SPEAKER_08 0:11

Hello, hello, everybody. Welcome.

SPEAKER_11 0:18

Welcome. Hey, Yui. How are you? Good. How are you guys doing? Good. Hello, Scott. Hi, Josh. Hi, Patrick. Welcome to the call. Happy Z call day. Um, I see Brent and Jake are on as well. Thanks for for joining us, you guys. Hello, nice to meet you, Jake. Um happy to have you all on the call this this week. We have Doug Gardner in Louisville, Kentucky with us today. And he is going to start giving you guys a little introduction on himself. Um, Doug, tell us if you don't mind what you were doing before City One and how you got started, uh, even how long you've been here, just to give everybody kind of an overall picture of you. And then you guys, you know the drill. Um, Patrick and Jake, I believe this is your first time on the call. So just to give you guys a little reference on how these go, feel free to just jump off mute and jump right in with any questions that you have for Doug today and whenever you want. So, all that being said, Doug, you have the mic.

SPEAKER_01 1:28

Take it over. Okay. Well, good afternoon, everyone. Uh, thanks, Savannah, for organizing this. Um, a little bit about me. I just finished 13 years at Citywide. Uh previous to this, I was probably seven or eight years in pharmaceutical sales. Uh, and immediately following that, I was in medical device or I'm sorry, medical sales. Uh, so I I've had sales and management kind of in my background, uh, but I'm one of these weird guys who has a mathematics degree and decided I didn't want to crunch numbers all the time and sit behind the screen and work for an insurance company. So uh so I'm a little bit of a varied cat when it comes to that. Uh so I I like the numbers, I like the finance. So I'm sure some of your questions will have to do with margin and all those fun things. So those are the things I like to talk about. But uh, but that was my background. Um again, so we uh Citywide was not in Louisville before I opened it. So uh we we started fresh here. So it wasn't a resale or anything. So um, so that's that's kind of a little bit about me, and you guys are welcome to ask anything about my background um, you know, as we go along.

SPEAKER_11 2:32

Thanks, Leg. I think that actually helps a lot because knowing that you were a market that kind of started from scratch, I think is a really helpful um topic of conversation for probably the 90% of the people on this call, if not 100%. Um, just understanding that this this wasn't a revenue or a revenue generating business when you walked right in. So um, you built this to what it is today. And um, all that being said, Scott, you have your hand up, so I'll let you jump right in.

SPEAKER_05 3:05

All right. Hey Doug, thanks for your time today.

SPEAKER_10 3:08

Yep.

SPEAKER_05 3:09

Um, yeah, maybe you can give just a little summary of your uh startup and how long uh what team you built right away, how long it took you to kind of get the break-even and kind of after that.

SPEAKER_01 3:23

Yeah. So when I started um again, 13 years ago, I I really was the sales guy. Um, and I was the copier guy, and I was the accounting guy, and I was a little bit of everything. So um when I started, it was myself and one FSM. And I I presume everybody here knows FSMs, night managers. I I don't know if you have a basic knowledge of kind of the the different staff levels that Citywide has. I don't know if Savannah do they know.

SPEAKER_11 3:50

Yeah, we we've generally talked about that, but just for um Patrick and Jake who haven't frequented these calls as much, your FSMs are what we would kind of consider as your account manager, your facility solutions manager. So they're the ones that are not only retaining that relationship with your client, but they're also salespeople themselves selling additional services. So you'll hear us say a lot of different acronyms um within these calls, FSMs being one of those, just think of those as your account managers.

SPEAKER_01 4:20

Yeah, so so FSM, so I it was myself and an FSM. And, you know, when I started out, you know, I think my office space was maybe 13, 1400 square feet. So not a big office. Um I didn't, you know, you're trying to sit conserve as much capital as you can early on. So, you know, you're not looking to be in a very, at least I wasn't, a very recognizable location that was not really necessary as long as it was nice and got the job done. So so back then it was he and myself, and it probably took, I wanted to hire sales exec right away, but it I was not fortunate to find one. Uh that's probably been my had been my biggest struggle uh out of the gate is finding good salespeople. Uh, and I'm sure I'm not immune to that or the only one, uh, not just at Citywide, but probably different industries when it comes to salespeople. That's that's a tough one to find. So um, so we we struggled out of the gate. So it probably took me, I think I came, I hired an SA, a sales associate, uh, which is someone who's probably two, three years experience, maybe right out of college, uh, versus a sales exec who's got more experience, maybe five, 10 years uh already selling. So hired an SA um and she kind of doubled as kind of uh again, I'm gonna use some acronyms, BDS. So my business, my in-house phone, uh inbound phone rep, as well as my sales associate. So she was doing both uh outbound calls from the office, and then she would go out probably two days a week in the field uh and knocking on doors. So that I kind of had a hybrid uh role for her, but that's kind of how I started. Uh again, it took me a minute. Um, I wasn't as fortunate as some of the citywide to start out and have us uh just a rock star sales exec right out the gate. Uh so my break-even was probably closer to two years, I would say. Um and again, that's just a function of not, you know, not being able to find the right people uh right out of the gate. Uh one thing I learned early on from even my time being in your shoes and interviewing some other franchisees was to follow the model. And so, you know, one of the things we do when we hire is uh predictive index, uh just kind of doing a personality survey just to make sure we're a good fit for each other. Uh so I was I was following the model. I was very picky on who I would bring in. And so if it didn't fit, you know, two or three different profiles that we were kind of looking for on the sales side, I just would pass. Uh and I kind of got burned on that. Uh maybe about two years in, I kind of sat down with someone, interviewed them, liked them. The profile wasn't a fit. And I'm like, you know, I like them, I'm gonna hire them anyway. And I could tell you within 90 days or less, I knew it wasn't gonna work. So I've been burned on that by not following. Um, and that's what all the all the franchisees that I did the research with and interviewed before I came on in Louisville, um, and uh to a man, they all said follow the model. And and that was a biggie, and that was following, especially the sales profile, before you even get them in the door, make sure you got the right fit. So hope that answers your question. Like I said, about two years for me, and Savannah could probably answer you better. But other folks, it might it might be a year and a half. You know, they they come out selling strong. Um, and so it probably varies per market, but again, my luck was what I just stated. So, but it's it's it's worked out. I mean, 13 years in, you just kind of you just kind of put your head down and and just keep selling and doing what you're doing.

