Hear The Inside Story About What It’s Like to Grow An Emerging Franchise In The Home Improvement Space

 

If you’ve ever wondered why the home improvement category is such an attractive space, listen in. Turp Ricketts, Vice President of Franchise Development, shares the inside story about how HorsePower Brands is rapidly expanding home improvement franchises in specific niches within the massive home improvement sector. Turp dives into HorsePower’s strategy and the unique pieces of the business they’ve put together to help franchise owners with critical fundamentals such as hiring great employees, managing a call center for customer intake and bookings, in-house advertising, and more.

This is a great listen for anyone thinking about investing in a franchise in the home improvement space or any emerging franchisors that are starting to scale nationwide.

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Listen to the podcast here

 

Hear The Inside Story About What It’s Like to Grow An Emerging Franchise In The Home Improvement Space

With Turp Ricketts, VP Of Franchise Development For HorsePower Brands

I’m joined by my good friend, Turp Ricketts, who is the VP of Franchise Development for HorsePower Brands. This is one of the companies that has a ton of stuff going on. It’s hard to keep up with. We’re going to get an update from Turp. Welcome, Turp. How are you?

I’m fantastic. It’s a pleasure to be here with one of my favorite people in the world.

I appreciate that.

I appreciate you laughing my bad jokes, and you’re a good dude too. I’m astounded to be here and very excited to talk to you.

I’m glad that you’re here. I would love to kick it off by learning a little bit more and sharing your story about how you came up in this wonderful world of franchising, and how you got hooked up with the guys over at HorsePower.

I’m excited too. We’ll dig into some cool topics here. My story is I’m a mama’s boy, and I was interning and working with the PGA Tour throughout college. I got offered a job and they said, “In ops, you have to work for a ten-year contract with PGA Europe,” and it was in Dubai. I don’t know if it’s still like this. I was like, “First of all, I would die if I was living in Dubai in my early twenties. Second of all, I have to see my mom more than once a week every year.” That didn’t happen.

I stumbled into the world of franchising. One of the things that I love about franchising and that always touched me about it that I didn’t know was a truth until maybe a few years ago is seeing my dad build a small business himself and go through those ups, the downs, where you’re from a country club to, “Where are we living now, dad, and why?” and seeing that man struggle and go through it. He’s my hero.

I then started getting introduced to franchising, and I’m like, “This is the beautiful thing about franchising. It fills in the gaps of someone that can execute at the end of the day,” and that’s what I’m passionate about. I fell into it. I was in a couple of different consulting, operations, and sales director roles. I was 25 or 26 when I met the CEO of National Lender, and he said, “I want to launch a franchise vertical. I had done some franchise consulting with him. I never managed anybody and he wants to build up this billion-dollar vertical.” I’m like, ” Yes, of course. This will be easy.”

A couple of years later, we got to about $650 million as far as portfolio. For the portfolio, they weren’t planning on it to build that large that fast, and they wanted to hold off on that. I was like, “That’s not going to work for me.” I have a background in finance and was familiar with a lot of different brands too. We do QSR fitness and are also service-based.

I met Josh and Zach through that. I called the CFO of redbox+ and Monster 250 times every day. Finally, they picked up. Josh was in the room. He’s like, “Come out.” I met them and I started working with them building out these customized finance programs. A lot of Monster and redbox+ would be very familiar with an iFoam. We need to understand how you’re going to scale, do it, and look at equipment finance agreements, etc. I respected Josh and Zach. I knew that they were good people who treated their franchisees well and they were running successful franchises.

When I wanted to leave UniFi, I told my dad. I wanted to give UniFi a long time. I respected RJ Grimshaw, who’s a super great dude and well-respected in the industry. I wanted to give them that time to run off that portfolio. I go, “I’ll give you two months, and then I’m quitting.” I didn’t look and then my dad’s like, “You’re a j***. You are a complete idiot. You left this job.”

The first call I made was to Josh Skolnick. Josh goes, “Give five minutes.” I’m like, “All right.” That was a little weird, but okay. He calls me back five minutes. He goes, “Perfect.” We’re doing this and we didn’t know it was going to be HorsePower Brands, but we knew that we had Mighty Dog Roofing on the come up and what we wanted to do from being able to provide the shared services at a better margin cost with unison within these different service-based brands.

 

I said, “I’ll fly out to Omaha.” I flew out, met Josh and Zach. They were like, “Are you doing it?” I was like, “I’m moving to Omaha.” From there, I worked with Mighty Dog and built that out. Now, I’m overseeing all the brands here under the HorsePower umbrella. It’s been a fun ride and journey, and I’ve loved every second of it.

It’s been nonstop from the day that you joined. What type of business did your dad have?

He had a custom clothing business. When it was hot in the ’90s or early 2000s, he’d come to get you fitted up in some pinstripe or sharkskin type of suit. It was so powerful going through that as a little kid where a lot of the parents are buying into franchises. They’re doing their children a huge favor by seeing what it’s like to own a business and go through struggle, and have to overcome and see you on your bad day and then appreciate mom and dad more on their best day too, also the type of dedication that it takes to be a successful business owner.

