Definitive Guide to Starting a Kitchen Tune-Up Franchise
My mom always gets mad at me when I steal her kitchen utensils. No worries though, that’s a whisk I’m willing to take…
If you enjoy renovation and kitchen equipment, boy do I have a franchise for you! It’s called Kitchen Tune-Up, and it’s particularly suitable if you have experience in the construction or renovation industry. You can find some basic facts and figures on our summary page here, but keep reading below for more information.
So, what’s the business model here? Essentially, you’re going to be selling on-site wood restoration and repair services, replacement of cabinet doors and cabinet hardware, painting cabinets, installation of cabinet refacing materials, new cabinets, and shelf organizers, and granite sealing. This falls under the “Man in a Van” bucket, though of course women are more than welcome to join!
Your target market clients are households, offices, and commercial businesses. Your key differentiator vs. the army of other contractors delivering a similar service? With Kitchen Tune-Up, it’s all about speed and price. Your customers will be folks that want their renovation work done fast (ideally yesterday), and at a great price point. Kitchen Tune-Up promises to deliver in 2-5 days what typical contracts would do in weeks.
The business model is popular amongst consumers, and this end user demand has attracted franchisees to the system; in 2018, the franchise system grew by 13 units to reach a total of 190. Like any franchise, the strong growth in units has been supported by growing end user demand (in this case, for renovation services) and fantastic unit economics. The chart below shows the size of Kitchen Tune-Up vs. its closest competitors; Kitchen Solvers and Shelf Genie.
In our view, Kitchen Tune-Up’s two closest comparable franchises, based on size and industry, are Kitchen Solvers and ShelfGenie. The charts in this report include these two franchises as direct alternatives, and some large fast food franchises (McDonald’s, KFC and Pizza Hut) to give you a sense of the wider franchise industry.
So, if this whets your appetite, keep reading and we’ll talk you through all the facts and figures you need to know before starting the process of purchasing your own Kitchen Tune-Up franchise.
Who Are Kitchen Tune-Up?
Kitchen Tune-Up was founded in 1986 by Dave Haglund, and started offering franchises soon after, in 1988. We love franchisors run by their founders, and we are pleased to see that Dave still runs Kitchen Tune-Up to this day. We were also happy to see that there is no ongoing litigation or bankruptcies reported in Item 3 and Item 4 of the 2018 Franchise Disclosure Document.
In 2018, Kitchen Tune-Up had approximately 200 franchises across the US (operated by 134 franchisees) – which makes it small fry vs. some of the other franchises we cover on Franchimp.com, but don’t let that fool you. We think Kitchen Tune-Up offers some of the most attractive franchise unit economics in the renovation space!
Kitchen Tune-Up restores cabinets, replaces fittings, countertops, and provides other storage solutions for both residential and commercial customers, although not all franchises offer the same services. Some focus on kitchen cabinet restoration, others on cabinet refacing, and some on complete kitchen solutions, so there is quite a lot of flexibility within the Kitchen Tune-Up franchise.
What your franchise chooses to do depends on your local market and your personal preferences, so you can certainly bring past experience to your new role as a Kitchen Tune-Up franchisee.
Kitchen Tune-Up offers an all-encompassing package to make the franchise purchasing process as simple as possible. On top of the usual things like training, business coaching, clothing, sales materials, and a personal mentor, Kitchen Tune-Up also offers franchisees a protected territory as part of the deal. Try asking for that from McDonald’s and see what they say!
Kitchen Tune-Up Franchisee Requirements
The ideal Kitchen Tune-Up franchise candidate has previous business management or construction/renovation experience and is hungry to try their hand at running their own business. You need to have strong project management skills and of course need great relationship management, sales and customer service skills. This is still a people business, and you need to enjoy building relationships, be highly motivated, and have True Grit if you want to grind out those inevitably tough early years.
While experience in home remodelling and design is beneficial, it’s not technically a pre-requisite for Kitchen Tune-Up. Any shortfall in technical experience you can substitute with passion and a hunger to learn.
