Paul Davis Restoration owner cracks the franchising code
The dream of owning a business is still a big thing in Minnesota. According to the U.S. Census and state filing records, between 8,000 and 17,000 new businesses are started in Minnesota each year. Only a small percentage hire employees. Typical start-up costs: around $20,000 to $50,000.
New entrepreneurs set themselves up for failure based on two things: lack of cash and lack of people skills. Even if they choose a franchise — where some foundational structure and price breaks are built in — success is not guaranteed.
Caleb Brunz learned this lesson in his 20s while building a College Pro Painters franchise. The franchising structure taught him all aspects of owning and managing a business. But he quickly learned that if he couldn’t get people to think like owners, he couldn’t grow. Long story short, his acquired leadership skills got him promoted to vice president, overseeing several states and 100 franchises.
“The only way that model worked was through structured leadership development: conflict resolution, leadership skills. It was recruitment, yes, but then you had to mentor and coach people,” says Brunz, now the president and regional leader for Paul Davis Restoration. Brunz left his corporate position with College Pro to be a franchisee in with Paul Davis in 2010. He built four Paul Davis franchises in the Twin Cities area, then bought out his partners and merged them in 2016. His operation now employs 70 people.
“I would say I’m the vision guy and Mitch is my integrator,” Brunz says of Mitch Seiffert, Paul Davis general manager who has partnered with Brunz since their days with College Pro Painters. “When we hire people, we tell them that we’re still a startup after seven years,” Brunz adds. “We keep reinvesting and we are taking a risk on them. There will be freedom and fun, but work is the expectation.”
Brunz has worked since he was 12. Starting a paper route, he had to sell subscriptions, collect money from his customers and pay his bills. With 13 brothers and sisters, it was the only way to have cash in his pocket.
“It’s really the person’s ability to leverage the strengths of a franchise. A good franchise system leverages national marketing and processes and systems, and for that you pay a royalty to the franchisor,” Brunz explains.
However, over time the value for royalty goes down, if you don’t leverage people and expand your capacity to grow the business. “If you can’t grow past the owner/operator stage, then you might as well get a job, work less and not deal with cash flow issues,” Brunz adds.
Seiffert agrees. After years of management, he believes that top performers subscribe to a sense of purpose beyond money. He filters his employee selection process by certain characteristics he has seen in top performers. “I’ll quote Simon Sinek, as I’ve found it to be so true, ‘People don’t buy what you do; they buy why you do it,’” Seiffert says.
The other big “aha” Seiffert learned from franchising is the systems. Operational systems are easier to teach, which makes it easier for employees to duplicate quality expectations.
Of course, you also need cash. It may take $200,000 or less to start a business, but you also need working capital, Brunz estimates. Then to grow you can plan on adding another $50,000 to $100,000 in payroll expenses per hire. “Every time we took a risk to add people overhead, we knew that we needed to get the ROI in increased sales or revenue pretty quickly. We couldn’t afford to spend six months on a new hire with nothing to show for it.”
Call it transparency. Call it a dose of reality. It’s a daily practice of process, people and profit management.
Location: St. Paul
Inception: 2009 — Brunz bought franchise; 1966 — franchisor started by Paul Davis
Leadership: Caleb Brunz, President; Mitch Seiffert, General Manager
Description: Commercial and residential catastrophe restoration company.
Thinking of franchising?
If a franchisor promotes a $40,000 franchising fee, double that for working capital. Double it again to hire someone.
Leverage the systems in place to support you, whether it’s bulk mailing, marketing programs or accounting support. Get involved so you really know what’s available to you, or what you could request as a new option.
Know why you are doing this business, not just what you sell, so other franchisees or employees can imagine them.