Franchisee Knows Value of Good Employees

By DANA MATTIOLI

Ted Schwarz, 45 years old, has been a Stanley Steemer franchisee for 22 years. Mr. Schwarz spoke with StartupJournal about his two stores in Eden Prairie and Rochester, Minn. which he runs with his mother, who is semi-retired.

SJ: How did you become involved with franchising?

Mr. Schwarz: My mother made the choice. She was recently divorced and we were living in Columbus, Ohio, where Stanley Steemer's headquarters is located. She was at a franchising class and met someone from Stanley Steemer and became involved. My dad was already involved with McDonald's restaurants as a franchisee.

My mother, brother and I moved to Minnesota and opened a Stanley Steemer together. My brother has since left the business.

SJ: How much was your initial investment?

Mr. Schwarz: A couple of hundred thousand dollars, which included training and buying the rights to exclusive market territory in 1985. We bought the rights to nine counties -- there is no other Stanley Steemer franchise that we compete with. We renewed our rights this year for a small fee. Trucks and equipment are a separate cost.

SJ: What was your biggest difficulty when you first started out?

Mr. Schwarz: Getting good people to work. You have to hire and go through a fair amount of people until you find a good employee. You need a lot of good employees, not just a few. You also have to get rid of the people in the bottom who are holding you back. It's easy to go into autopilot and keep them, but they can harm business -- whether it's teaching other employees bad habits or showing up late. You need people who want to help your company grow. I do less of this now but I have a manager who I train and I talk about techniques and ideas for hiring.

I have about 50 people working for me. My assistants rotate and I have about a 100% turnover rate each year among assistants. My office and crew staff last between three and seven years on average, but I've had some stay for over 10 years.

SJ: What is your typical day like?

Mr. Schwarz: I get in here usually around 7 or 8 a.m. I do a lot of paper pushing and sometimes I go out in the field. It's getting less entrepreneurial and more managerial. I leave usually by 4 p.m.

SJ: Do you plan on expanding?

Mr. Schwarz: Within the next couple of years I'll probably open another satellite office in Eden Prairie. In many ways Rochester is a satellite office. My employees park the trucks there and fill up on supplies there but the managerial functions are in the Twin Cities office and all the calls come here.

SJ: Do you do much advertising?

Mr. Schwarz: Yes, I contribute 2% every month to an advertising fund that buys national television ads. I also spend a lot of money on my own advertising, over $500,000 each year. This is an advertising-driven business -- no advertising means no business.

I use a lot of yellow pages and direct-mail advertising but we are moving away from that and going into more television. I supplement what the advertising fund is doing with my own television ads. We also have online advertising with offers or coupons on our own Web site and Val Pac's Web site since I use them every month.

SJ: Do you try any low-cost advertising?

Mr. Schwarz: Not much. I find it has low returns and it's more hassle than it's worth. I have tried advertising in newspapers and low-cost yellow pages but I dropped them. We track advertising money. When customers call we always ask where they saw us advertised and keep a list to see what works.

SJ: Is Stanley Steemer's corporate headquarters helpful?

Mr. Schwarz: They provide a lot of help. I had an executive here a while back to visit and go out to dinner. The franchise system is also really helpful. We get together at conventions and talk on the phone about new ideas or problems. It's like a free human-resources database.

SJ: What is the best part of being a franchisee with Stanley Steemer? The most difficult?

Mr. Schwarz: If you're successful it's the money. At the end of the day it is a profitable business. We had $3.7 million in sales last year.

It's nice being your own boss but it can also be a burden. Being the boss is quite a responsibility that doesn’t ever go away. If you’re an employee you can go out the door at the end of the day and forget about work.

It's also hard writing the 7% royalty check every month.

SJ: Do you ever feel like your creativity is stifled in a franchise?

Mr. Schwarz: Stanley Steemer understands that we are our own business people. They don't cramp our style. They don't come in and tell you how to run your business or force you to do things against your will.

SJ: Do you any kind of new technology to run your business?

Mr. Schwarz: Yes, and we are going more and more into that direction. We have a computerized dispatching system that organizes jobs and tracks them. I also use cell phones to communicate with workers. Before cell phones we used radios, but cell phones are much cheaper and more efficient. We are finishing the process of putting our payroll on the computer.

SJ: What advice do you have any advice for potential franchisees?

Mr. Schwarz: Expect to work hard and spend money. The people who succeed in Stanley Steemer are the people who would be successful in just about any field they enter. Also, try to get good workers as quickly as possible, most importantly a good manager.