When Ted Elliott joined Coverall Cleaning Concepts in 1987, he helped grow the janitorial franchise company to more than 3,500 franchisees.
Then he left in 1995 after disagreements with the owner about the direction of the company.
“I wanted to go to the next level,” says Elliott. “The corporate office at that time was in Chicago. The owner and founder were in San Diego just different ideas of what to do. After I left, they put the company up for sale.”
But Elliott’s ideas on what to do with the company were far from dead.
After being approached by a franchise owner about returning to the company, Elliott became part of a leveraged buyout of Coverall and was named president in 2002 and CEO in 2004.
“I came back to the company in 1998, and was really free to start implementing some of the things I’d wanted to do prior to that,” Elliott says.
Elliott established a growth strategy for Coverall that focused on building a national footprint, supporting existing franchisees to drive organic growth and laying the groundwork for an international expansion.
A national footprint
Elliott knew that to really tap into Coverall’s potential, he had to be able to service large national accounts, where one contract might yield several hundred locations that needed his company’s cleaning services.
He increased the number of franchise owners to 8,500 through recruitment and through acquisitions of smaller players, many of whom weren’t on the radar screens of his larger competitors.
“In our business, acquisitions come into play,” he says. “There are a tremendous number of small cleaning companies that really don’t have an exit (strategy). The larger companies are really not going to go down to a $100,000 deal somewhere. We have the capacity to pick the accounts up and roll them right into our existing franchise base.”
The dedication to covering the country with franchises has paid off. The company has landed a number of national clients, including FedEx and Sprint, and the Sprint account alone brought in more than 800 locations that Coverall franchisees clean. The corporate office handles the billing and support of the account, but local franchises clean the offices in their areas.
Elliott expects 10 percent of Coverall’s future growth to come from national accounts and another 5 percent from acquisitions, but that hinges on his ability to support and train his franchisees.
Providing support and training
The development and expansion of the company’s regional service centers has made the company’s national footprint easier to advance. The 90 service centers, located in the United States and around the world, provide training, conduct some billing and find new clients for individual franchise owners. All the franchise owners have to do is clean.
Many of the more than 8,500 franchise owners do not have college degrees, and some have full-time jobs and want to supplement their incomes. But doing a good job takes more than handing over a cleaning contract to a new franchisee with a mop and a bucket.
“Our best and biggest asset is human,” Elliott says. “That requires investment in training and development. We’re not working with Harvard graduates. A lot of these people have high school educations. Some of them might not even have that not to say that we don’t have college educated (people). But even our own (corporate) employees, I’m a staunch believer in training and development continual and constant.”
Elliott knows that the company is only as good as its frontline representatives.
“We’re in a people business, and they have to have the customer service skills, and they have to have the training to deliver a quality product,” Elliott says.
That’s where the regional service centers come in. Each center has an employee solely responsible for training and developing franchise owners.
“Investing in that franchise training director was a huge investment for the company because that means we’re putting 90 employees on the payroll,” Elliott says.
It’s an investment that Elliott recognizes will take time to pay off.
“He invests his whole day into making them good small business owners,” Elliott says. “It takes awhile because these people have to develop in the industry. They have to learn business. They have to learn sales. They have to learn cleaning. They have to learn management.”
One example of how the support centers further Coverall’s growth strategy is in the health care field. With about 30 percent of the company’s $272 million annual revenue coming from health care facilities, the regional support centers deliver specialized training in things such as blood-borne pathogens so he can continue to grow that area of the business.
The overall training program teaches franchise owners to work smarter, why it is important to invest in equipment and how to use the right chemicals.
“Production rate is everything for us,” Elliott says. “If you’re out trying to clean a 20,000-square-foot warehouse with a 24-inch broom versus an auto scrubber, you’re going to be there forever. We can show them, if you buy the auto scrubber, it pays for itself in two months.”
In addition to increased productivity, that investment in franchisee support has shown an unexpected benefit.
Franchisees “started referring their friends, and they started referring their family,” Elliott says. “They felt better about the company; they were more profitable.”
Last year, about 50 percent of the company’s new franchise owners came from referrals from franchisees.
“That has been a key strategy for us over the last five to six years,” Elliott says. “It’s added some sales that we weren’t focused on before. We were really seeing new franchise owners via other sources business opportunity, entrepreneur or local newspapers, and we really weren’t farming and asking for that from existing franchise owners.”
Elliott uses this referral of potential franchisees as a measure of how successfully his company is meeting the needs of existing franchisees. Many franchise owners start with the company part-time, with just a few accounts. How those people are treated has a lot to do with the success of the system.
“It’s the investment in the franchise owner, the training and being accessible to them when they have issues and questions,” says Elliott. “By having a local office every place we do business, the communication is wide open. We also survey them. Every month we have a thing called franchise appreciation day at each one of the local centers. We’re constantly polling and looking for the feedback from the franchise base.”
Coverall uses that information to enhance the offerings it provides franchisees. Satisfied franchise owners are more likely to stay with the company and expand their own operations. It’s another way for the company to cover more territory and position it for even more national accounts.
Elliott expects to add more than 1,000 franchise owners a year, and many of those will be overseas.
Coverall first went international within a few years of its 1985 inception, but Elliott says the company made some mistakes early on. It has since gained more insight into those markets and become more selective.
For example, although its initial foray into France was successful, a lack of understanding of the working culture led to trouble.
The company easily transformed its policies and procedures to accommodate French laws, and the Coverall concept, operated by an French company, took off.
“The company that bought the master license for France was a huge billion-dollar company that held and owned numerous other companies in France, including other cleaning companies,” Elliott says. “Coverall Cleaning Concepts took off like a rocket because there are a lot of people in France who want to be entrepreneurs and they want to be business owners and they don’t mind working hard. It was actually so successful, it started getting a lot of press. The unions that were entrenched in the other holdings of this company basically said, ‘You’ve got to close that company or we’re going on strike.’”
“Essentially, the company closed the Coverall office and took about a $1 million loss. We collected our fees for it, but they closed down a very thriving operation because of the culture of the French.”
Coverall, which has 10 service centers on foreign soil, had a similar experience in Spain. “They’re just not as capitalistic over there,” he says. “Unions have tremendous influence over business.”
Based on those early experiences, Elliott decided to stay out of Europe and try the Asian market. There are challenges there, as well, but Elliott says Coverall can navigate through the initial difficulties.
“The issue in dealing with the Asian market, we need to have patience,” he says. “They just don’t do things as fast as we do here in the States. They’re not in any great hurry. In Asia, they will implement exactly the plan and the program. It took them four to five years to get to where we might have an office operating at in the U.S. within a one-year period. However, once they’re done with it, they have replicated it exactly, and in some cases, probably executed better than we do.”
Elliott is looking into the Chinese market, but is in no hurry to rush in.
“When you’re in markets where people are working for $1 a day or $2 a day, that’s just a very small royalty stream coming out of that market,” he says. “Entrance fees are very important because it will take a long time before that builds to any real revenue base.”
Because of its limited earning power in China, the company will need to enter the market with a large presence to make it worthwhile.
“We will go to China,” Elliot says. “It’s a developing market. You don’t have to be first in there to be successful. We have a strong enough brand name that when we do go, we’ll go big.”
Until then, Elliott remains focused on the fragmented U.S. market.
“You just have to look back to the U.S.,” says Elliott. “We’re much better served investing in market penetration in the U.S. than some international markets.
“In other words, it’s all about training people to do the job right and giving them the tools to manage and run their businesses.”
HOW TO REACH: Coverall Cleaning Concepts (800) 537-3371 or www.coverall.com