Mr. Rooter Plumbing Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$122,303 - $263,800
Franchise Fee
$17,000
Total US Locations
232
Business Summary
Mr. Rooter provides residential and commercial plumbing and plumbing repair services. This includes sewer, drain, and pipe cleaning, septic tank pumping, water heater replacement, and various detection and repair services for water and gas lines. Mr. Rooter also offers grease trap pumping, portable toilet rental and maintenance, and the sale and service of private sewage, water-based heating, and water treatment systems. Additionally, it installs and services lawn sprinkler systems. The business does not offer restoration or mitigation services for premises damaged by fire, flood, or other causes.
Corporate History
The Mr. Rooter system began in 1993 with Mr. Rooter LLC, which offered franchises under the names MR. ROOTER® and AMERICA'S TROUBLE SHOOTER®. In November 2020, Mr. Rooter SPV LLC was organized as a Delaware limited liability company. In March 2021, during a securitization transaction, all existing U.S. franchise agreements and trademarks for Mr. Rooter franchised businesses were transferred to Mr. Rooter SPV LLC, making it the current franchisor. Later, in August 2021, Nest Bidco Inc., controlled by investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR), acquired the indirect parent company of Mr. Rooter, integrating it into the larger Neighborly family of brands.
Financial Overview
Investment Range
$122,303 - $263,800
Franchise Fee (Low)
$17,000
Franchise Fee (High)
$180,038
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$45,220
Equipment Costs (High)
$109,300
Working Capital
$27,500
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Mr. Rooter's direct parent, Neighborly Assetco LLC, appears financially healthy with positive net income and substantial equity, and no going concern issues. The larger parent company, Neighborly Company (the Manager), reported a significant net loss in 2023 primarily due to a $428 million goodwill impairment, but its net loss was much lower in 2024. Both entities have substantial assets and significant long-term debt obligations, exceeding $1.5 billion, arising from securitization transactions. The auditors for both entities did not raise substantial doubt about their ability to continue as a going concern. Mr. Rooter itself relies on its parent, the Manager, for continued operations and has no employees.
Financing Details
Mr. Rooter may finance a portion of the initial franchise fee for qualified franchisees. The amount financed is currently limited to less than 50% of the total obligations, but can be up to 70%, or 80% if certain requirements are met. Interest rates vary from 9% to 12% annually, depending on the franchisee's credit score (9% for 700+ score, 10% for 650-699, 11% for 600-649, 12% for under 600). The repayment terms are generally 5 to 9 years, increasing with the loan amount. Franchisees must sign a promissory note and security agreement, granting Mr. Rooter a security interest in all business assets. Payments are made monthly by automatic bank draft. Prepayment is allowed without penalty. Default on the note or franchise agreement can accelerate the entire debt. Mr. Rooter may also finance a portion of any renewal fee for qualified franchisees at 12% interest. Mr. Rooter does not guarantee franchisee obligations to third parties but may refer franchisees to third-party lenders.
Performance Metrics
Total US Locations
232
Franchised Units
229
Corporate Units
3
Avg Square Footage
4,000
Franchising Since
1993
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
Yes
Litigation Count
4
Litigation Summary
Mr. Rooter has disclosed four litigation cases. Two lawsuits involved Mr. Rooter LLC directly. In 2019, Mr. Rooter LLC sued a franchisee and an individual for violating a noncompetition covenant and misusing its trademarks. The franchisee counterclaimed, alleging breach of contract, fraud, and failure to provide adequate support and advertising. This case was settled in November 2019, with the franchisee paying Mr. Rooter $400,000. Separately, in 2015, Mr. Rooter LLC and other entities were sued by Beacon Plumbing for federal and state trademark infringement and false advertising, alleging misuse of its name in advertising and territory encroachment. This matter was settled in March 2017, with Mr. Rooter paying Beacon $125,000. Additionally, two administrative orders involved Mr. Rooter's affiliates: one in 2017 against an affiliate (predecessor to Window Genie) for failing to submit franchise advertisements, resulting in a $5,000 penalty, and another in 2010 against an affiliate (Molly Maid) for alleged violations of a consumer protection act, resulting in a $25,000 civil penalty. All disclosed litigation cases are resolved and none are recent or ongoing.
