Franchise QB

Episode 50: Jason Parker- Co-Founder and CEO- K9 Resorts

• Mike Halpern • Season 1 • Episode 50

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In this episode of the Franchise QB Podcast, host Mike Halpern speaks with Jason Parker, Co-Founder and CEO of K9 Resorts. They discuss the journey of K9 Resorts from its inception to its current growth trajectory, the dynamics of the pet services industry, and the unique business model that sets K9 Resorts apart from traditional kennels. Jason shares insights on franchise ownership, marketing strategies, and the importance of building referral networks within the pet care community. The conversation highlights the support provided to franchise owners and the financial performance metrics that make Canine Resorts an attractive investment opportunity.

Takeaways

Franchise ownership can lead to wealth and independence.
K9 Resorts started from a childhood pet sitting business.
The pet services industry is consistently growing.
K9 Resorts offers luxury cage-free dog boarding.
Employee recruitment focuses on passion for pets.
The company has a unique approach to dog daycare.
Building relationships with local pet professionals is key.
Franchise owners receive extensive support from the corporate team.
The average K9 Resorts location generates significant revenue.
Franchise ownership models include both owner-operator and GM options.

Chapters

00:00 Introduction to Franchise Ownership
01:09 The Founding Story of K9 Resorts
03:01 Growth and Investment in K9 Resorts
05:49 Understanding the Pet Services Industry
09:04 Differentiators of K9 Resorts
11:57 Marketing Strategies for Franchise Owners
14:48 Building Referral Networks
18:03 Franchise Development and Support
20:53 Ownership Models in K9 Resorts
24:09 Financial Overview and Performance Metrics
25:07 Conclusion

https://www.k9franchise.com/

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Mike Halpern, CAFC
mike@franchiseqb.com

