David McKinnon, one of the most accomplished franchise builders in the world, discusses his passion for franchising and key advice to grow your business. As Co-Founder of Service Brands International, he talks about how he built Molly Maid, Mr. Handyman and other companies to represent nine brands with nearly 2000 franchises in eight countries. He discusses the importance of trade associations and his involvement with the International Franchise Association. Tune in to this week’s episode of Million Dollar Monday to hear more.
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David McKinnon, one of the most accomplished franchise builders in the world, discusses his passion for franchising and key advice to grow your business. As Co-Founder of Service Brands International, he talks about how he built Molly Maid, Mr. Handyman and other companies to represent nine brands with nearly 2000 franchises in eight countries. He discusses the importance of trade associations and his involvement with the International Franchise Association. Tune in to this week’s episode of Million Dollar Monday to hear more.
Chapter Summaries
Key Takeaways
Resource links:
CONNECT WITH MILLION DOLLAR MONDAY!!
Hello and welcome to Million Dollar Monday. I'm your host, Greg Muzzillo bringing you real successful people with real useful advice for people with big dreams. I understand big dreams. I turned an investment of$200 and a lot of great advice from some really successful people into my big dream Proforma. That today is a half billion dollar company. Well, hello and welcome. I'm excited to introduce today a great friend, a long-standing friend in a very successful businessman who has great experience and great success in running multiple brands, building multiple businesses throughout multiple countries, actually, and also giving back. And we're going to talk a little bit about his generous endowment to Next Gen Franchising and some of the other business ventures he's involved in today. Please welcome David McKinnon, David, thanks for joining me.
David McKinnon:Greg. Thank you for having me, my pleasure to be here. Good to see you again.
Greg Muzzillo:Good to see you again. You know, it's funny. I really mostly knew you as the Molly Maid guy. I hate to say that, but that's kind of how I knew you. And now that I'm really studying your background and preparing for our time together, I myself am overwhelmed at the number of businesses that you built, really under, you know, under the brand Service Brands International, but also the number of businesses you own today. So let's jump right into it David, tell us just a little bit about your growing up years and your educational years and your early career background that got you into business and then business ownership.
David McKinnon:Greg, Thank you. Well, I grew up in the Caribbean. My parents were missionaries, so I had an idyllic upbringing. We lived on the island of Cotola just had this great upbringing. And then we moved. My parents ended that session ended up moving back to Toronto Canada. And when I was 17 years old, I met a guy, he asked me what I wanted to do with the rest of my life. And I was stunned because I thought I could give him a good answer. And I didn't. And he said, well, why don't we start a business together? And I said, what are you thinking? He says, well, they have this new thing now called a PC. And it's being sold in the United States were chain of stores called Computer Land. And, so I drove to Detroit that weekend and they were selling for about$5,000 a computer and learned that there was a 30% duty on bringing a computer across the border, back into Canada. But if you took the Hard drive out, which was about a five minute job, uh, it wasn't a computer anymore. And, long story short, when I was 18,19, well just maybe to finished the, the economics. So what was costing us$5,000 in Detroit, we were selling for 15,$17,000 in Toronto and, for a young kid, with no experience or no money or anything at 19 years old, I found myself with a quarter of a million dollars to spend and, decided to buy a service master franchise. And I did go to college. I got an accounting and finance degree on the side, but then that service master franchise, we were one of the first ones to get to a million dollars a year. And we were in the commercial carpet cleaning business. And, another guy asked me another question. He says, what are you going to do with all your business acumen? And you're not just going to do this, are you? And I started thinking some more and, what could it be? And, I met a lady named Adrian stringer and she was the founder of a little company in Toronto called Molly Maid and make the long story short a year or so later, I ended up in Ann Arbor, Michigan with the rights, purchasing the Molly, Made the system. And it had its ups and downs, but let's just say and ended up extremely well. And in the 1990s, we were kind of, I won't say sold out, but it was getting harder and harder to sell franchises. We had a lot of dots on the map and we started thinking about, well, what, what other services could we offer other than maid service. And, we started to thinking, well, why don't we become a multi-branded franchise company? We know franchising, we've been pretty successful at it with Molly Maid and, long story short, we ended up with Mr. Handyman, 1- 800 Dry, Clean, Protect Painters, PuroClean, ended up with nine brands under the service brands umbrella and, had a tremendous run in the nineties and the 2000. And then, in 2015, we had the proverbial offer. We couldn't refuse. And, w e sold the company in June of 2015 with all of its subsidiaries and then I became a unemployed person at that time.
