Housing Giants - October 10, 2008 - (Page 24)

for a home-and-lot sale, and 4.15 percent if the sale is home-only. “It’s really $80,000 over two years, if you add it all up,” says Hanrahan. “And our royalties average 3.55 percent of revenues.” For the investment, franchisees get the house plans and Rutenberg’s development and installation of a complete model home presentation and a coordinated marketing effort that includes the firm’s Web site, www.arthurrutenberghomes.com, as well as the firm’s promotional magazine, Legendary Homes, which is now distributed to 150,000 prospects a year. Perhaps the most powerful weapon the firm provides to franchisees is the complete, fully integrated information systems to operate every aspect of a home building business, from sales to accounting. And the franchises all share this information, except financials. “They get all vendor and cost data,” says Hanrahan, “so every franchise knows what all the others are paying for 2 by 4s. They see each other’s budgets. They know the median cost for every line-item in the system.” Rutenberg also has what it calls a “differential pricing system,” which allows franchisees to price out just three house plans for each new community and have the system then price all of the rest in the entire 90-plan offering, each with multiple elevations and garage configurations. Obviously, to maximize this benefit in Atlanta and Charlotte, ARH will need to develop as many house plans for those two markets as it now offers in Florida. The firm also monitors materials and product pricing across all its markets and negotiates “national” pricing with many vendors. Once again, to make the move into Atlanta and the Carolinas, Rutenberg will have to expand the reach of this system to new and different vendors. mOdelS mAke IT wOrk Rutenberg’s model homes are its primary means of controlling quality and building the brand. Every model home is designed, merchandised and marketed out of the Clearwater headquarters building. “We have a series of meetings that leads up to selection of what plan to model in each community,” Hanrahan says, “and we inspect every stage in the development of the model presentation.” Moreover, there’s a clause in sales agreements that homes will be built to “model home quality” and referencing the address of the model home in question. 24 HOUSING GIANTS.10.10.08 www.HOUSINGGIANTS.cOm http://www.arthurrutenberghomes.com http://www.housinggiants.com

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