How To's
What is The Cost of A Mr. Rooter Franchise?
Home service franchises can become profitable considering that many homeowners may need services relating to repairs, installations, etc. It’s both a recession-proof and pandemic-proof franchise type. That’s why many are considering investing in one. And, among the many home service franchises out there is Mr. Rooter. But what services do they offer, and how franchising one is a great investment.
Mr. Rooter Franchise Overview
Mr. Rooter started its operations in 1970. The plumbing and drain cleaning service was based in Oklahoma, but has grown across the United States and Canada.
They offer these general services to the public:
- Repairs
- Replacement and Installation
- Systems Maintenance
As a Neighborly brand, it includes other brands such as Glass Doctor, Aire Serv, and Mr. Handyman.
Training Information
Franchisees will undergo two training phases.
Phase I
This phase requires either one of the owners or a manager to attend the training. The duration of Phase I will be 15 hours or longer, conducted within a one to three-week period. In some instances, the franchisor MAY require a Franchise Consultant to join the training. However, the training may take longer depending on the attendees’ knowledge and experiences. As for the location, the franchisor may assign a location, or it could be held over video conference.
Phase II
Once Phase I is completed to the franchisor’s satisfaction, an owner and manager should complete Phase II training. It takes about ten days to complete, with the topics Business and Systems covered. Meanwhile, the training location depends on the franchisor. It could be in one of their offices in Waco, Texas. It may be in other locations or could be conducted through video calls.
Additional Training
The franchisor will also conduct field training within 14 days upon completion of the Phase II training. It takes one to five days to complete at a franchised location. Apart from that, the franchisor will call for a “Reunion,” which is a mandatory training or conference. Franchisees will cover the expense.
Territory
The franchisor will grant the franchisee a location specified in the site selection guidelines. Plus, once a location is picked, it will have a limited protected territory. Plus, franchisees will not get territorial rights beyond the specified territory.
The territory should cater to a population of at least 100,000 and up to 2,500,000 people. However, if the franchisee decides to set up a territory with a higher population, the franchisor may consider it.
While franchisees may get a protected territory, they can’t have an exclusive one. But, other franchisees planning on setting up their franchise nearby won’t be granted approval for operation.
Obligations and Term Agreements
If an individual will operate and franchise a Mr. Rooter store, they must do so unless the franchisor says otherwise. But, if the franchisee is a legal entity or corporation, a designated owner must oversee operations unless otherwise stated by the franchisor.
The franchisor requires the following stipulations:
- An immigration status that allows the franchisees to live and work in the US.
- The franchisee must only sell the goods and services as required. But, they may pitch a product or service, which the franchisor should approve.
- The franchisee should also honor the warranty for installations and repairs.
An initial franchise term lasts for ten years. But they may renew another 10-year term provided they meet standards and requirements.
Mr. Rooter Franchise Cost
The estimated franchise cost for Mr. Rooter is $79,975 to $178,140, with additional franchise fees. As for financial assistance, the franchisor may pay a portion of the fee for eligible franchisees. It depends on these criteria:
- Credit
- Collateral
- Then-current financing policies
They may also refer or discuss with a third-party lender regarding financing.
Below is the breakdown of the Mr. Rooter franchise cost plus other fees.
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $40,000 | $40,000 + $350 per 1,000 additional population over minimum |
| Vehicle | $2,975 | $29,250 |
| Equipment, Supplies & Inventory | $10,000 | $40,000 |
| Insurance | $1,400 | $2,700 |
| Advertising & Promotional and Local Marketing Spending for Marketing Start-up Phase | $7,500 | $15,000 |
| Training, Travel, Lodging & Food | $2,950 | $5,950 |
| Deposits, Permits & Licenses | $0 | $1,000 |
| Professional Fees | $0 | $5,000 |
| Additional Funds – 3 Months | $15,000 | $35,000 |
| Technician Training | $150 | $1,240 |
| Real Estate | $0 | $12,000 |
| ESTIMATED TOTAL (does not include real estate costs) | $79,975 | $187,140 + any additional franchise fee |
Other Costs
| Type of Fee | Amount |
|---|---|
| License Fee | 5% to 7% of gross sales except for special rates that apply to specialty services, and “roll-in” sales. In addition, minimum license fees apply. |
| Marketing, Advertising & Promotion (MAP) Fee | 2% of gross sales except for special rates that apply to specialty services and “roll-in” sales. In addition, minimum MAP fees apply. |
| Local Marketing Groups | Not to exceed 3% of gross sales. |
| Software System Fees | $53 per month, plus:Additional Microsoft Office365 Exchange email accounts are $4.00 per month, O365 E1 email accounts are $8.00 per month; and O365 E3 email accounts are $20.00 per month. Any support or maintenance on the point of sale system (ServiceTitan) is provided at the then-current hourly rates ($125 per hour). |
| Call Center Services Monthly Fees | One-time Set Up Fee: $0 to $249, depending on call center used. Monthly Fees: Vary by call center. Charges are based on per minute or per call basis. Minimum monthly fees are $99. |
| Annual Convention (“Reunion”) Fees | $1,000 or less. |
| Transfer Fee | The greater of (i) $7,500 or (ii) 5% of the sales price. |
| Late Fees | $10 per day. |
| Dishonored Check or ACH Draft | $25 |
| Interest | 12% on unpaid balances. |
| Failure to Maintain Insurance | The franchisor’s actual cost for insurance premiums and a reasonable fee for expenses it incurs. |
| Audit | Cost of audit plus expenses, plus any amount owed as shown by the audit, plus interest and late fees. |
| Renewal Fee | $5,000 |
| Amendment Fee | $250 |
| Unapproved Suppliers | The franchisor’s actual out-of-pocket costs of inspection or testing. |
| Indemnification and Attorneys’ Fees and Costs | Varies according to loss. |
| Tax Reimbursement | Varies according to tax. |
| Key Accounts/Management Fee | Up to 5% of total gross sales related to key account work. It includes gross sales that relate to key accounts. Plus, gross sales that are the result of any lead or any agreement developed by the franchisor’s business development department or any similar group that is part of its company or is its designee; gross sales for work that is dispatched from any call center operated by the franchisor or its designee; gross sales that are audited by the franchisor or its designee according to key accounts standards or gross sales that otherwise benefit from its key accounts activities or management. |
| Additional Training Fees | Then-current fee; Up to $1,000 per day. |
Did You Know?
- Mr. Rooter is one of the 500 franchises earning a spot in Entrepreneur’s Franchise 500 “Top Franchise for Veterans 2020” list.
- They also received recognition from Franchise Business Review in 2020 as one of the Top Franchises, receiving the “Satisfaction Award” and Franchise Rockstar Award.
- As part of Neighborly, franchisees will also get advantages. Neighborly has a group of brands, including Mr. Rooter, and through cross-marketing, they can help drive more sales to any franchise.
- Mr. Rooter has donated and joined in causes such as Ronald McDonald Houses and the ALS Ice Bucket Challenge.
- Those with a current plumbing business may convert theirs as a Mr. Rooter franchise.
Interested in franchising Mr. Rooter? You can start here.