From Corporate Ladder to Franchise Queen: How Rachel Took Over a Struggling Franchise Brand

Free Agent Podcast with Meg Schmitz – Guest: Rachel Southard, CEO of Ecomaids – Residential Cleaning Service

Meg:
Hello everybody, and welcome to or welcome back to. If you’re a repeat listener. Welcome to the free agent podcast. My name, Meg Schmitz.

If you’ve been here before, you know that this discussion is all about being a free agent and taking control over your financial future. The mission of my show is to share inspiring conversations with real people who took the leap into self employment, business ownership, franchising and freedom. From corporate refugees and executives tired of the desk job to entrepreneurs and investors looking to share camaraderie and inspiration through their business journey. My podcast aims to spotlight on real people who stepped into the unknown, took control over their destiny and became their own boss. 

Today, I’m so excited to have Rachel Southard with Ecomaids on this is an emerging brand. It is residential cleaning. Sexy is all get out. Hot, hot as can be.

And Rachel is taking over the company in the role of CEO. It has been and has some significant changes and things to talk about the world of residential cleaning, but specifically Ecomaids. So, Rachel, thank you for joining me on the show today.

Rachel:
Thank you for having me, Meg. I’m excited to be here.

Meg:
You are in the middle today literally of some significant activity for Ecomaids. Before we get into that, let’s have a little bit of background about who you are and what your experience is in the world of franchising because I’m sure my listeners want to know you coming in and disrupting an emerging brand comes from somewhere. You’ve got experience that comes from somewhere. So walk us through your history.

Rachel:
Sure. I’ll give you the long story short, because I am not one of those people who just happened to find myself in franchising at some point in their career. I literally grew up in franchising. My first job when I was 16 was working for a franchisee, a multi unit franchisee in the fitness space. I was with him for 10 years through college.
So on the franchisee side, I started in the daycare of a fitness center and grew my up, grew my way up to a regional manager overseeing multiple gyms in the DFW Metroplex.

After college I flipped to the franchisor side. Started with Anytime Fitness. I started with the Anytime Fitness brand when it was just Anytime Fitness just in the US and Canada was just starting to expand Into Australia.

Fast forward 10 years later with that brand for 10 years, we grew into a platform company, multiple brands. Anytime Fitness alone was over 4,000 locations in 33 countries. Still growing. I left in 2020, so lots of growth in that brand. And I ran operations for Anytime Fitness.

I left Anytime Fitness, stayed in franchising, went on to home services. So I was with another home services platform where I grew another emerging brand and ended up becoming the president of the emerging brands division. So I have three brands under me at that platform company before joining Happy Nest as the CEO of Ecomaids. So that’s my long career in a brief 60 seconds.

Meg:
So that’s a lot of emerging growth. And I’m sure herding cats at some point in there.

Rachel:
Yes. Yeah. Or cows. I live in Texas, so if you want to, some cattle, maybe. Yeah.

Meg:
So talk about that experience of herding cows, herding cats, and how that tough experience then is translating into the work that you’re doing to improve Ecomaids.

Rachel:
You know, I think I pulled most of my experience or most of my lessons learned from my experience at Anytime Fitness because we grew so fast and when you grow really fast without a strong foundation and things start cracking, you have to have and fix those cracks. Right. So I understand the importance of, you know, looking back and saying, oh man, why did that happen? We skipped a step here. Let’s fix it. And so then I know in the next brand, don’t, don’t skip that step.

You need that. So applying a lot of that fast growth and the pain of that, I mean, fast growth is really exciting. It’s a beautiful thing, but it’s a painful thing. It really is. I mean, the growing pains are real and all of those lessons learned, it really comes down to having strong foundations at scale.

What takes what you need for an emerging starting brand isn’t the same thing that you need for a large growing brand or a more mature brand. So knowing the stage of emerging brands and what they need, it’s, it’s really unique. And so I’ve been able to, you know, come in and catch some of those things that are like, oh, there’s that crack. I know where the cracks are and where to look for them and what to put in place.

Meg:
When you first came to Ecomaids, were you aware of the fissures that needed to be repaired?

Rachel:
Yeah, the Ecomaids kind of transformation is a little unique because it’s not so much pain points of an emerging brand itself. It really is the results of COVID hitting a brand in such a unique way. Ecomaids launched in 2020. I mean, Happy Nest acquired Ecomaids in 2019 and started franchising in 2020.

