Buying a Lawn Care Franchise.
Table of Contents
The two roads to buy a lawn care business.
When I started researching this topic, I came across something interesting when I was looking at lawn-mowing franchises for sale.
Most of the material I read online was either published by a lawn care companies with Franchises for sale or written by someone who offers a few tips, tells you that you are better off building your own business and hopes you click on their ads so they can make some money.
Franchises obviously point out that you are much more likely to succeed with a franchise, and do-it-yourself sites point out that you can ultimately make more income by building your own lawn care service.
They are both right.
I am going to try to keep the tone of this article neutral. I, of course, have my feelings on that subject, but I will do my best not to let that cloud my judgment.
Full disclosure. I have been in the industry for thirty-plus years and never owned a franchise, so I can not give you any real “fly on the wall” stuff here.
I have met many franchise owner-operators over the years. I’ve spent a lot more time in the back of lawn mowing shops than most people. I’m always happy to talk to them about their businesses and how they are going so, I’ve gained a lot of insight into how franchises operate over the years.
Here are some of the things I have learned.
Do you go it alone or buy a lawn care franchise?
That’s the million-dollar question.
Well, maybe not that much but still a pretty important question you should be asking yourself.
The answer to this question depends on you and what you want from a business.
Many people start a lawn care or landscaping business when the grass is growing, and by the end of the season, they are gone. I have seen this time after time over the years, and it’s actually getting worse, not better. These guys start with a hiss and a roar, underquoting every job to get the work. It’s incredible how much work you can get when quoting next to nothing. But this fast growth with cheap lawns comes at a cost.
I priced a job a couple of years ago. I looked at the lawn and figured it would take me forty minutes, so I quoted $40. The lady said I must be joking; the last guy was mowing it for $20. I asked why she wasn’t getting him to do the lawn. She told me his mower had broken down, and he couldn’t afford to fix it, so he gave up. That sums up the life cycle of gone-by winter business.
Someone figures they might mow lawns as it’s easy money, you can start with a cheap secondhand mower, and anyone can do it. They run out and cut some lawns. A few months later, they have lost their lawns and are broke again.
What went wrong?
Plenty. When you start a lawn care business, it is just that, a business. You need to run it like a business. Suddenly you are in charge of quoting, servicing the equipment, collecting money, complying with local laws, sending out accounts, holding taxes, and all sorts of other things.
Here are some excellent reasons why a franchise might suit you
If you have never been self-employed before
This is where a franchise can really shine. A good lawn care franchise will walk you through all of these things. They will already have a proven system for dealing with the day-to-day mechanics of running a business. They will walk you through everything one step at a time and make everything easier.
If you are used to getting wages, then a franchise lawn will be easier than going in alone.
A well-run franchise is the nearest thing to being an employee you can get. Because they have everything set out and you are just following steps, you will not have the same anxiety about bringing in enough work to survive if you do it alone.
The chances of your business succeeding are higher with a franchise.
Because franchises have that same business model every time, they tend to be better at starting a new business. They have been there and done that when it comes to getting things wrong, and they have learned from their mistakes. You will not be making the same mistakes that they have made. You can start your business off doing everything right, which will be a significant benefit in the early days.
It can be a healthy lifestyle change.
If you have been sitting in an office for years and have lived a sedimentary lifestyle, a lawn care business can give you a new lease on life. Suddenly you are a lot healthier, and you’ve lost some weight. I must say that this is not just the case with franchises. It will happen with a private lawn care business as well.
Maybe motivation is a lifestyle change, whether you buy a franchise or go private will depend on whether you are self-employed or working on a salary. If you have always been self-employed before, you might as well go it alone as you will already be familiar with the issues, systems, and documentation you will need to start your business.
Some of the disadvantages.
A Franchise can throw you into the deep end when it comes to the initial volume of work –
When a franchise has a high current workload, you can walk into a business that can completely wipe you out physically for the first few weeks. To be fair, the same thing can happen if you buy a lawn care business privately.
