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JAN PRO Franchise Cost Worth Owner Salary? (2022)

Written by: Parth Parth
Last Updated by Sabrina Giampaolo: July 12, 2022
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This article is based on its 2022 FDD

Upon extensive review, our Vetted Biz team was able to compile a short list of the “Top 20 Most Popular Franchises in the United States”. In the article below, we review the business model proposed by one of these 20 franchises: Jan Pro.

Contents

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Jan Pro Franchise

Jacques Lapointe founded Jan Pro in Providence, Rhode Island in 1991. A commercial cleaning service company, that operates in the US and internationally. Catered specifically toward the B2B audience. Including car dealerships, gyms, banks, churches, schools, and offices. 

Jan Pro

They emphasize their commitment to using only cleaning products that require fewer chemicals to clean more.

Jan Pro is currently headquartered in Alpharetta, Georgia, and is run by its CEO, Anthony Burton. He has been working with the company since 2003, where he previously served as Director of Operations.

They operate on a master franchise model with 98 master franchisees across the U.S.A. In the analysis, we will first look at JAN PRO’s Master Franchise and then at a Unit franchise. Before all of that, we will cover what master franchises are.

Jan Pro Master Franchise

A master franchise system is one in which a franchise brand establishes a relationship with another party to grant the latter the right to recruit new franchisees in a geographic location. The agreement those two parties sign is a Master Franchise Agreement. The master franchisee typically pays some money to the master franchisor and takes on some or all responsibility to train and support new locations in their area. The master franchisees are sometimes referred to as sub-franchisors because their role is similar to the master franchisor except in a given location.

Most franchisors use this strategy as an international growth strategy, expanding out of their local markets. According to a research survey, 20% of all US-based franchisors use master franchising to expand outside US borders.

JAN PRO calls its Master Franchisees Regional Developers. Their Regional Developers are local franchisors that recruit entrepreneurs to start their own businesses by becoming master franchisees under their brand. Regional Developers support their Certified Franchisees with training, client acquisition, and other services. Regional Developers also serve in the capacity of a coach, mentor, and advisor to help their unit franchisees grow their businesses.

jan pro

JAN PRO Positioned in the Cleaning and Maintenance Industry

There is a rising demand for cleaning and maintenance services in the U.S. as construction activities, investment in real estate, and the number of working women increased. The Cleaning and Maintenance industry offers commercial and residential services such as window cleaning, floor cleaning and care, carpet and upholstery cleaning, maid services, janitorial services, landscaping, vacuuming, snow plowing, and more.

The Cleaning industry supports over 3.3 million jobs, of which 2 million are supported by the Janitorial Services industry alone. The janitorial sector has over 845,000 businesses and market size of $58 billion.

JAN PRO competes in the Cleaning and Disinfecting market against big brand companies such as Mint Condition, and JanTize. Other competing janitorial services include Coverall, Vanguard Cleaning Systems, andAnago.

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JAN PRO Franchise Cost

The initial JAN PRO Master Franchise Fee is between $50,000 and $600,000. You have to pay this upfront fee when opening a JAN PRO franchise. The major variance is due to the territory size.

The estimated total investment necessary to begin the operation of a JAN PRO Franchise ranges from $127,500 to $769,000. The following costs are part of the upfront costs included in the initial investment for a JAN PRO. Many of these are one-time fees that are needed to launch the franchise.

Review the chart below to see how much it costs to start a JAN PRO Master franchise in 2022.

Type of Expenditure Amount 
Low High
Initial Franchise Fee 50,000 600,000
Real Estate 1,500 5,000
Initial Supplies 1,500 2,000
Equipment & Office Furniture 10,000 25,000
Business Licenses & Permits, Deposits & Other Prepaid Expenses 1,000 4,000
Insurance 1,000 3,000
Certification 3,000 5,000
Legal Fees & Registration Expenses 1,500 10,000
Computer Hardware & Software Licensing 5,000 10,000
Initial Advertising Expenses 3,000 5,000
Additional Funds – 3 months 50,000 100,000
TOTAL ESTIMATED INITIAL INVESTMENT $127,500 $769,000
Jan Pro

Master Franchise Ongoing Fees

Contract Services Royalty Fee: 4% of Gross Monthly Revenue

Sales Royalty Fee: 10% of the total initial franchise fees for Unit Franchises; upgrade fees for additional Customer accounts; transfer fees for the transfer of a Unit Franchise; and 10% of all principal and interest collected during the previous calendar month.

Advertising Fee: Currently, $150 or 2% of Gross Monthly Revenue, whichever is greater per month.

Smarthub Software License Fee: Currently $630 per month.