Greg Muzzillo:Well, you're probably still unemployed, but probably
David McKinnon:I'm unemployable for sure.
Greg Muzzillo:Well, we both are David that's right. But you're probably one of the busiest guys I know. All right. So that, that being said, how many total franchises did you have within this umbrella company of franchises?
David McKinnon:Almost 2000. And we're in eight countries.
Greg Muzzillo:Which of the brands? David, did you buy and which the brands did you start from scratch?
David McKinnon:Well, none of them, none of the brands, we started Molly made from scratch, but other, other than that, the other brands were in existence, but they were not a franchise brand. It was a single standalone company in the case of Mr. Handyman, out of Massachusetts and painting company was out of Atlanta. And so we purchased the rights to an existing system and then we started to franchise it from there.
Greg Muzzillo:So when you were saying about Molly maids, you said it was a lot of ups and downs, but it ended up okay. Tell our folks a little bit about some of the ups, some of the downs.
David McKinnon:Well, the, the big, up one of the early big ups was, November 11th, 1986. We were trying to sell franchises. It was before the internet. There was these things called franchise shows, which I know, you know about with a guy named Don Pelladino, but, we, we hired a PR firm. I didn't even know what PR was back then, but public relations firm and lo and behold, she got us up front page story in the USA Today in the money section and that the headline of the story was something like how to make a hundred thousand dollars a year in a house cleaning franchise and it had a picture of a Molly maid car, in the front section of the paper. And I'm going to guess we sold 50 franchises just because of that one article. And that really launched the company. On our trajectory. We, from there, however, one of the down sides, we got into, um, major lawsuit with a lawyer that rounded up some franchisees and started saber rattling and, really cost us a couple of three years. And, I actually ended up resigning my position, and we had sold some of our stock to a company, a big conglomerate that you would know, and they just couldn't deal with it. And so they went to bankruptcy to bankrupt the company. And I stepped back in, took it over that, got all of our shares back and we kind of reconfigured ourselves. We put in some high-end software for our franchise owners, and that allowed our average franchisee to go from about$300,000 a year to 1,000,005 a year. And it really changed. It really changed everything for us.
Greg Muzzillo:The, malcontent group that was creating some of these problems with lawyers, did they all go away?
David McKinnon:They went away. They all wanted back in after awhile. And then we said, no, which was a really hard thing to say at the time, but, we won every single case against them and proved our agreements worth worthwhile. And the good news is from that date where we, you know, 26 years, we never had another piece of litigation,
Greg Muzzillo:You know, David I'm sure you'd agree with me. Troublemakers are troublemakers and no matter what they might say to want to get back in, why would you ever open up the door to people that were trouble at one point in time? So good for good for you,
David McKinnon:That is exactly Right.
Greg Muzzillo:Good for you for holding the line. So that's really curious to me to go from$300,000 average unit volume to one and a half million, what possibly could the software be doing, could have done at the time
Speaker 3:It's scheduling computerized scheduling, automate automatic notices to employees, to customers, automatic service records for service times for vehicles, things like that. It really, it took it from a, from a paper and a pencil, business to fully automate it.
Greg Muzzillo:That was expensive. I'm sure even back then technology was way more expensive back then, but, uh, I'm sure you proved it to be well worth the investment.
David McKinnon:It was absolutely.
Greg Muzzillo:So it was Molly maids, the largest of the franchise franchise organizations underneath the umbrella.
David McKinnon:It was, we were almost half a billion dollars when we sold the company, just in the Molly Made brand.
Greg Muzzillo:What was number two in the, of the franchises that were part of your umbrella,
David McKinnon:Mr. Handyman. Yeah, we had about 300 locations. It was becoming, you know, we were only in it for maybe six years at that time. We were becoming the household brand for home repair and small jobs. And, yeah, Mr. Handyman did very, very well.