SPEAKER_08 7:39

Go ahead, Patrick.

SPEAKER_04 7:41

Yeah, um, I've got a question. Doug, thanks for your time. This is yeah, this is super helpful, as well as I've listened to some other of the recorded calls, and you touched on one of the questions that I that I that I had, which was it seems like there's two major categories of roles, right? Sales and ops. Yep, but within the sales, it it sounds like there's BDSs and SAs and sales execs and FSMs. Um within ops, it sounds like there's maybe a PM kind of a person that manages the independent contractors, and maybe a a QC person. I guess my question is, are there are these common job descriptions? Um, and consequently, is is the um is the compensation both base and variable kind of the same, whether it be in Louisville or LA? I get I get there's cost of living differences, but I guess my first question is, are those all are those the two categories in which any and within each category, how many roles are there? And differentiated behind the roles, and then are they standardized? Is kind of the system of question.

SPEAKER_01 8:50

I think you'll find uh the the longer in the tooth you get, uh the more roles you will have. Um, because when I started, I had an SA, which is a sales associate, and then that you kind of so you're I guess your progression, BDS to SA to S E, right? So business development in-house, SA, kind of your your greener, you know, less experienced sales rep, and then your SE is your more experienced sales rep, right? Uh, so that's kind of the sales side. And yes, they for us, and I think for most people, it's it's a base plus commission. Um, on the op side, only thing I would correct you on on Patrick is the FSM is is op. Your facility facility solutions manager's ops, uh, although uh a large, at least for us, a large component of their uh comp package is sales because that what they're doing. I mean, they're they're the account managers, they're the ones that develop a route. They go and see the customers every week. Um, and their job is to upsell other services, you know, window washing, floor care, whatever it may be. So they do have a component of sales, even though they're ops. Uh so uh, and they're the way I've got them set up, and I think most people, it's still gonna be a base plus commission for what they sell, uh, ancillary. Uh so I would look at it as almost like three silos, Patrick. You got sales, you got ops, and you probably got admin. Um admin are gonna be your your in-house folks, whether you, you know, at some point, you know, you you'll grow the so that you need a an office manager or you'll need um an accountant. Um in my case, uh I've hired a marketing manager to do my marketing. Um, I also I think you said PM, and and and every citywide probably will label it maybe a little bit differently as far as the title goes, but uh for like the for the uh contractor recruiter, um I I think we call them a business ops liaison or something like that. I forget off the top of my head, but uh that's the so we hired that person maybe two years ago to to just recruit for independent contractors. And somebody's gonna ask this question. I'll just go ahead and tell you right now, if there's one thing I would do differently out of the gate, I was I would hire that person a lot sooner if you can afford it. Which person was uh do you mean the the the uh independent contractor recruiter, the IC recruiter? Because they they're gonna be the lifeblood of your business. Uh I mean, those are the ones that are your partners that you're gonna rely on to go out and clean these buildings or do the floor work, and you're you you have to put a lot of trust in them. And so you're gonna need, and our girl, I bet now uh Charlene probably has she probably is interviewing 10 or 15 a week now. So now we're at the point, but again, I'm 13 years in. When I first started, I mean it, you know, you're you're putting ads on Craig's list, you're trying everything you can to find these folks, right? You're going to your local uh Jan San house. Uh, I'm sure in each of your markets, you probably have the the local Jan San company that sells consumables. So you know, you pick their brain on some of the some of the folks. So um, but that's one thing I would have done differently again. Had I had the capital, I would have I would hire them sooner. I hope that answers your question.

SPEAKER_04 11:59

Kind of the no that that that's really helpful that you bridged into a a question just around if you were going into a new territory tomorrow, yeah. Um, would you do uh a BDS, a um an IC recruiter, and a blow what would you have in an ideal world, which I probably shouldn't say ideal because then you'd have all the unlimited money in the world.

SPEAKER_01 12:23

I want a lottery and I can do anything else with all that money, yeah.

SPEAKER_04 12:26

With constraints of uh you know financial constraints, what would you go into a new territory with?

SPEAKER_01 12:32

Yeah, I I you definitely gotta have a strong SE. I mean, you gotta sell, you gotta get revenue on the books as fast as you can. So you definitely have to have a if you can find them, you gotta find a solid salesperson. I mean, I think you got to start from there and then and then kind of branch off of it. I mean, depending on what your strength is, I mean, as the owner, you're gonna be hopefully involved in the business uh for a while anyway, but you're gonna be in it from day one, right? Whether your strength is ops or your strength is sales, um, you're gonna be one or the other. Um, but I think you gotta start with a strong SC. Um, you gotta have someone that'll knock on doors. Um and you you have to have one FSM, I think. Now the FSM, I you know, depending on how quickly you grow. I mean, FSM can kind of be a hybrid. I I know some markets that have kind of had an FSM kind of be a night manager just early on, you know, because of capital constraints. But if you're asking me what I would invest in, it would be sales. I would figure out the ops.

