Hvac franchise makes inroads in Texas and other regions

September 12, 2000
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WACO, Texas — There is a whir of activity in the offices of this Texas business. The Dwyer Group, a worldwide franchise organization, is managing and recruiting franchisees for its several service businesses.

Of particular interest to the hvac trade is Aire Serv®, a heating and air conditioning organization made up of 56 individual franchises in the United States, Canada, and Saudi Arabia.

Aire Serv touts itself as an exclusive light commercial-residential hvac service and repair organization — a strong spoke in the Dwyer Group wheel of service companies. The list of businesses in this publicly traded company include Mr. Electric®, Mr. Appliance®, and Mr. Rooter®.

“The Dwyer Group wanted to build a lot of service organizations that could work off of each other through a lot of cross-marketing and co-op advertising,” explained Roger Goertz, president of Aire Serv. “The company already was in customers’ homes fixing plumbing and cleaning carpets, and they decided to see what else they could offer.”

Dwyer developed the Aire Serv concept in late 1994. Besides its franchises in 26 U.S. states, Canada, and Saudi Arabia, Aire Serv will soon be headed to Europe.

“We recently sold the master license agreement for the United Kingdom,” Goertz said. “Four partners bought the license and will be expanding into the U.K., Wales, and Scotland beginning in September. We’ve also had inquires from companies in France, New Zealand, and Brazil.”

For now, Aire Serv is planning to focus its marketing on specific regions of the United States. In the first quarter of 1999, it focused on the Southwest. The second-quarter focus is on the Northeast, with later campaigns in the Atlantic States and the South.

Franchising versus private ownership

One of the inevitable questions that contractors ask is, what are the benefits of owning an Aire Serv franchise as opposed to staying independent?

For some business owners, it gave them the opportunity to cross over into residential markets from existing commercial markets and vice versa. However, that scenario has created a two-headed monster for contractors, who then essentially have to manage two businesses.

Then Aire Serv came up with its “roll-in program,” which allows existing businesses to roll into one — an Aire Serv franchise.

“We have a program for roll-ins that includes different franchise fees and royalty structures,” said Goertz. “Many people have a fear of franchising. They don’t understand the fees and royalties [as low as 2% of sales].

“We don’t want contractors to drop their name and lose their goodwill and identity built over time. They use the Aire Serv name and add their name to it, using ‘a division of ABC Heating and Cooling,’ for example.”

Contractors also have the benefits of national brand name recognition, national pricing relationships with numerous vendors-suppliers, and training and support they might not get if they remained independent. Joining up also helps owners with the “business side” of the business.

“We chose to convert our existing hvacr business to Aire Serv to help us manage it better,” said Tim Funke of Poplar Bluff, Mo. “It makes the job less stressful, more fun again, and increases our bottom line.”

Goertz added that many contractors are highly skilled at what they train to do — they are excellent technicians. But many of them learn the business side as they go along. “You eventually hit the wall and to go beyond, you have to know and understand the business side.”

Of course, contractors have options to franchising, Goertz said: Hire a business consultant, or sell the business to a consolidator and become what he calls “an employee.”

“As soon as you sell your business, there is a mental change. Frankly, with Aire Serv, you still are the owner but now you have a ‘coach’ who acts as your private consultant. You have training programs and regional and national conferences, and a national advisory council. We don’t ever go away.”

David Coucke, a franchise owner in Austin, Texas, likes the fact that he still runs the business with national support.

“I started the franchise simply because it made sense,” he said. “I now have a national affiliation and support while controlling my own business and life. Plus, I can build equity in my business for a future sale.”

The benefits

The initial franchise fee is $150 per thousand population base. For example, a territory with 100,000 population base would cost $15,000.

The initial cost for participants in the roll-in program depends on the amount of business that is rolled into Aire Serv. Most of the existing 56 franchises were roll-ins, with some realizing 50% savings on their franchise fees.

In addition, “The territory would be exclusive,” said Goertz.

If a prospective franchise owner has little or no knowledge of hvacr, Goertz said, “We have programs developed for the type of business where an owner can make an acquisition. However, if the new owner has an hvacr background, Aire Serv will help them develop business skills to match or exceed their technical knowledge.”

Moreover, franchise owners can expect the following benefits:

  • Help with recruiting programs to find qualified employees;

  • Owner-option investment into other franchises, at up to 75% savings of the franchise fee;

  • Marketing program directed at customers who will only “accept” excellent service;

  • Ongoing training programs for employees and owners at no additional expense;

  • An award program for high achievers;

  • Creative pay and incentive programs; and

  • A corporate website where job listings are posted. One Aire Serv franchisee has used many of these benefits to support his technical expertise. “Like most business owners in our industry, I have a service technician background,” explained Tommy Dutton of Greenville, S.C.


Effects of consolidation

While franchising bears many similarities to consolidation, the differences, according to Goertz, are noticeable and beneficial to his company as well as the franchisees.

“Consolidation is a blessing for us,” he said.

“Consolidation has raised Aire Serv’s awareness level and brought excitement to the industry.”

Consolidation “has allowed us to be selective as to who we can invest in,” he said. “We have turned down applicants because of our heightened standards.”

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