What do you do when you run a business but you see an unmet need in a completely unrelated market? If you are Colton Paulhus, you get together with your loved ones, start your personal business, and a 12 months later you begin a franchise.
First steps
In 2019, Paulhus was running a marketing company when he got here up with an idea. “I saw the ad Facebook in favor of locally built small houses,” he says. He contacted his dad, Scott, a 30-plus-year veteran of the construction industry, and asked a few questions to try to discover if his idea was feasible. Colton then made his own announcement on Facebook about tiny homes, I’m curious to see the response. “We had 300 people interested in us inside three days and I think that: There is a market here“
Soon Colton, his brother Austin and Scott were building tiny houses on wheels Anchored tiny houses. But it wasn’t long before the company switched from tiny homes to the more code-friendly ADUs (Accessory Dwelling Units).
“We pivoted in late 2020 when California law became more favorable to the use of ADUs,” says Austin Paulhus, Anchored’s chief operating officer. “Now we only specialize in ADUs because the market is so big.”
Tiny house or ADU?
There are similarities between tiny homes and ADUs, and most individuals would not notice much of a difference. The distinction – and due to this fact the trouble – is mainly one of classification.
A small house is a small, often mobile apartment in which saving space is a priority. They are typically lower than 400 square feet and could also be on wheels (mobile) or on a everlasting foundation. As a result, in many places tiny homes are classified as mobile homes, even if they are built on a everlasting foundation.
An ADU is a secondary dwelling unit that has its own, independent living spaces (akin to a kitchen, bathroom, and sleeping area). These are normally positioned on the same property as your primary residence and may take the type of a basement apartment, an apartment above a garage or, in this case, a self-contained, immovable structure on the property.
The way a municipality classifies most of these structures can – and should – have a major impact on franchisees.
Deciding on a franchise
Anchored Tiny Homes began franchising in 2020. Three years later, the band has no regrets. “We haven’t looked back,” says Colton, the company’s CEO. “We had sales of $16.7 million in our first full year and $49 million last year, so we can expect significant growth this year.”
This construction-based franchise also has one unique aspect: “You don’t need to have any construction experience,” Colton says. “We have several franchises that are sold and getting ready to launch in Austin, Texas, Jacksonville, Florida, Salt Lake City, Utah, a few different places and none of them [the franchisees] have construction experience.”
Note: Regulations may vary by municipality
Despite the widespread popularity of tiny homes and ADUs, thanks in part to programs akin to Tiny House Nationsome states are friendlier – less regulated – than others, making legal tiny house ownership relatively easy.
“In most cases, it depends on the local jurisdiction, and every city and county is different,” Colton says. “In several states, ADUs are approved on a statewide basis.” Currently, these are California, Florida, Rhode Island, Washington, Oregon, Connecticut and Vermont, all with various restrictions and clauses.
On the other hand, New York at all times presented a challenge for people interested in living in a small house. The state has historically prohibited the use of tiny mobile homes for everlasting residence purposes, limiting their use to temporary or emergency circumstances. However, latest laws relaxed ADU regulations in the state.
Local and state regulations regarding ADUs and tiny homes are something that potential franchisees should check with the help of an attorney before purchasing a franchise.
Franchisee requirements and support
Colton says the company provides franchisees with a marketing team, an appointment setting team and assistance with various permitting and legal issues arising from different jurisdictions.
In addition to the financial commitment, Anchored Tiny Homes looks for certain qualities in a franchisee: “The most important thing we want in a franchisee is someone who will buy into the brand and then have sales skills,” Colton says. “We generate leads; all the franchisee needs to do is convince them that we are the right company for it.”
What Scott, the co-owner, looks for in a franchisee is more abstract: “a go-getter mentality,” he says. “The ownership mentality. They do everything in their power to get the job done, sell the units and build the business. It must be a practical person; this is not a burger franchise.”
Market for ADUs and tiny homes
The small domestic market is expected to grow over $2.5 billion by 2030, which is a huge opportunity for designers. While costs may fluctuate due to material supplies and other aspects, including Covid-19 and the war in Ukraine, Colton says the industry has weathered these storms well and is optimistic about the role tiny homes and ADUs can play in the country’s housing market .
“There are 7 to 10 million homes that need to be built across the country,” Colton says. “We won’t be able to achieve this with single-family houses. So we believe this is where we come into play. The market is huge.”