heat OF THE MOMENT

Entrepreneur, Jan, 2000 by Michelle Prather

HOME IS WHERE THE HEART IS

The experts and this year's Franchise 500(R) are hinting at something major: The home is a place of joy, stress and change--and franchises spanning several sectors can profit. Whether it's real estate, home inspection, home remodeling or maintenance, any service that helps consumers build a fine nest is in high demand. What's going to turn the whole thing upside down and then right side up again is--you guessed it--the Internet.

"All the big, national real estate franchisors are looking at [adding home design and remodeling options to their businesses], but it's like turning a very large boat in a bathtub," says Wilkerson. "You're going to find real estate moving into the retail environment, with Internet technology providing [everything from] virtual house shopping to design. The contractor, builders, product suppliers--right down to the Culligan man--will all be inside the computer system network at a real estate broker's site, ready to order when consumers buy the house.

Sound tricky? The trickier part, according to Wilkerson, is getting franchisees to embrace virtual real estate. "This will surpass the renewal license stages many [real estate franchises] go through for such a frustrating period of time," he says. Yet new blood may emerge because of it. "[Future] franchises in real estate may not be sold to a broker," says Wilkerson. "They may be sold to someone who's more experienced in personal retail-service marketing, who will then hire brokers to run the stores for them."

Although most maintenance franchises--from window washing to carpet cleaning--will probably remain in their non-Net environment, Wilkerson predicts they'll experience exciting growth this year. Be it a homebased business owner or a single, working parent, he says, people have neither the time nor the inclination to take care of all these chores themselves.

STAYIN' ALIVE

Call it imperialism. Call it the armed forces. In franchising, we call it strength via dual-branding and mergers and acquisitions. Take a look at how franchisors have transformed and teamed up this past year:

* Houston's Deck the Walls Inc. changed its name to Franchise Concepts Inc. after acquiring Framing & Art Centre and The Great Frame Up, and entering into a joint venture with Ashley Avery's Collectables.

* Diedrich Coffee Inc. became the second-largest company in the specialty

retail coffee market after ac-quiring Coffee People Inc., which franchised the 281-unit Gloria Jean's Gourmet Coffees concept.

* To diversify its market reach, leverage infrastructure and serve more customers worldwide, McDonald's acquired Midwestern pizza chain Donatos Pizza Inc. and London-based sandwich chain Aroma Ltd.

* Combined sales of $3 billion in 1999 were the result of a merger between the Pennzoil Co. (parent company to Jiffy Lube International) and Q-Lube Quaker State Corp. Pennzoil-Quaker State Co. is now one of the largest automotive consumer products companies in the world.

* Farmington Hills, Michigan-based A&W Restaurants Inc. signed a multimillion-dollar deal to merge with Lexington, Kentucky's Long John Silver's Restaurants Inc. Reason? Dual-branding pluses.