Franchise QB

Episode 33: Zach Beutler- Founding Partner, HorsePower Brands and iFoam

• Mike Halpern • Season 1 • Episode 33

Share episode

Zach Beutler, Founding Partner at HorsePower Brands, discusses the iFoam concept and its potential in the insulation industry.

iFoam is a full-service installation company that offers spray foam insulation as its main product. The industry is large and growing, driven by increasing energy consumption and a focus on energy efficiency.

Takeaways

Franchise owners of iFoam need a team of technicians, helpers, and sales managers.

HorsePower Brands provides training and support in Omaha, and franchise partners are recommended to have multiple spray foam rigs.

The initial investment for a three-territory market is around $400,000.
The Item 19 shows an average first-year revenue of over 7 figures.

iFoam is an excellent opportunity for empire builders looking to build a big business and create enterprise value.

Chapters

00:00 Introduction to the Franchise QB Podcast
02:44 Introduction to HorsePower Brands
04:05 The Entrepreneurial Operating System (EOS) and Horsepower Brands
05:27 Zach Beutler's Family Beef Company
06:55 The Potential of iFoam in the Insulation Industry
09:18 Building a Team and Scaling with iFoam
10:16 Training and Support for iFoam Franchisees
13:12 The Investment and Revenue Potential of iFoam
15:06 iFoam: An Opportunity for Empire Builders

https://www.ifoam.com/franchising/

Free Resource for Franchise QB Listeners:

The Franchise QB Playbook will guide you through the process of finding your perfect franchise fit.
https://docs.google.com/document/d/1XlbD8oyl3uyeiqaM73poH67BX1jRRyCGR7l7qB-3Nz0/edit?usp=sharing. Also, you can view the Franchise QB podcast at www.youtube.com/@franchiseqb.

