1. 26 November/December 2014 www.canadiancontractor.ca
PROFILE
A FRANCHISE MODEL
FOR CONTRACTORS
Blair McDaniel, founder and CEO of Alair Homes, wants to establish
Canada’s first truly national brand name in home renovation and
homebuilding using a unique business system.
By Trish Dugan
Can operating as a franchisee, rather than as an
independent operator, improve your renovation or
homebuilding firms’ profits?
For years, the Canadian home improvement marketplace
has said, generally, no.
The only truly successful, nationally-established
franchises in home improvement have focused, not on
general contracting, but on sub-specialties such as painting,
window coverings, flooring, storage, bathtub refinishing and,
of course, disaster restoration.
Now, British Columbia-based Alair Homes, the brainchild
of general contractor Blair McDaniel, 32, wants to be the first
nationally-franchised brand name in Canadian renovation
contracting and homebuilding.
Credit the fear-inducing influence of a certain celebrity
TV contractor for making such a model more likely to succeed
these days.
“Mike Holmes and other contractor celebrities have put a
real scare into our industry and, ultimately, the consumer,”
McDaniel told Canadian Contractor. “People are gravitating
Alair Homes franchisees
and staff visit a jobsite in
Collingwood, ON.

2. PROFILE
www.canadiancontractor.ca November/December 2014 27
toward companies that are
larger than ‘John, the local guy’
who might not be there in a year.
Our clients get a lot of comfort
out of working with a large,
nationally-branded company.”
And that client “comfort”
level also comes from Alair’s
“complete transparency” all
the way through the project,
McDaniel says. The company
has developed highly-detailed
processes and procedures
with a custom-built online
communications platform that
gives the client online access
to real-time information about scheduling, progress, pricing and
even mark-up.
Yes, you read that correctly; the mark-up is disclosed to the
homeowner by Alair Homes.
“Although we are licensed builders and renovators, we are
really facilitators and consultants first. Clients retain us to walk
through construction projects with them and provide details and
costs in a completely transparent manner. This is quite different
than the typical client and contractor arrangement,” says
McDaniel.
The Evolution of Alair Homes
McDaniel first swung a hammer for pay when he was a high
school student in Fergus, working as a house framer. By 21,
he had completed his first project as a commercial builder,
a 160,000 square foot retirement centre in Burlington, Ont.
Soon after, McDaniel and wife, Allison, an interior designer,
moved to Vancouver Island to work the boom in commercial
building. After about two years of that, they decided to start
building custom homes for clients and founded Alair Homes in
Nanaimo, B.C. in September 2007.
But almost immediately, the massive U.S. sub-prime loan issue
burst open, rippling across the border and cooling Canadian real
estate in its wake. And although the Canadian mortgage industry
was untainted by such precariously-leveraged lending, custom
homebuilders and homeowners in Canada began to fear “risk” in
a way that was unprecedented.
“So, we drew on what we’d learned in commercial construction
and created a business model that reduced risk,” says McDaniel.
To meet the need for
complete transparency and to
manage projects as effectively
as possible, the McDaniels
decided to develop and launch
their own software program.
While this required a sizable
commitment of resources, they
found existing off-the-shelf
builder software lacking.
“We spent over a year
building a software system and
are still fine-tuning it based on
feedback from the guys in the
field. Using our online portal,
clients have 24-hour access to
a written record of all details and progress on their project,
sub-trade quotes, pricing, selections, changes and more,”
says McDaniel.
A Three Phase Process
At first glance, the Alair Homes’ process seems much like any
other, but a closer look reveals the differences.
Overall, the process involves three distinct phases. The first
phase, for which there is no charge, includes an initial fact-
finding meeting that is documented on selection sheets, a review
of zoning and permit issues and a high level scope of work
estimate.
The second phase calls for the execution of a design and
estimate agreement and a deposit. Once the design is completed,
all details of the project are captured using a 120-category
checklist of construction components and hundreds of sub-
components. The flooring category, for example, includes the sub-
components of hardwood/tile/carpet/floor leveling.
