Home Improvement Franchise Report 2011
Writer’s Note: Special thanks to Jim Hunter of House Doctors for his help in the research process for this report.
You don’t have to be much of a news watcher to know that the real estate and housing markets have been in the midst of a challenging time the past few years. Home value declines, increased foreclosures, and reports of sluggish home sales have become regular headlines.
However, there have been some bright spots in the market recently with certain locales across the country reporting incremental gains. Home purchases in the U.S. are still slow with a noticeable amount of homeowners not willing to take a chance in the current housing market by relocating, but that can be linked to a positive: home improvement franchises capitalizing on the lack of movement. If you’re going to invest in a franchise, why not consider one in an industry that is proving to have solid demand even when the economy is in a slump?
Overview of Industry
Home improvement is a very large and well-established industry encompassing many kinds of decorating, landscaping, remodeling, renovation and restoration projects. The industry has consistently gained in popularity since the advent of specialized television programming featuring aspects of the industry. In recent years, interest of the industry has accelerated with the introduction of entire television channels, magazines, and websites dedicated to topics pertaining to maintaining or improving the condition of real property.
|The Year of Home Improvement
In 1956, President Eisenhower established Operation Home Improvement, a nationwide effort emphasizing the rehabilitation of existing housing rather than new construction. On January 16th of that year, Albert M. Cole, the reigning administrator of the Housing and Home Finance Agency, issued a proclamation declaring naming 1956 “Home Improvement Year.” The proclamation was seen as an act of “unprecedented cooperation between the Government, trade associations, and manufacturers” according to a newspaper article that ran during that time.2 The goal of the move was to take advantage of dealers, contractors and lenders who were eager to serve families that had a desire to bring their homes up-to-date. Home restoration, during that time, was being viewed as a way to upgrade the nation’s standard of living.
The market for home improvement franchises is the general public, particularly homeowners. While it was impacted by the crisis experienced by the closely-related housing and real estate markets, the industry has fared comparatively well – the remodeling portion of the industry alone has experienced expenditures of over $285 billion annually despite the challenges – and the whole industry is primed for steady growth according to analysts.1
During the recession, many homeowners only made necessary repairs to their residences. However, as the economy begins to stabilize and rebound there is optimism that property owners will begin to do the projects that have been postponed due to economic uncertainty. In addition, as a result of the fluctuations in the housing market as of late, a number of consumers, who may have relocated under different market conditions, have decided to remain in their current homes and spend money on updates and renovations.
Consumer interest in sustainability, also called green living, is expected to spur growth as well. “People are becoming more environmentally conscious with materials and also looking to improve the energy efficiency of their property,” says Jim Hunter, President of professional handyman service House Doctors.
For many consumers, the first businesses that come to mind when they think of the home improvement industry are big box retailers like Lowe’s and The Home Depot. While these companies are certainly standard-bearers for the industry, the size and scope of the home improvement industry allows the opportunity for a vast number of companies to find success. Of the countless home improvement franchises in the marketplace, 24 franchises are highlighted in this report.
Investing in a home improvement franchise offers prospective franchisees the benefit of established systems along with easier access to a number of resources in comparison to businesses run by independent operators. Another large benefit of being a part of a home improvement franchise system is that it allows for franchisees to take advantage of the brand equity of the franchisor, which is especially important because of instances of fraudulent behavior within the industry. These instances have spurred consumers to seek as many assurances as possible that the work they contract will be done properly.