By the end of 2011, G.J. Gardner Homes, a franchised custom home builder with offices around the world, expects to open franchises in Texas, Massachusetts, Tennessee, and the Carolinas. At presstime, the company was getting franchises up and running in Indianapolis and Lafayette, Ind.
Based in Australia, G.J. Gardner has been operating in the United States since 2005 and sold its first U.S. home in Visalia, Calif., in January 2006. It recently opened its 10th franchise office in California, in Elk Grove, and the company has another eight franchise offices in Colorado. Last year, its franchisees built and sold 114 homes in California and 48 in Colorado.
The company has built more than 30,000 homes worldwide over the past 25 years, and has more than 100 franchises in Australia, New Zealand, the U.S, Europe, and South Africa. Last year, its franchisees built and sold around 3,000 homes, whose average price was roughly US$250,000 but ranged from 900-square-foot homes selling for under $100,000 to 12,000-square-foot homes priced at more than $3 million.
(The franchisees do not purchase land, but will help home buyers find suitable lots to build on through Gardner’s network of Realtor and developer contacts.)
“One of the keys to our success is we don’t isolate ourselves to one particular kind of home,” says Greg Dettwiler, a former building contractor in Australia who has been with G.J. Gardner since 2005 and runs its California operations.
G.J. Gardner started franchising 16 years ago in Australia. “The company felt that in order to grow internationally, each area office has to have a vested owner,” explains Dettwiler. The corporation’s M.O. in the U.S. is to establish a master franchise in each state to which other franchises in the state report. The company provides marketing, setup, and training support (it has a training center in Los Angeles). Its royalty fee, which ranges from 4% to 4.4% on the value of each building contract, includes a 1% fee for marketing. A franchisee takes a minimum equity position of $100,000, and further investment depends on how quickly the franchisee wants to grow.
Franchising has been relatively rare in America’s housing sector, Epcon Communities being the industry’s best-known franchisor. Dettwiler says that his company’s business model lures independent builders who are interested in expanding their businesses but often don’t have the time or expertise. “One of the big misconceptions [among builders] is that if they are building fewer than five homes a year they are managing their time,” when in fact they are working an ungodly number of hours per week juggling many balls, says Dettwiler.
He continues that as a franchisee, the builder “has the marketing support and the system in place that give him more time to do other things.” Gardner’s website features Jeff Kreiter, who owns the franchise in Fresno, Calif., with his wife, Mona. “Before, I was pretty much a slave to the business,” says Kreiter, who in his pre-franchise days ran his business out of the family’s barn. When he joined G.J. Gardner two and a half years ago, he was building around five homes a year; now he’s averaging 30 per year and isn’t working nearly as hard because, he says, Gardner’s system showed him how to run a business that doesn’t need to rely on him 24/7.
The couple is now talking about opening a new sales office three times the size of their existing digs, and buying other franchises for their sons to run.
Dettwiler is the first to admit that franchising isn’t for everyone. While none of Gardner’s franchises in the U.S. have failed, at least four now have new owners, as their former franchisees decided to take another path. “We have more people interested in becoming franchisees than we can accommodate, but we’re also looking for people who are growth oriented,” he says.
John Caulfield is senior editor for Builder magazine.
This updated version of the article clarifies G.J. Gardner's royalty fee structure.
Learn more about markets featured in this article: Los Angeles, CA.