S10 E6: From 0 to 350: The Rapid, Explosive Growth of Koala Insulation

Speaker A: Welcome to Franchise Empires, where aspiring entrepreneurs learn exactly what it takes to become a successful franchise owner. From one location to 10 and beyond. I'm the Wolf of Franchises. Hey guys. Today on the show, I am the president of Koala Insulation. If you recall, from about a, uh, couple years back, I had the founder Scott Marr on the podcast. Scott grew koala insulation to 350 plus territories and sold it for what's rumored to be about a 90 to $100 million, uh, sale. And Koala is now a part of the Empower Brands portfolio, uh, which is, uh, where we touch base now with the president of Koala and see where the brand's at, what they've been up to, what they think the growth is from this point forward and really how they built a, uh, super impressive brand in the insulation space. Uh, and we get to dive into the entire insulation business as well. So hope, uh, you enjoy. The Wolf of Franchises is the CEO of Wolf Pack Franchising as well as a creator at Work Week Media. All opinions expressed by the Wolf and podcast guests are solely their own opinions and do not reflect the opinion of Wolfpack Franchising or Work Week. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The Wolf Work Week and Wolfpack Franchising may maintain positions in the franchise franchises discussed on this podcast. A full year, your first full year, uh, you know, uh, do you want to maybe give, give uh, us a primer on just, uh, your career in the franchise world and like that that led to you, uh, uh, becoming the, the CEO and president of Koala? Yeah.

Speaker B: Yeah. So as the brand president, you know, it's been, it's been quite the journey to, uh, to get here. I've been in the franchise space, you know, working for franchisors for more than 20 years. Uh, you know, majority of them have been in, you know, leadership and executive, uh, positions. Multiple different franchisors, from fitness to wellness to, you know, restaurants, uh, as well. And uh, I found my way to Koala installation, uh, you know, was really intrigued with, uh, Empower Empower brands, uh, and Koala. And you know, one thing that you know, really, really attracted me to Qual Insulation was it's a home service brand that was so approachable and likable. And you know, I really, really, uh, like the marketing. And as I looked more and more into the opportunity, uh, of you know, being the brand president here at Qual Insulation, it was really just checking off every box that I've been looking for uh. And ultimately at the time I wasn't even looking. Right. Uh, and you know, it's been, yeah, it's been one year, one year and one day as of today, uh, since taking my seat as, as brand president. And uh, uh, it's been quite the journey so far.

Speaker A: Yeah. And you know, longtime uh, listeners of the show will know that I interviewed Scott, uh, Scott Mar, the founder, uh, probably a year and a half ago. Um, and something I distinctly remember from that conversation with Scott was, um, because you know, for listeners who maybe aren't aware, Koala insulation started franchising, I believe in 2020, uh, you know, scaled quickly to I believe 350 territories sold. But you know, they had about a. When I interviewed Scott it was like 100, at least 100 franchisees open and operating like incredibly fast, um, growth. And again not just units sold, like the franchisees got open and were, you know, uh, driving performance, uh, in their local markets. And something Scott said was, he said franchising is all about knowledge transfer. He's like, my job is right to be able to get these franchisees up to speed as quickly as possible so that they know how to run this business. And obviously Koalas, you know, a support team behind them. But um, right. The goal is that you can get them kind of armed and dangerous with the knowledge they need to, to win in their market. And uh, he said that's where he focused a lot of his time as a second time franchisor with Koala is like building the systems for that knowledge transfer. And you know, so anyway, it's a long winded way of getting to the question, Corey, which is given you've been in the franchise world for a while. Right. Uh, you know, was there anything in particular that evaluating Koala where you know, based on other brands you've worked for, where you were like, wow, these uh, you know, they clearly have some, you know, any, any. Yeah, just any. Anything in particular on the systems that maybe impressed you? Uh, I'd be curious to hear.

Speaker B: Yeah. So, you know, one, one thing that uh, you know, I, I really liked uh, seeing was the vertical integration of you know, being. Being able to cut out the middle, middleman when it comes to building out our rigs, uh, for our franchisees. I mean, uh, you know, cutting out the middleman and really being able to drive prices down for our franchisees. That's one thing that uh, you know, he did an absolute incredible job for, you know, job with another component, uh, you know, is getting our franchisees ramped up properly and having our field tech support team getting out and supporting our franchisees, uh, to get, to get their business launched, uh, and you know, requiring that. Right. So you know, when a franchisee leaves training, we're scheduling that you know, first on site visit to really help that business get launched for that continued training, that continued education, um, you know, franchising, you know, it's all about that continued education component. So we've added additional layers and additional layers, uh, throughout, you know, the course of the last year to uh, provide, you know, our franchisees that world class support that they desire when looking into a system.