When I saw my dad go through those things, he wasn’t working hard. He just didn’t know what he didn’t know in certain places. I’m very biased, I think we’re the best out there, but there are other great ones out there. If you find a great one that has that support, doesn’t make it easier or anything, but you have that support and those holes that we can plug so that you can focus on execution and revenue-generating activity at the end of the day. I feel if my dad was able to have something like that or at least a version of it, things might have turned out differently for him because the dude certainly grinded, that’s for sure.

Was it just him in the business, or did he have a team of folks?

He did start to expand out to a team where he was almost like licensing. I’m sure we could get into the difference between licensing and franchising.

Your dad’s business is more interesting.

He started to build that up, and it was cooking to the point where he had about twelve guys that were all around the country that were selling under Thomas Turpin Clothiers. He was going to open a retail shop and then leverage out with some different deals and some stuff like that. 9/11 happened the day he was supposed to close.

I’ve never gotten this in-depth with the story, but the deal that day I was supposed to close the bank goes, “No,” and then his business started going like this in maybe mid to late 2007 to 2010. People started dressing down too. The margins on those $5,000 suits are pretty sweet. The margins on any clothing are pretty sweet, but he didn’t have the capital or wherewithal to be able to pivot and lose that store. Some of his guys started dropping off, and things went downhill fairly quickly, to be very real and blunt.

That’s outside of his control. The market shifted a little bit. I would imagine that the online retailers and stuff started popping up.

Yes, like crazy. When I was in finance, I would read like IBISWorld reports and industry data reports, people that are professionals much smarter than I am and most typically creditors, I want to know that there is not a Procter & Gamble or a huge behemoth company that’s going to sit at the table with us. I still do this for all the brands that we’re going to launch.

What by that is as you build a franchise, all franchisors like to talk about their brand, and how magnificent it is. You don’t have a brand, but you have branding because a brand that’s well recognized where you have some of that market capital. You’re going to sit at the table with like Proctor & Gamble or somebody like that. In that industry, if they’re hungry and you’re having lunch and you’re all eating lunch together, they’re going to eat it up and going to look at you while they do it. You’re going to lose. What do those industries look like? Being able to do that backend and understand that for all of our new brands with HorsePower is cool to make sure that we can have that brand and do it quickly. I went off a little tangent.

When the bottom and top lines get better, the royalty revenue and income stream – our lifeblood - get better, too. Click To Tweet

No, it’s good. I was going to ask you to talk through your dad’s business and his journey a little bit and being an independent entrepreneur out there having to battle every day and figure it out, and things changed. It’s just him and his team, and he doesn’t have the other franchise owners to call to compare notes and see what they’re doing to adapt to any changes that might be happening in a business or call the franchisor and stuff like that. It’s a different journey.

You had mentioned that there are some holes that you guys at Horsepower have taken under your wing in a way to help franchise owners with a lot of the blocking and tackling, nuts and bolts, and backend stuff that goes into running a successful business number one, and then number two, scaling it if franchise owners want to scale. What are some of those holes or services that you guys provide that might not be the sexiest or the most fun thing to talk about but fundamentally provides a big lift to the franchise owners?

The biggest one is Recruitzee, where it’s a flat fee of $1,900. Then we go out to recruit, do that first round interview, set up the interviews, do that vetting, background check for GM, salesperson, an ops manager, production, technician, etc. No franchisor does that. It’s a different entity because we’re not HR or anything, but we can provide it at a low cost.

If you talk to a good recruiter, they don’t want to chat with you unless they get 10% of whatever the salary is that you’re going to pay that person. They don’t care if it doesn’t work out. It’s where we’re able to understand what we’re looking for better because they’re right there. We can talk to them and understand that. We can do it at a much better cost.

If we can be a razor-thin margin in the black here, but over here, all of our franchisees can go in and it’s the same thing with Franchise Rocket, for example, which is marketing. Everybody knows everything about marketing. Every single digital marketing agency knows that we’re not doing as good of a job as they can, and this, that the other, but what they don’t have is they’re not able to have that transparency in that data and the measuring and understanding, “Here are the keywords that we need to be dialed in on for Gatsby and iFoam, etc.”

They’re also the same with Recruitzee with commissions, “I’m going to give you $10,000.” I’m going to pretend Dru is a marketing company. Dru’s going to tell me, “That is great. What is this $10,000 for? What do you want to do?” “Here are some options. I’ll do AdWords and then some Facebook advertising.” I’m Dru and I’m so tight and awesome that you’re going to pay me $2,000 or $3,000 out of that $10,000 as a commission for me even to do this and execute it for you.