Also, during this phase, hard quotes are obtained from trades,
plans suitable for permit application are prepared and a project
budget and schedule are presented to the client. For this phase,
McDaniel says they charge an industry-average mark-up and
100 per cent of their staff’s billable time.
At this point, the client is free to take the information to
another builder or they can proceed with the third phase using
Alair Homes to complete their project.
If the client chooses Alair, a construction agreement is
executed and a deposit is taken. Depending on the scope of work,
two to three project managers, an assistant project manager and
Blair McDaniel
CEO Alair Homes

3. 28 November/December 2014 www.canadiancontractor.ca
PROFILE
a framer are assigned to the project. As with the previous phase, a
mark-up and billable staff time are charged.
The third phase continues with a pre-construction start
meeting to review client expectations, schedule work and set
future meeting dates. As construction begins, ongoing project
management and scheduling are provided and as each milestone
is reached, the client provides payment before proceeding to the
next milestone.
Throughout the project, through the online portal, clients are
kept continuously informed of the amount of time the project
manager and assistant project manager have spent on their
project. They can also monitor the project’s progress, view photos
of the work and review all costs and invoices. The corporate office
maintains third party control of the project by
evaluating on-site performance and ensuring
quality control standards are met. The client
maintains control by approving every selection of
trade or finish through the online portal.
McDaniel says that Alair’s clients are not
paying more for projects than they would be
with a more traditional, unfranchised general
contracting firm.
“Clients pay in the same range as they would
pay from any other competitor. The difference
is that we provide greater detail and clarity by
clearly defining what the mark up on the project
is, as well as what the markup on each of our
staff members is,” says McDaniel.
Building A National Brand
In 2011, McDaniel decided to franchise Alair
Homes and set about the task of expanding his risk-averse
business model and establishing processes and systems
to support a North American network for custom building
and renovations.
“Most guys are great at what they do, but marketing,
accounting and a step-by-step quality control process for
construction is typically non-existent among 95 per cent
of small contractors,” says McDaniel.
As part of the franchise agreement, franchisees receive
marketing support, accounting and sales training.
Marketing support includes web page support for an
individual website in the form of blog posts and search engine
optimization (SEO). They also receive social media help with
Facebook, Pinterest and Twitter. Pay-per-click advertising
and listings in aggregator sites like Houzz, Trusted Pros and
HomeStars are also included.
The corporate office also provides support for trade shows,
local networking and customer appreciation events. All
franchisees and staff wear Alair Homes shirts. A corporate
graphic design team provides site signage, vehicle signage, trade
show signage, banners and all manner of print materials for
presentations to clients.
Full accounting service from the corporate office reduces the
franchisees’ involvement to reviewing and approving invoices
for payment and collecting cheques from the client for deposit to
their own bank account. Accounting staff then access franchisee
bank accounts to issue payment to sub-trades
and suppliers.
Sales training support includes initial project
management training and attendance at a
12-week sales training boot camp. Franchisees
also participate in weekly conference calls with
their peers and the corporate office to discuss
business performance and draw on the synergy
of shared knowledge.
While ordering isn’t centralized, McDaniel
says franchisees do benefit from pooled product
buys, special discounted rates from national
suppliers and the builder’s discounts with local
providers that are passed on to clients.
The Alair Homes franchise structure includes
master and unit franchise locations. The master
franchise locations are large geographic
areas with individual units. Some new master
franchise units operate as individual units in addition to their
intended role as management partners with the corporate office.
This is expected to change as individual units are sold.
Master units sell for $150,000-250,000 and individual units sell
for $69,250. As with most franchises, royalty fees are paid to the
franchisor.
At time of writing, according to McDaniel, all master
franchises in Canada have been sold, with the exception of
Atlantic Canada. McDaniel says that 26 franchises have been
sold and launched and 20 more will be operating over the next
year in Canada. There is one master franchise with two operating
individual units in Arizona. Individual units are still available in
all provinces.
