0:00

This is the Franchise QB Podcast, where we

0:00

empower entrepreneurs to win big in

0:06

franchising. We huddle up weekly to educate our

0:07

audience about the most successful small

0:12

business model ever created.

0:14

Franchise it! Welcome to the Franchise QB podcast.

0:22

I'm your host, Mike Halpern, a 20 year

0:22

industry veteran and entrepreneur.

0:27

My mission is for listeners to achieve

0:27

their American dreams of creating wealth

0:31

and independence through franchise

0:31

ownership.

0:34

Every week we speak with franchisees,

0:34

franchisors or vendors that support the

0:38

industry. Thank you for joining us and let's get

0:39

started.

0:43

Joining us in the huddle today is Zach

0:43

Beutler, Founding Partner at HorsePower

0:48

Brands. Welcome to the show, Zach. Hey, glad to be here, Mike.

0:51

Absolutely, glad to have you. So you have a long history in franchising

0:53

and business ownership.

0:57

You started as a sales associate.

0:59

You became a multi -unit franchise owner.

1:02

You are now the founding partner with

1:02

HorsePower Brands, which has a lot of

1:06

concepts under its portfolio and a big

1:06

array of shared services business.

1:11

Before we jump into HorsePower Brands, and

1:11

we're going to spend some time today

1:14

talking about iFoam specifically, tell us

1:14

a little bit about your background.

1:20

You know, I have a great respect for

1:20

franchising.

1:23

I've spent most of my adult life in the

1:23

industry.

1:26

So I started working at a nutrition store

1:26

as a part -time guy and everybody quit and

1:31

I became the GM kind of by default.

1:34

They began franchising and I saved enough

1:34

money to convince the founder to really

1:38

back me with an SBA alum. And I went down to Florida and opened a

1:40

franchise and it was all sunshine and

1:44

rainbows and I grew way too fast.

1:46

And I ended up, I remember we had an $8

1:46

million annual goal and ended up losing

1:53

everything, filing bankruptcy rock bottom.

1:56

And another franchisee at the time had a

1:56

dozen or so locations and I came on there

2:02

with an equity opportunity for future

2:02

growth.

2:05

And we grew that from a handful to 68 in

2:05

about three years and over 40 million

2:09

revenue. Wow. How many States did that cover?

2:13

Over 20. I remember.

2:16

It was really difficult to manage across

2:16

that many states.

2:19

And I traveled 20, 30 days at a time.

2:23

It was, it was, it was a lot of work, but

2:23

we learned a ton and then got into

2:27

franchise development and then in

2:27

consulting.

2:29

And now obviously as a founder of a

2:29

portfolio company, we've launched more

2:34

franchise concepts from one location to a

2:34

hundred than anyone in the history of the

2:38

industry. That's amazing. Yeah.

2:40

So let's talk a little bit about

2:40

HorsePower brands.

2:42

So for those that are. New to franchising and new to the podcast,

2:44

HorsePower Brands is a leading portfolio

2:47

company in home services based in Omaha.

2:50

I had the opportunity to go out there last

2:50

year and check out your facilities.

2:53

Really impressive. Eight brands, including Mighty Dog

2:55

Roofing, which was kind of the first one

2:58

that launched HorsePower.

3:00

We've got Blingle, we've got iFoam that

3:00

we're going to talk about today.

3:04

We have Heroes Lawn Care, Gatsby Glass,

3:04

Groovy Hues, Bumblebee Blinds, and Stand

3:08

Strong Fencing. And as I mentioned before, there are

3:09

eight.

3:12

shared services companies that are really

3:12

designed and engineered to support the

3:17

HorsePower franchise owners.

3:19

And then, you know, we talked about

3:19

briefly before we came on, I had the

3:23

opportunity to talk to your CEO, Tony

3:23

Hulbert, and we spoke a lot about how your

3:28

technology forward and you've created this

3:28

product called Howie that's launching

3:32

later this year. That's going to be this great interface to

3:33

help existing owners kind of grow their

3:37

business and kind of cross pollinate

3:37

between different.

