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The Franchise Manual Podcast

The Franchise Manual Podcast is about all things "Franchise" and the people that make it look easy.
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Feb 4, 2020

My Podner in this episode is Brendan Charles and he’s going to talk with us today about what franchisors should be teaching their franchisees about site selection, real estate negotiations, and build-out. Bad decisions in these areas can be detrimental to the success of the location. Everybody has some skin in the game here. This discussion will benefit both new and seasoned franchisors.

Time Stamps

Brendan Charles Intro

00:00:28

Segment 1

00:02:44

Get to know Brendan

Segment 2

00:15:38

Topic Segment – Site Selection, Real Estate, and Buildout

Segment 3

01:25:10

Quickdraw Questions

 

Topics Discussed in this Episode

  • You only get one chance to get the real estate right.
  • Real estate is one of the three main controllable in a franchise business model but real estate is only a “controllable” until you sign the lease.
  • If you don’t know what your break even is BEFORE you start looking for real estate, then your real estate decision could break you.
  • #1 rule in site selection – Never fall in love with a space.
  • The real estate brokers’ incentives are not necessarily aligned with yours – the more you pay in rent, the more the broker gets paid on commissions
  • Know exactly what your site selection criteria are BEFORE you start your search
  • How do you develop site selection criteria when you only have one location to go by?
  • Utilize the free services of your real estate broker to provide the demographic reporting
  • Once you have multiple locations in operation (data points), then you can compare performance with location attributes and fine tune your site criteria
  • Onboard your broker about the brand – make sure they share the enthusiasm of the brand’s potential as they will be your #1 sales person when presenting the concept to potential landlords
  • Spend a full day viewing all available locations in the “Market Tour”. Take copious notes on the good as well as the bad locations
  • Boil your options down to 3-5 locations
  • Time kills all deals. You have to move FAST after your market tour and get the letters of intent out quickly.
  • The franchisor should be very involved in the site selection process – don’t sit on the sidelines
  • Submitting a good letter of intent is the most important step in the whole landlord negotiation process – rent, term, tenant improvements, etc.
  • If you don’t get the Letter of Intent right, there is no way you will get the build out right, and if you don’t get the build out right, you’ll be behind schedule and way out of budget
  • Once the letter of intent is delivered, the landlord is on notice to respond, however, that doesn’t mean that you can stop looking.
  • Always have backup sites in your pocket
  • Use two LOIs to leverage the deals against each other.
  • Once you reach the lease stage, the due diligence of the space continues – make sure that the space is exactly what the landlord advertised it to be. This is done with a site survey
  • The drawings from the landlord aren’t always accurate so don’t rely on them
  • It is best to utilize a national architect for every franchised location rather than local architects
  • Floor plan design in a restaurant – the dining room is your money maker and should be maximized
  • Familiarize yourself with the design review process – go down to the city offices and meet the people who will be doing the plan review
  • Identify general contractor bid pool – qualify them – Have they built in the market you are in? – Do they have the relationships with the city officials, etc. Avoid too many GCs in the bid pool
  • At the time of the build-out, the interests of the landlord are in line with yours because they get rent money once you open your doors for business, so they can be a good source of referrals of general contractors.
  • Poorly planned design submitted to the city will stall the process
  • Be aware of a TAP Fee – a fee by the city in order to tap into the utilities. This can be very expensive
  • Ensure you have a plan to get your FF&E paid for and delivered on time according to the contractors timeline
  • Qualify the bids by ensuring that everything in the bid is supposed to be there and nothing is there that isn’t supposed to be there. Be sure to clarify who will be responsible for what activities and purchases. Make sure there is a clear matrix of responsibility.
  • No hammer can swing until the building permit is issued
  • There is no return on investment for the franchisee to be on site every day once hammers start swinging, rather, they should be focused on the bigger picture of doing the activities in preparation for the opening day such as hiring staff and marketing for the grand opening

 

 

Brendan Charles

Red C Business Advocacy

www.redcadvocacy.com

Brendan@redcadvocacy.com

Phone -   303-333-3420

 

Kit Vinson

www.franman.net

kit.vinson@franman.net

214-736-3939 x 101

 

Oct 30, 2019

My Podner duo in this episode is Andy Erskine and Bob Gappa of Management 2000, and they’re going to talk with us today about the importance of customer loyalty, what drives it, and how to manage it. This discussion will benefit both new and seasoned franchisors.

Today’s episode will be unique. This will be the first time to have a returning podner with the GREAT, Mr. Bob Gappa. You may remember Bob Gappa from Episode #2 where we discussed the nature of the relationship between franchisor and franchisee.

Andy has been Bob’s Protégé for 8 years now as he’s been learning franchising from the master and taking Bob’s accumulated knowledge and adding his own flavor to it.

Time Stamps

Andy Erskine Intro

00:00:29

Segment 1

00:02:36

Get to know Andy

Segment 2

00:11:20

Topic Segment – Creating Customer Loyalty

Segment 3

01:05:10

Quickdraw Questions

 

Topics Discussed in this Episode

 

What is customer loyalty?

  • Transaction count is NOT the same as customer loyalty.
  • Another term for disloyalty (brand adultery)
  • Customer loyalty is tightly woven into Brand, which is made up of the emotion that you create with your customers

 

What makes customers loyal?

  • Loyalty is built around emotions and emotions come from the customer experience
  • The way that you interact with your customer (operating system) is what creates positive or negative emotions.
  • Repeat customers are a result of your team members creating an emotional bond with the customer through the delivery of your product or service.
  • Brand standards should focus on creating the emotions that make customers want to talk about their experience with their sphere of influence and go back.
  • The Operations Manual is in place to create customer loyalty.
  • To understand what creates positive or negative emotions in a customer, we need to understand the customer journey.
  • The customer journey is literally every interaction that a potential customer has with you before, during, and after doing business with you
  • Visible versus invisible standards – both affect the customer and loyalty. Invisible standards are those not customer facing, like ordering a sufficient amount of material to deliver the product.
  • The issue with system standards is that there isn’t enough forceful compliance when they aren’t being followed and there isn’t enough positive reinforcement when they are, and so they don’t seem important to either the franchisee or franchisor.
  • Brand icons are as important to customer loyalty as brand standards. Brand icons are the aspects of your business that you are absolutely known for.
  • Emptions are what create the brand rather than a well-known company.

