James Young's unexpected life in franchising
Mistakes are a fact of life. It is the response to error that counts.
-Nikki Giovanni, poet
If it's true that you learn from your mistakes, James Young is wise beyond his years. Celebrating his third anniversary with Spring-Green Lawn Care and approaching his first as its president, Young, 34, is hoping the steep angle of his learning curve is finally leveling off.
It took six interviews with Tom Hofer, CEO of Spring-Green, before Young was hired to step into the leadership role. "That might be a record," says Young, who joined the company in April 2004.
"We always joke about who took the biggest risk in signing up. I always say I did: he could have fired me in a year and said, â€˜Good luck.' He says, â€˜No way, I did. I gave a 31-year-old a lot more responsibility than I was originally thinking I was going to.'"
Three years later, both are reaping the rewards. When Young began, revenues were just over $20 million. Spring-Green finished 2006 with more than $26 million in sales, is on track to exceed $30 million this year, and is targeting $39 million in 2009. The brand currently has 78 franchises open, some with multiple units, for a total of 130 territories, plus 5 company-owned locations.
Young brought a retailer's sensibility to the company, turning the focus more on the customer and introducing several successful programs. "Part of the attraction for me coming here was that they had 27 years of systems and process. What we needed to do was exploit the positives and be much more aggressive in our marketing efforts," he says. Three years later, the results speak for themselves.
He's riding high now, but it wasn't always so.
Act I: Welcome to franchising
Young was working in marketing and advertising in Buffalo, N.Y., when he got a call from his brother, Dave, in April 1998: their mother was diagnosed with breast cancer and the family needed his help. Dave, five years his elder, had a plan for him: in addition to helping the family, join him in a business venture.
The business was Verlo Mattress Factory Stores, founded in 1958 and franchising since 1981, selling its "Craftsman-Direct, made-just-for-you" mattresses. Dave, today Verlo's CEO, asked his younger brother to help him expand the brand from a Midwestern regional to a national retailer.
Young was able to remain in Buffalo and commute, seeing his mother, who died that same year in September, and then spending time caring for his father afterward, visiting for weeks at a time. He also was busy learning franchising.
When he started at Verlo, Young knew nothing about franchising, but went to school on the job-as well as in school, through courses such as the Franchise Mini MBA, "and any course I could from Bob Gappa. I was a sponge for that," says Young, who eventually earned his CFE.
A couple of years later, Memorial Day weekend 2000, Young was married. Soon afterward, Verlo had a new plan that required his presence in Wisconsin, and on Labor Day, he and his wife relocated. The plan? Raise venture capital and grow the company faster.
His brother Dave, who had started at Verlo building beds and owning a store, took on the role of CEO, hired a president from the mattress industry who also had a venture capital background, and Young became vice president of franchising. "I could have sold franchises from Buffalo," says Young. "I moved to Wisconsin to help manage the franchisee-franchisor relationship, and ultimately run the franchising business."
It seemed like the perfect scenario to both brothers, but their timing couldn't have been worse. "Basically, it was a terrible time to recruit venture capital," says Young. Dot.com had gone from boom to bomb, and investors were still licking their wounds. After a trying year, a lot of stress, and the departure of the new president, it was clear their new plan wasn't going to work.
"We decided that being brothers was probably more important than us being in business together. I think we both felt good about the run we had, taking the company from $20 million to $50 million," says Young. "It was time for me to go out and look for an entrepreneurial opportunity of my own."
Act II: Franchise exec crash course
He found a Canadian company looking to franchise in the U.S.: telecommunications consultant Schooley Mitchell. The brand's value proposition was simple: at no cost to a business, a consultant would review their telecom bills and show them how to save money. Payment was a percentage of the savings for the next two years.
It was the right time, the right model, and the right place, says Young. The telecom industry was in turmoil; displaced telecom executives were seeking new opportunities nationwide; and the need was there, as businesses small and large wrestled with new technologies and the fallout of deregulation.
Fueled by the talent and experience of its franchisees, he says, the U.S. operation grew rapidly to about 120 franchisees and 17 area developers by late 2003. Then the bottom fell out: the Canadian parent went bankrupt. "Unfortunately, the franchisor was not funded correctly," says Young, who still thinks ("on a good day") that it was a great idea.
"I was left holding the bag, if you will, or at least in some part responsible for the U.S. failure," he says. "It was an interesting time for a very young person to be dealing with a lot of pressures. The 15 months prior were so fast and furious."
Because the Canadian and U.S. companies were separate, Young was the point man in the U.S. "When it fell apart, the U.S. franchisees looked to me and said, â€˜Well what are we going to do, James? Is there anything we can do to salvage this?'"
Now, with a new infant and a 2-year-old at home, Young says he was asking himself some questions too, like "Where am I now, and what does the world really mean?"