Twenty-six
Alair Home
franchises
have been
sold in
Canada
and the U.S.

4. 30 November/December 2014 www.canadiancontractor.ca
PROFILE
Master franchise terms are 15 years, but are renewable for a
maximum of 35 years while individual unit franchise terms are
10 years, renewable to 30 years.
What Franchisees Say
At this point in their operations – the Edmonton unit opened in
2011, while the majority of franchises were launched in 2013
and 2014 – all seven of the master franchisees interviewed for
this story voiced enthusiastic support of the system, citing an
“incredible” level of support from the corporate office. They were
also unanimous in their belief that Blair McDaniel has created
a system and a process that attracts clients, reduces risk, and
builds their businesses.
Northern Alberta master franchise holder and
operator of the first Edmonton unit franchise,
Jamie Affleck, is an Edmonton native who first
worked with McDaniel from offices in Edmonton
and B.C. to expand Alair Homes in its pre-
franchising days.
In September, Affleck, who is a third-
generation builder, firefighter and a former
mortgage broker, took home an award of
excellence (for renovations over $500,000
from CHBA Alberta at their BUILD 2014 event
in Jasper, Alta.
“I think that the thing that’s really exciting
is that we are providing a concierge service
for clients who want a great experience in
construction or renovation. That’s from a design
standpoint right though the experience of
building your home, which is often associated with a stressful
environment. I’m not saying it isn’t (stressful), because in a period
of six months, you will still go through highs and lows. But a great
experience is possible, if we make sure our business of project
management is run as efficiently as possible and the commitment
to training and constantly improving is there,” says Affleck.
Gary Prenevost, one of three partners in the Ontario master
franchise and the operator of the Hamilton, Ont. unit franchise,
also happens to be a franchise consultant with Frannet Canada.
He says he did not provide consulting services to Alair Homes
when McDaniel decided to franchise operations.
When asked what he found attractive about the Alair Homes
franchise, he answered with a quick primer on franchising,
pointing out that what makes franchising work are the systems
and processes and the people who drive them. He went on to say
that the negative perception surrounding franchising is a result
of people thinking of the food or retail sectors when they think
of franchising. However, Prenevost says those sectors barely
account for 40 per cent of the entire franchise industry. He adds
that the biggest trends in franchising today are service-based
franchises operating in the business-to-consumer or business-to-
business arenas.
“What attracted to me to Alair Homes is that it’s a service-
based franchise that has built systems 10-15 years ahead of their
time in terms of their maturity as a franchise system. They are
doing some things that major brands in the U.S. and Canada
aren’t doing in terms of leveraging each other’s resources and
building the internal mechanics to ensure a
consistent, deliverable product. Why do people
go to a franchise? For a consistent experience,”
says Prenevost.
Prenevost also says he was also attracted
to the 100 per cent transparency to customers
on every single thing that is happening on-site,
including the markups that Alair is charging.
“Clients can go to our online software portal
and see what is happening every day because
project managers upload their notes every day. If
you do a change order, clients see it immediately
and it must be approved by them.
Prenevost said that, without this degree of
transparency, a $200,000 traditionally run job
might have a cost overrun of, say, $40,000 at
the end of the job. “The client is responsible
because they are making (the) changes, but the contractor isn’t
communicating it effectively and then there’s a big problem at the
end of the job.”
In the world of franchising, there are not supposed to be any
unpleasant surprises for the customer because there are systems
in place and the communication of what’s being purchased
and delivered is clear and unambiguous. This is the basic
“repeatable business processes” philosophy that has driven the
growth of franchises – from fast food to lawn services – for the
past half century.
Blair McDaniel and his contractor franchise holders want
to see their transparency model – and their systems – change
the way renovation contractors and home builders deal with
their clients. cc
Alair Homes’
business
model is
based on
100 per cent
transparency
on markups.
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