SPEAKER_04 0:24

It takes everybody a minute to get it to get settled back onto this. So I'm glad we're all here. Hey Rimch, how are you? Good to see you. I see a couple other people that have joined us. We've got some some Trenton, we've got some California. We've got a little bit of everywhere today. Hi Nathan, good to see you again. Welcome. Thanks guys for joining us. I know that a few of them were on last Thursday. We had an incredible call where everyone asked questions the whole entire hour. So it was a really a wonderful use of time. And I hope that everyone became prepared with questions today, too. So all of that being said, we have Stuart in San Antonio today joining us. So thank you so much for being here. If you don't mind giving us a little bit of background on yourself, kick us off with all things you, where'd you come from? How'd you get started? Anything you want to tell us about? And then everybody else, you guys just feel free to come off mute and ask all of your questions. So all of that being said, Stuart, I'll let you kick it off.

SPEAKER_02 1:34

All right. Thanks for having me, Savannah. All right. Well, I guess I'll start from I'm originally from Kansas City. Um, this is where City's based. Um, born and raised there. Uh I see Paul's on the call, so I'll say I'm a Kansas Jayhawk. I know he'd appreciate that. Uh, graduated from there and uh joined a couple of companies in the Fortune 500. Uh, started with Cynthia, uh, was there for about six or seven years, and then went to ADP for a couple of years, uh, primarily sales and uh leadership positions at both of those companies. And then had the opportunity. My path will be a little strange, uh, but I think I could be really valuable on this call uh because I actually at 30 years old joined the franchise or for citywide. So uh I was at the support center, uh, home office, franchise or yeah, there's a few names, uh kind of the the mothership of the whole thing. Uh joined that. Um, it'll age me a little bit uh back in 2010. So uh joined there in 2010. I got to start as a sales coach, uh traveling the country, getting to visit with all the franchisees, kind of seeing what's working, what's not working, helping them grow their businesses, and then got the opportunity to lead that team for a while. And then towards the end of the six or seven years I was there, uh got to do what Savannah's doing now, uh, which was some franchise development, as well as we started national accounts. Um, so we've got a national account department that's been going for at least 10 years now. So did that for a while. Um, ultimately, it was the franchise development piece, you know, being one of you only on the inside, where I was bringing in franchisees and seeing some of their backgrounds and seeing some of their success and just having that itch myself to think, hey, you know what? There's probably something more for me than nothing wrong with being an employee, but I felt like I had a higher calling, could do a little more uh based on my background. So I made the leap uh in 2018. Uh, so a little over seven years at the home office and started the location in San Antonio, Texas. So obviously couldn't start in Kansas City. Uh that was well established. Uh 1961, they started that one. Um, but I started the San Antonio, Texas location. Uh, my wife had grown up down here and had some family. She was in the military. So this was kind of a if I want to do this, I want to be. Uh so luckily the timing worked out. We just we moved down to San Antonio in 2018. Um, there's gonna be a lot of questions on the call. I guess I'll kind of fast forward. Um, it is a lot of work as you know, building a business. Um, it did take uh a lot. That first year was challenging, um, but we got through it. Um, we have had uh some, I would say, humbling success. You can kind of see behind me, I'm real proud of that. We hosted the convention last year for the whole system, uh, where we set a record for donations as well as a ratings at a record. Uh, but over the seven plus almost eight years we've been doing this, uh, we have gotten up to about 30 employees. So, not that many employees in this model. So you'll you'll kind of understand as you get going. Uh, we've got over a hundred contractors, probably several hundred people working every day. They don't come in the office, they're contractors. And we just build over 14 million in our first call it seven plus years. Uh, we are on a path to hit 20 in our first 10 years, 20 million in revenue. Um, so I guess I'll pause there uh for now, but that's kind of where I started and where I am. So about seven and a half years as a franchisee, and about seven and a half years as a uh franchise or employee.

SPEAKER_01 5:37

That's awesome, Stuart. And I assume as a former ADP guy, former ADP guy myself, you uh you're using ADP for your payroll. You would think that.

SPEAKER_02 5:47

30 employees weekly, that's a that's a good hit. You you would think that. Uh I can't tell you we're using uh we we might switch to ADP at some point, but yeah, we're with we're the competitor, unfortunately.

SPEAKER_01 6:00

Um can I ask a quick question? Awesome. So my name is Rich Cholano, I'm I'm live in New Jersey, exploring the Trenton market territory. Uh started in B2B sales myself at ADP, loved the place, uh moved into a medical device role. I'm in management now. I've been an individual contributor for you know 12 plus years. Um my question for you, Stuart, is you know, how has, and you've seen a lot, so I'm sure you might have done it a little bit differently and kind of um how has what you've done your first year or two in the role as an owner changed and progressed in from year one and two to years three and four and and beyond?

SPEAKER_02 6:39

Yeah, great question. So uh I can speak directly to you, Rich. I don't know about the others on the call yet, but the B2B background sales will be helpful. Uh that's what we're doing ultimately. So that was very helpful for me, so much so that um I raced to five million. You know, it was me and another salesperson, and we had someone setting appointments for us, but I knew that'd be my skill set I could bring to the table to get us going quickly, uh, is selling a bunch of new business for us. I probably closed a hundred accounts over the first three or four years. I wanted to get myself to a revenue level where I could take that off. Uh, so I did that. So I think the biggest change, and they talk a lot about that as you're going through, is you want to replace yourself in as many things as you can responsibly as you go. For me, I started in sales. Uh, my wife is involved in the business. She does admin, very uh not that detail oriented. She's very organized, she does that for us. I kind of stay out of that. Um, we've added operations people over the first couple of years to get going. Uh, but now I've replaced myself in everything. Um, so now I've got a leadership team. Um, we've got a sales director, I've got two operations directors, I've got an office manager, I've got a uh director of business operations. So I built out the leadership team. So that's been the biggest change is when you first get going, you're doing, doing, doing, and learning and doing everything. And the neat thing about this business is scale. So as you get going, you can add uh account managers, add salespeople, ultimately add leadership team. I think when I get to 20 million, I'll probably add vice president level um and just kind of keep going. Um, I still fill the role of call it a general manager, my official title is president, um, but I still have the leadership reporting into me for now. At some point, I might hire someone that runs it completely, but I enjoy it. Uh, I'm still really young, so there's really no reason to do that at this point, but I have an option down the road if I want to.

