Franchisors Carve Their Niches Wide and Deep
Printed in USA Today
by Nancy Rathbun Scott
Michael Isakson, CEO of ServiceMaster, describes the corporate dream. "Our vision is to build a family of franchises to support home and commercial needs, with a focus on the residential area. That includes everything: carpet, upholstery, furniture, pest control, lawn care, fire restoration, home warranty, and home inspection."

That's quite a dream for a company whose founder got his start moth-proofing wool carpets in the 1930s. But ServiceMaster's rise to ownership of 4,400 franchises worldwide -- with horizontal penetration into other niches through the acquisition of Merry Maids, Terminix, TruGreen-ChemLawn, Furniture Medic, American HomeShield and, just last month, AmeriSpec -- typifies how successful franchises evolve.

With gusto and precision.

From Low Rugs to High Rises
Steamatic used to do rugs; now they do 65-story buildings. Lloyd Swiggum, president of the residential and commercial cleaning company, likes to say that no job is too big or too small for his franchise owners. Take fire restoration, for example. The company can remove smoke stains and odor from a home that's had a kitchen fire. Or they can do the same to the World Trade Center after a bombing.

"We worked on that, and the aftermath of the Oklahoma City bombing and on the First Interstate Bank Tower fire, which was the largest fire in recorded history. We were on site at that building 24 hours a day, for five months."

Today, Steamatic is no longer a household company, but rather an environmental cleaning company. The ascent from humble to high-rise has taken about 50 years and a lot of fortitude. Starting with a patented high-heat carpet cleaning method, Steamatic branched into on-location drycleaning for drapes and fine furniture and then inched into large-scale fire and flood restoration at the urging of insurance companies and franchise owners.

"Everything we have done over the past 50 years has been done through our own research and development. We have proprietary equipment and chemical formulas," Swiggum says.

Steamatic's 375 franchise owners have played a big part in the process. "We could easily have sold 3,000 franchise by now if we had taken a different route. Instead we are looking at executive franchise owners. The majority of our evolution has been done with input from our franchise owners and their contact with customers."

In addition to fire, Steamatic deals with air and water problems. In the case of flooding, the company removes standing water, pulls up carpet and takes the pad away for cleaning, decontamination and treatment for mold and mildew. Later, the carpet is reinstalled. Air quality services followed naturally. "We got into air duct cleaning in 1976, when 29 people died of Legionnaire's disease. From there we began working with environmental groups to provide indoor air quality services."

Electronic restoration is a more recent enterprise. "We provide cleaning products and decontamination for computers and other electronic devices. We can restore these in cases of flooding, if corrosion hasn't started."

Steamatic can even handle soaking wet paper. "We can put written documents, pages and magnetic media into our dry freeze chambers, blast freeze and, through sublimation, stop the damage by bypassing the liquid state. In other words, the process goes from the solid frozen state to the vapor state. It's an expensive process, but we are leaders in that area."

Carve Wide or Carve Deep
Creating a solid niche market can mean carving deep, as well as carving wide. Russell Frith, chairman and chief executive officer of Lawn Doctor, Inc. believes in doing best what you choose to do. "There always is an argument to focus and there always is an argument to expand. It's a complicated set of issues. It's not right to be a company only into vertical expansion or, conversely, a company only interested in expanding into whole new areas. We are always looking very very carefully at how to make Lawn Doctor better for our franchise owners. To that end we are preparing a matrix of possibilities for growth."

Staying focused, however, doesn't mean squinting. "Lawn Doctor has enjoyed double-digit growth in our core 'weed 'n feed' business this year. We still don't install plant material and I do not see our business as cutting grass at this point. But we do have a pilot testing program for installation and maintenance of underground irrigation systems."

Grow As Your Niche Grows
Colortyme has remained in -- but pushed the outer limits of -- its rent-to-own market niche.

"When we started in 1979, our major focus was distribution of Colortyme brand TVs. Today, we are still in the rental business, but we now offer name brands and a wider array of products," says Mitch Fadel, president and CEO of the 315-store franchise company.

