Congratulations! You’ve decided to start your own business venture and enter the lucrative water damage restoration industry. And you’ve also decided that joining a franchise gives you the support and competitive edge you need to grow your business quickly so you can start making some money pronto -- Smart!
But which franchise should you choose? There are several to choose from, and they all look pretty good on paper, and it’s all a bit overwhelming because this is a big decision.
Have no fear. In this article, we examine the most recent public franchise disclosure documents we could find and break down the advantages and disadvantages of two compelling options for you - joining the established 1-800 Water Damage franchise system vs. joining the upstart Moldman franchise system.
Factor 1: Cost
“How much is this going to cost me?” is probably the #1 question in the mind of most people before they make a big investment. According to their 2023 FDD, the minimum cost to begin operation of a 1-800 Water Damage franchise is $206,989. Wow! That’s a big investment. Most people don’t have access to that kind of money so they will need to take on a loan, which is an annoying process to go through and also adds even more to the cost because you’ll be paying interest and loan fees.
In contrast, the minimum cost to begin operation of a Moldman franchise is $9,536. So for less than $10,000, you can get into the water damage restoration industry with a franchise system if you choose to join Moldman, which makes Moldman much more accessible to the average person. And less upfront investment means less risk.
Advantage: Moldman ✅
Factor 2: Return on Investment
“How much can I make?” is probably the #2 question in the mind of most people before they make a big investment. And to properly analyze that question, you’ve got to account for return on investment, or ROI. ROI can be thought of as “profit as a percentage of my investment.” For example, if you invest $100,000 and make a profit of $25,000, then that’s a 25% return on your investment.
Franchises never make any promises as to how much money you will make because that opens them up for a lawsuit if you don’t make as much as they promise. But most will disclose some helpful financial information in Item 19 of the FDD. 1-800 Water Damage discloses that the average gross income of all franchisees was $638,318, which is certainly impressive.
But don’t forget about your high initial investment with 1-800 Water Damage. With a start-up cost of approximately $200,000, you’re going to have to make a heck of a lot of profit to have a high return on investment.
In contrast, Moldman discloses in Item 19 of their FDD that their example franchisee’s gross income was over $600,000. If you assume an initial investment of $10,000, and an average profit, then that’s quite a high return on investment!
Advantage: Moldman ✅
Factor 3: Royalty Fee & Other Ongoing Fees
Royalty and other fees are disclosed in Item 6 of the FDD. A quick look shows that, for their royalty fee, 1-800 Water Damage charges 10% on income up to $500,000, with the fee dropping on amounts over $500,000. On top of that they charge an extra 2% for a marketing fund fee.
In contrast, Moldman charges a simple flat 10% royalty fee, with zero additional marketing fund fee. Their 10% royalty fee is easy to calculate and easy to understand, and therefore can be easily passed off onto the end customer.
Advantage: Moldman ✅
Factor 4: Training & Support
1-800 Water Damage is a large, established company with a robust training program. They have impressive training facilities at their headquarters in Ann Arbor, Michigan that franchisees travel to. There, they will receive classroom instruction and hands-on training. Keep in mind that franchisees will have some significant costs associated with training. It is quite expensive for most people to pay for a week of travel and hotel, so that should be considered. 1-800 Water Damage also has a robust support system.
Moldman has taken a different approach to training. Moldman’s training system is all online, and it teaches franchisees how to do hands-on training on their own. Traveling to their headquarters in Chicago for hands-on training is totally optional, so Moldman’s training system is zero-cost. Since their company is smaller, their support system is more one-on-one with the founders, which can be very helpful in the beginning phases of a business. Ultimately, while Moldman’s training and support systems work well for many people, it is less robust than 1-800 Water Damage’s.
Advantage: 1-800 Water Damage ✅
Factor 5: Territory
1-800 Water Damage has over 150 franchise locations. While impressive, that means that most territories, not just the best ones, are already taken and are unavailable. 1-800 Water Damage franchisees receive a territory with a population of approximately 350,000 people and the territory is not “exclusive.” Territory information can be found in Item 12 of the FDD.
Since they are a young, upstart company, most of Moldman’s territories are still available. Moldman has a similar “open territory” system and Moldman’s territories are based on a population of 300,000.
Advantage: Moldman ✅ (because of availability of territories)
Factor 6: Brand
One of the most significant advantages of joining a 1-800 Water Damage franchise is tapping into a well-established and reputable brand. 1-800 Water Damage has built a solid reputation over decades of being in business. They are also part of the Belfor Group which is a large conglomerate of various franchised services companies.
Moldman, on the other hand, is an upstart company that is just beginning to build a nation-wide brand. While customers tend to gravitate to their name and “hero” character, Moldman is still not well-known beyond the greater Chicagoland area and a few other local markets around the midwest.
Advantage: 1-800 Water Damage ✅
So there you have it! A comparison of 6 of the most compelling reasons to join a franchise system in the water damage and mold restoration industry between the established company of 1-800 Water Damage and the upstart company of Moldman. We hope this was helpful! Whichever decision you make, we are confident that you will be in good hands either way.
For more information about opening a Moldman franchise, click here:
For more information about opening a 1-800 Water Damage franchise, click here:
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