SERVICE WITH A SMILE

Personnel biz taps three hot markets and hits $100 million

D@WORK FRANCHISE, INC.
AT-A-GLANCE
3215 John Sevier Highway
Knoxville, TN 37920
800-383-0804
www.atworkfranchise.com

Historical Data: AtWork Personnel Services was formed in 1990, when John D. Hall, Jr. and his wife Glenda assumed sole ownership of the 11 staffing offices that had been part of an operation where Hall served as managing partner. AtWork Franchise, Inc. was formed in 1992 to franchise the AtWork Personnel Services brand. Two new brands, AtWork Medical Services and AtWork HelpingHands, have enjoyed a successful launch.

Growth Projections: In 1992 (first year of franchising), total company revenue was $12 million. By 2003, that had grown to $75 million and the company forecasts hitting $100 million in 2005. The long-term goal is $1 billion in system-wide sales by 2013.

Franchise Facts: The initial franchise fee is $11,500 per franchise program, and is payable in 23 equal monthly installments of $500. Total initial investment requirement ranges from $59,500 to $105,000.

Franchisees pay royalties of 1% of gross revenues as well as an administrative service fee, which is .6% to 5.1% based on gross revenues. The schedule of royalty and service fees includes a volume discount.

Exclusive territories are calculated by employee base and defined by zip codes. Currently, 42 AtWork Personnel franchises are operating in 14 states; 20 AtWork Medical Services franchises in 8 states; and 8 AtWork HelpingHands franchises in 2 states. The company projects opening 15 new units in each program during the upcoming 12 months. The company operates only one unit, which is an AtWork Personnel office in Arizona.

AtWork Personnel and AtWork Medical Services must be operated from commercial locations. AtWork HelpingHands may be operated as a home-based business.

Training and Support: Franchises receive comprehensive initial and ongoing training and support on all aspects of starting their businesses.

The personnel services industry is heavily regulated, and franchisees are ultimately responsible for full compliance with all applicable laws, rules, and regulations. The AtWork programs are carefully designed to minimize regulatory compliance issues, and the franchisor assists franchisees in this critical area through training.

AtWork HelpingHands can be opened with one person, with the level of employees proportionate to the volume of business and needs of clients.

In the traditional world of franchising, franchisors offer one concept and one way of doing things. In a bold move designed to offer greater autonomy and growth opportunities to franchisees, AtWork Franchise, Inc. offers three separate franchise concepts and has others in development.

The company, which has been operating since 1990, and began franchising in 1992, provides franchisees with the opportunity to choose a niche or niches that suit their own business goals and market. The concepts are:

Each of these concepts provides franchisees a solid entry into the multibillion-dollar personnel services industry. Outsourcing has become the preferred method of cutting costs and focusing on core business functions, and the temporary staffing industry has become the ultimate outsourcing service in America today. According to a U.S. Chamber of Commerce survey, 98 percent of all companies use some form of personnel staffing.

Of the various staffing niches, medical staffing has shown the most significant growth. With the shortage of nurses and healthcare professionals on the rise, companies are paying considerable fees to secure these employees.

Staffing industry analysts estimate that medical staffing was an $8.5 billion market in 2002 and will grow at a 16.5 percent compound rate through 2006, reaching $18 billion in sales. Of the medical staffing market, nurse staffing represents approximately 81 percent; allied healthcare professionals represent 13 percent; and medical administrative positions account for 6 percent. In-home non-medical assistance is a relatively new but growing concept, especially in the senior market.

“The offering of multiple products is not the norm in franchising,” says John D. Hall, Jr., CEO and co-chairman of AtWork Franchise, Inc., headquartered in Knoxville, Tennessee.
“We took this approach for two primary reasons. First, operators in our industry tend to focus on specific niches. We saw our AtWork Personnel Services franchisees concentrating on clerical and light industrial niches. As the market evolved and the need for nursing personnel and in-home assistance staffing emerged, we felt that specific franchise opportunities needed to be developed to adequately provide those services. Second, we wanted to offer our franchisees a vehicle through which they could diversify. The clerical and light industrial staffing market suffered in the recent recession. AtWork Medical Services and AtWork HelpingHands are more recession-resistant products.”
Hall says the primary drawback to this approach is that in some larger, high activity markets, such as New York City, clients often prefer full-service staffing companies rather than niche agencies; however, an AtWork franchisee that combines all AtWork brands out of one office will be in an extremely competitive position.
Though AtWork will consider selling multiple concepts to a single franchisee simultaneously, the preferred process is for a franchisee to purchase one concept, get it up and running, then add a second and eventually a third.
With two additional concepts, AtWork Med Travel and AtWork Search, in development, the company is actively staying on the leading edge of market trends. “We’re always looking ahead, watching what’s happening in the market and economy, and developing new ideas to help our franchisees maintain and grow their businesses,” says Hall.
Q &A With @Work CEO

