Having enabled its franchisees in New Zealand to build £2m+ turnover businesses, find out how you could join the home renovations chain in the UK and achieve similar results.
Franchise: Refresh Renovations
Description: Home renovation – offering a start to finish all inclusive service
Started in: 2010
Founders: Jon Bridge, Chris Caiger & Barry Bloomfield
No. of franchises: 50
Coverage: UK, New Zealand, Australia, USA
Average cost per franchise: £35,000
Founders Chris Caiger, Jon Bridge and Barry Bloomfield established a business strategy and marketing specialist called Traffic in 2001. Traffic quickly became the leading business growth specialist in the New Zealand building industry.
Traffic works with international corporate companies, helping them grow and market their businesses.
Following years of research and launching growth initiatives for other companies, they took the opportunity to use their Traffic know how and resources to set up and launch Refresh Renovations in 2010.
The mission? To transform the renovation sector by introducing a new business model run by commercially oriented people…
Moving into franchising
So how did you move into franchising ?
Refresh does not have the typical background for a franchise.
Most franchises start with a small business that does well and sees franchising as a way to grow. They have to learn the business, marketing and strategy skills required to roll out a new business.
Refresh started as a business and marketing company specialising in the building industry. We already specialised in researching the market for opportunities and launching new business models.
We have a large staff of specialists in business strategy, marketing, web, social media and IT development to develop and support growth. Not many corporates, let alone franchise operators, can offer this level of support.
We moved into franchising because we had the research to see the size of the opportunity and the know how and resources to establish a transformational new business.
Where did the business open its first franchise?
We piloted the business in New Zealand to validate and evolve the model. Once the business was proven and we had national coverage in New Zealand we rolled out the model in Australia to confirm that the model was meeting an international need, the franchisees were successful and that we had the capability of running an international operation.
How successful were those original franchisees ?
The original concept in the pilot phase was to provide existing builders with marketing and business processes and coach them to be more business oriented.
They quickly grew but not enough of them were able to adopt the necessary business mentality to achieve the growth targets we wanted.
As a result of the pilot, we switched our model to recruit commercially oriented people to own and run the business and they in turn employ the builders to run their construction team. This is a great outcome for the builders as they can focus on what they are good at and enjoy most – running the building side of the business.
The revised model has been very successful and has underpinned continued growth for franchisees and the business overall.
The franchise opportunity
What makes the franchise different/unique?
Refresh is the only nationally branded renovation building company. There are plenty of large specialist trade companies but no other full service renovation building companies.
The competitors for Refresh are thousands of small trade operators but they don’t have the marketing, processes ot IT systems that makes Refresh appeal to a large proportion of the market.
The Refresh offer is to provide homeowners with less risk of budget blowouts, better communications and better service than the traditional builder. We are able to do this because we recruit the right people and have developed processes to achieve this. We have built IT systems to ensure they are consistently delivered.
What services do you offer?
All types of home renovation … including kitchens, bathrooms, extensions, lofts, basements etc.
Embarking on your own home renovation project can be a daunting experience, Refresh Renovations offers a fully inclusive ‘Design and Build’ service that is dedicated towards providing a smoother and more transparent experience.
How big is the market opportunity?
The UK the home renovation market is £26bn (ONS data) and rising.
The 3% increase in stamp duty in December 2014 has put even more focus on home renovation as the cost of moving has become so expensive.
How many franchisees do you have today?
50 globally, and currently there are two franchisees in the UK who started at the end of 2017.
How is the brand marketed?
The brand is marketed via a variety of mediums, some managed by head office (web-based including paid online campaigns), magazine, mail shots etc. as well as by the franchisee at a more local level, where the franchisee follows a detailed marketing plan that has been discussed and agreed with head office.
How do you divide the regions?
Franchisees operate within large territories based off ONS data that represents the known renovation activity of each local authority.
The perfect franchisee
What do you look for in potential franchisees?
We look for people with more of a business or commercial background (as opposed to a building /trade background).