SPEAKER_06 8:38

That's awesome. Thank you.

SPEAKER_00 8:47

Charles, okay. Thank you, all right. Thank you very much. Thank you, Steph, for sharing your your experience under the progress you've made so far over the years. Uh, I want to ask a question for someone uh, of course, my question is related to what uh Rich asked. Um, in terms of how your experience, your background helped in um driving the progress you've made so far. For somebody that doesn't have that kind of background, for somebody like me, I have probably a finance background, of uh had leadership position, of work in finance strategy, business, um um change, process change management, and the rest of it. For someone that does not have a strong marketing background or sales background, what do you think one can do to be able to succeed in a role like this as a franchisee?

SPEAKER_02 9:33

Yeah, ultimately we're a sales and management company. So um I would hope the background at some point is in leadership. Uh, you've led people uh to a certain extent on either sales or management or some sort of function. Um, that's where I'm finding that I'm excelling in at this point. Um, I enjoy leading people. So ultimately, um early on, you will need some salespeople. If that's not you, you'll need to hire those people. Um, but it's really about just managing and leading a team. I may get in trouble for this, but I don't know the first thing about a lot of the work that we do. But I know I can hire people for it, and I know I can lead people for it, and I know I can I couldn't strip a wax of floor. Some franchisees might tell you they learned everything and they know the whole thing. I didn't. I just knew I could lead people and you can hire those folks. Um, all the contractors that you hire are going to know how to do the work for the most part. Um, I've just leaned on that and getting the right people in the right places, and that's that's work for me. So you don't have to necessarily be a sales guy, but if you could hopefully be able to figure out what a sales guy looks like and can hire that person or a sales gal, um that would be beneficial.

SPEAKER_06 10:53

Thank you for that.

SPEAKER_05 10:58

This is uh Bashar. Uh partner. We're looking at uh potentially uh territory in California. Uh I guess I wanted to ask you on uh evolution over the years. Uh have you seen that uh you've been able to pass on cost increases to your customers, or have you seen over the years maybe margins kind of compressed and uh competition uh flocking in and you know uh eroding some margins?

SPEAKER_02 11:28

Yeah, we have the price increase in our agreement that we have the customer sign. So there's an automatic price increase. Uh we do let them know every year, but we do our price increases in January and typically get you know kind of CPI, consumer price index, three and a half to four percent, uh maybe five percent during the kind of the coming out of the COVID year. Um, but yeah, we get price increases every year, uh, with a couple of exceptions. You might have some national accounts that you can't price increase or some uh relationships that you know if you give them a price increase, it could be detrimental. But uh, we get price increases every year. Uh, and it's in the agreement that we have our clients sign.

SPEAKER_05 12:08

And on the other side of that is uh cost of the contractors. Have you seen that they have been raising their prices higher than inflation, or how has that been trending?

SPEAKER_02 12:18

Good question. So we kind of have two sides of the house with this. We have the recurring revenue with janitorial service and like lawn and landscaping, things like that here in San Antonio. Um, for the most part, um we have risen our prices over the years. I think when I first got in here, and this is gonna sound really low to someone in California, but we were at like $16 an hour labor rate. We've moved it up to about 22, 23, what we charge for an hour of work. So, yeah, that is kind of going to be based on the market, your competition, where the contractors are coming in. If they take accounts, if they kind of stop taking accounts from you, you might be priced too low. So that'll kind of they'll kind of help dictate that. But that has risen over the last seven or eight years. Our minimum wage is very, very low here in Texas. But if that went up, that would be a factor. So you just kind of have to gauge those things. The neat thing, too, in California, Savannah probably knows this. There's a ton of franchisees in California. They could probably be a lot of help as far as that goes. But yeah, we do uh raise our prices, we do raise our labor rate. We have to. Um, and then the other part of it is all the extra services. And we're real proud to say this uh this year. We did 82 cents for every dollar of janitorial work. So I got 82 cents of extra services for every dollar of janitorial work. The goal is a dollar for dollar. Um, I don't know if many are doing that, but that's the aspirational goal. We're getting real close to it. Um, but a lot of work that goes into that, you do have your contractor bid. So if you have like a big painting project or um handyman work or you're doing a renovation or just simple things like that, uh parking lots, you'll have that contractor bid it. And then depending on the client, you can put your margin on top of it.

SPEAKER_08 14:07

And are those primarily one-off jobs? And you see two cents.

SPEAKER_02 14:13

Yeah, I mean, it's it's recurring revenue for your FSM base, right? So your operations people are dealing with clients, they're getting some recurring work. Um, and then I've got another division called CBS, uh, which is doing just one-off jobs. Their goal, too, is to find clients that you can do recurring revenue with. We had one this year that said, I gotta unload my budget. I got about a hundred thousand to spend. Please help me spend it. And I'm like, oh wow, we don't get that problem very often. But it does happen. Um, we had our first million-dollar project this year, which was pretty exciting uh for one project. Uh, they're out there. Um, and as the team gets bigger and you get your market share, you'll get more opportunity there. Um, but it's it's everything. That's the cool thing about this. What you guys are looking at is you're not buying a painting franchise or a or a cleaning franchise or a window washing franchise. You're buying a franchise that does everything, literally everything. There's like 30 or 40 different services we can help our clients with. It's amazing. Uh, so those are all different revenue streams. Uh, so yeah, we ended up doing almost six and a half million dollars this year, just an extra, extra service that weren't part of the cleaning or janitorial kind of recurring revenue that we're known for for the last 60 years.

unknown 15:33

Thank you.

