Buying an HVAC Franchise vs an Independent Business: Pros & Cons

Should you buy an HVAC franchise? That’s a question that many aspiring business or HVAC owners ask. It’s usually asked in comparison to buying an independently owned HVAC business. 

In our experience, there are pros and cons to each. 

Specifically, buying an HVAC franchise that has a tried and tested business model can be a smart way to build a successful business and expand quickly. An HVAC franchise cuts through the pains of setting up all the operational and business systems yourself and provides the support and status of delivering HVAC services under an established brand. 

But buying an existing independent HVAC business also has its own advantages. Specifically, any independently owned HVAC business worth buying likely already has a solid customer base and, importantly, a ringing phone. In contrast, when you buy a franchise, you are starting from scratch and trying to get your first few customers. Plus, if you prefer the autonomy of being your own boss and not having to answer to any franchisor's rules or pay them ongoing fees, this option may be better for you. 

In this article, we discuss these pros and cons with home services industry expert Ellen Rohr, Co-Founder & President of Zoom Drain Franchising and a ServiceTitan Brand Ambassador.

We dig into each option, including how to decide if a franchise is right for you, and why the ideal solution for growth might be doing both.

Table of Contents

• Buying an HVAC franchise

• Buying an independent HVAC business

• Why buying an HVAC franchise and an independent business could be the solution

• How ServiceTitan helps you run efficient business systems that optimize growth

Buying an HVAC Franchise

A home services franchise in a recession-proof sector like the HVAC industry can be a viable route for prospective business owners looking to start a new business. It’s also an option for HVAC professionals wanting to expand their existing business into a different area, for example, air duct cleaning services (e.g. Ductz) or an indoor air quality or air conditioning franchise.

A simple definition of a franchise is where a company (the franchisor or franchise owner)  allows a franchisee to adopt its systems and established brand name in return for an upfront franchise fee and ongoing royalty payments. Franchisors offer ongoing support and training to franchisees, and typically perform marketing support and advertising, too.

So, if you’re looking to join an existing business structure, buying an HVAC franchise might be the right move. 

Here’s a summary of the benefits and potential drawbacks:

The Pros of Buying an HVAC Franchise

Pro #1: Adopting a Recognized Brand

One of the key benefits of a franchise is that you’re buying the use of an established and trusted brand. This gives you some brand-recognition benefits if potential customers have already heard of your brand. 

A known or trusted brand name has obvious marketing benefits, such as possibly having more people reach out when they see an ad, or improving your close rate because those people trust that brand. It takes time to establish a trusted brand (via online reviews, marketing, and word-of-mouth), so buying an HVAC franchise allows you to bypass this stage completely.

Pro #2: Using Ready-Made Systems and Processes

Solid systems and processes are an absolutely essential part of running a well-functioning HVAC business, but it can take years to set up your own systems and procedures from scratch. So, perhaps the most appealing advantage of buying a franchise is that you benefit from all the ready-made systems and processes that have been set up by the franchisor. 

Depending on the franchise, this usually includes procedures involved in pricing, estimating, billing, financing, reporting, and marketing, among others.

These systems help you delegate and scale your business because they let employees step into each role (from tech to back office employees) and execute at a much higher level than they would without documented systems and processes. This is also an essential piece that potential acquirers look for if and when you decide to sell your business. So having these systems set up for you is a massive advantage and time saver.

Ellen Rohr says, “If you can get someone else’s manuals and all you have to do is learn them and take your team through them, that saves you 10 years.”

Pro #3: Marketing, Pricing, and Other Support from an Established Business

The backing of an established brand also gives your HVAC company a bank of useful resources, around marketing, training programs, vendor pricing, and more. 

For example, many franchisors provide national marketing campaigns that will benefit your business, and you will have access to marketing assets that you can use in your local area, which saves you time and money.

Franchisors are offered better prices by vendors, too, often negotiating favorable rates for materials, insurances, and vehicles, for example, so franchisees can cut costs in these areas, too.

A franchise brand will also be protected. So, if another company shows up in your area with a similar brand name, the franchisor will handle all the legalities, and you don’t need to worry about it.

For all of these reasons, Ellen Rohr says that it’s worth the cost and the 6–8% fees (which we discuss in more detail below) as you would easily spend that yourself on branding, manuals, and marketing.

The Cons of Buying an HVAC Franchise

Con #1: You Want to Be Your Own Boss

The beauty of starting a business is the freedom of being your own boss. You get to decide everything from the color of your company logo to how you word your advertising. If you buy a franchise, you won’t have this freedom. 

If you are a franchisee, you will need to adopt all the procedures and processes of the franchise, and you will report to the franchise on your company’s performance.

You may not be comfortable with answering to the franchise and/or not being able to make changes or decisions on your own. This can be particularly difficult if, for example, you’re already an HVAC business owner and you’re used to calling the shots. 

Ellen Rohr summarizes the #1 question you should ask yourself if you’re looking to become a franchisee: “Do you play well with others? If you have to be in charge of absolutely every decision, franchising is going to be very hard for you.”

