Running a lawn or gardening franchise
I, like many other lawn businesses, read the article in The Press a few weeks ago with interest. The headline was-
Owners of gardening business in bitter dispute with franchisees
And it discussed the lawn franchisers Candoo Lawns, who are relatively new to the scene in NZ, and have made a real stir in the lawn industry… because they are offering $5-9 lawn mows.
You get the picture. Offered most parts of NZ.
I thought I would pick apart a few of the issues we are seeing with Candoo, as well as franchising in particular specific to the gardening industry.
What’s in a name?
One of the best, easiest things about running a franchise is the advertising and public awareness of the company already exist. Flyers, logos, car wrapping (any of the stick on labels that you can put on your vehicle or trailer)… and that stuff can get expensive.
I have been really lucky with my business because I started out working in hospitality, where I had to do a lot of work on branding, but the bones were already there, as were all of the logos and old media bits that I could just alter. It did me well because I never sat at a computer with a blank screen wondering where to start… and when I was evolving my business, I had friends who were graphic designers, who made me a logo, came up with my name, and created me all sorts of things for free (or gardening work)! Shout out to Rowena Fry, who has been responsible for much of it.
Without that background, I don’t know where I would necessarily be. I would have worked it out, sure, but when? How? Right now I am getting our vehicles and trailer wrapped, finally- 11 years in- and it is still incomplete, 6 months in…
If I was to work for, say, Jim’s Mowing, it would have been one of the first, more simple things that I achieved, because a franchise streamlines all of those tasks for you. This aspect of running a franchise is extremely appealing to people who don’t want their faces plastered everywhere and are happy to function behind someone else’s (while still being an independent person who don’t need no boss).
They’re also so successful that we can shamelessly re-use some very well known logos, and everyone gets the joke. I’ve only seen this logo a handful of times and remembered the business name without ever needing Devon’s services. Good shot Devon.
But it’s not really the name, is it
I don’t think that the name is the key bonus to working under a franchise. It’s the speed of it all. You can walk into a ‘lawn run’ a lot of the time- a set of jobs which are already confirmed, on a list which is written out. You have a wee schedule there, which has all of the repeating jobs, you can add more, take off ones you don’t need, and you aren’t creating it all from scratch.
You also, somewhat vitally, don’t have to be a certain type of person.
I do not want to offend here. One of the best lawn guys I know is a franchisee. Everyone likes him a lot and he does great work. I am not passing judgement about the quality of people who work as franchisees, at all!
You do not have to be an entrepreneur in order to work for a franchise, compared to someone working on their own. You pay franchise fees so someone else does that bit for you.
You do not have to be charismatic, or likeable. You do not have to charm the pants off the people who want their lawns mown. You do not have to go in for cups of tea, or look like the people who you are mowing for. You do not have to have a great grasp of English. Your clients don’t have to know your name.
It all helps- a lot, and you will be much more successful if you charm the pants off of everyone you meet. You will get more work if you are social, chatty, and your client base identifies with you and likes you. But you don’t have to be. And the people who hire services like, say, Jim’s Mowing, hire Jim <and the people who work for Jim> just like my clients hire Me <and the people who work for me>.
I’m not going to tiptoe around here- the people who are publicly complaining about Candoo Lawns, that I have seen, are all brown skinned, and a few of them have noted that they are fairly fresh from India. I do not know anything about these people’s personalities and I do not know them. But I do know that if they are brown skinned people working in predominantly NZ European areas, they are less likely to get gardening/lawn work than if they passed as white.
Further, the people complaining publicly about Candoo Lawns, that I have seen, who are all brown skinned, are much less likely to be hired in any predominantly white workplace, due to their skin colour, accent, and probably their recent migrant status. I am not even going to bother to debate this, we all know it is true. Here you go, link 1, link 2, link 3 link 4… I could go on.
They are, you might say… people with fewer options? Fewer opportunities? Somewhat more vulnerable people?
Franchise fees, and income guarantees
When you run a franchise, you pay an ongoing fee to the big boss. I would have had to delve far too deeply in, to give you specifics here (they kept asking for my details and I am already on too many lists), but you are looking at around $10,000-15,000 per year to stay on their books.
Franchises also often provide income guarantees. This does seem to keep franchises in check, because they are not likely to hire 4 different people to work in the same area if they don’t have the work for them.
Here’s one from Candoo lawns- it’s a bit hard to decipher but essentially, they provide you with all necessary equipment (I do know they don’t provide the vehicle, just everything else), in 3 months you will have paid off your deposit, another 3 months you won’t owe them anything, after that you are earning a decent-ish wage, about $25-30 per hour in a 40hr week. That sounds… suspiciously good.
