It’s no secret that the residential renovations sector has traditionally been rife with budget blowouts and disputes. In New Zealand it’s a problem Refresh Renovations has been successfully solving since 2009, and now the company is exporting its unique home renovation franchise business model to overseas markets.  

Ask Refresh Renovations founder and director Jon Bridge what his absolute milestones are in his 15 years of business, and he’ll tell you it’s not about milestones.

“I don’t ever have absolute milestones. I have objectives and I work as hard as I can to achieve them,” he explains. “The objectives I set are always slightly out of reach, so I have to work hard to reach them.”

You’ll never achieve anything if you don’t stretch yourself, adds Jon. “If you have a clear vision of what you want to create you need to stick with it and keep going. Things take longer, cost more, and are always harder than you think.”

Refresh Renovations occupies a unique spot in New Zealand’s franchise sector, and now it’s looking to achieve a bold new objective – to spread its wings into offshore markets.

Jon believes the brand’s success is the result of identifying a real issue for home renovators and creating a solution that successfully addresses it.

“The issue we identified is that with residential renovations there’re often budget blowouts and it’s estimated that 20 to 30 percent of projects end in dispute.”

In such a huge market, and he’s talking the worldwide market here, it’s an issue that’s definitely worth solving, he says.

Jon explains that the main cause of budget blowouts and disputes is the huge fragmentation at the builder level of the renovation value chain, and the resulting scarcity of brands that need to look after their reputation. The market needs larger businesses that need to look after their brands, he believes.

“Small companies also don’t have the resources to invest in the required systems and processes. So, there was a need for someone to establish a large format renovation company that was underpinned by a brand, strong marketing, and strong systems and processes that could be rolled out at a local level.”

Refresh Renovations ticks all those boxes.

“Our model can address the issue anywhere it exists,” says Jon. “So, the key here is to identify markets overseas that have the same structure and the same problems. In our case, the renovation market is incredibly fragmented in every country, and the same categories of people are affected, so the model can work everywhere.”

Changing mindsets, addressing differing regulations

As it markets its franchise business offshore, Refresh Renovations recognises that different cultures have different risk-taking appetites, as well as different levels of openness to innovation and different ways of doing things.

“Our approach requires a change of mindset,” says Jon, “and that’s been our biggest challenge.”

He says it’s about finding early adopters who understand the business concept and the values of collaboration – who are good at growing teams, are process and customer-focused, and willing to take a risk on a model not yet proven in their particular market.

“Once you have 20 to 30 good performing franchisees, others who prefer a proven model will then want to get on board and things will really accelerate.”

Another challenge with exporting the franchise is the fact that building regulations vary between countries and, in the case of Australia and the US, between states. Both countries have building regulations stating that the owner of a renovation company must be a licenced tradesperson – or at the very least, each renovation company must have a licenced contractor as a director.

That simply embeds a model that is proven not to work, states Jon.

“Requiring a licenced tradesperson to be a director or owner of a Refresh franchise is obviously a serious limitation with our particular business model. Our model requires that a person with a strong business and/or professional project management background should be the owner of the company, as that’s the skill that is largely missing in the renovation market, and that is what is required to deliver better service,” he says.

“By requiring renovation companies to have a trade-based builder as a director, there’s the real risk that those people would bring the traditional mindset to the business, and kick back against everything we’re trying to achieve.

“We’ve proven our approach works with our dispute rate being 0.33 percent, compared to the industry average of 20 to 30 percent. It’s 60 to 100 times better for customers.”

This is one powerful reason why Texas, in particular, is firmly in their sights.

An opportunity as big as Texas

Refresh Renovations chose Texas, population 30 million, for its first US launch because the state’s legislative environment for business is very similar to New Zealand’s, and the UK’s – particularly around licensing.

“It enables us to maintain our competitive advantage by having franchise owners who are business-oriented, rather than just trade-oriented,” explains Jon.

“Texas is also a big market. Its population is about the same as Australia’s, and the population of Houston alone is larger than New Zealand’s.”

So far, the concept has been well received, and everybody easily understands it. “Now we’re currently going through the process of finding the right first early adopters to prove the model,” says Jon.

Right across the residential renovation industry in Texas the Refresh Renovations model makes sense, he believes, and he expects the business to really accelerate once the first 20 to 30 franchisees are performing well.

Aside from grappling with the different time zones, the biggest challenge so far has been the legislation. It’s not set up to allow for what’s actually needed in the market, says Jon.

“It’s frustrating and not ideal, but we work around it.”

Having good people on board as in-market partners will always be a challenge too, adds Jon.

He admits to being rather impatient when it comes to building the business and needs to remind himself that it will take time to get the right people on board.

“I just wish lots of great franchisees would jump in immediately so we can crack into building our market share!”

Worldwide potential

A billion-dollar revenue in just ten years, that’s the long-term goal for growing Refresh Renovations, and the focus is very much on international markets.

Jon Bridge believes that’s a realistic goal. “But it could take longer, as everything always seems to,” he admits.

They’re not hedging their bets all on one brand either. There are three other brands the company is looking to get established in selected international markets – Zones (landscaping), Oncore (maintenance) and We Sort It (smaller home service-related jobs).

The potential for growing Refresh Renovations is undeniably mind-blowing. The global renovation market is currently estimated at around US$3 trillion a year (NZD$5 trillion) and is forecast to double that by 2032.

New Zealand’s market is worth a potential $12 billion, Australia’s $35 billion, the UK’s £35 billion, and the US over US$500 billion.

While still relatively tiny from a global perspective, several independent research companies still name Refresh Renovations as one of the key players in the global home renovation market.

“This is definitely just the start,” says a confident Jon. “We’re the only company with this international franchise model that addresses the real issues. We’ve built our own custom IT systems, and we are making our model better and better over time.

“$1 billion is a 0.09 percent share of the markets we currently operate in, not even considering other countries. That’s one project per 1,000 projects done in each market.

“There’s nothing to say we can’t we get to $1 billion and way higher.”

Refresh Renovations could raise the capital to grow even faster, but they’re currently content to grow organically, adds Jon.

“We’re happy either way.”

Source: https://exportertoday.co.nz/