Con #2: Ongoing Fees

As mentioned above, a franchise fee is the initial cost of joining the franchise while royalty payments produce ongoing profits for the franchisor (typically paid monthly). 

Each franchise maintains its own system for royalty fees, and some require a fixed percentage or set dollar amount. Others may use an increasing or decreasing percentage based on sales, and some require none. If the royalty fee is based on a percentage of gross sales, it typically ranges between 6–8%. 

Obviously, the upfront fees require a significant initial outlay (as would buying an existing independent business) and you need to work out whether this is viable for you. The ongoing royalties need to be factored in when working out your business costs. 

When researching franchise options, Ellen Rohr advises that you don’t compare percentages directly. Instead, check what’s included. Sometimes a high number can also include back-office services (phone answering, etc.) which can really add value. As mentioned earlier, Rohr feels strongly that the fees are well worth it. 

Con #3: Starting from Scratch in a New Location

The third potential downside of buying a franchise is that, while you have the backing of a trusted brand and all the ready-made systems that come with that, you are essentially starting a new business in your geographical area with no shortcuts to get your business known and the phone ringing.

Ellen Rohr explains: “If you buy a franchise, you’re starting from scratch. At Zoom Drain, we recommend you get going with referral marketing — you become the mayor of your town. You’re out there going to events, BNI meetings, something every day. Somebody has to go and make friends in their community. I don’t know how you’re going to start from scratch without that.”

So, if you’re not prepared to do that legwork for your business, then a franchise may not be the right choice.

3 Tips on Buying an HVAC Franchise

Tip #1: Explore Your Personality Traits

We’ve discussed the importance of being willing and able to adopt the systems of the franchise to make it a success. We’ve also explained that working with a franchise will not give you all the freedoms of being your own boss and that you need to network in your community to build your brand. 

Ellen Rohr also explains that you need to be prepared to put time into your business —

“In home services, you are kidding yourself if you think you’re going to be a remote guy sitting on a beach from day one. You have to be in it. Anytime there’s a truck, the truck is the most dangerous piece of equipment we’ve got. So, you’ve got to realize you can make really great money in a recession-proof business, but you’ve got to be there to check your guys are good to go out.”

To find out whether you are suited to buying an HVAC franchise, Rohr recommends you do some research into your personality traits. 

There are several tools available online including DiSC, Myers Briggs, and Zorakle Profiles (which is specific to franchisees and franchisors).

These will reveal whether you have the right characteristics to run a franchise business, or whether buying an independent existing business might be a more suitable option.

Tip #2: Use a Franchise Consultant

If you’re serious about buying an HVAC franchise (and there are some great options such as the AireServ franchise, part of the Neighborly group), Ellen Rohr recommends that you engage a top franchise consultant.

For example, using a consultant like Dave Greenberg from FranChoice will really help you explore all potential HVAC franchise opportunities, just like a Realtor would if you were buying a house.

“It’s so much like real estate. A good Realtor really cares about you and your family. They’re going to put you in a home that makes sense, they’re going to listen to you and take their time to make sure it’s a good fit versus, let’s get 10 deals done this month.”

Tip #3: Ensure That Ongoing Fees Are Covered by the Customer

We explained above the typical fee structure for buying a franchise. You’ll need to find the upfront cost, which can be in the region of $150,000. 

However, Ellen Rohr advises that the ongoing royalties should always be covered by the customer, so ensure that these are absorbed into your pricing structure. 

She concludes, “If I were to start a business, I would 100% buy a franchise…If you play well with others and you cover the royalties, it could save you 10 years of working it out on your own.”

Buying an Independent HVAC Business

If your personality is not suited to being a team player and you’re not comfortable with adopting the systems and protocols of a franchise, buying a standalone existing HVAC business might be a better choice. 

Again, you need the money to buy the business, but this means you’ll have the autonomy of being your own boss and won’t need to adopt the processes or marketing strategies of a franchise owner. Instead, you take on an existing business, including its customer base and the phone number that goes with that business. 

Ellen Rohr advises, “Like real estate, I would look for the worst house in the best neighborhood. I’d look for a 60+ year-old-guy, who never got his prices right, who’s been in business 30 years, he's got a good reputation and a nice bank of business. I’d buy three of those guys. I’d buy them on owner finance deals, and I’d give them a percentage of sales for any that come in on the phone number I bought.”

The advantage of buying an existing business is that there will already be some brand recognition in the local area and you’ll have customers ringing in from day one. 

The potential downside is that you’ll also be inheriting that business’s problems, if there are any, and you won’t have the support of a big, franchise brand.

Why Buying an HVAC Franchise and an Independent Business is the Fastest Way to Success

We’ve outlined why buying an HVAC franchise or buying an existing HVAC business are both viable options for starting or expanding your own HVAC business, or diversifying if you cover another home services trade (for example, if you are a plumber or electrician). 

But if you have the personality that suits buying a franchise and you have ambitious expansion plans, Ellen Rohr recommends you do both.