SPEAKER_04 15:34

What was the big million dollar project?

SPEAKER_02 15:37

Uh tenant improvement. So a client uh bought a building and they want us to kind of fix the inside of it up, you know, put in a couple of rooms, you know, paint, you know, put in uh just basic stuff. Um, yeah, it's pretty cool. It was it helped us make platinum this year. Without that, we don't make it.

SPEAKER_04 15:55

That's awesome. Can you before I get to Shane? I Shane, I see your your hand up. Can you tell us what platinum platinum market is?

SPEAKER_02 16:04

Yeah, so um looking at Rich primarily just because based on his background, but uh you know, ADP, the CentOS is a lot of those companies have the the award trips. Uh, we do that here as well. So they have an incentive award trip for pretty much every level FSM, sales exec, um our people, but they've also got one for the franchisees called Platinum Market or Platinum Club. And uh I think 25 or 26 of the hundred and whatever markets made it this year. We were one of those. We've made it now four times, but it's just a big deal. I mean, you get to go to the convention, uh, that they'll send you a real nice eagle plaque. It really motivates your team. Um, it helps them feel like they're winning. Um, when you go to convention, they put it on your name tag, they recognize you during the award ceremony. Um, I I kind of like that. I like the recognition. You know, it's I think it's it's fun to be at the convention every year and be, you know, one of those franchisees that has that. Um, it means a lot to me. It means a lot to my people. I think as you get going with this, it almost means more to your people uh than it does to us because they they want to get back and uh get that accolade. Um, but that's the cool thing about this, too. The franchisee does a lot of those um kind of awards um to help kind of incentivize and motivate your team. And then to go even one step further, we've gotten to the point now we're big enough, we actually do our own award trip. So we've got kind of uh recognition we have for our producers, the account managers, and the outside salespeople, where if they had a certain criteria, uh we're taking them to Calbo this year in April. Um and I think we had nine people qualify for that this year. Um, so it's a little bit of both. Uh the franchise or does some stuff for you, and then we also, and I would say there's probably 25% of the franchisees that have got big enough where they do their own award trips.

SPEAKER_04 17:58

And the way you win that award or get into that level is based on your revenue per capita and your retention. So those are the two, those big growth metrics are what we are looking at in order for that platinum qualification. Shane, go ahead. Sorry I skipped over you.

SPEAKER_02 18:16

And stop raising it on a Savannah.

SPEAKER_10 18:21

Uh so my name is Make it harder. My name is Shane Meyer, and I'm actually looking at the Tyler Longview here in Texas, so I wouldn't be too far away from uh from you, I guess, Stuart. Um it looks like it goes all the way down to uh Texas AM country there. And uh I just have to give a shout out that uh I'm from St. Louis and I went to Mizzou, so I hope I'm not offending anyone.

SPEAKER_04 18:48

We're gonna have to mute you now.

SPEAKER_10 18:49

Yeah, I can't answer your question. I'm sorry. Um, so I'm actually a former franchise owner in a different kind of industry industry, fire and water mitigation uh industry. And so there's some overlap in some of the things that we did. Um, but I always thought those are very intriguing. I guess my question, um a couple of questions, but what do the most successful franchises do to get them to kind of that next level, be profitable versus what are the franchises that don't quite make it, which I know there's very few uh of those. What is the difference there?

SPEAKER_02 19:24

Yeah, uh good question. For me, uh kind of early on, um, it is the sales engine. Um, but even more than that, it's always about the people, right? So um we hire fairly slow, try to get it right. We've made a lot of mistakes, uh, but it's always about the people and the people you can attract and develop on your team. We're starting to get a pretty tenured team, which is great because they're producing at higher levels because they know what they're doing now. Um they give you all of the playbook uh citywide does. We try to follow it as closely as possible. Um, it's all there. They've been doing this for 65 years. Um, and there's also the other franchisees you can go visit and talk to, um, especially the guys that are just barely ahead of you to kind of see what they're doing. But for me, it's really just you got to have a sales engine going, you got to have a uh kind of a servant heart, be able to account manage and take care of your clients. And then you got to be able to be uh good with hiring and developing people. It's a people business, it's just it's massed as citywide, but it's it's just a people business. Um, and if you can get good at that, or you're good at that from your career, um, you can scale this thing and it it becomes just really about your people.

SPEAKER_10 20:41

Okay.

SPEAKER_02 20:41

And that would be what I would say is the difference between the people I see that are succeeding and not, um, the ones that get stuck. Um, maybe it's probably a people problem. They hang on to people maybe too long that aren't performing, or they're not hiring the right people because they're maybe panicking because they need that person and they hire someone really quick and it's not the right person, and you hold on to them for too long. Um, we've done all that, you know, we've made mistakes, but ultimately I think it's a people game and a development game. Um, and then really it's it's kind of easy. It just based on number of accounts and revenue, you add another account manager and night manager, and you go a little further, add another account manager and another night manager. And if you want to get real aggressive, you add a few more salespeople. It's just it's real scalable. I mean, we're uh budgeting to do 17 million this year, and that's only with 31 employees. So capital employee intensive. This isn't a ton of employees. Um, it's a lot of contractors, but you get the right people and they manage that for you. And I've got someone that all they do is bring on contractors. Um, there's just not a lot of employees for these revenue levels, from what I've seen in other franchises and other businesses.

SPEAKER_10 21:57

What is what is contractor turnover? Look like are they fairly sticky? Because for us, when I was in the previous world, it was it was very challenging. I mean, we went through before COVID and after COVID, and that was hard.

