It happens to everyone — one day, things are going great, business is progressing as it should, and the next day, the company is stuck in a rut. While business may remain steady, that hump can seem impossible to get over. Some enterprising HVAC business owners will use this time to attend training or hire a business coach. Others consider a different option — converting to a franchise business.
Becoming a One Hour franchisee is awesome, according to Troy Latuff, vice president, Franchise and Business Development, Direct Energy Home Services. However, there’s often a misconception of what franchising really means for business owners. Being a franchise means the company is still 100 percent locally owned and operated — the franchise is really there to be a partner and help franchisees grow their business from top-line sales to bottom-line profits and everything between, he said.
“They [contractors] think if they consider this, there is a loss of control, which there is really not; a loss of identity, which there is not; and a loss of ownership, which there is not,” said Latuff.
According to him, approximately 90 percent of HVAC companies go out of business within the first five years. All of these companies plateau — they hit a revenue number or a certain size and then they get stuck. While there are many reasons why contractors choose to become an HVAC franchise, one of them is to help break out of the rut.
“There are a multitude of ways we can help, which is why we have such a significant footprint across the country,” Latuff said. “We have 343 locations across the U.S. What we bring to the table is not unique in the way that nobody else does what we do. Most independent contractors can go out and get everything we provide separately from someone else. The difference is, we do it all under one brand, in one business: HVAC.”
PROS AND CONS
Steve Truett, president of Aire Serv, a Dwyer Group brand, said franchisees are attracted to the organization because of the support and operational systems it offers.
“These systems have been developed and refined over 25 years of being a franchisor,” Truett said. “They’re designed to help our franchisees scale their businesses and provide a better customer experience.”
Aire Serv has approximately 190 franchise locations in North America, all of which are happy to help out their fellow Aire Serv franchise owners. The network of franchisees is known as Aire Serv Nation, Truett noted.
“When you’re in business, you can’t go down the street and ask your competitor to assist you with a challenge you might be having,” he said. “Not only do we have our home office team to help with such challenges, but we also have a network of franchisees who have gone through pretty much anything a business is going to go through today or might go through in the future. That is a huge benefit.”
Additional benefits include using the Aire Serv trademark, marketing systems and materials, and vendor network. The vendor leverages the buying power of Aire Serv as well as all 13 of the Neighborly brands. Neighborly is an umbrella brand that connects all of the Dwyer Group’s sister companies for consumers, Truett explained.
“We’re now leveraging the customer databases of other brands in the market to help our Aire Serv franchisees so that it expands their reach with customers,” he said. “We started doing this last year, and it’s something we’re excited about. Any one of our Aire Serv franchisees can now tap into the customers of all the other Neighborly brands in their market.
“For example, if I have an Aire Serv and there is a Mr. Rooter Plumbing, Mr. Electric, and a Molly Maid in the market, I introduce those customers to the other Neighborly brands, and they do the same,” he continued. “Think about Marriott — I’m loyal to Marriott, but I may stay at a Courtyard or a Fairfield.”
One of the benefits of becoming a One Hour franchisee is its conversion team helps businesses during the transition period. The methodical approach lists all the different steps that need to take place to convert a business, Latuff noted.
“What we don’t want is for them to take a step backwards to take two steps forward while they are converting their business,” he said. “We have a conversion team on-site during the process, which is an integral part of their success.”
One Hour is also known for its cobranding.
“For example, a business may be called ‘Nicole’s Heating & Air Conditioning,’ so we want to utilize and leverage the success that Nicole already has and align it with us,” Latuff said. “So we allow our One Hour franchisees to use their legacy name and brand it ‘Nicole’s One Hour Heating & Air Conditioning’ to tell that story. At the end of the day, from an operational perspective, there are three sets of groups we have to convince that this is for everybody: the ownership group, the employees, and the customers. The story we need to tell, and we’ve done a pretty good job of it thus far, is what are we doing, why are we doing it, and what’s in it for them. And if we can convince every person in those three groups, then we’ve done our job. If we roll up in a yellow truck, and it used to be a white truck, customers want to know why. Well, if we do our job right, they won’t care why. The operations team is critical in that process. And not only are they going to help convert the business, but once the transition is complete, they’re there to support that business owner like a business coach.”
Latuff also noted that One Hour’s buying group, BuyMax, presents another advantage for franchisees. Because Direct Energy is a large business, it represents around $3 billion worth of buying power. Therefore, everything contractors buy, Direct Energy can buy at a lower cost. Not only are there upfront savings, but the program also offers back-end rebates for participants.
“It helps put more money in their pockets,” Latuff said. “That helps their bottom line, and it helps offset the cost of being part of the franchise. BuyMax also has private brands. If you think about the HVAC system — the furnace, air conditioning, air handler, filtration system, UV light, humidifier, and thermostat — everything you can imagine that goes into a new system is branded One Hour. The point of that is the customer knows who to call if something goes wrong because it’s very clear who installed the equipment.”
Private branding also benefits One Hour franchisees. One of the biggest challenges independent contractors have is that, no matter what brands they carry, they are only one of possibly hundreds of local dealers, so they are easily price shopped, Latuff noted. However, a franchisee cannot be price shopped because there are no other One Hours in that particular territory.
“You’re the only one the customer can get that product from,” he said. “That’s a great benefit at the end of the day because the customers are buying from the business, not the manufacturer.”
As with any business, there are challenges involved in becoming a franchisee. The biggest challenge can often be the conversion, according to Latuff.