I mean, this is a business where you’re going into people’s homes in the middle of a global pandemic and if you think about just the consumer behavior changes that came out of COVID it changed a lot of business models. and if you didn’t look back and make changes to meet those new demands of customers, hundreds and hundreds of businesses failed because they didn’t make those changes. So it was a really unique opportunity. 

It was a little bit of, you know, it’s emerging. We need to put some operational systems in place. But it was a lot of really looking at the consumer has changed, and we have to meet them where they are.

Meg:
And there’s no flagging of need for residential cleaning. People don’t want to clean their own homes. Life is too short to clean your own home. And so you were recognizing. And you started with Ecomaids and at what time?

Rachel:
It was June of 2023, so about a year and a half ago.

Meg:
Okay, so by then, Covid had come and gone, the worst of it at least and there had been some, I’m sure, sneak attacks and surprise left, sucker punches that your franchisees had to suffer through. So when you got there, what were the immediate needs that you wanted to address?

Rachel:
Yeah, the first thing that I saw and the pain points that I saw with franchisees was profitability, which obviously is one of the most important pieces of owning a business. There was some stagnant growth, and there was some just flat profitability, and it was really contributing to labor. I mean, that was one of the biggest impacts of COVID on this business model was labor. This is a labor business. It’s a service business. So you already have much higher labor than a lot of other businesses and especially when it’s a lot harder in this business to find operational efficiencies because you’re going in the home, not outside. 

So there’s so much more coordination. If I’m doing lawn work, who cares if you’re home, who cares what time I show up? I can get in and out. You can be really operationally efficient with inside with residential home cleaning, there’s a lot of coordination that takes place. So every minute, every second counts for profitability. So digging into where and why we had so much downtime in schedules and why were we so much windshield time and we really had to look at the model on the way that franchisees were setting up their labor and make some really big changes to drop the labor margins.

Meg:
So that was a loss or a lack of productivity.

Rachel:
Yeah.

Meg:
When they’re not in the home, they’re not efficiently using the schedule and monetizing. Why get into business if you’re not going to make money? So as you have been in the role of CEO, I believe you press pause on bringing new franchisees in, walk through that thought process, and then how did it impact your existing franchisees, knowing that expansion was going to stop for a while? What other impacts were there to the existing base?

Rachel:
So when I came in, I did a little kind of a listening tour. I took a couple of months to go around and meet all of my franchisees, listen, kind of listen to all the pain points and find those common themes. So profitability, growth systems, there’s a lot of, you know, it wasn’t. The good news is that I was hearing this. It was almost like deja vu. Every conversation was exactly the same, which actually made my job a lot easier.

It was like, okay, like, loud and clear. What we need to do here. Knew that I needed to make a lot of changes specifically to the model itself. Like what we recommend the person you’re looking for for hiring, what type of role that you’re hiring for, part time, full time, how you do scheduling. I did not want to bring new franchisees in, train them on the existing systems, and then three months later, have to say, hold on, forget about everything you just learned, we’re going to start over.

Because I knew we were going to make changes, and change is really hard. And I would have rather, you know, let everyone come in, new franchisees come in with the fresh new operations. I also knew that I needed to change the morale of my existing franchisees. They were really beat up.

Covid really beat them up. And they were down in the dumps. And I needed to kind of win the hearts and minds before I brought anyone new in. So that was really important.

Meg:
Did you suffer shrinkage then in your franchisee population and. Yeah, talk about that.

Rachel:
Yeah. I mean, at the end of the day, most of the franchisees were not managing their cash flow. That’s making it sound like it was their. Like there was a incompetency on their part. It wasn’t. You know, you come to the business with, here’s how much cash you need to run the business before you need to get to break even.
Right. And most of them had their, their cash flow saved up to get them through the first year or so of business. Well then Covid hits, there’s no customers. Well then now you get customers back but you can’t find staff. Now you have staff and they’re twice the cost as they were.

Folks were out of cash. So there was a lot of shrinkage because very. There was a lot of franchisees that did not hit break even before their cash ran out. And there was just nothing I couldn’t change. I could change all the operations and make all the great new things, but that’s not going to change that.

