Jani-King International, Inc.

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Jani-King International, Inc.

16855 Dallas Parkway
Addison, Texas 75001
U.S.A.
Telephone: (972) 991-0900
Toll Free: (800) 552-5265
Fax: (972) 991-5723
Web site: http://www.janiking.com

Private Company
Incorporated: 1969
Employees: 1,341
Sales: $500 million (2006 est.)
NAIC: 561720 Janitorial Services

Jani-King International, Inc., based in Addison, Texas, is the world's largest franchiser of commercial cleaning services. Business is contracted through the company's 115 regional offices, and the work is performed by some 12,000 individual franchise owners, many of whom work out of their own homes and hold down day jobs. In addition to general commercial cleaning, the franchisees wash windows and walls, clean carpets, perform hard surface floor care, dispose of trash, as well as perform special cleaning services. Clients served include office buildings, retail stores, resorts and hotels, restaurants, educational facilities, healthcare facilities, car dealerships, banks, stadiums and arenas, and high-tech and bio-tech facilities. Jani-King provides training on all aspects of the business, offers cleaning equipment and uniforms, and its regional offices handle invoicing and secretarial functions as well as lining up clients. Jani-King essentially sells franchisees a book of cleaning contracts at half their value. Should the franchisees not perform to the customer's satisfaction, however, Jani-King reserves the right to charge them to fix the problem. While the cost of a franchise is relatively inexpensive, franchisees pay 10 percent of their monthly revenues to the parent company and chip in 3 percent for accounting services and another 1 percent for advertising. On top of that Jani-King charges a finder's fee for securing new business, and should a client not pay its bill the franchisee is liable for uncollectible accounts receivable. Nevertheless, Jani-King boasts a large number of success stories, featuring people who with a minimal investment were able to turn a part-time job into a lucrative full-time business employing scores of other people.

COMPANY FOUNDED: 1969

Jani-King was founded in Norman, Oklahoma, by its longtime chief executive, Jim Cavanaugh. He grew up in Norman, where he developed into a budding entrepreneur as a boy by maintaining a paper route, mowing lawns, and peddling greeting cards. He enrolled at the local college, the University of Oklahoma, to study business, supporting himself by taking a job in 1968 as a night auditor at a Holiday Inn located near the campus. Here he befriended a janitorial contractor named Don McGuffin, whose crew cleaned the motel as well as a number of other accounts. McGuffin complained that he was so busy working at night that he did not have time during the day to drum up new business. Moreover, he was not especially good at selling, nor did he like to do it. Sensing an opportunity, Cavanaugh struck a deal with McGuffin to line up work for him in exchange for a finder's fee. Realizing the potential profits in the commercial contract cleaning business, Cavanaugh soon decided to launch his own cleaning company. Thus, in 1969 he dropped out of school, just 12 credits shy of graduation, borrowed $3,000 from a friend, and established Jani-King in a garage.

After five years in business Cavanaugh had 15 people working for him and annual revenues of $100,000. From the beginning he had an interest in franchising Jani-King, but it was not until 1974 that he had the time to market and sell franchises. Moreover, he needed to turn to franchising in order to expand the business without having to cede control to outside investors. He established franchise operations in Oklahoma City and Tulsa, and began developing a decentralized approach to running the company, with regional master franchisers offering support to individual franchisees who did the actual work. It took some effort, however, to convince potential clients of the viability of this "owner/operator" concept, but they soon realized the benefits of being serviced by people who had a direct stake in satisfying the customer, rather than some hourly employee who had no incentive to do anything more than an adequate job.

RELOCATION TO DALLAS: 1975

With national aspirations for Jani-King, Cavanaugh was not comfortable being based in Norman, and in 1975 he relocated to Dallas, Texas. Not only did he like the climate and community, Dallas was also a transportation hub and respected business center. His arrival in town was not met by banner headlines, however. He was still driving to sales calls in a 13-year-old station wagon that had an unfortunate habit of breaking down. Nevertheless, he was able to steadily grow the Dallas business and spread out from Texas to sell franchise operations elsewhere. In 1981 Jani-King began selling master franchises to accelerate growth. By 1982 Jani-King included 250 franchises, but just three years later that number had more than doubled to 550, including 58 franchises in Dallas alone. In all, Jani-King was established in 14 cities, including Los Angeles, San Francisco, Chicago, and Jacksonville, Florida. Total billings were estimated to be as high as $20 million, and it was clear that amount would continue to climb in light of the strong growth of the custodial industry. Increasingly, commercial building managers opted to employ outside cleaning contractors to eliminate the headache of managing an in-house maintenance crew. Jani-King was far from alone in franchising cleaning services, facing competition from the likes of ServiceMaster and Merry Maids, but Jani-King's approach was embraced by franchisees as well as clients, so that in 1986 it was ranked by Entrepreneur magazine as the top commercial cleaning franchiser, a honor it would hold for 14 out of the next 16 years.

The first move in making Jani-King an international business was taken in 1986 when a Canadian operation was launched. "As we saw acceptance in Canada," Cavanaugh told World Trade, "we thought it could be successful elsewhere. We discovered that opportunity is the same everywhere for a minimal investment." Nevertheless, Jani-King did not rush into global expansion. It first made sure that the operation was able to cope with the company's rapid domestic growth. The next step in establishing an international footprint came in 1991 when Jani-King landed a master franchiser in the United Kingdom. Soon after that, Brazil was added to the roster. In the fall of 1993, the company entered a pair of continents by expanding to Turkey and Singapore. Before the decade was out, Jani-King operations were also to be found in Argentina, Australia, France, Hong Kong, Japan, Malaysia, New Zealand, South Korea, Spain, and Taiwan.