SPEAKER_08 13:31

Got it. Thank you. Brett, you want to jump in?

SPEAKER_07 13:40

Sure, thanks, Savannah. Um hi Doug. Uh, first of all, thank you so much for sharing your time with us and all of your uh experience and knowledge. This is super helpful. Um and the overview of the different functions is is um valuable as well. Can you talk about where you are today? So you're 13 years in, and how many how many people are on your team, and then how many in each of those roles that you just described?

SPEAKER_01 14:05

I have, I think, in total, around 35 employees right now.

SPEAKER_10 14:10

Uh-huh.

SPEAKER_01 14:11

I have, I think, seven FSMs. I've got on the this is on the op side. I've got seven FSMs, I have two DOOs. I've got um so that's the that's well, night managers. I probably have 10 or 11 night managers. Okay. We typically we try to keep it one on one, one to one, one FSM per night manager is ideal. Um, you know, when you're in transition from having to hire the next team, that may get out of whack a little bit, but generally it's one to one. Um on the on the sales side, I have a BDS, I have three SEs, I've got uh a director of sales who leads that department. Uh I told you I've got the marketing person on the on the admin. Uh I've got a GM. So I've got a guy that runs the day-to-day uh 13 years in. Uh we our revenue is such that you know I can afford a GM now. So again, that's at some point, ideally you'll get to that point, uh, unless you want to be the GM. Um let's see, I have the IC recruiter, I've got my accountant. Um I've got an in-house handyman. That that's something that's maybe a little unique to some of the citywide markets. Um, we started selling a lot of other services, so I I thought we could probably afford to bring a handyman in-house and be my employee. Um, so I I don't think everybody does that. Savannah can probably tell you more than me, but I I know there's at least a handful of markets that have a handyman, but uh again, I didn't have that right out of the gate. That's just something that's kind of developed over the last few years. Um, here in Louisville, there's there's such a need for just small random jobs to get done, drywall repair or paint something, um, that it just and it and we've had him for three years, uh, got him a van and put him in a in a van and and and my FSCMs keep him busy. You know, he's probably you know, he does at least 40 hours a week. So I think that's that should be close to 35 people. I just kind of laid out for you, but that that's kind of where you're I'm at it at 13 years.

SPEAKER_07 16:17

I see. Okay. Yeah, it sounds like good good growth in the team. Yeah, and can can you can you share what your last full year of revenue was was like 20 2025?

SPEAKER_01 16:28

I will just tell you uh it's north of 10.

SPEAKER_08 16:33

Okay. Thank you.

SPEAKER_06 16:43

Yeah, thanks, Van. And thank you, Doug, for obviously taking the time as everyone else has mentioned here too. I had a couple questions about starting the territory when you got going, you know, 12, 13 years ago. Like, what was the market like? I mean, was there a lot of competition out there? And you know, or was it a pretty, I guess, you know, you know, blue ocean from that perspective? And then, second, to follow that up is what were some of the objection responses that you were getting from organizations when you would go in and try to sell the services? Like, I'm curious on what kind of those hurdles look like for you.

SPEAKER_01 17:12

Yeah. Um, you're you're never you're always gonna have some competition, I would think, in every market. Uh now, if you get out and I don't know who's uh who's from North Dakota, who's the North Dakota person out there?

SPEAKER_06 17:22

That's me. That's me.

SPEAKER_01 17:23

All right, Jay. I I don't I don't know. You may have the entire state of North Dakota, I don't know how dense it is out there, but uh there may not be as much competition in North Dakota as like Louisville and your other um larger metropolitan areas, but we all we had, I mean you're I think everybody's gonna have Jana King and Jan Pro and a coverall. I mean, those are your franchise companies that are out there, but uh we also have a couple of local in-house shops that have been around for quite a while, probably 20 plus years. Um, and and so they've got a good name brand here in town. So I don't know that everybody's got that, but so you're gonna have a little bit of uh of competition on the cleaning side, but I mean the way I look at it is I I mean I really don't have competition when someone asks me that question. I'm like, nobody does what we do uh all under one roof. And so um I don't really have competition, and that's how I kind of explain it to folks who may ask that question.

SPEAKER_06 18:17

Um but I see what the second part of your question was just kind of like what was the response when you started getting out there and building that territory with your you and your your salesperson at the time, like you know, what what was the the kind of the response? Like, you know, again, I'm I'm from up here, so we get a lot of you know, like a lot of the the you know organizations and a lot of the the buildings are managed by like property management companies and things like that. So I'm just kind of curious on on what you know you were hearing from a lot of people when you were at the start saying, hey, you know, this is what we offer. And you know, obviously it's different for every organization, but I'm just kind of curious what were some of the common ones.

