Maid To Perfection® Scours $75-billion Industry For Acquisition Candidates

BALTIMORE, MD (Friday, October 29, 1999) - Maid to Perfection - the nationwide chain that pioneered residential and commercial cleaning services within a single franchise system - now plans to pioneer consolidation of the fast-growing $75-billion-a-year cleaning service industry.

Anticipating continued strong growth well into the next millenium, MTP is launching an "aggressive campaign to penetrate every market coast to coast," declares company president and CEO Michael Katzenberger. Toward that end, Maid to Perfection is "stepping up efforts to identify qualified franchise candidates and area developers across the country while actively acquiring nationally recognized service chains." The 175-unit network has scheduled the addition of 100 locations in the year 2000 and each year thereafter.


Historically, there has been little consolidation in the services industry in general. And it is the industry in general that MTP is eyeing for strategic growth. "The acquisition target need not be a cleaning or maintenance company," Katzenberger points out. "We are pursuing a variety of service companies with national presence, including those that specialize in window cleaning, janitorial services, carpet cleaning, floor care. Instead of transforming a maid service by adding specialty services later, we could have specialty services first and add maid services later."


Katzenberger, who founded MTP as Midy Tidy in 1980, explains that "opening new offices from scratch in each market is a slow-growth process. To expedite growth, we will acquire existing competitors and integrate them into the MTP system. Augmenting that expansion, we foresee franchisees buying out local enterprises to get a quick growth spurt. For example, an MTP owner intent on adding $250,000 or $300,000 in annual sales might acquire a local service company of that size at the same cost of building sales internally."


On the other hand, the Baltimore-based CEO stresses, "Our consolidation program is designed to supplement - not replace - franchise expansion efforts. We continue to seek out the best qualified franchise candidates interested in a low-cost, ground-floor opportunity." Start-up costs for an exclusive protected franchise territory range from about $32,000 to $45,000.


The competitive advantages of offering and cross-marketing residential maid service and commercial cleaning services have helped boost system-wide revenues to an estimated $20 million in 1999 from $8 million in 1998. Maid to Perfection is the only franchised maid service that also provides such high-profit income streams as carpet cleaning, window cleaning, hardwood floor waxing and polishing, as well as office cleaning.


MTP, which began franchising in 1990, is not the largest cleaning franchise, but it nevertheless has been ranked number one in franchisee satisfaction and support. "That’s the focus of our operation," Katzenberger says. "We’ve built an infrastructure to maintain top-level satisfaction and support because, over the long haul, what benefits our franchisees contributes to our success. We’re not here just to sell units and reap franchise fees. Our goal is to build a solid nationwide system that ultimately impels growth and revenues for our franchisees."


The core of that system is the unique array of high quality services that Maid to Perfection franchisees are able to provide to residential and commercial customers. "It’s virtually impossible for any other operation to compete with our multitude of services," Katzenberger contends. "Other franchised maid services don’t have the infrastructure to support a broader operation," he adds. "Besides, they would be hard pressed now to admit they’ve been wrong all these years; their franchisees would sue."


Asserting "there is no formidable competitor offering the same full menu of services, not to mention the level of quality," the 39-year-old franchise veteran stresses, "we will remain ahead of the game well into the next millennium, recessions notwithstanding."


The company came out of the last recession unscathed. "In fact, the economic downturn had positive effects on our business," Katzenberger recalls. "There was a rise in two-income households, which created greater demand for professional housecleaning services. At the same time, corporate downsizing created a larger pool of labor from which we could draw. At this point, both the residential and commercial cleaning sectors of our business are booming, as well as those cross-market services our franchisees provide. Whatever the national economy brings, we anticipate achieving healthy revenue growth in the future, with system-wide income expected to top $35 million in the year 2000. And being primarily a cash business, higher interest rates have little impact on overall revenues."


But marketing programs do impact revenues and, according to Katzenberger, MTP’s marketing is unparalleled in the industry. "Even a brand new franchisee, fresh from training, will score a 90 percent closing rate on customer leads just using our marketing system," he claims. "It’s an area that we stress to franchisees and their office managers in our classroom and field training."


Training consists of a full week of intensive classroom instruction by the corporate staff and another week of on-site coaching by experienced field coordinators. In addition to comprehensive training for all partners and the office manager, in everything from setting up an office and hiring cleaning crews to keeping records and marketing services, MTP provides six weeks of pre-opening assistance, operations manuals, marketing materials, training films, and continued support.


Franchisees consist of a cross section - couples, women, men, minorities - from a variety of backgrounds ranging from doctors to sales professionals, from retired military to displaced managers. "Most have done extensive research before deciding on a Maid to Perfection franchise," observes Gloria Goldstraw, executive vice president and co-founder of MTP. "They come to us after having thoroughly studied other types of franchises, evaluated the competition, and investigated the markets," Goldstraw notes. "Their decisions are well founded."


Indeed, the average MTP franchisee owns and operates three units, with some having grown to 15. Offices require 400 to 500 square feet of space and can be located in low-rent areas close to the labor source, in industrial parks or virtually anywhere. Once franchises are operating, MTP helps them expand by reducing the franchise fee on their second franchise. "We give them a 50 percent discount on the franchise fee, and we even provide 100 percent financing," says Goldstraw.


Maid to Perfection franchisees, who pay a royalty fee of 7 percent on gross sales up to $500,000 and 5 percent on sales in excess of $500,000, serve the growing segment of home owners and renters with combined income of $50,000 with both husband and wife working. Services include light housekeeping, such as scrubbing floors, dusting, vacuuming, washing walls, windows, cleaning carpets, and waxing/buffing hardwood floors. They also contract commercial cleaning services for office buildings and suites. Franchisees pay no advertising fee.


The franchisor points proudly to the fact that it has no debts and has never been involved in litigation. "We are fully prepared, at all levels, to fully compete with Fortune 500 companies as we spearhead growth and consolidation in the services industry," declares Katzenberger.

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