With 30 brands under its umbrella, Neighborly is the undisputed No. 1 franchisor in the home services space. CEO Mike Bidwell says the strategy to create a collection of brands that serve the same customer base is the driving reason for their strong performance on these year’s Franchise Times Top 500.
He expects sales growth to continue, albeit a bit more modestly if the economy slows, and describes how Neighborly is helping franchisees stay profitable in light of labor shortages, wage increases, supply chain issues and more. “It’s crazy times,” Bidwell said.
Read Part 1 of our Top 500 CEOs series here, featuring Christine Specht of Cousins Subs.
Neighborly’s Mr. Electric leads the electrical service brands on this year’s Top 500, posting system sales of $142 million in 2021, up 32.5 percent. Neighborly’s Mr. Handyman ranks No. 5 among home improvement brands, up 52 percent to $135 million, among other examples of sales growth. Read the 2022 Franchise Times Top 500 here.
“If you back up, about eight years ago we had seven brands. Since then, we’ve done over 20 acquisitions,” he said. The idea was to create “this Neighborly hub for home services. What we had then, six brands would not be a marketplace. As we thought about fulfillment of the customer, we knew we needed a whole lot more verticals. Today we’ve got that.”
Asked for his outlook going into 2023, Bidwell said he remains “very optimistic. Our outlook is we’ll remain positive, that we’ll continue to have positive growth. We’ve had a very good couple of years. I don’t know it will be quite the same level as it was this year,” but even if the economy slows, he expects the Neighborly brands to hold steady.
“Even things like, if you’re paying someone to mow your lawn, you probably don’t have lawn equipment. Historically if you look at our brands, we really don’t see much of an impact in most of them during recession,” Bidwell said.
Labor shortages are affecting all of their franchises, he says, but if the economy cools that may ease the issue. “The last couple of years have been extraordinary for us” in sales growth, “and I think it will be a little more normalized,” he said. “As for labor shortages, “we were facing those before the pandemic. There haven’t been enough service professionals in this country or other countries where we operate. I guess we’re used to that.”
There’s also the dynamic of wage inflation. “Fortunately, we’ve been able to pass along those increases in wages to the customer. We’re staying very aware, we’re working with them to be aware of their margins,” he said about franchisees. “They’ve got to protect their margins so they don’t wake up one day and say wow, we’re not profitable. If they take a price increase, we help them study the market,” to make the right choice on any increase.
“And then supply chain, that is probably not as big an issue for us, but we have seen it. Things like windows are taking a long time, or shower doors. All of our brands are having struggles getting service vehicles,” Bidwell said.