Chem-Dry is a franchised carpet cleaning business. They claim to be the best carpet cleaning franchise in North America, offering entrepreneurs the chance to grab a piece of an industry worth $6.6 billion per year.
Launched in 1977 and now headquartered in Nashville, Tennessee, Chem-Dry have offered franchise opportunities since 1978. Franchisees operate a mobile business, using branded vehicles to visit residential and commercial premises to provide carpet cleaning, upholstery cleaning, spot removal, protective services and other authorized services. Currently, they have over 3500 locations worldwide and has operations in more than 30 countries.
Chem-Dry at a glance:
You won’t need deep pockets to get into your Chem-Dry franchise. After covering the franchise fee, new business owners are required to show liquid cash reserves of only $30k. There is no minimum net-worth requirement or any need for previous cleaning industry experience. Additionally, because Chem-Dry is a mobile business there are minimal real estate costs. You could operate your Chem-Dry business from your own home or a low-cost industrial unit. There’s no need for an expensive main street retail outlet. Best of all, Chem-Dry does not require franchisees to manage the day-to-day running of the business. You can hire someone to do that for you. This makes a Chem-Dry franchise a good option for investors seeking a passive investment opportunity.
Chem-Dry provides one of the more affordable franchise opportunities, with franchisees expected to spend between $72,000 and $254,000 to get their new business up and running.
The initial franchise fee is $23,500 (40% of which may be financed through Chem-Dry). Military and first-responder veterans may be eligible for a 10% discount off this fee.
After opening, you are required to pay an array of ongoing fees and charges. They include:
| Key Costs Guide | Low | High |
|---|---|---|
| Franchise fee | $23,500 | $23,500 |
| New business starter equipment (set) | $39,495 | $84,495 |
| Optional equipment | $0 | $28,525 |
| Cargo van | $0 | $75,000 |
| Equipment installation costs | $600 | $6,000 |
| Three months’ rent | $0 | $5,000 |
| Telephone and business license | $400 | $4,000 |
| Insurance | $600 | $7,000 |
| Technology | $800 | $2,000 |
| Advertising – three months (on top of monthly marketing fee) | $3,000 | $5,000 |
| Optional digital advertising – start-ups – three months | $0 | $1,349 |
| Additional costs – first three months | $2,500 | $9,000 |
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Yes, but very modestly. Chem-Dry’s own figures suggest average annual revenues of $113,000 per franchise, whilst other research suggests excellent gross profit margins of 53% to 63% depending on labor, fuel and product costs. Taking a middle figure of 55% delivers a typical gross profit of $62,150 per year. Net profits – what you have left after taking out all costs could be 50% to 60% of this sum, so anywhere from $31,000 to $37,000 per year. This is well below the average Canadian franchise owner’s annual income (all franchises) of $60,000 per year, and it explains why most Chem-Dry franchisees have multiple locations to multiply their income.
High to very high. The failure rate for a Chem Dry franchise is 14% in the first year, rising to 56% by year three.
Chem-Dry franchisees must operate their business within a non-exclusive area that the company assigns and approves. The minimum size of a franchised area will typically cover a population of at least 60,000 but in some less-populated areas the franchised area might cover a population as small as 5,000. Franchisees must conduct their Chem-Dry businesses from a single location within the franchised area from which they may operate as many crews, teams, sales agents and vans as they desire.
Chem-Dry support for franchisees includes:
Firstly, there are billions of square feet of carpet installed in homes and businesses across Canada every year. They all need cleaning at some point. Secondly, carpet cleaning is a year-round business. There is no seasonal volatility. Thirdly, starting a Chem-Dry franchise is highly affordable and even with net profits of around $37,000 per year per franchise, you could still get your investment back in 3 to 4 years. Lastly, you hire someone to run this business for you and manage it as a passive investment.
However, the downsides cannot be ignored: The extraordinary failure rate for Chem-Dry franchises by year three – more than half closing their doors for good – is concerning. And, the potential for competition from the 37,000 other carpet cleaning businesses that currently operate in Canada is very high. In summary, if you can accept the challenges and you like the idea of running a business from your armchair whilst making modest income, then a Chem-Dry franchise could work for you.
It begins with an application. Start the process today.
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Written by
Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.
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