SPEAKER_01 18:50

Typical question is gonna be well, how can you do that, right? We offer 20 plus services. Well, how do you how many employees do you have, right? So you got to get into the discussion about the business model. So that's gonna be your biggest probably question when you first start is how does the business model work? And I'm not sure I'm comfortable with contractors coming to my building versus in-house employees. That's gonna probably be your main, at least that was my probably our main objection. But property managers in general is gonna be a different conversation versus like an auto dealership. You're talking to a GM at an auto dealership. Um, at least in Louisville, uh, I've I found out that this in this city, uh, if you talk about citywide as as a uh commercial maintenance management company, as soon as you use the word management, they've automatically turned me off because they think I'm trying to take their job. Because they look at me as a property manager, and I have to explain to them that I'm not. So it's a different conversation. That's one thing I will tell you, versus any other prospect segment or industry that we have. Property managers are just a different animal, and you have to watch how you talk about it. It works with them just as easily as it does, you know, a single tenant type property, but uh it's just they're very protective, at least they are here. And I'm sure other markets they are gonna say here, we're a management company in the building maintenance industry. I when I'm talking to them, I try not to even use the word management because it just it just turns them a different way. So that's that's probably at least in Louisville, that's probably the the hurdle I had to get over was just explaining the model and how you know we do the background checks just like an in-house shop would be. So then at the end of the day, it your building gets clean. Why do you care how it gets clean, whether it's you know, my my contractor or or an employee, as long as it gets clean, you know, they're running background checks just like I'm running them. I mean, there's really no difference. So, but it's it's it's trying to get some folks over that comfort factor because here's the thing, they're used to doing things a certain way, and it's hard to change their mind. And so they've got their at least here, they got their mindset on I must have an in-house company, I must, it must be your employee. You know, and I no one's given me, at least my prospects have never given me a good answer as to why. I mean, there's why. So anyway, that was probably the number one for us.

SPEAKER_08 21:04

Thank you. Yep.

SPEAKER_00 21:09

Hey Doug, uh, thanks for your time. Um, I wanted to ask about uh even of margins. Obviously, when you were first starting off, what kind of margins were you targeting? And obviously, now that you're north of 10, uh, what kind of margins are you currently seeing your business?

SPEAKER_01 21:23

Um margins probably were tighter in the beginning. They've gotten better over time as we learn how to do things a little bit better. Um our typical margin on janitorial, uh, I'd say we early on we tried to shoot for 32. Um, now we're probably 35, 36. Uh on the other services, again, we probably tried to shoot for 35 ish, um, but now we're probably closer to 40. So again, over time, as you learn who your ICs are and which ICs, and that's that's the other reason why you it's great to have an IC recruiter that can recruit a lot so you can have competition amongst your. Independent contractors for the work. So you don't have to always depend on one who's going to hold your feet to the fire. The other thing is you don't want, and I've we've lived by this too, is you know, we don't have any janitorial independent contractors that represent more than 10% of our business. You don't want to get stuck if you're in a position where you're beholden to one I see. So we try to spread it out as best we can. But but margin-wise, again, I we probably I don't know, Savannah may be able to answer better, but I think we do a pretty good job, and we're probably, I would think, top 10 or so probably in the company in terms of margins. Um, because we, you know, being a numbers guy, as I told you, uh, I really look at that and profitability is big. Um, knowing how unprofitable I was in the first couple of years, I kind of focus in on that now. So um, so that's EBITDA-wise, uh that so that those are the margins. So EBITDA-wise, I'd say now we're probably in the my goal was 10 to 12 percent EBITDA. Somewhere in that ballpark. Um now I didn't get there day one, but you know, you'll probably live in the I don't know, six, seven, eight range, probably for several years. Um, unless, again, unless you can just sell a lot and just get lucky and all those good things. But I think a good range when you get to 10 plus years is probably 10 to 12 percent.

SPEAKER_07 23:28

Yeah, but maybe a quick follow-on on that particular topic, and maybe Joshua you heard me go there anyway, but so so with a 10 to 12 percent EBITA margin, um, is that before or after you have included your own compensation in opx?

SPEAKER_01 23:42

That's before.

SPEAKER_07 23:44

That's before, okay.

SPEAKER_01 23:45

I'm not including, I'm not including me.

SPEAKER_07 23:47

Okay, so that's so you're you're compensating and are you're you're the you're the only owner, right? I am. Okay, so your your your compensation comes out of that 10 to 12 percent. Yeah, it would come out of that if you you decide whether to take it or not, but it would come out of the 10 to 12 percent. It would.

unknown 24:04

Thanks.

SPEAKER_01 24:05

That's what yeah, yeah. So when I yeah, those numbers are all pre me, but I can just tell you my first I didn't take a a penny out of it for the first year. So I didn't pay myself anything for the first year, and again, that was just my situation. So, you know, again, if you if you come in with more capital and you know, you can do that, great.

SPEAKER_08 24:25

Patrick, go ahead.

SPEAKER_04 24:27

Yeah, and as a follow-up to that, Doug, I'm not sure if I'm allowed to ask this or not, but do you pay um your 35 employees like healthcare benefits and things like that? Or is that independent? Is each owner um make that decision on their own, or is there something through um citywide?

SPEAKER_01 24:48

Yeah, there's there probably is an option through citywide. Every owner is gonna make that decision on their own. I mean, we're all independently owned and operated, so everybody kind of makes their own decisions. Uh, I I didn't have benefits early on. Um, I probably have had medical five years now, five or six. So um, it took me a minute to get there. And but now that I'm there, uh I have we have medical, we have a 401k. Um trying to think. Uh oh uh well, it's not I'll bring AFLAC in too. I mean, though I'm I'm gonna get to the point where I can help them with some of these things, uh, but I I pay 50% of premium for medical um for them. And so a lot of my guys I've learned, I mean, their their spouse carries their insurance anyway, and for the most part, they I don't have you know complete uh uh coverage for everyone. I think I have maybe five or six or seven maybe that take pick me up on that, uh, because most people already have it covered.

SPEAKER_02 25:52

Hi, Doug. Yeah, thanks, Savannah. Hi, Doug. Uh, thank you so much for your time. Um, you said that this past year you did north of 10 million in revenue. I was curious as to what that split revenue split looks like between sort of contracted uh revenue that would reoccurs versus sort of one-off projects. And what would you like that to be?