It’s not like we’re giving the owner that $10,000 or anything. They’re still spending it, but all $10,000 is going into what they’re paying for, making them more efficient cost per lead better, and it’s a flat fee. It’s $500 to $1,500 a month flat and you have your own success manager for business coaches on the franchisor side where every twenty franchisees and for Franchise Rocket for every 12 to 15 franchisees. There is even more type of infrastructure there.

Their bottom line and top line get better. Our royalty revenue and income stream, that’s our lifeblood get better too. When all three of those things are working, it’s a nice circle and we run around, and we eat everybody’s lunch that we come across. It’s pretty cool. Those are just two of them. We have quite a few call center things like that and making it more effective for franchisees this big. That’s not to say it’s perfect either Dru, because we’re not, we make mistakes.

The HR, advertising, and marketing piece, especially on the digital side, which is the Wild West and that’s where a lot of new franchise owners and even new business owners get taken advantage of the promises, but how do you measure and account for it? The call center is a massive element of any single home service-related business because, at the end of the day, you have the elements.

The recipe that goes into winning in the home service space is if you can answer the phone when the customer calls, book an appointment, show up on time, be friendly, be professional, give them a fair price, and do good work. It doesn’t even have to be amazing out of this world in some special patented way. Provide good customer service and make sure they’re happy. You are an exceptional company automatically by doing those simple things very consistently because so many companies in this space, they’re just so massive and there’s so much money being spent, but running it like a business in a professional sense, it’s the exception. It’s not the norm. It’s wild.

In roofing it’s if you’re average, you show up and you’re decent. You’re the A-player. You’re on the Victoria’s Secret Runway Show by being average, and that’s huge. That’s why we love to play in the service space because none of the owners that we have know anything about roofing, foam, lighting, or whatever it is, but what they do have is they have that high-level skillset. If they haven’t been business owners prior, they’ve been at a high-level somehow professionally. They understand how to manage people, how to execute, and how to maybe scale a business, and then we plug those other holes.

Something that’s huge too that’s struck everybody since COVID is the supply chain. These are some more things that Josh and Zach have been making massive investments in as we have HPB fleet. We’re going and doing all of the upfittings of the different vehicles and making sure that we’re working with those manufacturers to make sure that if a franchise owner does want to scale, that we have that vehicle ready to go. When the franchise owner wants to launch, we have those in production, and also the upfitting of that vehicle, and everything that’s needed is taken care of there.

 

With Blingle!, it’s lighting for Christmas. We’re shipping in and got another $1 million worth of lights. The warehouse is ridiculous. It looks funny. I’ve never seen that many lights, but it’s awesome the investments that these guys are making in this. It’s not just for one cause, not just for us or the franchisee to benefit, but it’s everybody that’s going to go win together.

I always tell people, “You find the right culture fit and the right support system where they’re going to continue to innovate and get better.” Look at yourself in the mirror and say, “Can I execute what they’re saying right here or this model?” If that’s all three, and it’s hard to find all three, you know that you’ve gotten there. I can tell people with a straight face, “HorsePower Brand might not be the fit, but it won’t be because we’re not providing the best support and that we’re going to continue to improve and be the best out there because I don’t know anybody else that is doing it like we are.”

You guys provide a lot of amazing support services that a lot of franchise companies typically don’t, even though if they say they do like coaching folks from doing the research and analysis on a business, like anything that you’re told, there’s a way to validate all this. That’s what we’re going to do and all that stuff. We talk through what you guys do to help the franchise owners. Can you talk to us a little about what the franchise owners do to start, build, and scale if they want to scale?

It all comes down to we’re building basically a beautiful sales and marketing engine, regardless of which widget is it. The brand itself is just the widget. Some of those executable skillsets are going to be a little bit different and it’s, “What do you want?” Do you want a high ticket or a high margin? Even though it’s going to be a crazy number with an iFoam or a Mighty Dog Roofing, do you want the recurring revenue as well as commercial with Blingle!? Do you want that reoccurring revenue model that’s semi-absentee only with Heroes Lawn Care? It’s what that looks like from an execution standpoint.

Anyone coming out of a leadership position in Corporate America, even if they’ve been in ops, or they’re an engineer can execute on those specific things to make sure that their KPIs are dialed in, etc. They won’t be the salesperson, but we don’t necessarily even want somebody that’s an owner-operator going out there and being the salesperson, especially after the first three months or so. What happens is you get stuck in the weeds and you never scale your business. Scalability is huge too.

Everyone says it so flippantly in franchising. “We have such a scalable business model.” I’m like, “Any business model is scalable.” I could be building whatever and could scale this, but what is it going to take me? If I need to get a little leverage with equipment, “What does that do from a tax perspective from Section 179?” Am I hiring salespeople and adding trucks, and maybe a production manager here and there for every 3 or 4 salespeople like a Mighty Dog? So that’s less capital intensive, but then you don’t have the tax advantages as you would with a Gatsby, Blingle!, or iFoam with the Heroes, even with the equipment and vehicles.