 

How do you measure customer loyalty?

  • Technology is how to track customer loyalty through cell phones and credit card transactions
  • Knowledge is power. Know your customers behavior data and use that to create the emotional connection in them to make them loyal.
  • By understanding what customers value, we can create customer loyalty
  • Prism will segment your credit card transactions into demographics and behaviors

 

What do you do with customer loyalty data after you get it?

  • Data helps you refine your message to your real customers – understanding what they value so you can deliver the value that they want, which in turn creates loyalty
  • Don’t confuse frequency due to convenience with loyalty.

 

What should I be doing today as it relates to customer loyalty?

  • Start enhancing what it is that the customer values by understanding who the customer is.
  • Stop thinking of yourself as a franchisor and start thinking about yourself as a steward of a brand.
  • Stop having a franchisee advisory council and start having a brand advisory council
  • Answer three critical questions. Know who your customers are. Know what they value. Know how to enhance what they value.
  • Know how to make their experience personal.
  • Help the customer make a connection to your brand
  • Select employees, don’t simply hire them.
  • Focus on how to create a great place to work
  • Team members should know that their job is to create an experience that makes the customer want to come back
  • Training a team member is usually only focused on the activity, which is simply skills, knowledge, and abilities. In addition to that, you should focus on developing people’s understanding and emotional commitment to the purpose of their job, which is to get the customer to want to come back.

 

Andy Erskine

Management 2000

www.mgmt2000.com

M2000@mgmt2000.com

Phone -   800-847-5763

 

Kit Vinson

www.franman.net

kit.vinson@franman.net

214-736-3939 x 101

 

Books Mentioned in the Episode:

Love Marks

By Kevin Roberts

 

The Effective Executive

By Peter Drucker

 

Emotionomics

By Dan Hill

 

Retail is Theater

Aug 29, 2019

 

My Podner in this episode is Red Boswell and he’s going to talk with us today about how to generate franchisee leads. This is one of the hottest topics with franchisors. This discussion will benefit both new and seasoned franchisors.

Red is a unique character, and I mean that in a good way. This guy has been driven to make money ever since he was a kid. Starting in grade school when he was selling NFL pencils for a profit, into hos twenties when he build up a pet services franchise system  all the way up to 148 units. He’s been operating in the world of franchising practically his entire adult life. He’ll give us more details in just a few minutes.

Red now gets to fuel his business building passion as President of the International Franchise Professionals Group (IFPG), The World’s Largest and Most Respected Franchise Consultant Organization. .

Time Stamps

Red Boswell Intro

00:00:28

Segment 1

00:02:05

Get to know Red Boswell

Segment 2

00:29:45

Topic Segment – Franchisee Lead Generation

Segment 3

01:01:50

Quickdraw Questions

 

Topics Discussed in this Episode

The cost of a lead

  • The average cost of a lead in 2019 is $10,000
  • That number does not including commissions
  • That number includes large companies that don’t need to spend anything for leads because their brand is so well knows that they don’t need to advertise to get leads
  • Small companies usually pay a lot more to generate leads since their concepts usually don’t have any brand recognition

 

16 sources of leads

  • Direct mail
  • Print
  • Online
  • Brokers
  • Referrals
  • Consumer / Clients
  • PR
  • Industry / Conversions
  • Prospecting
  • Buying leads
  • Live events / Expos
  • Mobile / Roadside
  • Upgrade / Multi-unit Operators
  • Past leads
  • Guerilla marketing
  • TV Radio

 The marketing mix is a moving target and is different for every concept. There is no silver bullet, one size fits all solution for the marketing spend mix.

Do a lot – do it for a long time – test and measure

Every option will involve one or all of these three

  • Time
  • Money
  • Resources

The trick is to utilize the options that require the resources you have the most of.

 

Red’s Favorite Five

Red says that every solution must be customized to the individual concept, but if he HAD to pick his favorite five, the would be:

Brokers

  • Best option for any size franchisor
  • You pay to be a member then pay a commission per close
  • Many broker groups won’t accept smaller start-up concepts
  • Big saver of time and resources

PR

  • Hire a PR firm
  • Find one who is familiar with the world of franchising
  • IFA members a plus
  • Validate with their past clients

Industry Conversions

  • Converting existing business people who are struggling
  • You never know who may be disenchanted with operating their own concept and who would love to convert
  • These are cold calls usually

Live Events / Expos

  • Usually between $5k and $10K per event
  • Use common sense and work it hard
  • Energy – follow-up – is key

Online

  • You could make online all five
  • PPC Pay per click / Banners
  • SEO of your own franchise site
  • Develop a GREAT portal that grabs and tracks leads and conveys the information well. Portals tend to generate  a lot of volume with lower quality, but still worth the spend
  • Social media posting
  • Big data targeting
  • Job boards – make a job advertisement  with the tag “some investment required” – describes a dream job

Bonus Source: Guerilla Marketing

  • Example: flyers on every windshield at the local franchise expo

 

Common mistakes made by franchisors as it relates to lead sources:

  • Lack of infrastructure – be able to walk away from your business for 6 months
  • Don’t try to run your business and franchise it all by yourself
    • Franchise Development person
    • Marketing person
    • Onboarding / Training person
    • Field support person
  • Lack of good ops manuals
  • Not charging enough for the franchisee fee in order to pay for the costs associated with lead generation and other expenses
  • Negotiate a broker commission too low – nobody will show your system if the commission is too low
  • Seek wise counsel

 

Books Mentioned

  • Franchise Management for Dummies
  • Becoming a Strategic Business Owner
  • How to Win Friends and Influence People

 

Red Boswell
International Franchise Professional Group
www.ifpg.org
Red@ifpg.org  
888-977-4374 x 112

 

Kit Vinson
www.franman.net
kit.vinson@franman.net
214-736-3939 x 101
Jul 25, 2019

My Podner in this episode is Rob Vinson and he’s going to talk with us today about Franchising 101 – Where to start when you backed into franchising by accident, and don’t know where to go.