With a franchise, you may get the option of starting a bit smaller and building. I would recommend this if you buy an existing franchise business. Don’t load yourself with a 40-hour workweek from the start. Try to start with a 30-hour week. You should build up the other 25% pretty quickly, and it won’t be half as stressful.
A franchise can be the most straightforward business to start but the hardest to expand.
One of the great things about lawn care franchises is they are so easy to start. You go out there, and everything is managed through their systems so you can focus on building the business.
Depending on your ambition, one thing that may affect you can be at the other end of the business growth cycle. If you grow your business to a good size and love it, That is great, but if you decide to employ people or put another vehicle on the road, your franchise may not allow it.
Most lawn care franchises do not want their franchises to expand beyond one vehicle. You may have to buy another franchise license to put another truck on the road. If you are planning world domination with your new business, you will not be able to do it with a franchise.
The benefits of a franchise
Easier to get finance
When you are looking at buying into a franchise, the banks are usually more accommodating. They know that your chances of success are higher. More established lawn care franchises may even have deals with certain banks.
If you are buying privately, the bank will want to see financial returns and P&L statements for the business you want. This can get complicated, and the seller may decide to avoid all this by going with a buyer who has funds. (that’s what I used to do when I sold non-franchised lawn mowing businesses)
Your operation system is tried, tested and it works
– A good franchise is always working on improving its systems and procedures. This constant state of improvement will make your job much easier and allow you to focus on producing income.
You don’t need experience.
One of the great things about a lawn care franchise is that no previous experience is necessary. When you buy into a franchise, you buy their knowledge and expertise. They will help you with any issues, and you are never alone.
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You get full training.
The general training in this industry is usually a couple of weeks in a boot camp. The training will cover all the basics you need to run your business successfully. Ongoing training sessions are run regularly, but these will mostly be in the form of one-day courses.
Branding
Most franchises have excellent branding, and this can really help when it comes to getting and securing work. Most of the big brands already operate in town so locals will be familiar with their branding. You may just be starting, but the brand has been in town for years.
Your marketing is done for you.
The franchise will usually take care of all your marketing. By using a freephone number, the franchise will route all incoming quotes in your territory to you. This can be a real advantage if you are not big on marketing.
Marketing can be costly; a big franchise usually has national and local marketing champagne. You will be contributing funds to this regularly, but at least you do not have to deal with the marketing side of the business.
You have a support team.
More extensive franchises usually have a closed forum for their members to communicate. This information can be an absolute godsend when you have a problem or want to know what other operators are doing in certain situations. In the world of private operators, there is not the same camaraderie. Independent guys are not so keen on sharing. I didn’t start sharing any of my hard-earned knowledge until I got on the wrong side of 55.
You may be able to sell excess customers back.
Some franchises will help condense their operator’s rounds, reducing travel and costs. One of the ways of doing this is to sell lawns on the fringes of your territory. Some franchises have a buyback plan where you can sell excess lawns back to them. The extra income is great for turnover and helps you build a more compressed round. With a private round, it can be difficult to sell anything less the ten or so lawns at a time, so it is difficult to do this.
Local authority compliance
This is a big one. A franchise will ensure your business is compliant with local laws. They have their finger on the pulse, so you comply immediately. That’s one less thing for you to manage.
Wow, that all sounds so good; I’m starting to feel like buying a franchise myself, but before I do that, let us look at the downside. I said I was going to be fair and unbiased, remember?
The downsides of a franchise
The ongoing payments
The ongoing costs of a franchise can be expensive. You could be paying 5-10k a year in fees. To be fair, you would be spending some of these fees (like marketing) anyway. When reviewing a franchise, determine what part of their fees would be a cost of business regardless. They may be supplying software that would cost you $2k a year to source elsewhere, so some costs will be there anyway. See the actual price of being in the franchise, and make sure you are comfortable with it.
For example – if you turn over 2k a week, you may end up paying $150 a week in fees. 2K less running costs 40% = $1600 less Acc and taxes 25% = $1100 less franchise fees $950. If you had built the business yourself, you would be much happier.
