SPEAKER_09 0:02

Welcome everybody. You will have to turn your cameras and your mics back on. I know it kicked y'all off. Hey, Casey, good to see you.

SPEAKER_08 0:15

Good to see you.

SPEAKER_09 0:23

We've got a full house today. So, John, buckle up.

SPEAKER_01 0:29

I'm ready.

SPEAKER_09 0:30

You're ready to go. All right, y'all. For those of you that if this is your first time joining, I see a few brand new faces on today. We will let John introduce himself first. And then we will open it up to all of you to jump in and ask questions. Feel free to just come off mute and jump right in. So, John, go ahead. You have the mic.

SPEAKER_01 0:54

Thank you. First, I start off to say that's not my real background. I'm actually in Colorado right now. But uh it's nice to meet everyone. I uh my name's John Sarrani. Some people think I'm an old timer with Citywide. I've been around a while. Uh I uh I have a business partner, Scott Brown. Scott was he's recognized as one of the first franchisees in Citywide, I believe it was 2001 he joined in Colorado. And Scott and I had worked together over the years on several businesses in telecom. We were both telecom executives for years, and he always talked about getting me into Citywide. And one day he got my attention and I joined Scott in 2008. And so today, between the two of us, with there's a total of five markets that includes Colorado, Washington State for the most part, Austin, Texas, Dallas, Texas, San Antonio, Texas. That that geography represents roughly 10% of all of citywide. So we have 22,000, 22 and a half million in population within our footprint across the five markets. We have about 125,000 buildings over 10,000 uh 10,000 square feet. So it's a it's a huge business for us, and we're excited to be a part of it.

SPEAKER_06 2:23

Uh my background It sure does pay to be one of the first, doesn't it, John?

SPEAKER_01 2:27

It does, it does. Yeah, those are some nervous days in the past. Uh and I'll talk a little bit about that. But um my background is really in telecom. I was a telecom executive for many years, started off uh running cable TV systems, did that for many years, ended up running some very large cable companies, switched over to satellite, uh, ran Disney Network. I was president of DirecTV for several years. Uh I was CEO of Digicel in the Caribbean for four years. I was a CEO of other companies, software company, uh video development company, primarily tied to telecom. And then, like I said, Scott and I had worked together. He was also a cable executive, and he convinced me to join him in the pursuit of Citywide, which was fantastic. Now, back then, there was not a significant model like we have today. So we went through lots of changes in development, had a great team, had a great group of franchises we worked with, and worked with Citywide Support Center on developing the model further to maximize our position. And that's why that's where we are today. So it's come a long way to be in the business. We I guess I've been in that now 17 years, coming up on 17 years, so it's been a while. And uh, and so there you go. Uh, we can talk about a lot of different things. You know, I can I don't necessarily have to go back to the beginning, but the model hasn't changed a whole lot, to tell you the truth. It's always been uh, you know, fairly similar. Uh the only thing I would say is it's it's we went through a rebranding uh of the company from citywide maintenance to citywide facility solutions, which was a significant game changer because we represent, we're a sales and management company for building owners, and we're one-stop shop for them, and and we offer a variety of services. That rebranding really sent that message home loud and clear. And so the suite of services we offer is is very material. And so in the past, we primarily focused on janitorial. Now it's all the above, and literally all the above. And so we've spent a great deal of time in the last several years focusing on that. This year, across the five markets, we went through some hiccups in the early days uh on several different fronts. I won't get into the detail, but this year we're targeted to do knock on wood pride north of $95 million across the five markets. We're hopeful we'll get to 100. Uh, but significant growth. We've been growing on average between 20 and 24 percent over the last five years. So significant growth. If we continue on that pace in the next three and a half to four years, we'll double in size. And so that's really our our focus today. Um, we've we've spent uh we've spent a lot on people and infrastructure. We're really geared for growth because it's a great opportunity. So we're spending a lot of time, money, and effort and growing our business and taking advantage of the opportunity, and it's always been there, but the potential is massive. Uh Jeff Photo did a significant study of our industry and market share uh fairly recently and spent a great deal of money trying to understand what the opportunity is, and it actually ended up being double what we thought it was. So, and we see that every day. And so we've barely scratched the surface, and that's where you know I really get excited about the business. So, with that being said, you know, across our five markets, I'll tell you a little bit about our structure. It's a little different than most because we are a multi-unit franchise owner. Uh, Scott and myself have always been fully engaged in the business, but we have operating partners in each of our markets who are the president of the company and they're equity owners. And so each of our markets have a president and they work for us and they run the day-to-day of the business. So, all five markets, we have five different presidents who run the day-to-day. And uh, and Scott and I spend our time helping them with strategy, growth, management. We're very hands-on uh because of our corporate background. So we run it like a corporation. And so we're into every single detail you could imagine. Citywide provides a massive amount of data relative to performance across any category you want to look at financial, sales, operations, uh, you name it. There's a ton of data out there that we have access to. So we spent a lot of time trying to help our business partners be successful. We push them for growth, we push them to be the best. And uh, and we're not the best uh across the system. There's some amazing franchisees out there, uh, but we're always trying to get ourselves in that top 30% of all franchisees from a performance perspective, balancing profitable growth with just the opportunity we have in front of us. So uh I live in Colorado, but we travel a lot. My business partner also has a home in Colorado and Florida, so uh we're on the road quite a bit and uh spend a lot of time in the business. So we're definitely full time. Uh the only thing I would say that we've learned, especially today, is follow the playbook. The citywide model is powerful, and we're constantly telling our people to go back and go through retraining, go back and look at the details and do what we're supposed to do. And oftentimes, if we fall short of something, it's because we weren't following the playbook precisely. And so we spend a lot of time in that area. Uh, our kids are coming up in the business. My son works for us today at the group level, and so he also spends time out in the markets talking about following the playbook and making sure we're adhering to all the various things we need to do. And it's really that simple. And it took many years to get it to that point, but it's it's solid. And so that's really our message to our owners and things that we hold them accountable to. So we have a pretty radical change and difference in the markets. They're all different, they're all growing significantly. But from San Antonio is the smaller of the markets, even though it's probably three times bigger than most franchisees, uh, to Dallas, Texas, which is over 8 million in population. So it's significant size difference. Cost is also pretty material. From San Antonio on the low end to Seattle, Washington on the highest. And so we're in three different states: Texas, Colorado, and Washington. They're all different, regulatory scenarios, employment uh law. And so we have to make sure we're educated in all those areas. Um, so that's that's a little bit about me and who we are and what we do. I'd be glad to answer any specific questions. We have lots of data, lots of information, lots of history uh about you know what worked, what didn't work, uh, you know, what are we trying to accomplish? So I don't want to just spew too many numbers out there and just go off.

