By Khadija Cochinwala, FRANdata

As of 2024, of the 523 active brands in the franchised home service industry, 50 percent belonged to the home maintenance sector, 36 percent offered home improvement and remodeling services while 14 percent serviced emergency and restoration clients.

The home services industry broadly encompasses three related sectors – home improvement (renovations, construction, interior/exterior design, painting, carpentry, etc.) home maintenance (plumbing, cleaning, electrical and handyman repairs, etc.) and home restoration (general and emergency services). Within the home remodeling segment, businesses often offer specialized services concentrating on a specific type of project such as closet or bath upgrades. Conversely, general maintenance companies tend to offer more comprehensive services allowing their personnel to complete diverse tasks that can even include small-scale remodels.

Home Services’ Consolidation Drives Cross-Selling Opportunities and Investor Interest

The diversity in the home services industry has increased opportunities for cross-selling and expansion of service offerings amongst complementing brands and enhanced its resilience to economic downturns. Since individual franchised brands in the sector are limited and fragmented, consolidations of different concepts to form platform companies have attracted increasing interest from investors. For instance, Authority Brands, which had its start in 2017, received an investment from Apax Partners in 2018, and has grown from two to 15 home service brands. The industry has subsequently attracted considerable mergers & acquisitions (M&A) activity in recent years. In 2024, not only did BELFOR Franchise Group add JUNKCO+ to its portfolio, Threshold Brands and EverSmith Brands also expanded their presence in the industry with the acquisition of Miracle Method and Prism Specialties, respectively. The ongoing consolidation/investment efforts by private equity firms are transforming the industry, creating larger, more efficient entities that benefit from economies of scale and increased market share, allowing business owners from the same platform company to provide customers with end-to-end services.

Home Services’ Trends, Challenges, and Growth Prospects in a Changing Economic Landscape

Although the industry is typically recognized to be recession proof due to the constant demand and permanent need for skilled home services, it is also closely linked and affected by the residential real estate activity and markets. During and immediately post pandemic, due to the unprecedented growth in the homeownership rates, the demand for home services grew significantly, with average unit revenues peaking in 2022, as property owners sought home improvements to increase resale values. Work from home conditions also encouraged consumer interest in the upgrade and maintenance of their living environments. But in 2023 and 2024, due to the high mortgage rates and unyielding inflation, demand for home services declined as consumer spending shifted away from non-critical home improvement services to more essential expenses.

Looking ahead in 2025, improving financial conditions such as a strong labor market, rising home equity values and lower inflation are expected to make home improvement projects more affordable for consumers. Roughly 60 percent of millennial and Gen-Z respondents, according to the 2024 Harris Williams Home Services Survey, reported being more inclined towards outsourcing home services than favoring DIY options due to less homeowner free time, DIY interest, and more discretionary income. Stabilizing interest and borrowing rates will also likely encourage recommencement of delayed/postponed residential construction projects as well as improve existing home sales (projected by National Association of Realtors to cross 4.5 million in 2025) boosting overall investments in the home improvement segment. Moreover, the increase in the frequency of natural disasters and weather-related damages owing to climate changes is likely to spur growth for preventive maintenance and emergency restoration services. Additionally, according to KPMG’s Home Services Industry Update Report, the average age of houses has continued to increase to 47 years. With an aging housing stock, there will be a long-term need for professional upkeep and repair services. Finally, more tech-savvy homeowners are prioritizing the use of energy efficient smart home technologies such as intuitive lighting, automated thermostats and remotely controlled security features driving the demand for skilled home services. According to the IFA 2025 Franchising Economic Outlook Report, the number of establishments in the commercial and residential sector (which is dominated by franchised home service businesses) is projected to grow at a year-over-year rate of 2.4 percent and exceed 85,000 units, while the total output is expected to increase at 4.9 percent to $65.2 billion.

The growth opportunities during the pandemic catalyzed an explosive influx of new brands in the franchised home services industry leading to an upward trajectory in the market. According to FRANdata, the number of new entrants in 2021 and 2022 was approximately 55+ and 60+, respectively, compared to an average of 38 new brands entering the industry annually between 2015 and 2020. The intense competition in the industry not only pressures profit margins but also heightens concerns about labor costs and the availability of qualified technicians, as many companies compete for a limited talent pool. With the older workforce retiring, a declining interest in trade careers continues to limit younger replacements, further worsening the skilled labor shortage. To counter these challenges, franchisors are offering competitive pay, benefits and flexible work hours as well as apprenticeship programs to ensure a well-trained workforce. Additionally, franchisors have also increasingly leveraged AI and digital resources to address labor challenges and enhance customer management with effective scheduling tools. For instance, in 2024, Authority Brands partnered with ServiceTitan, a leading software platform that aims to power businesses and franchisee networks with the necessary tools to enable efficient data analytics, connect consumers with service providers and maximize business profitability.

Going forward, home service franchises that are incorporating the rising tech-integration and digitization of service offerings are poised to uniquely position themselves in a competitive market while simultaneously catering to evolving consumer preferences.

Khadija Cochinwala is a research analyst at FRANdata. She is part of a team of analysts who measure, track, and analyze franchisor performance. Khadija is committed to producing quality franchise insights that enable strategic decision making and propelling business growth. She graduated with a major in Communications and enjoys gardening and visiting exotic destinations around the world whenever she isn’t researching data. For more information about IFA supplier member FRANdata, please visit franchise.org/suppliers/frandata.