Fixer-upper franchise targets R.I. market

A Dallas-based franchise famous for its “We Buy Ugly Houses” slogan is looking to enter the Rhode Island market, seeking eight franchisees in the state.
“We’re very eager to open up Rhode Island, specifically Providence,” said Jason Killough, director of franchise development for HomeVestors of America Inc. “We’re already in Massachusetts and are opening in Hartford, so it’s a great fit into our Northeast expansion plans.”
The company already has more than 250 independently owned and operated franchisees in 30 – soon to be 35 – states, and it has set a goal of 500 franchises nationwide by 2010.
HomeVestors’ business model involves buying houses from people looking to “get out quickly for cash” due to a divorce, inheritance or relocation, Killough said.
“You don’t necessarily have an ugly house; you’re just in an ugly situation and need a solution,” Killough said. “We rescue people out of these situations.”
Aside from the cosmetic condition of a house, HomeVestor’s defines “ugly” as property with structural issues that are not apparent on the surface, such as foundation problems, or property with high mortgage interest rate. Property located in a neighborhood that the owner views as less than desirable from any standpoint is also ugly; for example, creating a long commuting distance to work, or being located in a high-crime area.
The company purchases ugly houses at 65 to 75 percent of their as-is value; it’s not in the business of buying foreclosed-on properties, however, Killough said.
HomeVestors is “the McDonald’s of real estate investing,” without comparable competition, Killough said. Its Web site calls it the first franchise company of its kind, and the largest and most successful franchise in the business of buying houses in need of repair.
The company is looking for franchisees with a background in business, sales, marketing or customer service and “sufficient capital,” or a minimum of $200,000 in cash or lines of credit. Candidates who are awarded a franchise attend two weeks of business training and must pay a $49,000 franchise fee, which includes training, support, materials and the use of the “We Buy Ugly Houses” advertising campaign. A franchisee must spend a minimum of $5,000 per month on advertising, according to the Web site.
“To us, it’s about coming into a market like Providence and building a brand,” Killough said. “Customers trust a brand. When we say we’re going to close on a house, we close on the house.”