Speaker A: Yeah. And you mentioned rig. Can you. What do you mean by that?

Speaker B: Yeah, so the trailers. So you know, every single franchisee uh, you know, gets, gets two trailers. Two trailers or box trucks that you know, one is for spray foam insulation and the other is for blown in insulation as well. So that's part of the, part of the package when we onboard a new franchisee.

Speaker A: Okay, got it. And so um, the vertical integration component then I guess that's like uh, I mean surely is there like you're not manufacturing that or are you.

Speaker B: We're not manufacturing. We use all of our, you know, we use, you know, world renowned manufacturers, uh, uh, for the equipment. What we're doing is we're putting them together. We're you know, with the customized, you know, uh, customized four qual insulation franchisees.

Speaker A: Okay, nice. And so yeah, they just, they get it delivered kind of in perfect condition.

Speaker B: Yeah, you know, uh, we, we talk that it's a, uh, an installation company in a box, uh, that they're getting started with. Right. You know, everything that they need, including marketing and such, you know, uh, put together right then and there. So after they complete their training, they are ready to launch their business.

Speaker A: Yeah. That's amazing. Um, super cool. And did you want to give maybe a primer for um. Because again I kind of went through it earlier. Right. With the fast growth, um, you know, from I guess a year and a day ago, you know, generally where was the business at and you know, what's, what's been the progress and trajectory since you've been involved on a day to day basis?

Speaker B: Yeah, yeah, absolutely. So you know, we had that, you know, very, very quick growth, uh, you know, when it came to quality, uh, you know, really, you know, took off 2021, 2022 after we started franchising in 2020. And you know, when I, when I took my seat, you know, the first thing I took a look at was the overall support, franchise support. And you Know that, that daily, you know, that daily support that business, you know, coach per se and you know, added, you know, added four times as many people in the support team over the course of last year. You know, we've added, you know, um, a full team of operational support team members that they're sold. Their sold, uh, jobs are to support our franchisees and drive their KPIs in the business and really, you know, an extension of a franchisee for their team as well. You know, those franchise business consultants or coaches, uh, you know, led by our director of operations. Another new team, another new position that we formed, uh, over the course of the last year as well. Then we took a look into uh, the field support team going, you know, how do we take this field support team from good to great. And you know, we added uh, additional headcount on the field support team, uh, added proactive visits for our franchisees. So getting out there, uh, when there's not an issue, right. Uh, and supporting our franchisees, you know, that, that's, that's you know, gone over so well with, you know, with our entire system, uh, to. And then marketing, really taking a look at our marketing m taking a look at our digital partners and such as well and ensuring that, you know, we are providing the best possible resources for all of our franchisees to drive as many leads as possible for the goal of having each lead be ah, as cost effective as possible as well. Um, so we added uh, additional team members, um, in the marketing room too. So really over the course of the last year our team's been growing just as fast as our organization has been growing as well. Uh, in the last year we've added nine additional seats, uh, to support our franchisees. Uh, you know, and that's. That, you know, that, that says a lot, right? We've invested in, you know, the, the human capital to drive our system even, you know, to, to grow it even faster. Now we are. Our existing franchisees, they're, they're growing, their existing businesses are continuing to grow, continuing to ramp up. One thing that I'm really excited for is we have yet to see a single koala installation location mature. And that's really exciting. You know, we've continued, you know, over the course of the last year we've, you know, we've gone through multiple different ceilings and we don't know how high this business can go and how big it can grow, which is really, you know, really exciting that, that you know, gets me up every single morning, uh, jazzed up to drive this business. So that's something that's great because, you know, as I mention mentioned, you know, we had rapid, rapid growth in 21 and 22. You know, the majority of our franchise locations are less than three years old. Uh, you know, so we're still a very, very young system. You know, we're adding new franchisees every single month, uh, as well, uh, you know, through, through, you know, very aggressive franchise development, uh, you know, plan as well and you know, working with our partners there too. So, uh, it's, you know, business is a lot of fun when you've got a great tailwind. The qual installation, we've got one hectic tailwind right now.

