Home performance contracting: What an opportunity! Jobs are typically small enough — in the $8,000 to $12,000 range — that just about any homeowner can afford them, especially with rebates and tax credits. The market is huge — $30 billion by one expert estimate — which makes perfect sense when you consider all those tens of millions of houses with poor air quality, mounting utility bills, inadequate insulation, ice damming, uneven distribution of heat or cooling, and on and on.
Of course what’s required is that you have to know how all the systems in the house work, both individually and together. You also have to know how to assess whether or not those systems are working properly. You have to be prepared to suggest solutions, a scope of work, and a price, then produce the job in a way that makes a profit.
If that suddenly sounds complicated, organizations exist that might help shortcut the process. Some are franchises, some not. Two deal strictly in energy audits and supply the training and equipment needed to provide that service to homeowners. One franchises the entire process, from audits to home performance contracting. One offers a Web-based system for managing all aspects of home performance contracting so that you can generate a report and scope of work from diagnostics performed on site, making it easier to sell and produce the job. All anticipate growth in the immediate future, especially if and when the Home Star energy rebate program, the so-called “cash for caulkers” bill, passes Congress.
Entering into some type of relationship with a service provider, such as buying a franchise for instance, can save contractors looking to enter the market the time and trouble of figuring out everything on their own. Otherwise, how will you know what type of services to offer, what equipment to use, and how to use that equipment to actually diagnose conditions to produce a report or a scope of work?
Two of these companies — Energy Doctors and Pro Energy Consultants — deal only in energy auditing, not home performance contracting. They test in, and will return to test out, if the client opts to have the work performed. But they won’t be the ones to do that work. GreenHomes America, a long-running home performance company that set out to franchise itself two years ago, offers homeowners both assessment and general contracting for improvements. Recurve, a home performance contractor in California, offers Web-based management and partner relationships with companies in other regions.
The ability to actually contract for the work is a key difference, especially when it comes to generating revenue. A trained auditor can do two maybe three energy audits a day, at anywhere from $250 to $900 a pop. He tests the house, issues a report, and (sometimes) refers appropriate contractors to the client, who can go ahead with the improvements or not. “We are a third-party customer advocate,” says Pro Energy Consultants co-founder Derek Sola. “We’re there to solve the problem without the motivation of needing to sell the [homeowner] something they may or may not need.”
According to the companies that both audit and retrofit — GreenHomes America and Recurve — there are two problems with audit-only operations. The first is that contractors can’t make enough money from audits to be profitable. The second is that clients often need to be sold on the need for improvements, otherwise they don’t act. “They don’t want us to give them a list of companies,” says Matt Golden, founder and president of Recurve. “When you do that, they don’t get the work done.”
That fundamental distinction aside, here’s a quick synopsis of the players offering services in energy auditing or home performance contracting.
Energy Doctors. The Spokane–based organization, which declares itself “America’s largest energy audit company,” makes available its energy auditing services but is not, strictly speaking, a franchise. President Chris Permann calls it “a business opportunity.”
Founded in 2002 by software developer Permann, Energy Doctors has 23 affiliates doing business in 28 states. That includes Permann’s Spokane operation. He estimates a total investment cost of $59,500, which includes all software for analyzing home performance data, as well as equipment including an infrared camera (but not a blower door fan), three days of on-site training in Spokane that takes novices through equipment use and shows them how to conduct an audit, followed by 32 one-hour online sessions that lead to initial certification as a thermographer. Certification at that level is followed by another 32-hour course so that auditors can sit for their Level 2 certification.
Energy Doctors affiliates are also sent through an eight-hour Building Performance Institute/ Residential Energy Services Network training toward BPI certification. “I want them to do not only energy auditing but electro-mechanic and other predictive maintenance,” Permann says, explaining that industrial is the more profitable end of the business and makes for large repeat customers. Homeowners generally have an audit done once; factories or other industrial facilities need annual checks.
Unlike chief rival Pro Energy Consultants, Energy Doctors, not being a franchise, has no franchise fee for startups and charges affiliates $100 per month to be listed on the national website. “Originally I was looking for people with a smattering of construction knowledge,” Permann says. “A remodeler or an engineer. But now, with the amount of training we provide, that isn’t necessary.”
Energy Doctors bills at a rate of $150 per hour. A typical audit costs about $300, Permann says. Training and assistance in marketing are a key part of the Energy Doctors package.
Pro Energy Consultants. Like Energy Doctors, Pro Energy Consultants is strictly involved in energy audits rather than the contracting of home improvements. Founded in 2008, the organization currently numbers 54 franchisees, owners say. Co-founder Derek Sola, whose prior career was in the franchising industry, describes the operation as a “full-fledged franchising system.” He says of franchisees that “we are not just teaching them building science, but how to market correctly, drive revenue, and be a business owner.” Total investment for startup franchisees is $45,000, with $29,900 of that being the cost of the franchise itself. Monthly royalty fees are $800, but will be discounted to $500 during the first two years. Equipment supplied as part of that startup investment includes an infrared camera, a blower door fan, and proprietary software.
New franchisees also spend two to three weeks training in Cleveland with co-owner Mark Cannella, whose energy audit business, founded in 1994, provided the template for Pro Energy Consultants. Cannella gives new franchisees on-site experience in conducting energy audits. ( Read an interview with him.)
“Our focus is the residential market,” Sola says. Cost of a Pro Energy Consultants audit to homeowners varies from $350 up to $900. After preparing a report based on test-in, auditors refer clients to a network of reputable HVAC, insulation, plumbing, and gutter contractors. If a job results, Pro Energy Consultants will return to test out. The contractors, in turn, refer their clients to Pro Energy Consultants, in a cross-marketing arrangement that helps drive new business.