You will be required to advertise within their rules.
You will have their contact number on your truck, not yours. All those calls will come through to the head office, not your phone, so you’re not guaranteed to get the call. No problem, you will get some flyers made. That’s fine, but again it has to have their number, not yours. What about classified ads? It’s the same thing again. It can be tough to do any kind of marketing at all if you have a franchise.
I was talking to a franchise owner the other day who was delivering lots of flyers and not getting any real results. He was wondering if it was worth it to even put the flyers out. I also get approached from time to time by franchise owners who want to use my marketing business (lawnmowing101). Unfortunately for them, I only work with independents. If their marketing were good, I wouldn’t hear from them.
No room to get creative
Don’t think about creating any of your own ads. They will have to be approved by the head office before they run. What if you get an excellent idea that will make your business run better? You need to run that past head office too. If they like your idea and implement it in all their franchises, you will probably find your franchise agreement allows them to keep any business-related ideas you put forward. If you are a highly creative person, you will probably hate this.
Require you to hit financial targets
Some lawn care franchises require you to achieve financial goals. You could lose your franchise or part of your guaranteed income if you don’t hit the targets. Many will say not to worry as they never enforce that rule. But it is still there, and that is not good. Watch out for this if you aim only to work part-time. A clause like this in your agreement could really hinder your plans.
The rules
This is a bitter pill to swallow but an essential one. Over the years, I have looked at buying into other businesses and have read quite a few franchise agreements. As a creative self-employed individual, I have never found a contract I thought I could live with. However, there is a good reason for all those rules.
All franchises have to be the same. Otherwise, they just wouldn’t work. These rules also have to be enforced. If this didn’t happen, there would be no such thing as a franchise. Can you imagine visiting your local McDonald’s and seeing a notice on the till saying they are selling homemade pizzas at this store? What if they decided to use a different oil in their fryer and leave the chips in for a bit longer?
You get the idea after a while; things would get entirely out of control. I understand the rules and know why they are essential, and now you do too. The question is can you live with them?
Using approved suppliers
This is primarily a byproduct of having to follow the rules. If all your franchises used different suppliers, then there would be no consistency with the output (the job). Again I understand, but there is another side to this that has nothing to do with production. If the head office is forcing you to buy a product solely due to a profitable deal they have done with a supplier; then you may find yourself paying more, not less.
Overcharging is a form of profiteering at its purest. They have a captive market, so they raise the prices. Hopefully, you will have filtered out franchises like this in your due diligence phase.
The guaranteed income clause
Read this carefully. It may sound great, but it may be funded directly from your initial franchise purchase price. If you gave me 12k, I could guarantee you a thousand dollars a week for ten weeks (message me if this sounds good). I’m just kidding, but you get the point.
Another thing you might want to check here is a practice that some franchises do. They say on the agreement that any work you turn down or lawns you cancel or lose (for any reason except the customer moving) come straight off your minimum guaranteed income. Agreeing to this can mean if you have a $60 lawn that takes ages and doesn’t regularly pay, it is a lawn you a stuck with for the guaranteed income period. If you drop the lawn, your guaranteed income will decrease by $60 a fortnight.
Having territories can hinder growth.
If you get a lawn from out of your area, you may have to give it away. Doing this can be frustrating, so you must know what you can and can’t do there. It is usually a good idea to limit your territory anyway, but it’s always better when making the decisions.
A funny story about territories: I was mowing a lawn once when a guy who had just bought a franchise pulled up at the lawn next door and started work. When I finished, he approached me while I put the gear away. I smiled and said hello and asked him how he was going. He said he was doing okay and asked me “If this was my final cut on the lawn, I was doing?” I said no and asked him why he wanted to know.
He then informed me that he had just bought the territory, so I wouldn’t be able to work there anymore. It was hilarious and a bit sad. I informed him that if he read his franchise agreement, the only operators who recognised his territory were from within his franchise. I told him I was independent, so I worked when I liked. He always seemed a bit grumpy when I saw him after that.