SPEAKER_09 9:44

Thank you. Thank you, John. That's so helpful for us to get to know all of your background. If you guys want to jump in, you can there's an option to raise your hand, or you can just take yourself off mic or off mute and jump right in.

SPEAKER_06 9:57

I want to know from John who do you pick that's better than you? Who are you gonna admit in citywide recorded history that you're gonna name is is better than you, because you said there's there's a couple, so I'm curious who you who you name in the system.

SPEAKER_01 10:13

Well, there's several, but I will tell you, you know, we we oftentimes make market visits to spend time with our peers to see how we can improve. I'm really impressed by Jeff Smith and Indianapolis, what they do uh as far as developing the business and uh the development of their culture and their people is significant. So every market we visit and spend time with has their own unique piece. Columbus is a business that's growing like crazy. So uh we just had my son out there last week for a full week to understand more of the detail behind what's driving their success in sales. Uh, I mean, I could go on and on. There's just so many amazing people out there, and we try to visit three or four a year and spend time with them. And we also invite them into our markets as well. So um it's there's several out there. But Jeff Smith's a great operator in the business, Bob and Karen Summers, uh that you know, they're incredible out in Boston. There's some really great operators in the business that uh that we try to follow, and we spend time on that just to make sure if they're there and we have a great leadership team, why are we not there to whatever level? And so we're tracking all these different areas because it's all about it's about sales growth, it's it's about managing your expenses, profitability, the bottom line, contractor development. I mean, you could go on and on and on, but there's key, really key components we're tracking today. Probably the number one is net growth. And net growth is a top KPI for us. How do we grow the customers and keep the customers? And it's it's really critical to our business not to lose sight of that. So we're we're looking at contract revenue growth, total revenue retention, uh tied to top-level growth, and then looking at the different categories because we're seeing we're seeing a significant surge in other services. Janitorial is where there's a huge amount of money because it's recurring, and uh, and we're constantly looking at that model, but other services is growing quickly. So it could end up for us, you know. Today, our target is a dollar revenue per capita, uh, as far as growth for us. So that's that's material. That'd be $22.5 million a year for us. That's our current target. Our top level target is two dollars, and we think we can get there. We think we can get to two dollars, a dollar on the services, and a dollar on the janitorial side. So we believe in the next five years we'll double that uh that number, even though we're already growing like a rocket ship.

SPEAKER_09 12:56

That's incredible. Oh, Nora, go ahead and kick us off.

SPEAKER_04 13:01

Yeah, thank you so much. Uh, and thanks, John, for that background. That's very helpful. I I just had a question on you know different markets, uh, because I would imagine that maybe your span of services, uh, you know, I'm I'm getting more familiar with the business model. I would think that historically janitorial was a core focus for the business. And obviously it sounds like based off your preamble, there's there's a lot of focus on on at least advertising and trying to make sure from a customer standpoint, there's an understanding of the breadth of services provided. But you know, just thinking about you know different markets, like if you're in an urban market that, you know, is more vertical, perhaps with more uh office space versus suburban markets and how that you know, just looking at productivity and and maybe business mix between suburban versus urban markets.

SPEAKER_01 13:53

Well, that's a great question. And I'll tell you that again, for market share purposes, we've barely scratched the surface. And I do look at a lot of our peers that are it's amazing what they do in some of these markets. Some of the top fastest growing franchises out there are in smaller, more rural type operations. You could look at Oklahoma City, you could look at Tulsa, Oklahoma, you can look at, I mean, I could go on with a list of people where the potential is there. Uh, we really spend a lot of time looking at buildings over 10,000 feet in size, even though there's a lot of business below that, a huge amount of business. So, for example, in Colorado, for example, they do a lot of banks. It's hard to make money on small banks, but they want you in there every night, making sure they're clean and organized. They want you to clean off the vault once a week. Well, and it's tough if you're doing one that's 3,000 square feet. It's great if you're doing 60. So because then they can you your contractor can hit you know 10 or 15 per contractor in one night, and uh and it works out well. The brand of Citywide has has grown so significantly today that now we're a recognized brand, and and it makes it a lot easier. A lot of people have heard about us when we're knocking on their door and talking about our business. And so, you know, if you took it to Indianapolis, they were sponsored the Indianapolis Spurs when they were in the finals, and Citywide was on the on the uh scoreboard many times on national TV, and there's several type things like that. I know Columbus takes care of Ohio State Stadium, and so uh there's all these uniquenesses that have really helped in that perspective. From a perspective, you know, we look at our markets, everyone's different. I'll take Colorado. Colorado has a pretty significant presence in downtown Denver with high-rise buildings. We're typically not going after buildings over 20 stories, for example. Uh, we do have quite a few that are 10 stories or five stories. It's probably not the norm, but but the potential is significant there. But we we avoid getting involved whether it's union labor, we avoid large buildings because the property manager generally is going to tell you the price. They're not, you know, we can't give them a bid, they're gonna tell us what the price is. That's what it is, and and that's really not the business we're in. We're after, you know, a step below that. Now we'll tell you that our footprint spans from we've done, we have a few properties over a million square feet today that are significant. Most are distribution centers, uh, very large distribution centers. That's a that's been a great mix for us. In Seattle, we take care of a lot of medical. We're in several hospital groups. Uh, so we have some hospitals where we take care of 28 buildings and they're significant, they're always changing, so there's a lot of work. And so every market can be a little bit different as far as you know, the the the current opportunity. In Austin, Texas, I think we have 85% of all car dealerships. And uh and because once you win one, you're gonna start to win them all if you have a good reputation.

