At least in the US, home construction and remodeling is an amazingly diverse industry. In particular, there are hundreds of thousands of individual operators and small companies, which collectively make up the majority of the industry. What we want to do here is to devise a business structure that works with these independent operators, that provides them with opportunities that augment and accelerate their own business. In turn, we find in these independent operators highly motivated and skilled individuals -- much more so than we could ever expect to hire.
We imagine a single central company (XC), which acts as the catalyst to forge the industry. This company is the repository for the industry's shared expertise, which it in turn disseminates through a comprehensive range of services.
This central company holds one or more brand names. The goal is that the brand names will come to symbolize quality and value in the industry. The value that the public sees in these brand names is the operating margin for the company. Accordingly, the company will be organized as a for-profit corporation.
We see this as a single company, and imagine that this company will grow to dominate the industry. There are "economies of scale" for the key functions of this company: the accumulation and dissemination of expertise, and brand promotion which in turn promotes the industry. To attain and maintain such a level of dominance, we have to use such economies of scale and other cost-minimizing strategies (such as open source software development) to reach a position as the unassailable low-cost provider of quality services. To get there, we need the heartfelt participation and loyalty of the industry.
One way to cement this loyalty is to encourage franchises and affiliates to invest in XC. Such investments would be very synergetic, so this may turn out to be a highly effective way to capitalize XC.
Obviously, at some future point an IPO is a possibility.
A franchise is a company which is licensed to make use of certain brand names and business plans from the brand corporation. We see franchises as the primary providers of XC services to the public and the trades.
At least to start with, exclusivity will be treated as a service that the company sells to the franchisee. Exclusivity will be delimited geographically and possibly by market segment. It will be granted for a limited time, and can be revoked if mandated business levels are not met, or if there are quality problems which undermine the brand name.
One special class of franchises might be a sales franchise (i.e., where we would grant a franchise to someone to sell franchises and recruit affiliates). This approach might allow us to scale up to a large number of franchises without having to build our own sales infrastructure accordingly.
An affiliate is an individual operator or company which has an established business relationship with XC (generally through its franchises) to perform specific services. Affiliates have access to confidential XC knowledge bases, and can generally offer XC services to the public. XC provides affiliates with business referrals.
Affiliates are eligible for certification, which shows that the affiliate has been trained and is expert in some particular field (e.g., low power wiring, networking software).
In the event that there are multiple brand corporations pursuing this market, we may wish to form a non-profit association through which the brand corporations could share information and services.
Multiple brand corporations are most likely to emerge where there is a low-cost advantage to specializing in a particular market. The most obvious case is a language-localized market (e.g., a Japanese owned and operated brand corporation would have a low-cost advantage over a US brand corporation in the Japan market).
Specializations within vertical niches (e.g., apartments) are also possible. Competitive brand corporations within a single market are also possible, but unlikely to attain a low-cost advantage.