“We start on day one with an initial training call to lay the groundwork because every business is in a different spot,” he said. “We lay out the plan of what we need to do first and methodically go through the conversion process. The challenge here is the business still needs to run. It’s not like we’re tearing down a building and building a brand new business. We want to keep that business operating and making money without a hitch. Ideally, from start to finish, the conversion process is approximately 90 days.”
Additionally, One Hour has adopted a new approach to bringing on new franchisees this year. For one, the company is targeting larger contractors. In the past, the challenge with bringing on larger contractors was the cost involved to convert the business. One Hour has developed a program that will help subsidize and pay for the conversion to ensure the company is in good financial standing, Latuff noted.
But contractors should not become a franchisee if they are not committed to changing how they do things, said Truett.
“A lot of people are resistant to change,” he said. “One of our biggest challenges is trying to find out if people are ready to change and embrace a different system. If someone is at a point where they realize they need systems and support to get to places where they haven’t been, then that’s the best time to look at joining a franchise. If they’re not committed to changing what they’re doing and doing things differently to get different results, then the franchise is not going to be the answer for them. Becoming a franchisee doesn’t eliminate challenges to businesses, but it does provide the support and systems that help owners get through those challenges.”
PULLING THE TRIGGER
Sheryl Knight, owner of Aire Serv of The Woodlands and Greater Conroe, Texas, said the opportunity to become an Aire Serv franchise came at the right time. Sheryl Knight, along with her husband, Michael Knight, opened Knight Air in 1991.
“At that time, he was just knocking on doors and trying to get whatever work he could get,” she said. “And he did a really good job of doing that until about 2010. That’s when we had a conversation about how much longer he would be able to do the job, because he was in his mid-50s at the time, and while his mind was still capable, he didn’t know how much longer his body would let him work in the field. So I said, ‘Let’s pray about it.’”
About a month later, Michael Knight received a phone call from the Dwyer Group with an offer to become an Aire Serv franchisee.
“He told them, ‘I’m listening, but I’m about 90 percent sure I’m not going to do what you’re asking of me,’” Sheryl Knight said. “He told the guy he had 45 minutes because that was the time it would take to drive to his next service call. By the time he got to the next call, he was intrigued. We really felt like this was where we were being led next.”
Sheryl Knight noted that while her husband is extremely knowledgeable about all things heating and cooling, they were unsure of how to go about hiring quality people to carry their business name and reputation. After listening to everything The Dwyer Group had to say, the couple realized that becoming a franchisee was the next step for them because the franchise had all of the support systems in place to allow the small business owners to learn and grow. The company was already profitable and successful, but since converting to an Aire Serv franchise in 2010, the business has surpassed its revenue three times over and has grown from servicing 780 customers to 3,300. They have also grown to employ five technicians, two office employees, and a salesman, who also happens to be their son.
“We never would have known how to grow our business like this,” Sheryl Knight added. “They are even there to tell us when it looks like it’s time to hire our next technician or office person or put the next truck in the field. They are there for those things. And if you have something go awry, you have somebody to call on for help. When you’re by yourself, it’s not that easy. You have to do all your own research, and you don’t have anybody to fall back on. To me, when you’re in it by yourself, it’s more cutthroat out there — everybody’s trying to get their next meal, so to speak. When you’re Aire Serv, everybody is willing to help everybody. For us, it was a huge blessing that came at the right time.”
And though the benefits far outweighed the drawbacks, the Knights did experience a few bumps in the road along the way.
“For us, the challenge was partly getting over the hill of paying royalties as well as having naysayers,” Sheryl Knight said. “You have naysayers at every turn — we had family members and people in the field saying, ‘Well, I would never buy a franchise and then have to pay them royalty fees — that’s ridiculous.’ I was like, ‘Yes, but look at what we’re paying for.’ It was very difficult for us to hear that, but now, they are believers that this was the right decision for us.
“I’m very grateful for all these little things that we’ve learned,” she continued. “For us, it’s been very beneficial. There’s bumps in the road, I guarantee that, but if you do the things they suggest, you’ll be successful. And believe me, we’re not perfect. We don’t do every single thing they suggest. If we did, we might be billionaires.”
One Hour Heating & Air Conditioning of Azle, Texas, is a fairly new franchisee, having only converted a year ago. Formerly Airwise Air Conditioning & Heating, owners Keith and Chris Hufsey decided to make the switch after running the company for 28 years. The married couple is actually preparing to hand the reins over to their son, Dustin Hufsey, general manager of the company.
“For me, it was a lot of the networking and support systems in place,” Dustin Hufsey said about why he wanted to become a One Hour. “The training and purchasing power are great, but the networking is huge. Being able to call on other companies in your same business that are already successful and doing things the right way is great. They are good about letting us come visit, take notes, and just learn from them. Normally, companies in your field are not very open to letting you in, but the franchise group allows you to learn from who is doing each part of the business the best. So we are able to take that back and apply it to our company.”
Dustin Hufsey said the main challenge is being willing to change.
“You have your way of doing business, but if you want to become part of a franchise, you need to be willing to do things that follow their systems,” he said. “They’ve come up with a process of doing things that works. But a lot of people come on board and hold onto their old procedures and don’t make the changes that are necessary.”
In addition to simply accepting change, the Hufseys faced another major challenege during their transition period.
“We were rebranding vehicles, getting new software, training, and all of that during our busy season,” Dustin Hufsey said. “It was definitely a challenge. But as long as you’re committed to it, then it’s well worth it.”
Read more about Direct Energy Home Services.
Publication date: 6/18/2018