“If I were to start an HVAC business, I would do so with acquisition as part of my overall marketing plan. The beauty of buying an existing company is that there’s already a ringing phone. You’ve already got some action.”

Rohr recommends buying the franchise first and then acquiring the independent company. “There are smart franchises out there who know how to do tuck-in deals, or what we call a napkin deal. You’re buying a phone number and a website. If team members want to come with you, that’s OK, but those little tuck-in deals can really make a difference.”

Regardless of whether you buy an HVAC franchise and/or an existing independent business, or if you’re setting up a new business yourself from scratch, having reliable systems in place is critical for a successful, smooth-running operation. 

Below, we explain how our field service software, ServiceTitan, helps HVAC businesses set up consistent and efficient systems like automated scheduling and dispatching, standardized custom forms, and real-time data reporting.

How ServiceTitan Helps You Run Efficient Business Systems That Optimize Growth

ServiceTitan’s HVAC software helps thousands of HVAC businesses boost workflow efficiency, deliver excellent customer service, and increase profit. 

Here’s a summary of how it works:

1. Features to Streamline Your HVAC Business

Many HVAC businesses use inefficient, manual systems such as paper files and Excel spreadsheets to capture customer information and manage jobs. ServiceTitan’s suite of tools are fully integrated and communicate with each other, so you never have to spend time searching for or transferring information.

Features include:

• A call booking tool so you can greet customers by name and ask all the right questions using customized prompts.

• Scheduling and dispatching features that match the right technician to the right job and ensure they arrive on time.

• Estimate and proposal templates that techs can build while on a job and show to customers via a mobile app.

• Invoicing and payment processing so you can ensure that invoices are accurate and payments can be made swiftly.

• Payroll tools that decrease payroll prep time with real-time timesheet tracking and automated bonuses.

2. Specific ServiceTitan Features for Franchisees

If you buy a new franchise from a company that’s already using ServiceTitan, you can benefit from the business systems set up by that franchisor within the ServiceTitan platform. This saves you a significant amount of time  because you won’t have to set up those processes yourself. 

For example, with ServiceTitan, the franchisor’s charts and checklists are already set up for you in QuickBooks®. There’s no need to upload, customize, and learn a software program. Taking out the set-up time means you only have to learn the processes and implement those with your team. 

ServiceTitan key features for franchisees include:

• Performance KPIs: Evaluate tech and office staff performance with real-time updates on generated revenue, memberships sold, HVAC KPIs, CSR metrics, and more. Drill down into specific metrics with a simple click and coach your team on best practices.

• Job confirmations: Automate texts to customers that confirm appointment times and provide links to their tech and a GPS tracker so homeowners know who is coming and when.

• Financing options: You can build Good, Better, Best options so your technicians can provide customers a transparent, tap-and-swipe buying experience proven to encourage bigger purchases. We also offer customer financing to close more deals on-the-spot.

• Custom forms: Upload your own forms for techs to use for specific jobs (e.g. HVAC change-out checklist) so there’s no need for paperwork and techs always have the correct documentation and process to follow.

These are just a few of the features available to ServiceTitan franchisees. We’ll highlight further specific features available to ServiceTitan franchisors next.

3. ServiceTitan Features for Franchisors

If you are a franchise owner, you’ll want to make sure your company operates efficiently at every level. ServiceTitan’s franchise management software allows all of your franchises to be on the same system, so you can manage across several locations.

In addition to the tools we’ve outlined, ServiceTitan’s specific features for HVAC companies setting up franchises include:

• Reporting: Our field reporting software gives you all relevant numbers for your business at a granular level, in real-time, so you can spot critical trends and view your entire franchise business from scheduled, customized reports straight to your inbox.

• Custom forms: Standardize documents across the whole franchise so that your franchisees follow the same procedures, set by you. ServiceTitan allows franchisors to upload custom forms to the cloud and assign them to specific job types so teams always have proper documentation. 

• Custom financing: Protect your margins with custom financing rules based on business unit and ticket size so HVAC jobs are always financed in a way that makes sense for your business. 

• Customer experience: From online booking to truck tracking and contactless transactions, ServiceTitan provides the unbeatable, mobile-driven customer experience today's customers overwhelmingly prefer when choosing local services.

• Marketing: With Marketing Pro, you can set up marketing campaigns across your entire franchise and monitor your ad spend and ROI via the marketing scorecard so you can tie in profits and locations to campaign performance and see what’s working across the board.

“You’ve got to have systems translatable from all locations,” Rohr says. “What’s cool about it, because of ServiceTitan’s tenets and permissions, I can see how everyone’s doing every day for sales, average ticket, close rate, and implementation use features. I can see what’s happening.”

Ready to Find Out How ServiceTitan Can Help You Run Your HVAC Business?

Whether you decide to buy an existing HVAC franchise, an independent existing HVAC business, or both, or if you’re just looking to improve your HVAC business systems, ServiceTitan’s HVAC software provides an efficient, quality service no matter how many locations you manage — which in turn, grows HVAC leads and boosts overall revenue.