As the boating industry suffered some of the worst casualties of the recession, particularly in Florida, one company defied the trend. Freedom Boat Club, a membership-based boating service headquartered in Venice, saw 20 percent year-over-year revenue growth while boat manufacturers, dealers and other related businesses went under.
The reason was simple, says CEO John Giglio: Value. People with shrinking incomes still wanted to go out on the water, and Freedom Boat Club allows them to do so less expensively and more conveniently than owning a boat. Members simply pay a fee and hop on a fishing boat or pleasure cruiser whenever they want—no maintenance, no cleaning and no bank loans.
But today, new industry reports show consumers are starting to shake their wariness of spending. Sales of boats, accessories and marine services rose 6 percent nationally last year, the first increase since 2006, according to the National Marine Manufacturers Association. In Florida, boat sales rose a staggering 34 percent and led the nation with $1.5 billion in total sales. Boat manufacturers, including local builders, are ramping up production to meet increased demand.
This might seem like a threat to Freedom’s business model, but it doesn’t worry Giglio, who assumed sole ownership and control of the company in May after his business partner, Bob Daley, retired. The pair purchased the company, founded in 1989, a little more than a year prior.
Giglio, a 37-year-old triathlete who prefers shorts and boat shoes over a suit and tie, expects to increase revenue from roughly $30 million this year to $40 million next year by expanding franchise locations across the country. But it’s not just about value anymore, Giglio says. In order to grow big, Freedom must retain the small-business hallmarks of customer service and hands-on attention to detail that define his business philosophy.
“We are the largest boat club in the country, and we will continue to grow larger,” says Giglio, who oversees 90 employees at his Venice offices and 11 corporate-owned boat club locations in Southwest Florida. The company also supports 50 franchise clubs across the eastern U.S. and Gulf Coast.
“At the same time, we can’t stray too far from what we do best,” he adds. “We have a neat little niche carved out. If you get too far away from what you’re good at, then bad things tend to happen.”
The company has made mistakes in its 23-year history, and Giglio uses that experience as a main selling point of the Freedom brand to potential franchisees and members. His own experience is filled with similar lessons learned. A Rhode Island native, Giglio fled to the warmth of Florida to attend business school at Florida Southern College in Lakeland. His first job was at the large Lakeland-based staffing company, Kelly Services. “What I found is with a big company like that, there are a lot of hurdles in order to get an opportunity,” Giglio says.
After a year, Giglio was hired by Electrobake Auto Painting & Body Repair, a family-run business based in Venice that operates 20 locations in Florida. He started as operations manager and in seven years worked his way up to vice president and part-owner, the company’s only non-family executive.
“When you are one of the main cogs in a small business like that, you do everything. I learned about accounting, inventory, sales, operations and management,” Giglio says. “It used to be that business graduates didn’t think about going into small businesses, but I think for graduates today and people who are looking for new business careers, that kind of experience is invaluable.”
In 2004, Giglio answered a posting on Monster.com for a job as operations manager at Freedom Boat Club. Besides loving the water, he had no marine industry experience. It was his future partner Daley, then president under Cincinnati-based owners Aspen Investment Partners, who interviewed Giglio on a Venice boat dock.
“I saw a young guy, but a guy who cut his teeth in the service industry, just like I did,” says Daley, 63, who helped run a large extermination business out of Atlanta and started seven other small businesses before semi-retiring to Florida. Daley says Giglio immediately impressed him with his detail-oriented approach to managing each aspect of
“He’s a stickler for consistency, and he’s good at developing guidelines,” Daley says. “At the same time, he’s like the guy next door. He’s the ideal leader in that he leads through good example and brings people up and holds them out as examples of the way the rest of the company should be.”
Aspen Investment Partners began shopping the company in 2008 but found no takers. The company’s reputation had somewhat diminished due to problems with franchises, some of which went bankrupt and took thousands of dollars in members’ fees with them. The company was still profitable, however, and Daley and Giglio saw an opportunity to repair and grow the brand. They looked into buying Freedom Boat Club in October 2010 but were rejected by several banks that cited the declining boating industry as a reason not to loan.
“In the wake of the financial fiasco of the last five years, banks really changed the way they looked at small businesses,” Giglio says. “Because of the nature of our business, our assets are based on member contracts and agreements. When the bank looks at that, they said we didn’t really have much even though we could show profit and growth." It was BankUnited that finally “got it,” Giglio says, and they financed the deal, for an undisclosed purchase price, in April 2011.
Giglio and Daley immediately focused on strengthening the franchises, which are individual businesses that provide their own boats and employees but utilize Freedom Boat Club marketing and resources, such as marine safety training and an online boat reservation system.
“We really spent the last year solidifying our base. We visited every location to make sure they were all up to our new standards, and some we did not renew agreements with,” Giglio says. “The franchises are really the biggest challenge, but they are also our greatest opportunity.”
All Freedom club locations offer the same deal: Members pay a one-time $5,500 membership fee, which also covers the first six months of boating. After that, they pay from $99 to $229 a month depending on whether they have a seasonal, weekday or full-time membership. Members can then reserve any kind of boat (usually in the 18- to 26-foot range) to use unlimited times each year at a home marina and at up to four other franchise marinas around the country.
The costs might appear high, but Giglio and his franchise sales reps are quick to point out that these expenses pale in comparison to the cost of a new boat at $30,000-plus along with trailering, marina storage, repairs and general upkeep. Freedom also sells the idea of “red carpet treatment” similar to a country club, where everything is taken care of for the boating member.
It’s paid off. Giglio reports 6,500 members nationally, which is the highest in company history and double from five years ago. They have also attracted good executives to head operations, sales and finance. A new position, director of franchise development, will for the first time focus on actively recruiting new franchise owners. The goal is to add more than five new locations this year near the Great Lakes and in Virginia, Maryland, and, for the first time, California.
Scott Isaacks opened his first Texas franchise in 2006 and now owns four. He says Freedom Boat Club’s “national brand” convinced him to invest in the company and also helped him attract members. However, he says his members noticed inconsistent service when they visited other franchises. Isaacks says Giglio’s time spent traveling to every franchise and addressing these issues has already changed the company culture.
“He’s an owner-operator himself and he’s been down in the trenches with the owners and operators,” Isaacks says. “His background and his knowledge have solidified the franchises and the company as a whole. It’s been like night and day.”
Giglio says he hates the word “compliance” when talking about franchises guidelines and consistency. Instead, he says it requires proper education and support to franchise owners and being available if problems arise. He says franchise owners—and even members—can call his cell phone any time. It’s this attitude that convinced Lisa Almeida to take over the foundering Freedom club in Jacksonville last September.
“Because they have the biggest fleet of boats in the country, there’s no problem I would call him about that he wouldn’t have some sort of experience with,” Almeida says. “As a new franchise owner, it’s nice to have that experience to rely on, including what types of boats to buy and types of people to hire.”
Almeida’s business has grown from four boats and 50 members to 16 boats and 200 members in just eight months. Giglio says that’s the kind of growth he expects for the entire company moving forward, but not at the expense of what makes the company—and his job—fun.
“This is a business, but it’s still a fun business. I like to spend as much time out at the docks as possible,” says Giglio, who is never without a few bottles of sunscreen in his truck. “There’s nothing better than being out on the dock and seeing people heading out on the water, some of them for the first time. That’s how you really know what’s going on in your business.”