Franchise Opportunities: Prepare to Grow
authors Patrick O'Toole | May 17, 2019
Franchise and dealership opportunities come in many forms. In fact, the breadth of business arrangements found in our annual Franchise Opportunities list—including dozens of home improvement and remodeling categories—cannot be summarized easily.
At one end of the spectrum, a true franchise opportunity often comes with a defined territory and requires an initial franchise fee, cash-on-hand requirements and an agreement to send as much as 10 percent of revenue back to the franchisor. These fees enable robust sales and marketing support, proven business systems and software, and a steady flow of leads.
At the other end of the spectrum are business opportunities where specific products are distributed directly to a contractor or entrepreneur. And for the most part, they are on their own from there. They must create awareness for the product; they must drive leads and grow their business. Support does come from the manufacturing organization in terms of product information, warranty service, etc. In exchange, they must meet certain sales minimums of products purchased.
Most franchise or dealer opportunities fit somewhere between these two extremes.
In January 2017, when Jeff Gear and his business partner, Tyler Russell, decided to pursue a concrete coatings dealership relationship with Penntek Industrial Coatings, Penntek had 30 dealers. Today, they have 150 dealers in 44 states and Canada. To Gear, a veteran home improvement entrepreneur, it was a unique opportunity.
A car racing buff, Gear had seen similar decorative concrete floor coatings in upscale garages. But when he tried to have the product installed in his garage, he simply could not find someone to do the job, so he reached out to Penntek for materials for a DIY effort.
During the ensuing job and conversations that followed, TSR Concrete Coatings was born as a Penntek dealer.
In offering concrete coatings, Gear and Russell knew firsthand the strong appeal of the product. Attached garages are the No. 1 job, but patios, driveways and basements were also good places to install the product. They were right—homeowners in their region liked the product, and soon they developed a viable niche serving small- to medium-sized metro areas in northwestern Illinois and southwest Wisconsin.
TSR has grown rapidly via heavy paid social media marketing and a snappy installation operation where most jobs are completed in one day.
To Gear, the keys to TSR’s early success are an intense focus on a single product offering and an undefined territory. “Try to not have a protected territory, that would be my advice to others ,” Gear says. “You don’t want to be limited. Granted, nobody wants someone coming into their territory, but then also you don’t want to be limited on where you can go and as you grow your business, and what would it feel like to be pigeon-holed into 50 square miles, right?
“My other advice is to get really good at doing the one thing,” he adds. “A lot of times I’ll see others coming into the business, and they are trying to have multiple dealerships with different product lines operating at the same time. One of the reasons that we have been extremely successful is that we literally just do one thing within our TSR business.”
TSR’s true secret sauce is its paid social media marketing program, which supports the company’s 13 crews who are constantly working. Gear uses paid programs on Facebook, Instagram and YouTube to drive. The techniques he’s developed allow him to target his message very effectively to likely buyers. Hundreds of messages each day are sent in from prospects wanting to know more.
Back at company headquarters in Lena, Illinois, three full-time social media staffers are trained to respond immediately. They answer questions about the product via direct messages. Often they get far enough along in the process where the prospect is moved to a member of the sales team.
“A good percentage of our buyers have signed contracts and paid deposits well before we meet them in person,” Gear explains. “Quite often meet them for the first time on the day we install the job.”
New TSR Dealerships
The TSR model of running a concrete coatings business is working. Last year Gear partnered with an investor in Waukegan, Illinois, who bought 40 percent of a TSR branch there. That branch is up and running with the investor now working full-time in the business, where growth is expected to be strong this year.
This year TSR is expanding into Bloomington, Illinois, about 250 miles southeast of Lena, where one of the company’s most trusted employees, Josh Smull, will start a branch there also as a 40 percent owner after investing $40,000.
This strategy of developing a fast-growth model and then rapidly expanding the business with local partners has been employed many times before—most notably Matt Kaulig of Leaf Filter has grown to be one of the largest contractors in the country through this strategy. And it all starts by not having a defined territory.
“That’s really the only way that we want to grow. And it doesn’t necessarily have to be a salesperson. It could be a production person. It could be a marketing person, and you know the individual that’s going for Bloomington. He actually started in marketing, then he went to production and then he’s been in sales for the last year,” Gear explains. “He’s literally worked in almost every position in our company.”
One of the keys to TSR’s dealer expansion plan is a strategy of continually reinvesting profits back into the business to enable additional purchases of trucks and equipment to put more crews on the street. The Waukegan branch is operating with three truck-trailer combinations, which cost $80,000 each. Moline is operating with 13 truck-trailers and crews. The more crews you have, the greater the capacity for turning the one- or two-day jobs.
“We’ve been reinvesting in the business week after week,” Gear says. “Our philosophy is live on what you can, but definitely put as much money and time and effort into reinvesting in your business.” QR