From an article by John Reid Blackwell in Richmond Times-Dispatch.
The war against one of the world's most despised and pervasive backyard pests is driving some fast growth for one Richmond-area company.
Consider that in just five generations, if unimpeded by predators or environmental factors, a single female mosquito theoretically could produce more than 1 billion blood-sucking descendants, and you have some idea of the potential market for Mosquito Squad's services. The pest-control company, founded in 2005 by several entrepreneurs, has become the fastest-growing of several franchise brands owned by Henrico County-based Outdoor Living Brands.
The company's franchises are focused on products and services for outdoor lifestyles around the home. Its Mosquito Squad franchise grew even during the economic recession, and it now has 99 franchises nationally. "Outdoor living is certainly a hot trend right now," said Scott Zide, the president and chief operating officer of Outdoor Living Brands, which has a staff of about 30 people at the company's office on Emerywood Parkway.
During a slow economy, people spend more time at home enjoying recreation and social activities in their own backyards, Zide said. "They want to improve the time they have at home, and one of the ways they do that is by building more outdoor spaces." At the same time, outbreaks of diseases carried by mosquitoes such as West Nile virus have boosted demand for mosquito control. "Awareness is growing, demand is growing, and I think that has fueled the growth we have seen," Zide said.
The vampiric behavior of mosquitoes is something that Zide and Boyd Huneycutt, who were among the co-founders of the brand, learned first-hand in the mid-2000s when they were working for Outdoor Lighting Perspectives, a provider of residential outdoor lighting systems. "We would do demos at night to show the lighting systems, and we would simply get eaten up by mosquitoes," Huneycutt recalled. "We thought there must be some way to solve this problem."
Their market research indicated there was an opportunity to build a brand name in the mosquito-control business. "We felt there was a niche in the market," Zide said. Huneycutt opened the first Mosquito Squad business in Charlotte, N.C., in 2005. "We spent a year or two refining it, tweaking it and improving it," Zide said. "Once we had done that, we decided to release it as a franchise."
The company started out providing misting systems for mosquito control, but it eventually moved into a barrier control system, which involves having a technician spray insecticides around the house every few weeks. "With a barrier spray, you are looking at $600 to $700 a year" for the service, said Huneycutt, who is now the company's vice president of franchise support. "With a misting system, you are looking at an upfront investment of about $3,000. The barrier system is much more affordable in most cases, and it does a great job."
"We also do water treatments for any standing water around the house," where mosquitoes lay their eggs, he said. The company also provides tick-control treatments.
The business really took off in 2008 and 2009, when the Mosquito Squad founders teamed up with Chris Grandpre, the chief executive of Richmond-based Archadeck, a designer-builder of decks, porches and outdoor living spaces. "Scott and I had been talking about how great it would be if we could put these franchise systems together," to create a company focused on products and services for outdoor lifestyles, Grandpre said.
Through a series of transactions in 2008 and 2009, they created the parent company, Outdoor Living Brands, and moved its headquarters from Charlotte to the Richmond area in 2009. The company continues to franchise Archadeck, which has franchises in 25 states plus Nova Scotia, and Outdoor Lighting Perspectives, which has franchises in 23 states plus the Bahamas and Kuwait. But Mosquito Squad has become the fastest-growing of the company's businesses, with franchises in 25 states.
Mosquito Squad made the Inc. magazine list of the 5,000 fastest-growing private companies in the nation in 2011 at No. 646, with revenue of $4.3 million, up 498 percent. It was the 13th fastest-growing franchise that year. "It has been fantastic how it has grown," Grandpre said. "We significantly surpassed where we thought we would be in five years."
Mosquito Squad saw growth even during the recession, which hurt the overall franchise industry in the United States. The number of franchise business establishments declined from about 780,000 to about 735,000 from 2007 to 2011, according to statistics collected by the International Franchise Association, a trade group for franchisors and franchisees. The largest decline was in 2009, when the number of establishments dropped by about 3.5 percent.
