Franchise QB

Episode 31: Tony Hulbert- CEO, HorsePower Brands

• Mike Halpern • Season 1 • Episode 31

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Tony Hulbert, CEO of HorsePower Brands, discusses his entrepreneurial journey and the development of Howie, a new technology created by HorsePower Brands. He shares the challenges faced by franchisees and how Howie aims to address them. 

Takeaways

HorsePower Brands has grown rapidly through franchising by focusing on their shared service model, data-driven strategies, and the development of Howie technology.

Technology, such as artificial intelligence and digitization, is transforming franchising in areas like estimating and communication with customers.

Successful franchise relationships require constant focus on the franchisee-franchisor relationship, setting clear expectations, and having a long-term vision.

Franchise candidates should prioritize revenue-generating activities, have optimism and a long-term view, and be willing to follow the Franchisor's system.

Established business owners considering franchising should seek advice from experienced consultants and industry professionals.

Adopting the Entrepreneurial Operating System (EOS) philosophy can help franchise systems align their vision, set goals, and improve accountability.

Chapters

00:00 Introduction to Franchise QB Podcast and HorsePower Brands
01:13 Tony Hulbert's Entrepreneurial Journey and the Development of Howie
07:02 Key Strategies for HorsePower Brands' Growth Through Franchising
09:24 Howie's Differentiation and Benefits for Franchisees
12:47 Building Successful Franchise Relationships
16:04 The Role of Technology in Transforming Franchising
24:45 The Impact of EOS on the Franchise System
27:05 Conclusion and Contact Information

www.HorsePowerBrands.com

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Mike Halpern, CAFC
mike@franchiseqb.com