Speaker A: Yeah, I can only imagine. I mean, the momentum generated, especially in those early years. It's got to be pretty exciting. And um, you know, you mentioned kind of like field support, uh, for franchisees and just beefing up the ops support team. Um, you know, I'm curious just given, you know, you've been working, uh, at franchisors. Right. For a while. Uh, and you know, in, in some different industries. I know as well. Like I believe you were at Perspire Sauna Studio for some time. And I'm curious from what you've seen and I know there's no one size fits all answer. Every brand is different. There's a bit of nuance and um, just variation in um, the kind of support that is needed from franchise to franchise. But generally speaking, have you found. This is just a number I've been curious to learn more about. But like, have you found, um, generally a range of like, franchisees to uh, let's call it like franchise business coach ratio. Right. Like, you know, I've heard of some brands where it's like for every 100 franchisees, there's one person at the franchise who are helping, uh, support them. And that's obviously probably the extreme of one end of the spectrum where that's not enough support for franchisees, but. Yeah. Have you found a general range of support that you feel like is economically feasible for the franchisor, but then also. Yeah, yeah, it's good for. It's enough support for franchisees.

Speaker B: Yeah, absolutely. You know, I've, um, you know, I've seen systems that have that 1 to 100 ratio. I think that that is, is much more reactive support.

Speaker A: Right.

Speaker B: You know, with having that many franchisees to support, you're picking up the phone or responding to emails. I mean that's, you know, when picking up the phone when somebody calls you or you're responding to emails that's a lot. Right. I believe in having about that, you know, 1 to 30, uh, ratio. Because that 1 to 30 ratio allows our franchise business consultants to be proactive as well, and schedule, you know, schedule proactive meetings, you know, through benchmarking versus the entire system and how that location itself itself is, is performing, you know, compared to other locations the same size or the system, you know, as a whole, and really dive into the KPIs of the business, uh, as well. You know, we've, uh, we've implemented, uh, the entrepreneurial operating system here, uh, at Koal Insulation. This is the third organization that, uh, um, I've utilized EOS with, uh, as well. And we, you know, we utilize EOS with all of our franchisees too. So you. On a monthly basis, we're having an L10 meeting with our franchisees, really going through their scorecard, their KPIs. I really talk about four KPIs nonstop that, you know, I want, uh, our franchisees to obsess about. And our franchise business consultants do obsess about it because I certainly do as well. And really those four KPIs can tell you so much about the business leads, appointments, jobs, margin. Those four need to know. Those four like the back your hand. And we really do that with 1 to 100. You're not able to dive into that. Right. So that 1 to 30 ratio is. That's the sweet spot. You know, once you start to get over that, you know, about 35, then you, then, you know, from my experience, you start to just become really reactive again. That's, you know, that's one layer of support, um, you know, from day one, uh, you know, as, as the brand president for Qual Insulation, spoken to our franchisees and spoken to our team and implemented, you know, what I call the franchisee first mentality. And really what that. It's a very, very simple mentality. We are either helping a franchisee or we are helping someone who is helping a franchisee. Very, very simple. Uh, because we know that, you know, we are as close to business partners as possible without actually being business partners. Right. And we are supporting our franchisees that are flying our flag that support is not reactive, support is proactive and, you know, reaching out, making site visits, you know, to, uh, to the franchise locations. You know, this year we will have visited every single location. Either myself or a member of my team will be on site with a franchisee in their office across the nation. And that's something that we're really proud of. Yeah.

Speaker A: Wow, that's Uh, I mean, at the level of franchisees, I think the most recent FTD was, it was over 350. Uh, I guess that was territory, so probably not. But um, still, that's a, that's a heck of a lot of travel for the team. So, um, you know, credit to you guys for getting out there. Um, do you want to maybe talk about, I mean, you know, I hear the word insulation. I think of that cotton candy looking stuff that was in the unfinished basement of my childhood house. But you know what, and you kind of mentioned like spray foam insulation before, I think when you about, were talking, when we were talking about the rig. But yeah, like, can you maybe, uh, for non, uh, you know, non, non experts in the insulation world just give an idea of like if I was a Koala franchisee, what, what service am I actually providing to homeowners? And, and, or I don't know if you guys do commercial work. But, um, yeah. Can you kind of break that down in simple terms?

