There’s a constant growth in demand for domestic needs businesses in the UK. Can you leverage this demand with a home improvement franchise?
Through our ongoing blog series, we have tried to discuss various types of franchises and the pros and cons associated with them. There has been a recurring theme to all these blogs – the business sectors discussed were required you to have little industry experience to get started.
In this post, we are going to stray off the course – just a little bit. Home improvement franchises require you to invest a considerable sum of money with equivalent industry experience to go with it. This may sound like a bad starter, but that’s not the case. The high barrier to entry means there are more opportunities and more room to grow your business.
We will discuss the market demand for home improvement and repair franchises in the UK, the economics of how it all works and what you need to know before you invest your hard-earned money in such opportunities.
Are Home Improvement Businesses Really Needed?
The short answer is – yes, they are. Today more, than ever.
There’s no better way to justify this claim than to look within. An average homeowner in the UK has to take on major home improvements once every three years. The minor repairs, refurbishments and value-additions keep happening multiple times every year.
“Every major home improvement projects costs the homeowner an average of £23,000 (or more). This number sharply jumps to over £42,000 for improvements in recently purchased properties.”
This wasn’t always the case. The domestic housing and real estate market was the first to bear the brunt of the 2008 downturn. The strange chain of events set in motion by the recession actually ended up helping the home improvement market, as homeowners stopped investing in new real estate and started, instead, adding more value to their properties.
Of all home improvement projects in the UK, 32% are devoted to bedroom improvements, 29% to bathrooms and 28% to kitchen. Outdoors and extensions account for the rest of the pie.
It’s clear that homeowners and landlords are willing to invest in home improvements and repairs – and the reason is simple. An average home improvement job provides an ROI of 300% in the long run through property value and increased rents.
Buying and running a home improvement franchise is all about making the most of the homeowners’ willingness to invest.
Data Source: Foxtons
How Much Do You Need to Buy a UK Home Improvement Franchise?
Unlike the franchise ideas we have discussed so far, home improvement and repair franchises have more types, and hence, a wider range of options.
“While service and repair franchise will cost you around £20,000 to £40,000 in minimum initial investment, the larger, more robust construction and improvement franchises will need you to invest £60,000 to £140,000 to get started.”
This is, of course, just the capital you need to buy the franchise and the knowhow. It also usually includes training, territory rights, necessary equipment and inventory (if applicable) for the first few months. You will, however, need to take into account other expenses like office/warehouse rent, staff salaries, mobile vans for the staff, marketing budget, insurance, utilities and other operational overheads.
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How Home Improvement Franchises Make Money
There are multiple revenue models used by home improvement and repair franchises in the UK. The most common model that runs across the board is the as-needed service model.
You get a call from your customer, you provide them a quote for the home improvement job they need done, you complete the project and you get paid – simple as that. The simplicity comes at a cost – more than 70% of domestic service businesses have to rely on new customers. As you know, acquiring customers always eats into the profit margins, steadily affecting the bottom line of your business.
Many home improvement franchise get around this problem by going ‘industrially domestic’. This is a new model that’s been gaining a lot of traction, especially in districts where renting a house is more affordable than owning one.
The idea here is straightforward – you work with landlords and businesses like hotels, lodges, dorms and hospitals to establish ongoing retainer contracts for improvements and repairs. This not only creates a steady stream of revenue, it opens the door for many such opportunities through business networking.
These are just the two most common ways for home improvement and repair franchises to generate revenue. Based on the specifics of business, you can certainly come up with new models that work for you.
The Importance of Territory Allocation for Home Improvement Franchises
We had a short discussion about the importance of business location in various articles on our blog. This concept needs to be looked at from a slightly different point of view for home improvement franchises.
The good news is, you don’t need to invest in a high-street, retail location to run your business. You can easily rent an affordable location to house your office and equipment. What’s more important to consider here is the value of the territory.
The reason home improvement franchises are expensive is that they offer you a ready-to-service territory that has been thoroughly studied for its business potential. For other businesses, it’s rather difficult to arrive at a number of potential buyers, but for domestic service franchises, the number of households gives you a clear idea of your target demographic.
In that sense, it becomes important to choose the territory wisely. The best business practices suggest that you should stay away from the spectrum extremes – virgin, uncharted, untested territories as well as oversaturated markets with stiff competition.
Once you have the territory problem sorted in your favour, you will have less to worry about in terms of short-term competition.
Types of Home Improvement Franchises
There are dozens of types of home improvement franchises that cover the entire range of home services – from appliances to gardening and flooring to furniture. We will restrict ourselves to the most popular types here.
Kitchen Improvement Franchises
Almost every house needs kitchen improvements from time to time. On an average, a UK homeowner spends a minimum of £2,500 on kitchen improvements each year. Kitchen improvement franchises aim to cater to these needs in their allocated territory.
Typical kitchen improvements include installation of appliances, redesign, refurbishments, modular conversions and utilities.
Traditionally, furniture businesses haven’t really been looked at as a part of the home improvement sector. Now, with the advent of the rent-it-all lifestyle, it’s safe to include these here.