SPEAKER_04 17:13

So is it fair to say that maybe um, you know, if you were to segment the market, like maybe the the really high-rise buildings, you know, north of 2020 uh stories, for example, that's like the upper market that maybe is the most competitively bid, or their the profit margins are tend to be a little bit more challenging and then citywide, and maybe the focus has historically been more of like the if you were to use a term, I guess like middle market as opposed to the large end of the real estate owners.

SPEAKER_01 17:43

I think it's a fair characterized characterization, but at the same time, I think we're evolving to that higher end market as we get bigger. So you'll see a lot of our markets now are going after supplemental labor, for example. They're taking care of hotels where they're building wedding venues and taking them down, and they're doing conventions and taking them down, they're doing Ohio State football games, NASCAR events, and they're leveraging contractors for that. But the high-raise buildings right now is really not our primary focus because it is more competitive, they're a little more price conscious, and uh it's not the area we're spending our time in. A lot of those property managers, ABM, I would say, is one that I've noticed in Denver, they they they're they've taken over all the ticket stands at uh Denver International Airport. So you don't see there's like one United agent, and there's like 25 ABM people back there, you know, making sure your bags are going through and you got your ticket, right? You got your passport and everything else. But uh one day I could see that as being an opportunity for us, but right now we've got so much out there we just don't think other questions. So let me uh you know, I'll tell you that if I look back uh to areas we could have done better. Uh I think that when we were starting, everybody was trying to get their arms around everything. And I think we weren't the best at selecting people on our team. I think we were trying to save money, I don't think we had the best offices, and I definitely don't think we had the right culture fit. And so culture for us is everything, and it's it's an important aspect for us. And so you've probably heard the term spread the ripple. You know, we want people engaged in the community, we want people who are focused on customer satisfaction. Uh, we represent a lot of people that work for our company, whether it's contractors, employees, subcontractors, you name it, there's a lot of people we represent. And so we spent a lot of time making sure we're doing our job from a leadership perspective. That's been a big focus for us for the last five years, and it's been a been it's been a big game changer for us. So that's a big area uh that we focus on today. As far as, and we're also trying to make sure we're competitive on comp and because you you pay for what you get, you get the great people, they do great things. And so we probably learned a little bit of a lesson there as well. And so um, again, it's a it's a great opportunity, and and uh there's so many different directions we could go. You know, we do spend a lot of time Citywide now, I think is kind of a sexy brand because it used to be people say I don't want to sell janitorial, it's not real sexy. I was a direct TV guy out there driving to work going, why don't they all have satellite dishes? I don't understand. I would stop, knock on doors, and talk to them myself. And you know, because if people didn't have a direct TV when I was there, we had Sunday ticket. And I mean, it was a no-brainer to sell. Well, now I'm doing the same with Citywide. Why don't we have that building? Why don't we have this building? They obviously have people taking care of their facilities, and now that we offer so many different services, you can get your foot in the door. And once you get your foot in the door, it leads to so many things where eventually they just hand it all over, hand over the capital budgets. And uh, you know, I'll I'll use my son as an example. He was taking care of tours in Denver. He started off with handyman service, and then they had a plumbing job, and then they gave them parking lots. Well, they have 26 big parking lots, so they just start handing things over because they don't want to deal with it. And they know we're gonna offer a competitive price, we're gonna do a great job, single point of contact. It's simple for them, and that's the balance. You know, we're we're if people want to save a ton of money, they can do that. But if you have properly documented workers, people understand the scope of work. They know they're going to get a fair price. Um, in many cases, it could be the best price, but it takes it all off their plate. So oftentimes we'll find that their facility manager is overwhelmed. Maybe the office manager, the building owner is running it, uh, I mean the CFO, it's all over the map. They just want to get it off their plate and get it dealt with. And so that's helped us a lot, especially getting into just getting your foot in the door and establishing a relationship and go from there. And it leads to so many other things.

SPEAKER_09 22:30

Hey, John, I'm gonna step in because I see Michael's hands up. Michael, if you want to go ahead and jump in, feel free.

SPEAKER_05 22:36

Great. Thank you so much, Savannah. And by the way, my camera is not working either. I don't know what it is. Um, but thank you very much for the opportunity here. John, really appreciate hearing about your business um and and just the breadth. Uh you obviously, in all the patches, you cover have quite a considerable uh understanding of the differences of every environment. Uh, I wanted to double down on on one of Owner's uh question. You you you touched on a lot of Denver, um but then you also mentioned avoiding unions, and I know that you have Seattle. Yep. So I'm just curious about the differences of your business between, say, Seattle, which is a lot more uh pro-union or union friendly, is a better way to put it, uh, versus Denver, which which isn't. Do you go after different types of clients as a result? Do you have different, you know, uh service providers as a result? What what what can you how can you compare those differences for us?