SPEAKER_02 22:11

Yeah, it's tough here too. Um, you got to put them in play because what I would tell you the the one that comes in that looks the part, um, and they're like, Oh, that one's a I can't miss. Well, they they don't want to go out and manage their buildings at night and take care of their people. And the one that comes in that's got you know shorts on and a t-shirt, and it's uh he looks like he's been or she's been working all day. Well, that one grinds and spends the time with her people and develops. You just it's hard to tell. So we just put them all in play as long as they've got all the the insurances and and they the COI and all that stuff that they they've got everything that we need. Um, and you test them, you know, and you watch them close. But I would say we're at the point now we're trying to bring in about four a month. Of that four, one and a half to two will work out. One won't, uh, and one might be mediocre that you can't grow with. So um that's just the reality of it. It's it's gonna be similar here.

SPEAKER_10 23:08

Um but um are your are your clients pretty understanding that the the this is a contractor issue and they'll stick with you? I guess if you created the relationships.

SPEAKER_02 23:19

That's where your account managers come into play. Absolutely. Yeah, the FSMs are very key in this. That one point of contact for your clients. Um, no question about it. Uh, if they've got a relationship, you've got some grace. Um, you still have to manage it effectively, but um that FSM is very important. And so is the night person going out at night and they're the eyes and ears at night working with the crews and telling you, you know, if they're doing it well or they're they're not doing it well, or they don't have enough people in the building or whatever it is. Uh that team together is very important. Um, but we've got all the protocols for that the new start policy, the star policy, the complaint policy. We've got all of that. We've been doing this a long time. Um usually only lose accounts. Um I shouldn't say this, but a big part of the reason you lose accounts is if you hold on to a contractor too long. The client tells you, and you just you hang on, you hang on, you don't make a switch, you don't upgrade. Um ultimately you'll lose it.

SPEAKER_10 24:23

Got it. And I'm I'm sorry to hog here. One one more question. I'll I'll I'll um let it be open. But my understanding, and I think Savannah had mentioned this, is um I live in the Dallas area, I can't move, so I would have to have a partner over in Tyler Longview. Um, I understand, I think Savannah said that's your kind of situation. Can you tell me how that relationship works?

SPEAKER_02 24:44

Yeah, so I've got business partners, um, and they're actually in Denver, Colorado, so they don't do anything day to day. Um, they've come down a few times in the eight years I've been here, which which is nice. We've got a good relationship. Um, but yeah, I uh I didn't necessarily have enough funds to get this going at the very beginning. Um, so we partnered together and they've been, you know, a lot of the finances to get this going um early in the early days. Um now, if I had been able to do it 100%, now you're like, oh, look what could have been, but it is what it is, right? Uh they helped me get it started uh back in the early days. Um, but yeah, I get a percentage of the of the profits. I still do pay myself, kind of running the business. Um, but yeah, it it just depends on everybody's situation. If you've got the the capital to do it and you can do it on your own, great. I didn't in my situation, but the opportunity presented itself for me to be uh a partner with the the two guys that uh are in Denver. And uh it's it's worked out very well for me. Um so it just kind of depends on what your your capital situation is. Got it. Thank you.

SPEAKER_04 25:50

And I think Shane, just to wrap that up, because I think that was a lot of fantastic questions. I think ultimately it's just about following the model, is what a lot of I'm hearing Stuart say as well, is we're providing a lot of that to you. And if you can be somebody that's coachable and follow that procedure, then you have that runway. Um, all of that being said, though, Stuart, you mentioned people quite a bit, which made me think back to last year's Z call. You talked to us about your three P's. And I thought that that was really impactful. Obviously, I'm still remembering it a year later. So I'm wondering if you can share that again before we kind of dive into those next questions.

SPEAKER_02 26:29

Yeah, so I talked to a lot of franchisees, um, a lot of my friends have been in for 15 years. And um, most of the ones that are succeeding to a to a nice level have got this figured out. But the ones that aren't necessarily are spending a lot of time, even at our level, in the business. Um and I kind of ask why. Uh for me, I spend a lot of time, and I'm trying to get to where I'm, you've heard, on the business. So for me, um, it's the three P's that Savannah mentioned. It's the three things I spend all my time on are people. I even got it on my wall over here, process, and you call it purpose or passion. But what that really means to me is I still am pretty heavily involved in who gets to join our team. And I don't know if that will ever go away because we only have 30 people. It's not like we've got 300 people. So we have a very um rigorous hiring process and almost so much to the point now where if we don't want to run to the car to hire that person when they leave the interview, the face-to-face, we don't make the hire. So uh everybody's got to agree and we go through a process. Um, but the people part is so, so important. We hire very, very slow. Um, and then the other part of that is development. So we use uh Sandler sales training. Uh, we're a big proponent of EOS, the entrepreneurial operating system, uh Geno Wickman traction that kind of operates our business to a certain extent. Um and we've got some things that we do with both of those, but I'm always looking for ways to develop the people uh because you're only ever as good as your people, like take care of your team and they'll take care of the client kind of thing. I'm a big proponent of that. Um, next is the process and kind of the strategy. So um I'm also a big proponent in daily consistent habits, and that's all this business is. It's a heartbeat. You do the same thing, you visit the clients every other week at the same time, you do your complaint policy, you you get the rating. There's a bunch of things you just do day after day, week after week. So I try to get the team as close to possible as following the habits. Um, and that's how you can scale. Um, another part of that is I own the budget. So uh that's one of the things with strategy. Um, and then one of our values is improve every day. So I try to get the team. Um, I know they're never going to want it as much as the owner, but I try to get them where they've got buy-in and they feel like they're tied to this and making platinum, what does it mean for them? And some things like that. Uh, Kansas City does a great job with stack rankings through Power BI. So you can kind of see where you're at in every single facet of your business compared to all your peers. We use that a lot with our team. Um, Shane, if you came on, you'd be in Texas. We'd be stack ranking against you. I'm looking at Austin, I'm looking at Dallas, I'm looking at Houston, kind of comparable markets to Texas. Um, and then purpose and passion is the last P. And for me, that is I get them once a month in our scorecard meeting. I'm setting the vision, I'm getting them excited about what they're doing. Um, that winning, that accountability, the culture of we are gonna make platinum club. That means a lot to our team. Um, the team appreciation events. You know, when I walk around the office right now, it's not even about business, it's about the team and what are they doing, what's their family. It's just try to get to know them. Um, so for me, that's what I focus on. It's who's gonna who's gonna join the team in the development, making sure we're tight with the process and always getting better. And then ultimately, um, I don't want to lose people on my team. So giving them kind of passion and purpose to where they aren't looking at going to work for an ADP or a CentOS. Or I'm I'm actually now we've gotten to the point we're taking from CentOS, we're taking from Enterprise Rent A car. I've taken a guy from ADP, we're getting people from Fortune 500 companies to come over and work for us, uh, which I think is pretty cool. Um in the early days, we weren't. We were kind of getting what we could get, right? When you first start out, but then as your story gets better and your vision gets bigger, you can start to take some people that you would consider probably worthy, worthy competitors working for big companies because you can offer kind of a different story. You can offer a big company, but in your franchise with only 25, 30, 35 people, you can give them kind of a small company feel too that Rich knows we didn't get at ADP. How's a number? Right. Uh Paul was at CentOS. We were just numbers. Um, you can kind of create a different culture with your local company, but also have the feel of we just passed a billion dollars in revenue.