The standard royalty fee in the industry is 7.9%, and the marketing fee is 2.8%. As such, JAN PRO master franchises have higher than standard royalty and lesser than standard marketing fees.

How much do JAN PRO master franchise owners make?

Total Billings (RS + SS) for Reporting Jan-Pro Locations For Fiscal Year 2021

Average Count % Achieving Average Median Low High
All Franchised Locations $5,273,624 97 46% $4,904,568 $233,042 $13,886,601
1 $6,665,083 29 48% $6,603,206 $3,204,878 $13,886,601
2 $5,865,708 30 37% $4,871,531 $3,204,878 $12,042,667
3 $3,744,286 38 45% $2,640,706 $233,042 $13,052,028

2021 JAN PRO Median Franchise Sales: $4,904,568

Initial Investment (midpoint)% Profit Margin of Average Franchise SalesEstimated ProfitsTime to Recoup Investment
$448,2502.5%$122,6146 years
$448,2505%$245,2284.5 years
$448,2507.5%$367,8424 years

Based on the median sales provided by JAN PRO’s franchise locations, at an average of a 5% profit margin it will take around 4.5 years to recoup your investment. This is in the same range as other franchise opportunities. You may not get a 5% profit margin which would elongate getting a return on your investment.

Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Cleaning and Maintenance stores; the extent of market penetration and brand awareness that JAN-PRO stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

Is the JAN PRO Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for JAN PRO franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.

We are going to use the formula Estimated Selling Price = Net Sales – 0.58

When you go to sell a JAN PRO franchise based on the median multiple of .58 and net sales median sales in 2021 of $4,904,568, it would sell for $2,844,649. This is significantly higher than the midpoint investment of $448,250.

The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.

JAN PRO (Franchisor) Income Statement Key Insights

STATEMENT OF INCOME

 Successor
December 24, 2020 to September 30, 2021
Predecessor
October 1, 2020 to December 23, 2020
Predecessor
Year Ended September 30, 2020
Revenue
Franchise fees$ 927,616$ 279,565$ 414,727
Royalties and advertising fund contributions17,681,1775,278,37219,705,985
Ancillary534,002177,8071,144,122
Operating Expenses9,302,9252,413,7129,566,768
Income from Operations9,839,8703,322,03211,698,066
Other Income (Expense)
Depreciation and amortization(5,231,858)(613,600)(2,624,343)
Interest income6,81921,568467,952
Interest expense(1,851)(18,824)(45,305)
Net Income Before
(Provision) Credit for Income Taxes4,612,9802,711,1769,496,370
(Provision) Credit for Income Taxes(929,624)(504,411)(2,028,613)
Net Income$ 3,683,356$ 2,206,765$ 7,467,757

JAN PRO is a profitable business for the franchisor with retained earnings of $3.68 million in 2021. Compared to $7.46 million in 2020, they saw a decrease of almost 50% from 2020 to 2021. This is an indication that the company isn’t doing very well. This could be due to the pandemic and the future financials of the company remain to be seen.

jan pro cleaning

Master franchises opened and closed

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised201990955
202095950
202195983
Company-Owned2019000
2020000
2021000
Total Outlets201990955
202095950
202195983

Over the last three years, the company has been expanding. Between 2019 and 2021, 8 new master franchisees signed on, bringing the number from 90 to 98. That is a growth rate of almost 10% which is just short of the industry average of 12%.

Now that we know a bit about the JAN PRO Master Franchise, let’s look at the Unit Franchise or subfranchise. It is important to understand that Unit Franchises from different master franchisees will have different costs. For this purpose, we will look at franchises offered by R.E. JOHNSEN, LLC – A Wisconsin limited liability company.

JAN PRO Unit Franchise Cost

The initial JAN PRO Unit Franchise Fee is between $2,520 and $60,000. You have to pay this upfront fee when opening a JAN PRO Unit Franchise franchise.

The estimated total investment necessary to begin the operation of a JAN PRO Unit Franchise ranges from $4,720 to $73,520. The following costs are part of the upfront costs included in the initial investment for a JAN PRO. Many of these are one-time fees that are needed to launch the franchise.

Review the chart below to see how much it costs to start a JAN PRO Unit franchise in 2022.