For coaching, the holes are different for everybody. We focus on where those gaps are if it’s on the accounting side. A lot of it in the first part is product knowledge side too because we don’t want somebody that’s like, “I’m Billy Bob and I’ve been roofing and my grandfather was roofing. This is what we do.” It’s a much different type of feel. A lot of that product knowledge is big in the beginning for sure.

You’re looking for franchise owners, both men, and women who can obviously get scrappy and learn the business, but it sounds like they’ve built and led teams of people before, and they’re good at that and enjoy that. That’s what fires them up every day, the ability to do the people piece well and be comfortable delegating and firing if they need to make a change, which happens when you’re building a small business. Hire slow, fire fast. That’s a part of it. The franchise owners do the people piece, stay in day out. They are managing their people. As they’re growing their businesses, each business scales differently as you said, but the people piece is the thing that sounds like day in, day out. That’s where the franchise owner’s focus is.

That’s huge too from a firing perspective. Some people are, “Let me give them another chance. Let me do this.” I was talking to somebody I’m like, “They’ve been on for two months and haven’t made a sale. They said the leads are bad.” I’m like, “Of course, they did. What did they do? Any business development or go to any BNI groups for you?” “No. “What do they do?” “They hang out in the office if they don’t have a call.” “That’s sick.”

I’m sure this person loves to hang out in the office and pay them. If a salesperson isn’t motivated by making a commission, that’s not good, but you have to be comfortable with that. Being able to pivot and understand when you’ve made a mistake as a business owner and then when you’ve made a mistake as a franchisor. If something bad is happening, it’s not just my fault and it’s not just your fault.

A beautiful about franchising is instead of pointing a finger, whining, and crying, “What do we need to do to fix it? Let’s look at these different KPIs and these leading indicators that we have,” as opposed to every month you meet with your business coach and say, “Here’s my P&L. I don’t need any help reading a P&L. I’m dumb. I’m not a smart person. How does that provide value here? How am I able to make a change in my business as a business owner now that will impact tomorrow as opposed to being 30 or 45 days late to the barbecue, if we’re looking at things like a P&L and balance sheet, which are important tools?” There’s not an added value there. Better than your competition.

They’re the lagging indicators of something that has happened or not happening in the business. There’s a lot of other stuff to look at before you look at the P&L and go, “I lost $10,000 last month. Why is that?” It’s because your lead gen and conversions are way off because your salesperson is not converting at the rate that we know every other salesperson in Mighty Dog Roofing is doing all around the country. Your market’s not different than Boise or Charlotte.

If you, as the owner, don't hold yourself accountable and don't want to make a change or can't pivot in a cool, calm, collected manner and utilize the resources you have, that’s going to go down throughout the entire team and create toxicity. Click To Tweet

It does take some mindset of a franchise owner. A lot of times, there’s a transition of a mindset that has to happen. It’s a big emotional journey for people as well, but the people piece is the big thing. Where do you see your top-performing franchise owners across all your brands separate themselves from the average?

It’s in that people piece and then accountability. Holding not just us accountable as a franchisor, but holding ourselves accountable. That’ll spill down. If you, as the owner, don’t hold yourself accountable and don’t want to make a change or can’t pivot and pivot in a cool, calm, collected manner and utilize the resources you have, and then you freak out, that’s going to go down throughout the entire team. It’s going to create some toxicity. It’s not good. Accountability is huge.

I always tell the ops team and people, “This is the scariest moment likely of this new franchise owner’s life. They showed out some cash. There’s a lot going on in their life right now, and you have to be empathetic towards that and understand if they call you up five times a day.” When we were launching mighty dog, Tanner was like, “Is this usual?” I’m like, “Yes, especially for people that are just going. You got to be empathetic towards that.”

If you have that glass half full, the franchise owner knows, “I’m there to support,” and also, “This is rock and this is rolling,” and then being that people person and somebody that has that empire builder, “I’m going to go eat their effing lunch mindset every single day. If I don’t, I will not be going to succeed.” You know this, especially as a business owner. If you don’t have some of that dog in you, you’re going to get eaten up.

The execution is like the ability to make it happen, even though you guys provide all these amazing elements behind the scenes. It still takes the franchise owners to take it all off the shelf and then implement and execute it, then put it all into this working machine and then put the people in to then make it go.

I tell people, “When a franchise company decides to franchise, they’re not going to do the people piece for you. That’s what they want you to do. They’re giving up the bottom-line profits to you, but you have to do the people piece. They can’t do it for you. They can’t even do it legally, but they don’t want to do it. That’s why they chose to expand via franchising because that’s what that strategy’s all about.”

You mentioned something interesting that I’d love to pick your brain on a little bit more and do a deep dive on. You mentioned that you have a semi-absentee-only business. I’m going to preface this because this word, “semi-absentee,” sure is fun to say because it sounds good and amazing. I was hanging out with somebody who was on a call with the key leader of an emerging franchise and they have a candidate.