It also was personal for him: "Of the 120 franchises we rolled out, I was involved a high percentage of those transactions at some level. Either I was supporting the AD to get the deal closed, or I was closing the deal."
Making matters worse, Young shared the U.S. office with four franchisees. "So can you imagine? A lot of life experience there in a short period of time," he says, laughing (now). "It certainly helped me shape who I am today, there's no doubt about that."
He spent the next three months working with the franchisees and investors, trying to save the U.S. corporation. This was a learning crucible for Young, then 31. Many of the franchisees were former white-collar professionals with sizable net worth, and expertise not only in telecom but also in business management and finance.
"It was a unique dynamic for such a young person, who didn't really understand the industry like they did-and certainly didn't have their business savvy," says Young, who nevertheless was thrust into the position of leading the initiative.
But once again, timing was everything. "As we brought investment groups in to look at it, the liabilities were too great. It was just too much risk." The money was in the pipeline, he says, but that wasn't enough to satisfy investors.
One other wound: vendor relationships. Young had continued to work with vendors from his "first life" in franchising at Verlo. After Schooley Mitchell, bridges were burned with no hope of reconciliation, he says. "That was very difficult for me, because I was still very young at the relationship part of the business."
With 20/20 hindsight, Young says he would have asked more questions at the outset, especially about the financing. "So you learn to ask those questions-if you live through it," he says, with a rueful chuckle. "At least I did."
Act III: Hope springs eternal/After the fall
Now, and licking some of his own wounds, Young turned to his remaining network in search of a new opportunity in franchising
"I had to regroup professionally and start over. I'd had a very young, aggressive career with a tremendous amount of responsibility and growth behind me, and all of a sudden the world just stopped," he says. "It wasn't like the world was just waiting for this 31-year-old to come run their company. So where was I going to go?"
Thanks to a reference, he was introduced to Tom Hofer, CEO of Spring-Green. Hofer, the company's third franchisee and CEO since 1987, is also majority owner of the privately owned franchisor. (Hofer was profiled in Area Developer 2006, Issue I.)
"He connected with my energy and my experience and said, â€˜If you can do what you think you can do, then you will have the opportunity you're looking for long-term here: to run this organization. But let's get to work and prove that we can be what we think we can be.'"
Hired in April 2004, Young was named president in June 2006. "Initially, I was probably a little bit ahead of him on those discussions when we met. But knowing what I wanted to be and where I had come from, I think he always felt that I had the potential," says Young. "I didn't want to not have the opportunity. In my mind I felt I should be leading a company by now."
Young says that having been in a family business before, it was easy for him to ask a lot of the right questions: Where are your children? Are they going to be involved? Would you like them involved? What's your succession plan? What's the long-term vision? And how can I help you achieve those goals?
"They were looking for an opportunity to revitalize-someone to come in who would bring an outside influence, but be sensitive to maintaining their culture," Young says-a culture reaching back nearly as many years as his age.
There were still many questions in 2004-at least in Hofer's mind, as Young tells it: "So here I'm coming from a company that went belly-up, a fast-talking, fast-moving young kid with a lot of aggressive aspirations for growth, but with a pretty good track record back from the Verlo days, and a lot of responsibility early in his career. But was this kid really going to fit inside his culture? Was he going to be sensitive to that, and be able to do what he says he thinks he can do?"
Slow and steady
Chief Operating Officer Barry Matthews had been with company 25 years when Young arrived. "I didn't need to sit in Barry's office and tell him the way lawn care needs to happen. I needed to be able to have confidence that Barry was going to be able to execute that and make sure that the operational support people could go out and train and teach that part of the business." He did.
Confident that operations were in competent hands, Young was able to focus primarily on two things: 1) franchise growth through new franchisees; and 2) a consumer marketing initiative. "These guys already had the system built. It was just a matter of bringing a consumer mentality inside the organization and focusing it externally, shortening the distance for consumers to have a relationship with us, and being more relevant."
On the units side, Spring-Green is looking to add about 15 to 20 new franchisees a year. "We are fairly focused on controlled growth as far as new franchise owners," says Young. "We're being pretty conservative on new franchisee growth in targeted markets to fill in and build density."
On the revenue side, however, Young says the company is being very aggressive. The lawn care industry grows at about 7 to 8 percent annually, he says. "We're tracking for greater than 14 percent growth this year, with the potential to reach 20."
The consumer marketing initiative meant the introduction of new programs, as well as shift in perspective. "We needed to talk about things that are important to the consumer-like trading the value of time for money; and finding a program that fits their needs and budget."
Under his leadership, says Young, "We've done a lot of market research on our customer profiles. We've retooled and delivered a multiple touch mail program with personalized lawn care program, and we've integrated that direct mail with our web site."