This is the Franchise QB Podcast, where we empower entrepreneurs to win big in franchising. We huddle up weekly to educate our audience about the most successful small business model ever created. Franchise it! Welcome to the Franchise QB podcast. I'm your host, Mike Halpern, a 20 year industry veteran and entrepreneur. My mission is for listeners to achieve their American dreams of creating wealth and independence through franchise ownership. Every week we speak with franchisees, franchisors or vendors that support the industry. Thank you for joining us and let's get started. Joining us today in the franchise QB huddle is Tony Hulbert, CEO of HorsePower Brands. Welcome to the show, Tony. Thanks Mike, thanks for having me. Absolutely, glad you're here. So for the audience, HorsePower Brands is a leading portfolio company in the home services franchising space based in Omaha, Nebraska. Their eight brands include Mighty Dog Roofing, Blingle, iPhone, Heroes Lawn Care, Gatsby Glass, Groovy Hues, Bumblebee Blinds and Stand Strong Fencing. Additionally, there are eight shared services companies designed to support HorsePower brands franchise owners. Today we're going to discuss, among other things, a new technology that HorsePower brands created called Howie. So let's kick this off, Tony, by learning about your entrepreneurial path, your past experiences in business and franchising that ultimately led you to HorsePower brands and led you and your team to develop the Howie. technology. Great. Well, again, thanks for having me and being part of this. And we're excited to talk about Howie. As it relates to myself, I was the typical CPA for many years out of college and spent a lot of time doing that. I jumped in at a young age as a CFO of a distribution company within the PepsiCo system. And I'll come back to that because that was a big influence in terms of my life, in terms of thinking of a portfolio company and consumer being part of that PepsiCo system. During some years, I also jumped in the entrepreneurial pathway of retail nutrition stores and worked with individuals that own stores, 60 plus stores over across 17 states. And that was in our early thirties and we were just going at it and we didn't know what we knew and we just kept figuring things out and I learned a lot about that from a perspective of being an entrepreneur and understanding whether we're going to be able to make payroll or what the results were and just living that day to day. So, That would be the true entrepreneurship of just being in it with that group of gentlemen that I spent many, many years with. And I look back and that was a great influence. I actually went back to that PepsiCo system at a time and I went back into a sales and marketing role. So I was the vice president sales and marketing. At that time, we had about 300 plus employees. It was all family owned, but it was a consolidated effort that we brought in many companies, many other Pepsi distribution companies under one centralized version. and just got to see more of the PepsiCo system, not just as a CFO of that local distributor where privately owned, but now in a sales and marketing role and got to experience being on the accounts alongside Walmart, Dollar General, large drug chains, C -store chains, all these different things. And you think about national or global scale, like PepsiCo is one of the best in the business. From there, Josh and Zach, our founders, gave me a call and It took me a good six months to make the decision and at that time it wasn't HorsePower, it was Mighty Dog Roofing, our first brand. And came over as the CFO, was interim brand president for that brand early on for the initial six months. What born out of those initial six months of Mighty Dog Roofing was HorsePower brands. And then we're here today, three and a half years later and still going along. You mentioned the eight brands, we're actually going into the heating and air in two months. That's awesome. Yeah, that's going to be a brand called varsity zone, heating and air. So we're going to take that athletic theme, red verse blue, and go attack that industry. We're excited about the heating and air industry without a doubt. Hey, tell me the name again. I think I stepped on your line there. No, you're good varsity zone. So it's going to be you'll see the trade dress, the vans and the trucks going down the road and you'll have a red verse blue heating in there. And it's going to be really cool. Yeah. Coincidentally, the first company I worked for out of college was called Varsity Books and we competed with Amazon. I think you know who won that one. Well, that's awesome. It's really cool that you have that corporate experience with Pepsi at a local distributor and you talked about scaling an entrepreneurial venture in the nutrition space to 17 states. I mean, those are amazing lessons that are hard to find. So that's really cool as your foundation for. you know, now being the CEO of HorsePower. So let's talk about Howie a little bit. In your experience, what are some of the challenges that were faced, that are faced by new and established franchisees? How do you aim to address those, those challenges with the Howie technology? You know, our founders came from a franchise space and they understand franchising extremely well. And so the customer of HorsePower brands, the easiest way to explain it to your audience is the customer of HorsePower brands is a franchisee. is the candidate looking to be awarded a franchise and we support that franchisee. The customer of Howie, the portfolio, is the homeowner, the consumer. At the end of the day, we believed it was a better path forward to separate the two so that we can clearly focus on marketing and supporting franchisees and bringing them into our system under the HorsePower system, but then also offer marketing opportunities on a portfolio level to bring all of our brands together. So the easiest example that I initially introduced is the Marriott. Everyone who is either a Marriott