SPEAKER_01 26:17

We uh we were probably, I'm gonna try to think I'll talk me out. We were probably 60-40 revenue, uh recurring revenue over the the OS in that ballpark. Um, if I can, I mean 50-50 is a great split. Um, in my eyes, if I can do you know 10 million in in recurring revenue and 10 million in in OS on top of it, which is going to be your higher margin uh services anyway, I'll I'll I'll I'm good with that. Um, but again, um from a recurring revenue standpoint, I mean that that's that's the beauty of the of the model, right? That's that's one of the reasons um I like the model so much, uh, amongst a few other things, but recurring revenue. I mean, that's that's kind of the value of your business. Uh, but what we try to do on the OS side, we try to get recurring OS. So we try to do contractual OS as well. So um I wouldn't just look at JS as recurring. I mean, if I can get a a a contract for window washing and and get a contract just like I, you know, I do with JS, I mean, that's part of my recurring revenue.

SPEAKER_02 27:22

Yeah. And a quick follow-up on that, how could you share how much margins differ between JS and OS?

SPEAKER_01 27:28

Yeah, JS, like I said, is around now, after 10 or 13 years, we're probably 36-ish on JS. Okay. And we're probably close to 40 on OS.

SPEAKER_11 27:41

Got it.

SPEAKER_02 27:42

Thank you.

SPEAKER_01 27:42

Yeah, OS, the other services. I I keep using these acronyms, sorry.

SPEAKER_11 27:46

I always warn everybody, we have we I feel like we have more acronyms than the hospital sometimes, it sounds like. Patrick, go ahead.

SPEAKER_04 27:57

Yeah, yeah. Keeping on on um recurring revenues, again, take yourself back to year one. Some of the other calls, some of your counterparts on the calls have said, OS, focus on that heavily in the beginning for for all the reasons you just said. Do I assume that those are under contract with a competitor? And if so, do you have to wait till they expire or or or do they get out of them if they're unhappy?

SPEAKER_01 28:25

Yeah, no, most of these are not under contract, like window washing and floor care, and I mean, they're not, there is no contract. I I think we're being a little uh have a little bit of ingenuity there when it comes to that, as to create a contract for that. Um there was no problem, there was no contract to get out of. If they were unhappy with their window washer, they just told them don't come back and they hired us. Um, and we've gotten good at it to the point where you know, if we do their cleaning and they trust us, we try to get them under a contract for that side too. Um as far as starting out, like as you heard me mention, it took me a minute to find a salesperson. So by not really by choice, but kind of by just so I could survive. We sold a lot of OS out of the gate because my thought process was that if it's gonna take me a minute to find a good salesperson, I'm gonna sell, I'm gonna find somebody that can sell, excuse me, other services with higher margins so I can make some money and help me get it give me time until I find my salesperson. So ours wasn't by design, it just kind of worked that way. And I think because we focused so much on OS in the beginning, it's helped us create almost that 50-50 model of OS to JS. Um, I think when I first started, I think, and Savannah could probably tell you more uh with her dad, but I mean, back in the day, they probably wanted you to have an 80-20 mix. Like I don't know that they thought of us being able to sell as much OS as as a company as as we back in the day compared today, but uh but we sold a lot of OS, and because of that early on, we learned how to sell it and we we just started selling more and more of it. So many different services. It wasn't just your basic floors and windows. I mean, we've got into you know fire restoration. We've gotten into heck, I even demoed a building, had a guy Google uh building demolition here in Louisville about seven or eight years ago, and I've never done that. And so he called us up, and there was an old house on a property, we knocked it down, put fresh dirt back, and called her today. So, I mean, that's a beauty of this model is you can do anything. Um you never say no because you can do it. All you gotta do is find the right contractor to do it.

SPEAKER_11 30:38

Um, so yeah, and and I would argue that you know, while OS is 50% sometimes of some people's businesses or maybe even the system wide system overall, it's the recurring revenue that is the scalability factor of this business. And without that, you're not going to see that consistent year-over-year growth, I would say. Um, the other service, while it's fantastic hits and it gets it gets people going in that way, um your recurring contract revenue is really what's going to create that that year-over-year growth. And I think Doug's a prime example of that being one of our top RPC leaders, one of our top our platinum markets for several, several years, top in retention. Um, that's a lot due into the the fact that he is leaning into the model in that way and really driving on the recurring revenue.

SPEAKER_01 31:37

Yeah, I mean, we recurring revenue is huge. Like I said, that that's the value for me. That's that's the value. If someone ever wants to come in and buy your business, they're gonna look at your recurring revenue, right? The OS, you have to keep selling it over unless you get it in a contract, right? You got to keep selling that OS over and over again. You know, once you sell the janitorial, the recurring, it's sold, it's on the books, now you just gotta maintain it. So one of the one of the metrics that that Savannah may have talked about is net gain. So we look at net gain every single month, if if not more, more often, but it's how much did we sell versus how much we lost in contract in recurring revenue. And that's that's your value driver. If you have a net gain of 200,000, let's say I sold 200,000 this year in JS revenue, but I lost 50. So my net gain's 150,000. So next year I've got over 1.5 million already coming in. So you that's just that recurring revenue that just keeps building on itself and growing for you. So um, but net gain is a number we look at uh just about every day, I would tell you.

SPEAKER_00 32:43

No, a question here about new accounts or new leads that come in every single year. Um, would you be able to break out what percentage of that is like outbound, your your team going out and prospecting clients, and how much of that is from your marketing function, um, both in current state and where you want that mix to be?

