Franchise QB

Episode 69: Nancy Baio, Director of Development- The Designery

• Mike Halpern • Season 1 • Episode 69

Share episode

In this episode of the Franchise QB Podcast, host Mike Halpern speaks with Nancy Baio, Director of Development, at The Designery. They discuss Nancy's journey into franchising, the unique offerings of The Designery, and the advantages for franchise owners. 

The conversation covers the importance of customer experience, marketing strategies, and the role of technology in enhancing service delivery. Nancy also shares insights on training, ideal franchise owner characteristics, and the financial aspects of launching a franchise.

Takeaways

-The Designery provides a comprehensive service for home improvement
-Franchise owners benefit from centralized support and technology
-B2B relationships can drive significant revenue for franchise owners
-Marketing strategies are crucial for client acquisition
-Showrooms enhance customer experience and decision-making
-Technology like virtual reality aids in project visualization
-Training and onboarding are essential for franchise success
-Ideal franchise owners should be networkers and relationship builders
-Investment costs vary based on location and setup requirements

https://thedesigneryfranchising.com/

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 on the huddle today is Nancy Baio, Director of Franchise Development with The Designery. Welcome to the show, Nancy. Hey, Mike. It's a pleasure to be here. It's great to have you on the show. So before we get started discussing your brand, The Designery, let's talk about your background. So before you joined Homefront Brands, which is the parent company of The Designery, to spearhead their development, you've grown franchise brands in the past in both the fitness and the home services categories. Tell us a little bit about yourself and how you found franchise. Certainly. So I was in medical device and pharmaceuticals for a combination of 25 years, had a great career, but wanted to do something different. And I had have a friend, Samantha Schweitzer, who was at the time at franchise fast lane. And I watched her career and I watched how she was able to work with people to transition from corporate America and live out their dream. And I thought, wow, I really would like to help people like that. with her assistance, I got my first role in franchising. I started with a fitness brand. It was a pilates brand. And it was a tad challenging. It was right after COVID. Still in the aftermath of COVID. So that was a little challenging being fitness. And then from there, I transitioned to a couple of different companies and mostly stayed within home service brands. I do believe that that is a smarter play. And so that's where I've been. Been sort of directing my career. Yeah, I got to tell you, home services, you landed in a good place because I spent 14 plus years in restaurants and it was great. And then obviously pandemic changed hospitality. And in the past couple of years, home services have been where a lot of my clients have been investing. So let's get right into it. Tell us about, you know, what is The Designery? Okay. So The Designery is kitchen, bath and closets. The products that we sell are cabinets, countertops, flooring tile, outdoor kitchens and appliances. So I like to say that it's a one-stop shop and you can cater to the whole home. While we say kitchen, bath and closets, it doesn't really stop there. We could put cabinets in a garage, in a home office, in a laundry room, in a downstairs, if they have a wet bar or a full kitchen. So it gives an opportunity for their customers of the design room to be repeat customers. Yeah. And kitchen baths and closets. mean, just that alone, even if you don't kind of go into other parts of the home, it's a tremendous opportunity, right? mean, there's franchises that just... specializing one of those niches and the fact that you cover all three, I think gives franchisees a good chance to create a lot of revenue opportunities. So let's talk about like, why would a customer hire the design for their home improvement project? What are the advantages of working with a designer? Certainly. Well, first of all, we can have, we are competitive with the big box stores in terms of pricing because we're a franchise. can negotiate with the suppliers. on a more global scale, so that helps. But to the customer, it's all about that customer experience. If someone's remodeling a kitchen or a bathroom, their choices are they go into a big box store and maybe work with a kid who was in lumber the day before. Getting those people back on the phone is tedious, and there can be a lot of error in working in that type of environment. With the design area, there's a designer on staff. So there's someone that's working with that customer from start to finish, from design to product selection, order and install. The alternative, if they don't go to a big box store is to go out and find some of the design space. So they have to hire a designer and then they have to go shopping around the city and go to different places like cabinets, countertops and piece everything in. So this really is a time saver. And this way, instead of having multiple places that they went to get product, they're going to, have one point of contact being that designer. So that sounds like a lot of advantages on the consumer side. What about on the franchise owner side? What are some of the major advantages that you would say of being a franchise owner within the design or remodel? Well, it's the support, right? So We have the technology all set up. We have the CRM. We've uploaded all the SKUs for all the different products. Thousands of thousands of SKUs. The ordering is done through that CRM. We have the marketing support in place, all the marketing collateral. We have a team in place within the design