or a Hilton, you become a member of that system. And regardless of which hotel you stay within, it's usually within that branded system that they offer. So when we look at Howie and we mentioned those eight to nine brands that we have on the consumer side, that homeowner eventually long -term will fall into the Howie system to start to discover new services and new brands and just discover that across. the metro areas within their local community. So that was the initial context as we look back to three years with Howie. Very cool. Yeah, thanks for sharing that with us. So HorsePower obviously has grown at an impressive pace, not only the franchise owners that have joined the system, but also the brands you've folded into the portfolio. So in your view, what are some of the key strategies that have enabled HorsePower's growth through franchising? It comes back to... We have three uniques that we really focus all of our attention to within HorsePower and the franchise side of it. One of them, as you mentioned earlier on, was the Z services, our shared service model. And so we don't want to simply just offer the brand, Roofing, Mighty Dog Roofing in the Roofing industry. We want to also offer the opportunity to understand bookkeeping, marketing, a contact center, whether it's phone calls, texts, or messaging, and a number of other services that we offer. So the Z services and the shared service model is one of our uniques. We believe that is sets us apart. The second one is we look at everything data within our system and we look at data as a strategic asset. And we could talk an entire episode just on that piece and bore most of your audience maybe, but the data as a strategic asset, like it becomes a currency in today's world. It becomes a valuable value at the end of it, when you're selling your business. And so we're piling on the amount of data that we're working with and within our system. So that becomes a differentiator. And then the third one is Howie. And so when we look at the success of HorsePower, we're taking the three of those pieces together alongside each one of these brands, which on itself stands on its own as a franchise brand and is comparable to many franchise brands outside of it. But when you layer on top of that brand, these three separate uniques that you gain from HorsePower or Howie, we believe it's a win -win. Yeah, I mean, you mentioned the data as a currency and a lot of, you know, kind of aspiring entrepreneurs don't think through that. But if you own that data, then there's a lot you can benefit from it. And it sounds like you guys recognize that. And because of your economy's a scale, that data is going to be really helpful, not just for, you know, one brand, but for the entire, you know, portfolio, which is really cool. So. Tell us a little bit about what sets Howie apart from other homeownership resources. How do franchisees benefit from this technology? Well, first, Howie was an idea two and a half, three years ago. But the reality is we need franchise density and brand density in markets to make it come to fruition. So just like Marriott, you need enough hotels in Dallas, Texas for the Marriott Bonvoy system to even make sense, right? And so it... It was intentional and to this point where 2024 is the first time we're actually having this conversation. You're one of the first that I'm having this conversation on a podcast and discussing it because openly for the last three years, we had to reach a point where we had franchise density and brand density. So that's first and foremost, it is a long-term view is how we look at it. But what we look to become is an accelerator in markets. We don't have to be a national brand across every single area across the nation. but within Dallas, Atlanta, Nashville, Tampa, areas of the country where we have multiple franchisees, multiple brands, we can become a national brand within those areas under the portfolio of Howie. And so a differentiator is the acceleration piece where the franchisees that will benefit will always be the next one. The next one that comes on will benefit from the many other franchisees that helped build it to that point. And so when I start to think about three, five, 10 years from now, maybe a time where I'm no longer, maybe I'm too old, the benefits that will continue to accrete and continue to climb, continue to build, it will be astonishing just because of those experiences and those data points. So that's one piece is just how do we combine all of our efforts across all these brands? We're building something great here. So how do we combine all the efforts? The second piece, and I want to jump into it, but what's very cool that has happened in talking about Howie with our franchisees, we've done this from the beginning. We've talked about our vision and our idea of Howie, but it's coming around in 2024 with real initiatives. So the first part is digitizing the customer experience, which simply means a forward -facing software tool that the consumer can see. They can book appointments, reschedule appointments, add the level of convenience, this frictionless customer journey for that homeowner to be able to communicate with us. All being able to do that under Howie, that's an initiative that is rolling out in test markets this year in 2020. that we can really perfect that and continue to build upon that. So that's the first step, but digitizing that experience within Howie is a second benefit. And the third one we can dive into as well, but then it becomes how the franchisees come together. Franchising is difficult already. The franchisee and the franchise or relationship. One thing that we are hopeful is the franchisees want to see Howie succeed in their market because it helps all of them. And so it truly is a combined effort. And so there's... how we events, how we huddles, how we happy hour, how he gives back. And we're really tying into how we can attack a market in a meaningful way by combining all the resources. Yeah, that's really cool. And