Type of Expenditure Amount
Low High
Initial Franchise Fee 2,520 60,000
Travel and Living Expenses While Attending Certification Program 50 300
Office and Related Expenses 150 550
Vehicle 0 500
Initial Equipment Package 750 1,250
Real Estate 0 550
Electrostatic Sprayer Machine 750 1,500
Floor Buffing Machine 50 1,300
Carpet Cleaning Machine 50 4,400
Insurance 200 620
Legal & Organizational Costs 50 2,000
Additional Funds (3 Months) 150 550
TOTAL ESTIMATED INITIAL INVESTMENT $4,720 $73,520
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Unit Franchise Ongoing Fees

Royalty Fee: 10% of your Gross Billings for the previous month

Support Fee: 5% of your Gross Billings for the previous month

Administrative Fee: 10% of your Gross Billings for Special Services for the previous month

Advertising Fee: Not exceeding 1% of Gross Billings for the previous month

The standard royalty fee in the industry is 7.9%, and the marketing fee is 2.8%. As such, JAN PRO unit franchises have higher than standard royalty and lesser than standard marketing fees.

How much do JAN PRO Unit franchise owners make?

The Regional Master Franchise in Wisconsin does not disclose sales figures for their 139 total units.

However, we can make an estimate based on R.E. JOHNSEN’s Financial Statements:

All the franchises in the system paid a total royalty of $1,065,100 to the franchisor. Since the Royalty is at a flat 10% rate, the Gross Billings for the previous year would be $10,651,000.

Across, the 139 units in operation, this amounts to $76,625 in AUV (Average Unit Volume)

2021 JAN PRO Unit Franchise Average Unit Volume: $76,625

Initial Investment (midpoint)% Profit Margin of Average Franchise SalesEstimated ProfitsTime to Recoup Investment
$39,12040%$30,6504 years
$39,12050%$38,3122.5 years
$39,12060%$45,9753.25 years

Based on the estimated Average Unit Volume for JAN PRO’s unit franchise locations in Wisconsin, at an average of a 50% profit margin it will take around 2.5 years to recoup your investment. This is in lesser than other franchise opportunities. You may not get a 50% profit margin which would elongate getting a return on your investment.

Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Cleaning and Maintenance stores; the extent of market penetration and brand awareness that JAN-PRO stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

Is the JAN PRO Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for JAN PRO franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.

We are going to use the formula Estimated Selling Price = Net Sales – 0.58

When you go to sell a JAN PRO franchise based on the median multiple of .58 and net average unit volume in 2021 of $76,625, it would sell for $44,442. This is significantly higher than the midpoint investment of $39,120.

The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.

Unit Franchises opened and closed

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised201911012919
202012914314
2021143139-4
Company-Owned2019000
2020000
2021000
Total Outlets201911012919
202012914314
2021143139-4

Over the last three years, the unit franchises under this master franchisee have been expanding. Between 2019 and 2021, 59 new unit franchisees signed on, bringing the number from 110 to 139. That is a growth rate of almost 26% which is greater than the industry average of 12%. 2020 – 2021 saw a decrease in the number of franchises – this might be part of a larger trend of decline in the need for Janitorial Services after the pandemic and due to work-from-home models. We recommend monitoring the industry closely before starting a business in it.

Conclusion

JAN PRO offers people the opportunity to be a part of a business that has good returns for the master franchisees. Unit franchises also make a good profit when selling their businesses. That said, the financials of the master franchisor look a bit shaky. It saw the annual income as almost half between 2020 and 2021. That is a worrying sign for both master franchisees and subfranchisees and prospective franchisees should closely monitor the company’s financial statements.

The master franchise makes a lot more money compared to the subfranchise but we do not recommend starting a master franchise if you have had no experience in either the Cleaning, Janitorial Services, and Maintenance Industry or with franchises. Knowledge of how master franchises work is very important and we recommend reading our full guide on what master franchises are and how they work.

As a prospective franchisee, we recommend you talk to at least 3 – 5 existing JAN PRO franchisees before entering the business. While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Cleaning and Maintenance Industry.

franchise specialist

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Buying a Hampton Inn Franchise

8 Steps to Sell Your Business for the Best Price

8 Steps to Sell Your Business for the Best Price

Ace Hardware Franchise: Is It Worth The Investment? (2022)

Ace Hardware Franchise: Is It Worth The Investment? (2022)

What to know about the SBA Paycheck Protection Program

What to know about the SBA Paycheck Protection Program

Miami businesses for sale: What to look out for

Miami businesses for sale: What to look out for

Explore Businesses for Sale in Florida

Explore Businesses for Sale in Florida

Small Business Coronavirus Recovery Options

Small Business Coronavirus Recovery Options

Changing Landscape for Retail and Food Space

Changing Landscape for Retail and Food Space

How to Understand Franchises Numbers

How to Understand Franchises Numbers

3 Salad and Go Franchise Alternatives For 2022

3 Salad and Go Franchise Alternatives For 2022

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