You are buying in low, using potentially in-house lending options (I am always leery of in house lending, they profit from your inability to pay them back), with basic maths telling you, you will recover within 6 months (a suspiciously short period of time). Worth noting that this is about the same you would expect from another franchise and is not unique to Candoo lawns.
Oh, hold up.
You are paying for a vehicle, and to keep it running; franchise fees; and other overheads too. The standard expectation is 1/3 expenses, 1/3 tax, 1/3 in your pocket. You are not an employee, where your tax would remove about 1/3, your employer pays ACC and overheads. You are a business owner, where expenses are more like 2/3, probably more with the ongoing ‘royalty’ fees franchises charge you weekly. So your $1,000 income guarantee is a $333 a week income guarantee.
Your debts to this company are not effectively earned back within 6 months.
Let’s have a look at the outlay to buy into a franchise-
$30,000 buy in franchising fee
$5,000 for a cheap vehicle
Weekly cost to live and generally function… let’s assume minimum wage cuts it, $780/week
Ongoing overhead costs and tax… let’s assume it’s only 50% of income, not the more realistic 66%
Franchise royalty fees, typically $125 per week, franchise dependent. I don’t know what happens with these if you are only earning the minimum guaranteed income, so I have left this out of my calculations.
Candoo guarantee that you will earn at least $1,000 per week. $500 into expenses, $780 to stay alive, you can recover your initial costs with the remaining -$280 per week. (Yes, negative $280)
Ah, ok. You will have a maximum of $500 a week to live off, and nothing spare to cover initial costs.
Consider, if you have a full schedule and are charging a decent-ish rate with low travel time. 35hrs of invoiceable mowing at $75hr- $2625/week and apply the same maths, 50% into expenses, $780 to live off. $532.50 a week can go back into repaying the upfront costs. It will take you 65 weeks, or about a year and 3 months, to cover your initial costs, while living on minimum wage, while charging out at a common rate for the industry and working fulltime.
The problem that I have with this is that your expenses massively creep up on you as a sole trader (person who effectively employs themselves). ACC fees turn up in November, and they are hefty. IRD calls to collect income tax once a year. A vehicle breakdown or new tool can be a big, unexpected outlay. You don’t get to keep the money in your account at the end of each week, you have to save it for these costs which come through in fits and starts.
Is this made clear to franchisees? Or do they think, phew, this won’t catapult me into further debt and problems, $1,000 a week is pretty sweet!
I am not the only person who is concerned- Franchise NZ notes, of a franchising scam a few years ago-
Often speaking little English, and operating in a strange country, they have invested considerable sums of money in their own futures. In many cases, it appears that they did so on the understanding that they would receive a guaranteed minimum income, that work would be brought to them, that they would not need a vehicle and that they did not need to converse with customers...
This is a nightmare situation for someone with little knowledge or connections to New Zealand law. Consider this situation here, or recall the drama in lockdown about how badly our couriers were treated during Covid 19 lockdowns, leaving all of the couriers heavily burdened and unable to make ends meet (yes, couriers are generally franchisees as well, but this was challenged in court with some success in the past 5 years). Being a sole trader, or franchisee, when you are not stable and confident within New Zealand is not a comfortable or easy place to be.
How do franchises get mowing jobs in the first place?
I know a couple of franchisees. Their phones ring constantly with new quotes and clients in Spring. Some of them can barely keep up. This is because the franchises they work for are so well known that people who need their lawn mown can search the company name, be connected to someone in their area, and be genuinely confident that someone will turn up and mow their lawn. And that’s, frankly, fantastic.
In the above situation, the franchisees can charge the amount of money which they know makes the job worth it. Because they are not hurting for work, and they know their worth.
Oh, sometimes we can’t charge what we are worth, because a new company comes through and offers completely impossible prices-
Don’t worry folks, they cap it at 45 minutes- so, you know, about $7.50 per hour
These ads came out at the toughest time of the year for lawnies. We had people all but sending each other gooey affirmations in some of my contractor groups. You can’t compete with those prices, but thankfully no one really did, because they would have gone bust as a result.
There is some debate as to whether the franchisees are paid $5, anything, or $65 per mow by Candoo in order to complete these mows- my knowledge of this is based on a few chats with Candoo franchisees (who said they were never paid), but a representative from Candoo asserted to me that they were paid $65 per mow.