I guess from the user standpoint, I like that there's like three different interfaces. You have the consumer that can book the appointment and kind of get the service scheduled and performed. You have the franchise owner that is going to oversee how their business is doing through the app. You have the technician that's going to have access to it. And I guess you also have the franchisor that's kind of sitting back and aggregating all this data that's just going to help everything get better. So that's, that's really cool. So let's, let's shift gears a little bit and discuss some views that you've gathered on the role of a successful franchise or what are some of the essential ingredients for a successful franchise relationship? You talked about that a moment ago from your perspective, what do you have to do to kind of build that trust and that collaboration between. a franchisor and a franchisee to win in this space. Yeah. And I think back to even the PepsiCo timeframe, they called it bother agreements, but it's very similar to franchise agreements. So 20 % of the U S was privately owned and you had the rights to distribute their products in those markets. Now you're distributing a product in a brand that is known around the world. And so as a bother, as a franchisee, what really do we have to complain about from that context? And, but still there was, There was contention in that system and I stepped back and I was on the bother side and I'm thinking, what do we have to complain about? We had these brands rolling down the street that everyone knew, like we're nationally recognized. Yeah. And so the first thing as a franchisor is just a constant focus on that relationship and it's never going to be perfect. There's always going to be times where we have to work together. and get through moments. So I talk often about cooler heads will prevail. Let's have a discussion. Let's get through this together. Let's build that system. So I do think that there's something about being a franchisor and always having a vision that is three, five, 10 years out, because it gives something for everyone to march towards or chase and go grab. Otherwise it becomes kind of like a job. And when people say, buy yourself a job, like what are we building together that will be bigger than something individually we can't do? And that's a key part of franchising. You truly are trying to combine efforts that you can't do on your own. So I think that's one piece. Another piece as a franchisor that you continue to learn and you continue to do a better job at is setting expectations on the front end, during, on the backside, in all phases of that franchise relationship, setting expectations of what this is for the franchisee to be successful and what that person's going to have to do and what their responsibility is, what our responsibility is and what we're going to do. It's a constant thing that you continually adjust and make sure that you're setting the right expectations so that when that person's in the system, they knew exactly what they're getting themselves into. They know what it looks like and they also know where they're going. So I think those are two key components that I share with our teams here at HorsePower frequently. Yeah, I mean, that's a really great observation. A lot of misconception around franchising is you sign an agreement and you... You know, the business runs itself. I mean, that couldn't be further from the truth. Like franchising mitigates a lot of challenges. It gives you so many head starts and advantages, but at the end of the day, you can't teach grit, hustle, determination, motivation. Like those characteristics are so vital to the success of the business. So that, that makes a lot of sense to me. It's like, give them the tools to win and make sure that you support them, between that peer network and between the franchise support system. But at the end of the day, the franchisee has to. produce results. So let's, you talked a lot about Howie today. What, how do you see technology overall transforming franchising? Are there any trends that franchisors should be kind of keeping their eyes on or aware of? Well, I am a geek behind the scenes. So I followed the technology. I was a CPA at one time. So I love technology. I think artificial intelligence is one of those buzzwords that is used too often and in the wrong context. And I think people don't. I don't even know if necessarily a lot of people understand what it could be or what it is. I don't even know if I necessarily know it, but I think AI is something that is thrown out there often. Now, if we step back and start to think about it in the home service space, being able to use a drone and take a picture of a home and having that software put measurements together that could translate into an estimate for a roof on a home and be able to shorten that, the time it takes to estimate that roof. and getting it to a point where maybe it's even again, customer like a frictionless journey because I'm a homeowner, I'm busy. And I simply just want an estimate of what it would take to replace my roof or repair my roof. Being able to use technology in that form to smooth that process even further. There's technology that we're utilizing in our Groovy Hughes painting business. Or if the homeowner would engage in that process, take eight pictures that are exterior side of the home, we could actually estimate that home from this seat and we can take those pictures and it will. get measurements close enough to provide an estimate that we can. I mean, that's so cool because you already have collaboration with that potential customer and they're kind of like, there's buy in there. So there's, we're working together already before the estimates been accepted. A lot of innovation I think could occur in home service. And it's not going to come from any one contractor because if I own a roofing business and I'm successful, I don't need to invest in technology to do that. I have my process to estimate