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Battle Looms Over Janitorial Contracts

Hartford Business Journal logo

A fast-growing commercial cleaning franchise that uses non-union crews is making an aggressive push into the Greater Hartford region and the Service Employees International Union promises a fight over every potential client.

In 2011, Florida-based Anago Cleaning Systems expanded to the Nashville market, where it now has 50 unit-level franchisees. Company leaders hope to replicate that success in the Greater Hartford region.

The first step is awarding exclusive territory rights to at least one master franchisor in the state this year. The goal is to setup two more territories by the end of 2015, said Judy Walker, vice president of marketing for Anago.
Judy Walker, vice president of marketing with Anago Cleaning Systems, sees opportunity in the competitive Hartford market.

The company has experienced a growth spurt in recent years. Anago currently has 2,229 unit-level franchises in the U.S., up from 1,233 in 2009. The commercial cleaning market is estimated at $100 billion nationwide.

Targeted areas for the janitorial cleaning business center on Hartford and surrounding areas such as Bristol, Farmington, New Britain, West Hartford and Wethersfield. Walker expects each territory to generate between 50 and 100 new jobs.

The arrival of another player — especially one with Anago’s growth record — in the already crowded field of commercial janitorial services could signal trouble for smaller cleaners, which typically struggle to make ends meet.

Anago’s primary focuses is cleaning small- to medium-sized offices that cater to the medical, insurance and legal professions as well as movie theaters, churches and schools.

But Juan Hernandez, assistant state director with the SEIU Local 32BJ, said it will be a challenge for Anago to find the workforce it wants and the customers it needs.

“It’s going to be difficult because they are creating minimum wage jobs with no benefits,” said Hernandez.

“Our members earn $13.50 to $13.80 per hour and receive healthcare benefits,” said Hernandez. “We know non-union workers earn about $8.50 to $9.00 per hour and don’t get benefits.”

“It’s a very tight market right now,” said Hernandez. “There have been no new buildings in Hartford and many businesses that were hit hard by the economy are still recovering.”

SEIU Local 32BJ represents more 2,000 building cleaners in the Hartford and New Haven areas and clean nearly 150 buildings, including some of Connecticut’s most important corporate centers and landmark buildings such as the State Capitol, Travelers’ Tower and Wesleyan University.

In New Haven, the list includes City Hall, Long Wharf Maritime Center, and One Century Tower, according to Hernandez, who said the union represents about 90 percent of the market.

But Walker isn’t worried. She believes the Greater Hartford market is big enough to support everyone.

“Take a drive down any street and every building you see is a potential customer,” said Walker. “Every business needs to be cleaned,” said Walker.

What emerges is a battle for business.

“There’s always room for a better mousetrap and a faster gun,” said Steve Dubian, president of the New England Franchise Association and owner of PR Works in Kingston, Mass.

“This kind of business model is popular because it allows a sharing of information between the company and master franchise owner,” said Dubian.

“Master Franchise Owners typically have knowledge of how things work in the community and can leverage local contacts,” said Dubian. “There’s really no downside to this because the company provides effective brand recognition and great advertising opportunities.”

The business typically appeals to “senior executive in their 40s and 50s who realize they’ve had enough of the corporate rat race and realize it’s time to control their own future,” said Walker.

“Anago partners with experienced business people who can market and manage large operations with multiple crews,” said Walker. “Our master Franchise Owners don’t clean. They recruit unit-level franchisees, secure new cleaning accounts and service the franchisees in their territory.”

The initial investment to buy the exclusive rights to a master franchise territory is $39,000 and includes an on-going monthly 6 percent royalty fee on all earnings.

The company slashed its buy-in fee from $150,000 to make it easier for new business owners to get started, Walker said.

Master Franchise Owners and unit-level franchisees are not considered employees at Anago. Walker said they are required to register as a limited liability corporation and pay their own salaries, benefits and taxes.

Anago’s two-tier franchise model, which is already in place in 32 master areas across 20 states, reduces overhead costs by having a master franchisor with a net worth of at least $100,000 and sales experience sign and find contacts for unit franchisees.

The initial investment to buy a unit-level franchise runs about $5,500 and includes an on-going monthly 10 percent royalty fee and 3 percent administrative fee based on all earnings.

Franchisees usually pay $1,000 down and finance the monthly $100 payment through master franchise owner. A typical unit-level franchisee earns between $3,000 and $4,000 a month.

“There is no limit to what they can do with Anago,” said Walker.


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