NO BIZ LIKE HOSE BIZ

Emergency hose fix biz is an easy pipeline to $80 million a year.

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Pirtek USA
501 Haverty Court
Rockledge, FL 32955
321/504-4422
www.pirtekusa.com

Concept: Pirtek is the world’s leading service provider of 24-hour, on-site hose and assembly replacement, serving almost every facet of industry including construction, manufacturing, transportation, agriculture and engineering, among others. Pirtek vans carry the component parts necessary to manufacture hose assemblies on site. Hose and fittings can also be purchased over-the-counter at Pirtek’s national network of service centers that serve as home bases to its mobile fleet.

Market Position: Pirtek is the only franchised company in the worldwide hose replacement industry. The market for hose and fittings is estimated to be worth more than $2 billion per year. Pirtek USA was founded in 1996 after the original concept was founded in Australia and expanded to the United Kingdom and Europe. Three hundred Pirtek service centers and a fleet of 1,500 mobile units serve Europe, Australia, the United Kingdom, Asia, Africa and the United States. Pirtek’s annual worldwide sales surpass $80 million.

$$$$: Start-up costs for a Pirtek service center, including vans, inventory, equipment, signs, office space and training are between $300,000 and $350,000, generally requiring a cash investment of approximately $100,000 to $150,000. The one-time, initial license fee is $42,000. Royalties are four percent of monthly sales, reduced to 1.5 percent for the first year. An additional 1.5 percent of monthly sales go toward a marketing and advertising fund.

Training and Support: Comprehensive training sessions for Pirtek franchise owners, operations managers and MSSTs are held at Pirtek’s Rockledge, Florida, corporate headquarters. Training includes both classroom and “on-the-job” training. Training sessions last three weeks for franchisees and two weeks for MSSTs and operations managers. In addition, a franchise support representative will be on location for three to four weeks after the opening of each Pirtek Service Center.

Franchisee Profile: Pirtek franchisees have strong business management skills developed from backgrounds in industries such as banking, sales, marketing and industrial management. A mechanical background is not necessary. Many Pirtek franchisees come from corporate backgrounds and are comfortable promoting and working in a business-to-business, industrial-based franchise concept.

In the Land Down Under, Pirtek is virtually a household name. The world’s leading service provider in on-site hose replacement is a car sponsor in Australia’s V8 Supercar Championship Series, the Aussie equivalent to NASCAR. Adults wear $250 Pirtek team racing jackets and 12-year-old boys race Pirtek cars on their Playstations.

Pirtek’s notoriety has been steadily building in the 25 years since it was founded in Sydney, Australia, and later began its mobile repair service for hose and fittings, a concept that has since expanded to 13 other countries. But when New Zealander Gwyn O’Kane came to the United States in August 1997 to help launch Pirtek USA, he was noticeably underwhelmed.

States that supposedly set the benchmark for the rest of the world in terms of efficiency, productivity and service in industry? O’Kane recalled that when he was an engineering intern at a Ford assembly plant in New Zealand some 20 years ago and there was a blown hose, a call would be made and a mobile hose service would soon be onsite making a new hose.

“Coming to the United States only eight years ago and finding that there was nobody providing this type of service throughout the country just blew me away, and it still does,” said O’Kane, now Pirtek USA’s vice president of franchise development.

Pirtek has more than 300 service centers and 1,500 of its boldly emblazoned mobile service vans offering 24-hour, on-site service and preventive maintenance programs in Australia, the United Kingdom, Europe, Asia, Africa and the United States. However, it sees a golden opportunity in the United States, where Pirtek USA was launched in 1996 with the opening of a corporate-owned service center in St. Paul, Minn.

In the ensuing nine years, Pirtek USA has been developing its corporate infrastructure while growing along the way, with 32 service centers now open across the United States. However, the pace is accelerating. Twelve of those centers opened within the past 18 months, eight of them in 2004. Two of the centers were second locations opened by existing franchisees.

