PILLAR TO POST Home Inspectors ranks in a 4-way tie for 72th place in the top 500 franchises in America, as per the “2014 Fastest-Growing Franchises” list (Entrepreneur, 2014). The company, headquartered in Tampa, Florida has been in operation since 1994, and provides “the finest [home] inspection report in the industry” (Franchising, 2014). This ranking was generated from all franchises in the United States and Canada having added new franchise units from July 2012 to July 2013. Pillar to Post added 359 franchises in the United States and 80 in Canada during this time period. The rate of Canadian units has remained relatively steady since 2010, but had grown by approximately 60-units since 2010, even after a loss of nearly 30-franchise units in 2012 (Entrepreneur, 2014). Therefore, the aggregate growth was close to 90-units in the last two years. I chose this company to get a better understanding of the housing market in North America, using this as a guide.
What Goods and Services are Produced?
Pillar to Post offers general home inspection reports for the real estate industry. This is a “consumer good,” since it is used for “personal good” as compared to a “capital good” used to create “other goods or services” (Jan, 2013). Home inspection reports are also a normal good since, as consumer incomes rise, consumers want more housing, just as they want more steak or clothing (Colander, 2013).
Pillar To Post provides three types of inspection packages, and is geared mainly to the home buyer. Whereas the most popular is their Premium Package, they also offer a Plus and a Prestige package, with the latter offering the most services. All packages offer their Comprehensive Evaluation “covering up to 1600 items inside and outside of the home”. The customer is allowed to choose which plan they prefer, and all reports are available in print at the time of service and also online. Other services provided by all of the plans include an Executive Summary and use color photographs to indicate areas of concern. Emergency shut off tags are placed for main utilities such as gas, electric, and water. Any repairs called-for within the reports are estimated for price and are printed for easy review. Each report offers a Seasonal Maintenance Checklist for homes of all sizes and in various climate conditions. (Pillartopost.com, 2014).
The differences between the Plus and Premium packages include an Infrared Scan for moisture and electrical overheating; a Lifetime Maintenance Advisory Service; an Appliance Recall Safety Check; Rodent Inspection; and as differentiated from the general Customer Satisfaction Commitment, the Premium package also includes a guarantee. The Prestige plan has all of these, plus it offers a Healthy Home Package which is “ideal for those suffering from . . . breathing disorders” as it tests for common allergens and mold (Pillartopost.com, 2014).
How to Produce
Pillar To Post relies on mainly three of the five factors of production. Home inspections do not use natural resources, but it takes human labor for the inspection to be completed. Computers and office space would be the physical capital needed. All inspectors have to be certified by ASHI, so that requires a specialization of labor. Finally, each franchise is independently owned and operated, thus requiring not only entrepreneurship from the corporate franchise model, but the individual owners and operators also have to engage the public to seek new business (Pearson Learning Solutions, n.d.). Where entrepreneurship really comes-into-play is that the labor “involves high degrees of organizational skills . . . [and] oversight responsibilities” (Colander, 2013).
For Whom to Produce
Home inspections are not required in the United States. However, the main trade group ASHI (American Society of Home Inspectors) notes that “90% of home sales” has some sort of home inspection done, either on the seller or the buyer side, or both (FindLaw. 2014). The number of existing homes in the United States that transferred ownership in 2013 was just over 5 million. An additional 496,000 were new homes, with new construction also recommended for home inspections (National Association of Realtors, 2014). Therefore, in 2013, and using the 905 statistic, then approximately 5 million home inspections were completed in the United States in 2013, although there may be some overlap as some homes have a seller and a buyer inspection.
Some Opportunity Costs
As with choosing any option over another, there are always opportunity costs. In the case of opening a franchise such as Pillar to Post, some of the opportunity costs will be getting certified as a Home Inspector by ASHI. Various states have different requirements, with the average of 120-hours of classroom and 4-5 field training sessions, with costs averaging around $4,000 (ASHI School, 2014). To purchase rights to the franchise requires an investment between $33,400 and $41,600 (Entrepreneur, 2014). Other opportunity costs would be loss of income from another position held, as operating this franchise requires a full time commitment.
References
ASHI School, The. 2014. Website. ASHI Education, Inc. Retrieved www.theashischool.com/home-inspections-classes
Colander, David. 2013. Microeconomics, Ninth Edition. McGraw-Hill Irwin. New York, NY.
Entrepreneur. 2014. 2014 Fastest-Growing Franchises. Retrieved www.entrepreneur.com/franchises/fastestgrowing/index.html
FindLaw. 2014. Home Inspections Before You Buy. Thompson Reuters. Retrieved realestate.findlaw.com/buying-a-home/home-inspections-before-you-buy.html
Franchise Update Media Group. 2014. Pillar to Post Franchise Opportunity. Retrieved www.franchising.com/pillartopost/
Jan, Bobby. 2013. Three Basic Economic Questions. Gaebler Ventures. Retrieved www.gaebler.com/Three-Basic-Economic-Questions.htm
National Association of Realtors. 2014. Field Guide to Quick Real Estate Statistics. National Association of Realtors. Chicago, Il. Retrieved http://www.realtor.org/field-guides/field-guide-to-quick-real-estate-statistics
PearsonCustom.com. n.d. Introduction to Economics. Pearson Learning Solutions. Retrieved http://www.pearsoncustom.com/mct-comprehensive/asset.php?isbn=1269879944&id=12310%20Interactive%20Tutorial
PillarToPost.com. Home Inspection Packages. Pillar To Post, Tampa, Florida. Retrieved www.pillartopost.com/pdf/2/homeinspectionpackagesbrochure.pdf
