Business Franchise Australia

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4-3-2-1 – Kaboom! The reason that Franchising in the Home Services industry has blown up

As a franchise consulting firm with over 50% market share in Australia we have a very close view on the franchise sector through the brands that we assist launch into franchising and through the recruitment services we offer.

 

We have seen a significant increase in the number of home service franchises entering the market and the growth rate of this sector year on year. Home services used to represent a very small percentage of the work that we performed (5%), historically retail and food & beverage represented a significant portion of the work we performed (80%). There has been a significant shift and the ratio for us has moved from 5 to 20% of the work we do being in the home services sector. There are four major reasons that I would like to share with you, causing this seismic shift.

 

  1. The Pandemic and shift in work/life balance
  2. Better Systems means better businesses
  3. The success of Home services in Franchising
  4. The changing face of Healthcare and the Government support of this sector.

 

The Pandemic and shift in work/life balance

I hate to even bring up the pandemic, we’re all sick of hearing about it, but it has caused a revolution in the way we see the world, in what’s important and how we want to spend our time. For the past 3 years we have all spent more time at home with lockdowns and remote working, we’ve had more time to reflect on what is important and how we spend our leisure time and doing chores around our homes is not what most of us enjoy doing and this additional time at home has shone a light on the state of repair of our homes and our desire to make home improvements.

 

These realisations have put a huge demand on the trades and services sector to get work done for us around our homes and this has resulted in a massive demand for homes service particularly with tradespeople and professions like Plumbing, Electrical Services, Solar, HVAC Heating & Cooling, Property Maintenance, handy man and home improvements.

 

People have reevaluated where they want to be working and for many being their own boss and working on their terms is how they want to work and live.

 

I’m going to reference Jim Penman and Jim’s services throughout this article as the largest franchisor in Australia with over 5000 franchisees and specialising in the home service sector, his business is well positioned to be referenced in this article.

38 of his 52 (and growing) franchise divisions are in the home services sector and they served over 500,000 new customers last year, over 1 million total jobs last year and have completed over 12 million jobs in total since starting his lawn mowing business.

 

Better Systems means better businesses

We know that the success rate in franchising is 50% better than independently run businesses and that is because of the systems and processes that have been developed by the franchisor and this contributes to the business success. For many trades-based businesses, the tradespeople behind them are excellent technicians but sometimes not so good at being a business owner, the marketing, accounting and business development that a franchise system brings makes their business better. We are seeing many trades-based industries starting to franchise so they can leverage the technical expertise of the tradesman but provide them with a business model that provides them with greater business success.

 

The success of Home services in Franchising

Last year I listened to Jim Penman talk about the home services sector and he shared an alarming statistic around business success in the home services sector, he claimed that 90% of independent home services businesses fail compared to a success rate of 90% within his network. This reinforces the power of systems and franchising and how it helps a business to be sustainable. With this increased demand for home based services there is a massive shortfall of people to provide the services, Jim penman claims to have had to turn away over 300,000 jobs last year as they could not service them, reinforcing the demand and abundance of work in this sector. Many home based services are offering income guarantees of up to $100,000 because they know that the work is there, often these income guarantees are much greater than the income that can be achieved through traditional paid employment, making this sector very attractive.

 

The changing face of Healthcare and the Government support of this sector.

With an aging population and significant disability sector the government has increased funding to facilitate the services in this sector. With government backing and a growing demand for these services to be delivered in the participants’ own home has seen a huge increase in demand for this home services sector.

 

In the past 12 months there have been over 300,000 services provided in the Aged Care services & Nursing sector, representing a 20% increase over the previous year and growing. There are now 1.3 million older Australians living at home and in need of some assistance with everyday activities and over 1 million Australians are accessing funding through the Commonwealth Home Support Programme (CHSP). Our aging population wants to stay in their own homes and their children want to ensure their parents are well cared for.

 

In the past 12 months we have assisted 5 NDIS businesses get Franchise Ready, this sector is booming.

 

In the disability sector there are over 530,000 participants now receiving individualised funding packages for disability-related support and this requires support workers to deliver this support which is often delivered at home.

 

So as you can see the demand for home services is up, the number of franchisors entering this sector is growing and the entry level is often much lower than the traditional franchises making it an attractive business model for prospective franchisees, we are seeing a return on capital in less than 1 year compared to other bricks & mortar franchise businesses with much higher capital requirements and a longer period to achieve return on capital ( usually between 2-3 years).

 

Home services is booming and for us the fastest growing sector in franchising delivering the best return.

 

Doug Downer an experienced Franchising expert with an impressive 30+ year senior management history in developing and leading businesses within the Franchising sector. He has been recognised in the Top 30 Franchise Executives in Australia on 4 occasions and in the Top 100 Global Influencers in Franchising on 3 occasions.

Doug owns three franchises as a franchisee and has owned 8 franchises as a franchisee, he has been responsible for the establishment of three of his own start-up franchise systems including all aspects from strategy through to market entry. Doug has operated at CEO and Director level in eight franchise systems. He also started and currently owns and operates five successful SME Businesses of his own,  so he is well versed in all aspects of franchising.