Franchise players

By Robert P. Mader, CONTRACTOR Staff Contemplate, if you will, while drinking your Starbucks coffee or, perhaps, on your way to Panera for lunch, the state of franchising in the plumbing-heating-cooling industry. While so many of the products and services we buy today come from franchises, PHC contractors have remained the last of the hairy chested individualists, resolutely resistant over the years

By Robert P. Mader,
CONTRACTOR Staff

Contemplate, if you will, while drinking your Starbucks coffee or, perhaps, on your way to Panera for lunch, the state of franchising in the plumbing-heating-cooling industry. While so many of the products and services we buy today come from franchises, PHC contractors have remained the last of the hairy chested individualists, resolutely resistant over the years to franchise them.

The lone exception is 72-year-old Roto-Rooter. Most of the other franchises, even if they've been around for years, still have plenty of openings.

Franchises may be the way for contractors to get the phone to ring and to be able to charge more money. It's often been said that McDonalds doesn't make a great hamburger, but they make a consistent one so that customers always know what they're buying. The lack of consistency has always been a problem in contracting. Will the service technician show up two hours late, the homeowner fears, looking like a prison escapee and incapable of performing the repair correctly? A franchise can offer a neatly scrubbed, uniformed, badged, consistently trained, on-time service tech backed with some kind of guarantee or warranty.

Contractors have also been resistant to franchising because they think they know what they're doing and, by-and-large, they do. They don't need the brand of a franchise because they've been able to turn themselves into a well-known local brand. But some contractors might need help taking their businesses to the next level.

Tab Hunter, president of franchise operations at Clockwork Home Services, which franchises Benjamin Franklin Plumbing, was a plumbing contractor for years but he couldn't break through the $2 million barrier. He bought a Benjamin Franklin franchise and his business prospered so much that Clockwork bought him out and brought him inside.

Hunter also notes that plumbing franchising is not an enormous leap for contractors, because it's a conversion of an existing business, not a change of life. Most people who buys a Quiznos, Hunter points out, haven't had a career in the submarine sandwich industry.

Here, then, are six plumbing-related franchises.

WHO: AMERICAN LEAK DETECTION, PALM SPRINGS, CALIF.

STARTING THE PROCESS: American Leak Detection uses sophisticated electronic equipment to located underground lines and leaks in water service lines, radiant floors or swimming pools. A prospect can call or request for information online. Within 24 hours, the company will determine if a territory is available and will electronically send a franchise package that spells out details and the cost. The company will want the contractor to fill out an application and "request for consideration" form before attending a discovery day in the office in Palm Springs. If all the approvals go through, the parties would sign a contract.

TRAINING AND SUPPORT: The longest training of all the franchises, six weeks of both classroom and hands-on work with the microphones, listening devices and probes. The firm also offers some business management training. The company has a training slab and students locate underground lines in other locations in Palm Springs.

THE COST: Between $73,225 to $157,050. The purchase price includes the de˛ned territory and ALD's premium equipment package. Some of the equipment can't be bought anywhere because it was invented by the Yale Ph.D.'s from Plainsight Systems in New Haven, Conn., who own the company.

MAKING CONTACT: Tim Holadia, director of franchise development, 760/969-6817,

WHO: MR. ROOTER, A DIVISION OF THE DWYER GROUP, WACO, TEXAS.

Dwyer has several other franchises, including HVAC contracting franchise Aire Serv and Dream Maker Bath & Kitchen.

STARTING THE PROCESS: Prospects come to Waco for an orientation that some franchisers refer to as discovery. Contractors learn about the Dwyer Group franchises, the company's code of values, and what they can expect from the Mr. Rooter system. Prospects are grilled to see if they really want to follow the firm's systems. Contractors are given a list of franchisees and told to call or visit any or all of them. The Dwyer Group, meanwhile, runs background checks on the prospect. If the prospective franchisee passes all the background checks and still wants to join, the firm send out the contracts and instructs them to think about it for 10 days before signing.

TRAINING AND SUPPORT: The Dwyer Group runs what it calls the Sure Start Program that lasts for a year after the initial week of training in Waco. The company teaches a 14-step process for taking care of customers that starts with laying down a mat on the customer's floor. Franchisees get a host of business management training, such as recruiting and financial management. They also get a mentor that visits the contractor. That's mixed in with seminars of one to three days, an annual meeting, training videos and constant telephone contact.

THE COST: $20,000 to $100,000 franchise fee, depending on population of the territory, with an ongoing licensing fee that ranges from 3%-7% of gross on a sliding scale. The higher the sales, the lower the percentage.

MAKING CONTACT: Mary Kennedy Thompson, president, 254/745-2597.

