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When Customers Become Franchisees

Stocks in this article: PNRA AA ENR

1. K-9 Resorts Daycare & Luxury Hotel
K-9 Resorts Daycare & Luxury Hotel was founded by two brothers in the dog-walking and pet-sitting business in New Jersey who decided to combine the operations -- then to expand a quickly successful business through the New York, New Jersey and Connecticut area.

"We always knew wanted several stores," co-owner Steven Parker says.

They decided franchising was the best way to do that and officially became a franchised operation this year.

And who better to have as their first franchisee than one of their best customers -- husband and wife Andy and Darcie Lubalin?

Parker says that he sold Andy Lubalin on the idea of franchising for K-9 Resorts after the customer came to him for advice on how to open a similar business. Parker sold the Lubalins the rights to the first K-9 Resorts franchise in March. He expects more to be sold in the next couple of months.

It was priority to make sure franchisees were as hands-on with the business -- and their four-legged customers -- as the brothers. The Lubalins, given their love for dogs, fit the profile, Parker says.

The Lubalins loved the Parkers' customer service and the high quality and cleanliness of their facility, he says.

"We have had some experiences with other kennels in the area and we've been dissatisfied for one reason or other," Lubalin says.

When looking at the company from a business perspective, Lubalin realized the Parkers were on to something.

"The pet industry is absolutely exploding, and while people are paying less for themselves and their family and their households, they seem to be paying more for their pets," Lubalin says.

In the past when pets had to be boarded, it was primarily so-called cage boarding, meaning the dogs were kept for many hours a day inside cages, he says. But kennels have been transformed into sites with rentable "rooms" and expansive runs so the pets can get exercise.

Lubalin thought becoming a franchisee was the best way to get into an expanding industry while limiting his risk. The franchise, expected to open in the spring, will be roughly 12 miles from the original one, making it less likely for overlap of customers.

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