SPEAKER_01 33:02

Yeah. Um, my marketing person is fairly new, and I don't know that many people, many citywides, many locations have their own internal marketing person. I would tell you right now, probably 98%, 99% of what we do, we go out and find, whether it's picking up the phone or knocking on a door or emailing, right? Doing an email campaign. Uh, I'm hoping at some point that I can, I'd love to get 10% in and out of marketing. You know, I don't know if that's possible, but we're gonna try. Marketing is one of those funny things, as you all probably know. It's like you put all this money into it, but it's hard to determine ROI unless you just really just maybe set the you know what out of it. And and that's and that's what we're trying to do is my one of one of the charges for my marketing uh person is to track every lead that comes in. And I want to know every quarter, whatever the case is, like I want to know if we got any business out of it. So we've got to, I don't know if it'll be perfect, but I I've got to figure out a way. And I know uh Samanna maybe I'll talk about it, but I know we've got some marketing things going on back at the home office that uh I I feel like it's gonna help us quite a bit uh on the marketing side and generating leads. But yeah, I want I'm what Josh, I want what you're saying. I want instead of us having to go out and find 99% of it, I'd love to have 10 or 15 come back into me, right? Without having to go out and put boots on the ground. So um I don't know what Mary Beth's number is, Savannah. You might be able to tell me, but I like if I can get 10%, that might be that might be pie in the sky. I don't know, but uh but I'm gonna try it. So what you know, she's so my girl's big, she she's she knows the TikToks and and the Instagrams and and Facebook and LinkedIn, she knows how to work all that. So here we go. What are you laughing at?

SPEAKER_03 34:43

You say TikToks with a plural. I said I say amber crombie and I get in pr in trouble for that too. It's boomer, it's boomer language.

SPEAKER_01 34:52

Yeah, yeah. Well, I say the TikToks of the world, which includes the other social media platforms.

SPEAKER_11 34:59

Fair enough.

SPEAKER_08 35:02

All right, Scott, you're up next.

SPEAKER_01 35:08

Um I was wondering, like on your janitorial, does there um do you have like a say percentage that's maybe the different types of businesses like healthcare or manufacturing or office or yeah, I don't have percentages, but I can tell you our number one is uh uh car dealerships uh in terms of just shared number. Um I have a uh like revenue percentage, but our number one is car dealerships, um probably office buildings right after that. Um we do I'm looking at it as well. I'm sorry, Savannah.

SPEAKER_11 35:43

I'm looking at it as well, and I was gonna say schools is another big one for you.

SPEAKER_01 35:48

We we have one large public school. I forgot about that one. Um we have a large public school system here that uh used to it took us two years to convince them to use our business model versus what they had always done, which is an in-house model, and they finally took a chance on us and figured it out, and now they see the difference between it's like night and day to them. So uh, so schools is a big one. Um every market's gonna kind of have their their signature industries, like what you're gonna see a lot of like for us here, it's medical, like we've got to get into medical. We have like three hospital systems here that really run the whole market. So we've got it, we've got to find a way to get into medical uh in the hospitals, I should say. We we do some medical, like your dialysis clinics and and you know, little clinics here and there, but uh, so for us, it's gonna our our focus now is medical or hospitals um and property managers. Property managers and and probably most of your markets are gonna control a lot of square footage. And it's I don't want it to be uh my number one, but I you still have to play in that sandbox. And so um because of so much, because of how much they they control. So that's kind of my for us this year, that's kind of our secondary target. But but we do a little bit of everything industrial, manufacturing, logistics. But those are probably the top three.

SPEAKER_08 37:06

Okay. I've got another question on that one.

SPEAKER_04 37:17

Um you mentioned you know, car dealerships, then you did office buildings. You said you have one school system. Have you guys um like done a case study on what that school system found as value for you to use it to other school systems? Is that kind of some of the stuff that is big in in this industry or not?

SPEAKER_01 37:40

I we haven't done it. We've we've been in there maybe two years now, so we we've not been in there as long just yet. Um now they may be running some numbers on their side, which we've asked them for, uh, to kind of give us some some numbers on value because what what we're doing now is we're trying to go after other public school systems. And we want to kind of use some of that data to be able to tell them what some of the numbers they turned internally on their side. So um, I don't I'm not sure how much they're gonna be able to give us, but they are whenever we need a referral, they are not hesitant to say, have them call me. I will tell them the difference between in-house and your model. So that's been good.

SPEAKER_04 38:20

Yeah. Thank you. Sorry for all my questions. No, you're fine. That's what it's like.

SPEAKER_11 38:27

So that's exactly great. I'm glad you're asking them, Patrick. Um, Doug, I'm curious about transferable skills from pharmaceutical sales into citywide. Sometimes people think, oh, you know, I've never been in that industry or I've never been in this type of sales. Can you talk a little bit about, you know, how you adapted into that new sales industry coming from a different type of sales role?