SPEAKER_01 23:30

Okay, so I mentioned downtown Colorado, and I would say that downtown Seattle is fairly similar. Okay. Um, it's more heavily union unionized. It's probably not the ideal footprint, it's challenged from a traffic perspective. And the minimum wage there is is kind of wonky that you know, you get to downtown, the minimum wage jumps up pretty high. And we have to have these various uh guarantees that we're gonna pay above minimum wage. And so you've got to have a select group of contractors that are able to work through that. We don't avoid those areas, by the way, but there's just so much other potential, we generally don't find ourselves competing in that situation. So it just depends on the circumstance. I will tell you, Dallas or uh Seattle is roughly 30 to 42 percent higher cost of living compared to our other markets. So it's very expensive. And our our wage rate is much more costly. And so uh, and I wouldn't say it's a challenge, you just have to look at it that way because the facts are the facts and you adjust your business around it. But but in in Seattle, particularly the downtown area does have a higher minimum wage in a specific zone, and so we recognize that, and and sometimes we get in there, sometimes we don't. It just depends.

SPEAKER_05 24:53

Okay. Are your your services still roughly, I mean, are they 30% higher? Uh your your uh your prices?

SPEAKER_01 25:00

Yes.

SPEAKER_05 25:01

Okay, they are and um do you find that you can still earn the same profitability in that market?

SPEAKER_01 25:09

Yes. In fact, I would say that Seattle right now is one of our most profitable companies today, um, versus other markets. So it varies a little bit. Um, you know, like I said, we're strong into the medical area, we're strong with car dealerships, we're strong in office buildings. We have an incredible owner, Jason Lawrence, he's our operating partner down there. He's a great leader of people. And so um, but Seattle's different. It's very uh, I'm not sure the right way to put it, it's very employee-friendly, meaning that if you get into legal battles from an employment perspective, you're never gonna win in Washington, and probably not in Colorado. And so we don't have that happen, but occasionally if something comes up, you just have to recognize the laws can be a little bit different. So we have to do a different review of our employee handbooks. We have a different review for our uh uh independent contractor agreements to make sure we're combinating the local law specifically there. And so everything's just a little bit different in how we manage it. I spent a lot of time, so Scott's probably my business partner, Scott Brown, he's probably the financial expert. He's uh he's a uh uh CFO and CPA by training, and he's really good at that. I spent a lot of time in sales, operations, HR, and legal because I run a lot of big companies. I developed a lot of experience. So uh if people have to make a change, a material change to a contract or a business, employment agreement, anything comes up, they've got to run it through me. Um, and then we can work through those issues. And I'm very attuned to all the various state laws that we have to deal with. Texas is probably the opposite end of the spectrum, it's wide open. And and again, it's it's a simpler place to do business. And we didn't pick them for those reasons, by the way. We initially picked those markets because we knew people who'd worked for us in the past who would start those businesses off. We needed people who were going to be, you know, wanted to run their own business but didn't have the money. And so we we found these people and brought them in, and that was the biggest mistake we ever made because we replaced 100% of them. They weren't entrepreneurial, they were used to working in corporate environments. And so, Scott and I personally had to replace every one of our operating partners, and that slowed us down for a couple of years because it's hard to do that once you've got an equity partner involved. But we worked through that, and now we have incredible partners in all the markets, and that's it, that's a key factor for us. And we're we're really driven by results, and uh, it's it is a serious business. I mean, back in the day when we're writing checks and going, you know, my wife would look at me like, oh my gosh, what are you doing? I mean, you're spending everything we have. And I said, just trust me, it's gonna work out. And it did, it all worked out, and uh again, we had some bumps in the road that I think fortunately, now that there's a solid playbook, a lot of new franchisees will not have to go through that pain because we went through if this doesn't work, then we'll go this way. If that doesn't work, we'll go that way. And and there were a lot of a lot of changes that occurred across the system that ended up working out to what are the best practices.

SPEAKER_09 28:26

And you know, quite quite the full circle moment when now 17 years later, you're writing the the big check to your own organization hosting the hosting the convention this year in San Antonio. You guys got to choose the the YMCA as your ripple, as your donation. And you guys got to write a big check due to your contributions and your efforts within your market, but also with the support of the franchisees. And I think that speaks volumes to the full circle, but also to what you were saying earlier about the ripple effect.

SPEAKER_01 28:58

Yeah, we just just that event alone, we raised $625,000. It was amazing to see people step up and and give back to the communities. And the YMCA was a fantastic business partner. Not only are they a great customer of ours, of ours, they're just they're just good people and they they support a lot of different causes. And our our owner's wife, Stuart Moyer and his wife, Christina, who also she's our business operations director in San Antonio, she grew up with the support of the YMCA, and that's one of the key reasons we we picked that group. And so that turned that that turned into a big opportunity. But that giving back is a big part of citywide, and uh we don't hesitate to to make sure we're trying to lead that path. All of our employees take part in it, whatever we whatever we're trying to accomplish.

SPEAKER_09 29:49

All right, Jonathan, go ahead.

SPEAKER_00 29:52

Thank you, Savannah, and thank you, John. What an impressive uh background and resume, and thanks for taking the time today. Um, obviously, you know, people is what it's all about in this business, right? And so you've got a big organization in in multiple states, but if you can think back to like your you know your first 30, 60, 90 days and for a new franchisee, who are the first, you know, one to two big hires you think that you know a new franchise franchisee would would want to make and would really help out?

