Should I buy a janitorial franchise or an independent cleaning company?
The choice turns on who owns the client contracts and what you pay for the brand. A janitorial franchise may hand you assigned accounts, training and a name that helps win bids, at the cost of ongoing fees and territory limits. An independent company gives you freedom but you must supply sales, buying and training yourself.
Both routes sell you a book of cleaning contracts and the crews who serve them. The difference is who stands behind that book. Ask whether the franchisor controls how accounts are won, assigned and billed. In an independent company, the owner built every relationship. Compare the two on contract ownership, ongoing fees, and the work you would take on yourself.
Who owns the client contracts
Ask whose name is on each cleaning contract. In some janitorial systems the franchisor signs the client and assigns the account to you, and it can reassign it under the agreement. In an independent company the contracts belong to the company, but many are short or cancellable on notice. Have your lawyer read the franchise agreement and any contract that can be ended quickly.
Fees on thin-margin work
Contract cleaning can run on thin margins, so every ongoing payment matters. A franchise may charge royalties, account fees or fees for billing and supplies. Ask for the full list, then rebuild the earnings with those fees included. An independent company has no franchisor fee, but its reported earnings may leave out costs such as a paid supervisor. Your accountant can help you compare them on the same basis.
Territory, brand and what you would replace
A recognized brand can help in a bid, and a territory can protect you from the franchisor selling nearby. It can also limit where you may grow. An independent buyer gives up that help and must replace sales, supply buying and crew training. Ask the seller who currently does each of those jobs, and plan who will do them after closing.
Questions to settle before you decide
- Can the franchisor approve, refuse or reassign accounts, and on what notice?
- Which supplies and software must you buy through the franchisor?
- Who handles quotes, inspections and client complaints today?
- How long are the biggest client contracts, and can they be ended early?
The general question is covered in should I buy a franchise or an independent business.
Related reading
15 pages on the same subject, grouped by topic.
Legal
Buying
- GuideHow to buy a cleaning business in Canada
- Expert answerWhat happens to the commercial lease when I buy a business?
- Expert answerShould I buy a business through a newly incorporated company?
- Expert answerWhat are the pros and cons of owning a dry cleaner?
- Expert answerCan I buy a cleaning company’s accounts without buying the company?
- Expert answerHow do I keep a cleaning company’s crews and subcontractors after buying it?
Selling
- GuideHow do I sell my franchise business?
- Expert answerHow do I clean up my financial records before selling?
- Expert answerCan a seller force me to take unwanted liabilities in a share deal?
- Expert answerWhat counts as cleaning up a business before a sale?
- Expert answerHow do I prepare a janitorial company for sale?
- Expert answerHow do I sell a cleaning company that depends on one big client?
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentBuying a business? How to protect yourself from potential liabilities
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