Speaker B: Yeah. So, you know, as simple as possible. All things insulation, right? All things insulation. All things, all things building efficiency as well, you know, and that's, you know, that, you know, that's anything from that, you know, anywhere from that. The pink stuff in your childhood home's basement. Right. But you know, the classic bat or blown in insulation, uh, as well as, you know, the spray foam insulation, which is, you know, great for, you know, air sealing, uh, and highly, highly, uh, energy efficient as well. And then you know, also crawl spaces, uh, you know, crawl space encapsulation is a big, big part of our business as well. Um, and then, you know, a lot of consumers, you know about, you know, with insulation, a lot of consumers don't think about insulation. It, it's behind walls and it's in the attics. Right. You're not seeing it. It's out of sight, out of mind. And you know, so part of our marketing is that uh, educational component about insulation and building efficiency too. So, uh, you know, oftentimes when a, uh, you know, when a customer calls us, they've already self identified an issue, uh, in their homes as well. You know, whether if it's, you know, they've got, they have drafts in their homes or one room is a lot hotter or colder than the other rooms in their homes or their furnace or air conditioner, uh, is constantly running and they're losing, you know, all of the, all of the conditioned air. Uh, you know, about 25% of conditioned air in homes goes straight through the attic. Uh, it's expensive, right? So you know, um, I often talk about, you know, proper insulation that teeters on. It's a balance between a want and a need. Wanting to be able to be more comfortable in your home, needing to save money on your energy bills, uh, you know, wanting to uh, reduce your overall carbon footprint. That's, you know, really, really popular with homeowners today and being overall more efficient. Right. And you know, we at Koala, we really, you know, position ourselves as the experts in building efficiency when we step foot, uh, into one of our customers homes. Now we're not just residential either. You, we are also commercial, uh, as well. We work with a lot of uh, uh, um, new home builders, uh, strip centers, um, QSRs, components like that. And that business continues to grow as our business does continue to mature. And we have multiple different national partnerships using our size and scale, with big box retailers, with, you know, national restoration companies, national pest control companies, uh, national H VAC organizations that um, you know, we are just scratching the surface on what our overall reach can be with our size and scale. So that's something that, you know, is really attractive for our entire system because, you know, brand new franchisees already have, you know, potential, um, you know, lead generators in their markets before they even open their doors. Um, and you know, that's allowing our franchisees to ramp up even faster as well.

Speaker A: No, absolutely, um, super exciting. And um, you know, on the residential work, do you guys find, you know, generally uh, are like new home builds, a big part of it where you just a new home going up and they need some insulation. So maybe you're able to, to get a bit more business there, uh, versus having to go in and convince a homeowner, uh, that hey, you actually need more, um, or is it, you know. Yeah, any, any insight you can share there and just that breakdown.

Speaker B: Yeah. So, you know, the, you know, when, when a brand new franchisee launches, they're going to be you utilizing, you know, the existing homes in their territories. Right. And it's called retrofit, um, you know, retrofit insulation. Either, you know, removing old insulation and you know, adding new or topping off, you know, the, the existing insulation, really what, whatever is needed for the customer. You know, we look at new home builds as the commercial component, uh, of our business, um, because oftentimes we're doing more than one home. Right. And you know, with the builder of an entire neighborhood being able to uh, you know, utilize that scale, you know, for our franchisees and you know, so it really averages that overall ticket, you know, for the franchisees. Now that's something that, you know, our franchisees really do graduate into that, um, you know, after they've mastered the, you know, the retrofits, the, uh, retrofit market. And you're not only, you know, with our, with our national contractor contacts that we have, but really, you know, that's where our franchisees really grow and nurture those relationships, you know, with contractors and be known for multiple different contractors in their markets that, you know, we are their installation guy or gal. Right. And, um. But, yeah, you know, franchisees, they love going up to one family home, uh, you know, and helping out one family, and they love going out and taking, uh, a look at the street and saying, hey, for over the course of the, uh, next four days, we're doing these 20 homes that are, you know, uh, have just been built as well. So it's a great mix. Uh, for us, our business continues to add more and more commercial work, uh, you know, each and every month, uh, as more and more of our franchisees are getting into additional commercial work. And really, again, what that is, is that's the relationships that they're building in the communities and then just the, you know, the. Their business. Overall maturing corporate time too.

Speaker A: No, absolutely. Um, and speaking of just like the. The business itself, I know you mentioned earlier, uh, there's four KPIs, right, that you guys really look for just to, I guess get a. Probably write like a quick proxy for the health of a franchisee. Uh, you want to maybe break down those KPIs, and uh, you know, I'm thinking it'll just really also just give, uh, a franchisee or prospective franchisee, if they're listening to this and, you know, seem interested, it probably can be a good insight into like, you know, what their focus, uh, as a business owner would be.