SPEAKER_01 30:21

That's a that's a great question. I think that I think that the first thing is looking at the franchisee, if they're buying into the business, what is their skill set? Because oftentimes we'll meet people that are really strong in sales and not operations, and vice versa. And um Scott and I have the benefit of working together, and so we cover all different angles uh between us, and now we cover all areas of the business. But I would say he was in the beginning stronger in operations and I was stronger in sales, and so we were flying all over the country doing all these different things. But if I look back um as far as that arena, you know, I think that we've tried to hire people with sales focus, and then we lagged in the operational side, and vice versa. We've hired operations people and they they weren't good at selling, and so it's hard to find that blend, but I would say whatever if if you have a skill and you don't think you've got that uh that piece of it, then you need to backfill that. I'll use an example. One of our operating partners is amazing at sales, he's amazing at running the business. I won't mention his name, but he admits he's not very good at ops. So we have a rock star ops person under him working for him who's very good to make sure that that's all being taken care of properly. He understands it, he just doesn't think he's the best at it, and so he had to backfill in that area to make sure that sales and operations are covered uh in a in a big way. I'll tell you that I think that it's a much different business today. But back then, I don't think we invested enough in hiring the right salespeople. And and it was a new business, and you would set goals and objectives and this amount of money you're gonna make, and this and that, and then we'd fail, and then they'd leave, we'd start over, and we do that many times. And it's it's frustrating to see that. So now we try to back into it and say, who do we want? How much is it gonna cost us? And then how do we adjust our business to accommodate that? So we were tight, we had we had no money, and so we had offices that weren't very appealing. Uh, I don't think we had enough good benefits for our people. Um, I don't think we paid enough money, and it resulted in turnover, which cost us a great deal of money. So if you look back, Jeff Otto made a comment, uh, I think it was two months ago, where he said, if I went back in time, if I hired the person in sales to and paid him $100,000, if I paid, if I hired somebody that paid him $200,000, I probably would have been much farther ahead than I am today. And I completely agree with that. You'd have no turnover, you'd have top-level sales, all the above. And today we have our overall goals today because we're growing today at the rate that you know we're probably growing. I mean, Dow Salone is growing by $60,000 a month in janitorial sales. And they're ramping up the what we call the commercial, uh, the commercial building services division, uh, CBS, you might have referred to, that's other services. And it's all kind of the same, but we have people focused on janitorial and we have people that focus on the other stuff until we get to janitorial. And I just think that that those those categories are are big opportunity for us today. And uh so if I look back, you know, we've talked about this. We'd probably hire a it depends on the size of the market. So San Antonio, we have a president who's well-rounded. He's got his wife joining him, who's also very good on the operation side. Uh, and he's a great leader himself. They have a tight culture, they have a couple, they have a director of, they have two directors of operations, they have a director of sales, and then they have some admin people, and I think their total headcount is 24. Dallas, we have 59 people today and growing. Um, we have a president, we have a vice president of sales, we have three DOOs, and we have, and we just hired a director of CBS, and the growth model there is pretty material. So, Dallas we'll see over the next two to three years, it's going to be splitting apart into three different divisions just because of the size. And so every market's a little bit different. But I would say find your key people to cover those components. Uh, whether it's I've I've talked to a lot of new franchisees, I've talked to a lot that have been around a while, and every one of them is unique and different. Uh, Jeff Smith in Indianapolis will tell you when he hit a certain level, he had to step out of the way and bring in Costa, who is his general manager, who is a rock star, and he will admit it it got beyond his skill. So he backed himself up with some really strong people. And so that's our mistake. You know, we we had terrible offices. We we didn't have any benefits at the time that were appealing enough to keep people and we didn't pay enough money. And uh, and I regret that now. And and now we're competing for top talent and it's a cool business, and it's not hard to find people now, and and uh, but you got to find people who are willing to work in today's world, you know.

SPEAKER_00 35:35

Super helpful. And then obviously, you know, there's some people in the office that are going to be used to a salary kind of compensation, but for these, you know, salespeople that you're talking about, have you noticed that you know, kind of a commission base plus a salary or bonuses? How do you kind of set those up to be your most successful, do you think?

SPEAKER_01 35:53

So we're working through that today. It used to be that it was more of a 50-50, 50% salary, 50% variable. And uh, and I have to tell you, I think in today's world, we're willing to pay a higher base and maybe adjust the variable down because people need to pay their mortgages. And because they have a bad month or two or even a quarter, it doesn't mean that you know they're bad people because it happens, sometimes it can be a longer sales cycle. And so we try to look at the big picture. So we've made some adjustments to bring salaries up and variable down a little bit. We've also brought the total comp up uh in general. So I would say today, and I mean, just to put it in perspective, in San Antonio, we're hiring sales executives on the JS side. We pay roughly $55,000 to $60,000 uh in base. We have good benefits now, we've got a great office, and we'd like to see them make $80 to $90 in year one. In Seattle, we guarantee you're gonna make over $100. I mean, right out of the gate, we guarantee you will make over $100 and we want them to make $150. And so we're picking the right people and holding them accountable to the growth so that they can earn that. And so, but they're two radically different markets. I was there recently. The cost of gas in Denver was $299, and Seattle was $550. So there's some pretty unique cost of living differences there. Um, and and we try to take that into account. We're constantly looking at market studies just to compare, making sure we're treating people fairly and equally, have parity across all the markets. But the comp piece is something that we're having to spend a lot of time on right now across all categories because we want to get people, we want to keep people, we want them to earn the money that they need to if they're doing their job.

SPEAKER_00 37:37

Very helpful. Thank you, John. Appreciate it. Yeah.

SPEAKER_07 37:41

Hey, um, quick question, John, and thank you. This is great. When you started branching out and doing um a multi-location, so when you went from one location to two to three, how did you decide to start dividing your time? And what did that look like with a on a people aspect with your leadership team, James?

