Ray Spears, Jeff Wilson and Charles Donaldson in 2007 established GlobalGreen Insurance Agency as the brand name for the franchise network of independent agencies developed and operated by St. Louis, Mo.-based Equity One Franchisors.
Spears, a former banker, said the idea behind the network is to provide opportunities to agents — many of whom previously represented captive insurance carriers — to own and operate independent agencies with access to a variety of insurance markets.
Spears, president and CEO of Equity One Franchisors, said the idea for GlobalGreen came about in a roundabout way.
“Jeff Wilson, one of my associates here who’s in charge of sales, had been a Shelter Insurance agent for a number of years. He had always wanted to be an independent agent. Left Shelter and became a lead person in a very large independent bank group here in the St. Louis area,” Spears explained.
Wilson led the insurance department for the bank but eventually decided to start his own independent agency, Equity One Insurance. Having developed relationships with insurance carriers through his position at the bank, Wilson was able to secure contracts with a variety of companies and the agency took off, Spears said. “Within a short period of time he started getting solicited by an aggregator saying, ‘Why don’t you hook up with us, we can do all kinds of things for you.'”
Having been in involved in the insurance business for 25 years, Wilson figured he could do the same kinds of things as the aggregator who was soliciting him. He contacted Spears, whom he’d known from the banking business, for advice.
“We spent a lot of time looking at [the idea] to see if it made sense,” Spears said.
“The more we got into it, the more it started making sense to do what this other party did — to become a consolidator, an aggregator. [Wilson] asked me to hook up with him and I did,” he added.
Wilson brought with him another former Shelter Insurance agent, Chuck Donaldson, who serves as operations manager for the organization.
“We put our thoughts together and tried to take all the good things we saw with the other aggregator … and left the bad ones behind and put our own deal together. That came together in May of 2007, so we’re approaching our fourth anniversary,” Spears said.
He explained that Equity One Insurance Agency is not part of the franchise network; it serves as a support unit for the franchising company, Equity One Franchisors. The two Equity One entities remain at “an arms-length” from each other, Spears said, “because we are in the franchising business, they are in the insurance business.”
The group decided on the GlobalGreen name as the brand for all of the agencies within the franchise network.
“All the franchise units operate under the name of GlobalGreen Insurance Agency, however, they are all independent companies, independent agencies. They all have a legal entity name,” Spears said.
For instance, an XYZ Insurance Agency in Cincinnati, say, would be the XYZ Insurance Agency doing business as GlobalGreen Insurance Agency, the trademarked name.
“What we’d like to see them do is push the GlobalGreen name out in front simply because that’s the name we branded and that’s what everyone knows us as,” Spears said. “However, in a community where the XYZ Agency is well known and the owner is well known, they like to keep that link to their legal name because everyone knows them in the community. And it really helps them sell, obviously.”
Captive Unrest
Most of the agent/agency candidates that Equity One Franchisors currently considers as potential franchisees are those that have been in the captive insurance agency side of the property/casualty insurance world. One reason for that, Spears said, is that “there’s a lot of unrest in the captive industry.”
Some of the larger captives are reducing their agent force significantly and changing the way they operate. “Which is a benefit to us and hopefully [we are] a benefit to those people who are being cut out of the formula,” he said.
He said the company looks for people with at least three years of experience in the insurance industry, although many of the candidates have many more years of experience and have owned their own captive agencies. And they have to have proved they are able to run a business.
“Because this is a business; the agency is a business. The downfall would be if they don’t have enough background in running a business. Don’t know how to address the other parts, just the insurance. The insurance is the product,” he said.
“Running a business is extremely important. … We have to be very careful, as we bring people in, to make sure that they have enough business acumen to be able to get up and operating and obviously get the product out.”
The most important part, though, is that the potential franchisees really want to be an independent agent and they “have enough years behind them that we feel comfortable that they can get out and sell and keep the meter running.”
While the franchising group does not have a minimum size limitation for a potential franchisee, it does have expectations. For instance, within three to five years an agency should be selling a minimum of three quarters of a million dollars a year, Spears said. “That should be pretty simple at that point. That would fit with our projections out three to five years,” he added.
As agents coming from a captive background, the new franchisees expect lots of support from the GlobalGreen organization, Spears said. GlobalGreen provides its members an agency management system — one that is user friendly and understandable. The branding is also important, he said, but what franchisees want and expect the most is access to multiple carriers.
“In some cases depending on where they are they don’t have all the carriers they might need,” he said. “Sometimes they come to us and say, ‘If you can get a couple of these regional carriers, coupled with a few of yours that we know are here and competitive, that would be the best of all worlds.’ So we’ll go to, wherever they are we’ll go out and try to hook up with whoever they say is competitive if we don’t have them. It adds to our carrier base obviously and helps us down the road. They’ll see that we have those carriers.”
One thing GlobalGreen does not provide is financing. “That’s one thing we’ve seen other folks get into trouble with and we’ve said from the front we want [franchisees] to have — the old expression — skin in the game. We want them to have enough capital up front to be able to run these things for a few months as the commission flows start to come in. That’s part of our whole franchise document, what the cost is, what they pay us to get into this thing. What they need is some working capital to keep themselves fluid for a while.”
Controlled Growth
With recent additions, GlobalGreen now has 56 franchisees in 16 states. The company has committed to growing by 15 to 20 units per year and it’s off to a good start in 2011, having added six new franchises in the first two months of the year.
While continual growth is envisioned, the partners want it to be controlled, Spears said. “Because we provide the support, the ongoing support, for their franchise operation. … We don’t want to overwhelm anybody and we don’t want to run the risk of not being able to provide the support. So, 15 to 20 units a year, we know we can handle that.
“That’s where we’re going. We don’t expect that we’re going to have a thousand agencies out there. That’s not really what we’re cut out to do. We want to hit a hundred. We’re at 56 now. We want to hit a hundred then we’re going to take a step back, make sure everything’s in tune, makes sure everything’s functioning properly. And then we’ll start working on probably the next hundred.”
Spears said some of the carriers GlobalGreen works with have indicated they are getting a little tougher on underwriting, which will eventually begin to affect pricing. “So we think we see a hardening for the rest of the year. Hardening of how things are done, it’ll make it a little more difficult probably.”
Still, he’s optimistic that even though capital may get more costly, carriers might draw back a bit, and underwriting may toughen up, GlobalGreen can stay on track with its goals.
“It comes in cycles like anything else. … But we think it’s going to be a little tougher out there,” Spears said.
Editor’s note: Listen to the complete podcast interview with Ray Spears at https://www.insurancejournal.tv/videos/5142/.
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