Contact me and my team with any questions along the way. www.calendly.com/franchiseguy
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 in the huddle today is Zach Beutler, Founding Partner at HorsePower Brands. Welcome to the show, Zach. Hey, glad to be here, Mike. Absolutely, glad to have you. So you have a long history in franchising and business ownership. You started as a sales associate. You became a multi -unit franchise owner. You are now the founding partner with HorsePower Brands, which has a lot of concepts under its portfolio and a big array of shared services business. Before we jump into HorsePower Brands, and we're going to spend some time today talking about iFoam specifically, tell us a little bit about your background. You know, I have a great respect for franchising. I've spent most of my adult life in the industry. So I started working at a nutrition store as a part -time guy and everybody quit and I became the GM kind of by default. They began franchising and I saved enough money to convince the founder to really back me with an SBA alum. And I went down to Florida and opened a franchise and it was all sunshine and rainbows and I grew way too fast. And I ended up, I remember we had an $8 million annual goal and ended up losing everything, filing bankruptcy rock bottom. And another franchisee at the time had a dozen or so locations and I came on there with an equity opportunity for future growth. And we grew that from a handful to 68 in about three years and over 40 million revenue. Wow. How many States did that cover? Over 20. I remember. It was really difficult to manage across that many states. And I traveled 20, 30 days at a time. It was, it was, it was a lot of work, but we learned a ton and then got into franchise development and then in consulting. And now obviously as a founder of a portfolio company, we've launched more franchise concepts from one location to a hundred than anyone in the history of the industry. That's amazing. Yeah. So let's talk a little bit about HorsePower brands. So for those that are. New to franchising and new to the podcast, HorsePower Brands is a leading portfolio company in home services based in Omaha. I had the opportunity to go out there last year and check out your facilities. Really impressive. Eight brands, including Mighty Dog Roofing, which was kind of the first one that launched HorsePower. We've got Blingle, we've got iFoam that we're going to talk about today. We have Heroes Lawn Care, Gatsby Glass, Groovy Hues, Bumblebee Blinds, and Stand Strong Fencing. And as I mentioned before, there are eight. shared services companies that are really designed and engineered to support the HorsePower franchise owners. And then, you know, we talked about briefly before we came on, I had the opportunity to talk to your CEO, Tony Hulbert, and we spoke a lot about how your technology forward and you've created this product called Howie that's launching later this year. That's going to be this great interface to help existing owners kind of grow their business and kind of cross pollinate between different. brands and stuff like that. So that sounds real exciting. We got some really talented people in the organization that are really helping us create some cutting edge stuff. At the end of the day, we are trying to focus on being the best franchisor that we can be. And with my background as a franchisee in multiple concepts, that was really important for my mission anyways. Yeah, very cool. So before we get into iFoam and talk about that concept, I know when you and I met, you talked a lot about the entrepreneurial operating system, which is talked about in the book, Traction by Wickman. What is it and how does it help HorsePower brands and their franchise owners? You know, it's interesting. I still remember going through my first actual implementation with a certified implementer and we had built the business to over 40 million revenue fighting all the time. And we were really struggling to just kind of, you know, that business was managing us essentially. And I remember leaving the first day going, what in the heck have we been doing? And so EOS or the entrepreneurial operating system is a system and process of how to run a business, how to hold people accountable, how to keep people in the right seats, how to communicate the vision. And one of the things I've really learned is unspoken expectations leads to a lot of resentment and it avoids a lot of that miscommunication. So, That's one of the biggest things I've found in franchising is failed franchisees tend to not have a consistent cadence for meeting with their team. They don't have a consistent way to measure their KPIs and they're constantly trying to hit these big home runs when if they just manage the small things for week over week improvement, they could really move the needle in a month or two. Very cool. And one thing I didn't mention when I introduced you was Beutler Beef, which is your family's beef company. And I think that ties into where you're sitting today. Can you tell us a little bit about that venture and kind of what that space means to you? Yeah. So I'm a third generation entrepreneur. My grandpa bought a livestock auction barn in 1969 for $1. And then he convinced my great grandpa at the time to let him leverage the farm to buy all the livestock that were guaranteed pricing on. And he built that business up from a failing operation to a multimillion dollar business in the 70s and 80s. And it's really interesting today. My dad and uncle and aunts grew up working in the business. My dad owns and operates the business today. My aunts married entrepreneurs. My uncle owns his own livestock marketing business. My cousin and I grew up working in the business every summer, every day after school, every Tuesday for the sales. And my cousin owns a large animal vet practice in town. And so that one decision really led to a family of entrepreneurship. And my favorite place to come work is my grandpa's dirty old rundown livestock auction farm. And so the seventies wall paneling, this is my like, call it my satellite office when I'm doing some of the farming stuff. That's awesome, man. Well, thanks for sharing that with us. So let's dive right in. We talked about HorsePower brands. Mighty Dog, I know, was one of the first brands you worked with. iFoam came shortly thereafter. Tell us just basically, what is iFoam? What does it do? iFoam is a full service installation company that offers primarily spray foam as the main product driver, as well as fiberglass, cellulose, concrete lifting, et cetera. But what we're trying to do is really disrupt the industry by providing the most effective insulation product out there, which is spray -full insulation. Yep. So how big is the industry? Are we talking 20 billion, 50 billion, 100 billion? It's huge. When you look at residential and commercial, this will be the largest average unit volume concept that we have under the HorsePower umbrella. When you look at the average job size getting into the larger residential multifamily and then commercial, you can build a huge business in the installation industry. So we're talking basically like home comfort and energy savings. Those are the two main drivers that kind of, you know, people find a need because their air conditioning units are not being, you know, they're just overutilized or their energy bills are too high and that type of thing. Well, there's some exciting stuff happening right now. And in my experience in history and franchising, this is the first time I've really been excited in a way where. When you look at what's happening in the world today, there's a energy consumption by household that's not going down. It's absolutely increasing. You have a government focus on energy efficiency. There's government rebates. You have the largest manufacturers in the space of insulation transitioning their business from fiberglass to spray foam, for example, Owens Corning. And they're lobbying in Washington right now to really reclassify the R values of different products because R20 of spray foam is not the same as R20 of fiberglass. It is far more effective and efficient. And so what you're finding is there's this need for a more effective, efficient product out there for new construction, for retrofit, commercial, residential. And so everything's kind of pushing that industry forward to where they need a more effective, more efficient product. And that's what spray foam is. And that's why there's such a huge demand. Yeah, that's what's nice about the market size because you have commercial, you have residential, you have new construction, you have retrofit, so there's kind of something for everyone with the product, which is great. So what does a franchise owner's team look like to launch? When you kind of recommend, okay, you're in the business, we like the model, let's go, what's that team going to look like? They're going to have a technician that does the spray foam. A technician is going to have what we call a helper, a junior technician that