SealMaster distributes a full line of pavement maintenance products and equipment. Its main products are pavement sealers, and in particular, asphalt-based sealers. Its surface preparation, including crack sealing, products and equipment support and extend the sale of pavement surface sealers. Traffic paints and related products and equipment round out its one-stop-source profile. Please review sealmaster.net for a more complete overview before proceeding.
It is a direct to contractor brand, not a consumer brand. You are setting yourself up for complaints from consumers if you sell the main surface and crack sealers through retail outlets. Some of the main SealMaster products don’t have the shelf life of consumer brands; but SealMaster products are better than comparable consumer products when used by contractors within the season they are produced. Moreover, application of SealMaster products requires some expertise. Most consumer complaints relate to incorrect application. You need a contractor to be responsible to the end user. Your main marketing and sales focus should be on developing and selling to contractors.
In virgin markets, especially, contractors must be trained to sell and apply SealMaster. Most residential and commercial customers buy sealcoats for aesthetics; most government agencies for asset protection purposes. To sell effectively, contractors must understand that the value of SealMaster is indirect and visual (higher property or customer value through curb appeal) for the former and direct and scientific (longer pavement life) for the latter. It is also crucial to manage customer expectations, both with respect to looks and wear and tear: it will not hide all imperfections in the pavement, and the application will have to be repeated at intervals. It is a good idea to conduct regular contractor training classes both to introduce SealMaster to new contractors (don’t forget to teach them the economics of being a sealer applicator) and to reinforce the contractor-centric positioning of your operation.
For competitive advantage, the main sealer products should be produced and distributed locally, using mostly local raw materials. ThorWorks Industries, the owner of the brand (and of several related and unrelated brands), offers well-qualified candidates in most countries an exclusive license to manufacture and distribute the main SealMaster pavement sealers as well as to distribute the entire line of SealMaster products and equipment. Candidates do not need prior industry experience, but they must be sales oriented, as meeting with and helping contractor-customers in the field are the primary driver to success.
Each licensed territory should extend about 100,000 km2 and have a population of at least 3 million. As much as possible, territories are comprised of one or more states or countries. We tend to discount downtown areas of large cities and vast rural areas, which are not good markets for SealMaster products. Suburban areas and small towns and cities are ideal markets. For comparison purposes, our home territory of Ohio is about 116,000 km2 and has a 12 million population base, with many small town and cities. Our sales team of three seldom reaches more than about 2/3 of this territory. Our smallest territory is the State of Rhode Island, which has 3,140 km2 and a population of 1.1 million; but this is by no means our lowest performing operation.
Such size areas allow for easy sales and distribution from one location. Sometimes, a licensee will establish one or more satellite distribution points within the area, to allow even easier access for smaller contractors who come to pick up their daily or weekly supplies. Larger contractors tend to have one or more sealer dispensing tanks that are filled as needed by tanker-trailers running throughout the area every day from the main facility of the licensee.
The main facility requires 650-950 m2 of industrial space close to main highways and an investment of about $1 million in build out (of leased space), production and transportation equipment, inventory, and working capital. We will guide you, your contractors, and your employees on how to build and operate your manufacturing facility. You will also need good sources for raw asphalt, sand, limestone, and water locally. Based on the grades of raw materials available to you locally, we will formulate a unique-to-you proprietary emulsifier you must purchase from us to produce SealMaster sealers with the requisite properties.
It is possible to start a small exclusive distribution operation (to test the market for about a year) with about $100,000, plus ongoing purchasing requirements depending on the territory, but this is allowed only when the intent is to upgrade to a full manufacturing and distribution operation when the test is successful, and funding for the full operation must be available prior to starting the test. In this case, the $35,000 initial license fee is deferred until a decision is make to upgrade to a full operation.
To put this in perspective, in the US, we currently have 34 licensed (actually, franchised, but differences are minor) operations. Of these, 24 had been in operation for more than five years by the end of the 2014 fiscal year. Their self-reported sales ranged from $887,930 to $12,200,126 and averaged $5.3 million. (One franchisee operated two franchises, but counted them as one, which would reduce the average per operation by a small amount.) Their average gross profit margin was 42%. (This does not include our corporate-operated Ohio territory, which is another high-performing territory.) Franchises with less than five years in operation (10) reported sales of $581,139 to $2,794,438 and averaged $1,716,830. Their average gross margin was 39%. Take into consideration some extra transportation costs and, especially, your import duties on some 20% of your business (locally produced sealers are usually 80% or more of your business); but also take into consideration that we tend to have much more competition than you do, and have to keep prices competitive. (Depending on your market, you may be able to charge a premium price for some products that do not have any or only sub-standard competition.) Subtract your local overhead, and you should have a fair idea of your return on investment.
There is no guarantee that the averages will apply to you, of course, but it is hard to be more accurate without conducting an actual operation. You may be able to refine these numbers somewhat by speaking with several of our franchisees yourself, and we encourage you to do just that before you make a commitment.
Contact information for our franchisees is included in the Franchise Disclosure Document (FDD) we use when offering franchises in the US. The FDD also includes some 100 pages of other disclosures that should be helpful to you. We will send you a copy upon receipt of your Franchise Application showing that you have the necessary funds available for this license. Sending this in does not obligate you in any way. The Franchise Application form may be found under Franchise Opportunities on the sealmaster.net website and can be completed and sent online. Just fill it in as best you can and indicate where you are uncertain. We can always go over the remaining points later. There is no need to spend a lot of time on this at this juncture.
If you wish to start out as a non-exclusive distributor, with reduced purchasing requirements, you may try that first, but you will not be entitled to licensee pricing, and someone else may acquire the exclusive license for your area, someone who may or may not want to continue your distributorship. To preempt others from taking the exclusive license, you may rather want to quality for it immediately and conduct a test distribution operation while we reserve the market for you, as indicated above.
A final word of caution! When you conduct a test distribution operation under a temporary license, you will not have the benefit of producing sealers locally at a lower cost; but you will want to test the market at a price similar to the one you will later charge when you produce locally. That will depress margins on your main sealer products, which are typically 80% of your business. A test operation, therefore, should be as short as possible, and it should not be considered a means for funding an upgrade to a full operation. Hence, we require that you qualify for the full operation before conducting an exclusive test.