WHO: BENJAMIN FRANKLIN PLUMB ING, SARASOTA, FLA., a unit of Clockwork Homes Services that also franchises One Hour Air Conditioning and owns best practices group Plumbers Success International.

STARTING THE PROCESS: After the initial phone call and research on the company's Website, contractors are invited to meet with owners of Benjamin Franklin Plumbing franchises and visit their shops. If they remain interested and a territory is available, Clockwork starts the rigorous qualification process. Two out of three prospects are turned down. There can be no criminal background. The contractor must be licensed and in good standing with the licensing authority. It must be in good standing with the Better Business Bureau and it has to be financially sound.

TRAINING AND SUPPOR T: After the contracts are signed, the franchisee comes to Sarasota for four days of launch training. They leave with a one-two-three game plan that's custom tailored for them. If a contractor has the wrong ratio of office to field staff or low revenue per truck or a low sales close percentage, he's instructed how to fix his specific problems. Each franchisee is assigned a business coach who's solely gaged by the production and growth of their franchisees. Each coach mentors from 20-25 franchises apiece. The business coach monitors the implementation of the game plan for the first 90 days, and then a 12-month plan is put in place. Business coaches make daily telephone contact with the contractor on budget items or how many calls are on the board for the day.

THE COST: $25,000 for a territory of 100,000, plus $250 per 1,000 after the first 100,000. The royalty fee is 5% of gross sales, paid semi-monthly on the 1st and 15th.

MAKING CONTACT: Tab Hunter, president of franchise operations at Clockwork Home Services, 866/574-7431.

WHO: MR. WATER HEATER, PITTSBURGH.

STARTING THE PROCESS: This franchise is new, based on a Pittsburgh contractor who's been around for 25 years. The company has developed a system to sell water heaters by the carload while undercutting the big box stores. Because the franchise is new, it's initially focusing on Pennsylvania, Ohio and West Virginia. The premise is that a contractor can predictably sell 2,000 water heaters a year per 100,000 population. The contractor and the franchiser would "qualify each other" during the initial phase.

TRAINING AND SUPPORT: Mr. Water Heater University, a one-week school that teaches installation, business systems, marketing and software. Classes also cover phone sales, hiring and firing, how to set up the trucks and how to upsell items such as expansion tanks and extended warranties. The franchisee would also meet with the attorney who helps set up the franchises, and the firm's advertising agency and its Web designer. Mr. Water Heater has TV and radio spots. Advertising and the Web site are customized for the contractor's territory.

THE COST: A franchise fee is $9,900 and plus 25 cents per household. It will probably cost $50,000 for a plumbing contractor to get rolling, much more for somebody star ting from scratch who needs a warehouse and trucks.

MAKING CONTACT: John Sembower, 866-MISTERW (866/647-8378)

WHO: ROTTER, CINCINNATI. STARTING THE PROCESS: Hope your father already owned one. Prayer or good luck charms might work too. Roto-Rooter has 500 independently owned and operated franchises in the U.S., and a little over 100 company owned operations, which gives the firm 92% coverage of the U.S.

"The remaining areas may be mountain ranges, rivers and swamps," says Mike Higgins, director of franchise development.

Some of the franchisees are in their fourth generation. Others are purchased by neighboring franchisees or by the company itself.

TRAINING AND SUPPORT: Roto-Rooter doesn't have a formal system because so many of its new franchisees are already part of their system. The firm maintains a library of training material in case a new franchisee comes in who's not familiar with the operation.

THE COST: $20,000 franchise fee plus a monthly territory fee based on population.

MAKING CONTACT: Mike Higgins, director of franchise development, 800-575-7737, but be prepared to wait.

WHO: ROOTER MAN, NOR TH BILLERICA, MASS.

Starting the process: If a territory is available, a contractor will get an information package that includes references from successful franchisees. Prospects who are serious will receive a uniform franchise offering circular that lists the principals, Rooter Man's financials, a list of franchisees, how many franchisees came in this year, how many left, and why. States may also have enacted franchise laws, so the offering circular may contain an addendum if state law differs from federal regulations.

TRAINING AND SUPPORT: The company has manuals on business management topics, such as hiring, firing, training and business administration. After the franchisee has a couple months to study the manuals, the company sponsors two days of comprehensive training to learn how to implement the systems in the manuals. The company also provides ongoing support on issues such as what to pay employees, what size ads to run, what tools to buy or credit card processing. Rooter Man also has vendors for group buys, such as insurance.

THE COST: $31.80 per thousand population with a minimum initial license fee is $3,975 for up to 125,000 population. The monthly royalty fee is 80 cents per thousand population, with a minimum of $65/month. In addition, the advertising fee is 8 cents per thousand population with a minimum of $10 per month.

MAKING CONTACT: Donald MacDonald, CEO, 978/667-1144.