6.1 (minimum gross) of contract
(franchise
agreement)
| CALENDAR YEAR |
GROSS SALES |
| 1st calendar year |
$450,000 (min. $22,500
franchise fee) |
| 3rd - 5th |
$500,000 |
| 6th - 10th |
$650,000 |
What
the minimum franchise fee means:
The franchisee signs a contract which BINDS
him/her to produce at least $4.5 MILLION
and pay CertaPro at least $227,500 over
the 10-year term of the contract.
That minimum franchise fee could prove to
be cause of a franchisee's failure, as happened
to me and others. I was struggling, trying to hang
on and increase business when that demand
for minimum franchise fee due arrived from
CertaPro. I didn't have it. I believe Certapro's minimum franchise fee is the catalyst for many/most Certapro franchise failures.
Here's
the question:
If a CertaPro Painters franchise is as successful
as they'd like you to believe, WHY do they
demand a minimum franchise fee? If you don't
make the minimum, CertaPro still gets paid.
It means CertaPro has no skin in the game,
their revenue is not dependent on your success.
|
|
Review
the numbers above, FROM CERTAPRO, then ask yourself
this:
How reasonable is CertaPro's minimum annual gross sales
requirement?
| |
|
Believe The Reality, Not The Hype
The
following is a quote from a 2005 Charlie
Chase video
and an example of the hype:
|
|
The Hype:
Charlie
Chase: "CertaPro has goals for 2006 and
2010
...by 2006 we would like to have 100 franchisees
greater
than a million dollars in sales.
...By 2010 we want to have 250 franchisees
at a million or greater."
He
also said, about those goals:
"Those are big
hairy audacious goals but we have been
known for hitting our goals"
|
|
The Reality:
Number of franchisees grossing $1 million
or greater at the end of 2009:
250
200
100
28
"We
have been known for hitting our goals"?
Yeah, right: "Certainty".
|
|
|