In the past year, Fadel notes a jump in electronic rentals, especially of computers. "We began to offer computers and cellular phones. Our customer focus groups showed there was a demand for that, and I believe that segment of our business will continue to grow."

Fadel says Colortyme will continue to target the lower middle- income strata that marches to Colortyme. "The rental market is 90 percent of our focus. We have stores in forty states and we are growing at about 15 percent a year. Fourteen new stores have opened in 1996, so far. We believe this is a niche business that will continue to grow consistently, as it has in the past, because the customer base that needs rental services continues to grow every day."

Economic Signals Can Signal Growth
Corporate shrinkage might have pained some companies, but it has been healthy for Sandler Systems, says Debbie Burkholder, national training director. "Because of downsizing, we have seen very, very strong people coming into our franchise network. The shrinkage has pushed some people who might have been a bit reluctant to get their foot off first base, which has brought Sandler very well-trained trainers: CEOs, VPs of sales and so on, from Fortune 500 companies."

Leaving corporate America has been just as good for the executives who have taken the plunge, says Burkholder. "We have a proven way for the sales trainer to be successful. We backup the concept with products and materials and a whole library of training curricula and tapes and notebooks which the trainer can take into the client."

The successful marriage of competent professional and workable system has helped Sandler define its niche and double the number of franchises. New products and services have been part of the evolution, too. "Our original niche was about reinforcement sales training. We've branched into courses for sales strategies for non-selling professionals: attorneys and accountants, for example. Banks, in particular, want to cross-train their people. We also offer courses in customer service and telephone skills."

As always, ideas have bubbled up from the owners. "They helped us decide what to do with ProSummit, our corporate retrainer program. Currently we are putting together a task force of franchise owners -- five to seven people -- who are coming in to help us design a sales management program. Because of the type of people we have, the evolution of the company has been driven by our franchisees."

Ideas Through the Hour Glass
Reel back to the late 1930s. ServiceMaster founder Marion Wade has built a successful business keeping moths out of wool carpets. But, on the job, he keeps noticing dirty rugs. So, in 1937, Wade offers the first on-location carpet cleaning to one of his customers.

Before long, other people want in. Franchising -- a relatively new concept in the early 50s -- seems like a good way to expand and grow capital at the same time. But don't people worldwide have carpets? Wade thinks so and in 1959, Service Master hops across the ocean to the United Kingdom, to open its first international franchise. By 1974, ServiceMaster has 1,000 franchiss. A decade later, the number has tripled to 3,000.

But all these franchise sales are mere vertical growth, and ServiceMaster sees a way to stretch sideways, too. In 1988, ServiceMaster acquires Merry Maids, which, even then, is the nation's largest home cleaning business. ServiceMaster's horizontal girth expands outward from there. Terminix, with 450 pest control franchises, is acquired in 1986. Home warranty service is added to the corporate portfolio with the acquisition three years later of American Home Shield. Moving the business out-of-doors in the early 90s, ServiceMaster purchases lawn care giant TruGreen-ChemLawn. In February of this year, the acquisition of AmeriSpec draws the country's largest home inspection franchise under ServiceMaster's banner. Then, just last month, the company purchases Furniture Medic, Inc., a 477-unit franchisor that provides onsite furniture restoration and repair.

Today, the ServiceMaster family boasts six million customers --and counting. A new dial-in service dubbed 1-800-WE SERVE is designed to answer "help me" calls from anywhere in the U.S. "Suppose Mrs. Jones from Baltimore, Maryland, calls and says, 'My basement is full of water. What do I do?' We can connect her immediately to a ServiceMaster licensee in her area. The same is true for pest control or anything else that needs to be done around the home."

Where do the various evolutions and revolutions begin? "They are a direct result of our licensees," Isakson says. "I often feel that we're in an hour glass. There are all these ideas floating around among franchise owners everywhere and those ideas come through the neck of the hour glass, which is the home office. We study and research the ideas for efficiency, customer friendliness and so on, and then disseminate the best ideas back out through the base." 

® copyright 1999 Nancy Rathbun Scott
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