By: Jack Findaro, Finance Director at Visa Franchise
Over the past few years a number of our clients at Visa Franchise have expressed interest in exploring dry cleaning franchises. While the preference for the majority of our clients is to invest in franchises or businesses within growing industries in order to obtain their E-2, L-1, or EB-5 investor visa, many clients like the idea of dry cleaning franchise businesses due to their familiarity with the industry from a consumer standpoint. However, it is important to note that a business such as dry cleaning, while appearing relatively simple from the outside, can be quite an endeavor once the investment opportunity is better understood. We have devoted considerable time and effort in order to better understand the dry cleaning industry and dry cleaning franchise opportunities on behalf of our clients in order to enable them to make a well-educated investment decision.
Size of Dry Cleaning Industry
The sheer size of the dry cleaning industry is what attracts many individuals to pursue dry cleaning franchise investments. In the U.S., the industry generates over $9 billion per year. There are over 36,200 locations employing over 144,400 workers. As a mature industry, these numbers, while large, are not necessarily surprising. What is interesting is the growing size of certain dry cleaning segments, such as environmentally friendly dry cleaners or dry cleaners that utilize easy to use applications for their customers. As an investor, it is important to not only understand the size of the market but to focus on the growing segments of the market.
Dry Cleaning Franchise Industry Trends
The dry cleaning industry is a very mature yet evolving industry. Dry cleaning business owners have had to adapt to the changing market to better address the needs, expectations, and behavior of their clients. The dry cleaning franchises that have been able to adapt to the changing market have been able to succeed, and even grow, within a mature and crowded market. Growing trends within the market include: implementation of technology, dry cleaning as an amenity, creation of hub and spoke model, and increase in popularity of environmentally friendly products. When successfully implemented, all of these notable trends are expected to continue to drive growth in the market in the coming years.
Technology in Dry Cleaning Franchises
A wide range of industries have been affected by the increase in prevalence of smart phones and their accompanying applications over the past decade. Dry cleaning franchises are no exception to this trend. The dry cleaning franchises that have successfully adapted to this consumer trend through creation of easy-to-use applications have been able to successfully grow outside of their traditional markets. Many of the same characteristics that have made applications such as Uber so ubiquitous, including the ability to schedule pickups and drop offs, tracking the status of dry cleaning, and ease of payment, are now evident in the best dry cleaning franchise applications. Dry cleaning franchise owners that have adjusted to this change have been able to increase both their market size and number of clients. We fully expect this trend to continue as consumers become more comfortable with this change.
Dry Cleaning as an Amenity
Busy, time sensitive individuals search for services that are convenient for them to use. The more forward thinking dry cleaning franchises have adapted to this desire for convenience by implementing “lockers” within many different buildings in their markets. Dry cleaning lockers are typically located in large office buildings, condominiums, and apartment buildings where customers can conveniently drop off their dry cleaning in their individual locker. The dry cleaning is then picked up on a routine basis and dropped off on a scheduled time and date. This has enabled dry cleaning franchisees to increase their reach by going where their customers are and offering them time-saving convenience.
Hub and Spoke Model
A dry cleaning franchise equipped with all of the necessary machines to clean garments on site can be greater than $500,000. However, a dry cleaning franchise location that does the simple washing and drying on site, without the specialized dry cleaning equipment, can be a considerably lower investment. A number of dry cleaning franchises have begun to implement a hub and spoke model, whereby a franchisee can open a “plant” location that does all of the heavy-duty cleaning then subsequently open up “drop” locations and “lockers” that are a considerably lower investment due to the fact that these secondary locations can send the garments that need heavy-duty dry cleaning to the plant location. This enables dry cleaners to scale their operations within their given market for a lower amount of capital.
Environmentally Friendly Products
A well-known issue of legacy dry cleaning franchises is that they leave a lot of hazardous waste due to their use of harsh chemicals. A chief social concern that many consumers have is that their actions have positive impacts on the planet. Included in their concern is the use of harsh chemicals frequently used in dry cleaning. Forward looking dry cleaning franchises allay these consumer concerns by through implementation of eco-friendly dry cleaning techniques in addition to recycling plastics and clothes hangers, thereby ensuring that the overall waste produced by the cleaning process is kept to a minimum. Many consumers are now rewarding these environmental efforts through their choice of which dry cleaner they decide to use.
Our clients are looking to invest in an E-2, L-1, or EB-5 qualifying franchise business. Therefore, our research and analysis at Visa Franchise has led us to deeply examine the dry cleaning industry. The dry cleaning franchise industry is mature, yet the successful dry cleaning franchises are the ones that have been able to evolve to the changing tastes and routines of today’s consumers. Addressing the desire for convenience, efficiency, and quality service are vital not just in dry cleaning but in various industries. The dry cleaning franchises that best address the these concerns are the ones that will continue to grow in the foreseeable future. Our role at Visa Franchise is to continue to find the best franchise opportunities within any given industry, including the dry cleaning franchise industry, in order to address the needs of our clients.