Leaping from one junior market to another has taken its toll on Russell O’Connell. But having made the switch, the founder of Myhome plans to lure new investors.

For Russell O’Connell, launching his franchise group on AIM was a torrid affair. The affable Aussie endured sleepless nights and endless stress while preparing Myhome International plc for the junior market last December.

Following five years on Ofex (now known as PLUS Markets), Myhome completed its switch to an exchange widely regarded as the next step for growing companies. But making the move was far from easy. "Painful experience?" O’Connell says. "Yes it is – business is painful and nothing’s easy."

Complying with market regulation was a headache, although O’Connell believes Myhome’s time on PLUS helped him plough through the red tape. "It’s a myth to say that PLUS is not a regulated market – believe me the compliance is not too far off [other exchanges]," he says. "I will tell you, though, nobody can prepare you for the due diligence process for AIM."

Early signs suggest that Myhome – a holding company for franchises that provide domestic services such as gardening, oven cleaning and kitchen repair – has adapted well to its new surroundings. Its market cap is £32.3 million, while shares have fluctuated between 65p-70p since the shift. "Most companies that have moved from PLUS to AIM have seen a substantial discount on their share price, so I am quite proud we have held ours," O’Connell says.

The move to AIM was made following a fundraising in November last year, with directors from Domino’s Pizza, including CEO Stephen Hemsley and major shareholder Nigel Wray, investing £4 million. Some 10 million ordinary shares and warrants giving investors the option to subscribe for 7.5 million new ordinary shares were issued, both at 40p each.

O’Connell believes the backing from executives who are driving their own successful franchise businesses is a solid endorsement of Myhome’s credentials. But whether AIM company investors agree is a different matter. Indeed, O’Connell is anxious about how investors will respond to the market’s first multi-franchise business – although he believes the recent investment should pique interest.

"If I was a shareholder and you have the CEO of Domino’s Pizza buying shares in another franchising company, you would think with his experience he has made an investment because he is confident in the management and where the company is going."

As well as endorsements by the big franchisees, O’Connell also draws inspiration from franchise operator Servicemaster. The NYSE-listed company owns several franchises, ranging from pest control and home security to carpet cleaning and landscape gardening. Its financial reports for last year’s third quarter show a 16.7% drop in quarterly net income – down to $68 million [£35 million] from $81.6 million [£42 million] in Q2. But despite its recent performance, Servicemaster and other established franchises are good role models for O’Connell.

"Franchising is an excellent, predictable business model… We only need to look at Domino’s Pizza to see a doubling and trebling of growth right across the board in the last five to six years and that’s what franchising can deliver."

Myhome board’s immediate plans do not include a market share placing, although O’Connell admits it’s something to consider later down the line. Instead, the 49-year-old will concentrate on Myhome’s aggressive acquisition strategy. Since buying Myhome for £300,000 in 2001, O’Connell has acquired gardening services provider Nicenstripy, kitchen refurbishment company Surface Doctor and Ovenclean, which specialises in cleaning domestic appliances, for some £2.1 million.

Most recently, O’Connell added Franchise Alliance, which hosts nationwide seminars for people keen to enter the industry, and car valet business Autosheen to the portfolio. Myhome paid £100,000 and £500,000 respectively for the businesses, with O’Connell planning further deals.

"We have been quite plain in our documentation that we are looking at sectors like plumbing and electrical. We have plenty of cash in the bank and no borrowings or gearings; we are looking at companies and potential other acquisitions."

Talks are underway with targets, although O’Connell was unsurprisingly coy about giving further details. He did, however, admit that home security featured highly in his acquisition plans.

"If you can just imagine I am cleaning your home, I already have the key and alarm code, so security is a natural extension. Security is also an active, re-occurring revenue stream and it’s all about hitting the same demographic with a variety of products. If I was going to place any bets, I would think that security would probably be the best area to move into."