This episode features a special pioneering entrepreneur that is consistently leveling up and chasing excellence and greatness. Scott Abbott, the founder and CEO of Five Star Painting and the current CEO of Five Star Franchising, joins the Level Up Show to drop some bombs related to scaling a startup from scratch to international success. Scott talks about what led him to founding Five Star Painting and the opportunity that he exposed in the market. He then goes on to share how he poured gasoline onto the growth by digging into the unit economics and understanding the ideal trajectory of a franchise location and when and how to provide marketing support to take it over the top. Scott also built a call center that supported the franchise network, and, today, that call center is ProNexis, which does the same for many home service brands in franchising. Scott’s vision and execution are rare and truly special. This episode demonstrates the genuine humility and service he shows up with that clearly translates to leadership and performance from those that he stewards within his organizations.
Today, he is building his next vision of creating the next great franchising platform in Five Star Franchising within the home services space. Five Star Franchising is backed by deal maker of the year award winner Princeton Equity Group and the combination of the two certainly bodes well for franchise investors due to the operational experience and franchising excellence that is made up of the Five Star Franchising platform. Scott speaks to the vision behind the quickly growing home services platform and how the ecosystem of support, resources, and human capital is transforming the way that home service brands show up in the marketplace. This is most certainly an episode that you don’t want to miss.
Our guest goes without exception. He is the Cofounder of Five Star Painting and the home service platform Five Star Franchising. Mr. Scott Abbott, welcome to the show.
Thanks, Nick.
It is a pleasure to have you.
You are one of the most amazing people I know. Let’s go.
Many folks say, “I didn’t necessarily raise my hand and choose franchising. Franchising has a way of finding people” I’m curious, Scott, what is your story? How did franchising find you?
It comes back to the beginning of time in the Five Star world. It was around 2003, and I was at a friend’s wedding, a guy I had known since high school. Some friends of mine who were close friends throughout high school flew in for that wedding from Edmonton, Alberta. One of them, Chad Jones, who is one of the cofounders and still a close friend, was at the time running a basement renovation company.
There was another cofounder whom I had known since 2015. He was running a little painting company called Five Star Enterprises or maybe Gold Star Enterprises. I can’t remember the exact name. We are at this wedding. We are chatting and catching up. I was pursuing other interests at the time and was pursuing an undergrad in business.
The business I had been working on was not working out. It was not coming to fruition. I was looking to do something different. I took a job at an accounting firm called BDO Dunwoody, which I hated all my life. It was my only attempt at trying to fit inside a conglomerate or some large organization where we had to wear suits all day long. It was one of the hardest times. Driving to the office was hell. I hated it. It is a great company. It is nothing to do with the business or the people because the people at BDO were great, and the organization was wonderful. The suits are too stuffy for me. The accounting environment and big offices are not who I am. Recognizing I was plotting my escape.
At this wedding, these two friends of mine were talking about how they were experiencing some real struggles trying to expand their little painting and construction company in Edmonton to Calgary, Saskatoon, and Vancouver. What they had done right was they were aggressive at marketing, but they had, in every instance, a bad example or a bad thing would happen, like the local manager of the operation in Calgary would steal customers. The guy in Vancouver would steal money. There was this constant problem where whomever they put in place in those markets didn’t have an ownership mentality.
As we were talking about this problem, I said, “I’m interested in building something big. Painting was the business everyone needed at some point. Do this with me. I’m going to do some research, and we are going to franchise this thing.” They were like, “What the hell is franchising?” I said, “I don’t know how it works because I have never done it before.”
My dad, years before when I was younger, had been involved in franchising. He was selling or getting involved in sales of a franchise concept called Koya Japan, which is a Japanese franchise fast food concept, and a couple of others. I remember hearing about how it would work and how it was a market or a territory. From that, they built their own business.
I knew the problem we had to solve was we needed to make sure that in every market we had opened up in, we needed to have someone who owned it, someone who had an ownership mentality, paid for it, had skin in the game and weren’t going to go anywhere. We got to work. We painted the house of our first franchise lawyer as a trade to get the FEV written.
This is up in Canada, the Wild Wild West of franchising. Back in those days, it was called the UFOC, not the UFC. It was the Uniform Franchise Offering Circular. It was what it was called in the United States. In Canada, we didn’t have anything. There were no laws. Ontario required something, but Saskatchewan, Alberta, BC, and Ontario, which is where we were starting, didn’t have any laws. We could sell franchises and say what we wanted to say. It didn’t matter. There was no governing law. In order to expand to the States, we needed to have that stuff put together. We started getting to work on that.
