Would you enter a competition to win a franchise?
Ace Cleaning Services is a 65-year-old cleaning business that has been franchising for just over 10 years. In partnership with the Franchise Expo, the company is running a month-long competition to give away 10 franchises.
Each franchise is valued at $14,000 and Ace Cleaning Services says it will give complete franchise packages to five winners in Melbourne and five in Sydney.
As part of the prize, Ace Cleaning Services will offer the competition winners a home or office cleaning kit, including vacuum cleaner, chemicals and equipment, uniforms, business cards and manuals, as well as “business planning, marketing strategies, sales and quoting”.
Franchisees will be given DVD training videos and “hands on” training in cleaning techniques, including carpet steam cleaning, hard floor maintenance, tile and grout cleaning and lawn mowing. Ace Cleaning Services said in the advertisement the new franchisees will also be given ongoing customer leads from the Ace Cleaning call centre and training in “growing, owning and running a cleaning business”.
Lindsay McDougall, chief executive of Ace Cleaning Service, told SmartCompany the company needs more franchisees to keep up with the demand for its services in Melbourne and Sydney.
“We don’t currently have representation in the Sydney metro area and we desperately need it,” McDougall says.
McDougall says the competition is not about recruiting cleaners but finding people who want to “run a business and grow a cleaning business”.
McDougall says the competition application involves a series of questionnaires that will help Ace Cleaning “get a feel” for what the prospective franchisee is looking for. He says Ace Cleaning is not looking for individuals with any specific skills, but instead those who have a “desire to run their own business”.
“We’re not looking for people who have their hand out, expecting everything to be handed to them,” he says.
“Franchising doesn’t work like that.”
Ace Cleaning has 35 franchises, which all pay a flat monthly franchisee fee of $650. McDougall says the competition winners will pay the same fee, although the first few months will be paid in arrears to get the franchisees on their feet.
While many franchise systems operate on a royalty basis, McDougall says the flat monthly fee – which he says is “much less” than what an Ace Cleaning franchisee would typically spend on marketing and advertising – means franchisees have access to better cash flow and the potential to earn more money themselves.
But Jason Gehrke, executive director of the Franchise Advisory Centre, told SmartCompany running a competition to recruit new franchisees is a risky strategy and not one that he would ever recommend using.
“The great risk is that is devalues your brand and undermines the value of the investment existing franchisees have made in the network as well,” Gehrke says.
Gehrke also questions the level of commitment Ace Cleaning would receive from the competition winners, saying “people don’t value what they don’t pay for”.
“On the one hand, if you gave away $20,000 cash, people can do something with that,” Gehrke says.
“But if you’re giving away a business, what you’re asking for is someone to make a career change in order to use the prize.”
Gehrke says there is a reason why most franchise systems require franchisees to put up their own “hurt money” at the start.
“It’s a quantifiable commitment to the business,” he says.