Rob has been a franchise attorney for 26 years. He was a partner at the prestigious law firm of Strasburger and Price, which is now Clark Hill after an April 2018 merger. Over 13 years he worked his way from associate up to partner. In 2001, he started his own law practice of Vinson Franchise Law and has been doing that ever since. He works, and has worked, with clients all over the United States as well as internationally.

Rob is also a founding partner of FranMan Inc, a company that specializes in producing franchise operating manuals.

In 26 years Rob has accumulated a great deal of experience that he is going to share with us today.

Time Stamps

Rob Vinson Intro

00:00:27

Segment 1

00:02:00

Get to know Rob Vinson

Segment 2

00:22:32

Topic Segment – Franchising 101

Segment 3

01:06:50

Quickdraw Questions

 

Topics Discussed in this Episode

  • What is Franchising?
  • Business Format Franchising versus Product Distribution Franchising
  • What is the difference between franchising and traditional licensing?
  • What are the three elements that must be present in order to be considered a franchisor by the FTC?
  • Just because you may not be considered a franchise by the FTC, you may still be considered a franchisor by the state government.
  • Why franchise instead of expansion through company owned locations?
  • What types of business lend themselves to franchising and which don’t?
  • What elements of a business does Rob look at when advising a client on whether the business is “franchisable”?
  • What resources are available to a new franchisor to help navigate the waters of franchising?
  • How can a franchisor find a franchise attorney?
  • What should the franchisor consider when selecting a franchise attorney?
  • What services do franchise attorneys offer to franchisors?
  • What is the FDD and Franchise Agreement?
  • Why did the FDD come about?
  • What are the dangers of a new franchisor using a template to create their own DFF and Franchise Agreement?
  • How important is a well-documented franchise operations manual?

 

Rob Vinson
Vinson Franchise Law
www.franchiselaw.net
rob@franchiselaw.net 
Phone -   775-832-5577

 

Kit Vinson
www.franman.net
kit.vinson@franman.net
214-736-3939 x 101

 

Jun 14, 2019

My Podner in this episode is Stan Friedman and he’s going to talk with us today about Customer Relationship Management software, or CRMs.

 

Time Stamps

Stan Friedman Intro

00:00:27

Segment 1

00:02:34

Get to know Stan Friedman

Segment 2

00:23:32

Topic Segment – CRM – Customer Relationship Management

Segment 3

01:07:51

Quickdraw Questions

 

Topics Discussed in this Episode

  • Brief history of CRM
  • What is CRM today
  • How is CRM used in franchising
  • Can a franchisor get by without CRM at first
  • When does a franchisor need to graduate to CRM
  • How to choose a CRM
  • What is FRM Solutions
  • The features of FRM Solutions
  • The types of information a franchisor need to be managing
  • the juggling act that a franchisor has to do when business gets that busy
  • Sortable, Reportable, and Dashboardable,
  • Candidate Gate – Franchisee Gate
  • Gating the candidate experience versus free reign
  • Managing beyond acquisition

 

Stan Friedman

FRM Solutions

sfriedman@frmsolutions.com 

404-936-8677

Skype - stanfriedman1

 

Kit Vinson

FranMan Inc.

kit.vinson@franman.net

214-736-3939 x 101

 

Books Mentioned in the Episode:

  • Traction by Gino Wickman
  • The E-Myth by Michael Gerber
  • Seven Habits of Highly Effective People by Stephen Covey
  • Spin Selling by Neil Rackham
  • The Physics of the Impossible by Michio Kaku

 

May 28, 2019

My Podner in this episode is Art Coley and he’s going to talk with us today about how to develop a franchisee recruitment system that will attract higher quality franchisees to your system.

Time Stamps

Art Coley Intro

00:00:27

Segment 1

00:03:00

Get to know Art Coley

Bonus Segment

00:19:40

Near business failure – Art’s “E-Myth” moment

Segment 2

00:32:00

Topic Segment – Franchisee Recruitment System

Segment 3

01:25:29

Quickdraw Questions

 

Topics Discussed in this Episode

What is the founder’s trap that keeps many small business owners from growing to their Business?

Becoming royalty self-sufficient needs to be a franchisor’s #1 goal at first.

Most franchisors never understand that franchise recruitment is a separate business that requires a separate skill set.

The value of a franchised business in not built on selling franchises, the value is based on unit economics.

Traditional franchise recruitment systems - what’s good about them - what’s bad about them?

What do you mean when you say “Disillusioned” franchise system?

Franchising Statistics:

  • 9% of all franchisors have ever made it past 200 locations
  • 20% have ever grown past 100+ units

The secret to franchise recruitment is having a system and implementing the system properly

What is Recruitment Operating System all about?

Discovery Culture versus Sales Culture - what does that mean?

Why is “Executive Buy-In” so important to a successful franchise recruitment system?

Building a recruitment operating system isn’t for a bunch of wimps!

What are the 4 Pillars of the ROS System?

  • Lead Generation
  • Pre-Discovery
  • 8 Step Discovery Process
  • On-Boarding

Any franchisor who is not doing some sort of Discovery Day is making a massive mistake.

Managing the handoff to Onboarding – Why is that important?

When there is no communication between Onboarding and Recruitment teams, the quality of the new franchisees will never improve.

What are the three phases of the discovery process? What do they mean?

  • Vision
  • Grind
  • Angst

What are some of the key metrics that every franchisor should be following regardless of what recruitment system they use?

What is situational leadership and what role does that play in the recruitment process?

  • Unconscious Incompetence
  • Conscious Incompetence
  • Unconscious Competence
  • Conscious Competence

What role does a good CRM play in the recruitment process?

Communication is key in every organization, but you say that communicating with existing franchisees is really important. Why?

 

Art Coley
www.cgifranchise.com
acoley@cgifranchise.com 
281-658-9409

 

Kit Vinson
www.franman.net
kit.vinson@franman.net
214-736-3939 x 101

 

Books Mentioned in the Episode:

Scaling Up
Verne Harnish

 

Lessons Learned – Wisdom Gained
Harish Babla

 

Empire of the Summer Moon
S.C. Gwynne

 

E-Myth
Michael Gerber
May 8, 2019

My ponder on today’s show is Ms. Angela Angela Coté of Cultivate Advisors, and she is going to visit with us about Franchisee Compliance, or as she likes to call it, franchisee success.

