FDD Talk: Fresh Coat Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Fresh Coat franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Fresh Coat franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Fresh Coat franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Fresh Coat outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Fresh Coat’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, median, highest, and lowest gross revenue for the 52 Fresh Coat franchisees that were open for at least one year before December 31, 2018, operated on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2018 and December 31, 2018, and submitted income statements by March 29, 2019

• 2018 average, median, highest, and lowest gross profit percentage for the 52 Fresh Coat franchisees that were open for at least one year before December 31, 2018, operated on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2018 and December 31, 2018, and submitted income statements by March 29, 2019

Section I – Background Information

17 Things You Need to Know About the Fresh Coat Franchise

Adds New E-Z Pay Payment Program

1.  In mid-May 2019, Fresh Coat unveiled a new program to combat the fact that painting businesses are losing out on hundreds of thousands of dollars in revenue due to the financial constraints of clients. With Fresh Coat E-Z Pay, Fresh Coat franchisees can now extend an exclusive line of credit (same as cash at 0%) to their customers. Since the program’s launch earlier in 2019, both Fresh Coat franchise owners and their clients have expressed how E-Z Pay has improved their options and augmented their budgets.

2.  According to Mike H., a Fresh Coat owner out of Texas, E-Z Pay hasn’t just helped his franchise gain business, but has actually resulted in expansion of projects already underway. “Recently, a client found out about the 0% financing through E-Z Pay and decided to take a $6,000 project and turn it into an $11,000 job.”

3.  Mike went on to state how both older and younger clients have utilized E-Z Pay for their respective needs. “We have elderly clients on a fixed income where E-Z Pay was the only way they could have gotten their homes painted. There are also younger clients who have told us that we might not have been the lowest bid, but the option to finance made all the difference.”

4.  Though E-Z Pay has proven to be a major selling point for franchisees, it is not a stand-alone program. With Fresh Coat’s VIP Realtor Program across the country, realtors preparing to take a house to market, use their local Fresh Coat franchise as their preferred painting service. With both programs working hand in hand, E-Z Pay isn’t only useful for home owners, but for those actively selling their homes as well.

Local Fresh Coat and TruBlue Develop Partnership to Better Serve Clients and Grow Businesses

5.  In late November 2019, TruBlue of West Houston and Fresh Coat Painters of West Houston took their referral relationship to the next level and are working to serve the community together. Both franchises are even presenting together at trade shows to help potential clients see the value of bringing in both companies for home repairs and renovations.

6.  For West Houston Fresh Coat Painters owner Yuri Lorenzsonn and TruBlue owner Arturo Lopez, helping clients love their homes doesn’t end with the project they are hired to do. Being a great contractor – and earning return clients – often means giving quality referrals they can trust to provide top-notch service.

7.  According to Lopez, “People aren’t looking for heroes – they understand one company can’t specialize in everything. They are, however, looking for a guide to help them avoid the pitfalls of hiring a bad contractor. Between Fresh Coat Painters and TruBlue, we can take care of almost any home project and, since we’re both focused on repeat business, we’re focused on quality and customer service. It’s a great partnership.”

8.  Lopez opened TruBlue of West Houston earlier in the fall of 2019, and Lorenzsonn has been in business since 2012. After spending those years building a great reputation, he wouldn’t partner with just anyone. When he met Lopez, he knew he’s found the right fit.

9.  Lorenzsonn added, “We work hard to make sure our clients are happy both with our work and our customer service, which often means they come back to us to help with other work, like renovations or repairs. I want to be able to give those clients a referral, but I’ll only do that if I am absolutely sure that company is going to live up to the standards I’ve set for my own company. Now that I’ve officially partnered with Arturo and TruBlue, I can help my clients avoid the headaches that often come with trying to find the right contractor.”

10.  For Lopez, the partnership will allow him to build his small business more quickly without adding painting to his own team’s repertoire. It’s also an opportunity to work with a mentor and fellow franchisee.

11.  On a final note, Lopez said, “Yuri has been telling a great story and making people in this area happy for more than seven years. Being able to partner with Yuri brings a higher level of credibility to my own budding business while also giving me the chance to learn from him. Punchlists and painting just go together. This is a great opportunity both for us and for our clients.”

Announces 2019 Scholarship Winner

12.  In mid-September 2019, Fresh Coat Painters announced the winner of the company’s first ever national scholarship – Kush Oza, who attends DePaul University. The $1,000 scholarship was open to any student pursuing a 2- or 4-year degree at an accredited college or university. The essay topic for the Fresh Coat Painters scholarship was the importance of business owners and entrepreneurs in America.

13.  The Fresh Coat Painters scholarship was one of five scholarships offered by Strategic Franchising, Inc. in 2019. Strategic Franchising, Inc. is the parent company of Fresh Coat Painters, Caring Transitions, TruBlue Total House Care, The Growth Coach, and Pet Wants. The scholarships were created to help the next generation make their dreams come true.

Company History

14.  Fresh Coat, which is based out of Cincinnati, Ohio, was founded in 2004 as part of Strategic Franchising Systems. The company offers interior and exterior residential and commercial painting services. The brand’s painters can paint a whole house or just one room and use eco-friendly painting supplies.

15.  Additionally, Fresh Coat does cabinet painting, popcorn ceiling removal, garage painting, office painting, apartment complex painting, and many more services. Fresh Coat also has color experts on hand that can help customers select the perfect color for their space if needed.

16.  A year after starting, Fresh Coat began franchising and today there are locations across the United States.

Entrepreneur’s Franchise 500

17.  Fresh Coat ranked No. 401 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Fresh Coat franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Fresh Coat’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  120
• Outlets at the End of the Year:  116
• Net Change:  -4

2017

• Outlets at the Start of the Year:  116
• Outlets at the End of the Year:  131
• Net Change:  +15

2018

• Outlets at the Start of the Year:  131
• Outlets at the End of the Year:  132
• Net Change:  +1

Company-Owned

2016

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• Presented below are historic Gross Revenue and Gross Profit figures for franchised Fresh Coat business owners for the one-year period from January 1, 2018 through December 31, 2018.

• Only data from franchisees who were already open for at least one year before December 31, 2018, who operated their business on a full-time basis in the United States during the entire period, who reported Gross Revenue for all 12 months of the period, and who submitted income statements by March 29, 2019 were included in the table.

• The information has been extracted from royalty reports and income statements submitted to Fresh Coat by its franchisees. The income statements submitted to Fresh Coat were prepared by the franchisee in most cases, not reviewed or audited by an independent accountant. Fresh Coat has not audited or independently verified any of this information.

• There were 132 Fresh Coat franchises (each franchise consists of a single franchise territory) in operation as of December 31, 2018, which were owned by 113 franchisees.

• Of those, 52 franchisees were open for at least one year before that date, operated their business on a full-time basis in the U.S., reported Gross Revenue for all 12 months between January 1, 2018 and December 31, 2018, and submitted income statements by March 29, 2019.

• Number of Franchisees:  52

The post FDD Talk: Fresh Coat Franchise Review (Financial Performance Analysis, Costs, Fees, and More) appeared first on Franchise Chatter.