Q&A with Lani Dolifka, Co-Founder of Watermill Express, the Nation’s Largest Provider of Drive-Up, Pure Drinking Water

Watermill Express is the nation’s largest provider of drive-up, pure drinking water. Customers supply their own containers and purchase water for 25 to 35 cents per gallon. Watermill Express is an environmentally friendly alternative to pre-packaged water. By promoting reusable containers, the company prevents the waste of millions of disposable water bottles each year.

The company is conducting a multi-market test of a new concept it calls Waterocks® Ice, which is a natural extension of its core product. Its ice tastes deliciously fresh and clean because it starts with pure drinking water.

Lani Dolifka, co-founder of Watermill Express, started the company with her husband Don when she was a sophomore in college.

Franchise Chatter (FC):  Can you tell us how Watermill Express got its start almost 30 years ago?

Lani Dolifka (LD):  The idea for Watermill Express came about almost 30 years ago when Don and I learned that our local municipal drinking water had been declared unsafe for pregnant women and infants. We decided to take action and provide a solution by developing an automated small-scale water purification plant that converted our existing tap water into exceptionally pure drinking water. With the help of family and friends, we created a system to produce clean drinking water, as well as an eco-friendly and economical model that allowed customers to bring in their own containers to help reduce disposable bottle waste and save money.

We opened the first location at a nearby car wash, and offered the water – free of charge – to patrons waiting in line. While at first no one would even try this exceptionally clean drinking water, the idea was soon embraced, and Watermill Express was born. We realized the value that
this service provided, as well as the strong business model it presented, and decided to pursue this business venture full-time.

FC:  For those unfamiliar, please tell us how the Watermill Express business works? What products do you sell and how do you sell them?

LD:  Each Watermill Express kiosk incorporates a 12 step system called the 12 Step Water Perfection Program, which ensures superior water quality and a great customer experience. This includes an 8 step purification system including reverse osmosis, 24 hour computer monitoring, an antimicrobial dispensing cup, and daily service by our staff, to name a few. Some of our competitors only clean and service their machines every 7-14 days, some even less than that.

Although our daily service and computer monitoring requires extra resources, we feel it’s critically important and we’re the only company in the nation to provide this level of service to our customers. We have people call in who thank us for taking such good care of the location where
they purchase their water. That says a lot for customer satisfaction at an unattended machine.

Customers bring their own clean containers to any of our 1,300 Watermill Express locations and fill their bottles with delicious, pure drinking water. Prices range from 25 to 35 cents per gallon.

FC:  How is your offering better than bottled water that is now available practically everywhere? How would you rate the level of competition in this line of business and how are you able to compete?

LD:  With Watermill Express, not only are you getting exceptionally pure drinking water, but our system makes this a product that helps customers save money and is an environmentally friendly option. By developing one of the country’s first reusable container concepts, we have saved an estimated 500 million plastic bottles from the country’s landfills and this number continues to grow as more and more people discover the benefits and ease of purchasing Watermill Express water. Simple changes in our purchasing habits can reduce the amount of trash we produce as a nation.

This industry can be competitive, but our model has created a platform that makes it much more affordable for customers, compared to competitors. What also really separates us from the competition is that each of our Watermill Express kiosks are serviced daily, and monitored
around the clock. We don’t wait for something to break or go wrong before we service our machines. We are proactive to ensure that our customers receive the same high level of quality in every gallon they purchase.

FC:  Why did you suspend your franchising program for a time, and why have you decided to resume offering franchises? How many franchised locations do you have currently?

LD:  We suspended our franchising program because we wanted to focus on developing more company locations. We have recently decided to begin offering franchising opportunities again because of the growing awareness and call for safe, affordable drinking water, and doing so in an
environmentally friendly fashion. We want to extend our services to other parts of the county, and franchising is a great way for us to do so.

We currently have just over 300 franchised locations.

FC:  Under your franchise business model, what are the primary responsibilities of your franchisees? How do your franchisees make money? What are their major expenses?

LD:  Our franchisees hire and manage a staff to service machines every day and respond to customer service requests. In addition to the daily service, there are other levels of service requirements – weekly, monthly, yearly, etc. We also encourage our franchisees to participate in the community, by supplying water to local events.

We have created a proprietary monitoring system, which allows our franchisees to manage a number of locations cost effectively from one home base; thus, they are able to own multiple locations over a wider territory, if desired.

The largest expense is the construction of the initial location. This can vary from location to location depending on local factors such as utility connections and requirements.

FC:  What is the ideal location and geographic territory for a Watermill Express franchise?

LD:  We look for areas in which people are searching for an alternative option to their tap water. We choose physical locations that are most accessible for our customers, including parking lots of shopping centers, strip malls, convenience stores, or car washes. With each water kiosk only taking up the area of a single parking space, this is an easy addition that current property owners can add as an additional source of revenue.

FC:  What are some common characteristics of your top performing franchisees?

LD:  They truly care about the water they are providing customers and go above and beyond to make sure every location is serviced daily. Our top franchisees are also those who know how to build the right staff and manage people well.

FC:  What can you tell us about the estimated initial investment, royalty fee, and profit potential for a Watermill Express franchise?

LD:  The initial investment for a water-only station is $53,200-$137,900 and our royalty is 8%. We also have a special program to honor our military men and women where we will waive the entire franchise fee for qualified Veterans.

FC:  Can you name a few franchises (inside or outside your category) that you admire, and why?

LD:  I think Noodles, another Colorado-based franchise, has a great concept and was one of the first to create a fast, fresh, diverse, and affordable menu for customers.

FC:  What are your growth targets for Watermill Express in 2012, and beyond? Which regions of the country are you targeting for expansion?

LD:  By the end of 2013, we hope to have over 200 water/ice locations in operation. In addition, we hope to open 50 additional water only locations. We are continuing to develop in many of our existing locations, but will also be expanding in new markets across the country.

FC:  Is there anything else you wish to share about Watermill Express?

LD:  Over the last 30 years in operation, we have been very lucky to work with a dedicated staff who have helped shape and form this company as much as we have. They are committed to the mission of providing safe, affordable drinking water. We consider everyone at Watermill Express part of our family and we are looking forward to adding more dedicated franchisees to the team.

For more information, call 1-800-487-9643, visit www.watermillexpress.com, follow them on Twitter, or connect with them on Facebook.