3:40

brands and stuff like that. So that sounds real exciting.

3:43

We got some really talented people in the

3:43

organization that are really helping us

3:47

create some cutting edge stuff. At the end of the day, we are trying to

3:49

focus on being the best franchisor that we

3:52

can be. And with my background as a franchisee in

3:53

multiple concepts, that was really

3:57

important for my mission anyways.

4:01

Yeah, very cool. So before we get into iFoam and talk

4:02

about that concept,

4:05

I know when you and I met, you talked a

4:05

lot about the entrepreneurial operating

4:09

system, which is talked about in the book,

4:09

Traction by Wickman.

4:13

What is it and how does it help HorsePower

4:13

brands and their franchise owners?

4:17

You know, it's interesting. I still remember going through my first

4:18

actual implementation with a certified

4:23

implementer and we had built the business

4:23

to over 40 million revenue fighting all

4:27

the time. And we were really struggling to just kind

4:28

of, you know, that business was managing

4:32

us essentially. And I remember leaving the first day

4:34

going, what in the heck have we been

4:37

doing? And so EOS or the entrepreneurial

4:38

operating system is a system and process

4:43

of how to run a business, how to hold

4:43

people accountable, how to keep people in

4:46

the right seats, how to communicate the

4:46

vision.

4:50

And one of the things I've really learned

4:50

is unspoken expectations leads to a lot of

4:54

resentment and it avoids a lot of that

4:54

miscommunication.

4:59

So, That's one of the biggest things I've

5:00

found in franchising is failed franchisees

5:04

tend to not have a consistent cadence for

5:04

meeting with their team.

5:08

They don't have a consistent way to

5:08

measure their KPIs and they're constantly

5:11

trying to hit these big home runs when if

5:11

they just manage the small things for week

5:17

over week improvement, they could really

5:17

move the needle in a month or two.

5:21

Very cool. And one thing I didn't mention when I

5:22

introduced you was Beutler Beef, which is

5:25

your family's beef company. And I think that ties into where you're

5:27

sitting today.

5:29

Can you tell us a little bit about that

5:29

venture and kind of what that space means

5:33

to you? Yeah. So I'm a third generation entrepreneur.

5:35

My grandpa bought a livestock auction barn

5:35

in 1969 for $1.

5:40

And then he convinced my great grandpa at

5:40

the time to let him leverage the farm to

5:46

buy all the livestock that were guaranteed

5:46

pricing on.

5:49

And he built that business up from a

5:49

failing operation to a multimillion dollar

5:52

business in the 70s and 80s. And it's really interesting today.

5:56

My dad and uncle and aunts grew up working

5:56

in the business.

5:59

My dad owns and operates the business

5:59

today.

6:02

My aunts married entrepreneurs. My uncle owns his own livestock marketing

6:04

business.

6:07

My cousin and I grew up working in the

6:07

business every summer, every day after

6:09

school, every Tuesday for the sales.

6:12

And my cousin owns a large animal vet

6:12

practice in town.

6:14

And so that one decision really led to a

6:14

family of entrepreneurship.

6:18

And my favorite place to come work is my

6:18

grandpa's dirty old rundown livestock

6:22

auction farm. And so the seventies wall paneling, this

6:23

is my like,

6:26

call it my satellite office when I'm doing

6:26

some of the farming stuff.

6:30

That's awesome, man. Well, thanks for sharing that with us.

6:33

So let's dive right in. We talked about HorsePower brands.

6:37

Mighty Dog, I know, was one of the first

6:37

brands you worked with.

6:39

iFoam came shortly thereafter. Tell us just basically, what is iFoam?

6:43

What does it do? iFoam is a full service installation

6:44

company that offers primarily spray foam

6:49

as the main product driver, as well as

6:49

fiberglass, cellulose, concrete lifting,

6:54

et cetera. But what we're trying to do is really

6:55

disrupt the industry by providing the most

6:59

effective insulation product out there,

6:59

which is spray -full insulation.

