by Deborah Balshem
ResiBrands, a closely held franchisor of home service brands, anticipates two possible capital raises in the next 24 months to support organic growth and new platform acquisitions, said founder and CEO Steven Montgomery.
The Round Rock, Texas-based company currently houses three brands: That 1 Painter house painting, Garage Up garage renovation and Pink’s window washing. It is looking to acquire two new smaller platforms in the first half of 2024, followed by potentially larger ones in late 2024 or 2025, Montgomery said.
To fund growth initiatives and M&A, ResiBrands plans to raise capital in approximately six to nine months, targeting strategic individuals, according to Montgomery. Another raise that may target institutional investors is likely six to 12 months after that, he added.
ResiBrands’ goal is to reach 1,000 franchise units within three years and systemwide revenue of USD 1bn within five years. It is projecting close to USD 30m in systemwide sales this year, primarily from That 1 Painter, which currently has 87 franchises in 14 states, Montgomery said. Garage Up and Pink’s began franchise sales this year and will help drive significant growth in 2024 and beyond, he noted.
Ideal platform acquisitions would be “simple home services brands that are not overly complex and have million-dollar potential revenue per unit,” Montgomery said. “Right now, we like services where customers are happy to write checks.” The company may look at more “disaster-relief type brands” in the future.
For its next two acquisitions, ResiBrands is seeking companies with no franchises or a few units, Montgomery said, noting that Pink’s was a local company with no franchise units when ResiBrands acquired it. In about 12-18 months, ResiBrands may seek larger deals. In 2025, it plans to enter Canada, the CEO noted.
Montgomery, 33, founded That 1 Painter in 2011. In 2019, his cousin and Chief Growth Officer Allan Alarcon, 34, came on board as a minority stakeholder. That 1 Painter began franchise sales in 2021 and ResiBrands was formed in 2022 to house That 1 Painter and the newly introduced franchise Garage Up.
Trivium Global, an Austin, Texas-based private investment and advisory firm that put together the Pink’s deal, holds a very small minority equity stake as “a transacting partner that will support ResiBrands with future acquisitions,” Montgomery said. ResiBrands corporate law firm is Spadea Lignana.
Garage Up began franchise sales in April and its first two franchises are set to launch this week. Pink’s first franchise, signed in June, will debut in September. For both brands, ResiBrands expects to open another 20 franchises this year and a minimum of 50 in 2024, according to Montgomery.
ResiBrands anticipates opening 150 new That 1 Painter units this year and 100 in 2024, the CEO added. The brand averaged USD 1.3m in annual revenue per unit last year and is “extremely profitable,” he said.
Montgomery pointed out that the types of brands ResiBrands seeks to own are low entry and low risk, yet have the same revenue and profitability potential as larger, more expensive, riskier investments such as restaurants, gyms and retail-based franchises.
ResiBrands charges franchises a 6% royalty, 2% brand fund and 1% appointment center fee, as well as additional marketing, training and appointment booking fees. Its one-time franchise fee of USD 49,000 for all three brands will increase to USD 59,000 in September, according to Montgomery.
Garage Up has no one competitor providing both epoxy floors and garage doors, with most peers providing one or the other, Montgomery continued. There are only a handful of players in each space, he added, including Papillion, Nebraska-based Hello Garage on the epoxy side, and Titusville, Florida- based Precision Garage Door.
Similarly, there are few players in the window washing franchise space, with Montgomery noting one as Manchester, Missouri-based Fish Window Cleaning.
The CEO said That 1 Painter aims to be the second largest nationwide franchise player within three years, with around USD 200m-USD 300m in systemwide sales. Right now, CertaPro Painters, a subsidiary of Toronto-based FirstService Brands, is North America’s largest painting company with more than 350 franchises.
According to Montgomery, the remaining 15 or so players combined are not as big as CertaPro, which still only holds about 3% or 4% market share, leaving “massive room for growth.”
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