Unglamorous but profitable commercial cleaning franchise looks for investors

By Deborah Hill Cone

Friday 28th June 2002

RENE MANGNUS: 'Not glamorous but a good business'

Franchising company Crest Licensing Systems boasts its business model, which smooths cashflow to franchisees by paying them fortnightly, makes it more attractive than other franchising investments.

Crest is aiming to raise $1 million, issuing 9.7 million new shares at 10c each, to fund expansion of its commercial cleaning franchise system and other franchise products.

The Crest commercial cleaning franchise, a Dunedin-created brand, has 45 franchisees and three master franchisees generating turnover of $2.7 million this year.

It aims to get a greater share of the commercial cleaning business, estimated to be worth $726 million in 2000 by Statistics New Zealand.

"It's not the most glamorous but it's a good business," Crest chief executive Rene Mangnus said.

The Crest system keeps control of the debtor's ledger and pays franchisees fortnightly, which is an advantage because it stops franchisees running into cash difficulties while they wait up to six weeks for customers to pay their invoices.

"It relieves the burden on franchisees because people need money to live," Mr Mangnus said.

Franchising was the model usually chosen by companies as a way to fund expansion to avoid having to find new investors and raise cash but Mr Mangnus said Crest was doing a capital raising "to fund and executive a speedier expansion of current business activities."

He said other franchising companies, such as listed companies Infratil and Restaurant Brands, had also sought investors.

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