and measure and provide a bid and I'm successful. but looking at it from a franchise or lens, we can invest in that technology and improve that experience and bring that to market in a more meaningful way. I see that piece, the secondary piece, it's just how we communicate with businesses. The question of call centers, the question of messaging, the question of how does that look long -term? And we talk long -term in the world of technology. Three years is like the equivalent of 30 years, a long time before. So, I don't know where the market's gonna go with technology in that space, but I see that that space changing significantly and we're already testing areas of that, but it's gonna take a few players to come in and really make a big change there. And I think that just how we communicate with our contractors for our home, I think it's gonna be a big difference three years from today. Yeah, and I think it's cool that you guys are not only building out your own tech, but you're also leveraging. other vendors. So if you keep those good vendor relationships for things that you don't want to reinvent the wheel, but participate in a great product that can benefit the system and then build out things like Howie, like you're going to stay one step ahead of competition. So that's awesome. So let's talk about franchise owners. Like what do you look for in candidates? I know that's going to differ brand to brand, but what advice can you give those exploring franchising as a business model? And you know, who do you look for and what should they be looking for when they're trying to find their franchise? Yeah, and from brand to brand for me, I get that question often, even from the candidates coming through the process. It's the same for me across all the brands. And you mentioned a couple of the buzzwords and the keywords of grit hustle. One of the areas I talked to at length in our leadership call is those first 12 months, that initial 12 months, and this is coming from a CPA focus on revenue generating activities and going from being a CFO of a very large business to going into being the vice president of sales and marketing. you understand what impact you can make by growing top line revenue. And the amount of energy it takes to do that is far, far easier than cutting expenses or trying to reduce costs or any of that stuff. So revenue generating activities, we talk a lot with semi involved owners or owner operators each day, like how are you prioritizing your day, your week, your month, your quarter, your year, especially during those initial 12 months, is 80 to 90 % of your time networking or building customers or doing something around building revenue. And we get, you talk to a lot of candidates, I'm sure that come from a successful business that they were in an operational role or an engineer and they do want to own their own business, but now they got to shift their mindset. They can hire the team, but they need to shift their mindset back to revenue generating activities and put energy towards that. So that's one piece of people that want to come in and grow the business. That's a characteristic that matters to me. Optimism, a long -term view. being able to follow a process in the system and understanding that you're part of a total system, a team player. There's some other characteristics that you hadn't mentioned that are key, I think that are important to anyone that is starting their own business. And we did it. And I was a franchisee, opening up nutrition stores, going into states we'd never been into. And it didn't matter what the cost of rent was or the cost of people, you know, 10 extra hours in a week, we went over hours on budget. If we didn't hit the sales. budget or the goal for the week, all the other stuff. It didn't really matter at the end of the day. We had to hit the sales goal and then we could start to minimize costs or look at costs and efficiencies and things of that such. Yeah, that's really cool. I mean, it's good to obviously kind of coach candidates and new owners to really have great time management skills. And not only that focus 80 % of your efforts on the 20 % that makes that top line grow. That's important to your business. and get rid of those little distractions or outsource those distractions. So that's really, that's good advice to, you know, be laser focused on what makes you good at what you do. If you even look at not to cut you off like the Z services, that's why we chose a bookkeeping firm. Why do we want to make sure that they're, they need bookkeeping. They need to make sure that they have financials and they're doing that step in their business, but they shouldn't do it. And so we offer it at a very nominal fee. And if you, are able to go source one additional job in the week. It pays for that plus more. And so figure out a way to focus on all those activities. And we're going to offer shared services to take away those those inconveniences to business ownership so that you can focus on the things that matter. Very cool. And just switching gears quick on the kind of other side, if you can give a piece of advice to someone that's got an established business and is thinking about becoming a franchisor, what would that piece of advice be? I'm not sure I'm the person to ask because the first piece of advice I'd say not to do it. Have a ton of capital and don't do it. Yeah, there's just a lot of things that have to work in becoming a franchisor. If it's your first attempt at it, there's many people that have been able to do it. But if you really share with and sit down with those people and you talk about their initial three to five years, those are years that were difficult. Now, to be able to do... what we're able to do, we're fortunate, we have a founder that has the capital and is investing into the HorsePower system in a meaningful way that allows us to grow at that scale. But then we hire a lot of people from the franchise industry to support franchisees because that's just in itself is a different