Potential Kitchen Tune-Up franchisees should be prepared to undergo a four-week online pre-training course, to familiarise themselves with Kitchen Tune-Up’s concepts and values, and then attend an eight-day classroom and practical training course in the head office in Aberdeen, South Dakota. For the 12 weeks following this course, you will work one-to-one with your chosen mentor, take part in webinars, and complete weekly training modules.
Kitchen Tune-Up Franchise Financial Requirements
Compared to many other franchise opportunities, Kitchen Tune-Ups requirements and financial requirements are quite accessible. You need a net-worth of $350,000 to qualify, and $50,000 of this must be liquid (e.g. cash, stocks, mutual funds and ETFs). As far as we know, the $175,000 net worth requirement excludes your primary residence. The liquid capital requirement is in line with other kitchen refurbishment franchises, and significantly lower than capex intensive franchises like McDonald’s .
The minimum investment required is $64,400, which is broadly in line with other refurbishment franchises. This is of course much lower than that required of traditional, capex heavy franchises like McDonald’s and KFC.
The maximum investment is $105,150, which again is broadly in line with Kitchen Tune-Up’s peers
How Much is the Kitchen Tune-Up Franchise Fee?
Like any franchise, Kitchen Tune-Up has a variety of franchise options and fees, including:
- As the name implies, this is the option for Regular Joe. Total fees for the 1st territory amount to $72,000, including a $25,000 Franchise Fee, $35,000 Territory Fee, and $12,000 for Training
- If you buy a 2nd franchise at the same time as the 1st franchise, the total fees amount to $67,000 ($25,000 Franchise Fee, $30,000 Territory Fee and $12,000 Training and Startup Package). Note that under the Standard Territory option, the 2nd franchise can be for a non-contiguous territory. If you would prefer to service one large contiguous territory, you can buy the two-unit option available as part of the Executive Franchise below (and at a lower per-unit cost we should add)
- A non-refundable deposit of $15,000 per unit is required, and your territory includes up to 41,000 Single Family Demographically Adjusted Owner-Occupied Households with contiguous Zip Codes. We love the specificity of this clause, and other franchisors would do well to learn from Kitchen Tune-Up’s transparency and clarity
- This option is like the Standard Territory option but includes a larger contiguous territory. The price per unit is lower, but this discount comes under the condition that franchisees buy either two or three units adjacent to eachother – single unit purchases are not available
- The two-unit option has an initial fee of $122,000, comprising $50,000 Franchise Fee, $60,000 Territory Fee, and $12,000 Training and Startup Package. A non-refundable deposit of $25,000 is due to reserve the territory and is applied to the initial investment. Under the Executive Franchise option, the reserved territory includes up to 82,000 Single Family Demographically Adjusted Owner-Occupied Households
- The three-unit option costs $172,000 ($75,000 Franchise Fee, $85,000 Territory Fee, and $12,000 Training and Startup Package), of which $25,000 is a non-refundable deposit. The territory included with this option extends to 123,000 Single Family Demographically Adjusted Owner-Occupied Households
- This option is for prospective franchisees interested in developing and operating three or more territories that are not contiguous to each other
- Franchisees can purchase between three and ten units inclusive. The three-unit option costs $200,000, and the ten-unit option costs $545,000
- You can think of this option like a larger version of the “Standard Territory” option
Unusually, Kitchen Tune-Up offers financing as part of the deal. Instead of paying the Franchise and Territory fees up front, franchisees can request financing from Kitchen Tune-Up. Details of the financing plan are presented in Item 10 of the Franchise Disclosure Document.
Like most franchisors, Kitchen Tune-Up offers a discount of $7,500 to veterans honorably discharged and first responders.
These initial fees are significantly higher than Kitchen Tune-Up’s peer group, and the wider franchise industry.
What Ongoing Fees Are There?