assists them with cleanup and prep. That's kind of like a sprayer in training. They're going to have a sales manager that goes out and manages the appointments and builds the book of business. And if they're in the business full time, they're really the GM of that business. If they're managing it at a part -time level, well, then they're going to have a GM that does the management on their behalf. Okay. And does iFoam or HorsePower brands help at all with the recruitment through your kind of shared services platform? We do with the Z services platform. We do have a recruiting agency that really helps franchisees find their either technicians, a general manager or sales manager at a really big discount. Yeah. Cause. In this business, someone has to be in charge of production. They have to do sales and kind of keep that business dev funnel full. And then you need someone that's gonna, the technicians and someone to oversee to make sure their jobs are done on time, on budget, good customer service, all that. So you gotta make sure that both things are being like, you're working on both at the same time to keep the business going. You gotta fill the pipeline and then make sure that your backlog's not filling up at a pace you can't keep up with. Yeah, there's a balance there. So let's talk a little bit about training. Like training and support takes place there in Omaha. What does that look like when a new owner on board? Well, you know, one thing that's interesting that I found, a lot of our candidates get into the process initially and they find it a little intimidating about thinking about going out and actually spraying insulation. And about two weeks into our process, it's not as complicated as they really thought. Especially when they talk to franchisees, none of our franchisees are from the insulation space. So they're all coming into this with absolutely zero experience. And so at training in Omaha, we run a technician training, a sales training, as well as an ownership training where they can come to multiple. But we do recommend that try to get their team out there so that we can really hit them from all aspects of the business. Very cool. So, you know, who are you looking for? You mentioned you're not looking for people that are in the space. So what makes an ideal iFoam franchise owner? Well, I would break up our concepts at HorsePower into three categories, small to medium. medium to large and then extra large, basically opportunities. And iFoam is definitely the largest business opportunity or biggest wealth asset that we have to offer. And so we need a candidate or a franchisee that's more driver hunter, conqueror personality. They need and want to build a bigger business, to get into an industry or a concept and make a few hundred thousand dollars, just not attractive or not enough of the, not enough. not enough income for what they're really looking to build. When you look at where we started with our first brand ever, which was Monster Tree Service, then went to Redbox Plus, those were very equipment heavy businesses. I have really found that when you're looking at home services where there's a barrier of entry where that equipment can keep out a lot of the smaller mom and pops, you can scale a lot more aggressively. So we want franchisees that want to build a big business. Yeah. You mentioned Monster Tree and Redbox Plus, both brands that got to that magic 100 unit mark before they were exited. And it looks like you're doing the same thing with all your new concepts, which is great. And I can see that this has more of a bigger investment in front with the equipment. So let's talk about where you guys are today. How many owners are in the system? How many territories are you operating nationwide? We're around 150 territories with about 40 owners. So most owners are going to have between three to four territories? Our average is about 3 .2 to 3 .3 depending on the month. So a lot of our franchisees don't buy out. multi -unit. Got it. So with the iFoam model with a little bit more equipment intensive like Monster Tree, what is that item seven look like? How much does it cost to get in? I know you guys are really making sure that owners are properly capitalized and come in with more capital than they probably need, which is a great thing and pretty unique. But what does that look like to to get someone up and running? Well, we've changed a little bit of our initial strategy based on how aggressive the franchisees are growing. And so we're really trying to get them to three spray foam rigs as quickly as possible with the least amount of capital required. And so we've made some changes that a three territory market is going to be around a $400 ,000 overall investment when you look at our equipment financing partner or our equipment financing partner. And so we now have an equipment financing partner that they can leverage 10 % down in 84 months. And so that really allows them to get in with a lot less capital. Yeah, absolutely. Very cool. So let's talk about the FPRs. What can you share with us in terms of return on investment and item 19? Well, the item 19 that's getting launched here any day, we're showing, when you look at the tiers of performance, the top 25%, top 50, and top 75 % of performance, you're going to see an average first year of above seven figures. And so they're doing a lot of revenue very quickly. One of the things that we didn't do a great job of initially was preparing franchisees for how fast they're actually going to grow. And so now when they come to the process, we really prep them to say, hey, you're probably going to want another piece of equipment within six months and hopefully another piece of equipment with a third piece of equipment within the first year. By preparing their strategy initially, it really gives them a lot of confidence, especially when they then go validate that that's what they're hearing. It really gives them a lot of confidence to make that capital. up for investment. Yeah, very cool. Yeah, I mean, it sounds like a space that just has a lot of upside. It's still in its infancy and it sounds like there's a lot of white space for new owners to come in and build a pretty big business. So, and that sounds like where you're looking for empire builders are going to take some territory and you understand there's this barrier to entry with the equipment expense and kind of build a good team and kind of scale it. So that's all real exciting. Yeah, we kind of plowed through this pretty quick. Are there any other aspects of iFoam you want to share with the audience? We know, I think when you're looking at, when I was a franchisee, there was three things that I really looked at. And well, two things initially, and then the third thing I learned later, but a lot of times candidates get in, they're asking a lot of questions around what's it gonna cost for me to get in and how fast can I cash flow? Well, after they get a little bit more experience in their investigation, they're then asking, hey, where are the headaches gonna be? Where am I really gonna get frustrated with this industry or a concept? Where a lot of people don't ask the right questions in my opinion is, in three to five years when they're putting in their capital and their time, where do they get the biggest return on that time in capital? What gives them the biggest enterprise value opportunity? And I'm really excited where they can build a very large business. They can depreciate the equipment along that growth journey and they can build a ton of enterprise value. And that's where I'm really excited about this concept, especially with where we're at today with the economy, with the shortage of new homes. and new home construction, there's a really good opportunity to get in now. And I think we're right at the right time for people to jump. Yeah. Are there any markets that stand out for you that are really strong for this brand that still have some good opportunity for multi -unit ownership? You know, one of the things that's really interesting is that this is one of the, not that we don't have success with that, not our concepts, but we're having a really good success or consistent success with the small to medium markets. So if there's a market that's say 600 ,000 total population or even down to 200 ,000 in population, they're going to be able to validate that they can build a huge business in those smaller footprints, especially if there's some rural area opportunities. And so the markets are huge. Awesome. Well, this is good, man. Well, I really appreciate you taking the time to chat with me about HorsePower brands, about iFoam. So if anyone listening wants to connect with Zach and his team, contact me at FranchiseQB .com or on Twitter.@QBFranchiseQB. I'll get you guys connected. Thank you so much, Zach, for taking the time to get in the huddle and discuss iFoam with us. It was my pleasure, Mike. Thanks for having me. Awesome. 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 to 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.