Australians just can’t seem to have enough swimming pools. There are over one million pools in Australia and demand for spas is also skyrocketing. PoolWerx franchise founder, John O’Brien, is strategically putting the frameworks in place to support a 10-year plan to become the single service provider to this forever-burgeoning market.
For O’Brien, choosing an “unorganised industry” and “organising it” is the first secret to smart franchising.
“We chose the pool and spa market because it was growing, unorganised, and there was a need to service and maintain pools and spas. This was our opportunity – to design a business model that gave the market structure and at the same time develop a robust marketing model that attracted franchisees,” he says.
Following this formula, the pool franchise has captured a 30 percent market share over 10 years and its franchisees are reaping the returns.
Looking after franchisees’ interests and business development is a key component of the PoolWerx strategy. According to O’Brien, setting franchisees up with a career path from the outset helps them see a future for their businesses.
“When franchisees join PoolWerx they become part of our ‘three tiers in five years’ plan. They start with a single mobile van and graduate to a fleet, then finally to a retail store with three to four vans. This enables the ‘man with the van’ to grow his business and command over $1 million-plus in turnover,” O’Brien says.
Franchisees are embracing the model so rapidly that O’Brien expects to have 300 franchisees from Cairns to Perth by 2010.
Three years ago husband and wife team, Paul and Kirsten Shaw, started with just one van. Before long they had multiple vans, a shopfront, 12 staff and turnover of approximately $1.4 million a year. They say they liked the idea of a “career franchise” rather than “just buying into a job”. The fact that they could earn a wage, enjoy a return on their investment while continuing to build equity in the business was a major attraction.
With over 23 years experience in franchising under his belt, O’Brien says a franchisor needs a lot of energy and focus to make a franchise system really successful.
He hones in on the point that to stay on top and maintain a winning franchise, franchisors must possess two key attributes: the ability to clearly articulate the vision to franchisees from the very beginning, and to lead them. From O’Brien’s perspective, these skills can make the difference between success and failure.
“Running a franchise system is no different to sitting at the helm of a large corporation. The only variation is that your franchisees have put their homes on the line to be part of your model, so they take their businesses very seriously,” he says, emphasising that franchisors should always keep in mind that one of the fundamental drivers for a franchisee to join a franchising system, rather than go out on their own, is that they want to be directed by a leader.
Another aspect of Poolwerx’s success is its emphasis on women. O’Brien notes that about 40 percent of franchises are driven by the female partner. His theory is that women are actually the ones who make the decision to come on board in the first place.
“These women are incredibly dynamic,” he says. “They see the opportunity of working together as a family and building a business that will make the family more financially secure. The majority of the time they are the drivers of the business, as well as playing an integral role at an operational level, be it in administration, marketing or store management.”
To harness the trend PoolWerx has designed educational workshops specifically geared towards women in a bid to nurture their roles and further grow the family business.
Adding to its stable of innovative franchisee incentive programs, it introduced the ‘match maker’ program 12 months ago.
“This program offers existing franchisees alternative options to entering the retail market and current ‘ma and pa’ operators, of which there are over 850 across Australia, an exit strategy or even the opportunity to become a PoolWerx operator,” O’Brien explains.
Take up has been strong and a sound strategic move for PoolWerx in its objective to “organise” the pool and spa market.
Winning awards has been another huge business driver for PoolWerx. Indeed, after recently winning the award for best pool store and pool technician of the year, O’Brien has seen franchisee enquires escalate as well as the quality of interested parties.
“Once you have won an award you don’t have to prove that your model works anymore,” he notes.
Winning awards, however, has in no way led O’Brien to take his eye off the ball. He is currently focused on opening the first PoolWerx in New Zealand mid this year, and exploring opportunities in what he calls the “sun belt western” – the coastal areas of Europe and the United States.
“We already have a significant stake in a French company and should be ready to begin operating in July. We’re not going to ignore overseas demand if it’s there and being the largest pool service business, it makes sense to expand offshore,” he says
Be this as it may, O’Brien is careful about his priorities, stating: “We are very mindful that we continue to achieve market share in Australia and to ensure our local franchisees are looked after.”
For franchisors setting their sights on overseas expansion, O’Brien recommends heightening the profile of their business through international trade shows. PoolWerx attends European trade fairs and conventions four times a year and receives a regular stream of enquiries via this form of marketing.
Staying on top
It’s not easy being a market leader, according to O’Brien. Once you have reached the top there is no time to relax. Everybody is watching you – your franchisees, your customers and your peers.