Angela cut her teeth really early on in the world of franchising as the daughter of Max Voisin, founder of M&M Food Market. If you are listening from the U.S., you may not have heard of M&M but if you are from Canada, with about 500 locations in its prime, M&M Food Market is a BIG deal. She worked on both sides as both the franchisor and as a franchisee running three locations of her own.

Angela has been interviewed on shows such as Social Geek Radio, Franchising Rising Podcast, Tutor Doctor Podcast, and Own Up, Grow Up Podcast. She has been written about in multiple publications such as Global Franchise Magazine, Franchise Blast, Canadian Franchise Association, Douglas Magazine, The Franchise Voice Magazine, Franchise Canada, and a few more

 

Time Stamps

Angela Coté Intro

00:00:40

Segment 1

00:02:48

Get to know Angela Angela Coté

Segment 2

00:24:34

Topic Segment – Franchisee Compliance – “Success”

Segment 3

00:58:56

Quickdraw Questions

 

Topics Discussed in this Episode:

All franchisees should be as concerned about system-wide compliance as much as the franchisor because compliance to the system standards directly protects their investment.

Common reasons for lack of franchisee compliance are:

  • Lack of buy-in
  • Misunderstanding of why system standards exist
  • Franchisor creates an “us vs them” mentality
  • Poorly trained field consultants sometimes lack “soft skills” that are needed to manage the delicate relationship between franchisor and franchisee

 

How can a franchisor inspire franchisees to WANT to follow the system?

  • Start the “system standards are good for your investment” education early in the relationship – pre-contract.
  • Create and nurture a healthy “franchisees monitoring franchisees” system
  • Regularly connect to the “Why” a franchisee became a franchisee in the first place. Remind them of their goals and how the system standards will help them achieve their personal goals
  • Create easy and open opportunities for franchisees to collaborate with management
  • Create an open and easy mechanism for franchisees to give feedback to the franchisor
  • Utilize a mystery shopper service when it is needed

 

Angela Angela Coté

angela@cultivateadvisors.com

Cultivate Advisors

 

Kit Vinson

FranMan Inc

www.franman.net

kit.vinson@franman.net

214-736-3939 x101

Mar 6, 2019

My Podner in this episode is Justin Howe and he’s the president of a brand-new franchise concept called H-Tea-O. Justin has agreed to let us do a series of episodes as we follow him through the process of franchising his business. This will be the first episode of that series. This interview is one of the best ones I have done so far, and I am really excited about it.

 

Time Stamps

Justin Howe Intro

00:00:40

Segment 1

00:02:20

Get to know Justin Howe

Segment 2

00:26:05

Topic Segment – Franchising H-Tea-O Part 1

Segment 3

01:10:30

Quickdraw Questions

 

Topics Discussed in this Episode:

  • Texas Tea – the birth of the concept
  • Franchising H-Tea-O
  • Proving the concept
  • Supply chain challenges
  • Trademark challenges
  • Creating a solid infrastructure
  • Putting together the perfect team
  • Becoming a franchisee in order to be the best franchisor
  • No Item 19 challenge
  • Real estate is one of the most important elements
  • Establishing a solid franchisee training program

 

Justin Howe

H-Tea-O

justin@jhowecapital.com

 

Kit Vinson

FranMan Inc

www.franman.net

kit.vinson@franman.net

214-736-3939 x101

 

Feb 19, 2019

Drue Townsend Show Notes

My Podner in this episode is Ms. Drue Townsend and she’s going to share with us A LOT of what she has learned from managing the MARKETING FUND at FASTSIGNS International.  The words “Marketing Fund” can create anxiety in many people and Ms. Drue will demystify the concept and teach you exactly what you need to know to make the most of your company’s marketing fund. Rob Vinson from Vinson Franchise Law joins the conversation to help us with some of the legal issues that are related to the Franchise Marketing Fund.

 

Time Stamps

Drue Townsend Intro

00:00:40

Segment 1

00:02:23

Get to know Drue Townsend

Segment 2

00:13:45

Topic Segment – Franchise Marketing Fund

Segment 3

00:59:10

Quickdraw Questions

 

TOPICS DISCUSSED IN THIS EPISODE:

What Is A Marketing Ad Fund?

It is a collection of money paid by franchisees and managed by the franchisor, to enact defined marketing and advertising initiatives and bring value to the brand and franchisees.  It is in addition to any Royalties paid by the franchisee to the franchisor. It is usually a percentage of gross sales (but could be a flat fee)

Marketing Fund By Laws:

There should be written By-Laws that outline how the fund can be used (what types of initiatives; pro-rata vs. major markets vs. national only), who makes decisions about it (as an example, highest ranking Marketing Person and CEO with Franchisee Ad Council input), who can sign contracts (often just the CEO and Marketing Person), where the money is kept (recommendation is that it is held in a different financial account with its own Profit and Loss Statement and Balance Sheet), who is providing the fiscal oversight and ensuring proper collection and use of the fund.

Sample Acceptable Uses of the fund

  • Build and maintain the brand and location’s central website
  • Create television ads
  • Run paid social media ads
  • Join a vertical industry association and exhibit at their trade show
  • Agency fees or marketing team member salaries/benefits
  • Marketing research projects

Unacceptable Uses

  • Franchise Development advertising
  • Legal fees for the new corporate office lease negotiation
  • Create training and operations manuals about safety
  • Pay for a convention cocktail party
  • Collect just to rebate back to franchisees who do X and Y

How to Justify an Ad Fund to A Franchisee

  • Use the dollars to protect and promotes the brand, which protects your investment today and should add value to your asset when you go to sell one day
  • It builds brand awareness and brand consistency when marketing and advertising has the same messaging strategy and look/feel; easier to control and do when centralized
  • Doing things “on your behalf”; things that you – or other franchisees - can’t, won’t or shouldn’t do on your own.
  • Looking for economies of scale (having a customer satisfaction survey platform that all franchisees can be part of through the Ad Fund vs. having each one find their own; having one website managed and hosted by corporate; buying national cable television vs. having 30 franchisees by spot cable), things that require compliance (email marketing platform); , would reach beyond one’s area and impact other franchisees positively or negatively (joining a national association and advertising on their homepage), etc.

