Mr. Handyman Tries Incentives To Lure Franchisees



Mr. Handyman will pay people to become a franchisee. Sort of.

The Ann Arbor, Michigan-based home and business fix-it franchise is offering to invest $20,000 in marketing for new franchisees who sign a franchise agreement before March. The program is designed to attract new franchisees now that the chain has stabilized sales and is looking to add new units again as the improving housing market promises new opportunities for the handyman franchise.

"We want to reinvigorate franchise sales and help bring out some more qualified franchisees," said the company's president, Alex Roberts. "It's a limited-time promotion designed to help generate interest, leads, excitement, and bring more people into the pipeline."

There's one key caveat to the investment: new franchisees must follow a set of "best practices" that the system recommends franchisors follow, but doesn't require. For instance, the franchisee receiving the investment must employ a customer service representative from the get-go to answer phones and take orders—some operators opt to wait until business picks up to employ such a person. In addition, the franchise needs to use the company's national call center that will answer the phone on evenings and weekends. "They're the best practices for people to build good, quality businesses," Roberts said. "Owners who do these things see great results."

As such, Mr. Handyman views the incentive program as a way to reinforce those habits, Roberts said.

Mr. Handyman's sales fell in 2009 amid the recession and a weak housing market, and the company has spent the years since then stabilizing its business and working to add sales to get unit volumes back up. The company hired a commercial development manager to help operators build a commercial revenue stream—some operators have long gone after business contracts, but the company has emphasized it more in the post-housing-crash economy. Mr. Handyman is also encouraging operators to take on more longer-term projects, such as a bathroom remodel.

"We're in homes all the time, replacing the toilet, a vanity or the sink," Roberts said. "Because we do all those things we could very easily remodel a bathroom. It's something people would call for, but in the past we'd say that's outside the scope of what we'd do. Today it's not."

All these efforts have led to improved unit volumes, and they're now back up to 2008 levels. But franchisee sales remain weak—the company added just eight new franchisees last year.

Roberts hopes to get six franchisees with the new incentive, which is a sizable chunk of the total franchisee investment—the company's franchise fee is $49,900, and its initial investment, including working capital, is $125,000. The $20,000 would not be a cash payment, Mr. Handyman would work with the franchisee on a marketing plan and the franchisor would pay the $20,000 to the marketing vendor that the operator chooses. The payment is designed to be on top of the franchisee's existing working capital, so it's like a marketing boost.

"Now we feel like we've stabilized after the recession," he said. "People are investing in their homes. It's time to kickstart our development efforts."

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News, notes and commentary on franchise financing, including SBA lending, both the SBA 7(a) program and the SBA 504 program, franchise finance programs, development incentives, big deals and startup lending.

  Mary Jo Larson is the publisher of Franchise Times Magazine and its sister publication, the Restaurant Finance Monitor. She is a frequent speaker at meetings and conferences, and at the Restaurant Finance & Development Conference. You can find her on Twitter at @mlarson1011.
  Reporter Jonathan Maze covers restaurants and finance for Franchise Times. He also writes for our sister publication, The Restaurant Finance Monitor, and writes a daily blog on the restaurant industry at www.restfinance.com. You can also catch him on Twitter at @jonathanmaze.

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