Speaker B: Of koala? Uh, yeah, yeah, absolutely. So as I mentioned, the four KPIs that we obsess about, you know, and leads, appointments, jobs and margin. This also allows for coaching, right? And, you know, being able to see what the lead flow looks like. What's that top of the funnel coming on in, getting them to an appointment, and then with appointments, you know, having, you know, what percentage of leads are turning into an appointment and how does that compare to the averages? Well, if you're below average. Let's talk about that, right? Above average, what are you doing differently? Oftentimes it's very simple. It's speed to the lead. How quickly are you getting, uh, you know, back to those leads that you're getting that you're receiving then appointments, uh, you know, of the appointments, how many appointments are turned into jobs? Uh, you know, what's your closing percentage, uh, when it comes to those appointments? Because now if we're getting a lot of appointments and not a lot of jobs, well, then there's a sales issue.

Speaker A: Right.

Speaker B: And we're able to focus on coaching on sales and providing additional resources for the franchisee when it comes to overall closing their deals. And then, you know, on the jobs turn into margin. What kind of margins are we looking at for um, you know, for the each particular job that you're doing? How does that benchmark versus the system? Are you, you know, are you shy a couple points or are you ahead of the system by a couple points? Well, if you're shy a couple points points, let's take a look. What, you know, is it the bidding? Is it the labor? Is it the time allocation? What is that? So being able to really focus on those four simple components, we're really able to, you know, take a look, you know, starting at that 10,000 foot level at just the four numbers and then diving in to where do we have those areas of opportunity to improve that particular location. Not every location has the same, you know, the same challenges. Right. So, you know, that's something that, you know, we really are able to cater our overall support for each individual franchisee as well.

Speaker A: Yeah, that's, that's phenomenal. Um, you know, I think we've got a good idea in the business. Um, you know, we got, we've got an insulation 101 lesson, uh, here as well as just um, you know, even the specifics on the KPIs, you guys, or you know, what, how do you think about the future as far as uh, koalas growth, you know, uh, at territories. Right. Um, that are already up and running. Um, I'd imagine like. Right. There's a lot of people out there who try to, I don't want to say they try to like get in early because it makes it sound like you're trying to like time. You know, it's hard to time the market, so to speak. Right. But people want to know that they can get like a good territory available. So, um, yeah, I mean, how do you think about this future and, and the growth and you know, is there still, uh, prime opportunity for new friends coming in or, you know, uh, what's the saturation point at so far?

Speaker B: Uh, absolute prime opportunities? There's no questions about it. Uh, you know, with uh, with koala insulation, we've got you know, hundreds and hundreds of territories available still in prime markets. Uh, you know, so we will, we will not slow down our franchise development for at least three to four years. And that's the reality. We'll continue to add new franchisees each and every month. Now, uh, you know, as far as, you know, our existing franchisees, they're ramping up extremely quickly, um, you know, getting off the ground extremely quickly. Unit level economics. I mean you can see in each fd they just continue to improve and improve uh, as well and you know, really, really encouraging for each and every business. As I mentioned at the start of this interview, we've yet to see a single location mature now. Uh, you know, we've, we've continued to look into potential new revenue streams for our franchisees as well, uh, you know, to continue our evolution as an organization, uh, which is, you know, which is really exciting and you know, really exciting for our franchisees, uh, to start to test out a couple, um, you know, a couple different opportunities too. So, um, we have, we have yet to see what the full potential of a Koala installation location is and yet to see the potential of what our ultimate organization will look like in three to five years. It, it's really, really exciting.

Speaker A: Yeah, no, I, I, I can only imagine, man. Well, uh, maybe we'll have to have you on, maybe for a, a repeat episode later on. Uh, yeah, there we go. Um, yeah, well, it's been great to kind of learn about the brand. Corey, you know, is there anywhere, uh, online, uh, that people who are interested kind of follow you Koala, um, you know, and get, get more information?

Speaker B: Yeah, absolutely. Very simple, you know, qualinstallation.com uh, you'll be able to uh, get all the information for your local location as well as for franchise opportunities directly, uh, @qualinstallation.com, uh, you know, myself, Corey Lyons on LinkedIn. Uh, very active, uh, as well, um, you know, with, with all of our quality installation locations on, you know, all the social media, uh, channels too. So, but qualinsulation.com will be the best, best, best source right now.

Speaker A: Well, uh, folks, we'll, we'll plug that website in the show notes and yeah, I just checked it out. You can scroll, uh, to the bottom, uh, or I think on the top as well. They have a franchise opportunity tab, so you'll be able to find it quite easily. Um, all right, well, Corey, yeah, thanks so much man and uh, we'll, we'll talk soon.

Speaker B: Awesome. Thank you very much. I appreciate your time.

Speaker A: Thanks for listening. To franchise empires. We're coming to you soon with actionable insights to take the next step on your franchise journey. So make sure to subscribe on Apple, Spotify, Google, or wherever you listen.