The franchise can choose not to renew the agreement at the end of the term.
The terms are usually around ten years and can be continued if both parties agree. The renewal is often not an issue, but it can become one. If you and the head office have been butting heads regularly, then this could be their chance to get rid of you with no strings attached. Although it’s highly unlikely that you will stay until your team’s end if you have a constant flow of issues with the head office. Even so, the thought of putting ten years into a business with no actual ownership at the other end disturbs me.
Selling could be complex as the franchise must approve any buyer you find
When it’s time to sell the business, there are two things. Franchises can take longer to sell than independent businesses, and if you find a buyer, you need to submit them to the head office for approval. You may also find yourself competing with the franchise if they advertise new franchises near your area.
You can’t quit the franchise and go it alone
– You will find that most lawn care franchise agreements have a restraint of trade attachment at the other end. If you decide to quit the franchise and start your own business, you must wait for a year or two before going out on your own.
A possible conflict of interest with the master franchise
You don’t see many people talking about this, but maybe they should. Think about this scenario. You buy a franchise with loose territories that the head office does not enforce. You buy this off the master franchise holder who now has eight sub-franchisees in town, including you. They also have a two-person crew who build rounds so they can sell new franchises. A potential customer rings the head office and sends the lead through to the master franchise holder.
What does he do with the lead? What is the benefit of sending the lead to you if you are paying a fixed weekly fee for the franchise? He will be keeping you happy. If he takes the lead and gives it to his crew, he will have one more lawn and another step closer to selling his next new franchise and getting another lump sum. He has better reasons to keep the lead than to give it away.
You are in the business of mowing lawns, and he is in the business of building and selling lawn mowing businesses. This method of operation sounds like a conflict of interest to me. You decide. Ask the franchise how they handle their leads.
How much does a lawn care franchise cost?
A lawn care franchise can cost anything from 20-80 thousand dollars. Some offers to self-finance will let you pay the cost off over time. You may think this is high, but lawn care is one of the lowest financial entry-level franchises you can get.
Greenfield or established business?
There are two different kinds of lawn care franchises available these are
- A greenfield franchise – This is a franchise that has not been built yet and has no customers. These are cheaper than existing franchises, and these can be a good buy if there is one available and you are prepared to put in the work.
- An established franchise – This pre-existing franchise is already running and producing an income. It could be owned by the franchise or by an owner-operator selling their business. These are more expensive as you buy goodwill and the franchise.
Always do your due diligence.
Do your research. I have heard it said that you should spend an hour researching for every $1000 you intend to pay on purchasing a business. You need to know how long that has been around and how many franchises they have. When you talk to the franchise, ask them if you can ring some other franchises. They will agree, and sometimes they will give you a list of franchises you can ring. Look at the list closely. Are there any franchise locations missing? Try ringing those.
Here is an article about what questions to ask when buying a franchise. It is worth reading as New Zealand is the most franchised country in the world, with one franchise unit for every 124 people in 2017. (the survey was conducted by a research team from Massey University Business School).
250 questions to ask before buying a franchise
Before you go ahead with a franchise, you read your franchise agreement word by word and highlight anything you want to question. Ask the franchiser. Take note of their responses. Then pass everything to your lawyer to read it and give you legal advice before you sign anything.
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Summing up.
If you are looking for a lawn care business solely for income and prefer to be an employee, then a lawn care franchise could be the answer. With a lawn care franchise, you can buy yourself a job. You could work it for ten years, sell it, and get your money back. It could be a perfect fit for you if you are being made redundant or simply want to get out of your office job. I have met owner-operators with a franchise who are perfectly happy and would not want it any other way.
However, Suppose you have self-employed experience and are not big on taking orders or following rules. In that case, setting up an independent lawn care business may be the answer for you, especially if you are a highly creative person who likes to experiment with different methods of marketing or operation or have plans for growth in other cities. If this is you, you may find a franchise too restricting.
The secret is seeing where you fit and the best choice for you.
They are both excellent options for the right person.
I wish you the best of luck regardless of your choice.
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