<blockquote>While some basic mechanical ability is helpful, overall business acumen and professionalism is more important.
~ Granite Garage Floors</blockquote>
Industrial franchises are a varied group of franchises that typically sell their services to other businesses in a setup known as business-to-business, or B2B, commerce. Because they commonly deal with other businesses, the lion’s share of these franchises’ income comes from fewer larger, on-going contracts as opposed to many smaller, one time jobs. (The latter of which is more common in business-to-consumer, or B2C commerce.)
One of the purest industrial franchises out there is Pirtek, a B2B hydraulic and industrial hose equipment and replacement company. Some of Pirtek’s franchisees even do service work for military and government clients such as the US Coast Guard, US Navy, and NOAA.
Retail tool franchises are another popular kind of industrial franchise. With these franchises, franchisees own a mobile van, which they use to make visits to clients. Another industrial retail franchise opportunity you can find now are markets such as Metal Supermarkets, which offers customers a wide range of industrial metal products, cut-to-size, with no minimum order quantity.
However, while industrial franchises tend to be more B2B in nature, it’s not always the case. Since they deal with pipes and are somewhat mechanical in nature, plumbing franchises are probably the most common subset of industrial franchises.
Over the past few years, plumbing franchises – along with all of its closely related home services franchises – have seen a surge in interest and profitability. As pandemic-related restrictions turned focus towards the home, many homeowners undertook projects to maintain or improve their houses leading to a major bump in both opportunity and profit potential within the industry.
Other industrial-related home service and facilities franchises include garage franchises, floor coating franchises, concrete installation and repair franchises, junk removal franchises, and similar.
In addition, adjacent to industrial franchises, and sometimes looped in with them, are specialized cleaning franchises, including air duct and HVAC, restoration, biohazard, and crime scene cleaning.
And be sure to keep an eye on solar energy. As alternative energy methods gain in popularity, solar energy franchises are poised to gain more traction within the industry as well.
Industrial Franchises =/= Manufacturing Franchises
A not uncommon mistake by some when first getting acquainted with the franchise industry is believing that industrial franchise opportunities are similar to manufacturing franchises. That is not the case.
Industrial franchise opportunities fall under the franchise type of business format franchises. Under this type of franchise, the franchisor licenses their brand to a franchisee for use, along with a predetermined way of conducting business. Business format franchising is the most common and popular form of franchising. Most often when people think of a franchise, it is the form of franchise they are thinking of.
Under the manufacturing type of franchise, the franchisor permits the franchisee to manufacture their product(s) (e.g., clothing, food, beverage), along with the right to sell the products using the franchisor’s trademark and name in certain instances.
Although not rare, this type of franchise is not common to those first getting into business for themselves. Typically, manufacturing franchises are companies that produce either a raw or finished product that its franchisor is known for. These operations are also called “suppliers” or “partners” commonly. Often, these manufacturing franchises are located in countries outside the United States because the cost of production is cheaper.
A very popular example of a manufacturing franchise is Coca-Cola. The Coca-Cola Company—and most big soft drink companies like it—produces syrup concentrate for its drinks. The company then acts as franchisor, selling its concentrate to contracted bottlers and distributors around the world (the franchisees), who finish the product by adding the other ingredients, bottle it, and distribute it to customers.
Initial Investment and Opening Costs for Industrial Franchises
The amount necessary to open a franchise varies depending on the unique business system and execution requirements for that particular franchise. The initial investment required for an industrial franchise can range widely, mostly dependent on if an office outside your home will be needed.
For industrial franchises, it is also wise to factor in the lease or purchase of a vehicle to your initial budget estimates as work is commonly performed at the customer or client site. Also, factor in what it will take to properly outfit that vehicle, if necessary. A vehicle purchase is becoming more of a norm because of the trend in many industries of moving away from traditional brick-and-mortar storefronts, where possible.
Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the franchise disclosure document (FDD) is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.
Keep in mind these estimates are just that, though—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.
Ongoing Costs for Industrial Franchises
Don’t forget about the additional costs required for nearly all franchise businesses. This includes expenses such as royalty fees, marketing fees, software fees, training fees, and more.
The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.
It’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.