Meaning in the middle for City Wide
As the dot-com bust slowed the economy at the end of the 1990s, Jeff Oddo noticed a significant opportunity for his facilities maintenance business as his clients began outsourcing ever more services to reduce their headcount of employees handling non-core functions.
Oddo realized his company, City Wide, needed an entirely different strategy than the one employed by his father, Frank, who founded the company in 1961.
Crafting a plan to take his family firm into its future, Oddo tore up an existing business model that relied on a large staff of in-house workers and vehicles, and opted for a franchise-based model that manages an array of subcontracted janitorial and landscape providers to keep its clients happy.
The sea change paid off: What may look like a middleman to some has morphed into a modern business-to-business service provider that allows its clients to reduce nonessential staff, provides a stepping stone for local building maintenance independent contractors and allows City Wide to become a leaner enterprise with nearly $125 million in annual revenue.
Not quite a middleman
“We are like a super franchise,” Oddo said, describing the changes he implemented at Overland Park, Kansas-based City Wide after taking the helm from his father. “You could buy a lawn and landscaping or janitorial franchise, or you could buy a City Wide franchise—the benefit of having a City Wide franchise is it provides you 20 different ways to get your foot into the door with our clients.”
By focusing both on the needs of his clients as well as the subcontractors now essential to City
Wide’s model, Oddo stepped away from the fear of additional competition by building up his company’s contractors so they can grow their own client base and, ultimately, leave City Wide to go out on their own.
“Contractors choose us because these people want to grow their businesses and just don’t know how to hire a salesperson and finance a larger operation,” he said. “There are certainly contractors who get to the point where they no longer need us and that’s OK—I got into this business because I really wanted to make a difference in the lives of others and franchising allows us to be able to do that.”
He added when contractors do leave the City Wide fold, he views it as a success that validates the new business model, rather than a loss of talent or gaining a new competitor that possesses inside information. “That’s because of the way we treat our shareholders and contractors,” he said.
From the client’s perspective, City Wide allows them to avoid hiring full-time facility managers, which can be crucial for clients like banks, automotive dealerships or churches that may have large parking lots or facilities to maintain, but either can’t afford or would rather not hire full-time staff to get the job done.
As opposed to a client hiring a traditional cleaning company, City Wide can perform the same function as traditional providers with lower overhead due to its lean business model. Its contractors own their own trucks and equipment and, in many cases, have their own employees.
“It’s a very common characterization that we are a middleman, but in reality we are performing a service on behalf of the end user,” Oddo said. “We’re able to provide our clients the full scope of our services without charging them any additional cost.”
The key to making it work is hiring what Oddo calls “the right contractors,” typically those in the middle range of what’s available in a given city—not too big nor too small. Smaller clients, he said, often lack the equipment or expertise City Wide looks for, while the largest contractors have more overhead and higher costs, squeezing the franchisor’s profit margins.
The pain of growing
Mohamed Omer owns his own contractor firm, Source Building Services, and has worked with City Wide since 2000 when his previous service management company folded. With a rotating roster of 40-60 employees and $250,000 in annual billing, Omer still has his own clients outside of City Wide that comprise 30 percent of his business.
As he experiences “the pain of growing,” his partnership epitomizes what Oddo described—mid-level contractors working with City Wide, growing larger and eventually separating from the mother ship.
“It’s very hard being an entrepreneur, establishing a business and wearing all the hats,” Omer said, specifically referring to all the overhead and back-end work required to be a contractor.
With City Wide, he doesn’t have to worry about sales or managing the client relationship, allowing him and his team to focus on managing the operations—specifically, cleaning the buildings the franchisor sends his way.
Receiving payment from clients is one of the primary challenges with Omer’s own in-house clients, the painful part of growing his business that requires larger and longer cash outlays until payments are received.
“I have customers I can’t collect from,” he said, adding “with City Wide, I don’t have to worry about that.”
For his City Wide clients, Omer’s profit margins can be much thinner, which is his main reason for hoping to eventually bolster his in-house client list.
“I discuss that openly with City Wide management,” he said. “Sometimes they come back to me with a better margin and sometimes they say that’s the best they can do—they’re in the business to make money and I’m in the business to make money, too.”
Omer, an immigrant from Sudan, added City Wide is a great model for contractors like himself, and that it’s helped him grow the company without deep pockets.
Aiming for a billion
As City Wide keeps growing, Oddo said he understands why his father ran the business under a different model, but said that making such a fundamental change to the company has added excitement into his daily routine and allowed him to leave his own mark on the family company since taking the reins in 1999.
While many industries in the company’s roster of clients have expanded in recent years, Oddo said City Wide’s recent growth has come through adding new franchisees. Compared to the late 1990s when City Wide cleaned 3 million square feet of space in a given night, it is now cleaning more than 125 million square feet per day.
Oddo is now plotting the company’s next 10 years and is finalizing a plan to get City Wide to reach $1 billion in annual sales by expanding the company’s turf beyond its 42 markets. He’s specifically eyeing six to eight new franchisees per year with a focus on growing throughout the Northeast.Back