For Chem-Dry, the world’s leading carpet cleaning company, the last year has been a time of significant change and continued growth. Already one of the largest and best-known brands in franchising, with more than 3,500 units in 47 countries worldwide, Chem-Dry continues to expand in domestic and foreign markets.
Recently, the company has focused on opening U.S. franchise locations east of the Mississippi River, where its presence is more sparse than out West. Chem-Dry was founded 35 years ago in Logan, Utah, a town of 48,000 people, where until recently the company kept its headquarters. But this year, new President and CEO Dan Tarantin decided to move much of Chem-Dry’s operation to Nashville, Tenn., a larger and more
accessible location for the Eastern entrepreneurs Chem-Dry wants to attract.
Tarantin, the former President and CEO of Jackson Hewitt Tax Service and a former franchise executive with Coldwell Banker and Century 21, took over leadership of Chem-Dry in November 2011 after his investment group purchased it, and is thinking big about the franchise’s future. Chem-Dry already accounts for 7 percent of the spending worldwide on carpet cleaning, more than any other brand in the fragmented market. If you haven’t seen a Chem-Dry truck in your neighborhood, you probably will soon.
Franchise Chatter (FC): Why were you interested in Chem-Dry, and what about it led your group to purchase the brand?
Dan Tarantin (DT): I spent a good part of my career in the real estate industry and in home services. I believe home services, which already has a great track record, is poised for some explosive growth post-recession. Our investment group began looking for well-known home services brands to acquire several years ago.
During the search, I was visiting my mother in New Jersey and noticed that she had several Chem-Dry products in her cabinet. I asked her about it, and she reminded me that we had always used Chem-Dry to clean our carpets and that she really liked how clean the carpets were and how fast they dried. In fact, she wouldn’t use anything else and had been a repeat customer for decades. I couldn’t think of another home services brand that had that kind of staying power, and it got my attention. If it’s good enough for Mom, it’s good enough for me.
We made a bid to purchase Chem-Dry in 2005 and lost out to Home Depot. We kept our eye on Chem-Dry and were very excited to get control of the brand last year when Home Depot decided to sell.
FC: Carpet cleaning is a competitive segment of the franchise industry; what sets Chem-Dry apart?
DT: Two things jump out. For one, we have over 3,500 franchise units, making us one of the largest franchise systems, and we have a stellar 35-year track record. We are currently in 47 countries and we expect to add 100 franchise locations this year.
We are able to do this on the strength of our individual franchise owners, who have achieved some really remarkable accomplishments in their business and personal lives with their franchises. You might not know this, but we have many franchises that are now reaching into their third generations of ownership. We have a significant number of family-owned franchises, we are one of the most sought-after franchises for returning veterans, and we are a really good choice for anyone thinking about starting a new business.
We retain an amazing 96 percent of our customers, and we can do that only because our franchise owners are excellent and work hard to serve their customers and treat them right. I can’t think of better validation that our service is the best out there.
Second, our core products and services to our customers are the absolute best in the industry. Our green, hot carbonated soda water extraction process is legendary in the carpet cleaning industry. Customers love us because we remove more dirt, stains don’t come back, and our carpets dry in just a couple of hours. Compared to steam cleaning, we are a much better option. Try a steam cleaner, then try us, and you’ll never go back.
Also, we were green long before green was popular. Today, green businesses are hot, and we are benefiting from this. Our core philosophy is that all of our products are organic and natural. We don’t use toxic soaps or chemicals. To make this point, at our recent national conference, we all toasted and drank our cleaning solution, The Natural, which essentially is carbonated water. It’s that safe.
FC: What has the past year been like?
DT: Change is always hard, especially in a well-run franchise system. I’m a veteran of some large real estate franchise systems, and franchising is a relationship business. Successful franchise systems have healthy franchisee relationships and profitable margins for the owners.
We’ve spent the past several months really listening to our franchise owners and paying attention to what they have to say, getting their feedback on what we can do to help them build more profitable businesses. Chem-Dry has a much longer average tenure than most franchise systems. Well-run franchise systems keep owners for an average of seven years. Our owners stay involved for 17, 18 years. They are pros, and their feedback is really important. Without franchisee support, none of the initiatives we have in mind will succeed.
We’ve relocated finance, marketing, franchise recruitment, and our management team to Nashville. The move puts us closer to the East Coast and makes travel easier. As we are planning on East Coast growth, this move makes us a lot more accessible for potential franchise owners. We’ll still keep our facilities in Logan — two-thirds of the staff are staying there.
FC: What does the year ahead look like for Chem-Dry?
DT: It takes momentum to grow a franchise system. Right now, we’ve got great franchise development momentum, and the team, led by our vice president of franchise development, Bill Knight, is expecting to open over 100 new units this year. This should continue in 2013. We’re a really affordable franchise with a great record and excellent franchise owner validation.
On the consumer side, the economy is recovering, and our same-store sales numbers are on the rise. For 2012, we’re seeing a sharp increase in national, corporate accounts. We’ve picked up really good accounts with the Apple Store, Radio Shack, Hallmark Cards, and a wide range of well-known companies that use us both because we are green and because we are good at what we do. I’d expect these corporate accounts
to become about 20 percent of our business by year’s end, really adding to our franchise’s revenue. Not only is the spike good for our bottom line, it’s an encouraging sign that the economy is heading in the right direction.
Our brand will continue to become more well known. One important piece of feedback we’ve gotten from our franchise owners is that during the recession, when all home services saw some decreases, our owners thrived.
All industries go through life cycles of being very fragmented with numerous competitors. Often in crowded spaces, you’ll see a brand emerge that is organized around high trust. The brand that carries the best word-of-mouth and enjoys the highest trust becomes the leader in the space. Chem-Dry is this company in the carpet cleaning space.
As you look at the customer funnel, Baby Boomers are aging, and people are busy. We see more and more people skipping DIY carpet cleaning and not using price as the selector for who they work with. This is why Chem-Dry has such an advantage — a well-known and well-respected brand makes acquiring customers and keeping them much easier.
Our franchise owners saw this when many local competitors went out of business during the recession. Without a brand, without national marketing, and without a sophisticated local lead generation strategy, small companies can’t compete with Chem-Dry.
As we go ahead, you’ll see a lot more aggressive local marketing for our franchisees. The days of the Yellow Pages ad are long gone, and to be a successful carpet cleaner, you have to be an expert at digital marketing.
FC: Why should someone thinking about opening a business consider Chem-Dry?
DT: Look at our franchise owners, and you won’t see large numbers of people who dreamed of being carpet cleaners. You’ll see a lot of talented and very successful business owners who are pillars in their communities. Carpet cleaning is an enormous industry, and it’s got a long history of being an excellent choice for a franchise.
Home services is on the rise, and the next decade looks particularly good for us. Our franchise opportunity is both inexpensive to own and has a good earnings track record. I can’t think of many franchises that you can open for as little as $9,995 down that have the earning potential we do. It’s a great business for veterans, families, individuals with a passion for working with people, and anyone who wants to build a large-scale business.
Lastly, we are proud that our franchise owners are able to build a business that has value and when they decide to retire, they have an asset that has monetary value.