The franchise world finds a new fuel for growth

By 2018, Fuller had just seven franchisees and, limited by his modest capital, was plodding along. He decided to enlist a New Jersey franchise platform, Happinest Brands, that year, giving the firm a significant stake in the company. Since then, Mosquito Hunters has ballooned to 130 locations around the country. Fuller, 38, says the growth would not have been possible without the financial support of Happinest, which also owns stakes in home services companies Lawn Doctor and Ecomaids.

Mosquito Hunters added 14 new franchisee locations last year alone and Fuller thinks he can grow even more this year. He centralizes many of his former headquarters functions, from human resources and call centers to legal and marketing, at Happinest.

“I realized I could be stronger as part of a bigger team,” Fuller says. “Most franchise organizations never exceed 100 units within 10 years of their founding, in large part because they’re underfunded. I wanted Mosquito Hunters to be something larger, a national brand. With a partner like Happinest, that can be a reality.”

This seems to be the latest wave in franchising, and perhaps ironic in the sense that it builds on top of the original premise of the industry — an entrepreneur signs on with a franchisor for the centralized support, including capital to procure financing, that the franchisor presumably can offer. Now the franchisors themselves are deciding that isn’t enough and are seeking out deeper-pocketed support themselves.

It’s been happening around the emerging category of mosquito abatement. The biggest franchisor in the business, Mosquito Shield based in North Attleboro, Mass., which has been franchising for only a decade, sold out pre-pandemic to Five Star Franchising, which also owns franchisors in window treatments and home remodeling. Last year, Mosquito Shield nearly doubled its franchise location count to 317. Meantime, Mosquito Joe, based in Virginia Beach, Va., is now a subsidiary of Neighborly, a collective of 30 home-service brands that include Mr. Handyman and Molly Maid.

Franchise ownership recently has moved up a further notch beyond such collectives to private-equity investment. Big companies like Roark Capital have taken stakes in brands that include Anytime Fitness, Arby’s and Baskin-Robbins.

Mark Siebert, CEO of franchise consultant iFranchise Group in Homewood, has seen private equity steadily staking out a larger presence in franchising. “The private-equity guys are paying top dollar for franchisors right now,” he says. “Private equity 20 years ago ignored franchising investments, but now it’s practically a feeding frenzy as they compete to get into this market.”

Whether it’s Roark or Neighborly buying up franchisors, Siebert sees a consolidation looming. Mosquito Hunters competes against a dozen other mosquito franchisors, and Siebert, who has advised Mosquito Shield in the past, predicts the total could get to 20 eventually before cycling back to a half-dozen or less within a decade. Bigger companies are likely to gobble up smaller ones in valuable markets, he says.

Fuller of Mosquito Hunters worries that the consolidation process will ruin the close relationships between franchisors and their franchisees that were common at one time. And if mosquito abatement companies start buying up each other, he wonders what might happen to the carefully drawn exclusive territories most companies promise to their franchisees. Some could wake up one day to find themselves suddenly facing off against rivals owned by the same parent company.

For now, Fuller isn’t going anywhere. “I have no plans to move to a desert island,” he says. A typical franchise investment in Mosquito Hunters runs a mere $100,000 or so, and the equipment and chemicals are pretty simple. It’s a seasonal business, yes, but that suits many middle-aged franchisees who schedule travel when cold weather arrives, he says.

He doesn’t regret his decision to bring on Happinest as a partner. “Without them, we’d be a little boutique with maybe two or three dozen franchisees,” Fuller says. “It came down to owning all of a little grape or owning a chunk out of a big watermelon. I wanted the watermelon.”