CertaPro Painters offers a full range of professional interior and exterior painting and decorating services, year-round, throughout North America. Their services range from residential to commercial painting, which is handled with great care by highly skilled and experienced professionals. Michael Stone is the current CEO and president of the company and has served in the role since 2015. He has been with CertaPro since 2003 and has previously served as Regional Vice President from 2007 and as Vice President of Operations from 2013.
CertaPro was incorporated in Massachusetts on December 18, 1991 and its parent company is FS Brands, Inc. (formerly TFC Brands, Inc.). CertraPro does business under the name CERTAPRO and CERTAPRO PAINTERS.
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CertaPro Painters
In 1971, Cameron Greig Clark and his partner, Stewart, found Stewart & Clark Painting in Thunder Bay, Ontario, Canada. In 1972, they changed the name of this company to College Pro Painters and in August of 1975, incorporated as College Pro Painters Limited in Ontario, Canada. College Pro Painters Limited expanded into the United States and formed a subsidiary, College Pro Painters (U.S.) Ltd. (“College Pro”), In 1978. At that time, College Pro’s operations were seasonal and generally limited to offering exterior painting services for single family homes and small residential buildings.
All franchises and company-owned outlets were run entirely by college students or college age individuals with assistance from College Pro. In 1991 College Pro decided to expand its operations and formed CertaPro to offer a full range of interior and exterior painting and decorating services, year-round, throughout the United States.
CertaPro Painters Franchise Cost
The total investment necessary to begin operation of a CertaPro Painters Franchise varies depending upon whether you use subcontractors or employee painters in your business.
With subcontractors performing the painting services, the total investment necessary to begin operation ranges from $147,750 to $175,000 while with employees, the initial investment will range from $169,800 to $221,000.
This cost includes:
- Initial Franchise Fee: $57,500
- Business and Technology Setup Fee: $7,500
- Commercial Services Fee: $10,000
CertaPro Franchise Cost Breakdown
Below is a breakdown of the estimated initial investment depending upon whether you choose to have your painters as subcontractors or employees.
Subcontractor Painter Model
| Type of expediture | Amount | Method of payment | When due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee | $57,500 | Lump sum or as arranged | At the time you sign the Franchise Agreement | CertaPro |
| Advertising & Marketing | $40,000 | As incurred | Within the first 3 months of commencing operations | Suppliers |
| Commercial Services Fee | $10,000 | Lump sum | When you sign the Franchise Agreement, unless you purchase an existing CertaPro business and the Commercial Services Licenses will be transferred to you | CertaPro |
| Miscellaneous Opening Costs | $2,000 to $3,000 | As incurred | Before opening | Suppliers, utilities, EPA RRP Rule, OSHA 10 online training, training, etc |
| Equipment | $1,000 to $3,000 | Lump Sum | Before opening | Suppliers |
| Office Equipment | $500 to $4,000 | As incurred | Before opening | Suppliers |
| Vehicle | $2,500 to $4,000 | Lump Sum | Before opening | Suppliers |
| Contractor License | $250 to $2,500 | As incurred | Before opening | State/Local Administrators; attorney’s fees. |
| Computer System and Proprietary Software Solution | $9,000 to $11,500 | Lump Sum | Before training | CertaPro and Suppliers |
| Travel and Living Expenses While Training | $500 to $3,000 | As incurred | During training and Forum Program | Airlines, hotels, and restaurants |
| Insurance | $5,000 to $7,500 (Note 7) | (Note 7) | (Note 7) | (Note 7) |
| Real Estate and Improvements | (Note 8) | (Note 8) | (Note 8) | (Note 8) |
| Additional Funds (3-6 months of operation) | $19,500 to $29,500 | As incurred | As incurred | Employees, suppliers, utilities |
| TOTAL | $147,750 to $175,500 | |||
Note 7: “…You should consult with a business insurance broker for an estimate of the cost of obtaining this insurance before you sign the Franchise Agreement.”
Note 8: “…Initially, franchisees operate their franchises from their homes, although if you reside outside your Territory or have staff. We recommend that you rent a small office within your Territory as soon as possible.”
CertaPro’s On-going cost and fees
Royalty Fees: 5% of Gross Sales.
Advertising Fees and Expenses: 12% of Gross Sales during 1st of operation and 8%of Gross Sales after 1st year of operation.
Technology Fees: 0.25% of Gross Sales.
How Much Do CertaPro’s Owners Make?