The fact that a lot of them were out of cash and that’s the number one reason why small businesses close and they don’t make it past the one year mark is you don’t hit break even before you run out of cash. So I did have a lot of shrinkage. There was quite a bit before I got here and there were some lingering. The first six months or so after I was here, we went right into, I started in June, 60 days of listening incorporate, you know, putting together the plan of what we’re going to do. And we launched a pilot in December.

So we took the couple months leading up to that to like, here’s the new model. We’re going to launch it in a few locations and take 90 days to see these locations see progress, to get buy in from the rest of the system. We had, we ran the pilot. Really great success. We had a training in April for all of our franchisees to come in together.

It’s the first time a lot of franchisees had even met each other in person. It was a really, really great time together down in Austin, Texas. And we rolled out all the new operations and started training all of the new franchisees on, you know, the new, new ways of cleaning, more efficiency, new marketing strategies in the whole business. We retrained everyone. That’s kind of where we are today is supporting all the franchisees as they make these changes in their business.

Meg:
So you didn’t really shift though away from what Ecomaids is all about. It was more about operational efficiency.

Rachel:
It really was, you know, we shaved. I’d have to go back and look at the numbers. But the franchisees and the pilot, the efficiency on time in the home. You know, if you, if I say that this is a four hour job, it should take four hours. If I say it’s a four hour job and it’s taking five, that’s a huge gap.

And so that, you know, sketch the Actual time cleaning to schedule time cleaning. We saw a drastic change, a drop in that percentage just incorporating new ways of cleaning. I brought in some experts who’ve been cleaning industry Experts for over 30 years in the industry to come and audit our cleaning processes and procedures.
And we just really overhauled. You know, there’s much faster, efficient ways of cleaning, much newer. You don’t think about the technology behind green. Most people think green and they think, oh, it’s vinegar, it’s not going to be effective. There’s some amazing science behind green cleaning that we weren’t adopting.

So we changed out a lot of our products that helped our cleaners clean a lot faster.

Meg:
That was one of the questions husband and wife I’m working with who are looking at Ecomaids, and that’s one of the challenges they have in their own home is the products are not anywhere near as effective as non green. So that’s really interesting. Interesting intelligence. Thank you for letting me know about that.

Meg:
But it’s true. Just taking me back to when I owned Great Clips. We were either underpriced, haircuts were taking too long, too long between clients to sweep up and take a coffee break. And what we really had to take a hard look at operational efficiency as well as our price point. To your point, if you, if your estimator, whatever you call that person, goes in to evaluate a clean and they’re saying this should take two people four hours and it’s taking five hours, is that because they misestimated the amount of time, the complexity in the home?

Is it a hoarder or a family with a whole lot of kids and you’re trying to move around, you know, they didn’t clean up in time or do you have labor issue where they’re just not motivated to get through the house? So it really takes some diagnostics in order to break all that down.

Rachel:
Yeah. And that’s exactly what we did. I brought in a lean Six Sigma operations person to help me go in and look at every single opportunity in the process of where is there inefficiency and how do we combat that?

We brought in a new software and new CRM that helps us with routing efficiency. Like, why are we driving 30 minutes up and then an hour south and then back up? Like there was so much opportunity to eliminate some of that windshield time that, you know, it’s dollars and cents. You know, seconds and minutes is dollars and cents in this business.

So you don’t think that it’s a big deal because it’s, you know, oh, it’s just a couple extra minutes, but that adds up, you know.

Meg:
Oh, that’s. Well, that kind of thing is really ineffective and that’s a lot. So you have. All right, so you rolled out the pilot and it was well received.

Since the pilot, have you, have your franchisees attained greater stability in their weekly monthly numbers? And then all you’re nodding, so that’s good. And then with new franchise owners, are you planning slower methodical growth or are you trying to backfill more quickly where you’ve lost traction?

Rachel:
Yeah, our existing franchisees that we have today are doing great. They are seeing progress.

I should say they are. I mean, you can look back at, okay, where are your labor margins this year over last year? I mean the year over year you’re seeing some really significant progress.

Meg:
Good for you.

Rachel:
Which is exciting. We are in the middle. I’m in a hotel right now. I’m in Lexington, Kentucky. We are acquiring one of our franchisees. She was actually one that was in the pilot.

She’s really turned her business around. I want to have a flagship store that I can bring my new franchisees into, even existing franchisees into and show proof of the new model. Like here it is in operation, here’s what we’re doing, here’s the growth that we’re experiencing and how we’re managing the day to day business. So I am in the middle of getting this location stood up, putting a GM in place and implementing the new model here. It’s 90% of the way there because this franchisee has been really great at adopting a lot of the changes.

