Roto-Rooter snaps up two franchises for $20.6 million

Roto-Rooter has purchased the territory and assets of two of its franchises, the company announced in April — one in San Francisco, California, and one in Fort Worth, Texas.

What’s happening: The Roto-Rooter corporate entity has been acquiring franchises to “boost productivity, market share, and profitability,” according to a statement. The two deals totaled roughly $20.6 million, with the territories covering a combined population of around 3.3 million. 

• What they’re saying: The Fort Worth franchise will be a tuck-in to the company’s corporate-owned Dallas branch, and the San Francisco location will be a tuck-in to the corporate-owned East Bay branch, “which is essentially all of the territory around San Francisco,” Michael Witzeman, CFO of Roto-Rooter parent Chemed, told Homepros.

The big picture: While Roto-Rooter once consisted entirely of franchises, the company stopped selling them about a decade ago, Witzeman said. 

• “Since we’ve owned Roto [since the early 80s], we’ve bought back 51 of the largest territories in the country, and then 71 franchises in middle-market cities like Savannah, Georgia, [and] Louisville, Kentucky,” he noted. “And we definitely are interested in acquiring, particularly some of the larger ones that we still don’t own.”
• There are about 435 franchises spread across the country. “Over 90 percent of the U.S. population has access to Roto-Rooter services,” Witzeman said.