Franchise Guru Has One More Up His Sleeve

Tuesday, January 11, 2011

Walter Ewell is at it again.

The local franchising veteran who has helped launch concepts like Econo Lodge, Geeks On Call, Jackson Hewitt Tax Service, Liberty Tax and others, has concocted yet another franchise venture - ServiStar.

This time he hopes to revolutionize the home services industry by creating a single brand under which independent tradesmen such as plumbers, handymen, electricians and HVAC technicians can operate as franchise owners to benefit from a widely marketed brand and centralized call center that they couldn't establish on their own.

As Ewell puts it, those independent handymen, plumbers and the like, "who would ordinarily go around town in a white van and you'd not know who they are," could buy into a franchise system, while still remaining their own bosses, and have a corporate backing to take care of marketing.

"We hope to be the first national brand in the country that's the one-stop-shop" for home services," he said.

He likens it to a mom-and-pop burger joint buying into the McDonalds franchise system because of the marketing power and still having the freedom of ownership.

"They all want to be in business for themselves at the end of the day," Ewell said. "That's what we played on at Geeks On Call." Ewell has had his eye on the ServiStar concept since his days of growing the Geeks franchise model in early part of the decade.

"From the time in the very early stages of Geeks, when it was basically two guys in jeeps, I looked all over the place to find a model of how you roll out and manage people in the field," Ewell said.

He found a few companies suitable for the Geeks franchise and dispatch structure. Those companies all were selling branded home services franchises. Ewell filed that idea for another day.

In conceiving the ServiStar model years later, he kept the same basic idea and was motivated partly by two trends. One is the fact that the average age of homes in the U.S. is 33 years, leaving open the door to an estimated $300 billion home services industry.

The other fact is that market is being serviced by a fragmented industry made up of mom-and-pop home services companies and lone operators. Ewell estimates there are 250,000 operating nationwide.

Unlike the on-site computer repair industry, which, due to falling computer prices, has been forced to evolve from its reliance on residential customers, Ewell said home services such as plumbing and electrical work are more resistant to technology cost fluctuations.

"When the toilet won't flush, people will fix it," Ewell said. "When the computer breaks, people will throw it in the garbage and buy another one." Ewell's new concept depends on the success of getting its name out there. An interesting turn of events allowed him to come out of the gate with the ServiStar name.

If that name sounds familiar it's because it was once a national chain of hardware stores. It's a name Ewell always liked because its broad connotation could apply to many areas of business.

Eventually TrueValue hardware stores acquired ServiStar. As Ewell was happy to discover about a year and a half ago, TrueValue had no use for the ServiStar name and abandoned the trademark.

Ewell jumped on it and began the lengthy trademark application. In the meantime he set out on a quest for financing.

He looked up the guys at Envest, a local private equity firm that has invested in some of the ventures Ewell has previously been involved in.

That's when Ewell was told to call Dwight Schaubach, a local businessman with his hands in many pots, none more enticing to Ewell than the Norfolk-based Johns Brothers heating and cooling company and its base of 11,000 local customers.

Long story short, Schaubach, who owns Johns Brothers, liked Ewell's idea and the two struck a deal to convert the Johns Brothers HVAC assets and brand into the ServiStar system. Johns Brothers' other arms, including security and heating oil, will remain under the Johns Brothers brand and owned by Schaubach.

That gave ServiStar an instant fleet of work vehicles, client list and list of interested franchisees in the form of Johns Brothers employees. Ewell said several Johns Brothers employees are buying ServiStar franchises or franchise territories.

"We've got wind in the sails," he said.

As part of the deal, Schaubach invested the Johns Brothers assets and became chairman of the ServiStar board. Ewell as CEO financed the franchise side.

So with those pieces in place and a few former Geeks employees helping to get the call center running, and TV commercials and other marketing ready to launch, ServiStar has its sights set on expansion throughout the region.

The company will first focus on selling franchises locally in four main trades: electrical, plumbing, handyman and HVAC services.

The model allows for separate franchises to be sold in each city in each trade. The pricing varies depending on the trade, Ewell said. But each starts with a basic franchise fee of $30,000.

Knowing that some individual plumbers and electricians may have talent but not much money, and aware of how hard it is for any business to get financing these days, Ewell has done research into the Small Business Administration's programs and the willingness of SBA lenders to loan for franchises.

"Because we have an established base of customers, the banks are very receptive to financing our deals since we're not a startup," Ewell said.

For franchisees who may not qualify at one of those banks, the SBA also has a micro-loan program, "for the guy in the white van," Ewell said. ServiStar can help them through this program for little or no money down.

Those programs are administered through local city economic development offices. The limits on micro loans have been increased to $50,000, thanks to the stimulus package.

While the company plans to start locally, as has been the case with Ewell's other franchise endeavors, the plan is to expand nationwide.

But Ewell for now said he will start small and stay conservative. Growing too fast can be the kiss of death.

"I feel like I have a Ph.D. of what not to do at this point," he said.

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