1851 Franchise: Can you start off by telling us about the history of Christmas Decor?
Brandon Stephens: Our founder, Blake Smith, started Christmas Decor in the mid ‘80s. He had started a landscape company when he was in high school. It evolved over time and grew to where he had employees, trucks, trailers, facilities — but he didn’t have anything to do in the wintertime when it got cold. So he started looking at different streams of revenue, and one of the things that clients really wanted was somebody to put up their Christmas lights. So he started doing that and, over the next few years, really worked out the systems and the scalability of the business. Within five years, Christmas decorating became the most profitable part of his company. It started off as a way to fill the off-season, but it ended up being a huge benefit to his core business.
When his landscaping competitors started, they would take off in the wintertime, but he was out there building relationships and servicing clients during the coldest part of the year. That ended up growing his landscape company exponentially. When competitors were laying people off, he was hiring as many employees as he could find, and he was getting the best employees in the marketplace. So what started off as an add-on to offset his landscape business actually helped his business grow. In five years, he had grown the business about five-fold. Christmas business only accounted for about 20% of the gross revenue, but it was half of the profit, so it was the most profitable work that he did.
In 1996, Christmas Decor started franchising. In the first year, they sold seven franchises. In the second year, they sold 70. From there, it was about managing the growth and scaling and bolstering the systems and the support to keep it growing. After doing that for a few years, they got rid of that landscape company and focused year-round on Christmas Decor. Since then, we've added in some additional services, like Nite Time Decor low-voltage landscape lighting and a permanent product line called PermaLights. And that’s how we’ve evolved over the years.
1851: What void does Christmas Decor fill? What inspired you to start?
Stephens: From an operational standpoint, we filled our off-season. From a bigger picture standpoint, this is an elective service. Landscaping, for example, is a very competitive business. Christmas decorating is a little bit harder to get into, and you need a lot of things in place. So it’s interesting (as a franchisee) to offset a business that’s very competitive and very bid-driven, with more of a white glove service. This is a service that you're buying because you want it and almost solely because you want it. It can also become a very frustrating experience if it's not handled properly. Nobody likes to have bulbs out or trip over lights. If you're not in the industry, you don't know what you need. So, for contractors like landscapers or pest control (who want to own a Christmas Decor location), we're able to provide them with an avenue to these affluent clients that have elective discretionary income.
What generally happens is they get into that house to sell a Christmas service, and then they can turn around and cross-sell pest control services or landscaping. They create a very economically resilient client base. Lawn maintenance has gotten pretty broad, so you don't have to be a real wealthy person to buy landscape services. But our average residential installation at Christmas is just shy of $1,800. When you get in front of those property owners who are willing to spend that kind of money, it's pretty fertile ground to sell additional services.
1851: What inspired you to start with Christmas Decor?
Stephens: I’ve been with Christmas Decor for about 19 years, and I think the thing that initially attracted me was just how interesting the business was. I had just moved to Lubbock, Texas, didn’t really know anybody and I met Blake. He was very passionate about what he was doing. I just didn't feel like the guy was going to fail. From an altruistic standpoint, the work we were doing was good work. We were offering a service that people wanted, were willing to pay good money for and it generally put a smile on their face. We get very few complaints, and there’s a joy to it.
The other thing is just the creation of jobs. The alternative is to probably lay people off, or for these businesses just to eat into their profits, which creates instability. So when you're keeping people from being laid off, there’s almost a higher calling, as far as the type of work that we were doing.
1851: What are some of Christmas Decor’s most important milestones over the past few years?
Stephens: We just saw our 25th anniversary. When you stay in business that long, you don't have to spend a lot of time building your credibility.
About six years ago, we made an acquisition of a company called Barcana, which is a three-generation company that originally specialized in interior Christmas trees. Over the years, they have evolved to where they offer a ton of specialty products. So on the Christmas Decor side, we make our living by putting lights on houses. Barcana now does various things like interior trees and toy soldiers, bigger commercial and low-labor pieces. It was an iconic brand in our industry, and we took it and revitalized it. Up until that point, our business was about 80% residential and 20% commercial, and when we made the Barcana acquisition, it really changed our offering and opened up a lot of doors as to the types of properties that we serve. Now, commercial represents about 40% of our overall business.
The third biggest recent milestone was our corporate office move to Dallas-Fort Worth. We operated in Lubbock for 19 years. We feel strongly in the franchising business that we need to have good contact with our franchisees. So it may sound small, but we always had to go through Dallas-Fort Worth to get to Lubbock. From the standpoint of convenience and flying, it was harder to get to. Once we moved to a big city like Dallas-Fort Worth, we had access to a bigger labor pool and just more regular contact. We had more people visit our Dallas office in the first year than we had visit Lubbock in 15 years. So from an accessibility standpoint, that was a huge move for us.
1851: What is Christmas Decor doing well right now? What are your brand’s differentiators?
Stephens: We’re one of the bigger players in our industry, so it’s almost like we have a say in the trends and we have a front-row seat to what people are looking for. We serviced about 40,000 clients last year. When you have access to that number of people and you can do surveys and gain insights, you really learn a lot about what people want. Because of the size of our footprint, we have a really good finger on the pulse of what's going on out there in the Christmas world. And because of that, we carry some weight with factories and within the industry as a whole.
We have gotten really good at the supply side of things. Right now, there's an international freight crisis going on. To get a normal freight container in from overseas is about $6,500. We’ve seen that go up to about $30,000 per container. That has a significant impact on sales. So because we were able to get our stuff in nice and early, we were partly able to avoid that.
From a franchisee demand standpoint, we've developed relationships with our franchisees so they give us regular feedback as to what they need. So we’re able to maneuver the changes in the industry pretty well.
1851: Why is now the time to buy a Christmas Decor franchise?
Stephens: Our industry is growing, and we’ve been doing this for 25 years. Without the franchisor’s help, you can probably figure out a way to make a little bit of money on your own. But we help you do it faster, get you up and running in a very short period of time and condense that learning curve that it would take to work out all the kinks and figure out the do's and don'ts. We have a network of people to access that includes our employees at the corporate office, as well as our other franchisees.
It's all about scaling quickly. Our royalty rate is 5%, and our ad fund is 1%, so that’s 6%. If I help someone build a half-million-dollar company, they’re paying us $30,000 toward a team of marketing experts, tenured franchise support reps and product inventory expertise. We have a pricing model that's pulled from data insights from all these franchises all over the United States.
It's a combination of the experience, the systems, the network and just the general knowledge that comes from the tenure of the staff or somebody that's been in the business for 25 years.
And then, just in general, the industry is growing. More and more, people are looking for ways to get some of their life back, and they're hiring out to do more things. With the pandemic, people are spending a lot more time at home. They're not spending money on vacation, so there's more disposable money floating around. We've had some really strong growth, and we're tracking about 95% ahead of last year right now.
1851: What are Christmas Decor’s growth goals and plans to reach those goals?
Stephens: We would love to hit 500 franchises by 2025. We're being pretty careful about how we manage that, but we have a lot of markets with territory available. We’d also like to get to $100 million in sales within the next four to five years.
We have a strategic plan. We’ve spent a lot of time on the Barcana acquisition, and then we made the move to Dallas-Fort Worth. So we’ve had our hands full over the last five years. Seven to eight years before that, we were really focused on infrastructure — systems and support — to make sure we were taking good care of our franchisees. We weren't really focused on adding new units as much as we wanted to help franchise revenues grow. The growth plan is just to refocus on some of those things that made us successful and then add new franchisees.
For more information on franchising with Christmas Decor, visit https://www.christmasdecor.net/franchise/.