Laundry Franchise - Profitable or Not?
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- เผยแพร่เมื่อ 18 มี.ค. 2021
- 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
www.franchise.city/our-services
#franchisecity #laundrybusiness
I opened up a laundromat back in the 90's in Santa Cruz, I was grossing a grand a day with only seventeen washing machines because I invested money into creating a unique and pleasant themed ambiance. During construction the local laundromat owners were laughing at me, saying I was wasting my money on an expensive interior design and ambiance; but I knew by using (the then new) stainless steel instead of the commonly used white machines in conjunction with a warm coffee house atmosphere and espresso bar, that I would have no competition, and I didn't. I was so busy I was open 24/7 being a college town.
In short I knew all I had to do was to creat a laundromat that didn't have the atmosphere that of a public restroom, and I would capture all the local business regardless of the competition.
Are you still in the business?
Or have you sold it?
@@jakp8777 Unfortunately lost it due to embezzlement of one of our managing employees with help from one of my partner's daughters who was supposed to be watching it while I was gone because I lived an hour and a half away. The Santa Cruz police told us straight up that if there's any evidence of it to support a drug habit (the boyfriend's habit of the embezzler), they won't bother prosecuting.
I was still in my 30's back then, and way too trusting of people. I'm in my 60's now, and I trust no one.
@@drjsantos15able No, went back to my construction business.
Sorry to hear about your negative experience. And it's true the mentality (still) with a lot of the Mom and Pops is to do everything as cheaply as possible. As soon as a "nice" place pops up - if its conveniently located - people are going to go there!
The explanations you provide on this channel have stirred me away from a lot of mistakes and purchases.
Thank you. May you get what you deserve!
💯💯💯💯
Thanks for the kind words :-)
The format of these videos has reached it's zenith. They are looking good.
I'm close to the owners of 2 laundry mats in my area. They have one main location and a 2nd location next town over. What sets them apart/why are they so awesome? First, their main location offers dry cleaning, alterations/repairs- ironically, the only dry cleaning place within a 30 mile radius- so GENUIS and 2nd- both locations are coinless. You can in- and you can use cash or debit/credit to load up a laundry card (good for either location)-put on their just what you need for the day or for the entire month (say $100 for example) and then you use the plastic debit card thingy to start the washer/dryers. If you forget soap/bags/fabric softener- you can either pay cash/credit/debit for it- (no longer have those vending machines that need coins) to purchase enough single load sizes of soap/softener/large bags to put clean clothes in to take home or an entire bottle of soap/softener. even has single load things of bleach and stuff. Owner was killing his back taking in large amounts of rolled quarters into the bank every few days-thus why he changed to this debit system.
Other laundry mat owners laughed and said you'd loose business. Yes, he saw a drop in the laundry part of the business for about 2 weeks until his customer base adjusted- now it's tripled. Also he has a several sizes of washers at both locations- but 2/3 of the washers are large enough to stuff 4-5 sleeping bags in, plus the kitchen sink. The other laundry mats in town have the giant ass dryers like he does, but the like 2/3 of their washers can only handle like 2 pairs of jeans, a tshirt and about 8-10 socks.
Oh and he offers snacks, juice, coffee, popcorn and large open areas to fold stuff, current magazines/reading material and a childrens play area plus drop off/pick off service for laundry and dry cleaning.
Just had 2 ikea bags of clothes and a comforter cleaned. Cost $50 to have them wash and fold everything, soap included!
Your channel is by far the most informative channel out there. Having owned 2 non franchise businesses over the years I find your insites very informative. I recommend your channel to any one wanting to start a business, franchise or not.
Sorry missed your comment. Thanks for the kind words!
Very clear and concise presentation. You are to be commended. I am a business broker here in Maryland, and I find your videos very informative.
I appreciate that!
Very interesting as always. Thank you for sharing
Thanks for watching :-)
This is what I wanna know....this is a great channel. So glad I found you
Thanks for watching!
Thanks again for sharing this valuable info
Thanks for watching!
