Start With A Win - Franchise Triumph: Unveiling Five Star Franchising's Secrets with CEO Scott Abbott

Starting point is 00:00:00 We, every one of us individuals, are capable of doing so much more than we ever realize. The one thing about franchising is it's always changing. There are more and more ways for people to find your service than ever before. And you want to close with a great business tip to franchisees and franchisors. What would that business tip be? Welcome to Start With A Win, where we unpack franchising, leadership, and business growth. Let's go. Coming to you from Start With A Win headquarters at Area 15 Ventures, it's Adam Contos with Start With A Win. Today, we have a true entrepreneurial maverick in our midst,

Starting point is 00:00:39 Scott Abbott, the CEO and co-founder of Five Star Franchising. Leading a portfolio with over 900 franchisees and a string of successful exits, Scott is a visionary in the business world. From transforming companies like Five Star Painting and Joe Homebuyer to active investments in SaaS and fintech companies and impactful ventures in land development, Scott's story is one of relentless innovation. Scott's got his MBA from Brigham Young University and bachelor's degree from University of Manitoba, and his entrepreneurial journey has earned him recognition, including the Utah Business 40 Under 40 and coveted titles like Innovator of the Year and Entrepreneur of the Year. Join us as we unravel

Starting point is 00:01:23 the secrets behind Scott's success, exploring franchising dynamics, and gaining insights into his multifaceted career. Scott, welcome to Start With a Win. Thanks for having me on here. Excited about this. Awesome. Hey, you've been in franchising for quite some time now. I think you and I probably both have two decades each in franchising. So we've seen a lot of things happen. Take us through your history a little bit. And how did you get to five star franchising? And what is that? Yeah, happy to do that. A co-founder in my, in myself, we've known each other since we were 11 or 12 years old. And he was running a small little painting company in Edmonton, Alberta, Canada. And I've been an entrepreneur since I was 16,

Starting point is 00:02:06 had had a couple of different, you know, small businesses dabbling in various things, you know, paid the bills, but no real home runs, kind of first base hits. And we were at a mutual friend's wedding. And at that wedding, he was talking about how he was struggling to grow his business from Edmonton to Calgary to other markets. And they're all corporate owned. And I realized very quickly that the missing ingredient to his success was that skin in the game, that ownership mentality, the entrepreneurship drive that comes with someone owning something. And so I said, you know what, Chad, I'd love to franchise this painting company. And he's like,

Starting point is 00:02:43 what's franchising? And I said, I don't know what it is. I've never done it before, but I've heard how it works. And I believe if we could convince someone to buy in and own a territory, the outcomes would be vastly different. And that was in 2004. And we sold our very first franchise in August of 2005. And it was while we were in the middle of doing an AB test. And what I had done is I had taken my main competitor in painting

Starting point is 00:03:09 and I copied their website. And then I took a brand that I felt would be a high-end brand and I labeled it that. So it was called Paintworks. And I, and I tried to make sure that this brand mirrored what my competitor looked like. And then I started with a company called Five Star Painting. And I said, if I were to do Five Star Painting differently, how would I do it differently to compete against that brand? And for that whole year in 2004 to 2005, we ran ads. We did campaigns with the different versions of it. And we A-B tested two painting companies.

Starting point is 00:03:44 We ran both of them in simultaneous or full year. And we found after that year that our advertising program at Fiserv Painting outperformed four to one, our paintworks program. So we realized we had something. And while doing that very first test, a man named Alan Turner, my very first franchisee six foot four kung fu

Starting point is 00:04:07 black belt he's still a good friend he saw a lawn sign called up and said it looks like you guys are franchised I'm looking at buying one is there any available and needless to say August in 2005 we sold our first deal. And that became the, you know, the, the moment of truth for the entire company in, in that year. And we quickly became a very fast growing franchise system, taking advantage really of kind of the shift of the whole world from print and yellow page media to online and, and kind of syncing up with my own coming of age, if you will, in business and, and being an online marketer. And it just resulted in this, you know, transformational event that was, has been amazing for us.

