CHICAGO — Whether it be a franchise, licensing, or a partnership, investor interest in ready-made laundry services solutions appears to be on the rise.
For a business model already generally seen as being recession-resistant, the labeling of laundry services as “essential” during the coronavirus pandemic has only served to ratchet up the attraction of investors looking for solid business opportunities.
And it doesn’t hurt that younger consumers—dare I say, millennials—who value time and are willing to pay more for convenience are embracing app-based laundry pickup and delivery.
In this article divided into three parts, American Coin-Op unboxes a random handful of these ready-made solutions to examine what they provide to investors or partners and illustrate why there is a place for such offerings in the laundry industry.
LaundroLab is a full-service franchise model or concept innovating on the traditional coin laundry industry in order to provide a five-star experience to customers and investors, says Dan D’Aquisto, co-founder of the franchise.
Each LaundroLab location offers a vibrant space, bubbling over with safety features, state-of-the-art Electrolux equipment through North American distributor Laundrylux, payment technology, and amenities to pass the time. Franchisees receive a business playbook, technology assets, education and support from a team with a long track record, and a well-regarded brand to build their business, according to company materials.
D’Aquisto says LaundroLab originally began as a pickup and delivery service called 2ULaundry and franchisees will continue to build a network with exclusive access to that pickup and delivery model through a national account relationship.
“We start by going through a mutual evaluation process, looking to identify the right owners for our opportunity and our business,” D’Aquisto says. “That takes about 60 to 90 days. Once a franchisee signs with us, that activates the on-boarding and new-store opening process, which is about nine to 12 months long.”
The process includes site selection, lease negotiation, store design, equipment purchasing, construction and installation. “Then we provide all of the necessary training, grand opening, marketing support, ongoing business support, whether that’s operations, technology, marketing, HR, all of the above.”
Projects range from $1 million to $1.5 million. Franchisees pay a one-time franchise fee upfront, then a gross revenue royalty fee and technology fee once open. There are also mandates for local marketing spending.
D’Aquisto says the full-service support is attractive to LaundroLab investors, whom he describes as “sophisticated business professionals who are looking for a semi-absentee, passive investment model.”
He says the franchise offers a “good balance” of owner independence and operating within the system.
“Obviously, as a franchise, we have to have our systems and balances in place as far as brand reputation and management,” he says. “So when they sign the franchise agreement, they’re opting in to abiding by those sort of brand standards and brand guidelines.” But the franchise considers itself to be “entrepreneurial-minded” and will have a franchise advisory council so franchisees can gather and share new ideas and opportunities.
LaundroLab began 2021 with a goal of finding its first five investors. It’s now up to 11, spanning as far west as Phoenix and as far north as Burlington, Vermont.
“We’re looking to build a national brand. We’re being methodical about the markets that we approach but we’re being even more methodical about the type of owners and investors that we want in the system who can really bring the mission and vision to life,” D’Aquisto says.
One of the newest players in the U.S. “ready-made laundry services” market is Mr Jeff. The franchise brand was founded in 2016, based out of Spain.
Mr Jeff says it has modernized the task of laundry through a 48-hour pickup and delivery mobile app-based service. It started a pilot project to open several flagship hubs inside existing Clean Rite laundromat locations in New York and Ohio, and two opened in New York City during 2021.
Shepherding the U.S. rollout is Managing Director Peter Stern. The international franchise has created several “daily need services” verticals in areas such as fitness, shared office space, and beauty.
“As a whole, we’re largely focused on our first vertical of laundry,” says Stern, a laundromat owner himself. “That’s where the bulk of the growth is. I think that’s why there’s been so much capital flowing into this industry in general. People see it as one of the last reliable traffic-generating retail uses out there.”
Mr Jeff offers two models: a “store within a store” concept where the franchisee sets up shop within an existing laundromat, and a traditional concept based on newly developed storefronts.
“We’re going full force in just traditional franchise sales and they’ll be newly developed boxes anywhere from 500 to 1,000 square feet and exclusively laundry and drycleaning services,” Stern says.
Picture a front counter for drop-off, with the equipment and production area hidden behind it.
“There’s a few machines, (Fagor) wetcleaning washers and dryers. All the dry cleaning is done through a wetcleaning process. It’s all done onsite. There’s a commercial grade steam table and ironing board in the back, wetcleaning machines and then regular washers and dryers to do all the wash and fold. Out of that same box, all the pickup and delivery would be done.”
Mr Jeff supplies the laundry-specific know-how and expertise, according to Stern: “We have a set-up team to help with the buildout, from permitting, construction, design. We’re just really a partner with them every step of the way of getting into the business, getting started, and then operations.”
The timeline for opening a traditional location would vary depending on site selection, lease negotiations, and local permitting. Stern estimates the project cost for a traditional “box” to be $150,000 to $175,000, “all in.” There is a franchise fee, a royalty fee as a percentage of sales, and a monthly technology platform fee.
Independent laundries are asked to meet certain criteria to become a Mr Jeff franchisee.
“There’s definitely a quality standard that we want operators to adhere to but that would be flushed out in the vetting process of the franchisee, especially if they were already … doing wash and fold,” Stern says. “If their quality wasn’t measuring up to Jeff standards, it just wouldn’t be a good fit to begin with.”
Check back Thursday for the conclusion!
If you missed Part 1, you can read it HERE.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].