7:03

Yep. So how big is the industry? Are we talking 20 billion, 50 billion, 100

7:05

billion?

7:08

It's huge. When you look at residential and

7:09

commercial, this will be the largest

7:12

average unit volume concept that we have

7:12

under the HorsePower umbrella.

7:16

When you look at the average job size

7:16

getting into the larger residential

7:21

multifamily and then commercial, you can build a huge business in the

7:23

installation industry.

7:26

So we're talking basically like home

7:26

comfort and energy savings.

7:30

Those are the two main drivers that kind

7:30

of, you know, people find a need because

7:35

their air conditioning units are not

7:35

being, you know, they're just overutilized

7:40

or their energy bills are too high and

7:40

that type of thing.

7:43

Well, there's some exciting stuff happening right now. And in my experience in history and

7:45

franchising, this is the first time I've

7:50

really been excited in a way where.

7:52

When you look at what's happening in the

7:52

world today, there's a energy consumption

7:56

by household that's not going down. It's absolutely increasing.

7:59

You have a government focus on energy

7:59

efficiency.

8:01

There's government rebates. You have the largest manufacturers in the

8:03

space of insulation transitioning their

8:07

business from fiberglass to spray foam,

8:07

for example, Owens Corning.

8:12

And they're lobbying in Washington right

8:12

now to really reclassify the R values of

8:17

different products because R20 of spray

8:17

foam is not the same as R20 of fiberglass.

8:21

It is far more effective and efficient.

8:24

And so what you're finding is there's this

8:24

need for a more effective, efficient

8:28

product out there for new construction,

8:28

for retrofit, commercial, residential.

8:34

And so everything's kind of pushing that

8:34

industry forward to where they need a more

8:39

effective, more efficient product.

8:41

And that's what spray foam is. And that's why there's such a huge demand.

8:44

Yeah, that's what's nice about the market

8:44

size because you have commercial, you have

8:48

residential, you have new construction, you have retrofit, so

8:49

there's kind of something for everyone

8:53

with the product, which is great. So what does a franchise owner's team look

8:54

like to launch?

8:57

When you kind of recommend, okay, you're

8:57

in the business, we like the model, let's

9:01

go, what's that team going to look like?

9:03

They're going to have a technician that

9:03

does the spray foam.

9:05

A technician is going to have what we call

9:05

a helper, a junior technician that assists

9:10

them with cleanup and prep. That's kind of like a sprayer in training.

9:14

They're going to have a sales manager that

9:14

goes out and manages the appointments and

9:17

builds the book of business. And if they're in the business full time,

9:18

they're really the GM of that business.

9:22

If they're managing it at a part -time

9:22

level, well, then they're going to have a

9:25

GM that does the management on their

9:25

behalf.

9:28

Okay. And does iFoam or HorsePower brands help

9:29

at all with the recruitment through your

9:33

kind of shared services platform? We do with the Z services platform.

9:37

We do have a recruiting agency that really

9:37

helps franchisees find their either

9:42

technicians, a general manager or sales

9:42

manager at a really big discount.

9:47

Yeah. Cause. In this business, someone has to be in

9:48

charge of production.

9:50

They have to do sales and kind of keep

9:50

that business dev funnel full.

9:54

And then you need someone that's gonna,

9:54

the technicians and someone to oversee to

9:58

make sure their jobs are done on time, on

9:58

budget, good customer service, all that.

10:01

So you gotta make sure that both things

10:01

are being like, you're working on both at

10:07

the same time to keep the business going. You gotta fill the pipeline and then make

10:08

sure that your backlog's not filling up at

10:12

a pace you can't keep up with. Yeah, there's a balance there.

10:16

So let's talk a little bit about training.

10:18

Like training and support takes place

10:18

there in Omaha.

10:20

What does that look like when a new owner

10:20

on board?

10:23

Well, you know, one thing that's

10:23

interesting that I found, a lot of our

10:26

candidates get into the process initially

10:26

and they find it a little intimidating

10:30

about thinking about going out and

10:30

actually spraying insulation.