SPEAKER_01 38:55

Well, before, I mean, so I've done this more than once. I mean, I think as long as you you have a willingness to learn, um, it's it's never a bad thing to say, I don't know that, and I will find out, right? So, I mean, when you don't know something, just tell them you'll find out. And and people are receptive to that. Before I got into pharmaceutical sales, I used to wholesale annuities to stockbrokers and financial planners, I used to do all that. So I had no idea, you know, how blood circulated through the body either. So I was able to, I mean, it's it's really just training, and as long as you're willing to talk to people and learn the sales, like uh City Wide utilizes kind of the Sandler training model, uh, which is a great, I don't know if any of you all have been through the Sandler sales uh process, but it's it's a great program. Uh it's kind of reverse psychology in a sense. But transferable skills, I mean, is you just have to be willing to learn, you have to be flexible, uh, not afraid to. I mean, that's sales, really. I mean, I guess in any industry, but I was worried about going from you know, wholesaling annuities to selling drugs. I had no idea. And so I use that a lot. I always use I'm the new guy on the block. I don't know, so you kind of let them educate you a little bit. But again, what we're selling here, it's not rocket science. I mean, it's cleaning floors and dusting and mopping. I mean, it's not rocket science. So um, so what you learn, what you typically begin to learn, that's why I say you got to be willing to learn. You know, it's great if the salesperson can spend some time with the ops team so they understand what a stripping wax is, a VCT. So the more knowledge a salesperson has going in, the easier the sale, I think, will be. That's one thing I've learned. So, again, for me, it's just it's the education part. Don't be afraid to get in. Just because you're the salesperson, don't be afraid to learn a little bit about ops. So that would be my two cents.

SPEAKER_11 40:43

Thank you.

SPEAKER_09 40:44

Yep.

SPEAKER_11 40:47

Let's brag on yourself a little bit as well with your TRR. You have one of the top TRRs in the system, total revenue retention. Um, can you talk to us a little bit about that? Is there an initiative going on with your office? Are you incentivizing FSMs? Are you how are you consistently driving those kind of numbers?

SPEAKER_01 41:09

Well, I mean, the biggest thing is we we took a couple of different programs. One of the things about Citywide that's great is all the franchisees are willing to talk and give and teach others. Uh, so um a lot of times you don't have to recreate the wheel. Uh, if there's something that you want to do, it's likely already been done. All you have to do is send an email to to folks and there and there'll be people willing to answer questions. So three or four or five, whatever years ago, our retention wasn't great. So what I did is I kind of what Savannah's talking about on the TR. I looked at the system, I said, who's got the best TRR now? So I went and found the two markets that I wanted to to kind of pick their brain, Minnesota, I think Columbus was the other. Um, I knew they had their ops on lockdown and they had a program uh for retention in place. And there's so many facets of it from the the number of visits you make customers to inspections, like proactive inspections you're putting in the system. Uh the night managers making sure they get inspections in the system, the follow-ups. I mean, it's it's a very, it's very detailed, it's very organized. But at the end of the day, it's you you set the plan, you go put the inspections in. We put out we spit out reports the following day that everybody gets to see. So everybody under the sun sees it. So you can't go hide from it. Uh so I took that was Minnesota's plan. So I took Minnesota's plan and then I married it up with the Columbus plan, uh, which Columbus is uh they had a couple of just key things they put at the beginning of their notes in the system so that you know if you actually saw the customer or did not see the customer. And so we kind of married those two together. And since we did that, um, we kind of had a big powwow with the ops team, both night managers, FSMs, and got everybody on board. It took probably two or three months for people to get comfortable with it because it's change, it's making them actually do something. Um, that's that's how we turned our TRR around. I mean, we we didn't reinvent the wheel, we just we put a program in place and we made people follow it. And and it was at the point that point where it's like if you don't want to follow this, then you're probably not a good fit here because you know it's it's hard as heck to to get customers in the front door. If we're gonna lose them out the back door, I mean that's you're you're like a hamster on the wheel. Right. So anyway.

SPEAKER_11 43:26

So I I'm taking a gamble on this, so I hope I'm correct here. But I want to say that last year around this time when you did a Z call, you mentioned how you maybe changed your contract terms and not really accelerated your your did you did you maybe do 12 month contracts instead and you saw that that helped? It was okay.

SPEAKER_01 43:46

Yeah, yeah, that's helped. I mean, um, yeah, I forgot that we did that. So when I first started Citywide, the way that the JS contract ran uh or read, it was a ninety day, call it we you you guarantee us ninety days, right? After 90 days, if we can't make you happy, you can give us 30-day notice and get out of the contract, right? So it was almost like a 120-day contract. And so, you know, we we just ran into some situations where some customers uh were using us for a short term, you know, three months, four months, and saying, All right, we're not happy now. Bye. And you go back in the system and you look at the notes on the inspections and they're all perfect. And so you would take those reports and you go to the customer and say, What are you talking about? We've got four months worth of activity or notes here that say we talked to so-and-so, and everything's great. Well, what we learned was they just they just wanted to use us for a short-term fix until until whatever they did, right? So we just changed the the the wording in the contract to make it a one-year contract. And I and at least in Louisville and I say in many other markets, it's pretty standard anyway. Your Janikings, your coveralls, whoever they are, have a one-year contract. So they're used to that already. Uh, we were just getting used and abused on some of that for these folks that wanted short-term leases for lack of a better term. And so we just stopped that. And so since we went to one year, we've had maybe two or three folks that tried to get out of it, and we just go back to the contract and hold their feet to the fire. And and and what that does, it's you know, because it's generally not it's not a personality conflict, they're just whatever's going on. We learned that it's a budget issue, right?

unknown 45:22

Okay.

SPEAKER_01 45:22

Well, well, then we can fix a budget issue. I mean, do we just need to go from five days a week to three days a week? I mean, so it it it sparks a conversation that maybe we wouldn't have had otherwise. So that's the kind of a secondary benefit that this one-year contract has done. It's it's made us talk to them um when they have an issue and and want to leave us, we we fix it. And so it gives us if they want to cancel it six months, we got six months to figure this out. And more often than not, we've been able to save it.

