Those considering starting their own HVAC company may have discovered there are a few avenues future business owners can take to realize their dreams. One is by the traditional method of gathering enough funds to become an independent HVAC contractor. The other is through buying into a franchise. Both have their pros and cons. Discover more about each of these opportunities below.
Why HVAC Contractors Consider Franchise
The main benefit to owning a franchise location is that the brand awareness is already built-in. Instead of spending loads on marketing, advertising, and offering special incentives to acquire your first customers, they will already recognize the name of the franchise and may even come to you without prompting! HVAC contractors are also enticed by the prospect of skipping the steps of organizing pricing schemes, finding a location for an office, and determining payroll. The parent company usually has their own standardized systems for these processes and can show the new business owner the ropes of how to get started in the HVAC business. For those needing a lot of assistance, or who feel less confident in multiple areas of management, they may be swayed to buying into a franchise.
While franchises may work for some HVAC contractors, most franchises work to make the franchise owner rich, and not the individual business owner. Also, not all franchises are the same. By asking around, you may be able to gather from other HVAC contractors that a particular franchise doesn’t have the best interests of the store owner at heart or is slow to respond to inquiries. Some franchises may also be dealing with several lawsuits, which is most often a bad sign. Financial instability and excessive pressure to buy into their company can also be a warning to stay away from the franchise. We will explain more in detail the risks of franchise ownership and benefits of independent small businesses below.
Benefits of a Network over Franchise
Although HVAC franchise opportunities can help new business owners get off the ground and find almost immediate success, they will also have control over many of the business decisions and may not be as profitable as owning an independent business in the long run. Most franchises require a buy-in (typically around $50,000 for an HVAC company) and a percentage of revenue to be paid to them in exchange for you using their name and services. Typically, the percentage is 5-10%. However, this percentage is required whether or not you make an actual profit. Since most businesses don’t see a profit for the first couple of years, your store could be in the negative for a while. Recovering the initial buy-in amount is also tough to overcome. With mandatory store upgrades and inspections, you may never taste the financial freedom you hoped for.
On top of this, you may need to get their approval for various ad campaigns, uniforms, equipment purchases, and building upgrades. This not only takes time, but it doesn’t offer much room for individuality or free choice for the business owner. If you don’t follow their contract to the T, you could lose your business. Most people who start their own business begin this adventure because they want more freedom over how they run things, and don’t want to keep working for someone else. Starting a business isn’t cheap, whether franchise or not, so you may as well fully benefit from the large investment you are paying up front by owning your own decisions and operation.
Now, just because you don’t join a franchise doesn’t mean you will be completely on your own when starting a business. There are networks designed to help small businesses succeed on their own by providing them with training related to various parts of business. Not strong in marketing? Attend a training! Need help with hiring processes? Contact your network! Being an independent HVAC contractor doesn’t mean you have to be totally alone.
Reach out to a networking group like SGI to help you move forward in your business goals. These networks are designed to grow with you and support you along the way, not sign you on and then throw you into the deep end hoping you eventually figure it out. Although purchasing a membership into a networking group does require an initial cost, the value of the information far outweighs the small fee in the beginning. The SGI network specifically works with experienced and successful independent business owners who can offer advice on processes that worked for them. The time and money saved learning from their wisdom often provides members with enough value to keep their memberships long term. In the end, the cost of a membership is far less than buying into a franchise, provides just as much, if not more, support, and allows for far more freedom than franchise opportunities.Stay Connected: