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From Poop Scooping to Dryer-Vent Cleaning: Why Hyper-Niche, 'Micro' Franchises Are Booming Can a company be too specialized? Itty-bitty franchises are popping up all over the place, and the big companies buying them have grasped the merits of thinking small.

By Jon Marcus Edited by Frances Dodds

This story appears in the March 2022 issue of Entrepreneur. Subscribe »

Image Credit: Zohar Lazar

Mike Gillespie picks up pet poop for a living. And it's a good living.

The sun is barely up one morning in late December, and Gillespie is prepping outside his tiny office in a southern New Hampshire strip mall. He changes from his hiking shoes to his heavy-duty work boots, climbs into his white Ford Ranger, and runs through his checklist. He has 33 stops to make around the bedroom community of Hudson that day, and some will be quicker than others. Sure enough, the pace slows at the second house. It's occupied by a mastiff named Mr. Big, as well as an obviously well-fed bulldog, goldendoodle, and cane corso. They've left such an awe-inspiring minefield around the swimming pool and backyard playground that Gillespie returns to his truck for a second 13-gallon trash bag.

When people ask Gillespie how business is going, he likes to say it's "picking up." It's an apt punch line because the kind of business Gillespie owns — a hyperniche franchise that does one very specific thing — is booming right now. The trend spans many different business categories, from home services (dryer-vent cleaning, drywall patching, mosquito control) to food (brands that sell only chicken salad, only soup, or only Bundt cakes) to boutique fitness (yoga, boxing, Pilates) and beauty (color analysis, makeup application, waxing). And while microfranchises aren't new, their momentum now says a lot about the state of the franchising industry and where it may be headed next.

Related: How to Thrive in Niche Markets

Today's hyperniche brands are the result of many industry-shifting trends. Among them: Potential customers are googling whatever products or services they need that day, which means hyperspecific brands often win in the search results. Big franchise conglomerates are eagerly acquiring niche brands, which incentivizes entrepreneurs to create them in the hope of a lucrative exit. And the franchise industry is experiencing a wave of interest from first-time franchisees, many of them seeking low-cost and uncomplicated business models.

That last part describes Gillespie well. He's a registered nurse and clinical manager who left healthcare in January 2021. Even before the pandemic, he'd been searching for more control over his career. That search led him to Pet Butler, a franchise based in Plainfield, IL, which last year had 36 franchise owners across 26 states and plans to add another 60 franchise owners in the next five years.

"I look at where I was, and now I'm out here putting poop in a bucket," Gillespie says. "But then I think, I'm my own boss. I'm working for myself, and the money I make is coming to me."

Last year alone, Gillespie doubled his revenue and is on track to double it again this year. These days, there's big money to be made by going small.

If you want to really understand the economics of niche franchising, the best place to start is with the home maintenance, restoration, and repair sector.

The industry is booming because of a confluence of factors, says John Hayes, director of the Titus Center for Franchising at Palm Beach Atlantic University. Growing ranks of baby boomers can't or don't want to fix things around their houses anymore, and their millennial children — many now in homes of their own — often don't know how or prefer not to spend time on chores and yard work. The formally certified contractors and handymen who used to do these jobs are aging out of the workforce, and individuals with less traditional training (like niche franchise owners) are stepping in to fill the service void. On top of all that, house projects skyrocketed during the pandemic. Home improvement and repair expenditures rose by 9% in the fourth quarter of last year and will grow to $430 billion this year, Harvard University's Joint Center for Housing Studies projects.

Related: 10 Traits of the Most Successful Franchise Owners

"It's the perfect storm," says Hayes. "Everything has come together for this." And that, in turn, has made these niche businesses very attractive to companies higher up in the food chain.

Major players that include the Belfor Franchise Group, Authority Brands, and Threshold Brands have been amassing (or "rolling up," in industry lingo) portfolios of microfranchises, each with one narrow specialty: fixing window screens, hanging garage doors, installing pullout shelves. Collectively, the thinking goes, these small brands can take care of pretty much any house or yard task — but there's no need to rebrand them all under one roof. Instead, it's just a matter of cross-selling: The homeowner who needs a window replaced might have a drain that requires unclogging, so a parent company can direct its customers from one of its niche franchises to another. This allows the microfranchises to continue operating as usual and makes it easier for customers to find their services, while the parent companies can pool customers and centralize back-office functions.

One franchise conglomerate that has been particularly successful at this strategy is Neighborly. Originally named The Dwyer Group, the company was founded in 1981 in Waco, TX, with one carpet-cleaning franchise. But by 2017, it had acquired several microfranchises and combined them on a single consumer-facing website called Neighborly. Those brands included Rainbow International home restoration, Mr. Rooter plumbing and drain services, Mr. Electric, Mr. Appliance, Glass Doctor, Portland Glass, the Grounds Guys, Five Star Painting, Mr. Handyman, ProTect Painters, Molly Maid, Window Genie, and Aire Serv heating, ventilation, and air conditioning. The idea was to refer customers of one brand to enlist the services of the others.

It worked. The number of customers using more than one Dwyer franchise shot up by 39% in one year, a success so big the company went all in and changed its corporate name to match its website. Since that time, the newly renamed Neighborly has added Mosquito Joe insect control, Dream Doors kitchen renovation, Precision Door garage-door repair service, ShelfGenie custom shelves, HouseMaster home inspections, and Dryer Vent Wizard. The microbrands in Neighborly's franchise network have a combined 10 million customers and Neighborly has applied for the trademark "Own the Home."

In September, the company took another big step, launching an app through which consumers can connect with any of its 19 U.S. service brands. A company that offers specialized services "isn't a new concept. That's been around," says Neighborly CEO Mike Bidwell. "What is new is rolling them up and aggregating them into a platform to extend the customer from one service vertical to another, one brand to another."

In July, Neighborly was itself acquired by global investment firm KKR, in an example of the sudden and substantial interest in niche franchising coming from some of the biggest private-equity players. Roark Capital, an Atlanta private-equity firm, has invested in dozens of franchises and chains, including Installation Made Easy and Nothing Bundt Cakes. Just as Neighborly was acquired by KKR, Belfor Holdings was bought by American Securities, and Authority Brands by Apax Partners. Investment firm The Riverside Company, which twice owned Neighborly predecessor The Dwyer Group, created Threshold Brands as a platform for eight microbrands it holds: MaidPro, FlyFoe, Men in Kilts, Pestmaster Services, Sir Grout, Plumbing Paramedics, Heating + Air Paramedics, and USA Insulation.

It's not only giant equity funds that are taking a page from the microfranchise playbook. Much smaller companies are also snatching up or launching complementary niche brands. Greg Longe, CEO of Fetch! Pet Care, which offers dog walking and pet-sitting, just acquired the mobile pet-grooming franchise Furry Land. And back in 2017, Pet Butler was bought by the established company Spring-Green Enterprises.

Related: Is Focusing On a Specific Niche Really That Important?

But despite the massive consolidation, everyone involved seems to recognize the value of keeping the individual brands small. "It's easier to break through the clutter with a hyperspecific service," says Spring-Green COO and Pet Butler president James Young.

In a consumer market driven by search engines, hyperspecificity is key to customers being able to find your company. Having a niche specialization "generally lowers [a brand's] marketing spend because it can be hyperfocused on what its message is," says Chris Cynkar, a franchise consultant at FranChoice who also teaches entrepreneurship at Carnegie Mellon University.

That's also why microfran-chise names are often so straightforward: Monster Tree Service, Nothing Bundt Cakes, Mosquito Squad. "There's a really big benefit from a naming-convention standpoint that speaks to the way people interact with businesses and the overwhelming dominance of internet search," says Heather McLeod, chief marketing officer at Authority Brands. "Having the name of the business also be part of what a consumer would search online is incredibly beneficial."

Demographics are also driving the microfranchise industry — both in terms of who's becoming customers and who's buying units.

Again, consider the homemaintenance and repair sector. "It used to be you would call a contractor or a handyman" to do small jobs around the house, says Monty Walker, vice president and COO of Screenmobile Corp., whose more than 100 franchisees do nothing but install and repair screens for windows, doors, porches and patios. "But those guys have gotten to the point where they're too busy." Anyone who's tried to get a kitchen remodeled or some plumbing repaired lately knows that's true: There's a shortage of skilled tradespeople. It's also likely to get worse as more of these tradespeople retire. According to staffing company Adecco, 62% of firms are struggling to fill important skilled trade positions. The general contractors who are left "would rather do bigger jobs, says Ted Speers, president of The Patch Boys. They don't want to send a couple of their people in to do drywall repair, which might be a half-day job. It doesn't make financial sense for them."

That leaves a lot of narrow, specialized jobs available — an abundance of work that's empowering for the people buying microfranchises. "Particularly with the generation now in their late 20s to early 40s, there's a growing comfort with self-employment and business ownership and self-determination," says Carnegie Mellon's Cynkar.

A microfranchise suits a new generation of franchisees' needs. Many older franchises, such as fast-food brands, are big and complex, and require an investment in real estate. But niche franchises are more nimble and therefore less expensive. "You don't have to invest McDonald's kinds of money," Speers says. Initial franchise fees for Chem-Dry or The Patch Boys are less than $30,000, according to Ken Osness, vice president of development for Belfor Franchise Group.

