Amy Nichols founded Dogtopia in 2002 when she combined her keen business sense with her lifelong love of dogs. It was the first dog daycare business in rapidly expanding Fairfax County, VA and Amy predicted that busy professionals, facing long commutes and hours away from their homes, were in great need of an alternative to leaving their beloved dog at home alone all day. The company started franchising nationwide in 2005.
In addition to all things dog, Amy is passionate about entrepreneurship and promoting women business owners. She is a proud member of the Women Presidents Organization and the National Association of Women Business Owners. She is also a regular speaker on entrepreneurship, franchising, and small business at conferences across the country.
Franchise Chatter (FC): How did you come up with the idea to open a daycare and spa for dogs back in 2002?
Amy Nichols (AN): I was working very long days and felt guilty that my Boston Terrier, Griffin, was home alone all day long. He was bored and even started eating my favorite shoes. After a long day at the office, he wanted to play and I was exhausted.
I started looking into dog daycare because I realized he needed the socialization and exercise while I was at work, but there were no options near my house in the suburbs of Washington, D.C. So I began researching dog daycare and “open play” environments for dogs. I did a ton of research online, read every book on dog behavior and pack management that I could find, and attended several dog behavior and training seminars.
A few months later, I decided to leave my corporate job and make a go at opening my own dog daycare business. About a year later, I opened the first Dogtopia in Tysons Corner, Virginia.
FC: What are some of the key milestones in your company’s history to date?
AN: In 2004, our second full year in business, my Tysons Corner location hit $1 million in sales. This is a huge milestone for any company, but being a woman business-owner and a new mom striving for work-life balance, this was an extremely meaningful milestone. I knew that I had something really special.
Opening our second Dogtopia location in White Flint, Virginia in 2006 was also a significant milestone because it enabled us to create more of a management team for the business, and also provided more office space for our franchise team and a site for training.
In 2007, we signed more than 20 franchise agreements and the majority of these opened in 2008.
Most recently, in 2012 we announced a strategic partnership with Thomas Franchise Solutions (TFS). With this partnership, we plan to expand to 400 locations across U.S. and Canada over the next seven years.
FC: What is your reading of the current state of the pet services industry, as well as its growth prospects? How competitive is the field?
AN: According to the 2011-2012 APPA National Pet Owners Survey, 62% of U.S. households own a pet, which equates to 72.9 million homes. At Dogtopia, we have so much room to grow. We look at the number of dog owners who want our services and recognize this market is very underserved. Now with our partnership with TFS, we have unlimited potential to expand.
FC: What are you looking for in a prospective franchisee? What are the typical day-to-day responsibilities of a Dogtopia owner-operator, particularly during their first few years in business?
AN: We’re seeking regional developers and franchisees who love and care about dogs and are also business savvy. Candidates should approach Dogtopia from a business perspective — be motivated to be profitable and grow their business, as well as share our company values.
Regional developers are responsible for growing their respective region by either opening and managing their own locations, or recruiting franchisees for their region.
Franchisees spend their time overseeing daily operations in the store as well as promoting it in their communities. Most of our franchisees employ full time managers so they can focus on growing the business.
FC: What is the ideal location and demographics for a Dogtopia daycare and spa? Can you describe your target customer?
AN: Our ideal Dogtopia location is about 6,000 sq. ft. and can safely accommodate 75+ dogs. We prefer locations on commuter routes so that customers can drop off their dog on their way to work. We typically look for industrial flex space near highways that are easily accessible.
The typical Dogtopia customer tends to have a college degree and an income of over $60,000 per year. They consider their dog a part of their family. Our clients are also very Internet savvy. In fact, 90% of our customers find us online and the other 10% from referrals.
FC: What are the staffing requirements for a typical Dogtopia location?
AN: A mature Dogtopia store typically has 12-15 employees. Our franchisees attend a mandatory two-week training at our home office and are required to bring at least one employee who also learns how to operate the business.
We utilize a layered training methodology beginning with classroom training on items such as dog behavior, pack management, and proper canine health and safety standards. Franchisees are then taken into actual playrooms for hands on learning and practical application of techniques learned in the classroom setting.
A combination of reading, writing, and exercises, along with practical hands on application, is used in all areas of training including customer service, sales, human resources, and overall employee management. Our franchisees also become certified in pet CPR and first aid as part of our training program.
FC: What are the most popular services offered at a typical Dogtopia location? What are the major expense items in operating a dog daycare and spa?
AN: Our most popular and consistent service is dog daycare, which generates about 65-70% of revenue. Demand for boarding usually increases during the summer and the holidays when people tend to travel. Rent and payroll are the biggest expenses.
FC: What are your top performing franchisees doing differently from other franchise owners in the system?
AN: The biggest common denominator is they hire a manager very early on to run the day-to-day operations. This allows franchisees to focus on growing the business and marketing efforts. At Dogtopia, we encourage hiring a manager from the beginning so the franchisee doesn’t feel chained to the store. We feel it is important to network and become deeply involved in the community, and this is only possible with the help of a manager. With this balance, we have found that the franchisee is usually happier and grateful for making the investment.
FC: What can you tell us about the estimated initial investment, royalty fees, and profit potential for a Dogtopia franchise?
AN: The average investment is about $350,000, including the franchise fee of $42,500. We have three locations that have annual sales of more than $1 million. The average unit volume for a store that has been open for 37 months is $633,000; the average for all stores is $570,000.
FC: Please tell us about your strategic partnership with Thomas Franchise Solutions. What are you planning to do with the additional investment capital?
AN: By partnering with TFS, Dogtopia is now poised to become the leading dog daycare and spa franchise in North America. The TFS partnership enables us to strengthen the Dogtopia brand by investing in a new system-wide point-of-sale system (POS), an online university to enhance training, increased national marketing efforts to drive brand awareness and sales, and additional home office team members to enable superior support. Furthermore, a greater emphasis will be put on accelerating Dogtopia’s retail offerings to help drive store revenue for franchisees.
FC: What are your growth plans for Dogtopia in 2012 and beyond? Which regions of the country are you targeting for expansion?
AN: Through our new regional developer model, we’re targeting the top 30 major metropolitan areas, and cities where we already have locations. The founder of Thomas Franchise Solutions, Peter Thomas, is Canadian so we are also focused on expanding into Canada. Our goal is to bring on four regional developers within the next year, and six the following year.