With 51 consecutive months of financial growth in the U.S., Two Men and a Truck has become North America's largest franchised moving company and is banking on further success north of the border. With 21 locations currently in Canada, in the coming months, the company plans to sign on five more locations in Vancouver, Alberta, and Edmonton. With 400 employees, these five new locations will add 125 jobs in the country.
Executive vice-president Jon Sorber and his brother Brig, CEO, are the co-founders of Two Men and a Truck. Along with John Prittie, president of operations in Canada, the men were in Toronto to discuss the brand's history, successes and future in Canada.
Question: Jon, you now run the largest franchised moving company in North America. But Two Men and a Truck had humble beginnings. Take me back to the start.
Answer: In the early 1980s, while our friends had jobs flipping burgers and delivering newspapers, my brother, Brig, and I started hauling brush and small loads of furniture in an old pickup truck. We started the business to earn extra spending money while in high school.
When it was time for us to go to college we were going to let the business fizzle out, but the phones kept ringing. People were requesting those "two nice young boys" to help move some things. Our mother, Mary Ellen Sheets, decided to keep the business going so we would have a job to come back to when we were on Christmas, spring and summer breaks.
When she took the business over, she decided she didn't like the name. Back then, the business was called Men At Work Movers, named after a popular music group in the early '80s. So, we had this "very serious" round table meeting...at a bar called Rick's, in East Lansing, Michigan, and decided that since we already used the words, 'Two men and a truck' in our advertising, and generic products were big at the time, we would just keep it simple and call it Two Men and a Truck.
Every time we came home from college, it seemed that there would be one more truck in the parking lot so we knew we were on to something.
Q: Most startups struggle out of the first year in business, let alone over two decades. How have you stayed relevant?
A: Our family (my brother, sister, mother and I) has always worked very well together. We all bring different gifts to the table and we all honour that. Take any of us out of the equation and the business wouldn't be here. We all recognize that and appreciate that. We're also wise enough to know that we aren't exactly Harvard business scholars. However, we are very good at taking in a lot of information, filtering it, and executing on what makes sense for our business. We also put the customer first, not profit, in our business. If we take care of our customers and do what is right, the profits will come later. And finally, about 20 years ago, we came up with our mission statement: that is, to continuously strive to exceed our customers' expectations in value and high standards of satisfactions. We live this and we train this from home office staff, to franchisees, to movers and drivers.
Q: What's been the most challenging part about growing a franchised company?
A: Probably staying relevant in the market place and staying ahead of the competition. When business is good, it's easy to rock back on our heels and lose momentum. We have had to be vigilant on hiring and retaining great people, and investing in new equipment and I.T., both, when our industry was slow and when business is good.
Q: Brig the success of your business relies on the relationship between you, the franchisor, and your 290 franchisees across the world. What do you look for in a franchisee?
A: Well, for starters, we aren't necessarily looking for people who are familiar with the moving business. We're looking for people who can manage time, people and money. Some of our most successful franchisees have the ability to serve. When we match those people up with our processes, it's a good combination.
Q: What are some of the key lessons you've learned working with franchisees over the years?
A: I think once we get into the relationship and we both understand each other and what each of us need is really important. Sometimes what they're expecting to get out of it might not be true, so I think one of the key things is up-front communication and knowing what each side really wants.
At the beginning of franchising, we'd sign up anyone who had money. But then it became a huge hassle trying to fit them into our model, so now we spend a lot of time to do that work up front.
Q: How do you deal with franchisees who don't 'work out?'
A: We communicate what the issues are, take a look at the issues and try to talk through it with them. We really work with them and we call them re-engagement visits. I would say about 90 per cent of these visits end up being positive and they end up getting better. Once things aren't working, don't let it get any worse. Find out what the problem is, figure out a solution, and get beyond it.
Q: What advice would you give to an aspiring franchise owner?