This is the Franchise QB Podcast, where we empower entrepreneurs to win big in franchising. We huddle up weekly to educate our audience about the most successful small business model ever created. Franchise it! Welcome to the Franchise QB podcast. I'm your host, Mike Halpern, a 20 year industry veteran and entrepreneur. My mission is for listeners to achieve their American dreams of creating wealth and independence through franchise ownership. Every week we speak with franchisees, franchisors or vendors that support the industry. Thank you for joining us and let's get started. Joining us in the huddle today is Jason Parker, co -founder and CEO of K9 Resorts. Welcome to the show, Jason. Thank you. Appreciate you having me on. Absolutely. Great to have you. you and your brother, Steven, had a pet sitting business as kids and a dog walking business. I'd love to kind of go back and hear about that and kind of hear the founding story of K9 Resorts if you can kind of share that with us. Absolutely. So my brother, Steven and I grew up in Scotch Plains, New Jersey, which is Northern Central New Jersey, about an hour west of Manhattan and love dogs, even as a kid. Our parents were just not dog people. So we were trying to figure out how to prove to our parents that we had enough responsibility to care for our own dogs. So we started watching our neighbors dogs when they would travel that grew and evolved into a professional pet sitting and dog walking company at its peak. had a couple of employees working with us and we were walking over a hundred dogs a day. And we then came up with the idea that we wanted to scale. And the best way to do that was to open up a brick and mortar resort for dogs. So we spent a couple of years researching that idea, doing our due diligence. And K9 Resorts was born on January 30th, 2005. We spent the next couple of years really perfecting the model, building out solid processes and procedures. And in 2010, end of 2010 into 11, launched our franchise program. Even there, we initially would only offer franchises in our home state and neighboring states so that we can ensure quality and consistency until we had a larger infrastructure that could help us franchise across the country. And then in 2016, we partnered with a family office style private equity firm that helped us grow from there. Very cool. So I do know that over the years for like the decade beyond that first investment, there have been multiple private equity rounds in the business. Can you kind of tell us a little bit about that? Sure. So our first round was in 2016. Then we partnered actually in 2021. with an existing franchisee of K9, which allowed us to have a pretty unique perspective on our board of directors, which is something that's not normally done. But this gentleman has a lot of franchise experience from the franchisee perspective, owning other brands and being a multi -unit franchise owner. And then most recently in 2024, we partnered again with the franchisee who has extensive franchising experience through multiple brands, multi -unit. And one of the partners was the former CEO of the Atlantis in the Bahamas. very cool. I was just there recently. you guys have been around for a long time, coming up on 20 years. Why now are you guys gaining so much momentum? I think it's the really, you know, it's a couple of things. Our unit level economics are very compelling from, you know, an investment standpoint. So our average unit is grossing $1 .7 million, $481 ,000 EBITDA. And that continues to grow as we open up more and larger resorts. And I think because of that, we are attracting really top -notch franchise owners, people that have run other businesses, other franchises, and we're bringing in best -in -class franchisees. combined with best -in -class franchisor support and a really compelling business model, it's the recipe for success. Yeah. And I want to get into your expansion plans in a little bit, but let's take a step back and talk more about the industry at large. Like how big is the pet services industry? Yeah. So the pet industry is about $150 billion a year industry and growing. It's one of the only industries that's been growing for the last 20 years. double digit growth consistently. So the industry is in a great place. It's in an exciting place and K9 Resorts is positioned at the highest end boarding and daycare option available and really a franchise model that is exciting for our franchise owners and even for the consumers are excited every time we open up a new location. Yeah, I'm a dog owner and I'm looking forward to getting into some of those differentiators in a minute. But let's talk about the business model overall. What are the primary revenue streams that a K9 franchise owner can enjoy? So yeah, we keep it pretty simple. We have overnight luxury cage -free dog boarding, doggy daycare, and then bathing services so your dog can come home clean, fresh, and happy after a stay at K9. Nice. Sounds great. So what about the people, right? Like that's a challenge with any business is the labor model. It's difficult to find people. It's difficult to keep people, you know, in your business, they're playing with dogs, they're feeding dogs, they're bathing dogs. You know, how hard is it to find these folks? So surprisingly, it's not that difficult. mean, labor is definitely something that we're always trying to improve upon. So it's something that all of our franchise owners, along with everyone at corporate is always looking at trying to figure out how to make it better, how to attract top talent. Cause that's really important at the end of the day. You know, we can have great franchise owners. can have great support at the corporate office, but the people, know, the pet care technicians, customer service representatives that are working with our clients, both two and four legged, those are the people that really need top -notch training. They need to be passionate about what they do. So we have a really good process on how to find, recruit, and then maintain five -star employees and team members. And they really do a great job day in and day out, working with the pets, working with the customers, making sure that these resorts are running smoothly and fresh and clean. Yeah. So it