Starting point is 00:04:52 It's funny you mentioned that because I remember 2004 sitting around with a bunch of franchisees and everybody going, okay, what do we do with what's this, this online thing versus the yellow pages ads. And there was like, we need to spend money on yellow pages and, and everybody, you know, half of the room's going, no, I think there's something to this internet. So, um, that's kind of fascinating. So take us through the growth and then you guys exited five-star painting at some point, didn't you? We did. Yeah. Uh, so, you know, really, I, I really i i don't so much in business i think is luck right but i think so much of entrepreneurship is being willing to take risk yep right like it's one thing to i lived in a moment in time in 2004 through 2009 where i think almost any business could be successful there's just so many tailwinds. The internet was coming of age and

Starting point is 00:05:45 we just happened to kind of come to life in that moment. And so Five Star Paintings, we were selling 15, 20 units a year off of internet marketing only. Wow. We didn't even know what brokers were. I didn't know they existed. So the idea of using an agency to help us find candidates was very foreign to us. But we understood internet marketing. We understood pay-per-click. We understood how to do yellow pages.

Starting point is 00:06:08 We could combine all that. And it resulted in some phenomenal growth. We were one of the fastest growing companies in Utah for years. And we made it through the recession where we kind of tested our mettle and we became battle tested as an organization. And we realized so much more about the industry and how to survive and thrive in different environments. But that was a defining moment for me personally. It's where you build an asset like, in our case, Pfizer painting.

Starting point is 00:06:39 And it became valuable. In fact, very, very valuable. And then you go through an external event like the recession, the Great Recession of 2009, 2010. And you realize that no matter how good of a business person you are, sometimes an external event can knock you off your horse and not everyone gets back up. And in fact, we witnessed it in that period of time. Luckily for us, we survived. But it shook me enough to think if 99% of my net worth is tied up in one asset, should I consider taking some chips off the table? You know, I've worked hard.

Starting point is 00:07:11 Our family has sacrificed. And it would be a shame to have done all that hard work and not to have taken full advantage. And so we, in 2014 and then sold in 2015, sold Pfizer Painting to, at the time it was called Dwyer Group. It's now called Neighborly. It was backed by Riverside as a private equity firm. And it was my, I had a couple of business sales along the way that I'd owned outside of franchising that I did okay with.

Starting point is 00:07:35 Once again, base hits, maybe second base and, you know, created some wealth. But Five Star Painting really was this kind of defining moment where, you know, I could retire. And so we sold to, to neighborly and, or to Dwyer group, but it opened my eyes to what was possible. And when we sold, we didn't, I actually said to him at the time, Mike Bidwell, who has since passed, unfortunately, um, he was the CEO at the time. I said, Mike, I, I'm not selling me because I don't love this business. I don't believe in this business. It's simple or the,

Starting point is 00:08:10 the model or franchising. It's simply, I need to take some chips off the table and make my family, put my family in position where we're, you know, we're set. And so I said, Mike, let me roll as much as I want to roll as much as you let me. I don't need the cash. And so we and my co-founder, we rolled 60% of the sale into neighborly and took it neighborly stock. We were the very first company they let in as shareholders at that time. And before then it would all, they just bought them all with cash and we convinced Michael to let us do that.

Starting point is 00:08:42 It was the best decision I made. It added a zero to the exit over the next seven years. So my mind just kept expanding about the potential and opportunity that existed. And so when we sold Five Star Painting, we kept Five Star Franchising, which is the holding company. And I had another brand called Five Star Bath Solutions.

Starting point is 00:08:59 It's a bathroom remodeling business. I had another company called ProNexus, which is a call center and lead gen agency. We call it customer experience. We support home service brands and finding leads and then turn those leads into customers. And so we kept that as a five-star franchising and we grew it, but I was still kind of figuring out, do I want to go big or do I want to retire? Do I want to go lifestyle or do I want to go big? You know, that those competing interests.