that's focused on working with our paid vendors. Sort of the go between the owner and the paid vendors. Working with our franchise owners on SEO campaigns, Google profiles, organic type initiatives like email campaigns, things like that. So they're getting all that support with the technology course of learning and development to add another layer and then also the marketing. Okay. So tell us a little bit about some of the benefits of being an owner, such as centralized purchasing and like assembly. How does that come into play to benefit another? So if, um, when working with a client and they place the order, we're assembling the cabinets for that client on behalf of the owner. So the cabinets are being assembled on our fulfillment center in Tennessee. We, we do this for a couple of different reasons. So they don't have to worry about labor. the space or tools to put those cabinets together. And so we will ship it. The other advantage too is that we're putting it together more like a custom cabinet. So, brad nails, glue staples, not just the clips that they come with. And then shipping that finished product out either directly to the customer or to the franchise owner to hold until install. Very cool. It's one less thing they have to worry about. Yeah, no, it makes it easier for the owner. So what are the products throughout those three primary service lines of kind of kitchens, baths? What products are eligible for this assembly? And then you have a tele-design team. So tell us a little bit about what they do. Great question. So cabinets are going to be about 70 % of your invoices. Number one, they're the. the most that you're gonna sell. And because of the expense of them, it just translates to your highest revenue generator. Everything else is just add-on, like your countertops, your tile, your drawer pulls. So for that reason, the products that are being assembled would be the cabinets. Everything else is shipped. Now the countertops, they're gonna find a local fabricator or we'll find a local fabricator for them. and they'll work with that local person for any cabinet installs. The tele-design is a neat feature. The tele-design is there for whatever capacity the franchise owner needs it. Maybe they are growing so quickly and they're not ready yet to hire another designer. They could take some of that burden off that designer and have the tele-design do the design portion of that project. If a designer has questions about the project that they're working on, they can go up and contact the virtual design team and just get some reassurance that what they're doing is the way it should be. Maybe they want to troubleshoot something and then they have the virtual team. We do a lot of B2B. There is a B2B focus. So if an owner has a six-unit apartment building, there's not technically someone that they're working with one-on-one per se. So they can put those types of jobs. over to the virtual team and free up their in-house designer for those customers who are coming into the showroom. Okay, great. Yeah, I was going to ask if B2B, B2C seems like you do both. I would think that a client would, or a franchise owner would probably lead with B2C and then as they build relationships in the market, they might do more to be in offices and things like that. Is that typically accurate? Well, maybe, except When they start out, the B2B is actually the low hanging fruit. So they're going to go out and they're going to, while we're waiting for Google to figure out that they're there and all their paid efforts start to kick in, they will go out and form partnerships with contractors, home builders, multi-unit developers, architects. They have to go somewhere for design and product source. So in forming that partnership, you're saying, hey, bring your clients to us. or your projects to us and we can handle everything for you. I mean, if you look at a general contractor, maybe he's working with someone on their kitchen. He does not want to go shopping for products. He does not want to deal with design. He wants to manage the project. So we're a good partner. And we have some franchisees that have done significant business, seven figures in one case, because of their B2B relationships. Seven figures. scheduled for this year to be completed by May. Just from one guy. So let's talk about how, you know, as a franchisor, you assist with the marketing and client acquisition. How does the design or he helped the owners kind of land appointments and then kind of get those home improvement projects on the schedule? Okay, great question. So there's about five different marketing buckets. Three of those we're going to handle on behalf of the franchise owner. So number one, their paid efforts. Their Angie's List, Facebook ads, Google paid ads, anything like that where they're spending money to place advertisements. So they will come up with a strategy and where they want to allocate their funds, and then we'll apply those funds where they've directed, and then we manage that ROI. So that's one bucket. The second bucket would be we're managing the national website, the local website, and the whole. hyper local websites on behalf of that franchisee. We're also creating our Google business profile. We'll also assist them with things as leads come in, putting those leads on a drip system so that we're constantly sending out information to get their interest to call and book an appointment. We also buy lists for email campaigns, such as lists of contractors. We'll also send out through social media, we'll send out advertisements like something like spring cleaning and redoing your closet sort of thing. We will post on their social media once or twice a week. We have the marketing plethora already created. If someone needs something done specific to them, maybe they want to put a half page ad in a high profile magazine and we don't have anything in our asset library that would cater to that, we would make it for them. The fourth and fifth bucket is really just the franchise owner getting out in the community, whether it be trade shows, doing lunch and learns with say a realtor group or an interior design group, mastermind groups. They could do things, door hangers, yard signs, kind of that guerrilla marketing, just really getting out in the community and letting the community know that there is a Designery and the service is offered. Yeah, and it's nice that the franchisor does a lot of the heavy lifting with the digital campaigns and the creative. So they could focus on building relationships in the community, attending those events, joining the BNI meeting, just doing all that stuff that's going to connect them with like really good referral sources in the community. Exactly. So we look for people that love to network and they're comfortable with it. So the design area also has a showroom model. So let's talk a little bit about the showroom. What are some of the benefits to the owner of having that available to them? So having the showroom really lends itself to a higher level of customer experience. This is not a business that you can throw everything in a van and haul it into a customer's home. I think also someone coming into this very modern, minimalistic, Apple Store sort of vibe. feel it puts them in a buying mode. They're seeing different vignettes, different types of kitchens, maybe a closet vignette, and it's really getting their mind going as to what they could do in their own home. So they're coming into the showroom. It's anywhere from 500 to 1500 square feet. I'd say the average is probably 1200. The look and feel of Designeries are consistent throughout the brand. The design center within that showroom the colors, the signage out front, it's all consistent. The owners have some creative autonomy in that because every space is a different size, they're able to create the inside of that space, as I mentioned with the different vignettes, as they see fit. We have third parties that can help with site selection and lease negotiation. We also have a third party that's going to help them with the design and the build up to include finding people to help build that up. They definitely have the ability to create a space that reflects their own personal style, but we make sure that it will run the test of time. We don't want anything in the showroom that's too trendy that's gonna be obsolete in two years. So we're assisting them with picking the right fixtures and things that would be able to last a while. And what type of real estate are you looking for? I mean, I'm assuming this isn't A+ retail. It's going next to Whole Foods. Where do you put these showrooms? So we are looking at a B or C rated space. There are sometimes given smaller cities that may not have that much to choose from, so they might go into an A rated space. But really, we're not looking for retail. This is not a walk in traffic. Type of business. so they can save some money on rent by going into a B or C rated space. Okay. So they have this beautiful showroom, customer comes in there. Like, let's talk a little bit about the tech stack that helps the franchise owner, like show the customer and help them visualize what it's going to look like after the work is done. Yes. To begin with, they're using to design that project, they're using Pro Kitchen and Closet Pro. And so they have those options. Once that final rendering is complete, what they'll do, what the designer will do is upload that final rendering to a virtual reality software. And then by placing an Oculus on the customer, they can do a virtual walkthrough of that space. It's really proven to do multiple things. Number one, it's hard for people to visualize the end result from a drawing. Most people aren't used to looking at those types of things and having that vision. So if they have the virtual walkthrough, they can look and say, there's too much white. I need to put some color in the backsplash. And they'll make changes faster. And then it also gets them to a decision faster. It gets them from proposal to project a lot quicker. Got it. Very cool. So when a franchise owner decides, hey, this is what I want to do, I like the concept, Where do they start their trainings that take place in Charlotte or somewhere else? So we have online university. So they will go in the first two months of onboarding. There's 130 point onboarding slash marketing playbook chess checklist. They'll start looking for their showroom. They will start their marketing initiatives. They'll start hiring their employees and then they'll do online modules and get trained in the various aspects, even right down to how to talk to a contractor. We teach that. The last step in the process after they sign their lease is they come to an in-person training for about two and a half days in Huntersville, North Carolina. When they leave training, they will be able to design a kitchen. Even though that might not be what their role is in the business, but they will have a working knowledge on how to build out a kitchen or a bathroom or a closet. So what does the initial like labor model look like for a franchise owner? know it probably is if they're going to be the owner operator versus kind of more of an executive ownership type. But what does it look like in terms of the people they hire to get this thing off the ground? Yeah. So the beauty of this is you don't have to start with a lot of employees. You can start really lean. So you can be an executive owner and hire a GM to do the day to day, or you can be an owner operator. You can do either one. We're very fortunate that our present founder still operates three showrooms across multiple territories. So our franchisees that are our executive model, they're being coached and mentored by somebody who's living in every day. It is very helpful. the only, let's say it's owner operator, they're running the day to day. They would hire a designer / salesperson. That's your customer facing role. That's your W-2. And then you'll have some installers. and those installers are 1099, you'll pay them on a per project basis, per day, per hour, whatever you see fit. For every million in revenue, you'll probably add another designer. And maybe somewhere in there you might add an office manager or someone to help with the influx of leads and getting those placed and then help with the projects. But to start with, it could be just the owner and the designer. Okay, what about Ongoing training Nancy. Do you have like a learning management system that franchise owners can use? We do. So when someone signs the agreement with us, there's about a two month onboarding process. They're going to get 130 point onboarding / marketing playbook in that time frame. They're going to hire anyone that they need to hire. They're going to start looking for their showroom. They're going to start their marketing initiatives, their paid efforts and get that going. And they will also go through a series of online modules and get some understanding of the brand and how to operate the business, which also includes even how to talk to a contractor. At the end of that onboarding two month process, a lease is signed, then they come to live training. It's about two and a half days. By the time they leave training, they will actually know how to design a kitchen. Even if that's not something that's in their day-to-day responsibilities, they will walk away knowing how to put a kitchen design together. Very cool. So what are you seeking in a new franchise owner? I know before you mentioned they have to be like a good networker, someone that can like really connect with people in the community. What else are you looking for in a franchisee? Yeah, so definitely someone that likes to network. If they are the owner operator running the day-to-day, they have to be comfortable going around and building relationships and networking. Very important. Leading teams, any sort of project management experience would be super helpful. People that can make decisions, also a big one. And that's pretty much it. And I guess lastly, just to have a real passion for this type of business. They don't have to have experience, but if they have a passion for it, it's That means a lot because they have to like what they're doing day to day as with any. That sense. So if someone is listening and they're interested in becoming a Designery owner, how much does it cost to launch the franchise? I know it's going to vary a little bit because we have a real estate component and cost to build things out, but ballpark, what's kind of our low end and high end and item seven to get into a Designery. Good question. So for a single unit, I'll quote a single unit. It's 156,000. to $387,000. And just as you mentioned, different parts of the country rent utilities can vary. So in that number, there's a one time franchise fee of $54,900. The rest of that number is comprised of rent utilities, signage, insurance, build out, furniture, fixture and equipment, marketing spend, grand opening spend, operating capital, right down to your office supplies. You can have up to three territories and only have to build one showroom. And I do have most of my owners come in with a three pack because it makes more sense. If you're working with contractors or builders, why not have a bigger area to pull from so you can follow them around? So you're insulating that showroom with as much population as possible and keeping your neighbors out. It's always more attractive to resell if that's your game plan. So that's the beauty of it is you don't have to have multiple showrooms if you have multiple territories. If you did more than- Yeah, I totally get that. So let's talk a little bit about earnings, Item 19. What kind of financial performance representations do you share in your item 19? Item 19, we started marketing this brand in 2023. So really, training started in 24 for most of our owners. and we gauge them on, they'll be in the FDD if they've had their showroom open for a complete year. So for our current FDD, we have two affiliates listed. One did $3.1 million and the territory size was about a territory and a half. So $3.1 million, the net margin was 17%. Another location, which was only about a half of the territory in our current size, they did $783,000 in gross revenue and their net profit margin was 25%. Got it. And where are those geographically, the affiliates? Yes, the $3.1M is in Roswell, Georgia. And the one that did $723,000 is in Calhoun, Georgia. Okay. So smaller, smaller areas. Yeah. Well, this has been great, Nancy. Anything else you want to add to the conversation before we wrap up today? Well, for those that are interested, come over and see me and I'll take you through the process. It's a great brand. We're growing like crazy. have, as I said, started marketing this brand in 2023. We have 40 owners currently and 105 territories sold. I got past my 100 mark and we're growing at a rapid rate. So, still have plenty to return to. I guess it wasn't this past summer, the summer before, I was fortunate enough to share the stage with Jeff Dudan, who's the CEO of Homefront and really learned a lot from him and I'm excited to see another great brand in the inventory and really nice to meet you, Nancy. So if anyone listening wants to connect with Nancy and her team to learn about becoming a franchise owner with The Designery, contact me at FranchiseQB.com or on X @QBFranchiseQB and I'll get you guys connected. Thank you so much, Nancy, for taking the time to get in the huddle and discuss The Designery with us today. Thanks, Mike. It was a pleasure. I appreciate your time. Absolutely. 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.