"We plan to change the face of the self-build industry"
A concept that revolutionised the Australian self-build industry, garnering a string of awards in the process, has been brought to the UK. Gordon Patterson and Gary Rigby interview the Master Franchisee for David Reid Homes, Martin Pick
Gordon Patterson: What is the origin of the David Reid Homes business concept?
Martin Pick: David Reid Homes was founded by David Reid in New Zealand in 1993. While working in the building supplies industry, David saw the potential to start his own business providing an alternative to the limited choices offered by developers. He set up a prestige 'design and build' service building bespoke homes to the highest quality standards.
Gary Rigby: How has the business developed in Australia and New Zealand?
MP: By 2000 David Reid Homes had grown to a turnover in the region of Aus$30 million (£13 million) and had several regional offices, making it difficult for David to manage the growth effectively. The solution to further expansion was franchising, and there are now 33 franchise territories operating successfully in New Zealand. In 2004 David Reid Homes launched in Australia, where there were around 30 franchised offices at the end of 2007.
GP: What are the distinctive features of the David Reid Homes business?
MP: We have developed management systems and software that enable franchisees to provide the highest level of quality and service, for a guaranteed fixed price to the client - there truly is no other branded 'design and build' service like it anywhere. Every home is architecturally designed and custom built around the client's lifestyle and aspirations, making each David Reid Home as distinctive as its owner.
GR: How did you come to acquire the rights for the UK and Ireland for this brand?
MP: David and I met when I was helping out another colleague at an exhibition in London in March of 2006. The stand was showcasing a number of franchise opportunities to people looking to move to Australia and start their own franchised business. One of the companies we were showcasing was David Reid Homes and David was the only principle from any of the companies that also attended the exhibition.
While on the stand I learned a lot about the David Reid Homes concept and was also taken by the number of visitors to the stand who asked if the franchise opportunity was available in the UK. Over the next three months or so David and I discussed the possibilities of launching David Reid Homes in the UK and Europe and following a trip to David Reid Homes in Australia in June of 2006 we shook hands and I returned to the UK to launch the business.
GP: What is the essence of the franchise package that is delivered?
MP: The David Reid Homes franchise is a real business management opportunity. It is a proven model that allows anyone who is highly motivated and willing to work hard and follow our system, the opportunity to establish a profitable business in the property industry - a business that in time will have a value in its own right.
GR: What training programme is provided and where is it delivered?
MP: David Reid Homes view franchisee training as an ongoing process, but the initial programme is over five days, with four days in the classroom and a day spent visiting franchise offices and show homes, to see the product and hear directly from franchisees. Currently this programme is delivered in Brisbane, where our Australian head office is located, with travel and accommodation expenses covered by the company. However we will have an ongoing training facility in the UK in 2008.
GP: What franchise representation do you have currently in the UK and Ireland?
MP: We launched David Reid Homes in the UK and Ireland at the end of 2006 and now have Territory Directors in place in each country, replicating the Australian structure which was the first stage in establishing the business here. Our first Irish franchisee is located in Dublin, and has been trading since late summer. Our first UK franchisee returned from training in Australia in October, and we are now supporting him in establishing his office in the Warwick area. He opened for business in December.
GP: What kind of profitability is available to a franchisee?
MP: The David Reid Homes Business Plan requires a much smaller number of builds than many people anticipate, as the value of each contract will be high. We expect that a franchisee operating professionally and properly would see a gross margin in excess of 20 per cent on each job, and should have earned back their franchise fee after their second build.
GR: What support services do you supply to the franchisee?
MP: David Reid Homes offers full ongoing support specifically through the regional Territory Directors, as well as via its network of franchisees and from the European Master Franchisee and senior management team in Australia. The company has over 100 unique designs that can be used to inspire clients, and has developed bespoke estimating and project management software, as well as a sophisticated intranet used to share information globally.
We provide full operational support to new franchisees, covering all aspects of the business from an initial stationery order to IT support, and the marketing of their new business. The David Reid Homes business model includes building show homes to showcase our product, and we are actively seeking investors for these in the UK and Ireland.
GP: What kind of person are you looking for to invest in your franchise?
MP: David Reid Homes is a business management opportunity - we are not looking for builders and the franchisee will not be involved directly in the building process. This will be managed by the franchisee's project manager. We are recruiting well funded business professionals with commercial experience, a passion for property and a strong desire to succeed. Customer Relationship Management experience is key and prospective franchisees must be comfortable working with demanding clients.
In Australia, successful franchisees come from all walks of life. We do have a couple from the building industry, but others include an ex-dairy farmer, the owner of a large wholesale/distribution business, and senior corporate managers...and David Reid himself was originally in the New Zealand police!
GR: What is your vision/goal plan for the next five years?
MP: Over the next five years, we plan to establish the David Reid Homes brand in Europe, and to change the face of the self-build industry here in the UK. Using a professional mapping company, we have divided the UK into 50 exclusive territories, and the goal is to have franchised the majority of these over the next five to seven years. The self-build market in the UK represents about 10 per cent of all new builds annually, 20,000 homes (according to NHBC), making it collectively the biggest single builder of new homes, and the long term vision for David Reid Homes in the UK is to own one per cent of this market.