Floor Coverings International

The right people

Business View Magazine interviews Neil Daley, Dir. of Merchandising for Floor Coverings Intl. as part of our focus on best practices of franchise companies.

Based in Atlanta, Georgia, Floor Coverings International is a mobile floor-covering franchise company that lets customers shop at home for hardwood, laminate and tile flooring, carpet and area rugs, window coverings, and specialty products. The company’s mobile van showrooms hold more than 3,400 styles and colors of name-brand products for residential and commercial use.

The original concept was founded in 1988 and the company began franchising in 1989. In 2003 Floor Coverings International was acquired by FirstService Brands, one of North America’s largest providers of essential property services delivered through individually branded franchise systems and company-owned operations. Floor Coverings International is headed up by President and CEO Tom Wood and has 161 franchises operating throughout the U.S. and Canada. Over 90 percent of its customers are residential homeowners, while the remaining are commercial enterprises.

Recently, Business View Magazine spoke with Director of Merchandising, Neil Daley, to find out more about this successful franchise operation. The following is an edited transcript of that conversation.

Director of Merchandising, Neil Daley

BVM: How does Floor Coverings International stack up against the competition in what is a very fragmented and competitive sector?

Daley: “There’s nobody that really provides a similar service. While there are many in-home flooring companies in the United States, nobody does what we do, which is the customer-centric business model that allows the customer to love the experience and love their new floors. Our competition, overwhelmingly, doesn’t have high consumer reviews. We are significantly higher than any other flooring company in North America. As part of FirstService Brands, we use a Net Promoter Score testing survey for all of our customers – not just those who buy from us – but also those who had an initial contact through consultation.

“What that Net Promoter Score testing shows is we have twice the number of consumer advocates for our brand than our closest competitor. Nobody in the in-home sales side of the floor covering business is even close. When you talk about Net Promoter Score testing, once you get above 80, that gets you in the realm of Apple for customers advocating for your brand. We are consistently, and have been for five years-plus, above 80. We test our customer base continuously, throughout the year. By putting the customer first, by truly giving them a turnkey solution, serving them in their home, and bringing the products to their home so that they can get the absolute best design and function for their budget – that’s our distinct advantage in the marketplace.”

BVM: Still, you do need to reach out to those customers before you can satisfy them. What’s your marketing approach?

Daley: “We have an extensive software system that allows us to understand who our customer is so that we can, very effectively, pinpoint the folks who are more inclined to make an investment with our franchises, rather than using a generic shotgun approach of marketing to all. I’d like to give you all the details, but I won’t because how we reach our customer today is through a proprietary software that has been created to allow us to understand who the right customer is who wants to engage with our brand and then connect. There’s nothing custom in how we market, but how we understand who to market to is the part that’s really unique. And another unique aspect is our customers are serviced by our Design Associates, not our franchisees. These are professional designers who really help the homeowner find a fabulous look for whatever room(s) they’re shopping for.”

BVM: So, your franchisees don’t sit and answer the phone; they’re more proactive?

Daley: “It depends on where the business is in their cycle. As a new franchisee, they have to get very assertive in marketing to reach customers who aren’t familiar with who they are and what they do. But once our businesses are established, the significant majority of our customers are repeat and referral clients. Yes, we continue to do brand marketing in the marketplace, but once a business has been up and running for just a couple of years, the overwhelming majority of our businesses rely on that repeat and referral customer. By having customers that love their experience, they tell their friends.”

BVM: What attributes do you look for in a potential franchisee?

Daley: “Our ideal model is someone who has the leadership experience in business and is able to lead others. Typically, they’re folks with extensive backgrounds as business leaders in other industries. Very few come from within the flooring industry, which is an advantage to us, in that they learn the business our way, which of course, we feel is the right way. As far as capitalization, certainly there is a minimum capitalization required to start this business successfully and cash flow it through the first short period to where it breaks even. But unlike many franchises, the capitalization needed is not that high because our business model has extremely low overhead. We have a small commercial office space for our businesses – not retail, but storefront. The commercial office space allows us to operate at the customer’s job site – their home or their business – with the mobile flooring showrooms. The mobile flooring showroom is equipped with over 3,400 product options, so we can operate completely autonomously, without ever being tied to an office. The combination of having everything that’s needed at hand, plus the technology that we leverage, allows for the business to be a hundred percent mobile, other than the administrative and warehousing needs of the business.”

BVM: How else do you support new franchisees?