Stewart Vernon, founder and COO of America's Swimming Pool Company (part of Authority Brands' stable of niche franchises), agrees. "The big-name franchise fast food restaurants or auto-parts dealers, you have to have a few million in net worth just to be considered," he says. "We're not only lower risk, but lower barrier of entry."

Gillespie paid for his Pet Butler business by cashing out a 403(b) retirement plan and using Pet Butler financing. Pet Butler even waives the initial franchise fee for pet industry business owners who buy in, lowering the up-front costs of equipment, permits etc. to as little as $10,000. "Because I was already in this industry, they knew I immediately had a few thousand customers on Day One," says Andy Wiltz, who was given that break when he added a Pet Butler franchise to his Woof's Play & Stay dog daycare, boarding, and grooming business in Kansas and Missouri.

Related: 5 Myths About Successful Franchisees

"The sweet spot for a long time in franchise investment has been between $150,000 and $300,000, but there are more and more people now who want to be less than $100,000," Palm Beach Atlantic University's Hayes says. "The microfranchising developers have caught onto that."

These low costs also open the door to younger franchisees, who might have been priced out of the industry before. Micah Droescher, 20, and Hogan McFadden, 21, are among them. They aren't even done with college, but they've already opened a franchise. "Our generation is obsessed with working for ourselves," says Droescher. McFadden looked at conventional large-scale franchise concepts, but the fees were more than they could afford while not enough to qualify for a Small Business Administration loan. So they signed on with The Patch Boys.

Kevin Krull skipped getting a college degree altogether. At 23, he bought a 1-800 Water Damage in Michigan. The franchise cleans properties that have been damaged by water, smoke, and other related problems. Now 27, he racked up $1.5 million in sales last year — and added a complementary brand called Blue Kangaroo Packoutz, which restores personal items damaged in disasters. Next he's planning to add yet another related service: a redbox+ dumpster franchise. "Blue Kangaroo needs dumpsters; 1-800 needs dumpsters," he says. "The contractors we always work with need dumpsters." Soon, Krull will have met his goal of owning three businesses before he turns 30.

Although microfranchises are often valued for their smallness, some are starting to think bigger.

In what Young calls its "empire-building strategy," Pet Butler is adding pet-sitting and potentially pet transportation. "Part of our focus is expansion of services — asking what pairs well with pet waste removal," Young says. "Once you have those customers, what else can you do with them?" In this case, he says, rather than creating new brands to offer such services, Pet Butler is adding them to the franchises it already has.

Other parent companies are thinking about growth differently, and have focused on selling additional microfranchises to their existing franchisees. That way, they make the most of a built-in market of buyers who have already been vetted. "We have a lot of guys saying, "I'm ready to start another business,' and they want to stay in the family," says Belfor's Osness. More than one out of 10 Authority Brands franchisees own more than one franchise, McLeod says. "That's really a focus of ours — attracting franchisees who might want to offer more than one of our brands."

But not all larger franchisors see it this way. At Neighborly, Bidwell says about 5% of franchisees own more than one of its franchises, but "sometimes when we got franchisees focusing on more than one brand, [the businesses] didn't do as well," he says. "We want them to focus on one thing."

After all, that's the crux of the microfranchise concept.

Don Powers is the founder of Fitness Machine Technicians, whose sole service is maintaining and repairing fitness equipment. "When franchisee candidates are sitting in my office, I hold my arms 6 inches apart and say, "This is where we want to focus,'" he says.

Other specialty franchises are thinking even smaller. Belfor's Ductz brand, for example, is spinning off a still smaller franchise to join the suddenly competitive dryer-vent market. "For the guy who says, "Even ducts seem too big for me,' he can just buy the Ductz dryer-vent cleaning franchise," says Belfor's Osness.

Related: How to Build Brand Awareness for a Niche Business

Fetch! CEO Greg Longe cofounded Dryer Vent Wizard with David Lavalle (who also started Mr. Handyman) back in 2004. He laughs when he remembers the reactions they used to get in response to the idea of a company that did almost nothing but clean out lint from dryer vents. "People thought we were insane." But the company grew to nearly 100 franchises and was acquired by Neighborly in 2020, so the next time around, people caught on quicker. "When we got involved with Fetch!, I think the same people scratched their heads for a while," Longe says, "but not all that long."

Red Boswell remembers that when he founded Pet Butler, people thought he was crazy to start a business that just scooped dog poop. And even he questioned whether subsequent concepts such as drywall patching could survive. "I thought, Are you kidding me? I found myself laughing out loud," he says. "Who would hire somebody to patch? That's all they do? And yet they're killing it. It's comical, and it's so cool."

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