There are two main ongoing fees you must pay Kitchen Tune-Up each month. These are:
- A royalty fee ranging between 7% and 2% depending on your monthly sales, e.g. monthly revenue from $1-$24,999 incurs a royalty fee of 7%, and for each additional $20,000 of monthly revenue, the royalty fee drops 0.5%.
- A 1% National Advertising Fund fee (note that you are also recommended to spend at least $2,500 per month, or 5% to 10% of your Gross Revenue, on local marketing.
Kitchen Tune-Up Average Franchise Revenue
Kitchen Tune-Up franchise gross sales varies depending on whether they are considered a “Full-Time Franchise” (completing at least 40 jobs), or a “Part-Time Franchise” (completing less than 40 jobs).
In 2018, the average gross sales for “Full-Time Franchises” was $728,086, and the average for “Part-Time Franchises” was $293,848.
Importantly however, these average revenue numbers have increased nicely since the depths of the financial crisis eight years ago. Back in 2010, average revenue for Full-Time franchises was $471,372, and $242,524 for Part-Time Franchises – Compound Average Growth is therefore 5.6% and 2.4% respectively.
Kitchen Tune-Up Average Franchise Profit
Kitchen Tune-Up makes it a little more difficult to figure out average profit, as they only break it down by the average order (aka “ticket”) type. The average across all tickets was 55% in 2018, suggesting that average Full Time Franchises are generating ~$400k of gross profit each year. Important caveat – this will vary significantly from franchise to franchise.
Unfortunately, Kitchen Tune-Up doesn’t provide any further information on expenses below gross profit. Overheads such as staff wages, storage costs, and transportation costs, and those chunky royalties are likely to be excluded from the reported gross profit margins and when you factor these other expenses in, average owner income is likely to be well below $400k. Based on our experience in the sector, we estimate that the excluded expenses will be as high as 25% of revenue, and our overall estimate for average Operating Profit Margins is therefore 20% of revenue. This suggests franchisee Kitchen Tune-Up EBITDA (earnings before Interest, Tax, Depreciation, and Amortization) is ~$140k.
As part of your research, you should definitely review Item 19 for more information on illustrative earnings, and reach out to some of the franchisees listed in Item 20 of the Franchise Disclosure Document to understand potential income better. You should also review the franchise disclosure documents for Kitchen Solvers and ShelfGenie because these are the closest substitutes to Kitchen Tune-Up in our opinion.
To calculate the Return on Investment, and Payback Period, we first need to know the initial investment cost. Taking the midpoint of the maximum and minimum, we estimate that the average initial investment cost is ~$85k. This suggests that the payback period is less than a year, and the Return on Investment is over 100%! The usual caveats apply – in particular, you will need to be on site delivering the renovation projects to generate this income – this is not “Passive Income”.
What Support Does Kitchen Tune-Up Offer Their Franchisees?
Kitchen Tune-Up’s offers a comprehensive start-up package which includes a protected territory, training, business coaching, clothing, sales materials, and a personal mentor, so, in the words of Capital Kings, “you’ll never be alone”. Kitchen Tune-Up stays in regular contact with their franchisees and host an annual 3-day National Reunion which we’ve heard can be pretty wild. They were ranked among the 101 Best of the Best Franchises by Entrepreneur Magazine in 2015 because of their fantastic franchise support model.
Kitchen Tune-Up Franchise Owners List
If you want to talk to local franchise owners in your area, you can find a detailed list of Kitchen Tune-Up franchise owners here: Kitchen Tune-Up Franchise Owners List. You can find out what territories are currently available or sold by clicking here.
Kitchen Tune-Up Franchise Disclosure Document
If you’re serious about becoming a Kitchen Tune-Up franchisee it’s a good idea to read through the Kitchen Tune-Up Franchise Disclosure Document, which you can find here.
Still interested? You can find out more by contacting Kitchen Tune-Up directly. Click here to find out more about acquiring a Kitchen Tune-Up franchise. Make sure you ask for the latest and greatest Franchise Disclosure Documents – the versions listed on Franchimp.com are only the ones we have found trawling through public records so they may be out of date or incorrect.