In Part 1, we explored the often-overlooked factors when choosing between a franchise and an independent restoration business. From brand recognition to system flexibility, there’s much more to consider than just upfront costs. Now, in Part 2, we’ll dive into two key areas: training and long-term business strategy, including how these factors impact success in both franchise and independent models.

We’ll also look at what franchisees and independent owners should know about market territories, support networks, and exit strategies. Whether you’re seeking the structured support of a franchise or the freedom of an independent business, these insights can help guide your decision.


Training

Ten years ago, the most effective way to receive functional training as a business owner and restorer was joining a franchise. Now, there are many more resources for training that go beyond simply getting IICRC-certified. There are training courses available that include flood houses for WRT training and certification, business coaching programs, companies that specialize in having video courses available 24/7, estimating courses and even third-party estimators available to help maximize your profits. Let’s also not forget the power of Facebook forums and networking with your peers. For the DIY restoration owner, it’s easier than ever to get started. It just takes time to understand your needs, deficiencies, and hire the right help for your business.

 If you prefer guardrails, or a potentially speedier startup, franchising may be right for you. The large franchises offer 150-328 hours of classroom and field training, whereas the smaller franchises offer 45-186 hours of classroom and field training. As a rookie restorer, I remember spending three weeks in Florida immersed in my new career. It was a lot of information, however we had excellent instructors that cared about our success. After we graduated, having one-on-one time with the corporate training at my location for a week built my confidence rapidly. Having an advocate I could rely on during my early days for advice and calming my nerves was very helpful, however I do believe that it is much easier even for a complete novice to be very successful as an independent owner, there just may be more bumps and bruises sustained in the early days.


Double check the business model

What many people don’t know is that any franchise, restoration or not, has competing business models. In general, publicly traded and PE owned franchises are obligated to return profits to their shareholders. They also may try to grow at all costs and therefore award franchises to owners who may not always be the best fit for their system, but have deep enough pockets to buy in. Franchisees usually are effected in their level of support. Franchise support is expensive, and there are often cost-cutting measures taken in order to save the franchisor money, shore up the P & L, and return profits to shareholders. Conversely, when an expensive undertaking is necessary, such as investing in training facilities, pursuing insurance carriers for program work, advertising, and marketing, these large operations typically have the financial resources available to deploy.

Smaller franchises tend to be more focused on their franchisees as every owner is critical to successful growth. These smaller franchises often are able to provide closer support and have deeper relationships with their owners. The franchisor CEOs also tend to be more focused on the individual success of their franchisees knowing that with their success, comes growth and success for the franchise itself. It’s important try and learn the exit strategy for the franchisor though as many are eventually looking to be acquired by private equity which can quickly change how the franchisor interacts with its franchisees. 


Who’s your master?

For those that come from the corporate world and are just beginning their self-employed journey, franchising is an excellent way to learn how to own and operate your own business. The popular saying in franchising is that “you’re in business for yourself, not by yourself.” This usually rings true. In the franchise model, you’re surrounded by support both from the corporate team and also other owners who are eager to help other owners. There are systems and precedents to follow which help build the new entrepreneur’s confidence. Conversely, you may sometimes feel pressure to adhere to the franchise system and there will inevitably be some conflicts. Sometimes it can feel that as a franchisee, you answer to many masters. The franchisor will have their preferences, the carriers and TPAs (if a part of program work) will have their requirements, the business owner will have their personal preferences, and even the owner’s family can have input that can add constraints. Franchising is a wonderful option for those that understand the limitations and restrictions and are willing to follow the system.

For those with business acumen, or are more tolerant of risk, independent business ownership may be a better option. Independent owners are able to make quicker decisions and are able to experiment more with their business. There is less support available, and independent owners will be responsible for finding, vetting, and utilizing a support network they create. To some, this freedom can be overwhelming, and owners can sometimes suffer from analysis paralysis which hinders the ability to scale the business

Ricelli: On the topic of training, consider how much and what type of training they provide. While some brands focus on technical training (available to anyone in the industry through various organizations such as IICRC), others also offer business, sales, HR and other types of training. Some large franchise systems offer up to 100-328 hours of training while some small systems offer anywhere from 45-186 hours of training. 

Questions to ask:

  • What training will be offered?
  • Who are the instructors?
  • What practical knowledge do they have on the material they are training?
  • What are the top offices within the group doing with the material and do they use/adopt the same practices?

While I currently am hired by brands to conduct their sales training as part of the onboarding plan for new franchisees, I have also been hired by brand and non-branded restoration companies to head their Revenue department, teach and coach their sales team all from their own budget: they picked up the tab.


What considerations should business owners make about the geographic area they service?

