Monster Tree Service is a business that was created five years ago by a guy named Josh Skolnick five years ago. It is a tree removal business based in Fort Washington which brings in an annual revenue of about 2 million dollars a year. From his huge success in the past five years of operation, Skolnick is considering selling franchises of his business.
Based on the information given in the article, should he sell franchises in order to expand his business? Yes.
It may be true that selling his franchise at this point in time is way too fast because the business model hasn’t been proven to work yet in other regions that he could potentially expand his business to. There is also the possibility of the brand name being hurt as the business is described as being very market-oriented and customers obviously are responding to that corporate value. Also, there is the huge cost of the initial investment. Yet, I feel that the benefits that come from selling the franchise outweigh the drawbacks.
Selling his franchise would:
- Expand his business regionally and financially.
Expanding regionally would mean a significant increase in sources of revenue and the revenue itself which would lead to Skolnick to earn back his initial investment in a fairly short period of time if it goes successfully. The basis of this prediction is that the business model, as far as I can tell from the article, has a big contribution margin per service. Expanding regionally would show stability and credibility of the business.
2. In the article, it mentioned how the business was actually the only big player who positioned themselves to specifically target the tree removal operation. This would mean that they are essentially the ‘first-mover’ and in order to strengthen their brand positioning, they need to expand and establish their business in the market in order to set up higher barriers of entry to the niche.
All-in-all, selling the franchise is a good idea for the expansion and establishment of the brand.
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