When construction activity declined during the recession, demand for HVAC services fell.
New York, NY (PRWEB) July 29, 2014
The Heating, Ventilation and Air Conditioning (HVAC) Service Franchises industry is highly dependent on activity in the downstream construction sector. Many HVAC systems are installed at the time of building. After the bursting of the housing bubble, the value of 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 expenditure recovered. In 2014, industry revenue is expected to rise as demand fully recovers. Overall, IBISWorld expects industry revenue to increase at an average per year in the five years to 2014, though growth is partly due to the recovery from recession lows.
According to IBISWorld Industry Analyst David Yang, “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 operators. In return, aspiring franchisees must apply to be part of a 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 operator can do.
The five years to 2019 promise to be more fruitful for HVAC service operators. “Construction activity is forecast to increase in both residential and nonresidential markets,” says Yang. Corporate profit and per capita disposable income will also enable businesses and homeowners to upgrade their existing HVAC systems. Federal and state governments will continue to incentivize the move toward more energy-efficient systems via tax credits, supporting industry growth. IBISWorld anticipates revenue to rise at an average annual rate over the next five years. Profit is also projected to grow by 2019.
For more information, visit IBISWorld’s HVAC Service Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
This industry operates franchised businesses that provide heating, ventilation, and air-conditioning services to both residential and commercial customers. Reports in our Business Franchise collection focus solely on the operation of franchised outlets and exclude non-franchise data. They show the total number of franchise outlets, total franchise revenue, and the average profit margin earned by franchisees. Our reports also highlight the largest franchisors by market share.
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