Boom Times for Cleaning Industry Franchises
It's become cliché over the last few months to label a business that has eked out even a tiny bit of growth as recession-proof or recession-resistant. But consider this--of the 10 fastest-growing franchises measured by Entrepreneur's Franchise 500®, six were commercial cleaning companies. That's downright recession-defiant. How can one sector expand so confidently when even traditionally aggressive franchisors have slowed?
Commercial cleaning franchises were primed for growth even before the market collapse. According to a 2006 Bureau of Labor Statistics report, the industry was expected to expand its workforce 14 percent by 2016, and according to industry insiders, there's no reason to think that number won't be easily met. That's because commercial cleaning has ridden two opposing trends--the massive expansion of office space throughout the earlier part of the decade and the need to eliminate employees and cut costs during the recession.
Steve Tessier, senior vice president with CleanNet USA, No. 7 on our ranking, says the expansion in commercial real estate over the past decades is the main engine behind his company's 20 percent annual growth. "We're growing just as much as before the recession, he says. "If you look at the building cycle as a whole, we're still seeing expansion and not seeing a tremendous loss of business. Buildings and facilities still need to be cleaned in some fashion to make buildings presentable for clients, guests and commercial real estate firms. It's a service they can't do without.
During the recession, employers have figured out that losing in-house janitorial staff is a primary way of cutting payroll, which has been a boon for commercial cleaners. "If I'm an employer having to lay off employees, it makes sense to look to outsourcing to service contractors, says Maurice Desmarais, executive vice president of the Building Service Contractors Association International. "When the recession ends, I can't imagine employers going back to full-time janitorial if they're pleased with outsourced service.
Even the rise of H1N1 has helped spur growth. The swine flu has led to an increase in special requests, with clients asking for more specialized products and more areas to be disinfected. Tessier estimates flu-bug prevention has increased CleanNet's services by 5 percent or 6 percent.
But the root of the cleaning-franchise growth might just be the fact that there's plenty of room to spread out. Stratus Building Solutions, No. 3 on the list, has quadrupled in six years and is going international; Richard Kissane, president of Jan-Pro, the fastest-growing company in the Franchise 500®, points out that though Jan-Pro has grown 25 percent to 30 percent each year for the last five years, it controls only 1 percent to 2 percent of the market share. In fact, no single franchise dominates the $113 billion cleaning biz.
"Our real competition is the mom-and-pop cleaning companies, but they can't keep up with us, Kissane says. "We don't sell on price; we're not the cheapest service on the market. But we do a really good job of following branded processes and systems. Even in bad times, people have to have their trash picked up.