It’s a sunny, warm afternoon in late May. It’s the middle of the week and you’re stuck in a stuffy conference room listening to someone ramble endlessly about next year’s sales forecast.
This is where you work.
Meanwhile, in the backyard of your house, tall shade trees sway in a gentle spring breeze, overlooking a lush green lawn as the sounds of birds and lawn sprinklers fill the air.
This is where Phil Fogarty works.
“I love being able to walk through some guy’s beautiful landscape that I’m taking care of and he’s stuck in his office with no fresh air,” Fogarty says. “It’s great because you get the satisfaction of pulling up to a house you’re taking care of and folks are out using their lawn, kids are running around.”
With descriptions like these, who could blame Fogarty for wanting to get back into the shoes of a lawn care business owner after two years off?
In 1998, Fogarty sold his business, Crowley’s Lawn Service, to Scotts Co. At the time, Scotts was aggressively expanding its lawn service subsidiary and Crowley’s was the largest independent service provider in the Cleveland area, with more than 15 employees and $1 million in annual sales.
Fogarty stayed on with Scotts after the acquisition to help it set up new markets and look for acquisitions of other lawn care companies. He continued the relationship not only for the regular paycheck but because of a desire to have a national influence over the lawn care industry, an industry he’d grown to love despite a grass allergy he’d had since starting work at Crowley’s in 1980.
“That went fine for the first year; it was kind of my dream job for me,” Fogarty recalls of the year after the sale. “The idea of being a part of something bigger, that really was impetus for selling in the first place.”
Chasing dreams
One year later, however, the push to expand Scotts lawn service stalled when the company invested heavily in its acquisition of the Ortho and Roundup product lines. Months passed.
Although Fogarty was still collecting a check and operating Crowley’s Vegetation Control, a smaller weed control offshoot of the lawn service, his goal of being a part of a national leader in lawn care had come to a screeching halt.
“At one point I said, ‘This is kind of silly. There are a lot of other things I could be doing,'” Fogarty says. “I suggested that somehow we part company.”
Not long after Scotts agreed, Fogarty was approached by fellow lawn care service owner Robert Ottley, who owns One Step Tree & Lawn Care in upstate New York. Ottley’s offer was to subfranchise a Canadian lawn care company in the U.S. as part of an ownership group.
The franchise, Weed Man, founded in 1973, was Canada’s largest lawn care service provider, with sales of more than $55 million and 135 franchises. The company is growing so quickly that franchise opportunities are awarded from a waiting list only.
Stacking up the competition
After visiting Canada and being impressed by the growth and operations of Weed Man, Fogarty and Ottley, along with four other successful lawn service business owners, invested in franchise territories. They plan to build Weed Man into the second largest lawn care franchise in the United States. Fogarty readily admits he and his partners have no aspirations to go head-to-head with $1 billion industry leader TruGreen-ChemLawn and try to overtake its commanding market share.
But, according to Weed Man estimates, TruGreen-ChemLawn has only about a 60 percent customer retention rate. That means about 40 percent of its business — or about $400 million of its sales — is ready for Weed Man to scoop up. The team’s goal is to become the dominant No. 2 player, boosting Weed Man system sales to between $150 and $200 million within the next 10 years.
“In order to grow and keep growing, they have had to buy out competitors,” Fogarty says of TruGreen-ChemLawn. “In turn, they have a very poor reputation for service. They’re getting better, but they still lose a lot of customers. ”
The six subfranchisors have master franchise rights for Weed Man in territories covering 20 states and about 150 million people. They hope to sell 60 to 80 franchises in each territory and collect royalty fees paid by each one they sell. Fogarty and Ottley own the Ohio and Western Pennsylvania territory and set up a parent company called Growing Opportunities LLC to manage it.
Fogarty believes the key to Weed Man’s success in the States will be the local support the subfranchisors offer franchisees. During his days as owner of Crowley’s, Fogarty saw franchises come and go because the corporate office didn’t know the area and didn’t help the franchise owner solve problems.
“If somebody in Columbus is operating one of our franchises and has technical issues or business issues that they want to resolve or they want to get together, we’re here,” Fogarty says. “We’re going to be able run things together and build a business together.”
Handling noncompete issues
In most cases of a business sale, the buyer designs a strict noncompete agreement that prohibits the seller from taking the money, starting up a similar business with a different name and raiding the former’s customer base. Luckily, Fogarty wasn’t bound to a strict noncompete agreement when Ottley approached.
When the Scotts expansion slowed, Fogarty asked if the company would let him get back into the lawn care business if he encountered the right opportunity. Scotts agreed, but barred him from soliciting the customers it bought from him until after 2001.
Fogarty says Scotts didn’t request the noncompete agreement in writing, but he gave it to the company anyway.
“I had a real good relationship and still do with Scotts,” Fogarty says. “I still help with things locally and they’re friends of ours. But, just so we were clear about everything, after 2001, all bets are off.”
South of the border
To build Weed Man in the United States, an American company called Turf Holdings Inc. was formed as the master franchise company. But before it could start selling territories to Fogarty and his colleagues, it had to jump through many bureaucratic hoops, thanks to Federal Trade Commission regulations.
“All of the laws that pertain to franchising in the U.S. are much more advanced to what we have in Canada,” says Roger Mongeon, president of Turf Holdings and Weed Man franchise operator since 1987. “It’s much more strict and more demanding. There’s a lot of federal filings. We also have to do filings in 15 states. The paperwork is quite significant.”
The 91-page Unified Franchising Offering Circular, or UFOC, is the main document all franchise operations have to submit to the government before they can expand. The document took about six months to complete with all the revisions and legal approvals.
Fogarty has been aggressively seeking out franchise owners, and more Weed Man franchise territories in the States are in negotiations. The company should have about half the country covered by next year, pushing Fogarty closer to the goal he set for himself when he sold Crowley’s in 1998.
“You want to keep challenging yourself and keep broadening your scope of influence,” Fogarty says. “So that’s where this led me. I was part of the original partnerships to bring this into the country and we can have a giant impact on the market now.” How to reach: Phil Fogarty, Growing Opportunities LLC, (216) 410-5489
Morgan Lewis Jr. ([email protected]) is a reporter at SBN.