SPEAKER_08 31:06

We're a large company, so they get the best of both, which I think is pretty cool.

SPEAKER_07 31:15

Thank you.

SPEAKER_01 31:19

Is that something that you implemented for your business, or is that something that's a resource that's provided from citywide?

SPEAKER_02 31:25

Uh provided from citywide. Um, so like I mentioned, Sandler sales training. Uh we you have to pay for it, but it's all there. Uh, we've got the person in place and the program in place. Uh, you just fund it for your people. Um, the EOS uh is if you're not familiar with that, it it's it's a I could spend an hour on it, but it it's it's a it's a big deal on kind of how you run the business. Um, I could essentially run the business with four meetings a week um because of EOS, it gives you a lot of um scalability. Um so those are the two main ones. We do some other operation stuff uh that we pay for kind of on the side, but um yeah, the developments is a big deal.

SPEAKER_06 32:10

But yeah, corporate helps with a lot of that.

SPEAKER_07 32:15

Charles, go ahead.

SPEAKER_00 32:18

All right, uh thank you, Savana. Okay, uh Charles, I'm gonna go here again. Um Charles, if you were to consider anything to be the major pain point over the years or the major challenge uh that you've uh encountered, what would that be? And how did you overcome that?

SPEAKER_02 32:36

Uh you're responsible for everything, and people do stupid things. That'd be my short answer. So ultimately, that's the thing. Uh, I will uh somebody called me last week uh because I'm in vistage and they knew I owned a franchise, and he asked, you know, should I do it? And I said, the success or failure is not on anybody but yourself. So if you succeed in this thing, it's because you did a great job. If you if you fail, it's because you didn't. Uh it's ultimately your business and you you're you're holding people accountable, you accept what you accept, you let things go if you want. All the decisions are yours. So that that's exciting, but it it's also humbling because if you make some bad decisions, you learn some mistakes, and and that's gonna happen. We've done that. Um, but to me, that to me, that's it's always people. Um, whether it's a contractor did something kind of silly and I've got to get out of that with my client and fix it, or an employee does something, and you're just kind of scratching your head, like, why why would why would they do that? Ultimately, you you're kind of looking around, you're like, who do I have to talk to about this? I don't have that big HR team for my old corporate job. I gotta figure it out. In my case, like I got a couple of business partners, we can kind of bounce ideas back and forth off. I got my wife, uh, she's a nice sounding board for me. Um, but at the end of the day, it's you. So um that's probably the hardest part for me was realizing that and realizing the success is probably gonna be based on the decisions we make and who we bring on the team. And uh, and so are the the failures. You know, if you you bring out a sales guy and he or she doesn't sell anything for six months and you keep him on board, why'd you do that? You know, that that's that'd be a fail. Um, and people do it all the time because it's easy. I already got this person, I don't want to go off to hire, I'm busy, I'm doing this, I'm doing that. Um, so I would say it's almost always the people and what and what you allow or what you don't allow would be where most of my um learning has come from.

SPEAKER_06 34:50

Is it okay if I jump in?

SPEAKER_03 34:51

All right, cool. Um hi there, Nathan in California. Appreciate your time here. Um, one of the main questions I had was um, you know, obviously going into a new market, uh, they're probably not aware of citywide. So if you could just give an idea of just some of the main competitive advantages or kind of talking points that uh the sales team kind of goes out when they're talking to these uh prospective customers, just to get a sense of kind of what are the big um uh pieces that you talk about when you're talking to a customer, comparing us to maybe another competitor.