The story was that the candidate wants to keep his job because he’s got a bunch of flexibility in it and wants to keep the income coming in until the business is growing and he’s going to hire a GM and stuff like that. The sales rep is like, “That’s semi-absentee to me.” The key executive who makes a decision at this company, which is not a HorsePower company said, “No, that is not semi-absentee to me.” I’m like, “How are you guys not know what semi-absentee means and you’re six months into development and growing?” Semi-absentee means a lot to a lot of different people and franchise companies. What does semi-absentee mean to HorsePower Brands?

I like that and I would love to expand on it because it is a word that’s thrown around a lot and does mean a lot of different things. People are like, “What questions am I not asking?” I’m like, “I don’t know because I can’t get in your head. I need you to know that it’s not rainbows, butterflies, kittens, and sunshine.” The semi-absentee model is sexy. Sometimes people and directors can make it sound like it’s too easy. “It’s so this and that.”

To us, it’s 10 to 15 hours a week that you have to commit. I’ll talk to some candidates sometimes too, and they’ll have it in their head, “I have a flexible schedule. I don’t need to hire a GM and take on that extra payroll right away, or at least through the onboarding process.” “I bet your flexible schedule isn’t as flexible as you think.”

People don’t realize that 10 to 15 hours a week is a lot of time. I beat up my development directors too because they should continuously try to do a better job with this of making sure that if you’re a semi-absentee, your GM needs to go through at least four weeks of onboarding. It won’t be a 40-hour week, but you’re going to have to pay them. You got to work that out. We help you work that out. We don’t say, “Figure it out.” We’re working with you on that. They then have to come to training for the week too. “Why is it taking me so long to go through training?” “Have you hired your GM?” “No.” “That’s being decisive at the end of the day. You have to be decisive in hiring someone.

Don’t be afraid to make a mistake. If you’re afraid to make a mistake, you’re going to sit on your hands your entire life, be old and die, and never do anything. Make a mistake, go out there, try it, and hire that person. You would’ve gotten to training earlier. Also, I always say during the onboarding process and that first month or two, “It’s going to take maybe a little more time. You’re going to be on the higher end of that fifteen. There might be something that happens, the salesperson wasn’t the right fit or whatever. I’m like, “That’s on you as a business owner, and let’s be real about that.”

 

As a semi-absentee owner, your payroll is going to be heavier. It’s going to take you longer to get to a point of a certain scale, whatever the business model is, it’ll be different, but then once you look at this pop-off, which is something that I would look at as scalability. “Am I at a 90% capacity with my truck? I need another one,” but when you’re at that point, an owner-operator where they got to that point faster, they can’t let other people swim in the lanes. They need a GM and should be focusing even more on and not in, but they want to jump in every day and go rock and roll and do it.

At that point, that semi-absentee owner scales that to a higher level, a little bit faster where it flips, but you have to have that heavy payroll, and this and the other. The semi-absentee is sexy if the person can do it and have the capability to do it. We’re not going to approve you if we don’t think you could do it, and we are strict with that. The tax advantages for somebody through some of those equipment-heavy types of options through semi-absentee are huge because you can write some of it off on your W2, which is awesome because they always knock on my door and I got to give them all my cash.

There is a whole tax game. We can offer some unsolicited non-certified public accountant advice.

I don’t even want to talk about it anymore.

Semi-absentee, to sum it up, you’ve got 10 to 15 hours a week of real-time, Monday through Friday, not 7:00 to 9:00 PM. You have time during the day of core business hours to be able to dedicate to the business.

To have the flexibility to be able to do that, but it’s a total of that 10 to 15.

Which is 2 to 3 hours a day, and then they have to hire a general manager to go through your training process that they’re going to work with and through a little bit. They’re still going to be very involved, but they’re not going to be doing as much. They’re going to be delegating and relying on the general manager to execute a lot. I imagine a lot of that comes down to sales too depending on your business model and not but imagine you want some people-oriented and some sales-oriented GMs.

I’ll make an analogy of being a semi-absentee owner. Let’s say you’re in a market where $90,000 or $85,000 a year is more money than most people make in the US. That’s a good salary. You’re my GM and I’ve given you the keys to my home. You can come in and you can go as you please. If you’re paying me $85,000 or $90,000, I’ll remember to lock the front door, but I’m not going to wipe my feet off. I’m not going to make sure the oven or TV is off and the thermostat is set to a certain level because I don’t care.

I’m going to lock your door so you don’t fire me, and that’s it. That’s how a lot of people go through it, but if I have something where there is some profit sharing or phantom equity, where it also gives that GM an opportunity that otherwise they would’ve not had in their lives, or at least at that point in their lives, and it also protects the owner from them if they decide to buzz off. You’re not giving them that equity straight up, but there are triggers and then profit sharing. You have to be willing to compensate there and you can’t nickel and dime it. People are very penny-wise and dollar foolish. It doesn’t make sense.