During my laundromat stint in the 90's I found that the two biggest stumbling blocks were finding locations where the local utility services, especially water and sewer hookup fees were only in the thousands instead of tens of thousands of dollars, some even wanted over a hundred thousand for the privilege. And the second obstacle was a location with available parking in an older neighborhood with homes and apartments that weren't originally built with a laundry facility that didn't charge an arm and a leg for rent.
Great info thanks - and very true location is key. Some cities/locations have rents so high it makes it hard to turn a profit, or even find commercial spaces. Likely to change soon when the economy cools :-)
@@FranchiseCityOnline Yeah, it amazed me how even the owners of dumpy locations were convinced their locations were made of gold and charged accordingly. I even came across a retail space for rent that was empty for years because the owner refused to lower "made of gold" rent. After I laughed at the price to the agent that was listing the space for years, I noted he quit being the representative afterwards. It was a weird phenomenon to see.
Supper informative..Thank you.
Thanks for watching!
Thank you for this wonderful info. I’m looking at cruise planners I’m a woman and was wondering is this a good franchise
Every single word you said was correct. Now, remove all of the diatribe about franchises, and you’ve got yourself a fantastic business model.
One in 12 businesses in the USA is a franchise so I'm gonna keep diatribing :-) Thanks for the comment.
And McDonalds sells billions of inedible hamburgers. What's your point. @@FranchiseCityOnline ?
@@KingofLaundry Those inedible hamburgers have created a lot of wealth! Hey, if people want to go solo laundry - all good. If they want a franchise - all good. I know people who have done both and done very well. Its not either or.
I’m gonna have to jump in here!! You may need to get Danny D’Angelo’s video on how to get a laundromat for free!! I have 9 Laundromats’ and have not paid for one of them! I will never franchise, as all capital is coming right back to me. It’s funny, people think we are a franchise, but no, we are branded.
@@splashemoutlaundromat Im interested! I have been thinking about setting up a Laundromat in my town and I have ni business or cormotae backgrround. I need some help! Thanks
Wonderful idea.Thanks I am thinking about this idea in Europe!
Thank you for watching!
This channel is fantastic.
Keep doing GOD'S work
Wow, you have this way of speaking that makes you very watchable and like-able not to mention your knowledge on ever aspect of whatever franchise your talking about!!
I had 2 questions if you don’t mind.
1. Have you heard of wavemax Laundromat franchise, wondering if it’s worth it. They say you need about $350k liquidity and $650k net worth, so just under a cool mil! I’m guessing there’s other expenses as well, but this is a very high tech franchise.
2. If I opened up a non franchise mom and pop, and I found a deal where the sellers are getting rid of their equipment for Pennie’s on the dollar, is it worth it, considering they may break and are probably not warrantied. Or is it better to dish out a huge amount with new warrantied equipment. Even though it’s financed, at the end of the day you still have to pay it all off, where as the used equipment is all profit because you own it?
Sry for such a huge comment. Thx. New subscriber!
Last thing. My Initial idea was an indoor golf simulator with 4/6 bays, which would be a business that I would actually enjoy, “Huge Golf Lover”, but not sure if I would be able to get those bays filled enough in the first year. My research showed that if you have your bays filled almost all the time, you can make a huge profit, but getting yourself out there is tough. You can charge $50/hr for each bay! 8 hrs a day X 6(bays) =$2400/day! (Each bay build would cost about $35k, but once payed off, you own it) The great thing, Not much competition! I think there’s only 10/12 total indoor golf simulators from Miami to Port St Lucie Fl. The bad thing, if you can’t fill your bays, you are gonna be in a ton of debt at the end of the year. Bays alone without rent/bills is $200k. But every indoor place I went to had no food, no drinks, felt like a warehouse. My idea would make it really fun for everyone, not just people practicing their swing.
Thx for the Video! If you don’t reply, I totally will understand lmao! Either way, I will be watching all your content!