Number one: take a look at the franchisor's processes. Use all of their resources and don't try to reinvent the wheel. It's key to make sure your employees feel the 'wins.' If you take care of your employees, they'll take care of your business. One of the biggest mistakes I see is when people treat employees like equipment, have a high turnover and never get good results. Take care of your employees, and take care of the customers, and you will be a great franchisee.
Q: John, the company started in the U.S., but eventually opened its first Canadian outpost in Hamilton, in June 2005.
Hamilton was the beachhead for the first Canadian location and has done very well. We typically look for communities with a population of approximately 400,000 people with 150,000 households or more. We also look at mobility rates and Hamilton was pretty typical with 14 to 16 per cent of the population moving annually.
We service a broad spectrum of customers in the residential and commercial markets. Hamilton, including the communites of Ancaster, Stoney creek, Dundas and Waterdown fit the model nicely and we figured it would be an excellent choice to launch and test market the first Canadian location. I also live in the Hamilton-Burlington area, so am very familiar with the territory and the competition.
Having the first office close to home allowed me to keep a close eye on the development of our pilot business.
Q: How much time and research went into the Canadian expansion?
A: We put lots of time and effort into researching both the master franchise opportunity for Two Men and a Truck as well the Canadian marketplace for expansion opportunities. It took several months. Heron Capital Corporation is the master franchisee for Two Men and a Truck Canada. HCC is a franchise development company so we have a solid understanding of franchising.
What we didn't know was how successful Two Men and a Truck's business model would be, what differences exist in the Canadian marketplace and the market potential. So, we went on a fact-finding mission to Two Men and a Truck International in Lansing, MI.
We also attended their annual meeting and visited with some of their franchisees. We were very pleased with what we learned. After getting a good handle on the business, we completed an extensive review of the Canadian competition and met with industry experts and suppliers including the Canadian Association of Movers. Based on that research, we learned that one of Two Men and a Truck's key's to success was "good old-fashioned customer service" and one of the biggest issues in Canada was a "lack of professionalism and customer service in the moving industry".
Q: Was there anything about the Canadian market that you weren't expecting?
A: We had a good handle on the industry prior to launching in Canada based on our research. However, there are a number of significant differences between the U.S. and Canada. In the U.S. it's a regulated industry and prior to setting up shop you must have a license or authority in most states. The number of licenses are restricted and it can be a lengthy and difficult process to get approvals in place. This regulation ensures a higher standard of operation and eliminates many of "the fly by night" operators.
In Canada, the industry is unregulated and any 'Two Guys with a Van' can hang their shingle. This is one of the reasons why we introduced our "Canadian customers bill of rights" to help educate consumers as to what to look for in a reputable moving company.
There are three other items that we found different, interesting and even challenging: The cost of operation is much higher in Canada versus the U.S. and if you think about it, you will quickly realize that most of our operating expenses are much higher. They include diesel fuel, labour, trucks and equipment. Diesel fuel in the U.S. is roughly $3.50 per gallon and it's closer to $7 here. A moving truck that rolls off the lot in Canada is north of $100,000, while the same truck in the States is approximately $75,000. Like other services companies operating in Canada, these costs have to be passed along to the consumer. Rates for Two Men and a Truck in the U.S. average say $109 per hour and we average closer to $129 per hour here.
Q: What are your future plans for expansion in Canada?
A: We will continue to expand through franchising and will award single and multipurpose units. We will continue to look for franchises that share our passion for customer service.
We now have 21 locations open and operating in Ontario covering all major markets. We can provide seamless service from London in Southwestern Ontario to Ottawa in Eastern Ontario and Barrie-Orillia in Central-Northern Ontario. We're currently looking for a franchisee for Windsor which will complete our Ontario development.
In 2014, we'll be expanding outside of the province, starting in Western Canada and working our way back to Ontario from Vancouver, Calgary and Edmonton. We also expect to start with a new franchise in Halifax, Nova Scotia. By the time we finish our Canadian Development, we'll have approximately 40 to 45 successful franchises across the country and will be one of Canada's largest moving companies with 350 to 400 trucks on the road and employ 1,000 to 1,250 people.
Interviews have been edited and condensed.