SPEAKER_01 37:57

Yeah, that's a good question. We went to Jeff Photo in the very beginning when Scott said, Hey, we need to go meet with Jeff and buy a bunch of these. We said we want 10. He said, I'm not gonna give you 10. So we happened to end up with five of the largest markets in the country. And obviously, he held us accountable because he's not gonna let us slow down. So we want to make him proud of us and and do a great job. So we spent a lot of time in that area. But but when we did, so we we Scott already had San Antonio acquired but not opened at the time. His brother ran Colorado. Uh, and when he when I joined him, so his brother Doug Brown still runs Colorado, and uh, and so we started with San Antonio and Washington, and so I did Washington, Scott took San Antonio. We did we went together, so I'm a pilot, and I had a plane, and we flew around like a bunch of crazy people all the time. I mean, we'd be in Seattle yesterday and we'd be in San Antonio tomorrow, and we were all over the place. And uh, but we need people we can trust to run the business. Uh, and back in the day, we were on the ground. I was training salespeople, Scott was training operations people, our president was in the middle of all of it, and we just go round and round and round until we got a comfort level that they were doing what they needed to do. And uh, but we launched Austin a year after San Antonio, and we lost Dallas, we launched Dallas Fort Worth probably about a year after Austin. So it was really Colorado first for several years. 2008, we opened San Antonio and Washington, and again, we hired the wrong people, so that was kind of a mess. And then we extended to Austin because we had the right to buy Austin and we had to open it within a year, so we had a little bit of time on our hands there. Uh, we tried to run San Antonio and Austin together, massive mistake, massive mistake. We didn't know that, you know. We were telecom guys, just put them together and get the efficiencies out of it. Did not work whatsoever. So we split it up, we hired a president to run Austin, uh, Ed Brand, who's fantastic. They're two completely different markets. And even though they work together sometimes on joint accounts, could be national accounts preferred accounts. That's the other thing I want to mention. Because citywide brand is so large now, we get a significant amount of a business that comes from the national account team. I'll use an example. I think Dallas, Texas this year, 30% of their growth is coming from national accounts. I mean, they're handing them over to us. In some cases, it could be a preferred account where we still have to go out and sell it, or in some cases it could be a national account like Federal Express or Auto Nation, or I mean, who knows? They go on. And so it varies a little bit depending on location, but the national account piece is it's not insignificant by any means. That just comes right to you. So that's a that's a key piece. Um, but hopefully that helps answer some of your questions. But today, you know, we'd like to expand further. One day maybe Jeff will let us do more, but he knows we have so much to do yet. Uh but you know, it's it's the fundamentals are there. It's all about people. That's in my opinion.

SPEAKER_07 41:20

Don, one last question that goes with what you were just saying. So when San Antonio and Austin, what would you say was the big why what would you say is the biggest reason that did not work running them together?

SPEAKER_01 41:30

Well, first we had the wrong uh person, uh, who, by the way, is still there. Our prior owner is still working for us, and he's in the top 10 sales people in the country. Dustin Landis, amazing guy. He just was the wrong fit for for running the business. And secondly, the distance was a little further than we thought. And uh, and then the the complications between the markets. So when we made that change, we decided to split it up. Stuart Moyer, um, knock on wood, Stuart ran the franchise development group. I called Stuart and said, Hey, we're looking for an owner who wants to step in, we'll work out a deal for 20%. And he called me back. I said, So let me know if you get a franchise candidate who, you know, needs some money, wants some support, and you know, wants to have a lot of fun and make a lot of money. He called me back 10 minutes later and said, I know the right person. Who? And he goes, Me. I said, Well, Stuart, you got to go to Jeff. You can't just come to us, go talk to Jeff and then have Jeff call us because we're not gonna go that way. And he did. And Jeff let us move Stuart to San Antonio and off we went. And then I'll tell you, the rest of our owners I found on LinkedIn, believe it or not. I went out and posted everyone I'm on LinkedIn. Forget about the people who worked for us in the past. We need entrepreneurs, people who are big thinkers, who are gonna work hard, and uh and and we finally got the right team in place. Thank you.

SPEAKER_06 42:54

Yeah, John, I think that if you did the same thing with the Adria, the friend dev person, that Jeff Odo would probably help pack the bags and and drive the U-Hawk for us. Just get her to get her to Texas, get her out of this office.

SPEAKER_01 43:08

Well, we we like the people in the support center, and they offer us a lot of help. So we don't ever intend to do that. That one was just unique. I had no idea that Stuart's wife grew up in San Antonio. I just had no idea whatsoever. He took a massive risk joining, had to build that business. It wasn't doing very well, and did an amazing job. And uh, those are all big risks, and uh, but it worked out really well for him. And it worked out for all of our owners, you know, just really did. Jason Lawrence, who runs Washington, he was he was involved in our sales group. We were having a problem with our owner. And uh he said, I want to own my own business by the time I'm 30. He was 28 years old. And I said, Well, just sit tight and follow my lead. Six months later, he was the president of Washington, and he's still there doing. Amazing job. So those are stories that are hard to repeat. But for us, scale is everything, you know, today that most of our markets are growing by two to three million, some are growing by four million, does it grow this year by over eight million in revenue? And uh so it's it's pretty material, and uh and it's pretty predictable to look back and say we're averaging 23% year-over-year growth in the last five years. And so it's not as though we're gonna drop down here and there. You could have a something unique happen. You could lose a large account, you could let this or that, but we we work on ways to overcome that.

SPEAKER_09 44:40

And I think for being this far in and still growing by 8 million a year just speaks a lot to the recurring revenue model, the the model that you have in place within your markets, too. So it's it's phenomenal growth. And hats off to you. You guys should listen to all of these. Um, every one of John's partners has done a Z call for us. So they're all in our recordings link. You guys can go back to and listen to all of theirs. So they're they're great calls to listen to as well. Um, Michael, I see your hands up next.

SPEAKER_05 45:12

Yeah, no, this has been incredible. I actually have had multiple questions come up while I'm listening. Uh my initial question was about breadth versus depth and services. Uh, how you know when you get a new customer, what is your your target for how many services you want to have then when you consider like a steady service of upsells while you're there versus how many new accounts are you looking for? I want to know if you could share metrics on that. Uh and then one thing to lay on top of that, as you're talking about your massive growth in you know, markets that you've been in for a while, how much of that is uh overcommitting on sales versus just a natural sales growth model?

