Expert Advice for Growing a Home Service Franchise in 2021
- January 21, 2021
- By: Vonigo
We asked the experts: What advice do you have for franchisors for growing a home service franchise in 2021?
So many entrepreneurs dream of expanding their business, and the home service industry is no exception. For many industry veterans, franchising has been a successful route to this goal — but it’s not without its pitfalls and needs to be planned and managed carefully for best results.
Here are their words of advice for growing a home service franchise.
1. Chris Abrams, Founder, Abrams Insurance Solutions
As a licensed insurance agent and investment advisor, I have unique insights into investing in a franchise. Here are my thoughts on franchising home service businesses.
- A franchise is a full-time commitment. Unlike other investments, you’ll have to commit a large bulk of your time to make sure your franchise is profitable. Before expanding, it’s critical that you consider your cash flow. You should have accurate projections of anticipated returns. These projections should include costs and take into account any debt incurred from things like loans.
- I highly recommend speaking with a financial advisor before expanding. They can help you forecast your expected return on investment and identify any hurdles that might interfere with your goals. They can also outline whether or not your franchise can support your debt service — a critical component in expansion.
- You should also review the Franchise Disclosure Document to make sure your franchise is financially viable. This document will give you key insights into what it takes to successfully expand. By speaking with fellow franchise owners, you can also glean valuable insights and make an informed decision.
2. David Cusick, Chief Strategy Officer, House Method
Before selling a home service franchise business, you need to:
- Perfect your business model. It’s the foundation of your franchise business success. You need a model that’s proven to work and easy to follow, something that you can easily pass along to others. You may have to change some processes or aspects along the way, but the idea is to make your business model better and stronger until you perfect it before you sell your next franchise.
- Establish a strong brand identity. You need customers to recognize your brand, so building your brand personality is crucial when you want to expand into more locations. Identify your unique value proposition, how you want customers to remember you, how can customers relate to you, and more. Strong brand identity will help build your credibility and authority in the market.
3. Alan Guinn, CEO and Managing Director, The Guinn Consultancy Group
My best advice for franchisees is simple.
- Be certain the franchise concept has been developed completely and represents a good investment for any franchisee.
- Be sure that the franchisors invest the funds necessary to engage excellent franchise salespeople, who pick high-quality franchisees.
- The franchisor must develop a written success plan to guide any new franchisee through the first six months of their operation, and work with the franchisee so that they follow that plan. If necessary, the franchisor should adjust the plan to achieve success.
4. Dan Bailey, President, WikiLawn
So many home service businesses start without a clear plan for financing because they think they won’t ever need it. Whether or not they end up needing to franchise, having a plan in place can only help. Our advice is always for businesses to look into the legalities of franchising in their state and get that process started. It can be costly, and those expenses need to be accounted for.
You also need to make a plan for how you’re going to staff each location. Are you going to send over a current employee to help get things running smoothly? How much time is required for training? How will you drum up business in this new area and how does that differ from your current marketing efforts?
These are all important questions for anyone who’s considering a franchise to answer.
5. Ron Holt, CEO & Founder, Two Maids & A Mop
My experience inside the residential cleaning industry is unique in that I have been both inside and outside the world of franchising. Having seen things from both angles, I can attest to the strong advantages of the power of franchising.
We obviously provide great support and training, but the true power of franchising lies in the shared entrepreneurial pursuit between the franchisor and franchisee. Both parties want the same thing and act as true business partners as a result. I’ve seen one-store operators grow into multi-unit business enterprises and watched aspiring entrepreneurs grow $1M+ businesses.
6. Tyler Swoyer, Co-Owner, SERVPRO of Southwest Dallas
SERVPRO of Southwest Dallas performs fire and water cleanup and restoration services. We are a locally owned location that’s part of a greater franchise network.
As we add additional locations, we have found that spending the time and money to get the best tools, equipment, and training for our technicians helps provide much greater service for the customer in the very opaque restoration industry. On the same note, it’s very important to have specific processes in place, so that customers get the same level of service every time.
7. Kyle Whitehead, Co-Founder, We Buy Houses in Central Texas
Home service franchises help us manage all the tasks in our lives. They offer services that save time, and are valuable for busy homeowners.
- Build a loyal customer base. As a franchise, it is imperative to provide reliable results. By providing efficient and dependable services as a franchisee, you can build a customer base. The customer base acts as a foundation for you to grow your business and get more referrals from your existing customers.
- Work with your heart. The home service franchise industry requires dedication and giving more to the community. In this industry, you are going to deal with young and aging people alike. The care you give to all the people in your community will open up more opportunities and build a base in the growing community. Working with your heart ensures you put your best foot forward, and the work you put out is the best you can ever give.