CertaPro Painters Franchise Sales Figures
AVERAGE REVENUE FOR FRANCHISEES
IN PRODUCTION FOR 12 AND 24 MONTHS
| Production Year Two | Top 1/3 | Mid 1/3 | Bottom 1/3 | Total |
|---|---|---|---|---|
| Average Revenue $ | $875,724 | $545,547 | $396,492 | $605,907 |
| % at/above average | 33.3% | 33.3% | 66.7% | 33.3% |
| # at/above average | 1 | 1 | 2 | 3 |
| Number of Participants | 3 | 3 | 3 | 9 |
| Median Revenue $ | $680,313 | $535,724 | $385,575 | $535,724 |
| Production Year One | Top 1/3 | Mid 1/3 | Bottom 1/3 | Total |
|---|---|---|---|---|
| Average Revenue $ | $1,078,226 | $419,446 | $396,492 | $605,907 |
| % at/above average | 25.0% | 50.0% | 66.7% | 33.3% |
| # at/above average | 1 | 2 | 4 | 5 |
| Number of Participants | 4 | 5 | 5 | 14 |
| Median Revenue $ | $853,144 | $405,834 | $258,578 | $376,636 |
The tables above show revenues of franchises in their first and second years of operation as of December 31, 2020. Revenue is defined as all gross sales generated under the franchise agreement, as reported by the franchises to CertaPro. The total median revenue for these franchises increased from $376,636 in year one to $535,724 in year two.
As of December 31, 2020, there were 307 franchisees that were in production for more than two full years. The average gross sales for these 307 businesses was $1,525,256 with 95 of them at or above the average. The median gross sales was $1,069,414.
For that, given the 2020 median gross sales, the table below shows you how long it will take you to recoup your investment for both the subcontractor and the employee business models with a 10%, 15%, or 20% profit margin. We will use the midpoint of the range of the total investment in the calculation.
Subcontractor Model
| Initial investment (midpoint) | % Profit Margin of Median Gross Sales | Estimated Profits | Time to recoup your investment |
|---|---|---|---|
| $161,625 | 10% | $106,941.40 | 3 years |
| $161,625 | 15% | $160,412.1 | 2 years |
| $161,625 | 20% | $213, 882 | 1.5 years |
Employee Model
| Initial investment (midpoint) | % Profit Margin of Median Gross Sales | Estimated Profits | Time to recoup your investment |
|---|---|---|---|
| $195,400 | 10% | $106,941.40 | 3 years |
| $195,400 | 15% | $160,412.1 | 2.5 years |
| $195,400 | 20% | $213, 882 | 2 years |
FS Brands, Inc. Income statements for 2020, 2019, and 2018.
Consolidated Statements of Income and Comprehensive Income
| 2020 | 2019 | 2018 | |
|---|---|---|---|
| Revenue | |||
| Royalties | 70,476,363 | 70,908,765 | 65,536,712 |
| Franchise fees | 4,153,582 | 4,794,246 | 4,384,939 |
| Merchandise sales | 286,162,253 | 318,557,953 | 312,088,350 |
| Services and other | 58,149,261 | 73,034,131 | 66,565,223 |
| 418,941,459 | 467,295,095 | 448,575,224 | |
| Costs and expenses | |||
| Franchise operating | 21,657,219 | 26,894,438 | 23,428,354 |
| Cost of merchandise sales | 200,653,290 | 224,199,103 | 205,577,393 |
| Cost of services | 5,167,179 | 11,070,226 | 17,210,968 |
| General and administrative | 125,729,239 | 137,073,029 | 126,288,939 |
| Management fees to parent | 4,430,219 | 4,884,590 | 9,190,670 |
| Depreciation and amortization | 20,801,420 | 18,824,462 | 15,129,595 |
| 378,438,566 | 422,945,848 | 396,826,465 | |
| Income from operations | 40,502,893 | 44,349,247 | 51,748,759 |
| Other income (expense) | |||
| Interest income | 571,979 | 137,100 | 150,252 |
| Interest expense | – | (471,761) | (1,009,817) |
| 571,979 | (334,661) | (859,565) | |
| Income before income taxes | 41,074,872 | 44,014,586 | 50,889,194 |
| Provision for income taxes | 11,005,369 | 11,218,325 | 13,133,228 |
| Net income for the year | 30,069,503 | 32,796,261 | 37,755,966 |
| Non-controlling interests share of earnings | (1,526,754) | (2,886,840) | (5,190,435) |
| Non-controlling interests redemption increment | (2,570,391) | 2,085,931 | (2,553,813) |
| Net income and comprehensive income attributable to common stockholders for the year | 25,972,358 | 31,995,352 | 30,011,718 |
FS Brands, Inc. Income statement key insights
FS Brands, Inc. is the parent company of CertaPro Painters, Ltd. In 2020, the company had a net income of $25, 972, 358. This was a drop of about $5 million from the previous two years where the company had a net income of $31,995,352 in 2019 and $30,011, 718 in 2018. The revenue generated in 2020 was $418, 941, 459 while the expenses for that year were $378, 438, 566. This produced a substantial income from operations of $40,502,893 which indicates a high return on investment.
