Home Service Franchises With 100 Percent ROI Potential

This week, I talked with Dave Handsen, CEO of Client Tether, the top rated CRM built specifically for multi location franchises. Dave has a unique view of the franchise world, since he and his wife also bought and ran two territories of a youth sports franchise themselves before selling in January.

We got candid about how franchise sales organizations really make their money, who actually thrives as a franchisee, and why generic CRMs like HubSpot and Salesforce fall short for multi unit home service brands.

The Key Takeaways

Below are the most essential insights from my conversation with Dave that you can apply to your home services business today.

1. Franchising Is a Business Model, Not an Industry

Dave points out that franchising has been built into its own industry around a single idea, getting into business for yourself and not by yourself. It hands new owners a system for the parts of running a business that most tradespeople never learned, marketing, sales, and back office finance.

“The beauty of the franchise model is that it encapsulates all those dirty, annoying pieces of the business you don’t know how to do, and they systematize it, and you pay for that. Then you walk into a package deal where you’ve already got yourself set up in a business that’s going to operate well.”

— Dave Handsen

2. Franchisors Are Obsessed With Unit Economics, Not Just Signups

While it looks like franchisors just want to award more units, Dave explains the incentives are actually aligned, since franchisors only earn royalties when franchisees are making money. That is why established franchisors invest heavily in coaching and technology to help existing locations grow revenue.

“The franchisor only makes money when the franchise is making money, so the incentives are aligned. Most franchisors that are wise and established, they’re obsessed with helping. They have franchise business coaches that will help you look at your P&L.”

— Dave Handsen

3. Franchise Sales Organizations Make Their Money on the Franchise Fee

Dave speaks candidly about how franchise sales organizations, or FSOs, are compensated. The majority of the franchise fee a new owner pays typically flows straight back to whichever FSO or consultant helped close the sale, which is why some of them are selling hundreds of units a year.

“Some of these guys are selling hundreds of franchises a year valued at about 50k a pop. Do some math, they’re making a lot of money. That’s really what they’re incentivized to do.”

— Dave Handsen

4. Not Everyone Should Be a Franchisee

Dave was candid about his own experience: entrepreneurs who love inventing systems often clash with the rigid structure of a franchise contract. The people who thrive tend to be great executors who don’t want to build their own playbook, which he says makes former military members especially strong fits.

“It’s harder to leave the contract than it is to get a divorce from a wife of like 30 years. People who are in the military, people who are great at executing but not great strategically, they don’t want to build a system and start their own thing. Those people are phenomenal franchise owners.”

— Dave Handsen

5. Home Services Concepts Get Dave the Most Excited

Working with hundreds of brands, Dave says the concepts with the best performing financials and the highest return on investment relative to the required investment are almost always home service or B2B service brands.

6. Why Generic CRMs Fall Short for Multi Unit Brands

Field service tools like Jobber and Housecall Pro were built for a single truck and crew, not for franchisors trying to compare performance across dozens of territories. Meanwhile large platforms like HubSpot and Salesforce are so broad they end up serving nobody well. Client Tether was built end to end specifically for multi unit, service oriented businesses.

“They’ve got good tools, they’re just not complete tools for a multi-unit business model like a dealership or a franchise, it’s they struggle in those areas. And then you got all the big boys like HubSpot and Salesforce, they’re designed for everybody, so they’re designed for nobody.”

— Dave Handsen

Looking Ahead

Dave’s advice for anyone considering a franchise is simple: do the research before ever calling a brand. Tools that let you pull a franchise disclosure document and benchmark real performance data exist, and they beat taking a sales pitch at face value.

“Make sure you do your research and your validation. Go look at the actual data of how the franchises are performing before you start reaching out to brands. That’s the best way to approach the industry, with data, because you have a lot if you know where to look.”

— Dave Handsen