- Be open to more significant opportunities. Stay open to new opportunities from different areas, and avoid limiting yourself to a small community. Outsourcing can work miracles in getting more new business and expanding the company you are building. As a franchise, one needs to make smart moves, have a good marketing strategy and study the market you want to venture into. The franchise home service industry grows one step at a time. It requires dedication and a lot of hard work to be on top and make the much-needed difference.
8. Chris Laan, Founder, Designer Sheds
I’d advise franchise owners to ensure they’ve implemented a relationship-selling model in their area before expanding to a new one.
It’s actually fairly simple to have success in a region with your sales. A strong marketing push can bring in the customers and make you think demand necessitates a new location, but this is often temporary. Once you’re selling in multiple locations, your ability to bring on new clients becomes more diffuse. It’s essential to have those sales relationships in place to not only ensure steady business, but to find better leads on new opportunities.
A stable brand is vital for franchises. You need to be building yours alongside any expansions or sales.
11. Jim Pendergast, Senior Vice President, AltLINE
I don’t see enough franchise owners seeking expansion debt and equity financing sources that truly make sense for their franchise’s operations.
Many franchise owners, especially first-time ones, enter into business with a small frame of reference around business expansion financing options. They know most about traditional lending, based on things like your historical cash flow or owned assets, and possibly understand private equity options, given this avenue tends to have a quicker cash-infusion turnaround.
Yet something like specialty lending might make just as much sense depending on your expansion needs and timeline. For franchises in the home service niche especially, these specialty lending options can be a great choice. They offer quick capital infusion secured through things like invoices and equipment — both of which home service franchises maintain a lot of.
Because of that, something like invoice factoring or asset-based lending can be great offerings to help supplement certain expenses while you funnel other profits or long-term loans toward your expansion.
12. Schuyler “Rocky” Reidel, Managing Attorney, Reidel Law Firm
One area that can cause issues with expansion is the cost of labor in particular markets. For example, in the southwest part of the United States, labor costs for manual labor are considerably lower than the rest of the country. Franchise systems that attempt to compete against manual labor often are priced out of the market due to being continuously undercut by independent contractors or non-franchised service companies.
Another example of extreme labor costs would be a franchise system expanding to the west coast, where the minimum wage has been raised considerably recently. For a franchise system that has been doing well with labor at $7-8/hour, it will be very difficult to remain competitive and maintain healthy margins when having to double your labor costs.
This is often an afterthought for many franchise systems but is becoming a more important aspect of choosing how and when to expand into certain demographics and areas.
13. Jonathan N. Barber, Managing Attorney, Franchise.Law
Franchises in service-based industries such as movers, junk removal, and cleaning should focus on their systems, procedures, and operational support before expanding into new markets. Entering new markets and bringing on new franchisees creates the need for more systemization and more human capital to be able to support the ongoing needs of all franchisees.
Additionally, many states have licensing or permitting requirements for home-services such as junk removal. Franchisors in these industries should take the time to research these requirements in those markets they are expanding into first.
Like a franchisor in any industry, a service-based franchisor should ensure that they have sufficient capital to manage the expansion as well as enough employees to support that expansion in the influx of franchisees.
Service-based franchises are seeing some of the highest impacts of COVID-19. Because states and local municipalities are treating stay at home orders differently, franchisors should stay aware of these requirements in new markets before expanding into them. These regulations are making it more difficult for franchisees to enter people’s homes to perform services. Because of this, franchisors should evaluate their systems and operations to ensure that they are protecting their franchisees and their customers.
14. Mark Wood, CEO, National Pool Fences
In the home services industry, we deal with a lot of necessary laws, bylaws and regulations to protect the safety of our contractors, clients and the integrity of our work. When considering franchising a home services business, it is easy to overlook this and leave it to local management.
The reality is that if any work is non-compliant, it will affect the reputation of the company as a whole, so the company must be on top of local and state regulations for each franchise location and ensure processes are in place to hold your management accountable to these standards.
Our company is compliant in every state of Australia, despite each state having different regulations around pool fencing. It was smoother for us to implement standards that would apply to all locations and allow changes as needed depending on local compliance laws. This is a good approach if you are beginning to franchise, but requires intimate knowledge of the rules of wherever you are opening up the franchise.
Tools for Growing a Home Service Franchise
Time is at a premium when running a profitable home service franchise. By streamlining your operations with features like online booking and franchisor-specific reporting tools, dedicated franchise management software helps your company reach greater levels of profitability.
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