Franchising in Construction: Successful American Cases.

In Italy, the construction sector is progressively showing increased interest in expansion through franchising. I’m referring to the home services market, which encompasses various businesses, including renovation and/or energy efficiency activities.

What is the reason? It’s all about the numbers. Firstly, due to the natural aging of existing buildings. According to data from La Stampa, renovations accounted for 54% of the construction market (in 2021), with an annual growth of 2.6%. Projections indicate an increase up to 6% by 2030. Additionally, 75% of properties in our country are inefficient from an energy perspective.

However, to understand the potential of the home services market in franchising and anticipate its possible evolutions, we must look, as often happens, to the American market, where the home services sector is already producing these numbers:

  • The aggregate annual turnover of companies in this sector was approximately $600 billion in 2022 (Bain data).
  • The market is expected to grow at a rate of 21.14% by 2030 (Verified Market Research data).
  • Growth is also linked to the use of apps in the sector; 60% of consumers prefer to book a service for their home via an app (Mckinsey).

With this trend in mind, I decided to analyze two American franchising chains in the sector to inspire Italian players who are considering franchising development. One is a long-standing market leader, while the other, founded more recently, has managed to grow rapidly in just a few years. I’ll also discuss what useful lessons we can learn from them.

Millionaires with Windows and Blinds: the Budget Blinds Case

In 1992, one of the strongest franchises in the world in home services was born. It’s called Budget Blinds and specialises in selling blinds, shutters, curtains, and other window coverings. Some numbers: it boasts a network of 1,500 franchisees across the USA, Canada, and Mexico, serves more than 10,000 cities, and each of its franchises generates an average of $712,000 per year. The story features a group of five twenty-year-olds, including two brothers, Chad Hallock, Brent Hallock, Todd Jackson, David Lewis, and Tony Forbes, who had experience in another franchise, Miniblind, also focused on window fixture sales. Together, each putting $5,000 in the bank, they founded the business.

The day before the launch of their company, Chad has a jet ski accident and fractures his foot. This event, as he himself recounts, becomes their fortune. Confined to bed, he spends every day on the phone trying to attract new customers and organizing appointments and installations. To initially boost sales, they charge a modest entry fee of $7,500, because they want to “offer opportunities to college graduates who didn’t have $10,000 to join an average franchise.” Later, to attract new affiliates, they use agents who receive percentages on franchise fees, while significantly increasing franchise fees to increase their earnings and encourage them to find new potential franchisees. Over the years, they expanded their product range to include not only blinds and shutters but also automated solutions for smart homes, such as motorized blinds that can be controlled via smartphones or voice assistants. The company also places a strong emphasis on customization, allowing customers to choose from a wide range of styles, fabrics, and materials. The story has a happy ending for the five when a private equity fund, Trilantic, steps forward and acquires the company in 2015. Only the two brothers retain 10% of the company. The deal yields over $500 million in total to the partners.

Their entrepreneurial adventure offers several points for reflection and advice. Among these, their demonstrated ability to create a strong sales network by nurturing sellers and increasing their potential revenue each year. Another winning strategy is in advertising. They decide to collect a fixed amount, an initial $100 per month, from each franchise as a fee for advertising activities, which would then grow based on the number of franchisees. They quickly reinvest this money in Internet, magazine, and TV advertising.

A “Koala” that Became a Giant

Koala Insulation was founded in 2018 but already has about 400 outlets. The franchising conceived by Scott Marr specialises in insulation services for ceilings, walls, and floors, with the aim of improving building thermal comfort and reducing energy costs and environmental impact. Marr had already founded a company, First Clean USA, later sold to a private equity fund, when he decided to launch Koala Insulation. He understood that the home services sector was experiencing significant growth but initially had confused ideas about where to invest. The thermal insulation sector seemed particularly interesting to him.

He makes three reflections that later proved successful, which we can also adopt:

  1. Thermal insulation services are not just for new constructions.
  2. Most customers are people who built houses 30, 40, 50 years ago.
  3. The thermal insulation sector is a win-win. The company wins, but so does the customer who can achieve long-term energy savings and return on investment.

And it’s precisely on this third point that he pushes in the promotion phase, showing with transparent data and numbers how much the end customer could actually save/earn from the interventions of his franchising network. Marr’s story struck me for several aspects, but above all for the obsessive attention that his franchising has shown, from the beginning, on the collection and interpretation of data in activities such as affiliate campaigns. In an interview, which I recommend reading from beginning to end, he himself states on this point:

“We worked on metadata, observing even the smallest data sets, which then turn out to be significant for your company. For example, we initially examined our incoming flow of potential partners, focusing on how many people entered our flow on a daily basis and then weekly and monthly. From observation, then I began to understand, it took us a little time to understand the dynamics of the data. But their understanding allowed us to prepare the company for success.”

Did you find this article useful? Are there other franchising topics or sectors you would like to explore further? Write me.




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