SPEAKER_11 45:49

So thank you. Yeah, um, Brett, real quick, Patrick. I think you had jumped in, um, but then I I might have accidentally lowered your hand. So feel free to go ahead.

SPEAKER_04 46:01

Yeah, I was just gonna ask, Doug, you talked about these inspections, like being in the system, reports in the system, and can you hold on for a second?

SPEAKER_01 46:10

I gotta hold on, I got a kid out here. Hold on. Uh-oh.

SPEAKER_03 46:19

Right, you can ask us and we might be able to help you before the celebrities back.

SPEAKER_07 46:26

The celebrities back. The kid okay.

SPEAKER_01 46:29

Yeah, I got three teenagers here, so any any moment you may hear some basketballs bouncing, or it is the tournament time here in Kentucky, so we got we got that going.

SPEAKER_11 46:40

All right, Patrick, go ahead.

SPEAKER_04 46:42

Um, no, Doug, I just asked you you mentioned inspections and you mentioned they're in some form of a report, then they go in some system. Is that more of an internal system for you just to manage things, or is that like you're doing QC work that you bring into the the customer and and you're like using those against SLAs in a contract? Like, can you just explain more what you meant by that system?

SPEAKER_01 47:07

Yeah, so when I say system, I'm talking about our Microsoft CRM database. We have we use CRM. We're a Microsoft company, so everything we have is Microsoft based. Um, and I think it's even called Microsoft CRM, maybe 365 CRM. I don't know, but it's Microsoft CRM. Uh so with that that's the system that every but everyone on the ops team puts notes in. Uh, we can run reports on it, so we can see how frequently they visited a customer. We can they have to give a rating so we see what our average rating is, scale of one to 10, etc. So um, and now the ICs even know we we even got to the point where the ICs know that we're gonna rate the IC as well. So I forget what the scale is, but if they get less than an eight, then they're on probation. If they're between an eight and a nine, it's this. I mean, so we we kind of have a it's set up so that even the the ICs know that they are being rated by our team, uh, FSM separately from the night manager. And so uh that's a way we can either reward them with more buildings or take a building away. So we kind of gotten it to where it's more sophisticated. Uh, and that was part of that uh program I was telling you, where we kind of married the two programs together. That was one of the things we did with it was um rate the ICs now, and now they're in they they have an incentive to want to do well in the building.

SPEAKER_08 48:23

Yeah. Got it. Thank you. Yep. Go ahead, Brett. Thanks, Sela.

SPEAKER_07 48:33

Um, yeah, I just had a a follow-on question on the contracts um matter. I I think the answer is yes here, but when you talk about a one-year contract, so the the customer is there, is is obligated to use you then for 12 months. That's that's um that's how the contract reads. Yes, and yes, and how and what um what can what can what can uh what can enable them to to leave? I mean, some kind of a breach of contract. How how often does anybody ever bust a contract term?

SPEAKER_01 49:01

Yeah, I mean, it it really depends. I mean, very rarely, uh, if it's a budget issue, right? If they just say, look, I've like a church. We had a church come to us, you know, six, seven months in, they were going through a budget crunch, and they had someone who's a member of the church that they wanted to, they needed to save money and the and the and the uh the the gentleman that was uh a member of the church could clean it for them, right? I'm not looking to you know make them stay for three, four more months. I mean, it's very unique. Um, but if you know, if someone if we're performing scope of work and we've got the inspections that are, you know, tight and the building looks good, I mean I'm not gonna let them out of it. I mean, so there's two schools of thought on that. You can you can, you know, be a professional and hold them to it and hope they understand, uh with the with the hope that you're not gonna you know tick them off so that down the road they may not want to come back to you, you know what I mean? So you kind of have to weigh that. Uh is it is it a large enough customer or with an with enough enough brand recognition in the city that you want to kind of put that out there? So you kind of have to weigh a few different things, but I mean, for the most part, your your bigger guys, they understand they're gonna give you a year to do what you need to do anyway. Uh, and I've always told, at least my team tells them too, if if we can't perform it and we can't find an IC for it and it's our fault, I mean, we're gonna let you out of it anyway. But that never happens, so gotcha.

SPEAKER_08 50:24

All right, thank you. Yep. All right, guys. Any final questions for Doug?

SPEAKER_11 50:35

Going once.

SPEAKER_03 50:36

What'd you what was your favorite part about convention, Doug? You just we just got back from 500 citywide peeps in sunny San Diego. I was curious like what feedback you have about just coming off a convention.

SPEAKER_01 50:50

Yeah, I mean, these things the convention is and you probably it's probably like a broken record for for you, Adrian and Savannah. You probably hear this from everyone, but I think the biggest thing us as franchisees get out of it is time spent with other franchisees. I mean, the the the networking, um, because I always come back with three or four things that I wasn't doing or I never thought about it that way. Uh, so there's always good nuggets that you get that you don't typically get. Um, you know, when you're just kind of running around crazy in your own market. But uh, when you got that many like-minded folks in one spot for four or five days, it allows for that to kind of come out. Um, and you know, having to bring a little Kentucky bourbon with you to try to get that out of them doesn't hurt either.

SPEAKER_11 51:34

So we enjoyed it. It was a great week.

SPEAKER_01 51:39

It was it was great.

SPEAKER_11 51:41

Well done. Thank you for fun. Thank you. Thank you so much for doing the Nice Power Hour, and thank you guys all for coming with so many questions. So hope it was a very beneficial use of everyone's time, and we'll see you next Thursday.

SPEAKER_08 51:59

Thank you.