It was interesting because as we were working on solving the problem of creating a business opportunity for somebody, we opened up a location in Winnipeg, Manitoba, which is where I was living. We used to have these yard signs out. After every job you do, you put the lawn sign up saying, “Line painting. It is on your truck.” When you are not busy, and there are not enough calls, you plant them on some corners of different streets. It was all hustle back then.
I built a website. I did running tests using this website and phone numbers to find out what was working and what wasn’t working in the marketplace. It is funny how life works. This guy, his name was Alan Turner, 6’4”, black belt in kung fu. He is the nicest man ever. He is soft-spoken but confident. He saw one of my lawn signs. He called me up. He was like, “I wanted to buy a CertaPro, but I found you guys. I think you are better. You paid that full franchise fee as everyone else did. That would make Winnipeg, Manitoba, Canada, our first franchise territory. It happened when I was moving down to Utah to do my MBA and open up some locations down the States.
That was the first sale, the one of many to come, and it was all hustle in those days. What spoke to me, even though I didn’t understand the model well, is giving ownership of that business to somebody and giving them the ability to create their own business. It made all the difference. They now cared about that a lot more than a job. It is a beautiful thing. People are paying to help you expand, and they are committed. It was the perfect model for us.
The fact that your dad was involved with franchising sounds like it gave you the familiarity and confidence to say, “Franchising is a model that we can take this business that is in high demand that people always need, grow, and take it beyond this small painting business.” How did you meet your partner Chad? How did he get involved? How did you guys end up working together?
I’m Mormon or LDS. I belonged to my faith. I have been that way since I was a young kid. I was in this little small chapel in Winnipeg, Manitoba. Chad moved in from out East. He came in from Toronto, and he was eleven years old. A new kid in the block shows up at church on Sunday, sitting beside each other, goofing off, and having a great old time.
That is where we met. I can still remember the day I met him. We became close friends from that day forward, and I always had a lottery spec for Chad. He is such a good person and has tons of fun. He is the person I knew I would want to work with and be a business partner with. He cares about people and wants to be successful. He is open-minded to ideas and aggressive in business. He is positive.
You know how hard business can be. In starting a company, you know how challenging it can be. There are moments in anyone’s business where you can question whether or not it was a good decision. Chad was a force of positivity, of knowing it would work out and being willing to make some big sacrifices early on in the business to get an out outcome we all wanted. He was a perfect partner.
I always say, “Business is the ultimate personal development course. Everyone has different traits and elements that they need to close gaps on in order to meet their goals and create something from nothing. It is a personal development course.” In addition to that, from my own experience, I have always been delusively optimistic, and it requires.
Business is the ultimate personal development course.
I call that irrational exuberance
I can see how Chad brings that to your partnership. How long have you guys known each other? It must be quite some time now.
Thirty-six years in 2023.
You are still business partners. It is going great. I’m curious, why is the name Five Star Painting?
First of all, coming back to my roots of Winnipeg, Manitoba, the Scranton, Pennsylvania of Canada. It is a blue-collar town, and not a lot of money was around there in Winnipeg, Manitoba. There weren’t a lot of big successful companies. It was known as a test market even for a lot of businesses. They launched a concept in Winnipeg. They knew if they could make it in Winnipeg, they could make it anywhere. It was a tough market.
Being cost conscience is part of my DNA. It’s being scrappy. It is deep in there. I can’t get it out. This whole idea of providing five-star quality, that the five-star price, was our motto. We are going to give people an amazing experience with them to pay for an amazing experience. That is why that name stuck. Five Star is the gold standard of service in anything. We mixed that with the fact we can get things done at an affordable rate. It resonated with the marketplace.
Google became more prevalent. That has been a great name. It still is an amazing name, but it seems it was innovative at the time. It was right in line with Google becoming a prevalent way to go on and find service providers or anybody online.
It is funny how that works. How it sounds innovative now at the time, it seems natural. I didn’t think it was brilliant at all. There were many times we thought, “I’m going to share this with you.” We started another company. I had two painting names I ran for a full year. Two painting companies with identical websites. It was a name that changed, Paint Works and Five Star Painting.