sounds like you're hiring for their attitude and the way they behave. And you can train them in the skill sets that apply to your specific brand. That's exactly right. And that's exactly what we do. We're looking for people that are happy, passionate, love dogs. can train them. You know, the easy part is training them on how to do their job because of the extensive training programs that we've put together. So that's actually relatively easy. And then from a manager standpoint, we love to promote from within, take someone who's been working at the resort. and have them be promoted to a supervisor, assistant manager, sometimes a general manager. And then also for general managers, we look to the hospitality industry, people that, again, know how to manage people, know how to provide five -star service, and then we train them on the K9 specifics. Okay, very cool. Thanks for that explanation. So you launched the thing 19 years ago. and we're aggressively growing the brand in recent years. Where are we now? How many K9 Resort locations are open and how many are in development? Sure. So we have 35 that are open as of today. We have another seven that will open by the end of the year. So that's super exciting for us. We are projecting 30 locations to open next year. Almost all of those are already under construction. So we're pretty confident with those numbers. And then another hundred besides all of those that are signed franchise owners that are looking for real estate. Wow. That's awesome. That's a lot of recent success. And it sounds like the benefit is you guys have been in the business two decades. So it's very responsible growth within the brand. So I have a question that I'm sure a lot of people are thinking about. There's a lot of competition in space. What's the difference between K9 resort and a kennel? What are the key? differentiators. mentioned before that you guys are the tippy top of the market in terms of luxury. What does that mean? Sure. So we're also the most award winning, which we're very proud of all the industry awards on a national and a local level. We've won. But really, I mean, the customers can tell when you walk into a K9 resort, if you took the branding away, you would think you're walking into a five star hotel for humans. And, you know, it just doesn't stop there. Right. So, you know, all of the nice things that we have and build out, that's great. But the technology that we have to keep the pets safe, I think is really on the cutting edge. So let's start with the layout of each resort. So instead of just having one large space that a lot of kennels have, and it's kind of like one kennel in a row after another, we have the entire resort sectioned off so that not more than a dozen or so dogs are boarding in one area. We have cage -free boarding that we offer. Dogs are comfortable when they're in their room and they're not playing in daycare. We have doggy daycare, which is a group play environment where social dogs can play with each other. They're always monitored and supervised by trained staff members. They get to go outside every hour or so to run around and exercise and eliminate out there. Not all of our competitors have outdoor areas. The materials that we use in the floor have micro -band built in, so that kills odor. and bacteria right on contact. And then we have amazing ventilation systems that change the airflow every couple of minutes to keep the air fresh and clean. So you take all of that, all of the disinfectants that we use, our hospital grade and top of the line, and you combine it with our great staff and our top notch cleaning procedures, the end result is a K9 Resorts facility where your dogs go in, they're happy. They're having fun playing with their friends and they leave and come home healthy. Yeah. No, it sounds like you've really focused on the facility itself with really intentional design, having phenomenal service for the two legged and the four legged variety and putting together a great team that kind of leaves those dogs happy, healthy and safe. It's interesting right before we joined this podcast, I have a five year old Boston Terrier and She's awesome, but she's home with us and she needs to get that energy out. So I spent 10 minutes throwing a ball with her in the basement so that she would be happy and quiet for this. So, so far she's doing great, but she kind of runs our household. So, so tell us a little bit about marketing, right? You have this amazing facility. We know it's coming soon. How does K9 Resorts help franchise owners drive boardings and daycare services? Sure. So I think, like everything with K9, we're constantly evolving. So we're always on the cutting edge of everything. Anything that we can do to help our franchise owners grow, that's what we're all about. we're always looking at different ways to market. We do a lot digitally, SEO, pay -per -click, things like that. We're on all the social media channels. And then we do a lot of grassroots marketing and we encourage our franchise owners to really establish themselves in the market. know, one thing that I like to say is the more hands you shake, the more money you make. And it's really true. You got to get out there in the market. You got to know your community. That's why it's great. If you live in the community where you own and operate your business, that's always a plus. If you can't do that, spend time in that community, have your general manager be part of that community. We're big into that. Yeah, that makes a lot of sense. And then To go above and beyond, like you mentioned, shaking hands, I'd imagine that this business has very specific referral partners that are going to be very beneficial, such as when you go to the vet and you trust your vet and you want to go to a great place that's going to take care of your dog, they'd be a great referral partner. Who else besides the veterinarians would you have your owners build relationships with to build that flow of referral sources? Yeah, great point, Mike. It's the whole, what we call pet professional network. So anyone that works with pets in a community, we get to know, and they get to know us very quickly because of the reputation that we build in these markets. So to go into that a little bit deeper, it's