10:33

And about two weeks into our process, it's

10:33

not as complicated as they really thought.

10:38

Especially when they talk to franchisees,

10:38

none of our franchisees are from the

10:41

insulation space. So they're all coming into this with

10:43

absolutely zero experience.

10:46

And so at training in Omaha, we run a

10:46

technician training, a sales training, as

10:51

well as an ownership training where they

10:51

can come to multiple.

10:54

But we do recommend that try to get their

10:54

team out there so that we can really hit

10:58

them from all aspects of the business.

11:01

Very cool. So, you know, who are you looking for?

11:03

You mentioned you're not looking for

11:03

people that are in the space.

11:06

So what makes an ideal iFoam franchise

11:06

owner?

11:10

Well, I would break up our concepts at

11:10

HorsePower into three categories, small to

11:14

medium. medium to large and then extra large,

11:15

basically opportunities.

11:19

And iFoam is definitely the largest

11:19

business opportunity or biggest wealth

11:22

asset that we have to offer.

11:25

And so we need a candidate or a franchisee

11:25

that's more driver hunter, conqueror

11:32

personality. They need and want to build a bigger

11:32

business, to get into an industry or a

11:38

concept and make a few hundred thousand

11:38

dollars, just not attractive or not enough

11:42

of the, not enough. not enough income for what they're really

11:44

looking to build.

11:48

When you look at where we started with our

11:48

first brand ever, which was Monster Tree

11:52

Service, then went to Redbox Plus, those

11:52

were very equipment heavy businesses.

11:56

I have really found that when you're

11:56

looking at home services where there's a

12:00

barrier of entry where that equipment can

12:00

keep out a lot of the smaller mom and

12:03

pops, you can scale a lot more

12:03

aggressively.

12:06

So we want franchisees that want to build

12:06

a big business.

12:10

Yeah. You mentioned Monster Tree and Redbox

12:10

Plus, both brands that got

12:13

to that magic 100 unit mark before they

12:13

were exited.

12:17

And it looks like you're doing the same

12:17

thing with all your new concepts, which is

12:20

great. And I can see that this has more of a

12:21

bigger investment in front with the

12:24

equipment. So let's talk about where you guys are

12:25

today.

12:28

How many owners are in the system? How many territories are you operating

12:29

nationwide?

12:31

We're around 150 territories with about 40

12:31

owners.

12:36

So most owners are going to have between

12:36

three to four territories?

12:38

Our average is about 3 .2 to 3 .3

12:38

depending on the month.

12:42

So a lot of our franchisees don't buy out. multi -unit.

12:45

Got it. So with the iFoam model with a little bit

12:46

more equipment intensive like Monster

12:50

Tree, what is that item seven look like? How much does it cost to get in?

12:53

I know you guys are really making sure

12:53

that owners are properly capitalized and

12:59

come in with more capital than they

12:59

probably need, which is a great thing and

13:02

pretty unique. But what does that look like to to get

13:03

someone up and running?

13:06

Well, we've changed a little bit of our

13:06

initial strategy based on how aggressive

13:10

the franchisees are growing. And so we're really trying to get them to

13:12

three spray foam rigs as quickly as

13:15

possible with the least amount of capital

13:15

required.

13:18

And so we've made some changes that a

13:18

three territory market is going to be

13:22

around a $400 ,000 overall investment when

13:22

you look at our equipment financing

13:27

partner or our equipment financing

13:27

partner.

13:29

And so we now have an equipment financing

13:29

partner that they can leverage 10 % down

13:33

in 84 months. And so that really allows them to get in

13:35

with a lot less capital.

13:39

Yeah, absolutely. Very cool. So let's talk about the FPRs.

13:43

What can you share with us in terms of

13:43

return on investment and item 19?

13:48

Well, the item 19 that's getting launched

13:48

here any day, we're showing, when you look

13:53

at the tiers of performance, the top 25%,

13:53

top 50, and top 75 % of performance,

13:59

you're going to see an average first year

13:59

of above seven figures.