I ran them both side by side for a full year. I had advertising all over the place. One, Paint Works was high quality, amazing work, and service. Five Star Painting was, “We gave you the price in the ad, $99 a room. Call now. Call to action.” It was an experiment of what would drive the most traffic. Five Star Painting, with our form of advertising, drove on one Yellow Page ad. We used to buy a quarter-page ad in the Yellow Pages. It would drive about four times the call volume. It is 4 to 1 over an ad of the same size but using a different message right beside it.
If you called up, my call center would say, “Five Star Painting.” They hung up, and if it rang again, it was Paint Works. We would go to the same painting crew. We just changed our t-shirts. We ran an experiment to find out what business. The customer spoke. That is who told us what the name should be. The innovation was the fact that we were willing to listen to the customer and in our experiment.
The other thing that was innovative about our painting company is we were the only company I’m aware of ever in painting to tell people what it would cost to paint their house in the ad or on our lawn science. Everything we had that would go out there would say, “$99 a room.” We focused on the interior 1st and the exterior 2nd. Eighty percent of our work was interior for a while until we started expanding into the United States and getting more focused on exterior work. Even then, it only got to 50/50. Fifty percent of our work was interior. In your business, you are 80% to 90% exterior. That is where all the money is at.
In business, it is all about being different. I don’t care what you are. Don’t be like everybody else. What we realized was most painting companies weren’t focused on the interior. We also realized that customers are picky about whom they let into their homes. Clean on time on budget was our motto. This was all on all of our ads. Cleanliness matters if you are in the house.
Those things resonate with customers. They are willing to call us. We also found that our close rate on interior jobs was almost 2X our close rate on exterior jobs because they only called us, and one other person to come inside, but on the exterior, they would call 4 or 5 companies. On the exterior, they didn’t care about using paint on you if you weren’t looking sharp or if your truck wasn’t wrapped.
They did care about that if you were coming in the house. If you showed up and you weren’t clean cut, you had tattoos all over your arm and face, and you looked like you weren’t reputable in some way, they would use you in the exterior of the house, but they wouldn’t want you to come inside the house. Those are things we found were competitive points we could use, and it worked. We closed more on the interiors. We got more interior jobs and more calls. Was it innovation or being scrappy, aggressive guys trying to make it work? I don’t know what it is, but that is how we got the painting thing going.
CertaPro, at that time, when you were starting, do you recall how many locations they had?
They had 150. They have been at it for a while. They are gone on their 35th or 40th year of franchising at this point. We started our thing several years ago. They started with College Pro, which was a student painting concept. They expanded that to CertaPro as a full-time, year-round concept. They had been in the painting game for a while with CertaPro.
There is no question. We looked at them as leaders. They created the space. We kept saying, “We are the Avis of painting. We are going to try, work and hustle harder.” I still have a lot of respect for CertaPro, their team, and the people there. I am proud to say, “I can’t think of one time I didn’t sell somebody looking at a CertaPro.
My favorite thing ever was when someone would say, “I went to the CertaPros discovery day.” I’m like, “We are closing you. You are done.” Locked and loaded every time. There is some advantage to being the second mover. You get to learn from all mistakes of the first mover and improve upon the mouse traps considerably.
I have a tremendous amount of respect for CertaPro and yourself. Five Star paved the way for the business model in painting, specifically in franchising. Hearing some of the scrappiness, as you refer to it, as that trial and error and adjusting to what consumers are looking for. I look at the name Five Star. I see it as being relevant for what day and age we are in now, which is Google and five-star ratings. Even though you may not have been intentional about it, and this is my opinion, from a consumer standpoint, there is something subconscious about Five Star Painting. It’s a five-star experience.
The painting was being standardized. There are CertaPro and yourself with Five Star. It was new. From a consumer standpoint, they have this new national standardized five-star painting experience. I can see how that must have been a ton of fun to take that to new markets, bringing a lot of value to consumers and giving that platform to franchise partners to exercise that entrepreneurialism with that winning formula. In that vein there, what are some tips you have for supporting franchise partners? That is a unique thing. It is not in every business model. What are some tips you gained over your career in supporting painting franchise owners?
We are on Five Star Franchising. We have six different brands. We support all under that platform. I think about things in the same way now as I thought about them back then. With any franchise partner, you are trying to figure out what you can do for them that they cannot do for themselves, or if they were to do for themselves, it would cost prohibitive, and they may not decide to do it
With any franchise partner, you’re trying to figure out what we can do for them that they can’t do for themselves.