So I would prefer to take a slow pace. I am going to be really, really particular and picky about the franchisees that come in because this brand is experience. It’s important to me and I owe it to my franchisees that I have to keep our culture strong and bring in really strong franchisees that are going to help us grow. So I’m kind of focused right now on getting our corporate store up and running and then we’ll slowly start bringing new franchisees in.

Meg:
So that’s interesting that you’re, you yourself are located in Texas and this is going to be a flagship location that’s not right under your nose.

So you’ve got to have really competent infrastructure to help build talk about than the culture that you are fostering so that it is helpful, it is supportive for your existing franchisees as they’re moving in. And the attraction then to franchisees coming in from the outside. What’s the essence of your culture.

Rachel:
I like to make data driven decisions. I’m still, I think there’s a time and a place for emotion and when you’re a business owner, sometimes that can get in the way of making data driven decisions. So I am really, really something new that I think I’ve brought to this group of franchisees is data and looking at your numbers and looking at your KPIs. And that was one of the things they didn’t have when I got here. If I would ask franchisees, what are the KPIs that run your business?

I would get a different answer from 10 different answers from 10 different franchisees. That’s a problem. There’s only, you know, so many. This, the business is the business. You need to know what KPIs drive this business and you need to look at them every day and have them on your board every day and where are you.

So one of the cultural changes I’ve made is understanding what the KPIs are that drive the business and we talk about them and we look at them and so if you’re not a data person, you’re going to become one if you join Ecomaids because before you know it, you’re out of cash because you weren’t, you were too focused on emotion and what you thought and felt, which doesn’t match the numbers all the time. So that’s been a cultural shift for these franchisees, but it’s also been why they’re seeing progress. Because they’re, you can’t, the data doesn’t lie. You know.

Meg:
It always cracks me up when people say, I really don’t know about my business. 

Rachel:

Yeah. 

Meg:
Don’t get into business expecting to make money if you’re not going to monitor those factors and usually in any business there are three to five significant. Top.

Rachel:
Yeah.

Meg:
Those three to five things are what you have to monitor every day.

Rachel:
Yeah. And a PNL is extremely important, but it’s such a lagging indicator of the day to day operation. So I don’t want to know. Yes, your revenue and your profitability is important, but if you’re just looking at a PNL and saying I’m not profitable.

Well, okay, what are the driving factors of that? Those driving factors, those KPIs come back, there’s activities that drive those. Are you doing the daily activities that it requires to move those numbers and you know, everything ties back to that. So that would be a really, you know, that’s a key part. When I think of the culture we’ve brought that to the forefront.

We do a monthly momentum call is what we call it with our franchisees. That’s on a specific topic. We require cameras on. You’ve got to be engaged. Don’t take this call from your car in between, like you need to be at your camera.

This is the data you come to the meeting with and we have really good conversations and we try to be, my team facilitates the call. We’re not, you know, presenting and teaching, but we are facilitating and asking questions and letting the franchisees communicate and talk to each other. Because at the end of the day, up until maybe up until next, next week, we haven’t been operators.

We don’t own the business. You’re the one out there owning, you know, running the business, you know, facilitating conversations where franchisees can kind of crowdsource information and best practices. I, you know, I always tell them it’s like the story of Big Mac. Where did Big Mac come from? It came from a franchisee and we had that a lot at any time.

Fitness. You know, those leading franchisees out there who were doing, you know, they were veering a little to the right, you know, going to. Away from the model, but seeing some really great success. And I’m going to encourage that because I want to learn from it, bring it back to the, to the group. Is that something we can operationalize and roll out to everyone?

So facilitating those conversations where franchisees are learning and sharing with each other is really important.

Meg:
Is there anything about Lexington that made it attractive? And where this question is coming from is the residential cleaning people all over the country want it and need it. So was Lexington a target market for the corporate office? Was there something about it and are there target markets going forward that you’re looking for expansion?

Rachel:
Yeah, there were a couple of key things we were looking at that anyone that would look at in buying a business, we wanted to make sure it was, you know, profitable, was at break even and it had opportunity for some big growth. And that’s what we saw here. We had a franchisee who had bought a really great team. She has built a really amazing team. And so that was really important.