way, different type of an employee. And it's not easy because you're taking people through those initial 12 months of any business, I don't care what it is, we're doing that within every brand 30 plus every year. Across eight brands. That's a lot of brand new business owners learning the steps of the way so You know to try to spin this and provide some positive outlook to somebody that has a business that's successful and wants to look to be a franchise or I would say seek advice and And the most expensive advisor is going to be the one that has no experience like to see advice from people that know what they're doing Reach out to consultants that can provide you candidates are well They're better educated as to what this is. And so the system of, of consultants, you guys do a great job of bringing people in better educated than somebody that doesn't have a consultant. So there's a lot to seek advice, I guess is what I really had comment you made about like the wrong advisor is going to be the most expensive. Cause if you go down the path of doing something the wrong way, boy, is that going to be costly. So I think getting multiple opinions by people that have kind of clout in the industry is going to be super helpful. So we're going to wrap up here in a minute, but one thing I did want to touch on, HorsePower Brands uses EOS, the entrepreneurial operating system philosophy. Zach talks about it all the time. He loves the book Traction and the organization has adopted it. It's not a computer operating system. It's a people operating system. It allows putting the right people in the right seats and makes everything productive and accountable. How has that impacted the franchise system by adopting that mentality and kind of coaching new owners through that system? It's still, it's a work in progress. It's a constant work in progress, but the moment people adopt it, and you gotta adopt the full aspect of it, you can clearly message to your suppliers, your vendors, your employees, everyone within your business as what you're trying to achieve. The beauty of the entire system when you get to this spot, because we've been able to achieve it within HorsePower, is I'm able to jump on a call and clearly explain to you that our tenure, our big hairy audacious goal is to be a billion in system wide sales and be operating in 50 states. We started that since 2021. We think we're going to hit it by 2027, but that was our 10 year target. And then if we broke it down to three year plans to annual goals, to quarterly rocks, to weekly meetings. But if you know where you're trying to go and you can start to break it down and just simply do the math, you got, you have some good people within your organization that can put the numbers into a spreadsheet and show you that it's possible. Now it's about telling that vision over and over within teams and build the team and the infrastructure around it. You can do that in a small business and you can do that with a heating and air business. And maybe your 10 year target is to reach three, four million. It's whatever the number is. Now, how are you going to break that down to a three year plan? Where do you want to be in three years? And then, okay, now that you know that, where do you want to be in one year? Okay. Now that you know that, where do you want to be this first quarter that you start your business? Now we're going to break that down to 13 weeks to get you there. It seems simple in a conversation like this, the discipline it takes to follow those steps is where, the beauty is, and once you reach that discipline, it just becomes easy. And so then all the employees on my team clearly know what our vision is based on those criteria, and they know where we're marching, and then they're able to share that to their teams, and we just break it down. So I think we're a testament here at HorsePower. We're able to grow at a fast pace, but we're all marching towards this one common vision, this one common target, regardless of the brand or the employee within our organization. That's awesome, man. Really appreciate that. Yeah, it sounds like if you have the discipline, then you can kind of shape the behaviors and those behaviors are going to lead to those milestones being achieved. So I like how you break it down and then it's like, Hey, you know, this is a big hairy audacious goal, but we're going to accomplish it just kind of like step by step. So that's cool. Well, Tony, you shared a lot of great stuff with us today. Anything else you want to add to the mix before we wrap up? No, Mike, I appreciate you inviting me and I love what you do and sharing some insights from all sorts of walk of life on this call. And I think that's important for your audience, especially if it's a prospective entrepreneur wanting to start their own business against seeking advice, seeking knowledge. This type of content is meaningful for the right type of person listening. So I appreciate that. I appreciate the compliment. And if anybody listening would like to learn more about HorsePower brands, contact me at FranchiseQB.com or on Twitter at QB franchise QB. I'll get you connected with Tony and his team. Thank you so much Tony for taking the time to get in the huddle and discuss HorsePower brands and how we with us today. All right. Thank you, sir. All right. Thank you for listening to the Franchise QB podcast where you're at the helm of your future as a franchise owner. If you enjoyed the content, please rate the show and recommend it to anyone that might be interested in franchising. Make sure to visit FranchiseQB.com to subscribe to my newsletter and for an actionable playbook to go from walk -on to legend in your new business. Follow us on Twitter @QBfranchiseQB and join us every week for a new episode. See you next time. Visit FranchiseQB.com. take the next step of your journey towards wealth, independence, and franchise ownership. And remember, when working for the man gets old, you must do something bold. Thank you for listening.