Greg Muzzillo:Yeah, let's go back to that PR thing. I think, I think we went over that a little quickly and I think there's just, no, there's no accounting for great PR when it does some business shifting stuff like, like what you were talking about, how did you find the right PR firm and how are they able to garner that kind of recognition for you?
David McKinnon:The PR firm we found was the one that almost every franchise I used SNS Chicago, and, they, they had, a very good staff and we happened to get a good account manager that was very creative. And, we were pretty diligent because we had no, you know, we didn't have a lot of money then. And so spending four grand a month for a PR agency was a pretty big investment. But you know, you're always hoping for the, the one big year, the today show or the front page of the USA Today money section. And we were fortunate enough to hit that if a jackpot,
Greg Muzzillo:I think what some people don't know is that, and I never worked with, although I heard a lot of great things about them, but I think a lot of people don't really understand that sometimes when, publications are looking for a story, they go to those PR firms that they know are going to have a story. And then that firm is going to, they, might have gone to SNS and said, give us a great story in the world of franchising or whatever that makes good money or whatever. And, from there asking you end up on a front cover and get 50 franchises and a lot of great momentum.
David McKinnon:That's probably exactly what happened.
Greg Muzzillo:So I would think for all of those entrepreneurs that are listening, finding a great PR firm, the sooner, the better, even if you might think you can't quite afford it, finding a way to afford it. I think David you'd agree is a great way to get going and growing.
David McKinnon:Yeah. It's one of the many arsenals you need to have, working on your side, you know, today everything's so different with social media and the internet, but you still need PR no doubt about it.
Greg Muzzillo:Because they have the relationships with the media that when they're looking for the story, you want to be in the right place at the right time with a great story. So, yeah. You know, recently I have a son that got into a business and, I advised him, listen, you got to go find a trade association and you have to, you can't be on your own all alone. I said, probably the number one thing that ever got me to where I am is being a part of trade associations and networking with all kinds of other people and getting great and professional training and great neck working advice. So tell me how you got involved with the International Franchise Association and, and what your advice would be about getting involved in trade associations,
David McKinnon:Great segue, Greg. in fact, when people asked me, they say, point back, say, what was the one thing you did that made your company work so well, and it's easy. I joined the International Franchise Association and I met four other guys that had all different business. One was photo, one was called Decorating Den, Moto photo. And another one was a FCI out of, Deck the Walls. Was there a big brand and the, great American bread company out of Montana, and we all formed a informal board. And every six months we met at one of the member's business and we would spend two days critiquing their business and telling them what we thought they could do better. And then they would do the same when they came to my business and we would have a monthly phone call. And it was basically, you know, pre existing version of something like Vistage or one of those. It was very informal, but I tell you it transform our company. And, that's really, when my eyes were opened to the fact that the skill set that we had was franchising. It wasn't Maid Service. And that's when I went, wait a second, if we could just find other profitable businesses, we can apply the franchise expertise, we'd have to this. And in the marketing. And that proved to be a pretty powerful combination, getting us ultimately to nine brands and multiple thousands franchisees, that, you know, leveraged the experience we all really had. And it's one of the things I would tell your audience when they're looking to grow. Don't go grow in the area. You don't know anything about, try to take what you've, the expertise, the contacts that the synergies you've got around you and look at what other businesses might plug into that, that you could just apply the same techniques, the same, you know, the, one of the things I looked at was the, the marketing department could be the same for Molly Maid. And for Mr. Handyman, the accounting department could be the same and the legal department would be the same. So you could get, a lot of synergies, with very little more increased overhead by adding brands in our case, our, these brands on to our businesses. But in the end, as I look back, you know, we were able to just leverage that franchise experience and even apply the same PR for Molly Maid to Mr. Handyman.
Greg Muzzillo:Yeah. I think there's a lot of wise advice there, David, you know, entrepreneurs like you and me can get bored eventually, right. And, want to get a new playground. But the key really is how can you leverage you use that word wisely? How can you leverage what you already know to find a new playground, but leverage your experience expertise in a new playground, rather than doing something completely new I've heard the saying many times, m ake money in your own business and lose it in other people's businesses.
David McKinnon:Yeah. That's good advice.
