1) You are basically a branch manager of Neighborly. You must comply with all the dictates and regulations from Corporate. And for this "honor" YOU get to pay all the bills! Workers Comp Insurance, Payroll taxes, Fuel bills, Accounting fees, General Liability Insurance, Advertising etc. It is not a partnership at all. One side (you) takes all the risks. The other side takes its share of the rewards before you - without any of the downside. Plus everything that you have acquired through hard work and advertising (customers etc) legally belongs to Neighborly. They literally OWN everything that you spend your money on!!! 2) Neighborly does virtually nothing for the 7% of gross sales plus incidental "marketing and technology" fees. It will approach 10% of gross sales. If you spend money to do a job and then include that in the price of the job Neighborly gets that part too even though it is a Cost of Goods sold and not revenue!!! Say you are doing a driveway sealing job and you spend $1,000 on sealer and the actual job is $1,000 for the labor and you charge the customer $2000 ($1,000 for the labor plus $1,000 for the materials) - you owe 7% on the total so Neighborly gets $140 even though you only "earned" $1,000. Talk about a margin killer. More on that below. 3) If you decide to shut your doors before the 10 year agreement is complete they will sue you for the "unrealized" fees that they would have received. 4) Many former owners have been bankrupted by this organization. 5) I have had to dip into personal savings and my 401K at times to keep my company afloat!!! My retirement savings went to this company!!! 6) They are always hounding owners to spend more and more money on advertising (even if it doesn't work!) And they will fine you if you didn't spend enough. As stated before it is a very asymmetrical arrangement. You spend yourself to the poorhouse on advertising and they reap any rewards without any of the downside. They literally have ZERO skin in the game. 6) If you decide to sell or close your Neighborly franchise you will be legally prohibited from starting your own similar business for 2 years within your "territory" plus a 25 mile radius around your territory. 7) A Senior Manager of Neighborly actually told me that it was in the Neighborly's best interest to not facilitate a sale so that the territory would go vacant and then resell the "territory" to another party in order to maximize the income to Neighborly. That is the mindset of Neighborly. Take the initial franchise fee and all the royalties for 10 years (or however long the owner can last). Sue to get the remainder. Rinse and repeat. PS. They are very litigious. They have deep pockets and are nested within corporate shell after corporate shell after corporate shell. The ultimate owners are KKR - a huge private equity firm. Google them.