This is where franchising is powerful. It is why I love the model and will spend my whole career here. It is because you can take the benefit of specialization in any category in bringing in the best talent in those categories, but because it is intellectual property, it can be replicated across every territory. As an example, and one of the most obvious ones for us, we started with a call center from the beginning.
A franchisee could hire an office manager and pay them $60,000 a year. When you are starting a business, you want to spend an extra $4,000 or $5,000 a month on one full type person to sit there and wait to answer the phone. It is cost prohibitive. It doesn’t make sense when you are only getting 20 or 30 phone calls a month, but yet, the customer experience is critical. If you want to offer a five-star experience, you got to get that right from the beginning, the moment they engage with your brand to the end, to when the product has been paid for. You have to make sure every step along the way is superior, so you get a five-star rating.
I will share this with you. I had some fun with this. When we sold Five Star Painting in 2015, there a lot of research has done in your company. They do tons of diligence. They hired a group to go and look at every review that was ever left anywhere on the internet for a Five Star Painting. I knew this was happening, but I didn’t know the results. They don’t share all the information with you.
Years later, I’m speaking at an event. Someone comes up to me, and she says, “I’m happy to meet you.” I’m like, “It is great to meet you too.” She was like, “I want you to know that I worked on your projects.” I said, “What do you mean?” She was like, “I was hired by the group that purchased your Five Star Painting in 2015 to do research and find out how well you ranked in the marketplace. It is my profession. All I do is customer experience research. I have never seen in my entire experience as high ratings as you had at Five Star Painting than any brand in-home services.” I took great pride in that.
Doing for your franchisees what they can’t do for themselves, or it would be cost-prohibitive. For us, we provided that call center and the next level. There is answering the phone, but innovating is one of our values at Five Star Franchising. Innovation, how do you do things better with what you have? How do you make sure that every interaction with the customer, whether it be text, phone, chat, and online scheduling, gives them all the tools possible to let a consumer book any way they want and make that seamless and tracking where it all came from? You can attribute how you are getting the business. We master the art of attribution and customer engagement.
Once you get that, how about marketing? How do you make the phone ring? Can you do it better than anyone else? We are good at delivering leads to our franchisees through digital marketing. It is one of our specializations. We crush it in that category. We bring it down to that cost per lead and cost per call. To get you a sense of the obsession and scrappiness that we had at our company, in the early days, we had our call center down from my office. I could hear the phones ringing and all the calls being answered. I listened to them once in a while. I had this radar. If that phone rang more than three times, I would be jumping up out of my desk, walking over, and answering them. I was like, “Don’t miss one customer.”
We did so much research on never mind the value of the lead or the revenue drive on average from a bid or revenue drive on average from certain marketing verticals. We hit it down to, “If I could make the phone ring, what was that worth?” If it came from Google or direct mail, if the phone rang, what was that worth? It was like, “I hear the phone ring. Every time the phone rang, that was $362.” I heard a ring in my office. You answered that phone because it was $362. Answer it and follow the math. Eventually leads to revenue franchisees.
We hold conferences, and I would ask the question, “What is the largest job you have ever got off of one phone call?” I have franchisees tell me, “$400,000 and $500,000.” I would ask the question to our team, “If we didn’t answer that one phone call, that is $400,000 that someone did not make.” Is that obsession? It is unfair. The reality is we can’t be perfect. We are going to miss a couple of calls, but how do you do it so that you are as close and perfect as possible?
Our obsession with that led to Pronexis, which is Pro stands for the home service professional. Nexus means to connect in Latin. We are about connecting consumers with their home service professionals through Pronexis. It is in the culture and DNA. It is inescapable. Could they go high a marketing manager? Yes. Could they go higher an agency? Yes. What is the cost of doing that? It is cost prohibited unless you are a business at scale.
You take all that scale that comes from a franchise brand or a concept, and you deliver the value from that scale to the franchisees, so they get the best popping thing possible, whether it be technology, call center, customer experience, marketing, lead generation, training, and coaching. For most of these franchisees and home services, their average revenue is $500,000 to $600,000 a year. It is the zone they are in. They are getting people being paid $100,000 to $200,000 a year that they could never afford in their business, working on their business every single day, obsessing with the same thing I’m talking about.
