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 Servpro 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 Servpro franchise is $236,270. 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. Unfortunately, we scoured the Servpro FDD and couldn’t find the financial information we were looking for. It appears that Servpro discloses very little. That, arguably, is a red flag. But we think we should give Servpro the benefit of the doubt and assume that, after some years of hard work establishing your business, you can make a pretty good income owning a Servpro franchise. But don’t forget about your high initial investment with Servpro! With a start-up cost of over $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 Servpro charges between 3-10% for their royalty fee, and on top of that they charge an extra 3% for their “brand fund” (marketing fund). Servpro also charges an additional low fixed monthly 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.
Even though Servpro’s multiple fees are a bit complicated to nail down and fully understand, it appears that the ongoing royalty fee & other fees from Servpro and Moldman are comparable, with Moldman’s being much more transparent, quicker and easier to calculate.
Advantage: Moldman ✅
Factor 4: Training & Support
Servpro is a large, established company with a robust training program. Their headquarters in Tennessee has an impressive training facility that all 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. Servpro 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 Servpro’s.
Advantage: Servpro ✅
Factor 5: Territory
Servpro has over 2000 franchise locations. While impressive, that means that most territories, not just the best ones, are already taken and are unavailable. Furthermore, Servpro’s territories are small (based on a population between 50,000-80,000) and they are 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 ✅
Factor 6: Brand
One of the most significant advantages of joining a Servpro franchise is tapping into a well-established and reputable brand. Servpro has built a solid reputation over decades of being in business. As a big company, It has a big advertising budget, which it has used to build plenty of recognition in the marketplace. If you haven’t seen one of their commercials on TV, you should watch one online to see. Their commercials are always well done.
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: Servpro ✅
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 Servpro 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 Servpro franchise, click here: