Episode 117: How to Scale a Pavement Maintenance Service Business to $15M Nationally

Host Mike Halpern sits down with Bryan and Michael Appell to discuss the rapid expansion of Appell Line Striping. Learn how this family-grown business turned a local service into a national brand serving household names like Starbucks and Best Buy, and how they provide immediate "day-one" revenue to their franchise partners.

Key Takeaways:
Built-In Revenue: How Appell uses its 50+ national accounts to feed work directly to new franchisees.

Low Barrier to Entry: A deep dive into the $250k investment that covers two territories and multiple service lines.

The "New Lobby": Why the post-pandemic shift to drive-thrus has made parking lot maintenance a recession-resistant necessity.

Avoid the Pitfalls: Benefit from 25 years of "painful learning curves" regarding materials, temperature, and equipment.

Guest Website: Appell Line Striping

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Mike Halpern, CAFC
mike@franchiseqb.com

Transcript

0:42

Joining us in the huddle today are Brian and Michael Appel, founders of Appel Line Striping. Welcome to the show, guys. Thanks for having us, Mike. Thanks Mike. Great to have you here. Good to see you again. So we met a few weeks ago in Tampa at a franchising event. A couple of my friends or colleagues and I watched your team complete a total lines striping job at a parking lot outside of a commercial office building. It was incredibly well planned and executed. Brian, I know you've been in the line striping space for 25 years and your brother Michael joined you in the family business. Tell us a little bit about your backgrounds and how you got into the pavement maintenance industry. Yeah, so my story, Mike, is 25 years ago, as you mentioned, went to college down in Florida. My goal was always to be in finance. I wanted to be a stockbroker. know, growing up in the outskirts of New York City, my goal was to be in Wall Street. So I went to school in Florida, going to school for finance, had a paid internship with Smith Barney, thought I had my life all set up. But on the weekends, was just to make extra money. was working with a guy just striping parking lots. And I can remember the first weekend I worked with him, like, this is just pretty cool. I liked being out there striping the parking lots with them, working with my hands. But very quickly, I realized that this is also a great and good business opportunity. And back then, the pavement maintenance industry was even more fragmented than it is today. So. After I graduated college, I decided to move back home to Long Island and start Appel Striping instead of going the finance way, which my parents had a few choice words for that direction, but it panned out. Came back home, started up hell striping. At first we were just doing the line striping service and I quickly realized, hey, I wanted to grow into seal coating and pave repairs. This way could really work directly with that property manager instead of working just behind a paver. So grew the services out, everything pavement maintenance related, we did. Did that for another six years, grew into a pretty successful good company alongside my brother Michael. I'll hook on to his story next. Then there was a big shift in the company where we were kind of like, hey, what's next here? Are we ready to franchise? And this is about 10 years ago. We're going to franchise this model yet. We got the model dialed in. It's profitable. It's a good business. But We actually had an opportunity to do some national work and build out a national program. I'll get into that a little bit more later. But we took that direction first. And the whole reason for that was, hey, let's do this. Let's build out some jobs out of state and let's be able to give that to the franchisees when we decide to franchise. So that's been me and Mike's mission all along for the past 10 years here. It's really grow that national brand and be able to give some of that to the franchisees when we decided to franchise. And we decided to franchise about three years ago when we made the decision to franchise. Now we have six people in, joined with Fran Devco, which we're very happy with. And now we're excited to bring more people onto our brand and really grow this business together with them. Yeah, that's awesome. Brian, thanks for sharing the backstory. And before we get into the franchise space, Michael, tell us a little bit about your background and when you decided to join your brother. Yeah, thanks. Thanks, Mike. I've been with working with Brian's as I'm 13 and out of middle school and high school. Worked with them in between summers at college. I went for a history history degree. Thought I'd be a history teacher. Still probably think about that sometimes how nice that life would be. Much less stress. But yeah, we were, you know, we were doing well and I was I was in my early 20s. And Brian kind of grabbed me and he's like, listen, he's like, before you go off and do your own thing, we got something here. Like, let's, let's give it, let's give it a shot. And I still remember being on the plane ride to Nashville to our first trade show. And we're just like, and you know, there was a lot of money at the time and it was, it was scary. It was like, is this going to work out? You know, when we landed our first customer at that trade show, still work with them today, which is nine years later. We've, know, it's, know, when you're kind of daydream and you talk about like what something can become and you're like, all right, we're going to get these many customers. We'll be doing this much revenue. It's wild because we would talk about it and it's, it's, it's happened so quick over the last nine years, but it's actually happened. So it's kind of just like crazy. Sometimes I have to pinch myself and like, we actually did what we set out to do and then some. so for the last nine years, I've, that's been my focus is leading that national team and, uh, growing that customer base, you know, and the last two seasons, I think we've just done under under 15 million around, around the country. Um, know, yeah, thanks. It's all pavement maintenance services. for just these large national household names that everyone hears of, you large coffee chains, fast food restaurants, you know, so just great, great customers. And they keep coming back to us because I think we just put them first and we know how to operate. We know how to product management very well. So, but then as Brian mentioned, what's been great, our mission has been how much of this work can we send to new franchisees in their territory? So that's been really cool to watch that come to fruition. Yeah, no, I wanted to jump in and ask because Brian mentioned how you started looking at a state, you went to this trade show, you guys are starting to do, you know, partner with people that are outside of your market with the intent to kind of franchise down the road and having these national accounts set up. Was that kind of the light bulb moment where you're like, Hey, we can, you know, do this and kind of replicate what we've done with the company on locations in a franchise model. So for me personally, I felt this need to teach people at a certain point. I felt like I'd been in the industry for 25 years. I like to think I know everything about it. I don't, course, there's still learning curves that I go through. But I just really had this knack for it. Now I want to be able to teach people. for me, teaching people to kind of grow their own business is even better. So that's how I kind of fell into the franchising world, I think. Yeah, that's cool. And like one of the benefits of being a franchise systems, you've got it all figured out, right? You've made the mistakes early on, you've corrected those mistakes, and then you kind of give a business in a box to the franchise owner that's stepping in. So let's talk about the early days. Like what kind of mistakes did you make that kind of shaped the business to what it is today where you can offer it out as a franchise system? So I've made every mistake and then some. I've spent a lot. Probably one of my biggest mistakes was I think we seal coated a parking lot and I seal coated at night. I didn't put the right drying agent in. The temperatures weren't right. I woke up to five phone calls and they said the parking lot's not dry. There's footprints in my store and people have it all over the inside of their cars. And it was a mess. But you got to know, hey, what temperature should you be seal coating in? What dew point, what ad-lib should you put in to correct for that if it's not warm enough? So those were painful learning curves. Okay, Michael, anything else that happened that comes to mind in that regard? Yeah, man, so many mistakes early on. But I think the biggest thing that we've learned, and we try to teach this to our franchisees, because it does go a long way, and it's how we've grown national customers too and kept them, is that when you do make the mistake, you have to own it. and just handle it and communicate with the customer. And sometimes things happen in parking lots that aren't your fault. The dump truck driver drives through our cones that we've coned everything off the right way. They drive through the seal coat. Still have to fix it. It's our responsibility to fix it. So handling mistakes the right way is what keeps customers coming back. So that's kind of the way we've always carried ourselves. I think that's great. I had a guest on a little while back who said that he messed up this lady's job. They were doing wood rot repair and he saw her in the grocery store in his town. He tried to avoid her and then he's like, what am I doing? Like, I just got to own up to this and be honest about it. And that's going to build trust. And she's going to say, Hey, this guy made it right. And it's going to give me a good reputation of the market. So I think that's a really good lesson to learn early on in a business ownership. So, you know, at what point did you guys realize that we really can make this a national At what point did you say, we can see a Pell striping not just here in New York, but all over the place. So that happened on almost on accident just by listening to our customers. So we had a pharmacy company we worked for here in Long Island and we striped and did crack fill and pottle repair for about 50 of their locations all throughout Suffolk, Nassau, Queens and Brooklyn area. Big contract for us at the time. remember the... there she called me and she said hey we need you can you go to West Virginia to handle some stores for me I said West Virginia I was like I don't how am I gonna do that like that's that's too far of a drive we're the middle of our season I'm like you guys are great customer we're not that great Brian just do me a favor think about it you know think about it and let me know me come up with a solution I know you will so I have the phone with her and it just kind of like hit me like a light bulb I said, what if I just call somebody down there, find a good company to work with, charge my customer a management fee to handle that, what times they're doing it. And maybe that'll work. So I called her back and said, listen, I have an idea. I called a couple of people. I found a company down there that sounds pretty reputable. I looked at their website. I called a couple of their customers. They said they're a good operation. I said, I'll handle everything. I'll charge you guys a management fee, and I'll put them to work. She says, great. Go ahead. Go for it. So we did it. He did, I think, 30 stores, it was, in West Virginia. Everything came out great. We got paid, we made a little bit of money and we paid the sub. He was happy. And that's really how our national program started was from that. oh You like one above and beyond for the customer, but it turned out to be a really good business model for you guys. And now that kind of leads into all these relationships you guys have with these independent contractors that you can kind of, you know, understand like which markets are good and, where do you want to target for your franchise owners? yeah. to that a little bit, because it's like, have such a grasp on talking to so many subcontractors, like in America, like we even get information from them on like new machinery comes out before even I hear about it sometimes. So that's great. And we're to leverage pricing with them, like, hey, what's this area pricing? What's the market look like in this area? And it helps our franchisees with us knowing that information. Yeah. I want to jump right into national accounts. I know we've kind of touched on it a couple of times, but that's such a big thing for a new owner coming in. Obviously they have to win their own business. They have to ratchet up their marketing. They have to build relationships and all that, but you guys give them a headstart. Can you talk a little bit about your national account program? Yeah, definitely. It's been a blessing. So I think uh five out of the first six, I think we've actually trained them. Their training is taking place on national jobs. which I mean, they're actually making money on day one while they're, we are there with them, showing them the services. That's been great, right? I mean, that's like, and so I get that because sometimes it just lines up with, have so much work that, you know, before I go to Atlanta, I have to work there, right? uh But I've done some stuff maybe in Houston at the time when we set up our franchisee there. I didn't have anything too close. I have such good relationships with some of my customers. I literally just called them up and I was like, listen, I need a couple of striping jobs close by because I'm training a new franchisee. I'll give you a discount. You know, they're happy to do it. So I set up five striping jobs that week. I've been able to do that almost like it's like a, little bit of a welcome package sort of thing. But then obviously it's in their back of their mind that we're also there locally. So now they're, you know, even though they're to send me work anyway around the country, maybe they're sending me some more in use scenario and that market. So that's been good. The other thing is I think we do national accounts a little bit differently than other franchises. I don't want to speak for everybody, but I know some or most franchisers or franchise companies, they grow the franchising first and they have a bunch of franchisees around and then they'll leverage that to get in with national clients because they say, hey, listen, we're in 30 states and we can do this for you. We did the opposite, right? So we grew up, we grew all these national accounts in all these states. I don't, we don't like force work down our franchisee's throats. It's like, Hey, it's like, have an opportunity for you. Do you want it? You could accept it or decline it. No hard feelings. it's maybe it's a 45 minute drive and you're like, I'm so busy. I don't want to go do it. You don't know if that it's not a problem. Um, or maybe it's just, maybe it's too small. Some of our guys are doing such lower jobs that if they just get a small stripe in job, even as down the road for them to go do it, they're actually, you know, not going to lose money on the job. But in big picture, they're losing money because they should be on a $5,000 job rather than the $1,000 job. know, so it's not any kind of thing where we force it upon them. It's been a blessing that I would say well over 90%, 95 % of what we offer gets accepted because it is good margins. It's already handled. They get the overhead from us and they know what's going on. The scope is laid out and it's for a great national customer that they know they're not going to not get paid on. Right. So it's been great. So give me a couple of brand names that the audience would be familiar with that you've done work with in this capacity. Absolutely. So Starbucks is one of our favorite customers. How about O'Reilly Auto Parts is one of my crown jewels, jewel diamond type customers. Service King, Champions, they merged recently. One of my favorites. Do a ton of work for raising canes around the country. Valvoline Oil Change is another one. Best Buy. So we have like Probably about 50 plus of these national customers and they just, some are larger than others, you know, of course, but they just, we, have, I have a whole team of people, know, six, six people on my national side that there's just work orders coming in every day all week long and they're being accepted and they're being sourced out. And the more franchisees we get, the more that's going to be sourced right to a franchisee rather than a subcontractor. And I love my subcontractors. have great relationships with a lot of them. after, know, building up. those relationships for nine years, right? You do hundreds of thousands of dollars with people. There's a camaraderie there. But my loyalty obviously is to my franchisees first. So our vision, our mission is, hey, let's cover as much of the country as we can with the Pell franchisees because they're gonna be using our equipment, our paint, our machines that we know works the best, which leads to even a happier customer because the quality is so high. Yeah. And one thing you guys mentioned to me when we were in Tampa, that was kind of an eye opener is that like a lot of these restaurants accounts, you mentioned Canes, they strike pretty frequently. Like it's almost like keeping up at the Joneses where, you know, the, the exterior that like curb appeal is so relevant for, you know, post pandemic where the guests aren't going inside and fast food, they're going through the drive through. So they want that to be pressure washed. They want the building to look nice. They want the parking lot and the landscape and it'll look nice. You guys benefit from that because if they stripe every year or twice a year, mean, that's recurring revenue for you guys and your franchise owners that I think a lot of people don't think about. Yeah, the parking lot is the parking lots, the new lobby is what a lot of people are saying. So 90, this is a stat I heard from one of my customers, a fast food customer. They said 92 % of their customers don't even go inside the store anymore. It's just, it's the pickup. Think about there's five parking spots that are just dedicated to pickup. So they might go in the parking spot. They send the text to the QR code. Someone that comes out and delivers it to them. They still don't step foot inside the lobby. And then even the people that go in the lobby, they're just walking in, grabbing the food that's waiting for them. they rarely sit down. So 92 % of your customers are going only to the parking lot. You want to keep your parking lot and the outside of the building looking as nice as possible. Yeah, so I know a lot of people have concerns about consistency in any franchise system. Like how are going to keep this looking the same, acting the same, behaving the same when you go in New York versus Tennessee versus Texas? How do you guys as an emerging kind of an earlier stage franchise system, you have an opportunity now to kind of keep that consistency. How are you making it happen? So we were very strict on what machines and materials that the franchisees could use. So we build out their Stripen package here in Long Island at our facility. We put the machineries that we recommend, the paint products we recommend, the standardized stencils that we use. That's like a great baseline because... I've used machines that suck, materials that suck, and I've gotten what happens with that. And sometimes you don't know it until you're in it. So we've been through those growing pains of figuring out what are those best materials and best machineries to use. So from an actual doing the job perspective, it's, this is what you're going to start off with because it's the best in the business. Yeah, you mentioned that there's kind of some secret sauce, right? You have to use the right paint. You have to use the right additives. You have to be at the right temperature. So all of that, when you make sure that the franchise owners are trained properly and they're supported properly, you should see that consistency regardless of where the jobs are done. Yeah. Yeah. Cool. So who are you guys looking for? When you think about an ideal franchise candidate to join Appel and get into the pavement maintenance and line-straping industry, who's ideal for you? I I know there's probably a moving target there, but early on, who have you seen have been really great to kind of follow them? Yeah, definitely a little bit of a moving target. And what I thought would be my perfect candidate maybe has changed a little bit. I think the number one top thing is like that positive person. I know it sounds