Buying a Janitorial Services Franchise:
Making a Clean Sweep
So you want to be your
own boss, but you have only a small amount of money to invest. You may be
considering a janitorial services franchise. For a fee, a janitorial service
company typically provides you with customers and marketing, billing and
In a typical janitorial cleaning franchise arrangement, you pay the
franchisor a fee for a "package" of cleaning accounts. The fee usually is
about half the gross income the accounts are supposed to generate in a year.
For example, for a fee of $10,000, you'll get accounts worth $20,000. You
also may have to pay ongoing royalty or management fees.
By law, a franchisor must give you a detailed disclosure document.
different from the franchise agreement or contract. The disclosure document
outlines the general franchise offering, including background information
about the franchisor, a summary of the franchise agreement, and a list of
current franchisees. The franchise agreement or contract is the written
document that spells out the legally binding obligations between you and the
The disclosure document should include:
- the total number of franchises, and the number of franchises that were
terminated or not renewed during the past year;
- evidence for any claims about potential earnings or the earnings of
- the cost of starting and maintaining the business;
- the names, addresses and telephone numbers of at least 10 franchisees
who live closest to you;
- the background and experience of the franchisor's key executives;
- a fully audited financial statement of the franchisor;
- any lawsuits against the franchisor or its directors by franchisees;
- the responsibilities you and the franchisor have to each other once
you've purchased the franchise.
You should receive the disclosure document at least 10 business days
before you pay any money or legally commit yourself to buying a franchise.
Buying a franchise is a big decision. Before you spend your money:
- Read the company's disclosure document. Review it carefully to learn
more about your obligations, the litigation history of the franchisor and
- Talk to other franchisees. Don't rely only on the information the
franchisor gives you. Talk to current and former franchisees about their
experiences with the franchisor.
- Contact your state franchise administrator. You can find the name of
your state franchise administrator by calling the North American
Securities Administrators Association at (202)
737-0900 or by visiting www.nasaa.org.
You also may contact your state Attorney General (www.naag.org)
or Better Business Bureau for more information.
- Get all promises in writing. If a salesperson tells you that the
franchisor will give you accounts near your home, but the written
agreement defines the geographic area more broadly, it's what's in the
written agreement that counts. If a provision in the agreement is
different from anything you discussed with the salesperson, demand that
the written agreement be changed to match the promises made.
- Review the franchise agreement carefully. It's important to understand
all the conditions of the agreement. It controls your relationship with
- Understand your obligations. As a franchisee, you may have to pay
royalties and other fees. Find out exactly what fees you'll have to pay,
how much you'll pay and how often.
- Investigate claims about potential earnings. The estimated value of
the package of accounts you buy may not reflect the income you'll earn
from servicing the accounts. Find out how the company assigns a value to
the accounts. Ask how many franchisees made the represented income and
where those franchisees are located.
- Be cautious when financing. While financing your purchase through the
franchisor may seem appealing, the terms of the financing agreement may
not be the best deal for you.
- Consider getting professional advice. Ask a lawyer, accountant or
business advisor to review both the disclosure document and franchise
agreement. The money and time you spend on professional help may save you
from a bad investment.
For more information, call the FTC toll-free, 1-877-FTC-HELP, and ask for
the publication, Buying a Janitorial Services Franchise.
The FTC works for the consumer to
prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop and
avoid them. To file a
complaint or to get free information
on consumer issues, visit
call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft and other fraud-related
Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
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