SPEAKER_01 45:53

Um I think that's a good question. So I think that we are investing a little more in sales growth today. So I would say we're investing, we're giving up, let's say, two to three percent of profitability to invest in the growth. Why? Because it's there, it's easy to get. And so that's that's a key factor. We do that by choice, and we'll probably continue to do that because we get the return pretty quickly. And uh, so in in some cases, you know, when something works, I'm gonna use Dallas, that's probably the extreme. Uh two months ago we had four two CBS commercial building service people. Now we have five as of today, our objective 10, and next year I think it's gonna be 20. And so, because there's just so much potential. I think that so on the on a few metrics. So on the janitorial side, you know, I I use the opinion you knock on the door, they're gonna need something if you pitch the right services. Whether you're on the janitorial side or the other services side, it's it's a unique model. And one day maybe it'll be that people just knock on doors and sell everything. But but the key aspect for us is just finding people who can sell. On the commercial, the CBS side, it's not as difficult because you're really partnering with a building in order to take care of their services. But but on the janitorial side, you know, we look for people who sell a minimum of $5,000 a month. We have several that sell over $10,000 a month. Um, they're commissioned on that over periods of time so that it builds up. We'll typically bridge their commission in the first six months. We don't want them worrying about paying bills while they're learning the business and doing this and that. So we'll bridge it and give them a minimum guarantee. And if for some reason they don't get to where they need to be in six months, we'll even adjust it further. If they're good people doing the hard work and it's just a matter of circumstances. So we don't want to lose good people, and so we'll work through that component of it. But we generally want somebody that sells at least 5,000 a month on the janitorial side. And again, we've got several over 10. And last year we had one person in Seattle qualify for diamond level. I think he sold 128,000 uh for us. This year we challenged him to get to 200,000 himself. Uh, there's a guy in Denver, uh, Colorado, Ryan Holligan. Last year he did okay, he sold 80,000. This year I think he could do 200,000. And so the more experience they have, the better they are at selling. And that's why we're after tenure, getting people who have the contacts, you know, have the relationships, and eventually it will come. I'll tell you the for us in the beginning, it took time to build the janitorial piece. So you understand if you have somebody that's that you sign up for 5,000 a month, we're gonna have that customer for roughly eight and a half years on average. That's a huge amount of revenue that continues to build. So they they sell 5,000 this month, 5,000 next month, it compounds. And we've run the math on that. Where another person, although a lot of that business is recurring, and what I mean by that is if you land a big property like Coors, they're gonna give you this, they're gonna give you that. And eventually you're just doing a couple million dollars a year for Coors in a variety of circumstances. So you've got the relationship, you've got the customer, you handle all the services, presuming you've got the right contractors in place. It is somewhat recurring. I've heard the term used that some of it's between 60 and 70 percent recurring. Once you have those big customers in place, the key is then how do you scale it? But but we get to the point uh we we continue to focus on janitorial, it's a big piece, but other services is a great way to bridge the gap and also put money in your pocket while you're building the business. So I always use the example to our markets. I talk to them about it all the time. We've got several parking lots out there right now that are over $100,000. Uh, we've got one group of parking lots that's $500,000, and we're getting competitive on our margins to say, you know, I don't want to lose at 23%. So 18% is a lot of money of $500,000 versus 22% of nothing. And so the bigger the projects, the lower the margin, still a huge amount of money, and pretty easy to manage if you have good contractors. If you have the right contractor, they take care of all of it, and you're just really making sure they're doing what they're supposed to do. Takes a little bit of time, but that helped us along the way sell other services because you're always going to find somebody who needs something. You know, they're always gonna need a handyman, they're always gonna need a plumber. Um, there they might do remodeling. Uh, I think Colorado's got nine million dollars out in bids right now on certain remodel projects. If you can believe that, it's just amazing. But San Antonio's got $2.6 million in large projects right now uh submitted that we feel good about. And so the other services aspect, I can't emphasize enough enough, it really brought a lot of uh balance to the business and not just janitorial. I hated it when we knocked on doors and they said, Well, I don't, I've got a janitoral contractor. Okay, well, that's great. What about the other stuff? You've got to have some pain in one of these services, whatever it could be. By the way, I was in your restrooms, they look terrible. Your parking lot's got a bunch of problems. We can really fix your landscaping, you don't wash your windows, you can just go on and on. And if you can do a sweep of the building, you can normally come in and identify issues that perhaps they don't see. And then at least they have our information. They know who we are, they know what we do, and one day they're gonna have a problem, they're gonna call. And that's that's a critical aspect. So I don't know if there's any more specific metrics. You know, I'll tell you again, I use the example on on salespe and operations people. Um we want them to make good money. We don't want them to worry about paying their bills. We want to be competitive, we want them to work in an environment they really love and have fun with and respect. They've got to have the right culture, and so there's always a balance in that. But again, we're getting more competitive on compensation. Uh, contractors, it's a pretty steady margin for us. We generally had a target of paying our contractors 68% of our revenue. Uh, we've gotten a little better at that, some of it tied to volume, where we're down to 65, 64. We still we don't want to get too low, or we know we're not paying enough. So if we see a market get below 64, we've start to talk them back up to 68 because we want incredible contractors doing great work. And so there's that flow. But I would say on average today, we're paying contractors roughly 65 to 66 percent, where the original target was was 68. And so that's that's helped uh in a big way. And the selection of contractors, again, a lot of these people become family. And you know, we started with one contractor, had one account, now we're paying them $250,000 a month. I mean, these are big companies, and so it's it's been fun to follow all these smaller companies that have grown up to being a bigger part of the business.

