Stop And Grow Franchiser Takes Time Out To Improve Lapels Dry-cleaning Business

HANOVER, MASSACHUSETTS (Friday, January 14, 2005) - Lots of entrepreneurs would love to have Larry Friedman’s problem: His business was growing too quickly.

In less than three years, the number of Lapels Cleaners, a franchise dry-cleaning business he founded with three other partners, grew from four locations to 20. One franchisee opened a store as far away as Texas.

For Friedman, 52, the growth was as worrisome as it was gratifying. He said it became clear to him that the franchisees needed more help to make their stores, business practices and marketing efforts uniform.

To do that, he felt the Hanover-based company had to stop selling new franchises for a while. That decision meant the cash flow into the business would reverse direction – no more $20,000 franchise fees coming in, and a fair amount of money going out to make the coordination efforts happen.

“I wanted to spend my time and money helping my guys become true franchisees,” Friedman said. “That costs a lot of money to do, and you can’t keep selling while you do that, because you just keep putting someone into the pot when the pot isn’t ready yet.”
Friedman’s partners disagreed, he said, and so he bought them out last fall.

“They wanted to keep selling, and understandably so,” he said. He spent almost $650,000 buying them out – a figure that includes the assumption of his partners’ share of the company’s debt.

Friedman stopped issuing new licenses in October and will start again in February, with aggressive plans to more than double the size of the chain this year.

In the meantime, Friedman said he established franchisee committees for marketing and operations. Those committees will have a significant say in the areas they concentrate on. “These guys and women will drive the train,” he said. He hired a direct marketer and sent out 165,000 flyers across Massachusetts and New Hampshire last week. He also bought a database and cross-checked it with franchisee’s customers databases to make sure the mailing targeted people who weren’t yet customers.

Friedman believes the systems are now in place to position the company for a return to rapid growth: He hopes to add 30 new locations this year.

Lapels Cleaners, like Newton-based Zoots, is trying to break into an industry long dominated by mom-and-pop operations. Other regional chains, like Quincy-based Dependable Cleaners and Tewksbury-based Anton’s Cleaners, are also long-established dry cleaners.

Friedman, a Duxbury resident, had nearly a decade of experience in the dry-cleaning business before he and former partner Robert Devaney were introduced and started Lapels. He’s also owned restaurants, including Sun Tavern in Duxbury from 1996 to 2000.
But the dry-cleaning industry has remained stubbornly resistant to consolidation. Friedman said he hopes that later this year he can begin buying existing shops and turning them into Lapels.

Peter Blake, executive vice president of the North East Fabricare Association in Reading, says the company’s goals won’t be easily achieved. “The fact of the matter is there are an awful lot of dry cleaners out there, and it’s tough to start a business from the ground up when it’s a saturated market already,” he said. Lapels’ customers drop off clothes that are then shipped to nearby dry-cleaning plants. The plants are often run by family-owned dry-cleaning companies, Friedman said.

The challenge, Blake said, is whether Lapels can make sure all plants it contracts with offer similar high quality. Friedman said the model is working well for his franchisees and the plants, some of which used to have storefront businesses but were pushed out because of environmental concerns about the chemicals they use. “They key is getting wholesalers that will understand if they do good work, my franchisee will grow, which will, in turn, grow the wholesaler,” he said.

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