Building, Renovation & Maintenance Franchises in NZ
Any business requires not just operational skills but also good management and great systems if it is to grow. That’s especially true in the building and construction industry, where many factors combine to make life complicated: compliance, contractors, suppliers, timing, weather, unforeseeable issues, the cost of mistakes and the emotional involvement of the clients.
The majority of building businesses are established by those who start with the operational skills and learn the rest as they go along. That can be very successful but, as any entrepreneur will tell you, involves a lot of trial and error as well as learning ‘off the job’ to develop the necessary management skills. It’s therefore not surprising that franchising has become popular in the building industry. The idea of a franchise is that someone else has already done the development work and will help guide you through the growth process.
Lockwood was one of the first home-grown building franchises in New Zealand and since then we have seen many local and Australian construction brands enter the market. Apart from new home building franchises, there are specialists in areas such as sheds and commercial buildings; renovation; maintenance and repair; kitchen and bathroom refurbishment; decking and fences; aluminium joinery; landscaping and more. Dedicated trade franchises have also developed in plumbing, electrical and building inspection.
So what advantages does franchising offer in this market? Here are a few:
1. Franchises offer systems to manage stock, staff and operations more effectively. The franchisor does the research and carries out the training on new systems and processes. All those costs are shared across the franchisees.
2. Franchises offer builders the ability to transition off the tools and into managing their own company: to work on the business rather than in the business.
3. Franchises have more buying power when it comes to suppliers, from goods and equipment to insurance and telecommunications.
4. Franchisees co-operate rather than competing with each other, sharing information on markets, customers and contractors. They also create a peer group for sharing ideas and issues.
5. Franchises can offer experienced guidance on growth issues: what staff are needed and when; lead generation and conversion; investment in plant and machinery; financial issues, debt recovery and raising capital.
6. Franchises offer a known brand to attract customers, and may offer added security in the form of customer guarantees.
7. Some franchises offer the ability to specialise in particular markets (eg. new home building, home renovation, kitchen or bathroom refurbishment, fence and deck building, premises maintenance).
8. And finally, well-established franchise brands are generally worth more than independent businesses when the time comes to sell. This means that franchisees are creating an appreciating asset as well as an income stream.
Of course, buying a franchise doesn’t guarantee success and not every franchise will live up to the benefits outlined above. In the volatile building industry, franchisees can and do fail sometimes, and such failures can tarnish the whole group, sometimes unfairly. That’s why it’s important to do more than ask ‘How much does it cost?’ and ‘What experience do I need?' Do your research – we recommend putting in an hour of research for every $1000 that you plan to invest. Apart from talking to the franchisor and asking them lots of questions, it’s also a good idea to consult a lawyer specialising in franchises and an accountant experienced in franchising.
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What you need to know
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