We also have one of many situations I’m aware of, where a franchisee is offered a lot more work than they take on…. but they are expected to drive as far as 1.5hrs away to get to those jobs.
Why are lawns being offered at such low prices? Why are they in the wrong areas?
This is a chicken-or-egg scenario, where a franchise doesn’t have enough work and realistically should not be taking on franchisees… but has. Franchisees sign up with the income guarantee, but have no lawns to mow, relying on a company to do their marketing, to find their jobs, to give them mows.
We have a situation in which people who may not feel confident or able to sell themselves, who have probably gone with a franchise because they are (or feel they are) less able to find their own work… being given no work. The franchise needs to support the new person until they are able to support themselves, with varying levels of success, varying levels of support, and a lot of finger pointing when a franchisee fails to thrive.
I never went to any schmancy marketing school, and I am no ad executive, but I do know that selling your wares for extremely cheap never translates into well paying customers. It is offensive at its core that this was the marketing strategy for Candoo, who are now blaming franchisees for their lack of success.
(A disclaimer here- $5-9 lawn mows were not the only strategy Candoo used to get clients. It also bought ongoing work from previous lawnies, and did other advertising. A representative from Candoo has also privately contacted me to outline how their franchisees let down their side of the bargain. It sure sounds like most of their franchisees are unhappy. Are most of their franchisees terrible at running a franchise? Regardless of where the blame falls here, doesn’t that lend some merit to what I’ve said above, perhaps these people should have been screened out and not allowed to buy into said franchise? Was taking them on perhaps a tad predatory? I would find it very hard to believe that Candoo are the victims, here.)
How do I escape?
Let’s say you start a franchise and buy in. They come with a restraint of trade (the publicly available information shows that restraint may be for up to 10 years). Regardless of how you got your clients, be it by word of mouth, or from the franchiser directly, they are all technically owned by the franchiser. You can’t take those clients when you leave. You are often restrained from selling your franchise for below a set price, so if you can’t sell your franchise for, say, $20,000, you might just be stuck with it. You can’t start a competing business unless you want to be sued up the wazoo. Oh, and you will be sued up the wazoo. So if you buy in, accept that you will be forever attached in one way or other- notably, it was so unusual for one franchiser to have franchises last 10+ years that they hadn’t considered what happens when the contract expires, and one lucky franchisee managed to leave with all of their clients. That loophole is now closed and I am fairly sure they had to pay the court costs to fight back (forgive me for not double checking this, this has been a long post with easily 100 different web pages opened). This portion of my blog has been heavily edited to avoid naming any one company, as you can see they can be particularly court-happy.
Franchising The Concept
I don’t want to bag out Franchising The Concept. Newsroom notes “in 2017 New Zealand was the most franchised country per capita in the world” (source), and businesses like McDonalds are franchises too- businesses which wouldn’t do half as well without the name behind them.
But specific to lawn businesses, I know a couple of people who really love their franchises, and a couple of people who would really like to escape, noting that having a franchise is great for the first few years, the make or break years for a business, but they have come to resent the fees. Franchises are a very safe platform to jump from, but once you’ve jumped, you may not be too happy to stick around.
While I have said that some people are thriving with their franchises, those people are very good lawnies/gardeners already. They are not starting from zero, and notably the many websites I perused while writing this emphasised that you could enter into the franchise with zero experience.
Mmmmmmmmmm. All I have to say about this, really, is a very suspicious “mmmmmmm.”
Gatekeeping Good Gardeners
As a footnote, thanks for reading this far- I do want to say how little I like the fact that us gardeners are a mysterious lot. We don’t have a yellowpages, or a big list anywhere that people can look us up and read reviews of our work. We are also famously flaky and tend to disappear on clients, never to return (not me! But definitely generally in the industry).
I do dislike that someone 2-3 doors down from my house might be desperate for a gardener, we would work together really well, and they just can’t find me unless I have an advertising presence.
I feel like to some degree, the inability to find a reliable lawn person or gardener is unfair for our more vulnerable clients, and why franchises are a really good idea- there’s some safety in it, and the ease of finding someone in your area is taken care of.
A whole pile of non-affiliated sole traders and small businesses seems terribly inefficient, and a couple of big, pyramid-style businesses seems terribly capitalist.
I’m unhappy either way, but at my core I remain aggressively anti-capitalist. I suppose the only real takeaway I would like you to leave on is do what is right for you, support equal rights for all people (and consider your own biases in depth when hiring)… and tear down capitalism however you are able.