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In 1974, Fred Thomas was in a pinch. First, the job that brought him from Ohio to Florida fell through after he'd already made the move. Then, after deciding to start his own sales rep business, a big customer backed out of a deal, and he found himself with a lot of inventory of pool chemicals.
To offload the excess inventory, Thomas opened a small, weekend-only outlet from a warehouse in Clearwater. Then he realized the demand for supplies was bigger than expected.
Fast forward to 2017, and Thomas's son, John Thomas, leads the company, Pinch A Penny — now the country's largest swimming pool retail and service franchise with more than 230 locations. Counting both corporate and franchise locations and offices, the company, which remains based in Clearwater, has more than 1,000 employees. Though executives declined to share corporate revenue, the average sales per franchise unit is $1.2 million a year. Also, Franchise Business Review's Franchisee Satisfaction Awards ranked Pinch A Penny a Top 50 Franchise this year.
But several challenges hover over the company, namely in recruiting the just-right franchisees, and, more lately, in fending off competitors.
Pinch A Penny has opened 75 new stores since 2004, and experienced 4.8% growth over the past 12 years. It opens between six and 12 stores a year. “We've always been slow and methodical in how we do our growth,” John Thomas says. “It's never been about how many locations can we have or states can we be in.”
Now that the company has covered most of Florida, it seeks to expand more in surrounding markets in the Southeast, particularly in Texas, Louisiana and Mississippi.
From the start, the company has leveraged pool statistics to aid its growth. Fred Thomas would plot address information from all the checks he'd receive to his first store, to see where customers were coming from. That's how he determined where he would want to put additional stores.
Today, the company uses a pool owner database to target potential customers and leverages a couple corporate stores to test new products.
John Thomas says the company's successful expansion should be partially credited to the bank that wouldn't loan his father money to open new stores. Being forced to franchise to expand was one of the best things that happened to the company, and Thomas believes resisting the urge to go 100% corporate has been one of his best decisions as CEO.
“Owners are what makes the difference,” Thomas says. “It's a better format for customer service.”
The chain approach has the advantage of giving retail facilities consistency in cleanliness, merchandising and marketing — providing a professional look and feel, Thomas says. On the other side, independently owned businesses, and mom-and-pop shops, struggle with the professional look and feel, but on average, tend to provide better service, Thomas believes. “Our formula has been to merge those things together,” he says. “I can give you the look and feel, but it is our franchisees that take care of the customers; what they do can only be done by an owner.”
Even with owning corporate stores throughout his time at Pinch A Penny, Thomas says it's the franchise storeowners who help the company rise to the top. They are the reason why he thinks the franchise often becomes a top performing pool store in the markets it serves.
With such a reliance on franchise owners for maintaining reputation, the 50-year-old CEO admits the biggest challenge is finding good people to open stores. “If you gave me plane loads of people that wanted the American dream, I could open a lot more stores,” Thomas says. The key is advertising and marketing the franchise brand, both online and through word-of-mouth, so people come to you, he adds.
Opening a Pinch a Penny franchise typically costs between $249,100 and $589,800 in investment, depending on location and market size, with an initial franchise fee of up to $50,000, according to a company release. In a May 1
franchise disclosure report, the company reports half its stores exceeded $1 million in annual sales.
But Thomas says the company isn't just looking for investors who have the money to put into opening a location. He's looking for active owners. “It's a challenge to get people that are looking for businesses to find you,” he says. “It has to be more than someone that wants to own — it has to be someone who wants to work it.”
To qualify potential franchise owners, Pinch A Penny requires candidates go through a process of visiting six to 12 stores and talk to the owners about what it's like to operate a store. They have to work with the company to build a business plan and fully understand the numbers before they are invited to sit down for a final meeting to discuss details with Thomas. The whole process takes around two months. “It's designed to prevent you from getting in; you'll pull yourself out of the business before I have to,” Thomas says.
Rick Bisio, a Bradenton-based franchise consultant and author of “The Educated Franchisee,” says Pinch A Penny's request to visit stores is unique, and a good idea. “A franchise is granted,” Bisio says. “If it's a good franchiser, they will be interviewing you as much as you are interviewing them. That's how it's done correctly.”
For this reason, Thomas doesn't consider the company to be in the business of selling franchises, and instead, in the business of pool merchandising. Most products sold in the store can be ordered from the company's distribution facility in Clearwater, and Pinch a Penny provides corporate advertising support for its locations. Franchise owners complete four weeks of training in pool care by a certified pool operator in Clearwater to understand the business inside and out.
Thomas says he doesn't push for the company to meet lofty goals for opening a certain number of stores or areas, because that can lead the company down a dangerous path of not picking the right people or places.
The key to success, instead, is having happy owners. Problems happen when you have the wrong person running the store, Thomas explains.
“Any time someone makes a major investment ... they have an expectation of what life will be like after and there will be a collision with reality,” he says. “The trick with this process is making sure that this collision is (similar to) a fender bender in a Publix parking lot, instead of two Mack trucks on I-75.”
Bisio agrees this is a good approach. “If the right partner is not there, you have to say no,” Bisio says. “Good franchisers say no.”
Since the company is private, Thomas says he doesn't have to worry about answering to Wall Street, and he doesn't stress about whether he opens six or 12 stores a year. That's a big reason why the company hasn't had to close a store in 25 years. “We don't have the Mack collisions any more,” Thomas adds.
Competition may become a growing problem for the company, with national competitors like Leslie's Poolmart holding more than 850 retail stores in 35 states and Australian-based pool and spa maintenance franchise giant Poolwerx making its entrance in the states in 2015, now with 17 retail stores and 40 service trucks in Arizona, California and Florida.
But Thomas says Pinch A Penny has significant room to expand in its territories, regardless of what others do. Says Thomas: “We've got plenty on our plate.”
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