The Importance of Franchisee Involvement in the Marketing Fund

  • Create a Marketing Ad Council (ours is called the National Advertising Council) and it has 6 elected Board Members representing the 650 locations in the US and Canada. Scale the number with growth; we started out with 3 and don’t have plans to increase beyond 6 anytime soon. Too many prohibits decision making.
  • The National Advertising Council – or whoever works with the corporate team on Ad Fund projects – can be different than the Franchise Advisory Council, or one group of franchisees can provide guidance to the corporate team on both types of topics.
  • You can have officers for the Ad Council, but because franchisees have their own businesses to run, we don’t have franchisees fill these roles and therefore then have to do the meeting minutes, organize administrative board events, etc.

What Should You Start Spending Money on Today From an Ad Fund

  • Digital marketing
  • A corporately managed website with micro-sites/location pages on it
  • Google My Business page management
  • Directory Listings management (so all information about a location gets propagated accurately and updated across the web)
  • Brand social media sites (and organic content/ads on them)
  • Creation of some brand materials (depending on your product/industry and how you go to market; could be an automated platform or just have the assets/materials available
  • Videos
  • Point of Purchase materials
  • Print materials (brochures)
  • Digital Asset Management software

Common Pitfalls with a Marketing Funds

  • Don’t cap your Ad Fund fees; it will make future high-volume franchisees happy but it will keep your Ad Fund from growing (and you will have more locations to help)
  • Try not to require yourself to spend pro-rata. It is very hard to do well and sometimes money needs to be spent in an area of the country or on something that doesn’t benefit all equally.  Ex:  a sponsorship that covers only 15 cities, but has regional television and a big online effort; a state listing on a website where 50% of your locations do business.
  • Don’t collect money only to give it back through subsidies or rebates or matching. A lot of admin work, disagreements about what does and doesn’t qualify, etc.

Franchise Marketing Fund Tips

  • Start an Ad Fund from the beginning (as you establish your brand/franchise). If you don’t have one, start one now with future agreements. Consult with your accountant and attorney to determine if it should be set up as a separate entity (and what kind), what the tax implications will be, if it is subject to any accounting regulations (ASC 606 deals with revenue recognition).
  • If corporate can match any funds, it is a great way to soften the process of starting an Ad Fund
  • Collect Ad Fund fees the same way that you collect Royalties (ex: EFT on the 5th of the month). If you don’t pay your Ad Fund fees, you are subject to the same compliance issues and penalties as you have if you don’t your Royalties on time/ever
  • Encourage franchisees to spend money locally on things that make sense in their market – local pay-per-click, display ads on local websites, radio, joining associations, sponsoring events, etc. Don’t fund discounts in national promotions either (ex: $1 off sandwich promotion should be absorbed by the franchisee; not paid by the Ad Fund).
  • Determine if an agency, freelance help or an in-house marketing team is best for your business. There are pros and cons for each, and in the long term, the best result is probably a mix of all three, but emerging businesses with small or no Ad Funds have to really stretch dollars.
  • Have governance and be transparent with your franchisees. Review financials each month and have annual statements audited. Share categories of spending at big meetings.  Have a franchisee-elected Board of Directors that works with the corporate team to be a sounding board, communicator, tester, etc.
  • Have protections. Require a small percentage of the funds to not be budgeted – to be held out of the budgeting process – in case sales decline or the Ad Fund is owed money by the franchisees. It’s easier not to budget for something than to have to cancel programs later.  As your system grows and your Ad Fund grows, have provisions in your guidance documents that allow you to reduce that percentage.  (We don’t, and our By Laws require a 5% hold back or carryover, which is now hundreds of thousands of dollars a year).
  • Make your agreements broadly specific. Sounds like an oxymoron but give the brand room to expand what the Ad Fund can cover, but don’t make it too open-ended. 

How to Set Up a Franchise Marketing Fund

  • Contact a franchise attorney and ask them for best practices in your industry, business and the way you market. See if they have sample drafts or if they can help you create an Ad Fund plan, By-Laws, content to include in your Franchise Disclosure Document and content to include in your Franchise Agreement.
  • Determine and set up your collection amount, audit and governance processes, etc.
  • Create a long range marketing plan – 3 to 5 years – based on estimated collected funds, and what those funds could buy. Prioritize the spending and share the big picture plan with franchisees and future franchise candidates so they know there is a plan, but clarify that this is based on assumed growth and that the plan is not contractually guaranteed.

 

Drue Townsend

FASTSIGNS International

drue.townsend@fastsigns.com

214-346-5797

 

Rob Vinson

Vinson Franchise Law

www.franchiselaw.net

rob@franchiselaw.net

775-832-5577

 

Kit Vinson

FranMan Inc

www.franman.net

kit.vinson@franman.net

214-736-3939 x101

 

Dec 1, 2018

My Podner in this episode is Robert Bilotti and he’s going to talk to us about franchisee onboarding and training.  We will dive deep into “training theory” and then wrap it all up with a step-by-step discussion on how a new franchisor needs to set up a training program for franchisees.

 

Time Stamps

Rob Bilotti Intro

00:00:40

Segment 1

00:02:31

Get to know Rob Bilotti

Segment 2

00:18:55

Topic Segment – Franchisee Training and Onboarding

Segment 3

01:14:03

Quickdraw Questions

 

Topics discussed in this episode:

The difference between a franchise system and a collection of mom and pops is “Training”

What is the difference between onboarding and training?

When do I need to hire a full-time trainer?

What to train versus how to train

Can a start-up franchisor use the operations manual as the training program at first?

Your first franchisees will be some of the most important validators of the concept, and if you skimp on training up front, it will come back to bite you.

Your most important franchisee is the first one after the former employee, friends, and family franchisees. That is the one that will really be the proof of concept. Be sure that you have a solid training program BEFORE that franchisee starts.

Invest in a learning management system (LMS) early

What is an LMS?

How does training change when you are in growth mode?

How to select an LMS right for your system

Moodle is a free, open source LMS

Look for a user-friendly system (from the administrative perspective) and a nimble system. Learn this by doing lots of demos and talking to other companies that use an LMS. Google is a great resource.

LMS support is probably one of the most important features. Usually, the more you pay, the more support you get.

What are the different modes of training (modality)?

  • In person Instructor Led
  • Virtual Instructor Led
  • Virtual Learning
  • Videos
  • Print
  • Audio
  • Knowledge Sharing (wiki learning)

If you set up a mentoring program to help train new franchisees, be sure to invest in a training program for the mentors so they can be trained in how to train.

There is a difference between lecturing and facilitation when it comes to training.

There is not one modality that is best for everybody. There is not a “one size fits all” when it comes to training.

Survey your franchisees, and do it often, how you are doing with training. Don’t just capture “smile sheets”, rather actionable information. This should happen every 3 to 6 months.

You CAN measure return on investment in training, especially in a franchise system.

Use gust satisfaction surveys to draw training topics.

What are the steps that a start-up franchisor needs to follow to develop a training program?

Step1:

Document – document – document. What makes your business a success.

Step 2:

What can you expand on from that? Create actionable content from that documentation? This is the “what”.

Step 3:

Determine how you will take that information and disseminate it to the people who need it? This would be the franchisee and their employees. This is the “how”.

Step 4:

Determine how you will support your franchisees in their training efforts to their employees.

Step 5:

Establish a mechanism for measuring the results of the training.

 

Allow plenty of time to develop your training program. If you start developing your training program after you have signed your first franchisee then you have waited far too long.

 

Rob Bilotti

www.novitatraining.com

info@novitatraining.com 

 

Kit Vinson

FranMan Inc

www.franman.net

kit.vinson@franman.net 

214-736-3939 x1

Oct 16, 2018

My Podner in this episode is Ms. Lori Kiser and she’s going to talk to us about how to best utilize a franchise broker consultant company.  Everybody wants to know how to find the path to granting more franchises, and in this episode we definitely talk a lot about that.

Time Stamp

Lori Kiser Intro                                  00:00:40

Segment 1                                          00:04:30

Get to know Lori Kiser

Segment 2                                           00:24:19

Topic Segment – How to work with Franchise Broker Consultants

Segment 3                                           00:57:15

Quickdraw Questions

 

Topics discussed in this episode:

Franchise Broker Consultants are not business consultants in the traditional sense of the word. They specialize in producing qualified, vetted leads for franchisors.

A franchise broker consultant is not part of the sales team of the franchisor. They will not take the prospect through the franchisor’s sales process, though they will stay involved as the candidate passes through the process.

In order to be successful with a franchise broker consultant, a franchisor must have the following already in place and running within their concept:

  • An in-house franchise development staff (sales team)
  • A well-defined sales process
  • The ability to go beyond the generic 6-step sales process, and know how to learn and understand the prospects dreams, desires, and business goals
  • Unit economics that are positive and consistent
  • A leadership team with a solid understanding of franchising

 

A typical start-up franchisor is usually not a good candidate for a franchise broker consultant group because the broker consultant is paid based on successfully bringing a prospect that eventually signs a contract with the franchisor. Because start-up franchisors typically don’t have the infrastructure in place to handle the lead volume, broker consultant groups are less likely to accept them as a client.

 

How to take your startup system and get it ready to be accepted by a broker consultant group:

  1. Create a specific landing site for franchisees. This will demonstrate to the broker consultant group that you are knowledgeable and organized, and that you have a place to start a new prospect so that they don’t fall between the cracks once the prospect is delivered to the franchisor.
  2. Create a sales process that works for your team and track the performance of the sales process and the development team. If you can’t prove that you can successfully close a prospective franchisee then a broker consultant group is not very likely to burn good qualified and vetted leads with your system.
  3. Be able to show GREAT unit economics – meaning, be able to show that the franchisees are making money.
  4. Demonstrate that all of the existing franchisees will validate well. Know that all of the franchisees are happy and that they will sell that happy story to a prospect who makes the validation calls.
  5. Demonstrate that the franchise system has all (most) of the amateur mistakes out of the way so that the franchise broker group’s brand won’t be tarnished by referring leads to the franchisor client.
  6. Have an FDD that is registered in al of the required states so that the franchise broker consultant will not be limited by geography. Similarly, be ready to offer and close franchise deals nationwide, including developing a nationwide support group to service the new franchisees.
  7. Demonstrate that your system can handle the stresses of sales volume, such as being able to build out a location for multiple new franchisees while simultaneously walking a second set of prospective franchisees through the sales process, AND manage all existing franchisees at the same time. This requires a team that is in place and seasoned.

A typical franchisor broker consultant will sift through over 100 candidates before they find one that is worthy of passing on to the franchisor clients.

The Franchise Rule does apply to a franchise broker consultant, although the broker consultant shouldn’t be doing any selling of the specific system.

 

Once a franchisor is able to join forces with a franchise broker consultant group, what is the best way to manage that relationship?

  • Think of the broker consultant as a talent scout, scouting players for your team
  • The franchise broker consultant will act more like a brand ambassador to the candidate.
  • Since the franchise broker consultant already an established relationship with the candidate, the franchisor should trust and utilize the candidate’s information from the broker consultant when the franchisor is brought into the relationship.
  • Be open to adapting to the processes, nomenclature, personality, and style of the franchise broker consultant group, as well as to the type of candidate that they typically generate
  • There are different types of consultant groups as well as different types of consultants within each of the groups. You will likely only work with a handful of consultants within a consultant group. That is normal.
  • The best franchise broker consultants are not as enticed by your commission dollars as they are developing their referral network. These consultants rely heavily on referrals from happy candidates who eventually convert to franchisees. While it is important to pay consultants a fee that is competitive, understand that they need to like you and believe that your system is successful before they burn good leads on your system.

 

 

Lori Kiser

www.lorikiser.com

 

Kit Vinson

FranMan Inc

www.franman.net

kit.vinson@franman.net

214-736-3939 x1

Sep 12, 2018

My Podner on this episode is Tom Spadea. Tom and I will discuss the benefits of properly managing the FDD and the Franchise Agreement, from the beginning, making sure to keep the end in mind. The "end" he speaks of is a possible acquisition by an investment company. What will they expect to see when they look at your franchisees contracts in your files?