Starting point is 00:09:27 I took some time off, took the family to Europe for three months, lived there for in France and in Spain and enjoyed that time, came back and realized that I wanted to go big. I wanted to build a billion dollar company that was absolutely focused on my mind in terms of what we could achieve if we did it right. And we ended up partnering with Private Equity in 2021. Bicer Franchising partnered with Princeton Equity Group. They're specialists in private equity and home services and franchising. And we went to work and we bought five businesses over 2021 to 2023. We now have six brands. We do about 280 million

Starting point is 00:10:06 system-wide sales, 900 locations, and are actively acquiring more brands today. And so it's, you know, we're pursuing the dream and having a lot of fun doing it. That's great. What, give me an example of some of those brands. Yeah, sure. So Five Star Bath Solutions a, it's like a one day bath. We come in, tear out the wall system, put a new one in, uh, we have mosquito shield, which is like pest control. Okay. And we help people take advantage of their backyards without being eaten alive. I come from Winnipeg, Manitoba, Canada, where the provincial bird is a mosquito. So they, they are just like, that's a brand that has a special place in my heart like we are

Starting point is 00:10:45 we're helping people survive some of the uh these uh these pests uh and there's about 350 locations in that brand okay and then we purchased gotcha covered blinds which is based out of denver and they do windows and wall coverings 16 locations. And we have three specialty restoration brands. One's called Bio One, also based out of Denver, and it specializes in biological cleanup. So think meth, fentanyl, crime scene, that kind of thing. Super unique business, very high margin. The motto is help first, business second.

Starting point is 00:11:21 They are helping people in many cases on the most difficult day of their lives. You know, their grandma's passed away. Something's happened and they need our services to clean up after. And then we've got 1-800-PACKOUTS and 1-800-TEXTILES. And those two brands specialize in if there's an event, a fire or a flood event, they come in, pack up your belongings, put them in storage while the restoration company restores the premises. And then they send those belongings to one hitter textiles if required to be cleaned from smoke or water damage. And then they pack it back in when the job's done. Wow. I mean, it sounds like a lot of very helpful, very necessary brands. So that's,

Starting point is 00:12:02 that's pretty cool. I mean, this is not this is not, Hey, I just want to, you know, remodel something half the time. It is literally you're changing people's lives and helping them out of some difficult situations. So that's pretty fantastic. Yeah. And it's, which is kind of our thesis. When we buy businesses or our brand, they tend to be between a hundred and $150,000 to start. So lower cost of entry, they tend to be between $100,000 and $150,000 to start. So lower cost of entry. They tend to be highly recession resilient. You know, fires and floods and deaths and these things and pests, they happen whether the economy is up or down. And so these brands tend to do very well in all these environments. And so it's, you know, we, we've been selective. We're very careful and

Starting point is 00:12:45 we're always looking for brands that specialize in something, our market leaders in a category that we feel could do well in any environment. Great. And now let me ask you, let's get into some of the business mechanics here, because I mean, given that many locations and multiple brands and you and I have seen kind of the different challenges in the ZZor relationship or in the Z operations or the Zor operations. What do you think? Obviously, we're going through more changing economy. The one thing about franchising is it's always changing. There's always something happening out there that you have to consider and think about. What are some challenges that you've seen franchisees overcome in adapting to, you know, you and I talked about going from

Starting point is 00:13:31 yellow pages to internet, things of that nature. What are you seeing now and how are those franchisees overcoming those? Yeah, great question. You know, there's in the last few years in the home services category, in general, labor has been an issue, finding the talent to do the work. Okay. And so for the brands we've purchased, they tend to be a lower ratio of laborers to the work itself. That's how we've solved that problem, frankly. But in home service franchising, finding licensed and capable laborers has been an issue. I actually believe personally that franchising solves that problem. People want to work with a winning company, with a winning brand. And they just want to do their trade and keep their customers happy.

