In Wasatch County, Utah, so-called starter homes can easily cost a half-million dollars or more. “Most people just can’t afford that when they’re getting started out,” Anchored Tiny Homes franchisee Jim Sanders said.
He noticed a housing crisis in the area—where he’s based—and saw a need for tiny homes and accessory dwelling units, which can be built on existing residential lots. Anchored Tiny Homes manufactures both, as a means for more affordable, compact living spaces. These units are in high demand, Sanders said.
He opened his territory last November, and business “started to pick up steam” come January. So far this year, his franchise has sold about $1 million, and he thinks sales will approach $2 million by the end of this year.
“It’s gone well enough to hire a full-time sales rep,” Sanders said. “We’ve got him running all of our sales appointments now, and I think he’s gonna do a really good job for us.”
In 2022, Anchored’s 8 corporate territories grossed $27.4 million from July 1, 2021, to June 30, 2022, with average unit volume ranging from $2.2 million to $5.4 million. All 8 territories sold 146 units to 143 customers. Average gross per unit is $185,120. Last year, the brand reported overall sales just under $50 million.
The initial investment required to open a territory ranges from $113,583 to $237,000.
As Anchored Tiny Homes’ first franchisee, Sanders didn’t know what to expect in terms of sales for his first year, but he’s confident he can gross his targeted $8-$10 million in the next few years. “I wasn’t exactly sure how long it was going to take to get there,” he said. “But I would say that we’re definitely satisfied with the success that we’ve had so far, and we just want to keep building off that.”
He envisions opening another territory—maybe Phoenix—but for now, Sanders is concentrating on the territory he has open.
Sanders’ customers can be split into two groups: investors and families. The investors are looking to add another stream of income to their properties, and families are trying to avoid putting their relatives in senior living facilities or building a less expensive option for their kids to live on their own. “And ADU or a tiny home is a good option for a lot of people,” he said.
That’s on par with Anchored overall. The brand’s core client base is about 70 percent families, 25 percent investors and 5 percent people who want a pool house or something similar, CEO and Co-founder Colton Paulhus said.
While Sanders has worked in construction for years, Anchored Tiny Homes’ franchisees don’t need that experience, Paulhus said. “What we’re really looking for is someone that’s hungry, drive, wants to follow a system and can sell,” he said. “I mean, ultimately, we’re selling a high-ticket item, and we need people that can sell.”
Paulhus’ father, Scott, and brother, Austin, run the business together. His father has 30-plus years of general contractor experience, while his brother works on the operations side and Paulhus has a background in marketing.
He was inspired to start a tiny homes business after seeing an ad on Facebook. After talking to his father, he put up his own ad and received 300 inquiries in a matter of days. “We ended up selling two tiny homes our first month in business,” said Paulhus. At the time, the brand was selling tiny homes on wheels. “So, it was kind of like an ‘Aha’ moment.”
That was in 2019, and in 2020, Anchored Tiny Homes pivoted to accessory dwelling units, rather than stand-alone tiny houses, because California passed a law requiring residential lots to allow ADUs to combat the housing crisis.
“There’s different articles that say there’s anywhere from seven to 10 million homes that need to be built across the country,” Paulhus said. “We’re just not going to get there with single-family homes.”