That is the business going to completely fade away when she steps away? Like we don’t want that. Right. If it’s. It’s relying on systems today, not a person.

We see where she’s right now. Lexington, Rachelmond are about 45 minutes away. And she’s really grown her business more in Rachelmond than Lexington. So there’s so much opportunity to grow here because she hasn’t even tapped into a whole part of her territory.

Meg:
So. So she’s not leaving. You’re.

Rachel:
No, she’s leaving. We’re taking. We’re taking both. We’re taking Rachel and all of it. Yeah.

Meg:
Okay. I can hear the voices of people I’ve worked with to say, well, why didn’t you buy a struggling location and really prove your chops and turn it around?

Rachel:
Yeah, I mean, I wouldn’t say that this isn’t a struggling location. It’s been pretty flat. She’s improved her profitability, she’s proved her labor by seeing efficiencies. But she’s been open for two years and pretty flat. I mean, there is so much to show by implementing our new operations and growing. I mean, I’m expecting to have double growth next year. I mean, I’m expecting business next year.

Meg:
Okay. And then target markets. Do you have target markets for expansion.

Rachel:
For this particular location or for new franchises?

Meg:
No, just across the country as you’re bringing in new franchise owners. Any markets to avoid versus markets you want?

Rachel:
Not necessarily because it’s residential home cleaning. It’s different than a previous business. I was in, window cleaning, for example.

You really want to be in the Sunbelt. You want to be south because you have so much swing and seasonality. We don’t quite as much here. It is a little different when you get more into, you know, heavier urban markets because you’re dealing with more condos and property managers. So you may swing a little heavier on the commercial side versus single home families.

But I mean, there’s opportunity all over. It’s great.

Meg:
That’s interesting. Do you have franchisees who are focusing on condo and apartment dwellers?

Rachel:
Yeah, I mean, I have, you know, light commercial is definitely a part of our business.

It’s an opportunity for us to put a lot more rigor in a sales process around, which is our. One of our 2025 strategies.

Meg:
Okay.

Rachel:
But we have a whole apartment strategy today and process and collateral and resources for franchisees to grow that arm of the business.

Meg:
And I know in our last conversation we were talking about markets that are strong with Airbnb or those short term rentals and what that does to the repeat nature where a residential customer might be every other week or once a month, but with that Airbnb twice a week.

Rachel:
Yeah, yeah, we. I have several franchisees that are in markets where Airbnbs are really popular. It’s not going to be in every market because a lot of cities have banned them. But if you’re in an area that has Airbnbs, that’s a really good market to get into. It is different.

You’re not running. It’s not a normal clean that you would do in a residential home because it’s more of a turnover. So you’re. You’re kind of. Your checklist is a little bit different.

So you just have to know what those operations and those processes are and have a team that runs that, and it can be really profitable.

Meg:
Cool. This has been. I could keep asking you questions on and on and on. I know you’ve got a ton to do, getting your team organized and getting this transition transaction taken care of.

I so appreciate you jumping on the calendar to do this. It was important to me to have you tell the story of what’s going on. It’s not just Ecomaids. It was really such a broad impact across so many different industries, thanks to Covid. But the rebound, what you are doing at Ecomaids is not what’s happening universally in franchising.

So kudos to you for bringing the rigor and the structure to a system that clearly needed it. And going forward, Rachel, you’re. I can’t wait to see what happens, and I’ll have more referrals coming your way.

Rachel:
I’m excited. Thanks, Meg. It was interesting. When I started, I got into a group with another group of CEOs of home cleaning franchises, and it was. It was almost validating to me. It was like, okay, this isn’t an Ecomaids thing. This is like an industry thing. Covid has really struck everyone, and I think what’s pretty cool with Ecomaids is we had the opportunity to make some really, really awesome changes because we were a small, emerging brand that other bigger brands can’t just go and flip and change hundreds of locations.

So I think Ecomaids is in a really good place for some exciting growth. So I’m excited for it and look forward to working with you on it.

Meg:
Thank you. And you’ve got two great people on the brand.

Rachel:
Oh, yes.

Meg:
Eric Martin and Sharon Coupon. They are rock stars.

Rachel:
Yes. Yes. They’re awesome.

Meg:
Good. All right, well, I’ll let you go. Thank you for joining me today. And have fun with the turnaround.

Rachel:
Thank you. Appreciate it.