Monday, Jun 03, 2019

Regional franchise market ripe for growth

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Experts say interest for service-to-home franchises will continue in 2019 despite predicted recession

Service-to-home franchises have been on the rise in 2018, and industry experts say the interest, from both franchisees and customers, will continue into 2019, even with predictions of a shallow recession.

Brigitte Betser, consultant for FranNet, a franchising consulting agency with offices in Michigan, said the West Michigan market is ripe for growth, particularly in what she calls the “personalized services” industry.

Betser said Michigan is going to continue to see an increased focus on franchises bringing services into customers’ homes. Whether it be cleaning, dry cleaning or beauty-related industries, consumers — and millennials in particular — are becoming more dependent on mobile services.

“When you think about growing markets looking at demographics, I would say millennials are likely two-income households who don’t have time to do all the cleaning or home repair,” Betser said.

Service-type franchises as a whole — including brick and mortar — will continue to flourish, even in spite of predictions of a coming recession in late 2019 or early 2020. Betser said such services are quite resilient during all economic conditions.

“In beauty or health care, their sales almost doubled during the 2008 recession,” Betser said. “It was a cost-effective way to make yourself feel good. I think people are recognizing that.”

The franchisee demographic hasn’t changed much over the year, Betser said. While the prospect of owning a franchise can be attractive to all ages, sexes and incomes, the key demographic still tends to be the 50-year-old male who left the corporate world to set up a different income channel or to do something more fulfilling.

Buzz Franchises CEO Kevin Wilson has seen similar trends both in the types of franchises people are taking advantage of and the types of people who want to be franchisees. While the demographics are across the board, Wilson said he’s primarily seen interest from people who were previously in the corporate sector, have some money saved up and want to start their own business while the economy is thriving.

When it comes to the recent trend of in-home services, Wilson said both aging retirees and younger workforce members have reason to take advantage of them.

“You got this aging population that has done well and has money,” Wilson said. “They don’t want to spend their free time and retirement doing stuff around the home that someone else can do more efficiently.”

“Another category is people in their 20s and 30s who were not brought up doing things around the home,” Wilson added. “They’re getting into the workforce and saying, ‘My expertise is my job. I can pay somebody else to do that.’”

All of Buzz Franchises’ brands are service-to-home-based. Previously, the company owned Mosquito Joe, a pest control franchise with a West Michigan presence, and sold it in the summer of this year.

Buzz Franchises’ newest brand is Home Clean Heroes, which was launched over a year-and-a-half ago but has been confined to Virginia Beach, Virginia, where Buzz Franchises is headquartered.

“We spend a lot of time developing the positioning of the brand in the marketplace, so it has the most effective response from customers,” Wilson said.

Buzz Franchises also owns Pool Scouts, a 2 1/2-year-old pool-cleaning brand with 20 locations in eight states.

Home Clean Heroes operates eight trucks and services around 1,300 customers in Virginia Beach, Wilson said. By the end of 2019, he hopes to have his first franchisee for the brand in Grand Rapids, which he said should take little time after gauging opportunities.

“The idea is it’s really a business in a box, and somebody who has no experience at all can come to us,” Wilson said. “Once we get them through the training, from when they commit to when they open, could be as short as 60 days.”

Betser said in-home service is a good type of franchising to get into for people who are interested in a low to modest investment, want to get into a trade-type business and want to put full-time ownership effort in the business.

“Nothing is recession-proof, but there are recession-resistant businesses,” she said. “If you focus on certain demographics and their needs, I don’t look at that as a discretionary income. They’re going to need these services even more because they don’t have the time to do it.”

Another unique emerging concept looking to grow in the West Michigan market is in-home personal training. New York-based GYMGUYZ is a personal training service that currently has one franchise in West Michigan, serving Grand Rapids, Alto, Ada, Caledonia and Middleville.

GYMGUYZ founder and CEO Josh York said the company only recently broke into the Grand Rapids market with a handful of coaches on staff, but the company runs the full range of personal training and brings all manner of workout gear — body bars, resistant bands, pool equipment — wherever clients need it.

“We come to you and bring all the equipment — pool, park, place of worship, you name it,” York said. “There’s no brick and mortar, so you don’t have any excuse.”

York started GYMGUYZ in 2008 after working part time as a personal trainer at a brick-and-mortar gym and noticing there were not enough consistent gym-goers for personal training as a career to be sustainable.

“The thing for me was there’s always been an issue in personal training,” he said. “I’ve always been in the fitness space, but a trainer without clients is unemployed.”

York’s vision was to make GYMGUYZ the largest fitness brand in the world in the next 15 years. The New York-based company currently operates in 32 states and Canada, and plans soon to open in the U.K.

York said GYMGUYZ plans to continue expanding in the Grand Rapids area with more franchising opportunities in 2019.

According to data from the International Franchise Association, West Michigan is home to around 2,000 franchises, creating almost 170,000 jobs and over $702 million in GDP. Statewide, there are approximately 23,000 franchise locations in the state of Michigan, contributing over 242,000 jobs and over $11 billion in GDP.

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