Thanks for the comment! Sorry for taking so long to reply for some reason TH-cam put your comment in spam. Re: buying old equipment there is no right or wrong answer. Sometimes people get lucky sometimes they dont. Depends on the market as well - some neighborhoods will look for the nicest locations, some dont care. Re: Wavemax (and any franchise) it depends on the buyer, their budget, operational preference, business goals and most importantly local market demand and demographics. There is no single "best" franchise for every situation. If you need help finding the best franchise you can always just contact us! franchise.city/our-services The golf idea sounds very interesting based on the nature of the current market. Creating an "experience" vs just a place to hit balls would likely attract existing customers from other venues. There are so many variables though its impossible to say with any certainty. Economic conditions, customer habits (do they want to socialize while golfing? I would assume so but dont know) and how soon the competition will steal your idea once they see you doing well. I would definitely do some market research, you can hire companies to do it or conduct it yourself to determine if people would use a facility like that, how much they would pay, etc. Costs a few thousand but could save you a lot more if there is no demand!! If you are somewhat confident but risk averse you can always bring on a few investors to reduce potential losses. Hope it helps!
Where can I find more about the locker situation briefly touched on here? Who takes the dirty laundry from the lockers. Cleans it, and returns it to the proper locker? We were talking about owning a laundromat but that sounds more like a dry cleaning service.
A franchise will always be better based on what I'm seeing in all these videos
The Section 179 deduction can be applied to any business, not just Laundromats. And more than likely, you won't be using a Section 179 if you're just starting out, since you'll most likely lose money on paper anyways from depreciation, so what's the point? A Section 179 deduction basically elects to write off the depreciation in one year instead of the lifespan of the asset. Really doesn't make sense to do a section 179 unless you're already profitable and made big purchases, or looking to expand so you buy a bunch of assets to start another location....It could also be used as a smoke screen for drug dealers to pay into the system and get their act together and get right with the IRS. That's only what I've heard though!
Thanks for the comment - actually it can't be applied to just any business, there are specific costs that qualify, generally related to equipment, although in some cases buildout can also be used. I haven't spoken to El Chapo in a while so can't confirm or deny the second point :-)
Arcade games also sell well inside laundromat
Good point! Thanks for the comment.
Rather be a mom/pop laundromat.
This channel should be way more popular but I’m kind of glad it’s not lol
Perfect timing, was looking at this laundromat, selling for $700k, revenue is 425k, and after expenses for net income says about 200k, has 3 employees, 1 full time and 2 part time. What do you think I should look out for or ask when I look into this sale and talk to the seller? Of course it's a franchise so idk how I feel about it.
At $700k asking price it is *probably* in decent shape. The ones to worry about are *usually* the fire sales. With a franchise you can call existing owners in the system to gauge what their experience has been with the system. With a resale it's usually more about P&L's than the franchise itself. Next time - just call Franchise City brokers we have tools to help you compare multiple opportunities, as well as vet the franchise with our "Franchek" process. www.franchise.city/our-services Thanks for watching! And all the best in the venture. They definitely can be moneymakers.
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CAN YOU DO A SEGMENT ON FUNERAL HOMES/CREMATION SVC OR BEAUTY SALONS???? THANKS
I'll take a look :-) If you are actively looking you can always call us and have (free) custom reports on those industries rather than a general video www.franchise.city/our-services
@@FranchiseCityOnline Thanks
This would be a great one to see!
Are there any laundry franchises in canada?
ugh, i feel dumb i tweeted at you about this topic and THEN i found this video after. oops…
There is a podcast for people who want to own a laundromat of all things.
Popular subject! One of those businesses people are drawn to for "easy riches" - machines do all the work :-)
that sista was hott! great info as always!
Thanks for watching!
I am interested
You can contact us by email www.franchise.city/about/contact or toll free in USA 1-800-432-1583. Thanks for watching.
Have you done a Togo's video?
I had never heard of Togo's! I'll add it to the list :-) If you are actively buying feel free to give us a call for free data and custom reviews in 24 hrs: th-cam.com/video/HDrFegUMSZI/w-d-xo.html
*looks at thumbnail*
For a sec there, I thought she was my step-sis.. huh.
A man of culture.
0:11
You would be dumb to just give your money to a franchise when you can just open your own laundromat yourself.