Daley: “In regards to ease of start-up, it is extremely easy to start up because we lead our franchisees through an extensive training period that includes, beyond flooring knowledge, business goal setting, leading and training their people, financial modeling, marketing, IT support and training – everything that they need to get the business running. Then we, literally, take a mobile showroom, which is a fully-outfitted, wrapped vehicle, and we hand them the keys, and it’s appointment-ready. We make sure that they have multiple opportunities to experience what it’s like to be a Floor Coverings franchisee by spending time with another business owner as part of their prep. In fact, they spend, typically, six to eight weeks, at a minimum, of training before they see their first customer. So, we have a very extensive training program to make sure that they’re not just flooring experts, but they understand all the pieces that are required to lead and run a successful business, and so, can continue to grow, support their community, and take care of their customers as they scale.”

CEO & President, Tom Wood

BVM: Do you have any multiple franchise owners?

Daley: “We do have some multiple franchise business owners, but we find that there’s so much opportunity within a single territory that the way that we scale is not by adding additional territories, but by adding additional mobile showrooms to the business. As you scale the business, you add another mobile showroom to service the higher consumer demand with one more design associate, which is the term we use for retail sales professionals. Typically, the only time we have folks that invest in multiple territories is if they’re looking to relocate sometime in the near future. As an example, we had a franchisee that wanted to move south from the cold New England winters and bought another territory, and scaled that territory up as he prepared that other business for sale, just so that he had a continuous business operation. Otherwise, there’s no shortage of opportunity – even our smallest, single market can produce a multi-million dollar business.”

BVM: How do franchisees obtain their supplies?

Daley: “We don’t follow the more traditional model of leveraging multiple suppliers for a single product category. Instead, we try to aggregate as much of our purchases as we can through as few suppliers as possible. So, our franchisees get the absolute best service product availability and pricing and that is passed on to our customer. If you were to look at our business, almost 95 percent of our business is through a very few suppliers.”

BVM: Can individual franchisees work with their own vendors?

Daley: “They are not required to use our suppliers, exclusively. Almost all of our franchises have some local businesses that they work with because of design or certain niches that may be in a local marketplace. We encourage that. It helps them connect to their community better and supply the product the customer needs and wants. We do ask that anybody that they do business with, we help vet them to ensure that it’s first-quality goods that are being offered and that the companies that they’re looking to source materials from are strong, and should there ever be an issue that they’re around to take care of it.”

BVM: What is your outlook for the company, going forward?

Daley: “In 2020, we will be adding 30 additional franchises throughout the balance of this year and we’re looking to add approximately 50 franchises in 2021. We are in a rapid growth model. One of the great things about being a part of FirstService Brands is we’re able to look at how our “sister franchises” have been able to successfully grow their systems and repeat the model with Floor Coverings International. It’s a different widget, but it’s the same process from a franchising perspective. We grow, typically, four to five times industry growth, annually. So, we are consistently at 18-20 percent growth in an industry that is commonly only in low single digits.

BVM: How has the company been impacted by the Covid pandemic?

Daley: “The only negative has been around the same thing that affects everyone; we’ve had members of our team become ill. Fortunately, we haven’t lost anybody to the virus. Other than that, we’ve done the right things regarding safety protocols to ensure the safety of our customers and our staff, with all of our folks exceeding the PPE standards, as well as ensuring that our customers have an option for post-installation service for their home; to ensure that there’s no possibility for virus being left behind.

But in regards to business – we’re booming. Customers who may be less inclined to go to a brick and mortar business, today, are comfortable if someone comes to their home, as long as they’re following the proper safety precautions. So we are actually extremely busy. There was a short time in March when things slowed down, as everything did. But we are coming off a strong year, last year, with significant growth planned for the balance of this year.”

BVM: What else would you like our readers to know about Floor Coverings International?

Daley: “Our small business owners have more pride and expertise as a specialist than anyone in the flooring industry. When you combine the pride in what they do, how they are the brand in their local marketplace, it’s easy to see why their hard work has allowed us to become the highest-rated flooring company in North America. And their customers promote the brand because of their hard work. From a business standpoint, we are the white-glove service for any budget, whether it be a starter home to a McMansion. You don’t have to pay a premium to get good people delivering the right service; you just have to find the right people, and that’s our job as a franchisor – to make sure that we find the right people and give them all the tools they need to succeed. We’re very blessed to have the people representing our brand that we have today, and we’re looking forward to a very successful 2021.”

AT A GLANCE

WHO: Floor Coverings International

WHAT: A mobile floor-covering franchise company

WHERE: Atlanta, Georgia

WEBSITE: www.floorcoveringsinternational.com