Laundry Franchise - Profitable or Not?

How much does a laundry franchise cost? How much can you make? What are the responsibilities of an owner? Today on Franchise City.

We are often asked about laundry franchises and whether the laundry industry is a profitable one. It can be, as with any franchise you really have to align your local demand, demographics, as well as your financial capabilities and goals to determine suitability. Laundry businesses are one of those many people have the perception of being gold mines with little to no work. They can be profitable, if done right, but most new buyers make huge mistakes that result in failure.

The business model at first glance is simple. You buy some machines, local people come in and do their laundry. If it were actually that easy everyone would be a millionaire. If you have been watching this industry you see massive turnover with independent operators as the owners sign long term leases in bad locations, then they overbuild the location with too much equipment and get so deep into debt their margins cant cover costs. They will often buy cheap machines, which results in frequent breakdowns, high repair costs, higher power costs, and annoyed customers. At any given time you will see dozens of these struggling businesses for sale on the business portals. Be careful if you are looking at resales. There is very high turnover in this laundry business with non franchised independent shops.

This is one of the reasons people will look at buying a franchise as all of the important details have already been figured out. Also- a franchise will often have stronger buying buyer on equipment so you can potentially save money by investing in a franchise over going independent. Yes, you pay royalties, but the money you make and save based on their experience should cover those costs and more.

In order to be profitable you need to look at the type of machines you use, your location, your footprint size needs to fit the local demand, your marketing and client acquisition strategy and whether you are going card or coin based.

Now those are some of the big things, but there are so many little things new buyers have no idea about. Your lint traps can cost you money if not done right, thousands of dollars a year, your drain troughs can be an ongoing problem if you don't set them up right, your lighting costs, heating and cooling costs, ventilation, all these things, if you do them right, will make you more money. If not, you'll be another person selling their business at a loss. A franchise typically has all these points worked out.

Some laundry franchises also have value added services that provide additional revenue streams. Services like a Dry cleaning drop off where customers drop their dry cleaning, you then job it out and make a margin.

Locker programs are also a great additional revenue stream. These lockers go into apartment buildings, condos or large corporations. Employees or residents drop the laundry in the lockers, create a digital code, when laundry is returned the customer gets a text message and they pick it up. Vending - side business for drinks or snacks. You have the perfect captive audience waiting for their laundry who are likely to buy snacks and this is a good additional revenue stream.

Typically an operator in a laundry franchise will need to spend abut about 8-15 hours a week. This is a "semi passive" business where owners can often keep an existing job and/or operate multiple units.

Word of mouth will be a huge part of advertising, and if you have a dumpy location with broken machines, and don't offer the latest options, people will soon move to the shiny new franchise down the street. This can be a very competitive business

Total investment, of which most is equipment costs ranges from at the very low end about $300,000, average about $600k investment, of which about 75% can be financed. There can also be tax advantages via the section 179 deduction for equipment, where you can write off the equipment in one year vs depreciation over time. Typically franchises look for around a Net worth minimum about $350k, and some laundry franchises are SBA approved. In some financial disclosures we have seen net profits of up to $200,000 a year, if you are leasing your equipment you will want to back that out of your profits.

Another interesting point is that as of yet there are no national laundry locations yet. It is a very segmented industry. I expect over the next decade one of the franchises will take that spot, so getting in early in a companies growth can be advantageous long term.

If you would like to look at what laundry franchises are available in your area, or look at any others give franchise city brokers a call or visit at
https://www.franchise.city/our-services
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