Independent Entrepreneur Cleans Up In Franchise Field

Cleaning Services 'Recession-resistant,' Says Businessman

January 27, 1991|By Erik Nelson | Erik Nelson,Staff writer

Four years ago, when Thomas Gilliland hit 30, he decided it was timeto stop selling for other people and start his own business.

Now the Columbia businessman and 47 other independent business people arecleaning up, literally -- and figuratively, too, if they are as successful as their counterparts in other regions.

It took three years of searching before Gilliland settled on Coverall Cleaning Concepts, a commercial franchiser that started in 1985.

Coverall had fewer than 100 franchises in the United States four years ago. It had grown to 900 franchises when Gilliland signed on last February. A year later, he controls the company's Baltimore-area territory, and now has 47 franchises. The company now has nearly 1,500.

Coverall recently was ranked 32nd in Inc. Magazine's 500 fastest-growing privately held companies in the United States, and first among commercial cleaners.

"This is the fastest-growing service industry in the country, and it's about as recession-resistant as a business can be," said Gilliland, who operates from an office at K&M Lakefront North in Town Center. "If the door is open, the building's got tobe cleaned."

After paying Coverall a master franchise fee of $200,000 and investing another $140,000, last February, Gilliland said hegrossed $700,000 in 1990 and expects to exceed $1 million worth of contracts this year to clean offices, auto dealers and other businesses.

"I'm where I want to be. I know the things that we have to do, because we want to get better at what we do."

What puts Coverall ahead of other cleaning firms is that many of its cleaning people are themselves franchise owners, and thus more concerned about the job they do, Gilliland said.

"Large traditional janitorial companies, these are the people that are making $4 an hour and they don't care."

"Our franchisees receive 85 percent of the contract price," and when it comes to cleaning offices, that means a minimum of $10 to as much as $30 per hour, he said.

Of that 85 percent, only about 2 percent to 3 percent is spent on cleaning supplies, and cleaning equipmentis provided by Coverall, Gilliland said.

Franchisee Malcolm Bradley, who started toting cleaning equipment a year ago from his home inBaltimore to his franchise area in Columbia, thinks that's a pretty good deal.

"I've done everything from selling stocks to selling cars; this has been one of the most sound things I've gotten into to date.

For an initial investment of $8,000, Bradley was promised $1,500 worth of business a month, of which 9.5 percent goes to the masterfranchise and 5.5 percent goes to the parent company, based in San Diego.

After nine months, Bradley was able to hire enough people todo his regular contract work, and today his franchise does about $8,100 worth of business a month. That includes two 64,000-square-foot office buildings in the Columbia area, he said.

"I actually got into it with the perception that if I could make an extra $500 a month, it would be great. I had no idea that it could grow to this high."

About half of his 85 percent is overhead and the other half is income for him to keep, he estimated.

"Truck drivers only make more money by working additional hours. In this business, you can make more money by hiring additional people," Gilliland said.

There are othercleaning franchise companies, such as $1 billion-a-year Service Master, "but we don't run in to them too often, or any large janitorial services, for that matter," Gilliland said, explaining that "probably 95 percent of all the commercial cleaning companies across the UnitedStates are mom-and-pop operations."

Michael Tuck, founder and owner of competitor MTX International in Owings Mills, said it's not unusual for cleaning companies to gross between $250,000 and $500,000 ayear. But only about 10 percent of U.S. commercial cleaning servicesmake more than $1 million a year.

Tuck, whose contracts top $5 million annually, said he is not worried about Coverall franchises taking his business away.

"There's enough out there for everybody," hesaid, if they want it.

"We normally don't face much competition from franchisees," because the commercial cleaning business requires "a lot of hard hours; nights, weekends. It takes a tremendous amount of energy and effort to sustain it," and in a small franchise, it is the franchisee who has to sustain it.

"My first year I spent a lot of time mopping floors and stripping floors and shampooing carpets." Now, however, with 400 employees, projected to increase to 1,000 overthe next five years, he can stick to managing the company.

Gilliland doesn't do any cleaning either, and instead works 12-hour days supervising his staff of nine and trying to sell the Coverall concept to potential franchisees.

"I like what I do, but to an extent I'm asales and marketing operation, and that's what I like to do," he says.

"On the other hand, what I do is get people started in their own business, and that's a pretty good feeling."

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