John D. Hall, Jr., is the founder, CEO and co-chairman of AtWork Franchise, Inc.

Q. Why do you allow the franchisee fee to be paid over a two-year period?

A. We’re here to help people get into business for themselves, not to create obstacles for them. By allowing the franchise fee to be paid over a 24-month period, our franchisees can use their start-up capital to do things that will generate revenue and grow their business.

Q. You take a different approach to how you employ the personnel you provide to clients. What do you do and why?

A. Our goal is to provide our franchisees with the opportunity to have complete control of their local market and business activities while being backed up by an unprecedented level of support from the corporate entity. Typically, and in all other staffing service franchises of which we are aware, the franchisor is the employer of record. That means the employees the franchisees place are actually those of the franchisor. The franchisor pays the wages, taxes, workers’ compensation, and other costs, so the funding on the employee payroll comes directly from the franchisor’s bank or other funding source. The disadvantage for the franchisee is the amount of overall restrictions imposed in terms of the client base and the type of job orders that can be accepted.

AtWork franchisees are the employer of record as they would be if they were operating a staffing company outside of a franchise relationship. They have a greater control of their employee base and the ability to take on the clients and job orders they desire. They are able to meet the very different and specific needs of each client rather than spending their time overcoming preset policies and barriers set by the franchisor.

Q. Does this approach require the franchisee to have a greater amount of operating capital?

A. Not necessarily. The franchisee can, of course, fund their own payroll if they choose. However, as part of our support for our franchisees, we provide accounts receivable financing, which is an excellent cash flow management tool.

Q. Is it common for franchisors to do this?

A. No. In fact, it’s quite unusual for the franchisor to provide the funding services to the franchisee. In most cases, the franchisor either funds the payroll himself or obtains the money from a bank or other funding source. But we actually lend the money to our franchisees in the form of a revolving credit line secured by their accounts receivable. This gives them a substantial degree of local control and flexibility, while still having the support of a franchise organization.

Q. What is AtWork’s Job Mobility tool?

A. This is a customer support mechanism that provides an additional level of information exchange between staffing managers and the client company. Using this tool, from any computer with an Internet connection, clients can quickly place job orders, check a specific job order’s status, perform weekly time card entry, display and print invoices, and review real-time account balances. They can be a more active participant in the staffing process without added time on the phone.

Q. How does AtWork’s Biometric Time Clock work?

A. The device is placed at the client’s job site and communicates over the Internet to our central server. Once job candidates have successfully passed our screening process, they are registered in our database along with their fingerprint profile that is obtained through an in-house biometric finger scan device. When employees report to work at the client’s site, they key in an identification code and are then verified by a finger scan device in the biometric time clock. This assures accurate punch times and eliminates employees clocking in and out for one another. Best of all, the arrivals can be monitored from the local AtWork office. If it becomes apparent that there are some no shows, the AtWork office can locate backup employees and dispatch them to the job site often before the client even realizes there was a problem.

Q. The information you maintain on your franchisees, their clients, and their employees is critical. How do you protect it?

A. We have a state-of-the-art IBM AS400 computer system at our corporate office in Knoxville that our franchisees and their clients can securely access on a real-time basis via the Internet. We have an identical secondary system about 40 miles away in White Pine, Tennessee, where all the information is duplicated. If a disaster were to occur at our corporate headquarters, we would be able to quickly access the backup system and there would be very little delay in the payrolling and systems functionality for the franchisees and their clients. And if anything happens at the franchisee’s location—a fire, storm damage, theft, or whatever—we still have the data here and can service the clients.