If you have the talent, it’s worth paying the talent in the GM. There are creative ways that you can layer in some variable compensation to then where it doesn’t add to your fixed monthly expense, but rewards them for hard work and keeps them motivated and incentivized to go out there and get some revenue and manage those margins.

When you pay out profit sharing or bonus as a business owner that goes back into your pocket, the more they crush, you crush. They’re going to make your life a heck of a lot easier. If they don’t remember to wipe their shoes off in my bad analogy, that’s going to be a couple of extra hours that you got to go grind on, dig through, and figure out.

It’s big there, everybody understands that, that comes through the HorsePower process, that you got to be willing to incentivize them. Two, a franchise candidate that comes through when they think of a GM, they think maybe of someone that is $120,000 or $130,000 and they’re like, “How would I make any money doing that?” There are so many beautiful ways as a small business owner that you can incentivize. That’s a heck of a lot better than they might think of and go back to, “This is what it was like at PepsiCo.” This isn’t PepsiCo.

If you are thinking about trying to get into a franchise or any business with a semi-absentee, there are certain elements to talk through. The franchise company knows what those elements are and will help advise you to work through the best approach. Click To Tweet

I’m going to put you on the spot a little bit. Can you talk through some franchise owners that you’ve seen have success in any of your brands running it under the GM model from day one with the GM not being like a vested operating partner?

No, because it doesn’t work. They’ll end up having that GM leave, etc. With Heroes, when I said semi-absentee only, we have a whole flow chart of phantom equity and what they can earn. We have business development. This is not just Heroes, but all of the GMs like business networking groups for them to develop professionally. Zach Buetler ends up to all of that type of stuff. We have traction implementers coming out and talking to him.

It’s something that doesn’t work or it’s tough to make work. It’s tough to make it work. If we can’t support it, I don’t know who else can. There has to be a cookie and something that’s there for them. Heroes is predominantly semi-absentees. All of our other brands have it sprinkled in. There have been those success stories, and it’s what we see from a standpoint of, “They did the right thing from a comp perspective. Their GM went through the training, and their GM bought in. A lot of times I would talk to the GM before the person even accepted the offer, or they talked to the director.

We’re involved there because we want to make sure that franchise owners make the right decision too, and then we help them to craft those different comp plan structures. They’re bought in. They’re drinking that Kool-Aid up and ready to go. They’re an attachment of the owner and that’s where it works well. Not every GM’s going to be a stud and amazing. If they can execute, bought in, and care does a lot to an organization when people care about it, it’s not talking in BS. Everyone talks about how hard they want to work.

You have validation. People can talk to franchise owners that are running some of your brands semi-absentee, which is a key part for anybody reading this. If you ever work with me, you’re going to hear me in my soapbox, preach validate, and validate. The good franchise companies want you to validate because that’s a whole another source of wealth of insight and information when you talk to the franchise owners to hear how it’s going for them. There are always some good nuggets that you pick up from those conversations that hadn’t come up in conversations yet or whatever. That’s key that you guys have the validation to support it.

You hear different opinions. “I wouldn’t do the semi-absentee are. I would never do it any other way.” “I found an okay GM and my salespersons are awesome.” “I might have the right people in the wrong seats,” things like that. You get to hear it differently. I will say it’s a little bit harder to be semi-absentee in my opinion from an overall standpoint, but either way, you got to be strapped in and know that we’re going to be there for you to support you. As you said, you will be able to validate a lot of different things and hear a lot of different opinions. At the end of the day, whoever that candidate is going through is saying, “I can do this. I can do either, whatever it might be, but I know I can execute.”

I appreciate you letting me do a little bit of a deep dive there because it keeps wearing its head. There are so many franchise companies out there that say their business is semi-absentee and then they have nothing. They don’t have anything that you guys have put in place. You can say any business is semi-absentee, just hire a manager.

For first-time business owners, a lot of times they take that in full and believe it. Some franchise companies say, “Is it a lie?” “Yes, it’s a lie,” in terms of a show this plays out into reality. What we went through is a good example of like the pieces and the elements are there. There are things to think about if you are thinking about trying to get into HorsePower Brands, a franchise with semi-absentee, or any business that is semi-absentee.

There are certain elements to talk through and the franchise company knows what those elements are and will help advise you to work through the best approach. What we went through was a good example in my opinion of doing a deep dive on semi-absentee stuff of any franchise. Thank you for letting me do that. Why is Heroes Lawn Care semi-absentee only?

We set it up where it’s 3 services about to be 4 in 1. It’s lower ticket types of things where it’s fertilization, irrigation, and pet waste removal, that’s how you get onto the property. You upsell them by adding mosquitoes. There’s a lot of routing. There are a lot of things where we don’t know what the business owner would necessarily be executing on because you have that one tech in the truck and then you have your GM. Everything else is so tech-based where we run all of the billing and do all the sales digitally.