That’s where I see the true value of franchise or the franchisee is, for their 6% of sales, they get that bench strength that they could never get on their own, all focused on their brand. All of those people in the organization are available to them at a call or an email. The model is phenomenal. That is why franchising is continuing to scale and grow quickly in every category where business ownership is critical.
You are putting your thumb right on it. It is the shared resources and the expertise of the franchisor. If franchise owners leverage and benefit from it, you can’t do that as an independent operator at the beginning. It takes at least 3 to 4 years to get to scale. Most don’t get to the scale that is needed to have a lot of those resources in-house. The rest of the market is competing with those resources. Consumers don’t care. They are going to pick the best option. I want to transition. You mentioned something there. You sold Five Star Painting. Why did you sell Five Star Painting? Would you mind taking us down that journey?
When I was about 15.5 when I started my first company. I have a theory, and it is true that for most entrepreneurs, their first business is like who they are. They have a hard time detaching themselves from the business. They were like, “The business is me. You can’t take this away without taking me away.”
Having had a few experiences with entrepreneurship prior to Five Star Painting gave me some visibility into that. I wasn’t building Five Star Painting to be me. I had taken much of what I knew about business, put it into the company, and gave everything I could to make it successful. The reality was I never felt like Five Star Painting was my child or part of me.
Coming to terms with selling it was not difficult. I knew when we were building the company that we were going to sell it. It was a matter of time. As long as we add value to the organization, we continue to run it. It is not like we couldn’t have continued to add value after 2015 when we sold it. One thing that stuck out to me that opened my mind and made me think a little differently about this was you mentioned it earlier, and I call it irrational exuberance. What did you call it?
Delusionally optimistic.
As an entrepreneur, it is irrational to have as much confidence in yourself, “I never franchised anything, but I had all this confidence I will be successful.” That doesn’t make any sense, but it is. That is what confidence can do. You can overcome incredible obstacles when you believe in yourself and think you can get something done. Even though it doesn’t make sense, you could.
With Five Star Painting, we had been putting everything we could into it. We walked right into the 2009 and 2010 recessions. For the first time in my life, I experienced something that said, “Something out there could happen that you have no control over that could take it all away.” It doesn’t matter how hardworking you are or how smart you are. I was watching people in business that were smarter and worked harder than me all over and losing their companies because of what happened in 2009 and 2010.
That shook my confidence a little bit and made me think, “The bigger this becomes. The greater piece of my net worth is tied up in an asset that is not liquid.” I have five kids. I work and I love what I do, but my family is why I’m here. I’m here for them more than anything else. That is more important to me than anything else. I didn’t want to be in a position later on in life where I built something of real true value only to have it taken from me because of some event external to what I could control.
What I did know was Five Star Painting was going to be huge and would continue to grow without me if I found the right partner. I met the group from Neighborly, which back then was called The Dwyer Group. I was impressed by their team, the values they held, and the scale they have achieved. I approached them and said, “I’m ready to move on, but I don’t want to give up all my ownership.” It is not about me taking all the chips off the table and saying, “I don’t believe in it any longer.” It was me saying, “I want to de-risk my life, take some chips off the table, and how much can I roll back in?”
We rolled the maximum they let us. I negotiated up for what they offered as much as they possibly would let us do. It was the best decision I ever made. I give a lot of thanks to the people at Neighborly and The Dwyer Group. They built an amazing company. If I look at the value of the stock that I rolled into in 2015 to the day when we traded out in 2018 and 2021, it is about a 10X return on our investment, and the money we left rolled in.
The stuff is life-changing. It was to let Five Star Painting continue to grow. To this day, we still do their call center work. I still do some marketing work for some of their franchisees. I still provide them with their software. They still use our field software to run their business, and I love it. Business is growing. It is massive and done well. We continue to be a small part of that.
It was de-risking my life. It is funny because in doing that, I came right back to the thing I love but no longer for the same reasons. I’m not here any longer for the money. The money is nice. We do great and fine, but we are not here because we need the money any longer. We are here because we love what we do.
I can tell you firsthand that I have gone through experiences in 2023 that have shown me exactly what you mentioned. The attachment to myself, LIME Painting, and how much my personal identity and who I am is tied up in the business. Have you ever watched the Spider-Man movie where it is the Venom version, the black suit that comes on, and he is trying to tear this thing off? He detaches it. I can relate.