SPEAKER_09 53:16

That's incredible. Chris, you want to bring us home?

SPEAKER_02 53:20

Wow, my camera started working. That's that's incredible. Anyway, um, yeah, I just wanted to ask a lot of the questions have already been answered that I had, but um, as a group, your your your team, what is the uh your net profitability based on the the the total revenue? 8.3 percent. Say it again?

SPEAKER_01 53:43

8.3 roughly up and down, but that's you know, and there's there's reasons for it. I would say we're giving up two or three percent because we're focused more on aggressive growth. Um, that's one piece of it. Um, you know, we believe we can easily get to 12 if we want to, but right now we don't want to. We want to continue to grow, continue to hire. If once you get the model down, it's it's uh the payback will continue. So I'd rather do more volume and give up a little bit right now. But I would say across the board that's it, you know, Seattle I think is doing 11%, 10 to 11 percent. I mentioned that earlier. And uh, and you know, we're getting more aggressive in Seattle to drive revenue, and so we expect those margins to come down as we get a lot more aggressive in the marketplace with what's going on, especially the shift in tech. Uh, there's a lot of changes going on in the Seattle market specifically. There's a lot of massive growth in Austin, Texas as well. Massive growth in Dallas Fort Worth. And so there's there's a little bit of a shift, but that's been pretty consistent for us eight to 10%. And and right now, I think we're closer to the eight than we are the 10. Then it can vary by market.

SPEAKER_02 55:00

Well, what do you think of the other markets that are available right now, like El Paso, and so there's some others?

SPEAKER_01 55:07

Yeah, I mean, so first of all, there's some accounts down there already. So whoever buys into those markets is gonna have an opportunity because we're servicing them today, and we know we're gonna lose them when somebody steps in. So we've got some markets around Dallas on the east side uh that are available. We've got some down in Galveston, El Paso. We have customers in El Paso, we have customers in Galveston, and we're taking care of them because we have to. We have customers in San Antonio or somewhere else, could be Nashville account and vendors. We manage that business a little bit differently. Same in Washington. We have some customers that are three hours away. But when you have a building management group come to you and say, we have 10 buildings, and I'm not going to give them to you unless you do them all. By the way, three of them in eastern Washington. We now fly our account managers out there once a month, but we have a different model that we use, and we have great contractors to do that. So I think, you know, I'll tell you, if I went back in time, Scott and I tried to buy Houston, and uh we love the fact of owning all of Texas. I'm in a new scenario, that's why I asked the question. Yeah, we ran out of capacity, we ran out of capacity. We did. We it's a big market. I'm sorry, go ahead. It's a big market, and uh, you know, we flew in there a few times, and quite frankly, we just lost track of time. We had too much on our plate, but we we we were making an offer, and then you know, we didn't have anybody to run it or anything like that. But uh I love doing business in Texas, and uh, there's a lot of great markets out there, by the way. There's a ton. And uh, you know, we love, I mean, I I could go on. There's a lot of great markets out there that are left, and there's just so much potential. And if you look at the list of some franchisees who have a population of, let's say, between 800 to a million and a half. Look at some of the most successful franchisees out there that have a million and a half or a million of population, and they're killing it. Indianapolis is one, Columbus is they're just killing it.

SPEAKER_02 57:15

And it seems it seems like the the the uh it's preferred to have kind of a tight community, though, like like the buildings are closer together for the for the FSM. Uh manager teams.

SPEAKER_01 57:30

As you get bigger, it gets a lot easier because you can tighten up their their group. You know, we we didn't pay enough in mileage, and people were driving all over Dallas, Texas, and we heard complaints about that a lot. And now we have so many customers everywhere, it's a pretty tight group, but uh we we didn't have the game plan set up properly. But I think every market can be different. Seattle has some crazy traffic stuff going on. Austin Texas is a lot of crazy traffic stuff, so you've got to figure out who's gonna cover which side of town, um specifically. So um, yeah, in Texas, it's it's uh I mean, all of our markets have great opportunity, great upside, but but there's still so much out there. That's why we'd like to do more. But right now, believe me, we have so much more to do. Um, so much more to do. And so we want to maintain our pace that when citywide hits a billion, we're at 100 million. Citywide hits 2 billion, we want to be at least 200 million. That's our objective. And we'd like to beat that. I told Jeff one day our goal is to be bypass Kansas City, the largest and the longest in franchise. And if we keep growing Dallas by eight to 15 million dollars a year, we're gonna pass them here in the next three or four years, if not sooner.

SPEAKER_09 58:47

I love those goals, John. That's incredible.

SPEAKER_01 58:49

That would be fun.

SPEAKER_08 58:51

I don't know if Kansas City would like that, but I think that would be pretty great.

SPEAKER_01 58:56

Yeah, you know, but but there's there's a guy who bought Idaho, and uh he's a he was a friend of Jason Lawrence. They worked together. I know Idaho, I grew up in Jackson and Wyoming. I'm a I'm a Wyoming guy, and uh, and there's not much there. And Idaho, such a great opportunity. It really is.

SPEAKER_09 59:15

Such a great opportunity.

SPEAKER_01 59:17

It's it's a different model, but it's a great opportunity. So it depends on the model that you know what somebody's trying to go after.

SPEAKER_09 59:24

Yeah, absolutely. Well, John, really appreciate your time today. You shared such valuable insight and so much great information. So if any of y'all have any questions that you didn't get a chance to ask, please feel free to email Adria and I, and we can direct them over to John and get you any more information. But John, thank you so very much.

SPEAKER_03 59:43

Yeah, you're welcome.

SPEAKER_09 59:44

Thank you, John. Thanks so much for spending your afternoon with us.

SPEAKER_03 59:47

Thanks so much for joining. Talk to you later. Great day, bye, everybody. Thank you.