 

Time Stamp

Tom Spadea Intro                              00:00:40

Segment 1                                           00:03:22

Get to know Tom Spadea

Segment 2                                           00:24:40

Topic Segment – Managing Your Franchise Agreements with the End in Mind

Bonus Segment                                 00:57:15

Managing Franchisee Growth

Segment 3                                           01:02:50

Quickdraw Questions

 

Topics discussed in this episode:

Where do most franchisors get it wrong? Many franchisors and franchise attorneys focus mostly on the substantive issues of the and forget about procedural issues related to the process - managing latent defects

  • Item 23 receipt page not being properly executed and filed
  • Guarantees not properly executed
  • Individual versus LLC signing FA/lease

You can have the best FDD and franchise agreement in the world, but if you don’t manage the process properly, it can cost you a lot of money in the short term with an unenforceable contract, and in the long run, upon exit.

It’s important to understand who the real audience of the Franchise Agreement is. It is the franchisee, but it is also a prospective private equity investment firm who may want to purchase your system in the future.

 

What is the process?

Step 1: Make sure that the franchise agreement is up-to-date

Step 2: Geographical Analysis - Ensure that the franchisor is registered in every registration state where the concept will be offered. That includes where the prospect is currently located as well as where they want to open a location. Both states must be registered if required by that state.  Deliver the correct FDD for the state.

Step 3: Ensure that 14 days pass between delivery and signing of the Franchise Agreement, not including delivery day and signing day

Step 4: Spend the time to ensure that names are all spelled correctly, along with middle intials. Check the address, LLC name etc

Step 5: Prepare a custom franchise agreement based on the specific agreements made between franchisor and franchisee – do not use the sample franchise agreement that is included in the FDD. Deliver the document to all required recipients and ensure proper signatures

Step 6: Ensure that the lease includes all of the required language as per the franchise agreement

 

There are many different software packages that can help you with each aspect of the transaction, but Spadea Law has the platform that hits every element. Compliance Map helps franchisors ensure that they are only offering the franchise in the proper states. The link to the Compliance Map software demonstration is below:

https://vimeo.com/260105446

If you haven’t managed the steps of the process well, then it is not too late. Review your documents and get the documents in line now, before you are approached by an investor.

 

Books:

Exponential Organizations

By by Salim Ismail and Michael S. Malone

 

Seven Habits of Highly Effective People

By Stephen Covey

 

The E-Myth

By Michael Gerber

 

Khan

Conn Iggulden

 

Podcasts:

Dan Carlin’s Hardcore History

 

Tom Spadea

Spadea Lignana

www.spadealaw.com

610-662-0192 (cell)

 

Kit Vinson

FranMan Inc.

www.franman.net 

214-257-7685 x1

 

Kit Vinson

 

Aug 22, 2018

My Podner on today’s show is Mike Pollock and he’s going to give us tips on how to build a franchise development system for your franchise. But it was more than just that because we also talked about how to take a warm lead through the process to close the deal.

 

Time Stamp

Mike Pollock Intro                              00:00:40

Segment 1                                           00:03:15

Get to know Get to know Mike

Segment 2                                           00:22:10

Topic Segment – Franchise Development 101 (Sales)

Segment 3                                           01:18:40

Quickdraw Questions

 

Topics discussed in this episode:

How to set up an efficient process for franchise development

·         Brand Overview Presentation (45 minutes to 1 hour long)

·         Develop a solid franchise prospect application that focuses on:

o   Background

o   Financial situation

·         Have the Unit Economics Call

o   FDD introduction call (15 minutes)

o   Unit Economics (45 minutes)

o   Receive signed Item 23 (Proof of receipt of FDD)

o   Password

o   Validation instructions

·         Validation Debriefing Call

·         Discovery Day

o   Brand Overview Review

o   Meet the Team

o   Lunch and dinner are the best opportunity to visit with prospects

o   Field Visits

·         Voting Process

It is best to have multiple prospects attend a discovery day (between 4 and 5)

If you are going to hire a company such as FranLift to manage the franchise development process, then it is best to get them involved earlier rather than later.

Have a marketing budget set aside in advance. It typically costs between 8K and 15K to bring 1 franchisee in the door.

 

Mike Pollock

FranLift Franchise Experts

mikep@franlift.com

214-551-0261

 

Kit Vinson

FranMan Inc. (Franchise Manuals)

Kit.vinson@franman.net

214-736-3939 x1

 

Oct 26, 2017

In this episode, Doug Groves and I talk about insurance, specifically, what types of business insurance are out there, the importance of finding a rep that knows your industry, and what role does insurance play in the relationship between franchisor and franchisee.

Time Stamp

Doug Groves Intro                             00:00:40

Segment 1                                           00:02:41

Get to know Get to know Doug

Segment 2                                           00:16:17

Topic Segment – Insurance 101 for Franchisors

Segment 3                                           00:38:19

Quickdraw Questions

 

Topics discussed in this episode:

Basic coverage that all business owners should have:

  • Property (property, fixtures, furnishings, and equipment)
  • General liability (slips and falls)
  • Workers’ Comp (employees injuries and lost wages)
  • Auto (company owned vehicles)
  • Employment Practices (HR related risks)
  • Umbrella (covers over and above the above mentioned)

Every insurance policy has a purpose.

Umbrella policies are a cheap way to purchase vast amounts of insurance for a much lower price

When you are deciding on limits for each type of insurance:

  • Property: The property limits should be equal to the replacement cost of the property it is covering
  • All other: The rule of thumb is that you make the value of the insurance policy to be more attractive to a would-be plaintiff than your personal assets.

Best Practice: Select an insurance broker who has experience in providing insurance for companies in your same industry. They will know which questions to ask in order to recommend the right options for you.

The question is answered, why does this line appear in all franchise agreements and franchise operating manuals: ““All liability insurance policies must name us (the franchisor) and any subsidiaries that we designate as additional insured.”

We answer the question, why do franchisors require franchisees to carry certain levels of insurance.

What is the EZCert program and how does it help franchisors manage all of the insurance certificates from all of their franchisees – for FREE.