I didn’t have prior businesses that gave me that experience, but that is a real thing. Being on the other side, you are able to run the business in a different capacity when the business is no longer associated with who you are. That is an important step, at least in my career, that I have had to make. Scott, you own Five Star Franchising. It is a home services platform. Why is a home services platform beneficial for franchise owners?
You can run the business in a completely different capacity when the business is no longer associated with who you are.
Why a franchisor is beneficial to a franchisee is the same way a platform is beneficial to a franchisor. It is the same mentality. What can I do for the franchise brand that belongs to our group that it can’t do for itself? How do you scale and uplevel every part of the business so that the franchise brand that is part of the platform benefits from even better talent, experience, technology systems, training, and support?
We are making the franchise brand a part of something where they get all the value from an experience from the team around how to build the best brand. I look at 2022 with all the brands that we have purchased. What we have done in those companies in terms of raising the bar and leveling up the business has been incredible. In some cases, we have seen almost a 3X in profitability for some of the brands that are part of our platform.
People love to win. You love to be on a winning team. I love team sports. I play soccer a lot every Friday and Saturday. I’m a competitive individual. I don’t mind losing against people that are amazing competitors. I’m not a sore loser, but I will fight hard to win every place I have played. In business, I look at it the same way. I have a team. We want to win. There are some scoreboards we have to keep track of whether we are bumping the score or not.
The people in the organization are part of that get the benefit of the feeling that comes from being part of a team that is winning, and it is a great experience. We keep looking at ways in all the same things. It is in marketing, technology, systems, support, and customer experience. All the same things you do for the franchisee, you are an argument with the franchisor to give down to the franchisee and constantly up-leveling the game.
Departmentally, you are able to take your platform’s leadership team and complement the existing brand’s leadership team but add rocket fuel across the systems and bring world-class systems, processes, experience, and capital to elevate that brand, and that all impacts the franchise owner. Scott, something you said I appreciated when I asked you about Five Star Painting being acquired is you said, “I went, and I found the right partner.”
At the time, it was The Dwyer Group, now Neighborly, but they were an organization, a home services platform that you knew aligned with Five Star Painting and level up the brand and take it to the next level. You are doing that now with Five Star Franchising. When you go through the process of acquiring a brand, what does it look like with the existing leadership team of that brand? How does that integration happen? What does it look like?
This is one of the things most people get concerned about. They see it in movies and TV shows. They think, “I’m going to get acquired. They are going to fire all my people.” You can’t cut your way to growth. We don’t buy companies we don’t have a vision for growth with. If we don’t believe the business is going to grow, we are not playing. We don’t buy businesses and cut costs to strip out earnings. We buy and invest in businesses to grow. In growing, that’s where we find the profitability.
You said it earlier in the US, traction comes from good to great. It is this idea of, you are driving a bus, there are lots of seats on the bus, and your bus is half full. You stop, and you are going to pick up five more people. You got 30 seats left. Five people get on, and you realize, “One of those people is way better in that seat than I have a current position in.” You make room.
When we acquire companies, we look at their team and go, “How do we integrate with them?” In some cases, how do we elevate them? One example happened. We acquired a company called Gotcha Covered Blinds. They are in Denver, in your hometown. It is an awesome company. Paul Lindenberg is the Brand President there. He is an amazing individual and a total leader. I love working with him.
One of his team members was in technology. We promoted to Five Star Franchising platform level as a VP of Technology. He is the right guy. He had the experience, and we needed him now to elevate the rest of our brands, not just Gotcha Covered. Paul was ecstatic for him. It is an opportunity for him to grow in his career. That is what happens.
In other cases, what is also wonderful is when you pull the bus over at that stop, five people are given the opportunity to get on the bus. They don’t have to get on. Five of them can walk on, and one may go, “I don’t like this bus. I don’t like where it is going.” As the bus driver, my job is to make sure we all know where we are going. It is clear what we are trying to achieve.
If that doesn’t resonate with you, it is okay. There are lots of businesses that need your services where you could do and be an amazing part of that company. There is no harm or foul in you deciding, “I don’t want to get on the bus.” We help you transition. It is not our goal, but a lot of companies talk about, “We are a family here.” I’m a family man. You can’t change your family. You have kids, brothers, sisters, and a wife. That is it. You are done.
