Cleaning franchisor CrestClean bullish on outlook

It aims to double in size within five to seven years.

Crest Licensing Systems, the Dunedin-based franchisor of the CrestClean system, says it is bullish about the outlook and expects to double the size of its business in the next five-to-seven years.

The closely held company doesn't publish its financial results but says annual contracted revenue runs to about $65 million and the current year-to-date growth is 17 percent. In June, franchises reached 600 in New Zealand.

"We have confidence that we can double the present revenues, through growing in each of the regions we operate in," managing director and shareholder Grant McLauchlan said in a statement. "We have 1,000 franchisees in our sights as an achievable goal, with the increase in the average sized franchise accounting for the doubling of our turnover."

Under CrestClean's model, the company handles selling, invoicing, accounts payable and processing of GST returns, with franchise holders guaranteed twice monthly payments for meeting their cleaning contracts. "The benefits are that franchisees are paid in a timely manner, and don't have to wait for customers to pay them, nor do they need to manage a debtors' ledger," McLauchlan said.

On Trade Me currently the company has some 38 franchises on offer around the country at $35,000 apiece and a master franchise for Palmerston North & Kapiti Coast for $157,000. It also has three property caretaking franchises for sale at $30,000 each. CrestClean says it facilitates re-sales and has an average length of service "trending upwards towards six years."

According to Franchise New Zealand, the country is the most franchised in the world, with one franchise for every 124 people. The industry body's 2017 survey says there are an estimated 631 business format franchisors in New Zealand, up from 446 in 2012, and 37,000 'franchise units'.

Annual turnover in the franchise sector is an estimated $27.6 billion, amounting to 11 percent of gross domestic product, it says.

McLauchlan said the CrestClean brand is trademarked in nine Southeast Asia countries, including India, and the company plans to expand overseas. "Cleaning is considered a 'sunrise industry' in Asia, it is enjoying rapid growth in line with the growth of large metropolises, and the requirement for improved standards of cleaning and hygiene," he said.

In 2009 it sold its first master franchise in Delhi, India, to Crest Commercial Cleaning (India) Pvt, which now employs 600 people. According to the company website, it is targeting US$100 million turnover from offshore operations. The investment required is US$175,000 for a master franchise fee and US$70,000 for system development.

Crest Licensing has 10 shareholders, of which McLauchlan has an interest in a 44.3 percent holding, making him one of the two biggest shareholders. The company was started in 1996 and says it has achieved double-digit sales growth in each year since then, making the Deloitte Fast 50 on three occasions. The 2017 year marks its 21st in operation.