Jeff: Restoration is a fiercely competitive industry. The allure of high profit margins and somewhat low barrier to entry makes this an enticing industry for many. Franchises will provide either protected or unprotected territories to their owners. The geographic size, population, and demographics vary by each franchise system. When researching franchise organizations it’s important to consider if you’ll be receiving a protected territory, who your franchise neighbors may be, what your opportunities are for expansion, what protections are in-place in the scenario that a franchise neighbor either markets or does work in your territory. Having a defined territory can help a restoration company owner focus their marketing efforts in one area and maximize their marketing ROI. 

For the independent owner, the ability to serve a broad market area can be alluring. Not being confined to a defined territory does offer the ability to travel to demand, however I caution owners from servicing too wide of an area as this can be inefficient. Windshield time, traffic, and fuel consumption decrease efficiency and is typically not reimbursed by carriers. Having techs in vehicles for several hours each day limits their productivity.

Ricelli: What to expect from the Franchise model:

  • Know where to focus your efforts for sales and marketing
  • How far can your budget go?
  • Market share, from the department of insurance: 5.5% of all households will have a filed property claim per year, what does that mean to you? More households equals more opportunities, but you still have to go after them. 
  • Direct work in the territory: is this available and if so, how much? If your franchise system has relationships that will provide you direct work, what is the impact of that on your COGS when you get the work yourself from your local marketing efforts?

Jobs/assignments: how will you make the phone ring and get the work you want?

What to expect from the Franchise model: several franchise systems offer direct work opportunities for their franchisees, but is that the type of work you want?

  • direct/program work - assignments which will come to you directly from the carriers or regional/national accounts
  • You will still need to build local relationships, at least 50% of your work should come from relationships you’ve built, 25% should come from digital and the other 25% maybe a TPA or direct work. This will allow you to have a sustainable source of business


What should I know when it’s time to retire?

Jeff: There are three ways to exit your business, sale, death, or closing down. Naturally, the first one is preferred. Selling a franchise may be easier than selling an independent restoration company for the same reasons they’re appealing to a rookie owner, systems, support, and existing customer base. It’s also possible the franchisor, for a fee, can assist in marketing your location when you’re ready to sell. Always review your Franchise Agreement as many franchises do charge a transfer fee and have a first-right-of refusal.

On the independent side, it may seem less expensive to sell your business, however you’ll likely engage a business broker who takes a fee from the sale. This may, or may not be, less expensive than a franchise’s fees. Further, selling a restoration business can be challenging due to the level of complexity, liability, and knowledge that can be difficult for an outsider to grasp. A buyer may require an owner to stay on for 1+ years in order to train and manage the company whereas the franchise will require the new owner to attend trainings and get certified in order to be eligible as an owner.

Ricelli: Can you leave if you want to? And what will that look like? Some franchise systems will not allow you to sell your business to a private equity team - they want you to sell it back to them (franchisor) at their valuation or to someone they have vetted as suited to be part of the brand. Will you have to pay a penalty fee to exit the system if you want to leave before the maturity of your agreement? On the other hand, what will the valuation be for a locally owned and operated restoration company versus someone who is part of a national brand? 


What considerations should restoration owners consider when it comes time to sell their business?

Jeff: There are three ways to exit your business, sale, death, or closing down. Naturally, the first one is preferred. Selling a franchise may be easier than selling an independent restoration company for the same reasons they’re appealing to a rookie owner, systems, support, and existing customer base. It’s also possible the franchisor, for a fee, can assist in marketing your location when you’re ready to sell. Always review your Franchise Agreement as many franchises do charge a transfer fee and have a first-right-of refusal.

On the independent side, it may seem less expensive to sell your business, however you’ll likely engage a business broker who takes a fee from the sale. This may, or may not be, less expensive than a franchise’s fees. Further, selling a restoration business can be challenging due to the level of complexity, liability, and knowledge that can be difficult for an outsider to grasp. A buyer may require an owner to stay on for 1+ years in order to train and manage the company whereas the franchise will require the new owner to attend trainings and get certified in order to be eligible as an owner.

Ricelli: Can you leave if you want to? And what will that look like? Some franchise systems will not allow you to sell your business to a private equity team - they want you to sell it back to them (franchisor) at their valuation or to someone they have vetted as suited to be part of the brand. Will you have to pay a penalty fee to exit the system if you want to leave before the maturity of your agreement? On the other hand, what will the valuation be for a locally owned and operated restoration company versus someone who is part of a national brand? 

To conclude, there is one determining factor if franchising or independent ownership is right for you. Being franchise owner or independent both have their benefits. We suggest first determining if being independent or a franchisee is right for you. Then, if you determine that franchising is your correct path, determine if you want to join a large or small franchise organization. From there, we highly recommend speaking with both current franchise owners and previous owners to learn more about their experiences. In either business model, you’ll need to put in 100% in order to be successful in this industry.