With teams, you trade players. You want athletes and competitors that want to win the cup. I saw you on Facebook the other day with you and the cup. If you want to win with a team, everyone on that team got to be focused on going into the cup. If they don’t want the cup, they don’t belong in the team. That is okay.
In that analogy, the most important thing as we approach acquisitions is that everyone is clear on our objectives. If someone feels like it is not a good fit for them, it is okay. If I have gone to great lengths to help people find a job someplace else I know they would be a fit, I have them stay on our team because they weren’t fit. We are respectful of people in both ways, whether they are coming on or they want to get off.
There is such a stigma around what that process can be, but I admire you for the way you go about it and the culture that you set, the expectations, and for giving that choice. That is what it is all about when it comes to a team, everybody being on the same page and understanding the mission, accepting that mission, and wanting to get on the bus to accomplish that goal and win that cup. You are somebody that is passionate about franchising. You said, “This is a space you will finish your career.” You are no longer doing it for the money. You are fortunately in that position where you can show up and do it because you love it. Why do you love franchising so much?
Charlie Chase was one of the Founders of CertaPro and FirstService Franchising. He will be the Chairman of the IFA in 2023. He was speaking about why franchising. When you think about the model of franchising, instead of being part of a conglomerate that owns the whole thing and you are a cog in the wheel and are being paid a salary, which made amount to 0.01% of the entire revenue, it flips at a whole model on its head and says, “What if we make you the owner, we turn you into the entrepreneur, you own 94% of the revenue, and you give us 6% to give you all the tools that you had at the conglomerate that you worked at before?”
If you are a white-collar working in a big office environment, you are used to having the accounting department, the finest department, the marketing department, the IT department, and the call center department. You are used to having all these logistics. They are all there. Whole swaths of people working in this business in these disciplines, and you are a sales guy. You want all that back office, but now you can do that where you own it. You are building equity for yourself. That is a company you own that pays you, gives you freedom, and allows you to build something of value. One day when you are done, and you want to retire, you sell that business for a lot of money, and you retire a happy person.
That is why I love franchising. It gives back way more to the franchisee than in any other business model I’m aware of outside of being an entrepreneur by themselves where they get 100%, but they got to find a way to build all those departments themselves, which costs way more than 6%. It is the perfect model and way. It is why the model’s expanding and had such great success.
The success rates are like 3X, 4X, to 5X, but the marketplace experiences. I know what it’s like to fail. “The first attempt in learning,” someone told me that one time. I know what it is like when you try something that doesn’t work out. It is hard. I like to be in a position where I’m helping people avoid those pitfalls. They can be successful.
Charlie Chase of CertaPro said it well at the IFA conference, and you have lived it out beautifully. Scott, I admire the two of you and your partner, Chad. I will add to what you said. The franchise space is unique because you are not only in business for yourself. You get all the benefits of entrepreneurialism plus everything else, but you are also in business with others. That community and culture are unique for every system and brand, but being in business with other business owners, you don’t get it in any other space. It is why franchising is blowing up at such an amazing model. I look forward to seeing what the future holds for franchising. There are many amazing leaders, thought leaders, high performers, and franchising. Thank you for getting on the show. I appreciate it.
It is great being on here. It is great to see you. Best of luck to you, and let’s catch up soon in person.
If anybody is interested in getting in touch with you, how can they do that?
You reach out to me on LinkedIn or email me at SAbbott@FiveStarFranchising.com.
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Scott is a respected entrepreneur from Utah that has led several companies from their growth stage to exit.
Most notably was co-founding Five Star Painting, one of America’s largest painting franchise systems, taking it to over 100 locations in four countries, culminating with the sale of Five Star Painting to The Dwyer Group, one of the world’s most respected franchisors in the service industry.
During his role as CEO, Five Star Franchising received numerous franchise and business awards and was named the 15th fastest-growing company in Utah Valley by Utah Valley BusinessQ, while Five Star Painting ranked No. 7 among the top 50 franchise opportunities with 50-99 locations for 2013 by Franchise Business Review.
Scott earned a Master of Business Administration from the Marriott School of Management at Brigham Young University, as well as a bachelor’s degree in management from the University of Manitoba.
Scott has been recognized personally with several awards for his entrepreneurship, being named to the Utah Business Forty Under 40, and receiving recognition as Innovator of the Year and Entrepreneur of the Year while in Canada.