Spring-Green launched an online sales program in 2006. "We are the first company to sell a significant amount of lawn care service online," he says. "From a competitive advantage standpoint, we don't expect we'll be the only lawn care company doing this long, but it's nice to know that a small company can go out and compete with some larger companies and be ahead of that curve. That's been a very exciting part for me, to be here and help take this company to the forefront."
Young says consumers like online shopping because they feel in control of their buying decisions- whether choosing to shop at 3 a.m. or which plans and services to buy. "Seventeen percent of people who bought online added upsells," he says, compared with a usual rate of about 10 percent upsell over the phone.
Other innovations he's been involved with since arriving include:
- a centralized inbound call center that can make sales while franchisees are out working;
- a start-up support program to help new franchisees to prepare for and make the most of their first year;
- MAP (Military Assistance Program), to help veterans get a head start; and
- Flex Start, which allows franchisees to buy a franchise at any time of year, but not start operating full-time until the next January 1.
Flex Start was a response to a perennial problem. "We did not have consistent franchise sales, we had spurts based on seasonality," says Young. "If someone's calling you in March-April, they've missed the window. All the planning for spring happens the previous fall."
With Flex Start, new franchise owners are able to keep their day job and work evenings and weekends in a part-time capacity as they train during the remainder of the year they've signed up. "We've launched probably 70 percent of our new franchisees in the last three years under this program," says Young.
They also receive help preparing a marketing plan and setting up their direct mail campaign. "What's interesting is we're seeing a 20 to 25 percent increase in performance based on starting the business that way," he says.
"One of the goals here is to be a powerhouse and not just to have a lot of franchisees on the street," he says. "Building stronger relationships, density in markets, and better marketing strategies is all part of the long-term vision of building this for the next generation."
So is bringing in the next generation. Tom Hofer, turned 60 this year. His son, Ted, just a few years Young's junior, joined the company in mid-2005 and is being groomed to take over the company, a succession plan Young is very involved in developing.
In fact, says Young (who is not a shareholder), he's currently working a long-term staff and development plan to build infrastructure to support the new CEO-essentially writing himself out of the company. Looking back to his initial conversations with Tom Hofer, "I like to think of myself as helping to build his company, not necessarily building my company," he says.
Yet Young is taking an owner's pride in his accomplishments at Spring-Green, not only building a company but rebuilding his confidence in his abilities-now seasoned with a growing maturity.
"The things we've been doing and the energy that we've pumped into this business for the past several years are really starting to pay big dividends," he says. "I get extremely excited about what we've been able to do in a short period of time, to take this very strong organization into a leading industry organization."
Says Young, "I didn't reinvent lawn care; you can't do that in three years. But I think the timing was good, the leadership relationship was good, and my influences from my experiences were good. It's just meshed together."
Years with company: 3
Years in franchising: 10
Key accomplishments: Being able to revitalize a mature franchise system and brand without changing the organization's core values.
Books of note: Managing Generation Y (I am a Gen Xer). Generation Y has some big expectations and this book is very insightful. It does not however give you the shortcut guide to text messaging like I had hoped!
Favorite web sites: IFA University. It's a running joke with my peers it took me 6 years to earn my Certified Franchise Executive (CFE) status.
Where you find your business news: Google Alerts, Kiplinger.com, Inc.com
Biggest mistake: Unfortunately, I probably have not made it yet. I would rather have it behind me.
How you spend a day, typically? 5:30 a.m. get up with the dog. Office by 7 a.m. I am productive until 9 a.m., and then I begin my day of fighting and lighting fires. Around 6 p.m. I become productive again and hope to leave the office before 7 p.m. It is amazing what you can get done in a few short hours.
How long is your work week? All week unless my wife tells me to turn the PDA off.
Favorite activities: Lately, it is tracking web sales. We are the first lawn care company to launch an e-commerce initiative and to actually sell service online in a significant way. It is a big deal, and for now, a competitive advantage. While everyone sleeps I can watch orders click in. Twisted? Maybe.
Exercise: Playing with my kids. (I have a 5-year-old son, Kaden, and two daughters, Brenna, 3, and Gillian, 1Â½.) I love to play basketball, but it has been awhile-ever since one of those Gen Yers drove the lane on me and said, "Later, old man."
What do you do for fun? Enjoy my children. I love being a dad.
Best advice anyone ever gave you: "Make a franchise owner money and their trust will follow."
Best advice you ever gave: "Don't try and fool the customer, it never works."
Growth meter (how do you measure your growth)? In this business your yardstick changes by season. Right now I am very focused on measuring our growth by customer acquisition. At present this sleepy, 30-year-old franchise system is tracking for better than 14 percent growth.
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