Building a Franchise Network Growth Strategy

At ServiceBridge, we’d had the opportunity to work with franchise networks of all sizes. Some of them, such as our friends at Critter Control; are established nationwide networks – their territories are mostly filled out, occasionally there are new locations or contracted ones, but they find themselves in control of a relatively stable network.

Other franchise networks find themselves in much more volatile times – for better or worse. For example, Mosquito Joe – ranked #26 on the Entrepreneur Franchise 500 list – has been in existence for less than a decade. From 2015 to 2017, they’ve grown from 14 to 225 franchisees – an astounding 1,026.7% growth rate; a growth rate that only the hottest technology startups of the world might be able to compete with.

Other franchise networks find themselves less fortunate. BrickKicker Home Inspection is a prime example. In 2007, BrickKicker had about 200 franchisees in the United States. Just ten years later, they sit at 40 locations nationwide. Many of the franchise networks that have shrunk in the past ten years saw their business severely impacted by the 2008 Market Crash, and have yet to see recovery.

AndyOnCall is another franchise network that has seen a significant contraction in the past decade – from 55 units in 2007, to 35 units today.

In looking at each of these franchise networks – what can we learn about creating a growing network; and avoiding a contracting franchise network?

Fighting Market Forces

Unfortunately, sometimes the factors behind contraction are beyond the control of the franchise. However, there are actions that can be taken to ‘weather the storm’ and keep a franchise network as healthy as possible despite external forces.

Every company in real estate services – real estate agencies, residential builders, and home inspectors – took a significant hit as the result of the 2008 market crash and resulting recession which followed. But some of these companies were able to manage the consequences of this period much better than their peers.

HouseMaster Home Inspections ranks in at #353 on Entrepreneur’s Franchise 500 list. In 2007 at the peak of the real estate market, HouseMaster had 341 franchisees nationwide. In 2017, they have 281 locations currently operating – an 18% drop, compared to an 80% drop for BrickKicker.

The two companies offer almost identical services – so why did one come out of the recession so much better than the other?

1) First to Market: HouseMaster began franchising in 1979 – a full 10 years before BrickKicker was founded, and 16 years before BrickKicker began franchising. Having such a head start, they were able to establish a network long before BrickKicker went to market. This head start gave them a better brand presence against newer entries to market and helped them establish themselves as the market leader for home inspections.

Much like planting a tree – the best time to do so is 20 years ago. The second best time is now.

2) Marketing Experience: Ken Austin, the founder of HouseMaster, used his marketing background from working at Johnson & Johnson as well as Warner-Lambert Co. to promote his newly founded home inspection. Before founding HouseMaster, Austin did not have a real estate background – but he was able to learn quickly and grow a business.

In contrast, Len Franckowiak, founder of BrickKicker; ran the Home Building Institute – a school that taught real estate pros about the different facets of home building, and ran a specialized course in the inspection of older homes. Despite having much more detailed knowledge of home inspections then Austin; HouseMaster has been much more successful.

With franchise businesses, technical skills are rarely required – as we discussed in our blog on Field Service Franchises, the focus in finding the right franchisees is often targeted on finding people with good marketing, management, and business skills. From a quick overview, this appears to be a key difference between BrickKicker and Housemaster and their very different paths in the past decade.

However, not all external forces have caused franchises to falter – some have resulted in incredibly explosive growth.

Right Place, Right Time

In the late 1990s, the first case of West Nile Virus in the United States was documented in New York City. For most US residents, mosquito-borne illness went from being something they would learn about happening on the African continent to a very real concern in their own backyards. Further cases of West Nile Virus continued to be documented.

Mosquito Joe, part of Buzz Franchise Brands, was founded in 2012 – the same year that the United States was hit by one of the worst epidemics in history as a result of West Nile Virus. 286 people died and thousands were hospitalized during this epidemic, with Texas and southern states being hit the hardest.

By 2015, Mosquito Joe had grown from 1 location to 114 locations throughout the United States.

In late 2015, a new mosquito-borne illness caused epidemics through South America – the Zika virus, which causes not only illness but significant birth defects. Starting in 2016, travel advisories were posted to several South American countries and the CDC began taking steps to deal with Zika outbreaks and infections. The Zika virus was a source of significant controversy around the 2016 Summer Olympics in Rio De Janeiro with some athletes refusing to attend due to concerns about the disease. Over 4,000 cases of Zika virus have been documented in the United States, the majority of them a result of travel to South and Central America.

