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Anago’s two-tier structure puts its franchisees in the franchising business

Monday, August 15th, 2016  |  Franchising Today

Date: Monday, August 15th 2016
Author: Alan Dorich

If a commercial space needs cleaning services, Anago Cleaning Systems is the one to call, President Adam Povlitz says. Not only is the company skilled at tidying up offices, hospitals and schools, “We could also do banks, concert venues, apartment complexes, hotels, churches, places of worship and synagogues,” he says.

Povlitz’s father, David Povlitz, founded the Fort Lauderdale, Fla.-based company in 1989. Previously, “He had worked with his brothers in commercial cleaning in Michigan,” the younger Povlitz says, noting that his father cleaned venues such as the Pontiac Silverdome.

After David Povlitz’s mother moved to south Florida, he visited her for the holidays. “He fell in love with Florida,” Adam Povlitz says, noting that his father tried working for Jani-King International Inc., now a competitor.

“He decided, ‘You know what, I could do this better,'” Povlitz says. Anago took its name from the Greek-Latin term, “anagoge,” which means “to guide or uplift.”

Anago began offering janitorial franchising opportunities in 1991. Today, “We’re in 37 major metro areas across the United States and Canada,” Adam Povlitz says, noting that Anago is one of the leaders in its industry.

“We’re definitely not the largest,” he admits. “There are folks that had a 15-year head start on us. We’re definitely top-five in the industry, but we’re the younger, scrappier one.”

The Family Business

Adam Povlitz came to work for his father’s company in 2009 after working for IBM as a financial analyst for North American sales and distribution. “I never wanted to work with my dad,” he admits, but later changed his mind.

“I was just looking at [where] my place was in IBM,” he recalls, noting that the company employed over 200,000 people at the time. “[I thought], ‘I could work here forever and have a great job, but what impact could I make?'”

That soul searching led him to Anago, which owes its success to hard work, he says. “We had [many] people just putting in a ton of effort, working crazy hours and getting it to where it is today,” he says. “A lot of people believed in Dave Povlitz.”

Into the Future

Anago keeps up to date with new technology, Adam Povlitz says. “We’ve taken momentum from the founder and are riding that into the technological future,” he says.

This includes the introduction of its own app, which handles all aspects of customer service, including bidding and estimating for cleaning contracts. “The client can sign [them] on the tablet,” he says.

“Everything is automatically uploaded to the cloud,” he continues. “It leaves bid processing all but eliminated.”

Franchising Masters

Anago operates with a “two-tier” franchise structure, Povlitz says. “What we sell are master franchise locations,” he says, noting that the company looks for franchisees with an “empire building mentality.”

“If you buy a master franchise from Anago, you’re also in the franchising business,” he says. “What they do is ultimately grow from within their master territories by selling unit or janitorial franchises and selling cleaning to the commercial clients in those areas.”

This has proven to be very profitable for Anago and its franchisees. “We’re saying [to] everyone who gets a master franchise with us, ‘You get to share in it, because you’re selling unit franchises in your territory,'” he says.

“Whether it’s Denver or Chicago, they’re able to not only collect fees when someone buys from them, but they’re also selling the cleaning contracts,” he says. “They’re collecting a residual income for as long as that unit franchise is cleaning the account. It grows real fast.”

Anago currently has 37 master franchises, which include several franchisees that have been with the company for a long time. “My oldest has been with me since 1995,” Povlitz says.

Recently, the company sold franchises to people in Winnipeg, Canada; Denver, Colorado; and Austin, Texas. “There’s a good wave of people that also purchased them recently,” he adds. “I’ve got a handful more getting very close.”

Lead Generators

Anago’s corporate office operates with a staff of 25 to 30 employees. “We have a handful of folks in support of our master franchising owners and we have in-house telemarketers,” Povlitz says.

The telemarketers assist in generating leads. “Very few have managed a telemarketing staff,” he says, asserting that this is an important part of Anago’s business. “We actually call it ‘business development.’ You’re speaking with clients and building relationships.”

Anago may grow this part of its business soon. “We actually have room for up to 30 in the business development department,” Povlitz says, noting that it recently added five to its team. “I expect to need to add another handful in the near future.”

Making Adjustments

Anago has adjusted to a 2015 decision by the National Labor Relations Board (NLRB) that revised its standard for determining joint-employer status. In the decision, the board said that its previous standard was not up-to-date with workplace and economic changes.

Now, when the NLRB evaluates if an employer has enough control over employees to qualify as a joint employer, it will consider if that employer has exercised control through an intermediary or has reserved the authority to do so. “It’s having ripples in the franchise community,” Povlitz says.

“The laws could be potentially changed so franchisees ultimately become employees of the franchisor,” he continues. “Literally, all the franchisors are up in arms about what’s going on and what’s going to happen next.

“It gave us an opportunity to do a sanity check on our manuals and operating procedures,” he says, noting that Anago looked at its regulations and models. “We’ve been very proactive about it as well as very thorough.”

Always in Style

Anago recently grew its footprint by expanding its location in Fort Lauderdale, Povlitz says. “We went from a 6,000-square-foot building to 11,000 square feet,” he reports. “We are planning to add additional support staff, especially in our business development department. This new space gives us the room to expand as we add additional Masters. In addition, our original Master Franchise, Anago of South Florida is now located in the same building. It’s our model city and gives us a good testing ground for new programs we develop at corporate.”

He sees more growth for the company, since the cleaning business never seems to go out of style. “It’s one of those businesses that’s been around since Socrates,” he says. “It’s not going to get exported to some other country around the world.

“It’s a very stable [business],” he says. “Most people don’t know who cleans their office right now. But if someone took a look at it, they’d realize it requires that local and human element.

“I think someone can really use it to generate wealth,” he says, noting that some franchisees bring members of their family into the business. “Most of our master franchises buy with their spouses or they bring a son or daughter into their business.

“That’s happening more often than not,” he says. “Seventy-five percent of the master owners have one family member or more involved in their business.”