Business owners buying related franchises for cross-marketing opportunities and growth without having to expand into new markets is part of a bigger trend, said Nick Powills, CEO of Chicago-based No Limit Media Consulting. After years of covering franchises as a journalist, Powills now offers public relations services to franchisors and their franchisees.
He’s noticed that more and more business owners are buying multiple related brands or buying brands that they can incorporate into their existing home-grown business.
Jesse Russow, who owns Avalanche Roofing and Exteriors, added the Rainbow International restoration services franchise to his business this week.
“I’m just trying to add some stability to a seasonal business,” Russow said.
He’s also trying to grow. He opened his roofing business in 2007. He’d been selling for other companies for years and would get frustrated with owners who failed to pay.
“I pawned everything I had and I was living in a motel,” he said. “But I knew I could sell.”
His first year in business, Avalanche had $1.3 million in revenue. The second year it was $1.67 million. Because he had to be out of town during a lot of the 2011 season, revenue hit just $1 million. That was when he decided to look into restoration. Of course, a major hailstorm at the start of the 2012 season led to $3 million in roofing revenue.
But, by the time he realized it was a record year, he had already signed a contract with Rainbow International.
The Waldo Canyon fire didn’t influence Russow’s decision to add disaster restoration to his services. But if he’d already owned the franchise last summer, it would have been a bigger year yet.
Russow has liked the idea of adding restoration services to his roofing business for a few different reasons.
“We’re not the biggest roofer in town,” he said, “but we’re pretty big.”
That means there isn’t much more market share for the company to get. If Russow is going to grow his roofing business, he’ll have to move into new markets. But with a new baby and a life in Colorado Springs, he’s not interested in new locations.
So, growth means diversifying.
When he decided to add disaster restoration to his offerings, he knew he wanted to go with a franchise.
“I wasn’t willing to build another business from scratch,” he said.
Rainbow has a system in place that he can follow and experts he can call when he has trouble with the machines.
When there are problems on the roof, he knows the business well enough to solve them, he said.
“But it took me 10 years to learn that,” Russow said. I don’t have that kind of time.”
He’ll be able to market restoration to his roofing clients and roofing services to restoration clients.
He’s not looking for fast growth.
“I’m just looking to establish myself in this market,” he said.
Mark Whitmoyer moved to Colorado Springs in 2006 for a franchise opportunity. He heard 7-Eleven was selling its corporate stores to franchisees, which would save him several thousand dollars in commission to a previous franchise owner. He bought the store at 1240 E. Fillmore St.
It’s a good business, he said.
Good enough that when he saw a piece of land open up near the intersection of Powers Boulevard and Dublin Road, he asked corporate to work with him on another location. They weren’t interested.
“So, we just built our own convenience store,” Whitmoyer said.
That worked out because it allowed him to add a liquor store and a Pita Pit. The Pita Pit inside Whitmoyer’s Snack Shack at 6445 Source Center Point is the first Pita Pit franchise inside a convenience store in the country, Whitmoyer says.
“We knew we wanted some sort of food program,” he said. “We’re not big enough nor do I have the background or desire to do our own food program. A franchise is like a business in a box.”
He chose Pita Pit because it’s a healthier alternative and it’s a little different from nearby competition. The idea behind adding the food franchise was to draw people into the store and to give them an added reason to stop at his Snack Shack, which is branded with Shell Gas.
“It’s going really well,” he said. “It was a great choice. We had no idea there was this loyal following for the Pita Pit brand name.”
Powills said he expects to see more business owners buying into franchises that mesh with what they’re already doing and give them opportunities for cross-marketing.