Some of the techs we can teach to upsell and go, “We did a job here. If you close, go knock and run around and do things like that,” but it’s the business owner doing BNI groups and things like that. Being out in the community and want to BDN where we didn’t know and see a ton of value in somebody coming in that at that high level that can be that total people person and run those teams, understand the KPIs and stuff like that, where we already have it set up. If they can spend a little bit of time in the business, we have it dialed as far as Heroes.

It’s between the technology and because they’re lower ticket purchases, there’s not a sales element like there would be with the Mighty Dog Roofing sale. You got to go out there, do the estimated scope of the job, sell the project, and even help with an insurance claim. It is just people see it and sign up for the most part.

 

Think about the execution of picking up dog poop.

I’ve always told myself I’m not going to let somebody buy a franchise that picks up dog poop, but if you have multiple revenue streams, and it’s a way to get into the customer, that makes sense.

That’s the secret sauce.

Are you serious that that’s the reason that people are calling?

That’s how you get on the property and then you can upsell them. We have subcontracted services as I said, we’re adding mosquitoes, but none of those things standalone we’re attracted to us. We need to have an AUV where we can see that clear line of sight to that million plus because we want to build and scale a large business and I know it’s incredible. I bought a puppy.

Congratulations.

His name is Apollo. He is a tiger or bullmastiff so he’s pretty eye to eye with me. I’m really excited, but that’s a thing, I’m paying for that all day.

Probably extra for his. How old is Apollo?

I haven’t even got him yet. I can’t get him until mid-month. He’s probably seven weeks now. It’s exciting.

We went the opposite way. I had a lab for fifteen years. Her name was Copper. I had Copper before I had my wife. I brought Copper to the relationship. There’s always a little bit of resentment. There’s a little dynamic there. Allie didn’t have the opportunity to spend the puppy time with Copper, which is an important thing, and then she shed all this stuff. Copper had a good run. We put her down a few years ago. It’s Allie’s turn to pick a new dog and she picked a Cavapoo. It’s like this little 12- or 13-pound King Charles Cavalier and mini-Poodle. I am a total lab dog guy now. I love that stinking thing. It is so awesome. I don’t think I can go back to a big one.

Dogs are awesome. If you don’t like dogs, I’m not sure that I can trust you now. There has to be a good reason. If there’s a good reason, I’m not going to totally shut you off, but you can’t go, “I don’t like them.” What do you mean? That’s insane. The breeder was like, “They’re very lazy.” I’m like, “That is extremely cool. They’re docile.” He goes, “They’re like big bear lap dogs. They want to hang out with you and lay around.” Maybe I missed my teddy bear or something, but I’m excited. I’ll have them out at the park. I’ll send you some videos.

I want some pictures. That’s awesome. HorsePower Brands has been up to some stuff as always in a good way. Can you give us a state of the union update because Zach was on a couple of months ago? You guys are moving so fast, I’m sure a lot of stuff has changed. You got some new brands and some new franchises

Focus creates wealth; diversification preserves it. Click To Tweet

In the last couple of months, we were at 20 to 21 franchisees. In June, about 20 to 22, next month we should be close to 30, but we’ve launched a couple of brands.

Are those net new franchise owners?

It’s not territory.

You’re bringing on about 20 trending to 30 net new franchise owners a month, which is amazing. That is a dream number for a lot of franchise companies, but you guys have also invested a significant amount of capital on the back end. You can read Zach’s episode to know more.

There’s something big to be said about that. We’re investing in our infrastructure too. We added another onboarding coach. We’re tweaking some things within onboarding because we can get better. How do we better support the owner-operators or semi-absentee? Not just through business, but through a startup.

We understand that we’re not perfect and here’s what we need to do to pivot and get better, and we’ll continue to do that because we need to. We just can’t sit here on a throne and say, “It’s perfect.” There are mistakes and holes that we need to fill. We know that we’re willing to make those changes. It doesn’t happen like this, unfortunately. I wish I had that secret sauce, as much as I love HorsePower. I’d probably be selling that sauce somewhere.

How many franchise owners do you guys have across each one of your brands now?

Gatsby Glass has 1 and 4 owners coming to discovery day next month. Twelve for iFoam. Thirty-one or thirty-two with Blingle!. Don’t quote me. It’s not exact. Mighty Dog is 80. We launched Gatsby, which is the fastest and largest growing segment within the glass industry, which is it’s a specialized service. We capitalize on B2C and B2B from remodeling to new builds in the commercial space like glass frameless shower doors.

We have some cool stuff from, “Let’s be functional on the design side.” It’s very recession resistant too. We understand that when COVID hit, the market was remodeled from a new build. We can hit each and every single one of those. A brand that’s been taking off is iFoam. It’s like, “Who’s your customer?” A lot of industries are niche with, “I need to get 80% soccer moms,” and that’s it.