Bankruptcy History
Mr. Rooter itself has no bankruptcy history. However, its parent company, Neighborly, is controlled by investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR). Item 4 discloses five bankruptcy proceedings involving KKR portfolio companies, not Mr. Rooter directly. These include: The Collected Group LLC (a fashion brand), which filed Chapter 11 in April 2021 and emerged in May 2021; Envision Healthcare Corporation (a healthcare provider), which filed Chapter 11 in May 2023 and emerged in November 2023; Genesis Care Pty Limited (another healthcare provider), which filed Chapter 11 in June 2023 and emerged in February 2024; IPI Legacy Liquidation Co. (f/k/a Impel Pharmaceuticals Inc.), a pharmaceutical company, which filed Chapter 11 in December 2023 and emerged in April 2024; and Café Coffee Day (an Indian cafe operator), which filed an insolvency resolution in August 2024, with its appeal allowed in February 2025. All these cases involved restructuring and subsequent emergence from bankruptcy or an allowed appeal.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Mr. Rooter franchisees must not be in default of their current agreement and must have met all monetary and other significant obligations on time throughout the term. They must be in good standing, having received no more than two written notices of default, and must not have failed to meet the Minimum Performance Standards for more than two calendar years. Franchisees are required to provide written notice of their intent to renew 180 to 240 days before the current term expires. As part of the renewal process, the franchisee and their guarantors must sign a general release of claims. A renewal fee of $5,000 is also required, along with completion of any then-current training requirements. Finally, franchisees must sign Mr. Rooter's then-current form of franchise agreement, which may have terms and fees different from their original agreement.
Training & Support Program
Franchisor Assistance
Mr. Rooter provides franchisees with pre-opening assistance that includes site selection guidelines, lists of approved supplies, and the Operations Manual. It also offers initial training programs and support for the business opening. For ongoing operations, Mr. Rooter maintains the Marketing, Advertising and Promotion Fund (MAP Fund) and regularly updates lists of approved products and suppliers. Mr. Rooter conducts periodic consultation visits, offers refresher training courses, and hosts mandatory regional meetings and annual conventions (Reunions), for which franchisees may pay a fee and cover their own expenses. Additionally, Mr. Rooter offers continuous communication and support, updates the Operations Manual, and may provide pricing suggestions. Franchisees are required to participate in a Call Center Program for certain customer calls.
Initial Training Hours
123
Training Location
Offices in Waco, TX, or virtual training, with some field training at selected franchised businesses (which may also be virtual).
Ongoing Support
Mr. Rooter provides ongoing assistance to franchisees through several means. This includes maintaining the Marketing, Advertising and Promotion Fund (MAP Fund) and continually updating lists of approved supplies and vendors. Mr. Rooter conducts periodic visits to franchise locations for consultation and guidance. Franchisees are required to attend annual conventions, called "Reunion," and other designated training courses and regional meetings. These may incur fees and travel expenses for the franchisee. Mr. Rooter also offers continuous communication, support, and updates to the Operations Manual. Additionally, Mr. Rooter may suggest pricing policies, negotiate Key Account arrangements, and requires participation in a Call Center Program for handling certain customer inquiries, including rollover and after-hours calls.
Franchise Requirements
Ideal Candidate Profile
Mr. Rooter seeks qualified prospective franchisees who demonstrate credit-worthiness and have available collateral. If an individual, the franchisee must typically directly perform or supervise business operations, unless an approved manager who has completed training is in place. For corporate entities, a designated principal owner or a qualified managing principal must directly supervise the business, satisfying Mr. Rooter's experience, reputation, leadership, education, and licensing criteria. Private equity owners, in particular, are expected to have a managing principal meeting these qualifications and undergo all required training. For expansion, Mr. Rooter looks for existing franchisees (including PE Owners) who are in good standing, exceed system-wide average Gross Sales per capita, and show year-over-year growth in Gross Sales per capita.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
Supervisory
Territory Type
Limited
Territory Size Requirements
Mr. Rooter defines territories based on population. A typical territory will have a minimum population of 100,000 and generally a maximum of 300,000. Larger populations might be permitted in specific situations, such as densely populated urban areas or territories with a high percentage of impoverished residents. The fee for additional territory is $425 per 1,000 population.
Staffing Notes
Mr. Rooter requires franchisees to employ a sufficient number of competent and trained staff to ensure efficient customer service. Franchisees are solely responsible for ensuring all employees or subcontractors pass required background checks before entering a customer's home. Mr. Rooter emphasizes that franchisee employees are not considered employees of Mr. Rooter, and Mr. Rooter holds no responsibility for employment-related matters, even during training programs.