cliche, but it's like so true. It's like, you have someone, if you give me a person that's like, that's positive and I could like mold them a little bit to where I need them to get to, it's just so much easier. So they gotta be positive. And they do have to have a little bit of capital, right? Not just capital where, okay, I'm paying for my machines, I'm paying for my upfront costs, but you need a little capital to get through first couple of months. This is a service-based franchise business so it's not a restaurant where you open your doors, people come in right away. So you do have to have a little bit capital to carry you through those few months while you're gaining those customers to work with. So I think that's important too. I would just add to Coachable. know, I think in our first couple of years, like we were trying to find that line of, you know, how to interact with our franchisees. you know, sometimes maybe we're too like on like a friend, we're so close with our franchisees. So it's like, you become like friends, which is not a bad thing, right? But the more, they're not employees either. So I treat my employees different than a franchisee. You can't make them do certain things. You can guide them and give them advice. But someone taught me recently a couple months ago, said, you're really a coach. And I don't know, that clicked for me because, you if you played sports, know, coaches can be tough on you sometimes, but it's all out of love. It's so you could do a better job. So someone who understands that even if they have business experience and no experience in this industry, be ready to learn different things from us. Be ready to be coached. And I'm not saying we're 100 % right all the time because we're not, and we've learned things from our franchisees. I'm proud to say that. But yeah, would say coachable is a key factor. And we've had both people come through the system, whether they're owner operator type or investor type, and they both worked in their own separate way. Yeah. Okay. Very cool. yeah, I mean, coachability mindset, capital, those are good, good things to start with. So let's talk a little bit about capital item seven in terms of the startup cost range to get in and become an appell owner. Um, what's that going to look like? Yeah, quick average with that, you're looking at 250,000 right around there, and that'll get you about two territories and two services to do. And what are those two services we're starting with? Is it like pavement maintenance and line striping? So we offer the three services, which is line striping, seal coating, and pave repairs. So we always have you start with the line striping. And we go through a deep dive and we pick whether it's best for you to do seal coating or pave repairs, depending on the geographical area you're in, depending on data we see on the national program to see what work we've done in that area. For instance, we had a franchisee at West Houston who called us and he said he wanted to buy our striping and sealing package. So we pulled up some data and we did like zero seal coding in Houston. And we're like, what's going on here? The whole place is concrete. You don't seal concrete. So we were like, Dave, we're like, we're gonna talk about it, doing the seal coding for the sheer reason there's not a lot of seal coding going on in Houston. Another reason I think that the national program is important is. Yeah. helpful. Not only to you as the company, like making good decisions about what markets go into, but like you can speak with real world experience to your owners that are coming in and saying, Hey, this is what we're seeing. We have a ton of activity here. The accounts like that's pretty cool. yeah, this has been great guys. mean, I was really impressed when I went out to the job that was down in Tampa. It seems like a phenomenal concept, relatively low startup costs. I'm excited for you. Anything else you guys want to add to the mix before we wrap up today? No, I mean, I'm I'm humbled with the amount of phone calls we're getting lately from candidates. So I've been humbled the past couple of weeks and it's been, yeah, it's been a really cool experience. I'm excited for the future and the future will help. that it's, yeah, it's been humbling. It's been exciting. It's a lot of work, but it's man, we have so much energy right now because we're so excited how things are going. But I would just say if anyone's interested, you know, if you're thinking about getting out of corporate America, because that seems to be a big theme in candidates that we're hearing from lately and you want to control your own destiny, whether it's with us or a different franchise group, you know, go for it. Look into it because... It's a lot of work, but damn, it's rewarding when it really works out and it's worth taking the risk. I love it. I love it. Well, if anyone listening would like to connect with Brian Michael and the Appel line striping team to learn more about becoming a franchise owner, contact me at franchise qb.com and I'll get you connected. Thank you both so much for taking the time to get in the huddle with us today. Thanks Mike, appreciate you. Thanks for having us, mate. You're welcome.