groomers, veterinarians, dog trainers, boutique shop owners that own pet boutiques. And what happens is because of the... procedures and the way that we run our resorts, as specifically our doggy daycares, we're very strict with the temperament of each dog that we will allow in doggy daycare. So what happens is we open a new resort in a community and very quickly the veterinarians realize that, my God, we're not seeing any dogs with injuries from K9 resorts. And that news spreads very quickly. And so there's a lot of thought that goes into our training on how to do a temperament test and what dogs to approve or deny for doggy daycare. We just want, ultimately at the end of the day, we want a safe environment in doggy daycare. Doggy daycare is an environment for social dogs to run around and play. It's not an environment to bring your dog to become social. That's why we recommend coming as a puppy and then bringing your dog in regularly for doggy daycare. Yeah, it's an interesting point. So all those key referral sources you mentioned, they don't compete with you. They don't do services that you provide. So I would imagine that that makes for a nice symbiotic relationship where you can refer people to them and they can refer people to you. And it's like rising tide floats on boats. 100%. And the one thing that's actually really interesting, you know, sometimes in certain markets, veterinarians and veterinary offices offer boarding. And in those markets, a lot of those folks will recommend K -9 and they'll tell their clients. If you're looking for regular boarding, traditional boarding, or in certain instances, hospital boarding where the dogs have to be more closely monitored, where their facility is the right option. But if you're looking for a more luxurious accommodation, an environment where your dog will get to play all day with their friends, K -9 Resorts is a better option. Yeah, no, that's awesome. And then you mentioned before, like all types of dogs can find a home in your resort. Our dog is within our four walls, the sweetest dog you'll ever meet. You bring her outside and she interfaces with other dogs. She gets a little bit aggressive. so when we board her, it has to be in an environment where she doesn't interact with other dogs. Do you guys have that kind of solution for dogs that aren't as friendly with other dogs as they are with people? Absolutely. So at K9 Resorts, every dog has to be friendly towards people in order to be able to enter the facility. After that, we then talk to you, the consumer, and ask, what does your dog like? What does your dog not like? A lot of the dogs that come to us participate in the dog and aid care program, so they enjoy playing with other dogs and socializing, but there are a bunch that do not. And for those dogs, they stay in their own private room or suite, and they get one -on-one interaction with the members of our staff. Very cool. My dog would fit in. You got to open one here in Northern Virginia. More work can fit right now. So let's talk about the project. We have site selection, we have architecture, we have construction. Do you assist franchise owners in those three phases and what is the typical timeline from when an owner signs on the dotted line until their grand opening? I know It's always going to depend on availability of real estate, but just generally speaking, what kind of guidance are we giving the owners and how long is it going to take? Sure. So, yes, the answer to your first question, we provide all the support from start to finish. And we talked about growth a little bit earlier and we talked about how quickly we're growing. And I think it's just important to say that at K9, our philosophy is we always hire people at the corporate office to support the growth that is coming. So we already have the whole team baked out and ready to open 30 locations next year. We're not going in reverse and trying to scramble once those locations get ready to open because we're helping franchise owners again from start to finish. So we help with site selection. have a team, real estate team in -house that coordinates with our franchise owners and the local agents on the ground. We then have architects and engineers that... are gonna spec out and build the plans for the K9 Resorts location. We have contractors that can build throughout the country and then we help with all the marketing and training once the resort is getting ready to open. Typically it's about 15 months from the time someone signs a franchise agreement until they open and have their grand opening and cut that ribbon. We've done it in less time and in certain instances it's taken more time. Yeah, I appreciate that kind of ballpark. It always depends on availability and if you can negotiate with the landlord. Do you have any owners that actually own the land in the building or is 100 % of them leaseholds? No, we do have owners. I would say give or take 20 % of our owners own their property and their building. We always tell franchise owners that we want you to get the best site and that's the best way for success in your business. So don't be focused on I only want to buy or... You got to be open minded and our franchisees understand that because the business here is pet care, not real estate. And that's, you know, we want to get the best location possible. And I'll just go back to, you know, how quickly someone can get open. A lot of that also depends on the franchise owner. If the franchise owner is very diligent in, you know, scouting their market, looking for properties, trying to be creative and find sites that might not be listed on the MLS, they're going to be able to have a better chance of success. and they're gonna get open faster. So we always like to point that out to our franchise owners. And I would guess that those type of owners that kind of think outside of the box and do that extra legwork are probably gonna be top performers in the system because it's not just the project, it's how they operate the business as well. Like do whatever it takes to succeed. So tell us a little bit about, you mentioned that you hire in advance, which is really great. It's always... when you hear franchise wars are putting, you making investments in the team prior to the