FS Brands, Inc. Cash Flow Statements of 2020, 2019, and 2018
Consolidated Statements of Cash Flows (Expressed in US dollars)
| 2020 | 2019 | 2018 | |
|---|---|---|---|
| Cash provided by (used in) | |||
| Operating avtivities | |||
| Net income for the year | 30,069,503 | 32,796,261 | 37,755,966 |
| Adjustments to reconcile net income to net cash provided by operating activities | |||
| Depreciation of property and equipment | 14,851,981 | 13,083,035 | 9,879,944 |
| Amortization of intangible assets | 5,949,439 | 5,741,427 | 5,249,651 |
| Deffered income taxes | 722,653 | 345,617 | 740,637 |
| Change in non-cash working capital | 25,173,976 | (5,399,029) | (26,687,515) |
| 76,767,552 | 46,567,311 | 26,938,683 | |
| Investing activities | |||
| Purchase of property and equipment | (11,681,756) | (17,640,339) | (15,612,614) |
| Acquisition of businesses | (21,800) | (8,063,000) | (34,936,381) |
| Purchase on intangible assets | – | (169,143) | (3,633,118) |
| Sale of subsidiary to related company under common control | – | 21,405,412 | – |
| (11,703,556) | (4,467,070) | (54,182,113) | |
| Financing activities | |||
| Advance from ultimate parent | – | (21,760,271) | (14,726,250) |
| Advance from parent | 3,466,199 | 6,713,166 | 33,288,429 |
| Advance (payment) of notes payable | (1,308,622) | (1,169,547) | 1,124,449 |
| Purchase of non-controlling interest | (2,128,811) | 737,172 | (4,563,936) |
| Sales of shares to non-controlling interests | – | (1,001,156) | 1,200,000 |
| Payment of dividends to non-controlling interests | (1,619,722) | – | (3,117,007) |
| Payments of obligations under capital lease | – | – | (115,216) |
| (1,619,956) | (19,926,606) | 13,050,469 | |
| Increase in cash and cash equivalents during the year | 63,401,040 | 22,173,635 | (14,192,961) |
| Cash and cash equivalents – Beginning of year | 31,653,532 | 9,479,897 | 23,672,858 |
| Cash and cash equivalents – End of year | 95,054,572 | 31,653,532 | 9,479,897 |
| Supplementary information | |||
| Cash paid for interest and dividends | – | 820,861 | 984,653 |
| Cash paid for income taxes | 11,755,401 | 11,560,625 | 17,373,862 |
FS Brands Inc. Cash Flow Statement Key Insights
At the end of 2020, FS Brands had cash and cash equivalents of $95 million which was over 100% of what they had at the beginning of the year. In 2019, their cash and cash equivalents increased by over $20 million from having about $9 million at the beginning of the year to having about $31 million at the end of the year. However, in 2018, the cash and cash equivalents dropped from $23.6 million at the beginning of the year to $9.4 million at the end of the year.
How many franchise units have opened and closed?
| Outlet type | Year | Outlets at start of year | Outlets at end of year | Net change |
|---|---|---|---|---|
| Franchised | 2018 | 333 | 333 | 0 |
| 2019 | 333 | 340 | +7 | |
| 2020 | 340 | 342 | +2 | |
| Company-Owned | 2018 | 0 | 0 | 0 |
| 2019 | 0 | 0 | 0 | |
| 2020 | 0 | 0 | 0 | |
| Total Outlets | 2018 | 333 | 333 | 0 |
| 2019 | 333 | 340 | +7 | |
| 2020 | 340 | 342 | +2 |
The number of franchise units has increased from 333 in 2018 to 340 in 2020 with 7 new outlets in 2019. There’s no record of closed outlets from 2018 to 2020.
Is it worth investing in CertaPro Painters Franchise?
Based on their sales, CertaPro Painters, Ltd. is a profitable business with high profit margins that guarantee a quick return on your investment.
“In order to assess the performance of your franchise, CertaPro Painters recommend tracking the following measurements: Success Ratio, Average job size, and Percentage of leads from previous customers and through word of mouth.”