Typical furniture franchises have two USPs – buying and selling furniture to homeowners and repairing existing furniture. While the potential of furniture repair industry isn’t quite appealing, there’s certainly enough room in the buying, selling and renting space.
An important task while running any furniture business is to strike the perfect balance between logistics, market trends and local interests. If you get this right, this type of home improvement franchises can be as lucrative as any.
Running a landscaping franchise is all about bringing experience and specific expertise on board. Be warned – landscaping franchises will cost you much more than most other home improvement franchises.
The reason for these high – at times, prohibitive – levels of investment is the nature of the job you will be expected to do. You will need to get on board trained and certified design professionals and, quite possibly, hire the services of architects and planners. These top-of-the-line professionals will, quite obviously, cost a lot.
But it’s not all bad. Landscaping can be a hugely profitable business if you operate in a high-income territory.
Gardening franchises are slightly different. These are thoroughly service-oriented franchises that aim to acquire regular, returning customers (unlike landscaping franchises).
Utility and Repair Franchises
Domestic services have long been scattered. Utility and repair franchises aim to resolve this problem by clubbing multiple services like plumbing and roofing together. This is again a relatively novel business idea that has, so far, been fairly successful in urban areas.
Property Maintenance Franchises
Property maintenance franchises use a theme similar to utility franchises. The biggest positive for such franchises over other types is the loyalty-based revenue model. Once you have a customer on board and you provide good services to them, you can rest assured that you will form a long-running business relationship with them.
Property maintenance franchises largely cater to landlords who have multiple properties under their hold.
Renewable Energy and Air Quality Franchises
Renewable energy has forever been a fringe concept – but this is changing. More and more households in the UK are willing to invest in renewable energy to benefit from various allowances and play their part in a greener future. Solar power franchises are the best exponents of this idea.
Air quality franchises are an extension of utility franchises, and aim to provide cleaner, healthier air to houses and places of business.
Flooring and Roofing Franchises
Flooring and roofing are among the most requested home improvement services. Many homeowners hire roofing and flooring experts every two years to keep their properties in good health – and in this lies the real business potential for flooring and roofing franchises.
Premium Services and Value Addition Franchises
These franchises cater to the high-end homes that have premium requirements. This niche can be tough to crack, but equally profitable once you get in.
A great example of this are swimming pool franchises. While the demand may not be as widespread as other services, swimming pool franchises can turn over a sizeable revenue with only a handful of clients. The downside is that such services are overly dependant on the disposable income of their target customer base.
Should You Buy a Home Improvement Franchise?
Buying a home improvement franchise – or any franchise, for that matter – can be a difficult decision to make. At franchise4u, we receive countless questions from people who want to buy a franchise, but they aren’t sure-footed. Before we go any further, we would urge you to read through our free franchising guides to know what it really takes to run a successful franchise business.
As far as home improvement franchises go, the first consideration should always be your ability to invest. Since these franchises will cost you a significant sum of money, make sure that you know the risks associated with the business. Preparing a contingency-proofed business plan can paint a clear picture of risks and opportunities.
The second consideration should be the expertise and experience that you bring on board in your personal capacity. Prior experience in the given field will always come in handy, and you won’t have to learn ‘on the job’.
Lastly, you should be able to carry out a thorough, on-field and fact-based market research that is customised for the territories you may have shortlisted. It will tell you in no uncertain terms what the potential of a franchising opportunity is.
Top Home Improvement and Repair Franchises in the UK
Let’s take a quick look at some of the most popular and innovative home improvement and repair franchises in the UK.
- Minimum Initial Investment: £10,000 (plus VAT)
- USP: High-quality, low-maintenance external doors
- Low/no royalties
- Thorough support
- Staff training
- Start on a budget
- Associate BFA Member
- Minimum Initial Investment: £25,500 (plus VAT)
- USP: Sophisticated surface repair
- Relatively untapped market
- Novel services that are gaining in popularity
- Extensive training and support
- Assistance with marketing
- Minimum Initial Investment: £17,000 (plus VAT)
- USP: Specialty blinds, curtains and awnings for domestic and commercial clients
- Exclusive distribution rights for major brands
- Staff training and business support
- Associate BFA Member
- Minimum Initial Investment: £25,000 (plus VAT)
- USP: State-of-the-art home security solutions
- 12+ years in operation
- Exclusive territory rights
- Funding support
- Training and marketing assistance
- Valuable and popular brand name
- Minimum Initial Investment: £250,000 (approx.)
- USP: High-end furniture
- Available in 65 countries
- A popular brand name with hundreds of high-street locations in operation
- Funding support may be available
- Ideal for urban territories
- Minimum Initial Investment: £19,950 (plus VAT)
- USP: Sustainable, efficient ventilation solutions
- Exclusive territory rights (400,000 homes)
- Extensive business support
- Consistent knowledge transfer
- Full BFA Member
- Choose your franchisor based on your industry experience.
- Be prepared to make a large upfront investment.
- Home improvement franchises require you to invest in your staff.
- Choose your territory only after conducting a thorough market research.
Talk to operational franchisees before you sign a franchising agreement.