Customers have asked Applied Physics to compare companies that franchise their Decontaminating Program to startup companies or companies expanding their business, compared to Equipment ownership. Various companies offer Franchises requiring an initial franchise license to be a part of their organization. Typical license cost is around $69,000, which entitles you use of the franchise company name, product names, to rent each decontaminating fogger that you use for $1600/month and to buy their private label sterilant. There is a phrase I heard in a movie many years ago, “For a little fee, I will set you free”.
I have to ask the obvious question, why does one need to buy a license to use a company name, rent their decontaminating foggers and buy their name brand sterilant? Does this make the company paying the franchise license more legitimate? Does Franchising actually give you a jump start in a new or expanded business? Or is Your Success based on how well you present your service to your clients and how professional your clients see you operate?
If paying a fee to set you free is right in your heart, then pay that money out; but let me suggest an alternative. Something far more practical and beneficial for the money you contemplate spending for a franchise license! Buying your own top of the line DF2S DryFoggers, which has been used in the Pharmaceutical industry for many years and using EPA Registered Minncare sterilant with proven success against coronavirus, all which leads to many years operation in the sterilization business.
Let’s do a comparison to give you an idea what licensing and renting decontaminating foggers and buying private label sterilant costs you, compared to buying your own equipment. Let’s say a company had 10 locations around the country with 1 crew running cleaning services at each location, and they wanted to expand into the sterilization business with their existing crews. 10 sites x $69,000 / license = $690,000 USD for the initial franchise license fee. 1 crew running 1 rented fogger per month would be (1 crew x 1 fogger/month x $1600/month x 12 months x 10 sites) = $192,000 USD annual equipment rental cost. If the crews are required to purchase sterilant from this Franchise Licensing Company, then each crew, total of 10 crews, will need at least 2 – 4 barrels each year for sterilization services, somewhere between 20 barrels and 40 barrels total. If the barrels cost $1600 / barrel, then the sterilant cost per year for 10 crews is between (20 x $1640) $32,800 USD and ($40 x $1640) $65,600 USD + shipping and handling, annually. Let’s use the low number of $32,800 for annual sterilant consumption. To start the first year of this Franchise Sterilizing business and use the franchise business name, rent the franchise decontaminating foggers and buy the franchise private label sterilant for 10 locations running 1 crew each is $690,000 + $192,000 + $32,800 = $914,800 USD 1st year start up costs. Thereafter, the equipment rental and sterilant are annual costs of $224,000 each for year 2, 3, 4, 5. Below is a spread sheet for calculation of numbers.
Let’s compare this annual franchise cost to ownership of your equipment. A DF2S provides about 35,000 cubic feet per cycle. With 2 barrels of Minncare, you would get a about 7 Million cubic feet of sterilization at 7.0% Minncare dilution in purified water, depending on customer requirements at each job site. You need a good dry air compressor, so budget $7500 for 1 oil free air compressor and compressor lines with each DF2S. DF2S cost is about $56.5K with all the right accessories, 2 barrels of Minncare sterilant and all the Air Quality Test Instruments. Each DF2S would run about $67K per DF2S order. Do the math for about 7 million cubic feet, divided by 35000 cubic feet per cycle, times your service charge. As an afterthought, competitive thermal VHP H2O2 Vapor Generators run as high as $75K per unit with around 20,000 cubic feet a cycle.
First year franchise cost for the franchise license, monthly costs and sterilant costs is $914,800/year. If you used that money to buy DF2S Decontaminating Foggers with all air quality test equipment and 2 barrels of Minncare, you could buy 13.65 DF2S systems. That means a Franchisee above could license and operate franchise equipment, purchase sterilant for 10 locations with 1 crew each site at $914,800 during the first year start up with $224,800 spent in each years 2, 3, 4, and 5 as a Franchise. What if, you were to buy 10 DF2S Decontaminating DryFoggers for 1st year costs of $670,000? You would only be purchasing 2 barrels of sterilant in year 2, 3, 4 and 5 as additional costs. As a Franchisee you would spend $1.814 Million USD over a 5 year period, while as an Equipment owner, you would spend $683,120 USD over the same 5 year period. The labor for both operations would be the same. See the chart below for numbers.
Hmmmm, license as a franchisee and have no equipment ownership; or buy your own, top of the line, stainless steel, DF2S Dry Foggers for your 10 crews, and you own the stainless steel tools, which last for years when operated properly. It’s 316L stainless! Very low maintenance! But you can’t do that if you franchise, because you don’t own equipment.
As an equipment owner, you can have top of the line, 316L DF2S Dry Foggers, Minncare sterilant and all the Air Quality Test Equipment. It only took 1 year to own your equipment as compared to Franchise and not owning your equipment. The Franchisee keeps on licensing a name, renting fogger equipment and buying private brand sterilant. For a little fee, I will set you free!
There are a variety of businesses that successfully operate as franchise businesses. If you have the opportunity to own your own highly durable, stainless steel, decontaminating foggers, it seems a company would immediately see the obvious benefit of owning your own high quality decontaminating equipment for much better profit margins.
Call Applied Physics, Inc. at 303-999-6837, if you want to own your decontaminating foggers with a very long life and high volume, decontaminating capacities.
John Turner, Applied Physics, Inc.
File Name: DF2S-vs-Franchise.xlsx
By John Turner|2021-01-10T10:30:58-07:00May 17th, 2020|