SPEAKER_02 35:26

Yeah, so I guess kind of going over the 30,000-foot view, there's really only a couple or three different types of competitors. Um, you've got kind of the corporate competitor that hires their own employees, right? Maybe an ABM or an ISS. You might see them at like an airport or a downtown building. Um, and you'll have some local ones that have gotten pretty big. And they do their own uh their own labor, they have their own people. Um, and then you've got franchise cleaning companies, and there's a bunch of those. You'll have a Janiking, a Janpro, Vanguard, Coverall. Um, there's quite a few. And they kind of look like us a little bit to a certain extent, but what they do is they have a franchise cleaning owner that really is responsible for the contract. So it'd be kind of like our independent contractor, but they sell their accounts to that individual, and that person becomes a little bit responsible for the client relationship. I wouldn't be nervous if my independent contractors were responsible for the client relationship. Not that they're bad people, but that's not their skill set. They're very good at what they do, typically. Some of them can lead and manage, but for the most part, that's why I'm hiring account managers. I'm getting, you know, college educated, oftentimes bilingual here in San Antonio, um, very intelligent folks that are out and they look and kind of act the part in front of the client. Um, I feel much better having that person manage that relationship. And then um, the lastly, you'd have just all the kind of uh mom and pops. Oh, and then I guess the fourth would be they don't choose a company at all, they do it themselves. And that's really the competitive landscape. Uh, I think the reason we're the best is I will get this in here. It is our our our our value prop. We do represent the client. So I can pull contractors in and out as I see fit, and ultimately I'm sitting on the same side of the table as my client. And what we do is we offer 25, 30, 40 different services, all with one point of contact. And once they understand that and realize we're not going to be more expensive than the competition, because I've got the sales and management, and the contractor has the labor. And you pull all that together, it's going to be about the same as our competition. They typically get that. Um, and that would be our differentiator, I would say. Well, that's what we talk a lot about is representing the client, one point of contact, all the different services we do. If there is an issue, we manage through it very quickly. Um, whereas if you've got a uh a large corporate company, they've got to counsel that employee, they've got to coach them up, they've got to ultimately remove them, they got to replace them. That takes time. I can take a contractor out, put a contractor in in a matter of one day, um, and manage that client relationship. And then if you've got the franchise cleaning companies, well, they make money by selling the franchise or sells to the franchise cleaning companies, which would be our independent contractor. That's a revenue stream for them. So they're incentivized to move these people in and out of contracts to make money. We simply don't do that. If we put a contractor in, they do a good job, and the client's giving us nines and tens. I want to grow that contractor. I want to benefit their business. I've got a contractor we've grown with. He started with us day one. He's now approaching 100,000 a month because he's built his business. He does great work with us. I know Kansas City's got several that are way bigger than that. And you keep keep an eye on that. You don't want them to get too big, but I do have some that are getting $30,000, $40,000, $50,000 checks. So you're doing a good thing for them too. You're helping them grow their businesses because ultimately they're not gonna be go out, they're not gonna be able to go out and market their businesses. A lot of times they're not great at managing, but they're good at cleaning, they're good at staffing, they're good at putting a team together. Um, so you need them. So it becomes a kind of a partnership with um us doing the sales management and them doing the labor.

SPEAKER_08 39:35

Thank you.

SPEAKER_07 39:38

All right, Rich, go ahead.

SPEAKER_01 39:41

A little bit further into that to that question. I mean, what are some of the biggest objections that your salespeople are handling? What why when you why when you sit down with somebody, is it more relationship-based? Is it more pricing? What do you typically see as the top two or three objections from from a potential client or customer?

SPEAKER_02 39:58

Yeah, uh, maybe them, maybe them um not having enough, I mean a standard term, not having enough pain or frustration with their current uh supplier to make a change. Um, that would be a big one. You know, we try to avoid those appointments, but ultimately you get in there and there's just not enough. They're not frustrated enough with their current vendor to make a change. So we we run into that. Um, we do run into pricing a little bit. You know, we're you know, middle, high, we're not the lowest uh the price. If there's five companies, we're probably gonna be one of the higher ones typically, and that's okay. Uh, we're standing on our value. Um, I mean, there's all sorts of different reasons, you know. I think it just depends on the salesperson. Um, if you got a good salesperson, they should be able to overcome a lot of those, but it's gonna be the same. Uh things you're getting in the industry you're in now, Rich.

SPEAKER_06 40:50

It's really not gonna be a whole lot different.

SPEAKER_04 41:02

I love the poster on your wall, and I know you talked a little bit about convention. It's super awesome. I love that. Um, you talked a little bit about convention and how big of an accomplishment it was, but um, I think you should brag on yourself a little bit and and talk about how much money you raised and what for and what's the purpose of it. Because I think we talk a lot about mission, vision, and values in our brand review with um everybody here. And I think having that opportunity to make that impact is a big reason why you do what you do. And so I'd love to hear that story and explain a little bit about what that is.

SPEAKER_02 41:38

So we hosted in March of this year, or not this, it's new year, 2025, last year. Um, and about nine months before that, we were honored with the call that we were gonna be the host. Um, I didn't have any idea. I was like, wow, that's what they've never come to Texas. Uh former employee being a franchisee is never hosted. That was pretty cool. So we got the call about nine months in advance uh that we'd be hosting that next year. Um, so one of the big things you do as the convention host is you get a select uh charitable benefactor. Um, because they do a charity gala on one of the nights, and it's a big deal. All the franchisees come together and help kind of raise money for that. So we picked uh the YMCA. Uh my wife grew up in San Antonio, she was a Y kid, and they didn't have much. Uh, so she was benefited by someone to do the programs and be in the after-school things and the summer camps. And uh, to a kid without much, that's a big deal. Gotta do sports and stuff she couldn't otherwise do, single parent. And so we chose the YMCA and we met with them. And over the course of the next six months leading up to the convention, um, we put a lot of effort into sending out videos with our messaging and trying to do pre-fundraising and um just letting the franchisees know why we selected this and what the benefit would be uh by giving this money to the YMCA. And then we did something different, which I thought was pretty cool. Knowing that it's a national YMCA network, we also said, hey, if you donate money and it's at least more than I mean, a decent amount, um, we'll give you 10% back. So you can go and actually present to your YMCA in your market and build a relationship there. So that seemed to work. Uh, I think help no, I think Christina and I knowing a lot of people also helped, but the night came. Um, we were able to talk to Savannah's dad, Jeff. Uh, he gave a nice donation on behalf. We matched it. Um, it was a big donation to start it off, kind of got things going. Uh, two or three hours, we bought it. We brought in an MC, we had silent option, we did a bunch of stuff. It was a lot of work. I don't know if I want to do it again, but if it ever get happened. But um anyway, it we ended up raising $610,000 that in one night, uh, which was pretty cool. And it ended up being uh the most the YMCA's ever received in one night. It was 150 years here in San Antonio, and the most we raised at a citywide event. Uh, although I hope Ian in San Diego beats it this year. I think that'd be pretty cool. Um, but it was a pretty big deal. Um, they were so blown away. They asked me to be on their board, so I've now joined their board uh of directors for the next three years, which I'm hoping uh we can give back more to them, but also I I'm hoping that'll help my team uh because I want there to be opportunities that we can get just from our name recognition, getting out there more. Um, but it was a big deal. Uh someone from corporate uh sent me this, it's a picture from that night. It's we also uh they rate the convention. Um, they ask us this franchise to rate the convention every year out of five. And I think we ended up with a 4.71, uh, which I didn't know at the time, but we were the highest rated convention in the 23 or 24 years they've done conventions. That was pretty cool. Um, yeah, kind of a neat moment, but um, that's a big part.