Mosquito Joe added 54 new units in 2016, and another 58 in 2017 so far.

Mosquito Joe’s success isn’t solely attributable to the spread and prevalence of these mosquito-borne diseases – pest control companies have been offering mosquito services long before Mosquito Joe. Mosquito Joe’s largest competition, Mosquito Squad, has been franchising since 2005 and seen similar levels of success with 212 locations currently in operation and a less rapid, but steady and strong growth.

However, the timing could not have been better to introduce a mosquito control franchise then in 2012 during the wake of the West Nile epidemic. Demand for mosquito services was at an all-time high – and demand hasn’t seen a drop as the United States experiences warmer temperatures and longer summer seasons. Timing isn’t the only key to their success, though:

1) Proof of Concept: Mosquito Squad has been franchising in 2005, growing from 64 units in 2010 to 212 units in 2017 with a 3-year growth rate of 41%. No doubt that seeing the success and continued growth of Mosquito Squad helped to confirm Mosquito Joe’s entry into market.

If you’re planning on launching a new franchise brand, often times it helps to see how other companies are performing in the same space – it’s a key indicator of demand for services and viability of a franchise model.

2) Strong Branding: Mosquito Joe arguably has some of the best branding in the field service industry with bright green and yellow trucks; and a friendly “Make Outside Fun Again” motto. This, combined with a 100% satisfaction guarantee; provides consumers with a brand they find fun and have confidence in.

The franchise world is an incredibly crowded market, particularly in certain industries such as commercial cleaning. If you’re going to grow, you need a brand that stands apart from the crowd and offers something unique from competitors.

Service Still the Key

No matter the franchise technology used to run the business, the brand and marketing efforts, how attractive the pitch to potential franchisees – none of this matters without high quality of service. At the end of the day, you can have the best website, brand new trucks, and be in the right place at the right time – but if your service sucks, all these efforts are for nothing.

Andy OnCall has seen a contraction from 55 units to 35 units over the past decade. A quick search for “Andy OnCall complaints” doesn’t paint the company in a particularly great light: PissedConsumer has 40 complaints with 0 resolutions. Yelp! provides mostly mixed reviews of the service. Granted, there are positive reviews out there - and some locations have stellar ratings – but seeing what’s there on PissedConsumer would give reason to think twice before enlisting their services.

1) Reputation Management: Each franchisee should be paying special attention to their branch’s reviews on sites like Yelp!, Yellowpages, and HomeAdvisor; and responding to each review – both positive and negative. For negative reviews, there should be a response and an attempt to resolve. Almost every service company will have a few unhappy customers – any company, really – but 40 reviews without resolution is a red flag.

2) Documented Procedures and Standards: One of the most successful franchise networks, Rooter-Man, provides full-fledged guides on every aspect of franchise operation from personnel to repair guides. Having guidelines in place, along with field service management software to document jobs completed with forms and invoices that explain the work done to customers; can help to avoid jobs gone wrong and unhappy customers.

Final Thoughts

It’s often said that success is a combination of effort and luck – and this statement holds true for the franchising space. However, there’s an argument to be made for creating your own luck to some extent.

First-to-market matters – but it’s no guarantee of success. While part of HouseMaster’s success was being one of the first to franchise, Mosquito Squad was founded a decade before Mosquito Joe, only to be surpassed in the number of locations this year.

Skill doesn’t always matter – despite BrickKicker’s founder having deep experience with home inspections, it did not translate to sustained growth. HouseMaster was founded by someone with little real-estate experience – but his marketing and management capabilities have enabled their network to grow.

Externalities happen – the 2008 market crash and the 2012 West Nile Epidemic being prime examples. Strong franchises have found ways to weather negative externalities by positioning their company well, and taking advantage of market trends in order to see their way to success.

Standing out – many areas of franchising are crowded markets. The companies that have done the best tend to be one of the first – or bring something unique to the table. And legacy companies who do not evolve tend to die out.

Service first – above all else, a service business is about fixing the problem fairly, on the first time. Ensure your team has the tools, documents, and procedures to delight customers – from forms, to field service software to guidebooks.