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JAN PRO Franchise Cost Worth Owner Salary? (2024)
Written by: Parth Parth
Last Updated by
María Fernández Amato: March 1, 2023
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Download NowThis article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.
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.
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 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.
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, and Anago.
JAN PRO Franchise Cost
The initial JAN PRO Master FranFranchise 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.
Estimated Initial Investment
| 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 |
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 Sales | Estimated Profits | Time to Recoup Investment |
|---|---|---|---|
| $448,250 | 2.5% | $122,614 | 6 years |
| $448,250 | 5% | $245,228 | 4.5 years |
| $448,250 | 7.5% | $367,842 | 4 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 contributions | 17,681,177 | 5,278,372 | 19,705,985 |
| Ancillary | 534,002 | 177,807 | 1,144,122 |
| Operating Expenses | 9,302,925 | 2,413,712 | 9,566,768 |
| Income from Operations | 9,839,870 | 3,322,032 | 11,698,066 |
| Other Income (Expense) | |||
| Depreciation and amortization | (5,231,858) | (613,600) | (2,624,343) |
| Interest income | 6,819 | 21,568 | 467,952 |
| Interest expense | (1,851) | (18,824) | (45,305) |
| Net Income Before | |||
| (Provision) Credit for Income Taxes | 4,612,980 | 2,711,176 | 9,496,370 |
| (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.
How Many Jan Pro Units Have Opened and Closed?
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 90 | 95 | 5 |
| 2020 | 95 | 95 | 0 | |
| 2021 | 95 | 98 | 3 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets | 2019 | 90 | 95 | 5 |
| 2020 | 95 | 95 | 0 | |
| 2021 | 95 | 98 | 3 |
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.
Estimated Initial Investment
| 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 |
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 Sales | Estimated Profits | Time to Recoup Investment |
|---|---|---|---|
| $39,120 | 40% | $30,650 | 4 years |
| $39,120 | 50% | $38,312 | 2.5 years |
| $39,120 | 60% | $45,975 | 3.25 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 type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 110 | 129 | 19 |
| 2020 | 129 | 143 | 14 | |
| 2021 | 143 | 139 | -4 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets | 2019 | 110 | 129 | 19 |
| 2020 | 129 | 143 | 14 | |
| 2021 | 143 | 139 | -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.