Jani-King began the 1990s with more than 1,500 North American franchises, found in 33 states and most of the Canadian provinces. Billings topped the $50 million mark in 1989, a sizable jump over the $40 million generated the previous year. Jani-King's client roster exceeded 10,000 and included such blue chip companies as American Express, Boeing, Coca-Cola, General Motors, IBM, Merrill Lynch, Nabisco, and Xerox.

COMPANY PERSPECTIVES

To provide every Jani-King Franchisee the opportunity to be successful in a business of their own. To provide to our customers a level of service unequaled in the cleaning industry. To create a cooperative atmosphere in all areas that reflects the personality of a successful, vibrant, enthusiastic company. To develop an organization that will encourage all people to prosper and grow to their full potential.

Jani-King's North American growth accelerated in the 1990s. From 1,508 franchises at the start of 1990, the company ended the year with 2,071. According to Entrepreneur, Jani-King ranked third behind Subway and McDonald's on its list of the top 500 franchises in 1990. The economy at this time was slipping into recession, but that did little to slow down the company's growth. As Cavanaugh told the Dallas Morning News about the cleaning industry, "One of the nice things about it, our business is pretty recession-proof. There's always dirt."

By 1995 annual revenue approached the $200 million mark, 90 percent of which came from domestic operations. In addition to entering new markets, Jani-King grew sales by adding the industries it served. For example, in 1995 the company's president, Jerry Crawford, was attending a convention when a hotel general manager inquired why Jani-King did not offer its service to hotels. The company had gotten its start because of Cavanaugh's job at a Holiday Inn, and over the years Jani-King had been contracted by hotels to provide floor care and to clean common areas, but there were other tasks that could be taken on, such as maid services and laundry. After returning home, Crawford conferred with Cavanaugh and they decided there was sufficient opportunity to warrant the creation of a hospitality division to tap into this market, which would require the expansion of staff. It was clearly an investment that would pay off. Just like building managers, hotel managers had needs that had to be met but were reluctant to hire extra help. Jani-King could be hired to provide offhour cleaning and allow hotel management to focus on their core concern: the comfort of their guests. Moreover, large hotel chains maintained massive regional laundries that provided linens to hospitals and nursing facilities in addition to hotels. The laundries also turned to Jani-King for cleaning services in order to maintain focus on the quality of production.

With Jani-King adding franchises at a rate of about 100 per month, revenues continued to climb in the second half of the 1990s, to $240 million in 1996 and $300 million in 1997. To keep those franchisees employed, the sales representatives at the regional offices charged with drumming up business looked to even more new markets, landing contracts at airports, universities and school systems, and sports facilities. In addition, Jani-King developed a method for sanitizing "clean rooms," allowing it to do business with computer manufacturers as well as other high-tech companies and bio-tech facilities.

FIRE DESTROYS MUCH OF HEADQUARTERS: 1998

Jani-King's momentum was blunted in October 1998 when an electrical fire destroyed about half of the company's 25,000-square-foot headquarters. Completely devastated were the executive offices, and the research and development, international, and shipping units. Fortunately, the blaze occurred around midnight on the weekend and none of the 84 corporate employees were in danger. Even so, as soon as the fire was brought under control—it kept reigniting because of the large amounts of paper present in the offices—the Jani-King staff put in long hours to recover from the loss of records and destruction of promotional materials that the regional offices depended on to make sales. The shipping manager, for example, had to fill orders from memory as best he could. The emergency did serve the purpose of bringing the staff closer together, the temporary tight quarters forcing employees to learn more about each other's jobs, something that would prove beneficial when the headquarters was again functioning under normal conditions. The fire also forced the company to relocate, moving into larger accommodations which had been needed for some time. The recovery from the fire was handled so effectively, in fact, that some of the regional offices were not even aware of the accident until reading about it in a company newsletter.

With the advent of the new century, Jani-King maintained its pattern of steady growth. About 550 new franchise owners were added in 2000, bringing the worldwide total of franchisees to more than 8,000. The company also continued to make inroads in certain industries. Out of the work it did for hotels came contracts to clean resorts and casinos. In 2001 the company won a contract to clean the Florida casino ships of SunCruz Casinos when they were in port overnight. In 2002 Jani-King was awarded the cleaning contract for the Salt Lake City Winter Olympics to provide housekeeping services at the Olympic and Para-Olympic Villages.

KEY DATES

1969:: Company is founded in Norman, Oklahoma.
1974:: Franchising begins.
1975:: Headquarters moves to Dallas.
1986:: First international franchise is awarded in Canada.
1998:: Fire strikes company headquarters.
2002:: Jani-King becomes NASCAR sponsor.

To burnish the brand image of Jani-King and create further business for the franchise owners, the company increased its marketing efforts. In 2002 it became a sponsor of a NASCAR car running in the Busch Series and hired ex–football player and media personality Terry Bradshaw to serve as its pitchman. Later the company sponsored a truck in NASCAR's Craftsman Truck Series.

International expansion also kept pace in the new century. Moscow was added as a new market in 2004, making Russia the 16th country Jani-King served. Later in the year master franchises were placed in Belgium and the United Arab Emirates. In 2005 Jani-King was selected to provide environmental services for the Johns Hopkins Hospital in Istanbul, Turkey. Later in the year Jani-King established a regional office in its 20th country, Portugal. Further inroads in Europe were made in 2006 with the opening of an office in Athens, Greece. In the meantime, Jani-King continued to fill in U.S. markets, opening offices in Lafayette, Louisiana, in 2004; Pensacola, Florida, in 2005; and Augusta, Georgia, in 2006. By this point the number of U.S. franchises approached 10,000, Canadian operations neared 600, and international franchisees exceeded 1,600.