“You continually have to innovate, be innovative, and reach for ever higher standards,” he says.
To stay on top, PoolWerx has developed a service package that franchisees can offer residential clients.
“We have found that most pool and spa owners just want a healthy, clean pool and not have to think twice about maintaining it. We now quote a yearly maintenance fee and come in once a week or fortnightly to service the pool and spa. This is a very different approach, and Australians aren’t yet quite used to it,” he remarks. Still, the strategy has worked well for owners, and for franchisees it has helped secure a regular client base.
Watching American operators and how they market themselves is something Australian franchises can benefit from, O’Brien believes. To our detriment we still suffer from the ‘tall poppy’ syndrome in Australia, he says – so much so that we frequently do not allow ourselves to be proud of our achievements.
“Americans aren’t afraid to be proud of their brand. This is a big reason why they do so well,” O’Brien says. “Australian franchisors tend to be great generalists, yet in the US they tend to be better niche operators. We can learn a lot from the Americans in that they are the world’s best franchisee recruiters and are not scared to push the boundaries to get their marketing right.”
For O’Brien, getting compliance issues right is just as important as brand marketing is to staying on top.
“Compliance with OH&S regulations also give you a competitive advantage,” he says. “Simply being compliant has helped us not only win commercial contracts, for which protection from injury issues can be a deciding factor when choosing a service operator, it has also helped us obtain our Registered Training Organisation (RTO) certificate, extend our insurance cover, and increase our coverage without having to pay expensive premiums. In addition, we can provide professional indemnity insurance to our franchisees.”
O’Brien also recognises that something as important as compliance is just too unwieldy to conduct in-house. As such, PoolWerx outsources to an OH&S consultant that keeps the franchise abreast of legislative changes.
Challenges ahead
O’Brien believes there are a number of key challenges franchisors need to be cognisant of in 2005. The move towards grouping franchises and taxing them as part of a large organisation is definitely something to watch. State governments can be “hungry beasts”, he says, and “while they say there is no such intention, there is a bit of ‘anti-franchising’ sentiment in the air.”
He adds that for the retailing segment the stronghold the likes of Westfield and AMP have over rentals and shopping centre marketing is fast becoming a huge issue. As a result, franchisors will have to seriously weigh up the future consequences when advising franchisees to set up inside shopping centres.
While the current high employment rate may not be a problem for some franchise operations, for others, in O’Brien’s view, it could adversely impact the standard of staff recruitment and reduce the number of quality potential franchisees.
For Poolwerx, however, the economic slowdown has led to a natural vetting of applicants.
“We are currently experiencing a lower volume but higher quality of calls while still maintaining our average of signing up one franchisee a week,” O’Brien says.
He also issues a warning about franchising associations that come and go, suggesting that they can create unnecessary disputes between franchisors and franchisees just to justify their existence.
Code of Conduct
Franchising has never been more popular as a business model as what it is in the world today and, of course, Australia is the only country with a mandatory Code of Conduct.
In O’Brien’s view, the Code works well and the balance is right – at least for now.
“The government really doesn’t need to add another layer of complexity. It should just leave franchisors to do what they do best – be entrepreneurs,” he says.
Franchise Agreements
Franchisees have definitely become more sophisticated over the years and quite skilled in their due diligence before entering contractual agreements. But before a franchisee signs on the dotted line, O’Brien suggests franchisees cover off a few final points, among them:
• Can the franchisor effectively articulate the business vision?
• Can the franchisor explain how he or she managed a significant conflict? This will give potential franchisees a clear idea of the business culture. Is it going to be a partnership arrangement or not?
• Can the franchisor explain what happens after the business is successful?
Future franchising
If John O’Brien could wave a magic wand he says he would make lending institutions lend more freely against the equity of a brand.
“The problem with franchising is that the people with vibrancy and energy between the ages of 25 and 35 are the ones who should be starting a franchise. The reality is that it’s not until you hit your 40s that you can afford one.”
While some banks, ANZ among them, offer unsecured loans, more should consider it, he maintains, as this “would definitely be lending well spent”.
In the view of many the health and wellbeing sector is one to watch, but O’Brien believes the franchising systems that will flourish over the next few years are quality retailers like Homewares, House, and home renovation franchises such as Hotondo Homes. He points out that 60 percent of Australians buy services, and commercial services like building are in high demand.
Could it be that these players have simply followed the O’Brien ‘secret formula’ and unscrambled what was previously an ‘unorganised’ market? For the conservative, maybe it’s a ‘market to watch’, but for the contrarian, perhaps it is more a case of – get in right now.
24-May-2006