Seasonal Franchises Will Deck Your Halls
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Christmas decorating franchisees face a hectic holiday installing decorations for thousands of residential and commercial customers.
Andrea Connor loves Christmas so much that she's celebrating the holidays with millions of lights, hundreds of wreaths and enough garland to span 210 football fields.
Mrs. Connor, 34, of Niceville, Fla., is one of 400 Christmas Décor franchisees, men and women who altogether will install $50 million worth of decorations this holiday season for about 50,000 residential and commercial customers.
Ironically, company founder Blake Smith turned to holiday decorating in 1986 not to spread holiday cheer but as a way to keep employees of his Lubbock, Texas, landscape business busy during the lean winter months. A decade later Mr. Smith started franchising Christmas Décor to owners of landscaping, pool-care, driveway-seal-coating and exterminating businesses where demand also drops off during the winter.
While the add-on business makes up most of the system, Christmas Décor also attracts people like Mrs. Connor, whose franchise provides most of her annual revenue. Mrs. Connor, who has a degree in landscape design, was working for a landscape-management company when she discovered Christmas Décor at a trade show six years ago. She talked her boss into adding it to their services and then bought the franchise when he left the business. She has been stringing lights across resort entrances and up and down trees ever since.
"The hardest part is working within such a tight deadline," Mrs. Connor says from an outlet shopping mall where she and her crew are assembling a 50-foot-tall Christmas tree. "I have six big commercial accounts who all want to be decorated by Thanksgiving. Then we do residential and small commercial jobs until mid-December. I barely catch my breath before it's time to take everything down in January."
Kevin York of Elburn, Ill., a former corporate auditor, bought a Christmas Décor franchise in 1996 for opposite reasons. "I hate holiday decorating," he says. "Since I'd rather pay someone else to do it, I figured I could capitalize on that sentiment." This year he and his partner, who owns a landscaping business, will ring up decorating sales of $250,000 to $300,000 from 200 customers who feel the same way. Mr. York also took an equity position in the franchise business itself and now spends part of every year helping train and supervise other franchisees.
Busy as Elves
We found him on a chilly November morning, watching a crew of workers in red jackets and matching hard hats wrap coils of miniature lights around the branches of a 30-foot-tall maple tree. The job, Mr. York says, will take 2,500 lights and a trio of workers four hours to complete. "Most people approach their trees with a ball of lights and throw it over and back again. We go in and handle every branch."
The Care of Trees, a 60-year-old tree-and-shrubbery-maintenance company headquartered in Wheeling, Ill., purchased five Christmas Décor territories in northern Illinois and southern Wisconsin three years ago. Decorating coordinator Ellen Knell says "we wanted to provide a Norman Rockwell-type service for our clients."
Evoking the Christmas spirit doesn't come cheap. Care of Trees's minimum charge is $500 while commercial jobs, like the one we're watching in an office park in Elk Grove Village, Ill., can easily hit $3,000 or more for lighting up a few evergreens, adding a couple of wreaths to the building's glass doors and, of course, wrapping every branch of that maple tree. Lou Leggett, a Care of Trees arborist, says residential customers pay $1,500 to $4,000 to have their roof lines, windows, entrances and shrubs decorated with white or colored lights. Elaborate wreaths, lighted garlands or lawn ornaments, like a candy factory, can add thousands more to their bills.
The fee includes removing the lights and other items and storing them until the next holiday season when, Ms. Knell says, "we hope they'll buy even more."
As Mr. York predicted years ago, the service is a surprisingly easy sell. Franchisees set up booths at holiday trade shows, distribute flyers and, when possible, identify their service on customers' lawns. Greg Simpson, office manager for Christmas Décor by A.J. in Gastonia, N.C., says "we're a full-service landscaping company and bought this franchise in July as a little subsidiary. But we have eight workers, and they're busy all the time. It's hard staying organized in this frenzied mode."
"We don't even advertise to commercial customers," Mr. York says, "Because we're decorating the homes of people of influence, including business owners, they find us." The franchiser also locates all the lights, artificial greens and other materials and sells them to franchisees at a markup. "It would be very difficult to source all that product ourselves," says Daryle Johnson, who added a Christmas Décor franchise to his Van Meter, Iowa, landscaping business nine years ago and watched it grow "larger than we ever expected."
Franchisees pay a fee of $17,500 for a territory of about 100,000 likely customers and must invest a total of $45,000 to $100,000 to get started. They pay 4.5% of revenues as a royalty, as well as an advertising fee of either $180 a year or 20% of the royalty payment.
Franchisees set their own prices for their services--"Whatever the market will bear," says Mr. York--and the system's four largest franchisees have annual gross revenues of $700,000 to $1 million. Profitability in part depends on how much of a franchisee's regular staff and equipment can be used for the seasonal effort. Care of Trees, for example, has a bucket-lift truck that installers use to string lights in high places, but when Mr. York needs a bucket truck, he must rent one.
For stand-alone Christmas Décor franchisees like Mrs. Connor who want something to do the rest of the year, Mr. York recently added a second company, Nite Time Décor. So far, that system has 45 franchisees who install permanent landscape and architectural lighting for high-end homeowners and businesses.
While Christmas Décor has no direct competitor, Scott Zide, vice president of Outdoor Lighting Perspectives (OLP), another architectural-lighting franchise in Charlotte, N.C., says that 10 of that system's 57 franchisees offer some kind of Christmas-lighting service. OLP, however, provides no holiday materials or training.
Cathy Noss, an OLP franchisee in Denver, says she and her husband, Mead, are making money while having fun decorating about 30 houses each Christmas, at fees that start at $3,000. Bob Lyons, an OLP franchisee in Nashville, decorates the houses or office buildings of about 40 of his best customers, but calls the holidays "the worst six weeks of my life." The problem, he says, is that holiday lighting coincides with the busiest time of year for his regular business and pulls crews from more lucrative jobs.
Christmas-decorating businesses must be prepared to store a lot of inventory the rest of the year, and often cope with training a seasonal staff for only a part-time assignment.
That doesn't bother Andrea Connor, who runs an ad each fall seeking workers "who want to have fun while earning their Christmas money." Because she works along with those new hires, climbing up and down all those ladders keeps her physically fit. And because she loves the holidays, the franchise has special rewards. "What can be better than seeing people out taking family photos in front of things you've done?" she asks.
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