Greg Muzzillo:So now not only I'm sure. And I know that you took a lot away from your time and membership in the International Franchise Association. I know you also gave a lot to the International Franchise Association, and by the way, congratulations, I know the International Franchise Association named you to their hall of fame. And I know they really, I know they appreciate all of your contributions back to the world of franchising. And one of those contributions was making a significant investment in an endowment in Next Gen Franchising. You want to tell us a little bit about that?
David McKinnon:Sure. So I, the year so I sold it in 2015. So the, the IFA meeting in February in Las Vegas, 2016, there was this new idea Doc Cohen had this session called Next Gen and Franchising. And the whole idea was they were trying to figure out how to involve younger people in the IFA younger businesses and how they could stimulate, excitement in young, in the youth about franchisee. And so, long story short, they had, they invited 20, young entrepreneurs from all over the world who had submitted an application. And they somehow ran through a qualification process. They had a session that I snuck in on, and it was kind of like a speed dating section where for five minutes a person would tell their story and then we'd make recommendations back to the person. In the case of the table. I sat down, there's a guy from Nigeria and a gal from the Philippines, and they were telling us what they were doing. And, you know, I had just gotten out of franchising and I got so stimulated by this whole thing. And I immediately saw a way to take this and make it into something that could be pretty significant. And so Doc Cohen said, tell me your idea, how much money do you want to put in? And I told him, he goes, it's your baby. Go run with it. So, up until COVID, we ran a international global competition, 3,000 applicants last for the last one, we ran, 20 winners, bring them to the IFA convention. Then we've had a work off during the first two days where we would narrow it down to three of the 20. And the three of the 20 were finalists very much like shark tank and the final day go in front of 5,000. People we'd have special judges. I actually had Daymond John judge a couple of years ago, and then they pitched the pitch pitch to the audience, and then the audience votes on their, on their phones, which idea they think is worthy of the winner. And it's been a tremendous, I've got all these friends now all over the world. I get texts from people at four in the morning telling me what their, what the new milestones they've hit and their business. And it's just been a, it's been one of the most joyful things I've done in my life.
Greg Muzzillo:There's no doubt. David, I, you know, you and I were both young and setting our hearts and minds on achieving a certain level of success, surely was a great journey and a big passion, but once you achieve it right, helping others, which is why I do Million Dollar Monday, which is why I'm appreciative of you coming on here, just helping other people achieve some level of success. I don't know. I, of course, I know you enjoy your success. I entered my success, but I think, I think sometimes I might enjoy helping others easily, as much as I've enjoyed achieving my own level of success.
David McKinnon:Absolutely. I get more out of helping other people achieve their dreams now. And, it's wonderful that I'm able to do so.
Greg Muzzillo:Well, David, I truly am impressed with what I've known you to accomplish and what I've learned in preparing for our time together, that you've accomplished. And, so my final question for you is now that you've achieved such a great level of success in your life and in business, what big dreams do you have left for the rest of your life?
David McKinnon:So interestingly, I've come full circle, I've become a franchisee. Again, I am a franchisee for Sola Salons, which is a business where we're basically the landlord to beauty professionals. And, my goal was to involve my children in this business, which I've been extremely successful at. I have two children on each coast, Florida and California, and, we have five stores open and they're in the process of opening three more. And, it's a, franchise business. It's headquartered in Denver, Colorado. And, again, we, open anywhere between 5,000 and 8,000 square feet, chop it up into 66 square feet of a lockable door, most temperature controlled. So a person can go from working in a studio with 12 other people in a row. And the music's the same and the temperature's the same. And every day learn the drama of everyone else's life around you. And people want to just be their own boss shut their own door, have their own clients. And for 350-400 dollars a week, they can rent their own space, be their own boss. We helped them with marketing and online, management tools for scheduling their customers and all that stuff. But it's, it's, it's been a great business for us and it's been a real thrill for me to watch my children grow in the business world. And in franchising,
Greg Muzzillo:David It's been a real honor for me to spend some more time with you reconnect with you. It's been too many years and, I'm proud of you proud of your success and proud to call you friend. Thanks for your time, David.
Speaker 3:Thanks so much for having me, Greg, all the best to you and you.