Franchising Is a Means to Gain Market Share
Another way to grow — or to enter the HVAC contracting business — is to become a franchisee. And the HVAC trade has two of the more successful franchise organizations in any service business, namely One Hour Heating & Air Conditioning and Aire Serv. Each business boasts several years of experience in the trade and represent 400 franchise owners in North America and other countries. Their success and rate of steady growth is an attractive selling feature to prospective franchisees — and many business owners have learned how to manage a profitable business and grow in spite of uncertain economic conditions. In fact, a down economy may be the best time to become an HVAC contracting franchisee.
“There is a lot of business uncertainty in the world,” said Doyle James, president and CEO of Aire Serv. “A lot of people are unsure about what is happening with the government, regulations, insurance, etc. There seems to be a wait-and-see attitude. Proactive contractors who gain market share right now can come out on top when the economy turns around.”
Aire Serv has 175 locations, mostly in the United States and Canada, offering immediate response and 24/7 service. It is part of the Dwyer Group, which operates six other service franchises.
The company is known for its guaranteed service, including its Performance Guarantee, which guarantees that an installed system will heat and cool a home at its designed temperatures, or Aire Serv will correct it at no cost to customers. It also has a Satisfaction Guarantee and No Lemon Guarantee.
Scott Boose, COO of Clockwork Home Services, under which One Hour operates, said, “Interest in HVAC franchising is increasing after a steady state in the last 18 months. As the economy continues to stumble, many contractors are looking at a franchise system such as One Hour to provide the support they need to compete in an ever changing environment.”
One Hour Heating and Air Conditioning was founded in 2003 and has 225 franchise-owned territories and 43 company owned locations “that serve as the model for the systems and a test bed for new ideas,” said Boose. “One Hour is based on the concept ‘Always on time or you don’t pay a dime.’ ”
What a Franchisor Has to Offer
Having a brand name and reputation to back it up is an obvious attraction to potential franchisees. Marketing a brand like One Hour or Aire Serv is obviously easier than Joe’s Heating & Cooling, which is an unknown entity.
“The One Hour franchise model is based on the strong brand identity of the One Hour name in the markets in which it operates,” said Boose. “A strong brand and name creates added awareness in our markets and thus an avenue for growth in a difficult economic climate.”
James said that a market presence has increased the familiarity of the Aire Serv brand. “The greatest interest has been in areas where we already have a presence in the market and people are familiar with the Aire Serv logo,” he said. “We tend to see a build-up in these areas. We are seeing the potential for one to four new franchisees in these areas where there may have never been an interest before.”
But a name and a reputation shouldn’t be the only reasons for choosing to own an HVAC contracting franchise.
Both companies stress the standard operating procedures which benefit business owners who are looking for more structure in their operations and management.
“One Hour offers our franchisees the benefits of standard operating practices known as OpX, which is delivering Operational Excellence,” said Boose. “These procedures illustrate best practice in owning and operating an HVAC business.
“Our systems start with how to answer your phone effectively, converting as many of your inbound calls to opportunity as possible. We also focus on selling systems, margin controls, and overhead standards to create a thriving and growing business – delivering year-on-year returns.”
One Hour franchisees meet twice a year at national events to gain the latest insight into their markets, new advertising campaigns, hear from industry and motivational speakers, and follow the direction of their brand.
According to Doyle, Aire Serv has built its business around integrated processes, sales systems, and incentive systems. “It is a black-and-white, step-by-step process,” he said. “We have put together a benchmarking system with the goal of getting all franchisees using a common software platform. We are also aggregating financial statements so the business owners can see how they compare to other companies.
“In addition, we offer hands-on, one-on-one coaching as opposed to mass seminars — showing people how to use this information for their business. It has been a continual process.”
When asked the most important benefit of owning a national HVAC franchise, both Boose and James said it was hard to narrow the choices down. But James said that the key features of Aire Serv programs center around benchmarking and understanding financials.
“The most understated thing in our industry from a business standpoint is understanding financial numbers,” he said. “Gaining financial awareness is very important. You can identify problems and how to fix them where you have 175 other companies to compare to. That is pretty powerful.”
“There is no true single most important program but rather the discipline a franchisee must have to execute and participate in all the programs which are made available to them,” said Boose. “The system works effectively when all pieces and parts are utilized. One Hour’s operating standards provide the compass for excellence in delivery, our buying group allows scale leverage and logistics, our training is essential as new employees are added to the business as it grows, and a standard software system ensures timely and accurate financial data and management information.”
Reaching Out to Contractors
Getting the message to prospective franchisees is very important — especially since both Boose and James agree that HVAC contractor franchises are a strong option for new or existing business owners.
“As the marketplace continues to consolidate, big box retailers continue to enter, and the economy remains weak, we see proactive contractors looking at a franchise system like One Hour as a means to compete, thrive, and creating value and liquidity for future exit strategies,” said Boose. “The One Hour brand is focused on leaders in each respective market.”
James said, “We are seeing a growth again of consolidation and utility company involvement. Consolidators are owned by private equity companies who are looking to continually grow. For those folks who want to remain independent, they need to leverage the strength of a large franchise group, offering a common brand and a common look-and-feel.
“We are looking at large contractors who want to grow to bring them aboard as franchisees. We can do that by investing capital into companies in order to help them grow into being an Aire Serv franchisee.”
“The most difficult contractors to reach and talk about franchising are those who are small and who don’t have time to look at and digest industry information. We take a direct approach to reaching these types of people using direct mail, invitation to shows, and dealer meetings, where we get a lot of interest.”
According to Boose, the future for HVAC franchising, especially the One Hour brand, is especially bright. “Franchisors like One Hour are able to continue to offer benefits to even the most successful contractors,” he said. “As the market continues to change and new entrants look to penetrate, a franchise brand like One Hour allows a local business to compete locally with the power of a national backer and the scale of a multinational provider.”
James said that franchising continues to grow and noted that potential franchisees shouldn’t view franchise ownership as a get rich quick scheme. “This is not about a short-term gain — but about a long-term commitment,” he said.
Publication date: 10/03/2011