The critical skills that we’ree interested in are people that are able to demonstrate the following:
- relationship management (both with the client and within their own team),
- leadership (the ability to build and manage a team)
- good communication and negotiation
- sales and marketing focus
- genuine self starters
- entrepreneurial spirit
Many people currently in corporates have these skills and Refresh is one of the few franchise systems where these skills are transferable to running their own business.
Refresh has the processes and systems corporate staff are used to being supported with; we need the people who have the skills and attitudes to use them.
So do franchisees work from an office, or are they home-based? Is it part-time or full-time?
To start their business the franchisee can be home or office based, but as their business grows it is likely they will want to take on an office.
That is entirely their decision and will be aligned with the performance of the business and the future aspirations of the franchisee.
How are franchisees vetted?
Franchisees are vetted via a combination of factors:
- telephone screening prior to being invited for a presentation
- Nathan Profiler – an online questionnaire to assess franchise suitability
- business acumen
- our assessment in terms of their ability to represent the brand and operate as a pro-active member of the growing network of franchisees
How much do franchisees pay and what are the ongoing franchise fees?
The franchise fee is currently set at an introductory level of £35,000 + VAT, with £10,000 being recycled back into the franchisee’s local marketing budget.
The ongoing costs relate to a 6% franchise royalty (on gross sales) and 1% national marketing fee (on gross sales). Set amounts being paid towards local marketing, I.T. and a management service fee.
Franchisees who sign up are offered full and comprehensive training, which is ongoing and also offered to new members of their business.
They also benefit from support relating to producing business and marketing plans with regular reviews scheduled to ensure they are kept up to date and are being delivered upon.
Success and growth
How successful are some of the franchisees today?
Franchisees in New Zealand who have over four years experience under their belt are hitting £2m (equivalent) in turnover with net profits of 15-17%.
From what we have seen so far there is nothing to suggest that the home renovation market in the UK is any different in terms of the scale or the economic drivers underpinning it.
How is the brand looking to grow?
The brand is continuing to consolidate its foothold in the New Zealand and Australia where it can claim to be the largest home renovation specialist in each country, as well as expanding to the UK and USA.
In the UK the ambition is create a national network of franchisees who will be able to claim that they are part of the ONLY franchised offering in their sector.
What is the potential of the business?
There is no reason why UK franchisees cannot match, if not exceed, the performance of their New Zealand and Australia counterparts in creating businesses with £2m+ turnover.
What will the challenges be in achieving that?
There are a lot of similarities in the New Zealand, Australia, UK and US markets:
- the construction sector is broadly equally split between home renovation, commercial activity and new home build markets
- high levels of home ownership and a growing housing stock means the market is continuing to grow
- there are no other national operators in the home renovation market
- there are no other franchised operators in the home renovation market
The biggest challenge is finding the right people, who share our vision, and who want to be part of creating something new in the UK.
What awards has the business won?
In the early days we entered various awards to establish our credibility but, as we now have strong evidential business results, we rely on those rather than entering awards.
- Winner: TVNZ Transformational Marketing Award
- Platinum: Marketing effectiveness summit awards 2015
- Winner: Best emerging franchise awards 2015
- Deloitte Fast 50 Award identifying Refresh as one of the 50 fastest growing companies in NZ.
- 2013 Interactive Media Award Winner: Best in Class
- Summit International Marketing Effectiveness Platinum Award Winner 2012
- NZ Marketing Awards Judges Choice Award Finalist 2012
- NZ Marketing Awards Emerging Business Award Finalist 2012
- NZ Franchise Association Business Service Provider of the Year Finalist 2012
- Summit International Creative Silver Award Winner 2011
To what extent are the founders involved today?
All three founders of the business are still actively involved in the running of the global business, two of whom are Brits who emigrated to New Zealand over 20 years ago.
Finally, is the company a British Franchise Association (BFA) member?
Not yet, but we are actively working with them and it is our full intention to join after our initial franchisees have been up and running for the minimum qualifying period.