SPEAKER_04 45:20

Absolutely huge that you were able to raise that much money for that organization. So I I think that's a really cool story. And I think that, you know, when we go through these calls and um and and talk a little bit about the ripple effect and the mission and the vision and the values of the company, it oftentimes resonates with somebody hearing that kind of thing and just how impactful it was. So I appreciate you sharing that. Well, we have like 15 minutes left. So if you guys have any questions, please feel free to jump right in. Otherwise, I can do some more talking. Rich, go ahead.

SPEAKER_01 46:00

Yeah, sorry for all the questions, but I um what percentage of your business is compromised of janitorial services versus other services or even supplies? I mean, what how does that breakdown typically look? And is that is your model? Obviously, you're doing very well, you top 25% of the franchisees. I mean, is that is that you know, would would your threshold be similar throughout the country or does it vary based on location? What what can you talk a little bit about that?

SPEAKER_02 46:24

Yep, I can give them numbers. I'm a franchisee now. I and it was kind of cool when I was in the franchise development. I couldn't always give numbers, right? So um I I've got them down pretty good. We did we did about seven and a half million uh this year in janitorial service revenue. Um, and then we did uh just over six million uh was other services, and then we did about 600,000 in supplies, so it ended up being eight percent roughly supplies revenue and uh OS other services revenue. Kind of doing that quick math was pretty decent. Um, I don't have it right in front of me, but it was like 70 percent. And I would say, how does that compare? I don't know necessarily. Um, I kind of do, but I think we're probably on the upper end, our percentage. Um, one of the things I'm really focusing on this year is what we call net gain, is trying to get the contract revenue up, up, up, up. Um, I like the OS work, but a lot of that sometimes is one-time jobs. And now we got to beat six million this year, and I think we will. Um, but what I really want to get is the contract revenue every single year, increasing that by uh as much as we can responsibly, because ultimately that's probably the value of the business at the end of the day, is what does that recurring revenue look like? Um, so that's always the focus, but uh, we've gotten pretty good at the other services, so we're gonna help our clients with it and and keep doing it.

SPEAKER_06 47:58

But the the I think the focus is always the contract revenue.

SPEAKER_07 48:04

Go ahead, Nathan.

SPEAKER_06 48:07

Right.

SPEAKER_03 48:08

Um, yeah, question kind of off that as well. Um I understand that in terms of um gross margin, we're trying to get to that based on the FTD and talking to Savannah. It's kind of like that, I believe 35%, right? Somewhere around there, that's kind of the average. Um, but after that, there's obviously expenses. And I'm just trying to get a sense of as a new um uh prospective franchisee, what is kind of like I mean, I don't know if you can give approximate numbers, but just an idea of maybe what that kind of final number could look like in terms of even percentages.

SPEAKER_02 48:40

Yeah, I'd love to go into that. And I think as you get bigger and bigger, I think the hope is that the EBITDA becomes a little bit bigger because of scalability. And we have seen that. Uh, so we EBITDA uh, well, I mean, I'll take out we got ERTC funds this year, so I'll take that out because that's that's not fair to put that in there. Um, but we we EBITDA about 10.5% this year. So when you go back into it, gross margin was about 35, Nathan. You're about spot on there. And then you just kind of run it backwards, right? So the operations team, depending on your size, is gonna run you know eight to ten percent. Your sales team, depending on how quick you want to grow, is gonna run four to six percent. And then your admin, which has your royalties in there, uh, is gonna run at seven, eight percent, somewhere in that range. And you kind of take that down. Um, I'd like to see an EBITDA in the 10 to 11 range. I was pretty happy with that. We also want some big, we also want some big jobs this year, and some of the bigger jobs, you've got to take uh smaller margins to get them. Uh, we we had some jobs that we were taking 20, 22 percent margin that we would never do on a regular day-to-day job. But to get you know, a million-dollar job, I was happy to get $250,000, right?

SPEAKER_03 50:05

On a one job. Yes, that makes sense. And then if it's smaller, let's say, for example, you're doing five or six million, could it uh are we still looking at maybe that 10 to you know, 10%? Could it be, or is there like 10 to 15 or 10 to, you know, is there any it depends on how aggressive you want to grow.

SPEAKER_02 50:24

I guess that'd be the answer. And how how uh some people want to staff up uh to feel comfortable, they've got enough people in place and they're not constantly behind on staffing, but you should be in that range. I mean, you should you'll probably be a little bit less than that when you're smaller. Um, you could be in the seven to nine percent range as you're when you're smaller, but it really just depends on how many salespeople you want to put at it and how um I kind of like to try to stay ahead with account managers. Like I try to get one 30 or 40,000 in monthly revenue before I need them. That way they're we're not fully up and running, and I desperately need someone, I try to get that person early. So that costs a little more. Um, I also we do an award trip, right? And I'm gonna spend 70,000 on that. Um, I'm taking seven people to the convention, I'm gonna spend 30,000 on that. So you start peeling that out. Those are my decisions. Now I'm probably at 11 and a half, right? So I but I've I've decided I want to invest in my team and and put some money into things like that. Um, you can get pretty lean. You could probably get as lean as I don't know, Paul or Savannah could probably answer that better, but you could get lean in 13, 14, maybe 15. Appreciate that. Thank you. That's too lean though for me. I would I would be a little concerned. I want to give back to my people too. I want to make sure they're making commission, they're making because ultimately you can't do it without them. So I they they got some nice commission plans, some nice bonus plans. My directors get paid for Platinum Club. Um, but to me it's worth it because I want them to stay and I want them to be happy here. Um, I see some owners get real lean, and I I won't name names on the call, but like some markets that like um different labor rates than Texas, and they still pay what I do. I'm like, really? You're not paying anywhere near what you need to be to get an A player or even a B player. You're getting a D player because you're not paying enough. So don't I you don't get caught in that either. Uh, you can't save your way to success.

