Poolwerx has agreed to purchase equipment exclusively from Spanish manufacturer Fluidra, and chemicals solely from Lonza.
The Australian franchiser, which moved into the U.S. last year with the stated goal of opening 300 locations in five years, expects the arrangement to draw more franchisees.
Through these two agreements, the Brisbane, Queensland-based firm has locked in suppliers for approximately 70 percent of the products expected to be sold and used by its U.S. franchisees. The company plans to close that gap, and is currently in negotiations with other vendors for similar arrangements.
When Poolwerx entered the U.S. in March, 2015, industry observers stated that the company was known in Australia for its ability to negotiate lower pricing, thereby increasing its profit margins for franchisees.
“The whole reason was to improve margins,” said Troy Hazard, senior vice president of strategic development for Poolwerx. “The average margin across the industry is about 35 percent. We’ll improve on that substantially. In exchange, we’ll offer these [vendors] longer terms. They secure a customer in each of our franchisees.”
Exact terms were not available. However, it is known that all franchisees will make its purchases through these vendors, and the lower pricing will not require minimum purchases by dealers, officials said.
The retailer and service franchiser had been in negotiations with the manufacturers for more than a year to reach these agreements. In doing so, the company in part answered some of the frustrations vendors express regarding its customers – a lack of loyalty from year to year and an unwillingness to grant one manufacturer 100 percent of its business, said Poolwerx CEO John O’Brien.
“If a manufacturer can lock in a dealer for all those years and know they have all their business, it encourages them to make a greater investment in their stores,” he said. The time and money spent on attracting a client’s business instead can be used on things such as customer service and training, he added.
Additionally, Poolwerx will find ways to improve efficiencies for its vendor partners. For instance, orders will only be placed once a week, and training can take place for multiple franchisees in a region.
“To get this great deal, you have to be able to give value back,” O’Brien said. “… We’ve brought clarity to manufacturers that we’re a solution to their problems.”
Poolwerx’s business model ties service vehicles to each retail store it opens. So far, the franchiser has a presence in five states – California, Arizona, Texas, Florida and, most recently, South Carolina. It has sold 48 territories to 15 franchisees, for a total of 19 stores and 83 service vehicles. Fourteen more retail locations and 40 vehicles are in the process.
The South Carolina operation began in late summer/early fall, with locations in Florence, Myrtle Beach, and Murrells Inlet.
The company has other big moves in the works. In early 2017, Poolwerx plans to move its U.S. headquarters from Phoenix to Dallas, citing its central location in the country. The property will include a full-scale training facility like the one the franchiser has in Brisbane. Once the facilities are in place, new American franchisees will attend training in Dallas rather than traveling to Brisbane, as previous U.S. franchisees have done.
Its home-base operation also won the designation “Established Franchiser of the Year” from the Franchise Council of Australia.
“This is good for the industry,” O’Brien said.