It happened in real estate. It's happening in home building. Could remodeling be next?
Consolidation, the spooky specter hanging like a storm cloud over the nation's small- and mid-sized remodelers, seems to be everywhere in housing-related industries. Even segments of remodeling — replacement, insurance restoration, and sunrooms, to name a few — have experienced it, in the form of franchising, during the past several years. But the full-service additions and alterations segment remains largely unaffected.
That could rapidly change as big box stores like Lowe's and The Home Depot get involved and franchises become increasingly successful. “I love the little guy, but consolidation is inevitable,” says Mark Richardson, REMODELING columnist and president of Bethesda, Md.-based Case Design/Remodeling.The Franchising Picture
Richardson's opinion is a popular one, and for many, the question is not whether the industry will see consolidation, but rather when and how.
Franchising — running several operations across a region or the entire nation under the same name with the same business systems and procedures — seems a likely avenue. There is a substantial list of specialty franchises that have seen success in recent years. These products include replacement windows and siding, bathtub liners, gutter protection systems, decks, and sunrooms.
But these products are relatively easy to franchise because of their uniformity; a streamlined process from sale through installation is a must for any successful franchise. Indeed, most attempts to franchise more complex, full-service remodeling projects have failed rather quickly.
That landscape is beginning to change, however. DreamMaker Bath & Kitchen, which is owned by national franchisor Worldwide, has been doing more involved single-room remodels since the late 1990s. And earlier this year, Case announced plans to franchise its full-service arm using a model similar to the one it uses for its handyman franchise, which currently has 66 locations nationwide.
“This is a complex business, a tough one to franchise,” says Doug Dwyer, president of DreamMaker. “You have to have people who know how to market, to generate leads, to sell, and to design. Then there's production — ordering a wide variety of products that are coming from different places, trying to get them to arrive at the same time, and then dealing with subcontractors.” In short, there's a lot that can go wrong, and it's hard to streamline the process with so many people in so many locations.
Still, it's not impossible. “Insurance restoration firms have to deal with every trade that someone doing additions and alterations does,” says Seymour Turner, executive vice president of Chicago-based Airoom, one of the largest full-service remodelers in the country. And the insurance restoration industry has a number of successful franchises. If they can do it, why can't remodelers?
That's basically the question that Scott Baker, president and CEO of Paul Davis Restoration — a large national insurance restoration chain headquartered in Jack-sonville, Fla. — asked himself. Finding no really good answer, Paul Davis started a pilot program that had eight franchises doing remodeling. After a two-year period, which vice president of operations Robb King calls “very successful,” they decided to extend the program to more of their contractor network, and now more than one-fourth of the company's 223 franchises do some work outside of restoration.
“We thought it was a good position for the company,” King says. “Project management is one of the core skills [in both insurance restoration and remodeling].” Franchisees have the benefit of shared systems and learning from one another's experiences.
After about a year and a half, it seems to be going well. “It's been difficult for other remodeling franchisees to get consistency and deliver a product that is fairly uniform,” Baker says. He adds that due to Paul Davis Restoration's existing infrastructure and support system for the restoration franchises, it is one of a handful of companies able to do just that. It's for a similar reason that Richardson believes the Case full-service franchise will be successful —and so far, through a pilot program, it has been.