14:03

And so they're doing a lot of revenue very

14:03

quickly.

14:07

One of the things that we didn't do a

14:07

great job of initially was preparing

14:10

franchisees for how fast they're actually

14:10

going to grow.

14:13

And so now when they come to the process,

14:13

we really prep them to say, hey, you're

14:16

probably going to want another piece of

14:16

equipment within six months and hopefully

14:21

another piece of equipment with a third

14:21

piece of equipment within the first year.

14:25

By preparing their strategy initially, it

14:25

really gives them a lot of confidence,

14:29

especially when they then go validate that

14:29

that's what they're hearing.

14:33

It really gives them a lot of confidence

14:33

to make that capital.

14:36

up for investment. Yeah, very cool.

14:40

Yeah, I mean, it sounds like a space that

14:40

just has a lot of upside.

14:43

It's still in its infancy and it sounds

14:43

like there's a lot of white space for new

14:47

owners to come in and build a pretty big

14:47

business.

14:49

So, and that sounds like where you're

14:49

looking for empire builders are going to

14:52

take some territory and you understand

14:52

there's this barrier to entry with the

14:56

equipment expense and kind of build a good

14:56

team and kind of scale it.

14:59

So that's all real exciting. Yeah, we kind of plowed through this

15:01

pretty quick. Are there any other aspects of iFoam you

15:03

want to share with the audience?

15:06

We know, I think when you're looking at,

15:06

when I was a franchisee, there was three

15:10

things that I really looked at. And well, two things initially, and then

15:11

the third thing I learned later, but a lot

15:15

of times candidates get in, they're asking

15:15

a lot of questions around what's it gonna

15:18

cost for me to get in and how fast can I

15:18

cash flow?

15:21

Well, after they get a little bit more

15:21

experience in their investigation, they're

15:25

then asking, hey, where are the headaches

15:25

gonna be?

15:27

Where am I really gonna get frustrated

15:27

with this industry or a concept?

15:31

Where a lot of people don't ask the right

15:31

questions in my opinion is,

15:34

in three to five years when they're

15:34

putting in their capital and their time,

15:38

where do they get the biggest return on

15:38

that time in capital?

15:42

What gives them the biggest enterprise

15:42

value opportunity?

15:46

And I'm really excited where they can

15:46

build a very large business.

15:50

They can depreciate the equipment along

15:50

that growth journey and they can build a

15:56

ton of enterprise value. And that's where I'm really excited about

15:57

this concept, especially with where we're

16:01

at today with the economy, with the

16:01

shortage of new homes.

16:04

and new home construction, there's a

16:04

really good opportunity to get in now.

16:08

And I think we're right at the right time

16:08

for people to jump.

16:12

Yeah. Are there any markets that stand out for

16:12

you that are really strong for this brand

16:16

that still have some good opportunity for

16:16

multi -unit ownership?

16:19

You know, one of the things that's really

16:19

interesting is that this is one of the,

16:25

not that we don't have success with that,

16:25

not our concepts, but we're having a

16:28

really good success or consistent success

16:28

with the small to medium markets.

16:33

So if there's a market that's say 600 ,000

16:33

total population or even down to 200 ,000

16:38

in population, they're going to be able to

16:38

validate that they can build a huge

16:42

business in those smaller footprints,

16:42

especially if there's some rural area

16:45

opportunities. And so the markets are huge.

16:50

Awesome. Well, this is good, man.

16:52

Well, I really appreciate you taking the

16:52

time to chat with me about HorsePower

16:55

brands, about iFoam. So if anyone listening wants to connect

16:56

with Zach and his team, contact me at

17:00

FranchiseQB .com or on Twitter.

17:02

@QBFranchiseQB. I'll get you guys connected.

17:04

Thank you so much, Zach, for taking the

17:04

time to get in the huddle and discuss

17:08

iFoam with us. It was my pleasure, Mike. Thanks for having me.

17:11

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17:12

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17:16

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17:18

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17:28

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