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NEW YORK — The HVAC service franchises market has seen improved performance over the last two years, and can expect industry growth to 2019, according to a report from IBISWorld.
As IBISWorld notes, after the housing bubble burst, both nonresidential and residential construction plummeted, pushing industry revenue down from 2009 to 2010. Furthermore, demand for maintenance and upgrades waned as well, due to declining corporate profit and per capita disposable income. Since then, demand for HVAC services has quickly picked up as construction expenditures recovered. In 2014, industry revenue is expected to rise as demand fully recovers. Overall, IBISWorld projects annual growth of 3.6 percent from 2009 to 2014, though growth is partly due to the recovery from recession lows.
According to David Yang, IBISWorld industry analyst, “The strong performance from 2012 to 2014 is not anticipated to fully bring the HVAC service franchises industry to its pre-recessionary levels.” Revenue is expected to be equal to pre-recessionary levels in 2014, but profit is estimated to remain below.
The industry’s franchise model allows franchisees to use the franchisor’s brand name to compete better against other HVAC service companies. In return, aspiring franchisees must apply to be part of the franchise and pay royalty fees up front and annually. This model often benefits the franchisees because it allows for training and branding beyond what an individual service company can do.
The five years to 2019 promise to be more fruitful for HVAC service companies. “Construction activity is forecast to increase in both residential and nonresidential markets,” said Yang. Corporate profit and per capita disposable income will also enable businesses and homeowners to upgrade their existing HVAC systems. The federal and state governments will continue to incentivize the move toward more energy-efficient systems via tax credits, supporting industry growth.
For more information, see IBISWorld’s HVAC Service Franchises in the US report.
Publication date: 8/25/2014