By Dwayne Tanner
For aspiring entrepreneurs, franchising offers an exciting gateway to business ownership—with options ranging from fast food to fitness to home services.
With such a wide variety of industries under the franchising umbrella, choosing the right fit means aligning your investment with both your interests and long-term goals.
While each franchising vertical has unique benefits, service-oriented businesses can be especially advantageous—providing new business owners with lower cost of entry, greater opportunities for scalable growth and more.
Service businesses offer lower startup costs
For starters, consider the financial requirements for buying a service business. Launching any new business requires an initial investment, but for service companies, the upfront cost tends to be more modest—especially when compared with retail.
There are a number of reasons for this. First and foremost is the lack of physical inventory. Unlike retail stores, service-oriented franchises don’t have to stock up on a large amount of supplies. As such, there are limited initial costs related to inventory storage and management.
In some cases, service franchises can dispense with the cost of owning a brick-and-mortar location altogether. While a restaurant or convenience store requires plenty of physical space, something like a drain cleaning service, carpet cleaning business or pet control company can often dispatch calls from a very modest front office, or even a home.
These are just a few of the ways in which buying a service-oriented business can reduce the upfront costs associated with franchising, providing an appealing point of entry for aspiring entrepreneurs seeking affordable startup opportunities.
Service businesses offer recurring revenue streams—and can be recession-resistant
Another advantage of service-based franchises is their built-in potential for recurring revenue, even amidst seasons of economic uncertainty.
Simply put, offering essential or highly-valued services is a great way to meet ongoing consumer needs—needs that don’t necessarily dissipate during market downturns.
Plumbing services are often needed when drains become clogged or pipes leak, and after natural disasters, many property owners seek property or contents restoration services to help recover and rebuild, regardless of economic conditions.
Service franchises also thrive on word-of-mouth referrals. In a world where reliable, affordable service can be hard to find, satisfied customers often become loyal advocates. In a world where finding honest, affordable service professionals can be challenging, consumers tend to be all too happy to pass along referrals to their friends and neighbors—meaning there is considerable upside for franchises that cultivate high levels of customer satisfaction.
Satisfied customers can become brand advocates, but they can also become repeat buyers—especially when service businesses offer subscription or maintenance options. Whether it’s monthly pest control or routine plumbing inspections, there are plenty of ways for service providers to turn one-time customers into regulars.
Scaling the business with complementary franchises
Many entrepreneurs dream not just of owning a single business, but of expanding into multi-unit ownership. Here again, service verticals offer some unique advantages. Not only does franchising provide an on-ramp to multi-unit ownership or regional expansion, but the service industry in particular offers opportunities to own complementary services.
Consider this example: water damage from a leaky pipe can compromise the infrastructure of a home, and if left unaddressed can have ruinous effects. A plumbing franchise may be able to help identify the leak, replace the piping and ensure the household plumbing system is sound. If the franchise owner also operates a restoration business, they can seamlessly offer that next step—building trust, streamlining service, and increasing revenue. This is just one example among many of how services can overlap and intersect, making it possible for franchise owners to cross-sell and cross-promote similar service offerings.
Explore the advantages of service-based franchises
Franchising offers many incentives to aspiring business owners, including strong systems, systemwide resources and support and built-in name recognition.
These perks could be present within any large franchise ecosystem—but service businesses tend to offer more advantages, making them a natural fit for first-time entrepreneurs as well as seasoned owners looking to expand.
Dwayne Tanner is vice president of franchise development for BELFOR Franchise Group, where he works alongside franchisees throughout the home service space. Prior to joining BELFOR, Tanner enjoyed successful stints at major brands like Taco Bell, Wendy’s and Ruby Tuesday.