SPEAKER_04 52:33

Stuart, on that same note you mentioned uh account managers and how you plan for them a little bit earlier. What amount are you giving those account managers to manage? What's your range there?

SPEAKER_02 52:47

Yeah, so keep in mind we're we're a little we're yeah, we're a low labor rate here in Texas compared to the rest of the country. Um, you know, there's good and bad to that, right? Uh cost of living is awesome, but we also don't bill out as much. If I was billing out as much as someone in California or the Northeast, we'd be a $25 million company. Um, it's just a labor rate thing, right? But so we we typically I've got a guy at about $150,000 a month, but we're trying to get everybody to about $125,000 to $130,000 in contract revenue per month. That's FSMs.

SPEAKER_04 53:19

Okay, perfect. Thank you. That we I've been hearing that about the same range, so I was curious. So just for everybody's awareness there, like like he mentioned, he is not hiring that next account manager until that other account manager is managing that about $120,000 to $150,000 a month contract revenue.

SPEAKER_02 53:40

Yeah, I mean we've got we've got six right now. We're doing about $700,000 a month in contract revenue. Um if you did the math, that would be $840,000 to hire the next one.

SPEAKER_08 53:50

I'm gonna probably hire them at about $780, thank you. Do you all do any sort of online marketing?

SPEAKER_10 54:01

Is it is it mostly in person? Have you seen any benefit to doing anything online, or is it in-person is the best way I I I know, but yeah.

SPEAKER_02 54:12

Um we've tried pay-per-click and gotten a little bit out of that. Um we've tried SEO, gotten a little bit out of that. Um we're trying to get our LinkedIn followers up. We just passed a thousand, which doesn't sound like much, but uh we're trying to get that up. Um I've hired more salespeople, you know. It is kind of feet on the street, you know, phone calls. We've got an influence, or it's now something else. Uh, what's the new um called now? There's a new one we've got.

SPEAKER_07 54:42

The new FEO?

SPEAKER_02 54:44

Uh no, a new, it's replacing influence. Um anyway, it's it's a mat kind of a mass email uh marketing. Um the the name's escaping me.

SPEAKER_04 54:55

Yeah, I can't remember. I'll I'll find out.

SPEAKER_02 54:58

Yeah, uh, but yeah, we do that. So we do we do some mass emails to our to our prospects and clients uh through this. Uh we do a lot of posts on social media. Um a lot of we're really trying hard to get referrals from our clients. Uh, we get a fair amount of those. Uh as you get bigger, that becomes a little bit easier. Um, but yeah, there's just a bunch of different ways. National accounts, you know, from time to time, we got opportunities. That's always great. Um so just a little bit of everything.

SPEAKER_10 55:27

Um, another question. Uh so the the the territory I'm looking at, the Longview Tyler is is very spread out. Is there a pro and con to that or is it there's probably not a you know a big difference? So instead of being one big city, you have all you know, you have college station, you have Tyler, you have Longview, you have Lufkin, you know, everything else. Is that good or bad?

SPEAKER_02 55:50

I don't think it's bad. Uh and I should know the area being in Texas, but what what what would be your I don't know how far, how how many miles roughly?

SPEAKER_04 56:00

Uh Savannah, do you it's about 200 miles north to south.

SPEAKER_02 56:05

Okay. Yeah, I mean, I there's other markets like that probably. I think Austin's pretty big. Austin goes pretty far.

SPEAKER_04 56:12

Yeah, we have several other markets here too um that we can discuss as well, but Idaho's a whole state. Um, we've got some very large in-space California markets, as well as I know North Carolina and South Carolina. So there are a good amount that have that um spread out nature to it. Um, but what I mentioned earlier is kind of you know, focusing on the major metro that you might be in, and then maybe eventually having a satellite location down the line. Would you agree with that?

SPEAKER_02 56:46

I I would. Um, yeah, I absolutely would agree with that. And for for us, San Antonio, decent sized city. Um, I don't know how far north to south, probably 50 miles, maybe 60 miles. Um, we put our I live on the north side, so it was really not convenient for me, but I put the office right in the middle of the city, um, just to make it convenient for all my contractors and my employees. I'm probably the furthest from the office, but that's by choice where we wanted to live. Um, but yeah, I would recommend what Savannah is saying. Put it in the hub, whatever that big city is, and then just kind of start from there, then you can move your way out. And if you feel like you need to have a satellite office somewhere, there's other franchisees that have done that for sure.

SPEAKER_08 57:28

The only thing you might be missing that I like, but it wouldn't be the end of the world, is we have most of our people come in the office most of the time, like every day, uh, at some point, just to kind of help build that culture.

SPEAKER_02 57:40

It 200 miles could be hard as you kind of expand to do that with people that are really far away, like a sales guy or gal.

SPEAKER_08 57:47

Um, but it you can still manage through that.

SPEAKER_07 57:54

Awesome.

SPEAKER_04 57:55

Well, thank you so much, you guys. This is such a wonderful hour again. Stuart, thank you so much for all of your time and um all of your feedback for these questions. So this has been phenomenal, and um, I really appreciate it. So thank you all so much.

SPEAKER_08 58:11

Nice work to do guys. Thanks, guys. Thank you guys. Bye bye. Thanks.