At Your Service! Why service brands are a good bet in 2022
PuroClean Disaster Restoration franchisee Dawn Erickson never thought she would be passionate about water extraction. “I’ve never loved any job more in my life,” she says.
Erickson and her husband and co-owner Mark Erickson have been helping residential and commercial businesses in the Charleston, South Carolina area meet the challenges of fire, water, and mold damage since 2009. The couple’s multi-franchise operation ranks among PuroClean’s top 10% systemwide.
In a world where customers increasingly turn to companies for expertise, improvement, and solutions to save time, money, or generally make life easier, service-based brands are the job-well-done sector of franchising. And business is booming.
Demand for these services and the drive to lend a helping hand have entrepreneurs embracing the service-based franchise path, which often comes with a lower cost of entry, lower overhead, and more flexible operating hours than location-based and product-dependent retailers or restaurants.
Business services contributed $121 billion of franchising’s total 2020 economic output of $670 billion, second only to quick-service restaurants at $241 billion, according to Statista.
So how do you know if a service-based franchise is right for you? Seasoned franchise owners say it starts with finding a service that fits your skill set and goals for the business you want to build.
Erickson was looking for a business that would match her communications and real estate background and her husband’s construction and general contracting know-how when a franchise broker suggested disaster restoration. At the time, Erickson had never heard of that. But the more she learned, the more she liked the idea of buying into a needs-based business that didn’t rely on the state of the economy to drive results. Disaster restoration is paid largely through insurance claims, which means far less waiting to recover out-of-pocket expenses.
“You have to dry your house if it’s soaking wet, and you have to clean up if you’ve had a fire,” she says. “So it felt like a safer bet that could withstand anything going on with the economy, and it was an industry that people needed.”
Technology-fueled advancements are continually expanding the definition of a highly responsive, service-oriented, and increasingly mobile business model. Today there is a dizzying array of service-oriented businesses, ranging from automotive, residential, commercial repair, pest control, and cleaning services to eyelash extensions, fitness, virtual assistants, pet grooming, and support for seniors.
For entrepreneurs, it means more opportunity than ever before to be their own boss.
From pilot to service brand franchisee
After a 15-year aviation career and more than 200 days away from his wife and kids each year, Mike Mulheran was ready for a new adventure. In 2015, he traded his life as a pilot for jet-setting CEOs and celebrities for a home-based franchise business and became a franchisee of Creative Colors International, a leather and vinyl repair brand. When performing his due diligence, Mulheran, a father of four, was sufficiently impressed by the family-run feel of the brand and the profit potential to open a location in Minneapolis.
“One of the attractive draws for me was knowing that I didn’t have to have brick-and-mortar,” he says. “When we say we are 100% mobile, nine times out of 10 people are just thrilled.”
Navigating a new career as a service-based franchise owner didn’t come without some growing pains as he learned the business. Expansion in the service-based sector is generally determined by geography, allowing franchisees to scale for greater reach by adding new territories in nearby cities or MSAs.
For Mulheran, that resulted in him acquiring two more territories in the Twin Cities area and developing a greater understanding of his customer base, which he estimates as roughly 90% B2B and is located mainly in rural, industrial areas, versus initially catering to the “more affluent areas that weren’t as good as I thought they were going to be.”
If you can afford it and are all in on a brand, Mulheran recommends franchisees start with multiple territories. “I quickly learned that when I was doing my due diligence I didn’t ask all the right questions to potential clients because I didn’t fully understand the business,” he says. “What I thought was actually the best territory ended up being my second territory. And my best territory was the one that I didn’t make the initial agreement on. Starting with a larger area gives you a lot more room to expand and figure out what markets are going to work best for you.”
For the Ericksons, the purchase of a second franchise location in the Charleston area 2 years ago was a great move, allowing them to grow in an affordable, economical way that made sense for their business model. “You have to work hard on homing in and fine-tuning the business, learning from others, and growing your business and growing it wisely,” says Erickson. “We’ve been blessed that we’ve had a great support staff on the corporate level at PuroClean from the start.”
Multiple service brands
Multi-brand service franchisee Bryan Frnka will not do a deal unless he can control the market where he operates.
“I realize that a lot of people can’t do that if they’re looking for a one-off franchise, but we prefer to manage and control the brand reputation in our market,” he says. “It’s hard to maintain consistency and a high-level brand reputation when you have nine locations in a market and nine different franchisees.”
Frnka likes to get in on the ground floor of service-oriented concepts. One of the first franchisees of Amazing Lash Studio, Frnka now owns 11 locations of the brand in Texas, Nevada, and Colorado and is a multi-unit franchisee with Scissors & Scotch. His portfolio also includes Palm Beach Tan. Most recently, he invested in Body20, an emerging boutique fitness concept and plans to open five locations in San Antonio, where the bulk of his management infrastructure is based.
Frnka looks for brands with slow, stable growth versus rapid expansion, and for franchisors that have operational experience and understand the mechanics of the business they are selling.
“When you are in the discovery day, they are interviewing you as a franchisee, and we are kind of interviewing them,” he says. “Quite frankly, if we don’t like the people we’re doing business with and don’t think they have a grasp of the concept from an operational standpoint, we won’t invest.”
Do your diligence
Knowledge is power for any industry and especially critical for owners of service brands, who rely on specialized skills, training, and customer service for success. Even semi-absentee owners would be wise to learn the business and know how to do each job required, says Erickson, who holds water, mold, fire, and trauma certifications for the cleaning and restoration industry.
“A lot of people are taking a big leap of faith, so doing the research is important,” she advises. “Make sure you have good support systems in place and talk to people who have done what it is you want to do. Understand that you are definitely going to have to work hard, and that it’s also extremely important to be ethical, caring, knowledgeable, professional, and excel at customer service. You could be knowledgeable on how to fix their place, but if you don’t care about them, and you don’t treat them right, you’re not going to make it in this industry.”
He Sells Restaurants
For restaurant veteran Justin Scotto, the transition from running restaurants to helping others buy and sell them has allowed him to leverage his 20 years of industry knowledge as a franchise owner.
Scotto was in the middle of selling his portfolio of a dozen Firehouse Subs that he developed and operated from the ground up when he came across We Sell Restaurants.
“I enjoyed my time as a restaurant owner, but at my chapter in life I was looking for a franchise that would allow me to spend even more time with my wife and kids, be successful, and have a great schedule that works for my family,” he says. “With We Sell Restaurants, the setup was perfect.”
Scotto, now a certified restaurant broker and owner of six territories across North and South Carolina, counts on his brand’s ongoing support and new tools to keep his business growing. He shares four skill sets he believes are valuable for success when owning a service-based brand.
1. Leadership. Owners should show leadership within the company and franchise system and contribute to making the brand better.
2. Personality-plus. An outgoing personality is a must if you are a customer-facing franchise owner of a service-based brand. “No one likes to talk to a dud,” he says. “I love talking and meeting with people in the restaurant industry, and personality helps to connect.”
3. Professionalism. It’s the brand name on the logo, not yours. It is essential to act professionally and represent the brand name to the fullest, not only with clients but at all times.
4. Passion. Be passionate and excited to be part of the brand you have invested in as a franchisee. If you don’t have the passion for the job, it will quickly show with your customers.
“Do your homework and don’t jump into a service brand until you are 100% sure it is the right one for you,” he says. “Stick to the values that are important to you for success. If the brand is not close to that, then it might not be the right one for you.”
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Multi-Unit Franchisee Magazine: Issue 1, 2022