Pirtek USA plans to open an additional 12 centers in 2005 and 20 in 2006. It already has locations in seven of the 10 most populous markets in the country, including Chicago, Houston, Philadelphia, Phoenix, San Diego, Dallas and Detroit. Eventually, O’Kane foresees 400 Pirtek Centers in the United States.

“It absolutely made sense for us to come here,” said O’Kane of Pirtek USA, whose 140 to 150 mobile workshops it has on the road already make it the U.S. leader in on-site hose replacement. “The potential for Pirtek in the United States is substantial.”

Pirtek USA, which had sales of approximately $20 million in 2004, is looking to tap a lucrative market. The market for hose and fittings is estimated to be worth more than $2 billion per year. Thousands of companies in numerous industries rely on hydraulic or fluid-power systems and can utilize Pirtek’s products and services.

But those industries are being serviced in an antiquated way, at least in the United States. According to O’Kane, only a scattering of companies provide on-site hose and assembly service, with no uniformity in brand recognition or level of service. Pirtek’s walk-in service centers—primarily located in industrial parks—stock the highest-quality international brands of hoses and more than 2,000 hose fittings and adapters, but its mobile units have the biggest impact on customers.

Usually when there’s a breakdown at a job site or factory, work can be stopped for hours, days or even weeks until the proper replacement hose can be obtained, oftentimes from a local hose shop with no mobile service. Breakdowns not only idle expensive pieces of machinery—a $20 busted hose can bring a $3 million crane to a screeching halt—but also the employees who are being paid to operate them.

Pirtek reduces costly down time to a minimum with its on-site service. Its fully equipped mobile service vans usually arrive in less than an hour staffed by a technically qualified Mobile Sales and Service Technician (MSST). The vans are stocked with a full range of hoses and more than 700 different fittings and adaptors, along with a crimping press and cut-off saw to manufacture hose assemblies on site. The majority of service calls take one hour.

“Whether you have a piece of machinery broken down in Australia, the United Kingdom, France, Germany or downtown Chicago, the customers’ needs and level of expectation are exactly the same,” said Jamie Vokes, Pirtek USA’s director of franchise support. “Only three things change—the climate, the currency and the language.”

Pirtek has evolved from modest beginnings in 1980 to become the worldwide leader in its industry. Its Australian founders, Peter Duncan and Wally Davey, ran a hose shop in the Sydney area. They aligned themselves with other hose distributors in Sydney in looking to gain a uniform supply contract from a hose supplier.

In Pirtek’s first step toward building its reputation for superior products and service, an alliance was formed with Italian-based Pirelli Technology to supply Pirtek’s hose and fittings. Today, Pirtek has maintained those stringent quality standards with its suppliers among the world’s leading manufacturers of hoses and assemblies.

Three years after Duncan and Davey founded Pirtek, customer demand led them to experiment with mobile, on-site hose replacement in 1983. It proved to be a huge success and realizing that a mobile hose service lent itself well to franchising, Davey and Duncan began doing just that in 1985. Only four years later, Pirtek debuted in the United Kingdom, opening its first store in London.

In 1983 customer demand led Pirtek to experiment with mobile, on-site hose replacement. It proved to be a huge success and realizing that a mobile hose service lent itself well to franchising, Davey and Duncan began doing just that in 1985. Only four years later, Pirtek debuted in the United Kingdom, opening its first location in London.

In 1996, Englishmen Forbes Petrie and Peter Brennan, the founding partners of Pirtek UK, began Pirtek Europe with an initial entry into Germany, the Netherlands, France and Belgium. That same year, Pirtek USA came into existence under the leadership of current Pirtek USA President Morgan Arundel, an American and a successful grain broker.

As Pirtek USA looks to expand its U.S. network it offers prospective investors a virtually untapped business-to-business, in-dustrial-based franchise opportunity. “It is a unique offering that is somewhat different than all of the franchise offerings out there,” said O’Kane.

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