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Otto found that it was more economical to sell 1 "clean-out" followed by regularly scheduled visits to ensure pests were unable to have a foothold in a building, than it was to perform a full "clean-out" service once or twice a year.
Otto pioneered the franchise model for service businesses. Otto would invest $5,000 in a new location, and paid $50/wk to the branch partner who was responsible for securing the premise, hiring staff, and purchasing equipment. Otto focused his efforts on advertising.
Otto developed a profit-sharing program with branch partners. Branch partners started to out-earn Otto, and the pest control business started to thrive across the US.
By 1940, Orkin had 50 branches in 14 states, including branch offices in nearly every major southern city. Gross sales in 1940 were around $1.5 million (equivalent to $28m in 2020). Orkin continued to thrive in the WWII era, when pest control was declared an “essential service”.
By 1956 Orkin was generating nearly $16m in revenue (equivalent to $150m in 2020) and became known as the “General Motors of Pest Control”. Orkin’s explosive growth is largely attributed to its profit-sharing plan, which made many branch partners millionaires.
In April 1964, Orkin was acquired by Rollins Inc. for $62.4 million (equivalent to $515m in 2020) in what is considered to be the first leveraged buyout in US history. Rollins/Orkin today is worth nearly $20bn, and employs over 13,000 people.
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