franchise fees and the royalties. Tell us a little bit about the leadership team that you've assembled for Canaan Resorts. Absolutely. So as I said, we're constantly building, but it's exciting that in the last 12 months, we've really built out our C -suite. So over the last 12 months, we've hired a chief operating officer, a chief marketing officer. Chief Financial Officer and Chief Development Officer. And these are the department heads that are leading finance, real estate, operations and marketing. And really working closely with myself and my brother, Steven, to help build this brand. We've got a great team at the corporate office, even before we hired these folks that are really amazing. They've been with us, many of them, for many, many, many years. And they've watched the business grow. They've seen K9 evolve. They've seen us go from only operating and opening locations in New Jersey to now getting ready and opening in California and having open locations in Florida, Texas, Arizona. So it's really exciting. We believe in growing as an organization together and giving people an opportunity to grow within their role to a new local. Yeah, no, that's great. Appreciate you giving me some context on the C -suite. Very exciting. So what about ownership type? When an owner comes in, do they have to be an owner operator? Do you allow a GM model for a kind of semi -absentee ownership? What does that breakdown look like in the system? So we actually, we have both. So either option works for us. In the beginning, a lot of people that were coming in, I think this is pretty typical in a franchise model, were owner operators, right? Because you're not going to really attract some of the larger franchise owners that... You know, maybe own a couple of McDonald's and some QSR restaurants and some planet fitnesses or whatever the case may be. You know, now we're at the point where because there's enough data on K9 and we have a very detailed item 19 in our FDD, we are over last two years, we have been attracting a lot of multi -unit people, multi -unit, multi -brand. So we've been able to grow with that GM model a lot more now. And it's been working out very well. again, especially when we're recruiting general managers from the hospitality industry. Yeah, no, that's great that you kind of allow both and have seen kind of household name franchise systems diversifying to K9. So you mentioned Planet Fitness. You have a Planet Fitness owner that has now gotten into your system. We have many Planet Fitness owners that have gotten into our system, Florida, Texas, even some more states as well. And it's exciting because a lot of these people have been with Planet Fitness from the very beginning. mean, literally we have franchise owner number one of Planet Fitness now that it owns four K9 resorts locations and is building out a half a dozen more. So they're seeing a lot of similarities between the brands and telling their friends and family that are also involved in Planet Fitness to take a look at K9. That's cool. So let's talk a little bit about item seven. I know it's going to be a big range because the different footprints and all that, but what is the general range of guidance you provide for this project cost? Furniture, fixtures, equipment, construction improvements, the whole kit and caboodle. Yeah, so right now it's between like 1 .5 and 2 .5 million and that's all every cost to get your K9 Resorts open. That's for a 6,700 square foot facility. Costs are obviously going to go higher if you build larger and in certain markets a lot of markets it makes sense to build larger So it really just depends we talk to our prospective franchisees and we look at their market and go over the demographics with them prior to them buying and we try to figure out how many locations you know, they want how many they qualify for and then how large are they going to be in the markets that they're proposing so we're having those conversations in advance But that is the general range that is in our item set Yeah, and you touched on your item 19 earlier if we could revisit it What was the average that you publish in terms of the volume and the epitaph? Sure, so currently in our item 19 It's $1.7 million is the average gross sales and average EBITDA is $481,000 very cool and I'm sure there's other data in there in terms of other performers like units that have been around for a little bit longer. Exactly. The more mature locations that, and whether they're more mature and or are larger, are going to perform considerably better. Very cool. This has been awesome, Jason. I really appreciate all the information. Anything else you want to add to the mix about K9 Resorts before we wrap up today? Yeah. I mean, I think at the end of the day, we're still out there looking for franchise owners who are interested in owning their own business and being their own boss. We provide a tremendous amount of support. We have some really great markets that are still available throughout the country. And we're looking for anyone that is interested in having a conversation to go to K9sorts .com and get in touch so they can learn more. Yeah, that's great. And I'll post that link here in this episode. And if anyone listening would like to connect with Jason to learn more about becoming a franchise owner with K9sorts, contact me at FranchiseQB.com. or on X @QBFranchiseQB. I'll get you connected with Jason and his team. Jason, thank you so much for taking the time to get in the huddle and discuss K9 Resorts with us today. My pleasure. Thank you, Mike. Absolutely. Thank you for listening to the Franchise QB podcast where you're at the helm of your future as a franchise owner. If you enjoyed the content, please rate the show and recommend it to anyone that might be interested in franchising. Make sure to visit FranchiseQB.com to subscribe to my newsletter. and for an actionable playbook to go from walk -on to legend in your new business. Follow us on Twitter @QBFranchiseQB, and join us every week for a new episode. See you next time. Visit FranchiseQB.com to take the next step of your journey towards wealth, independence, and franchise ownership. And remember, when working for the man gets old, you must do something bold. Thank you for listening.