Starting point is 00:14:21 And so I find that franchising actually helps solve that problem. They want, people want to buy from brands and they want to outsource that, that service to, to an organization like ours. So I think franchising actually is an answer to, in general, tailwinds and trends that are happening where homeowners no longer want to do the work themselves. They want to buy from trusted brands. and so you're seeing in general consolidation of you know chucking the trucks that exist out there to more brand focused uh systems which is why franchising is an answer in my view to what's happening in the marketplace now the other challenges that are that people are seeing is you know corporate america needs to make money i don't know if you knew that or not, but they really do. I've heard. Yeah.

Starting point is 00:15:06 And they love their profit. And if you're an oligopoly and you tend to own 80% of search, you have the ability to just raise your prices and no one can do a thing about it. in general, in services businesses where customer acquisition, the cost of acquiring customers are going up. It requires way more creativity, way better content, way better solutions in general for our franchise owners to find their customers than they had before. In 2005, I could do a PPC campaign and acquire a customer for $20. It's now, in many cases, $200. So that, that in general, that shift is once again, pushing customers more and more towards brands, more and more towards brands that have an online presence that can demonstrate to customers our ability to get the work done and have and be trustworthy. And so that franchising is an answer to that problem as well. But as a franchisor, you know, we're seeing it and we're seeing that across all of our brands

Starting point is 00:16:06 and we're putting special attention to programs that help our franchisees acquire customers. Awesome. And with respect to your franchisees or the Chuck in a truck or a single unit owner operator, is there anything in particular that you're seeing or saying that causes regular success to continue to grow for these people? Yeah, there's, you know, there's a, in general, a franchise or in my view, a franchise of responsibility is data driven. And we look for trend lines, right? So we look at a whole brand,

Starting point is 00:16:48 we're trying to find these little peaks where people are seeing big successes. And we're trying to extract from that and saying, okay, this person's using this lead gen source, this person's using maybe this social media source, you know, and different tools, and then pulling up from that and saying, okay, now take this program and duplicate it over here. So as a franchise, it's our responsibility to help the franchisees find the wins quickly and then duplicate those in a way that helps them be more successful and increase probabilities of success. So, you know, we're seeing, for example, financing has become a big part of the remodeling

Starting point is 00:17:27 industry and so bringing in easy to use financing programs that are that are low cost helps our franchisees close our business so at our bathroom brand almost a quarter if not 30 percent of all the bathrooms we install are a seller you know finance program. And so if you create, that's a program that comes with being part of a brand, it's very hard for a small business to tap into something like that you need to be qualified and be of significant size, we add value to the franchisees by being able to get those programs in their in their hands and those tools

Starting point is 00:17:58 help them close. Other in other cases, we're seeing wins around social media becoming way more relevant in search. So TikTok, Instagram, Facebook, and so forth. And so once again, like the, the tool sets, what's become more challenging than ever before. And which is what I think is an opportunity for franchising is there are more and more ways for people to find your service than ever before. You know, back when when like we mentioned 2004 is

Starting point is 00:18:25 direct mail and it was yellow pages okay and lawn signs now it's direct mail yellow pages lawn signs facebook instagram social media you know snapchat and then people ppc and yahoo and and on and on and on and on and so the the amount of noise out there is just getting bigger our responsibility as a franchise order to help cut through that noise, find the programs that work and deliver those programs to the franchisees and social media, Facebook, Instagram is one such tool set that has come on the scene in the last three,

Starting point is 00:18:56 four years. It's working for us. Okay. What, um, you know, it's interesting when you, you talk to a lot of franchisees, a lot of different franchise companies, you have your own podcast, things like that. Is there any particular business tip that, you know, if you wanted one person or one thing that people take when they walk out the door from, you know, let's say Scott Abbott is up on stage at this franchising conference talking and you want to close with a great business tip to franchisees and franchisors,

