He met Larry Shaw, HART Health’s founder and CEO, at an event sponsored by Vistage, a CEO peer group. Shaw was interested in franchising HART’s successful van service for commercial and industrial first aid supplies. Rao had been head of Blockbuster’s international Franchise operations for several years and understood the franchise sector. As head of a Blockbuster subsidiary in Minneapolis, MN, he got a taste of having more control and the ability to make decisions quickly without layers of corporate approval. For his next career move, Rao knew he didn’t want a large corporation but didn’t want a start-up, either. “I wanted something that had either been around for awhile or was looking to get to the next level,” he says. HART was that company. In the Q & A section below, Ramesh Rao talks about how and why investing in a HART Health franchise makes good sense — and how he checked out Larry’s claims himself.
What do you like about the sector HART Health is in?
OSHA mandates that companies and employers stock first aid supplies. It is not like yogurt, which is a discretionary purchase. There is a need there for industrial grade products and it is hard for companies to keep items supplied themselves.
Your biggest competitors are Cintas and Zee, two big national companies, or hyper-local independent companies. How can HART Health stand out?
We have a huge opportunity. This is roughly a half billion-dollar industry and with the van delivery model the big guys have up to 70 percent of the market. Any MBA book or class will talk about industries with a few majority players and say there is always room for a third or fourth if you have differentiators. We have developed differentiators, developed strategy and developed our infrastructure.
The differentiators are the quality of our product, our service and our ability to control our customer’s costs.
How did you decide HART Health really was different?
When I first met Larry, he talked about HART’s order and inventory control system and said the competition didn’t have anything like it. It is not that I didn’t believe him per se, but I did my own validation. As part of my early consulting engagement I called on Cintas and Zee separately and acted like a customer. Lo and behold, it was exactly what Larry said. They did not have inventory control. They literally wrote orders on a note card. They were inflexible on service cycles and the pricing was higher, too.
We prefer to go against the big guys. For the most part, companies will already have a service so you are pulling the business from someone else, but we show how we can control their costs and help keep the business local. Our customers really like that our franchises are locally owned. In addition, industrial grade first aid supplies are our only business (unlike our big competitors) and Larry works to develop our branded products. He likes going toe-to-toe with Advil and other national brands and in terms of quality has succeeded.
Who makes a good HART Health franchise candidate?
We look for personality traits rather than experience in this industry. We want people who are driven, competitive and tenacious. Somebody with a sales profile is preferred but either way, an owner needs to be outgoing and energetic and like to get in front of people, whether on the phone or with presentations. It is a soft sell but they need to get their arms around the sales process, and tenacity is part of that.
What makes a HART Health franchise an attractive option?
It is a flexible model with a recurring revenue stream model that in itself is beautiful. It is not a retail or service model that is a one-time service and you don’t see them for the year. Yes, you have to get the accounts but after that you are visiting them every 30 to 90 days. You can open one territory or multiple territories by signing an area development agreement. It also has flexibility based on an owner’s strengths and desires. Someone who is strong on sales can hire another person to do the servicing, for example. With our JIT (Just In Time) inventory control system, storage needs are minimal, a few shelves in the garage, and you don’t have to drive into an office. It is a simple, home-based business model that allows you to have freedom. You work weekdays and maybe some evenings.
What is the relationship between corporate and franchise owners?
If you are going to franchise a concept you have to understand franchisees are different than employees. They believe it is a partnership and it is incumbent on us to understand that. If we can work together as partners what they want is open communication and a sounding board for challenges they face. It is important to have honest, clear lines of communication.
How is your work-life balance now that you are with HART?
I came from retail, which is seven days a week and holidays. Our HART corporate headquarters is closed on major holidays. My wife and I are very, very energized. We are working pretty hard but it is not like the retail days. In the evenings we do a little work but we also value quality of life and family, so it is not like we work 12-hour days in the office. I am able to do a luncheon or go to the science fair with our kids.
What is the culture of HART Health?
I was really intrigued by what Larry had developed and that he has kept that attention to detail and passion after 30 years. In many ways, HART is like its founder – youthful in spirit, with lots of passion and attention to detail.