Scott Whitaker, owner of Restoration 1 Spokane, Wash., has partnered with Traction Capital, an investment firm dedicated to helping entrepreneurs in the Western U.S. Private equity firms have recently begun investing as franchisees in the restoration industry, signaling a new era of business growth and opportunity. The influx of funds across the industry will allow local businesses to expand their services as well as provide more resources for those impacted by natural disasters.
Whitaker opened his first Restoration 1 franchise in 2017 while serving as Captain of the Spokane Valley Fire Department. His goal when he first purchased the business was to grow it, and sell it. Over the last five years he has experienced strong growth, expanding into additional territories in Central Washington and garnering the attention of Traction Capital. With this investment, Scott remains in the driver’s seat of the franchise, and has his eyes set on building a multi-state operation supporting multiple communities.
Speaking with C&R ahead of this announcement (which you can watch/listen to at the top or bottom of this article), Whitaker shared his excitement about what this investment means for future growth potential for his company. This also wasn’t an overnight decision; it was multiple years in the making. Two years ago, Whitaker started working with industry broker JT Kraai to stay in tune with his valuation, and goals to sell. When the time was right, and he went to market in 2022, Whitaker was intentional in what he was looking for. After a few offers that weren’t good fits, Traction Capital came along, and both Whitaker and Kraai could tell early on that Traction wasn’t a “normal” PE firm.
“They don’t call themselves private equity; they call themselves permanent equity,” Whitaker explained during his conversation with C&R. “They want to buy and hold. They don’t want to buy, create more money, and flip it. They want to hold the asset for a long, long, long, long time.”
Whitaker first appear on C&R’s Restoration Today podcast in May of 2022, discussing how to get paid using the S500. The podcast was among 2022’s most-popular podcasts. Whitaker is known for bold, outside-the-box thinking that has helped him grow his Restoration 1 franchise exponentially in a short number of years.
“I am excited to partner with Traction Capital as we grow our business to the Tri-Cities and Yakima area and look to other opportunities beyond the state. I believe a key component of our success thus far is the fact that we have built a team of great people and helped them succeed individually. Traction shares this philosophy and will allow us to develop even further,” said Whitaker.
As the deal neared closing time, Whitaker said Traction remained connected and committed, even as the valuation of his franchise continued to grow.
“This could be an area of increased participation from private equity,” Kraai told C&R. “For larger franchisees that meet private equity qualifications, a transaction similar to Whitaker’s can infuse capital into individual franchisee operations to help them increase their growth and reach.”
“We are excited to partner with Scott and the Restoration 1 team in Dallas to continue to provide best in class services to customers in the Western U.S.,” said Justin Turner, Managing Partner at Traction Capital. “Whitaker has developed a great team, and we look forward to working in the background to help provide the resources and systems necessary to continue to grow the business into multiple states.”
Whitaker said Stellar Brands corporate, the parent company of Restoration 1 located in Dallas, also worked closely with him throughout the transaction process. It is possible this is the first, or certainly one of the first, transactions between private equity and a franchisee in the restoration industry.
“[Stellar Brands] realized we all want the same thing. We all want growth. And it all came together just fine.” Whitaker said.
“Over the last several years, we have been focused on developing our franchisees’ individual businesses and providing resources to help them grow their financial performance,” said Sherry Rose, CEO of Stellar Service Brands. “My vision is to empower franchisees to serve more customers and enter into new markets, so that they, too, can achieve the American Dream. Whitaker’s partnership with Traction is a testament to his persistence and dedication to both his team and the surrounding community.”
The Restoration 1 brand itself has rapidly expanded to 313 locations open and in development across the U.S. to become one of the fastest-growing brands in the $210 billion property restoration industry.