Direct employment by franchise businesses also declined from nearly 8 million in 2007 to about 7.8 million in 2010. It rebounded slightly in 2011 to about 7.93 million. The Franchise Association forecasts that the number of franchise establishments will grow about 1.9 percent in 2012, and employment will increase about 2.1 percent to 8.1 million.
Grandpre thinks there are several reasons Mosquito Squad saw growth during the downturn. One reason was a ready supply of people who had been downsized from corporate jobs and wanted to go into business for themselves. "It is not uncommon for folks who have been impacted by downsizing in corporate America to turn to franchising," Grandpre said.
The credit crunch also hurt franchising, and difficulty obtaining loans is still a problem, according to the Franchise Association. The group reported in April that franchise businesses will require $11.72 billion in new lending capital in 2012, but banks will only make about $9.5 billion available, a nearly 19 percent shortfall. According to the IFA, that will result in nearly 94,000 jobs not created that otherwise would have been created if the capital were available, and $12.9 billion in economic output not generated.
Executives with Outdoor Living Brands say the company has sought to keep the startup costs for its Mosquito Squad franchises lower than typical for franchises.
The cost of buying and starting a franchise varies greatly from industry to industry, but the median is about $200,000, according to the International Franchise Association. Certain restaurant, health care or hotel franchises can cost far more, even millions of dollars.
Mosquito Squad "is a relatively low-investment concept," Grandpre said. The startup costs, including the franchise fee and buying the necessary equipment, range from $30,000 to $50,000. Grandpre said most of the new franchisees have used a combination of personal capital and sometimes 401(k) or IRA rollovers to finance the costs. That helped during the downturn, when loans were hard to get. "They did not have to go out and get bank capital," he said. "They used their own savings to start the business."
The Richmond area is home to at least 14 franchisor companies, including seven in restaurants and food products, three in health care, two in convenience stores and the balance in technology and consumer products, according to the Greater Richmond Partnership, a regional economic development group.
Outdoor Living Brands is aiming to expand the Mosquito Squad brand to about 300 franchises in the next three to four years. "Then we will begin to look at international expansion," Zide said.
Mosquito Squad has adopted a philanthropic cause relevant to its business. It supports Malaria No More, a nonprofit group that is fighting the mosquito-borne illness malaria, aiming to end deaths from the disease in Africa by 2015.
Weather has an impact on the demand for Mosquito Squad's services, and it's been a big year so far for mosquito control. "Obviously, we had a mild winter and warm spring," Huneycutt said. "The season started at least 30 days earlier than normal. A lot of folks are doing additional sprays."
Virginia has at least 57 species of mosquito, "and each one is as different from the other as a hawk from a hummingbird," said David Gaines, state public health entomologist with the Virginia Department of Health. "The weather we have had this winter and spring has caused an earlier start of activity by a number of different mosquito species, which means that the mosquito season is longer," Gaines said. That doesn't necessarily mean there will be more mosquitoes, he said — just a longer period of annoyance.
As for mosquito-control services, Gaines says they are effective as long as employees are trained well. "Barrier sprays are certainly the name of the game these days," especially in controlling Asian Tiger mosquitoes, the invasive species that is the source of most complaints about infestations.
Mosquito Squad brings all of its new franchisees to Richmond for a training course in the science and control of mosquitoes, including hands-on training with the spray equipment. "Business is great," said Sid Ragsdale, owner of the Mosquito Squad of South Richmond franchise. Ragsdale, who has a professional background working in landscaping and retail store management, got into the business in 2009. While visiting a friend's house for an outdoor event, he and his wife noticed they were not being bitten by mosquitoes at all. "They told us they had this great service," Ragsdale said. "I Googled it and came up with Mosquito Squad, and I saw all these franchise opportunities."
Ragsdale's first full season owning a franchise was in 2010. He now employs some college students part time in the business and is thinking of adding office staff. Outdoor Living Brands is a very supportive franchisor, Ragsdale said. "Some (franchisors) just want to take your franchising fee and walk away," he said. "Outdoor Living Brands is the opposite of that. They completely understand that I own this business, but they are there to help me as a partner."
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