Starting point is 00:19:26 what would that business tip be? Oh, think big. I love that. Think big, dream big. Like we, every one of us individuals are capable of doing so much more than we ever realize. And we see within our 550 owners that own 900 territories

Starting point is 00:19:48 right i've got some owners that are growing at a pace that would blow your mind i have one owner in particular that's growing at between 50 and 60 but he's doing eight million dollars a year right so he's growing from eight to 12 and some owners would some people think well 8's the apex i'm the i'm the biggest there is i'm not gonna get better than that no no no no this owner his mindset is just so expansive in terms of what his possibilities are that every year he does something well beyond what was ever done before. And I've been told, and I believe this, I'm a pretty devout Christian. I do my, you know, it's been part of my life and I've given a lot to my community, my own faith. And I believe that hell is that moment when we go to heaven and we see who we could have become

Starting point is 00:20:41 and we didn't attain it. that's actually the the moment of not fulfilling our our potential and wherever we are can can we lift our gaze a little bit and think bigger and if you do that you tend to move into that space if we become you know read the news too much and spend too much time on negativity, then it just, it, you start to see that in results. So I would definitely tell anyone that, you know, you are so much more, you're capable of so much more than you think you are. That's amazing. I mean, and it's such a great tip because, you know, we, we get up every morning. If you're a franchisee, a lot of times you're the owner operator and you get up and you go grind. And sometimes you get head down and mired in the,

Starting point is 00:21:24 you know, how difficult the work is, or you're overwhelmed, or, you know, there's maybe there's a traffic jam on your way to your appointment. So everything is late for the day, things like that. But I think if you take and reflect on what Scott just said about think bigger, it opens so many new doors. So thank you for sharing that amazing piece of wisdom. I have a question for you. You've got 20 years in franchising, a ton of experience,

Starting point is 00:21:52 built a whole bunch of businesses, acquired a whole bunch of experiences and experience in the process. Scott Abbott, CEO and co-founder of Five Star Franchising. How do you start your day with a win? That's a great question. I'm a big fan of doing really hard things at the very first part of my day. So as an example, a cold shower. I live in Utah. We're at 4,200 feet elevation. The snow-capped mountains are there in the background. When I turn that cold shower on, it's around 50 degrees, 48, 50 degrees. It's very cold. And before I walk into that shower, my mind's telling me and screaming at me, don't go in there. It's really cold. And it's been very, very uncomfortable. And I embrace that. And I view that as if I do the hardest things at the beginning of the day, then later on

Starting point is 00:22:51 the day, the tough things aren't so difficult. Making those hard decisions or doing those things that maybe you don't want to do, you can just, you lean in and you get it done. And I love it. It's, I don't know if you've heard of a book called what doesn't kill you, makes you stronger by Scott Carney. And he follows a guy named Wim Hoff who does a lot of this cold, you know, cold and breathing exercises and so forth. And I'm, I'm a big fan, do the tough things, do them the very beginning of the day, get them done with. And it just makes the rest of the day so much easier. Awesome. Do the tough things. I've heard

Starting point is 00:23:22 it called eat that frog. So, you know, nobody wants to eat a frog, but I guess if you have one in front of you and that's the tough thing, then you go after it. So anyhow, Scott Abbott, Five Star Franchising. Thank you so much for being on Start With A Win. We appreciate all you do. I look forward to seeing you around in the franchising community even more. You're super involved in helping people grow their businesses. Like Scott mentioned, if you have one of those home services businesses, like what he's talking about, feel free to reach out to him. He also has a great podcast. Scott, what's the name of your podcast? It's called the Home Services Summit. And you can go to YouTube. There's a channel that has all 35 episodes. Awesome. Make sure you check that out. And Scott, thanks for being on Start With A Win. Great to be here. Thank you.

Start With A Win - Franchise Triumph: Unveiling Five Star Franchising's Secrets with CEO Scott Abbott

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