Home service franchises continue to grow in times of financial hardship

Last month, Neighborly, the world’s largest home service franchise company, announced that it was expanding its portfolio through the acquisition of Junk King, the junk removal and hauling franchise. Neighborly now owns and operates more than 30 different brands, all focused on repairing, maintaining and improving homes and businesses. In September it was included in the 2022 Inc. 5000which ranks the fastest growing private companies in the US and marks the company’s fourth consecutive year on the list.

Neighborly’s success and rapid growth reflects the boom seen in the home service industry in general in recent years. While other franchise industries, such as hospitality and retail, have suffered significantly during the pandemic and are bracing for a further threat during the forecast recession, home service franchises are reporting increased demand for both their core services and their franchise opportunities. Why is this?

First, the home service industry generally solves a significant “pain point,” something the customer can’t do themselves because they don’t have the skills, experience, or equipment. From plumbing and electrical installations to appliance repairs and drain unblocking, the company can be a point of contact in an emergency at home. And even if the service is more of a “luxury” than an essential service like lawn care or cleaning, modern life juggling work and other commitments means there’s always demand from time-poor customers who prefer to call in the experts instead of trying to do a job yourself.

Second, for most homeowners, their property is their largest asset that they want to keep and add value to. In today’s financial climate where the cost of borrowing is rising, people are choosing to stay in their current home rather than move, and to invest their money in home improvements and projects that make their existing home more comfortable and attractive. property when the economy and housing market start to pick up. Again, most homeowners will not have the skills and experience to tackle major works on their own and will have to enlist the help of a company.

There’s also the fact that in times of financial hardship, people tend to take a “do it and get better” approach to life. Instead of investing in new technology and applications, there is a tendency to fix what we have. We were forced to stay home during the pandemic, and the resulting unusually heavy use of home appliances and technology inevitably led to things breaking down, meaning repair shops were busier than ever. And those enforced periods of lockdown have led to long-lasting and potentially lasting changes in patterns and behaviour, with more people working flexibly from home and staying home as the new going out, meaning that trend is likely to continue.

For a prospective franchisee, a home services franchise can present an attractive opportunity with potentially low risk at a time when a potential investor could be nervous about investing significant capital. Many are designed to be owner-operated franchises, can be operated mobile or from home, and are relatively inexpensive. For that reason, where other franchise industries may be reporting a dip in new franchise applications and filings, the home services franchise industry may be well placed to weather the forecasted storm of the next two years.

No company can truly claim to be “recession proof”. However, the performance of the home care sector, both during the Covid-19 crisis and post-pandemic so far, suggests that it is on track to label itself “recession-proof”. If so, like Neighborly, home service franchise brands will continue to grow in 2023 and beyond.