Focus creates wealth, and diversification preserves it, but it doesn’t mean because I’ve been supporting market verticals like in Mighty Dog with the gutters, we’re adding solar, etc. or a direct, “This is the only person I’m working with the type of deal.” It doesn’t mean that you’re not focused. What I love is it’s like a wider bucket. You have remodels and retrofits of existing homes so your B2C. You have B2B with residential commercial, metal buildings, and agricultural. We’ve invested with the best equipment package in the foam industry and also spill out a state-of-the-art foam and spraying for the techs where we get them certified with all the different certifications that they need. We train those technicians onsite in Omaha. It’s super exciting. That’s taken off.

We have Bumblebee Blinds that are launching in a couple of months. We’re about to launch Groovy Hues house painting, so it’s a piece love paint and power wash. It’ll be everything from interior painting, cabinets, exterior, shutters, deck fence, staining, and all kinds of cool stuff like that. It’ll be a little bit lower investment, but it’s commercial going to residential. There’s already a team built out where we have a brand president, director of ops, director of marketing, and a director of sales. We’ve had those people on staff for a few months, all of them. That’s building this model out. We haven’t even launched this bad boy yet. We’re not going to put the big potato out.

Who does come up with the names of your brands? They are good. Blingle! might be the best name I’ve ever heard for the appropriate business, but where do these names come from?

 

This was fun to go through the whole process with Mighty Dog. When I’m talking about reading all those industry data reports, etc. on what this industry I want to get into, we then find that. There’s naming, branding, and all of these things. We do a lot of census pulls or whatever. We’re hiring outside consultants and then understanding, “What does this color say to someone?”

Doing it with Mighty Dog, that shade of blue, I was about to rip my hair out because we’re talking these consultants and these other marketing people and they’re like, “No, this doesn’t work,” but when it’s a done and it’s a finished product, you’re like, “That was so cool to go through.” You don’t understand the little tweaks here and there and what you need to do. “Does the dog have a tail? For Blingle! should we do one light or should we do an exclamation point at the end?”

What else is out there? Also, competitive analysis to see what’s out there as well. is it cool to detract? Would it deter anyone? It’s pretty sweet. It’s like Josh and Zach are marketing executives, and then some outside consulting too because we want that more from the data perspective. It’s not them necessarily making the decision, but that data perspective is so important. We don’t have any on it at that point. We want to make sure that we launch it where it’s buttoned up, but it’s pretty sweet. I love the brand.

That was a very fancy answer because you guys have some badass names. They’re really good. What else is on the horizon for you and for HorsePower?

Those are on the dock. There’s one other brand that we want to get launched by end of the year. That’s including Groovy and Bumblebee Blinds, which might be in early Q1. There are some other supporting verticals we’re looking at. I’m not totally certain when those will launch and what they’ll look like. We want to button up and build a lot of infrastructure behind the call center, Franchise Rocket, as well as the recruiting side of things, but the moon is where we’re going. It’s a rocket ship.

That’s what we want to continue to do, invest in great people. It’s a fun culture. Good people like Zach and Josh do it right. Hopefully, I get to take a nap or a vacation. Zach doesn’t let me leave. He keeps trying to get me to come to his farm and work on the weekends with him. I was like, “Do you see these dainty hands? These things have never seen a day of manual labor. They’re not big enough to hold a hammer or whatever you do.”

We’re going, building, and trying to bring in the right people and do the best that we can for franchise owners, and be that vehicle for people and help them accomplish what they want to do with being a business owner. It’s a dream. It’s something where you have a lot of support with us. For the right widget, we want to take you to what’s your why at the end of the day. Mine is to help a lot of people and make it so that they don’t go through what my dad went through at the end of the day. Personally, I’ll probably be in this office for a while.

I hope they unlock the door at 6:00 and let you leave to go home.

They’ll slide latte and pizza under. They do that. Sometimes they throw a piece of Papa John’s at me and a couple of Coors Lights. That kid is like a rabbit dog. They keep me in there, but I love it. You have to be passionate about what you’re doing. You don’t get anywhere without hard work. As I said, a lot of people want to say that they work hard and that they’re passionate about what they do, but it’s something that you feel.

When people come in for a discovery day or new hires, you feel the culture and the energy. There’s like a buzz and it’s exciting. It’s exciting to be a part of. From working in a broom closet next to Zach to where we are now, I knew they had a lot of cash and vision, and were good dudes. I was like, “Let’s see if this works out.”

What you’re doing is not easy running Franchise Development, I used to be in this similar role and there are a lot of moving parts and it’s pretty fast-paced. You do a good job, my friend. I appreciate you hopping on here and letting us talk a little bit and riff about HorsePower and all that good stuff. Thanks for coming on. I appreciate it.

I love it. Thank you very much. You’re excellent to work with and what you do as well. I appreciate you having me on.

 

Important Links

• HorsePower Brands
• Josh Skolnick
• Zach Beutler
• iFoam
• Recruitzee
• Franchise Rocket
• Gatsby
• Blingle!
• Heroes Lawn Care
• Zach Beutler – Previous Episode