 

Doug Groves

Program Insurance Group

doug@pigbcs.com

512-848-7210

 

Kit Vinson

FranMan Inc. (Franchise Manuals)

Kit.vinson@franman.net

214-736-3939 x1

 

Notable mentions in this episode:

Book: Killing the Sacred Cow

By Garrett B. Gunderson

Our culture is riddled with destructive myths about money and prosperity that are severely limiting the power, creativity, and financial potential of individuals. In Killing Sacred Cows, Garrett B. Gunderson boldly exposes ingrained fallacies and misguided traditions in the world of personal finance. He presents a revolutionary perspective that can create unprecedented opportunity and wealth for thoughtful, mission-driven individuals.

Aug 4, 2017

In this episode, Brian Schnell and I talk about Three Party Franchising – that’s using master franchisees and area developers to grow your franchise system. Many people misuse these two terms, or use them interchangeably – Brian’s going to clear it all up for us.

Time Stamp

Brian Schnell Intro    00:00:40

Segment 1                 00:02:28

Get to know Brian Schnell

Segment 2                 00:23:53

Topic Segment - Is Three Party Franchising Right for Your System?

Segment 3                 01:00:51

Quickdraw Questions

 

Topics discussed in this episode:

What is the difference between a Master Franchisee and an Area Developer

What is the Three-Party Franchise model?

Three Party Franchise model works very well internationally

Avoid the temptation of "0-100 franchisees quick" through three party franchising without a full understanding of what is involved. Don't try to sprint before you know how to walk.

The conversation about Three Party Franchising shouldn't take place without a full understanding of risks and benefits to all parties.

What is the necessary infrastructure before diving into a three-party franchising model? A full understanding of:

  • Site selection
  • Field support
  • Unit economics

The infrastructure must exist somewhere; either on the franchisor side or the area developer side.

The functions of managing a franchise system are usually carried out by a team of corporate employees. It is not realistic to expect an area developer to fulfill the same functions plus operate a unit without the proper infrastructure.

Finding an area developer that is good at EVERYTHING is not likely. Try focusing on an area developer's core competencies and supporting the area developer in the areas where he/she is weaker.

Don't offload functions of managing a system to an area developer that can be more efficiently executed by corporate office.

After you sign a master franchisee or an area developer, the system DOES NOT go into autopilot. The franchisor must stay involved and active.

Trying to fix problems in the three-party franchise relationship are much easier to correct early on, so stay connected and involved.

Educate yourself before trying to utilize a three-party model by talking to attorneys and consultants who have experience.

Manage expectations up front through a well written agreement and ops manual

 

 

Brian Schnell

Faegre Baker Daniels

brian.schnell@FaegreBD.com

612-766-7699

 

Kit Vinson

FranMan Inc. (Franchise Manuals)

Kit.vinson@franman.net

214-736-3939 x1

 

Notable mentions in this episode:

 

Faegre BD Franchise Summit

https://www.faegrebd.com/faegrebd-franchise-summit

 

Paul Rocchio - IFA

Procchio@Franchise.org

202-662-0790

Contact Paul for information about joining the International Franchise Association

 

Book: Dare to Serve

By Cheryl Bachelder

Servant leadership is sometimes derided as soft or ineffective, but this book shows that it's actually challenging and tough minded - a daring path. Bachelder takes you firsthand through the transformation of Popeyes and shows how a leader at any level can become a Dare-to-Serve leader.

Jun 9, 2017

In this episode, Nancy Friedman is going to share with us her experiences as a franchisor and what she believes were the reasons for its ultimate failure.  This is going to be a really good episode because we always hear about people telling us how they succeeded, but rarely do we get to hear from the other side of that coin. The episode is filled with great “take-aways” and is a must-listen for any emerging franchisor.

Time Stamp

Segment 1                                           02:54

Get to know Nancy Friedman

BONUS:                                              27:21

Free gift for listeners

Segment 2                                           28:33

Topic Segment – “Franchising Failure” A Case Study

Segment 3                                           50:00

Quickdraw Questions

 

In this episode, Nancy discusses the five steps to ultimately fail in franchising.

Step 1:

Proper vetting of prospective franchisees is key. Do your due diligence. Trust but verify

 

Sept 2:

Make sure you have the proper infrastructure in place before you begin the journey down the road of franchising. You can’t do everything all by yourself.

 

Step 3:

As a training document, a reference document, a master document for the system standards, as a sales tool, have your franchise operations manual in place. As a successful Startup ‘we’ make it look easy. It’s not.

 

Steps 4 and 5:

Don’t be too hot for the deal. Speed is not success. Have a growth plan in place. When you grant a new franchise, ensure that it fits into your well thought-out plan. A shotgun approach may have worked for some companies, but it doesn’t mean that it’s the easiest, most efficient, or best method of expansion. Franchising isn’t for everyone.

 

Nancy Friedman

The Telephone Doctor

www.nancyfriedman.com

nancy@telephonedoctor.com

314-291-1012

 

Kit Vinson

FranMan Inc. (Franchise Manuals)

www.franman.net

Kit.vinson@franman.net

214-736-3939 x1

 

Apr 27, 2017

In this episode, Pete Baldine talks to us about how to build a solid, emerging franchise model. It is a very broad topic, but the episode is filled with great “take-aways” and is a must-listen for any emerging franchisor.

Time Stamp

Segment 1                                           03:01

Get to know Pete Baldine            

Segment 2                                           33:58

Topic Segment – Building a solid emerging franchise model                         

Segment 3                                           01:12:32

Quick-Draw Questions                                    

 

Topics discussed in this episode:

  • Establish a solid, proven model
    • Running a business and being a franchisor are completely different
    • Prove the model by establishing good unit economics so you can develop a solid story of success
  • Be capitalized well enough to build proper infrastructure and support new franchisees
    • New franchisee training
    • FDD / FA
    • Ops manual
    • Ongoing training programs
  • Stage One franchise system growth – friends and family
    • Support friends and family franchisees and make them successful
    • Search your existing franchisee base for success stories and duplicate them
  • Stage Two franchise system growth – professional candidates
    • Successful franchise sales requires a solid process
  • What is a new franchisee worth – what are the costs
  • The importance of establishing trust
  • How to evaluate prospective franchisees candidates
  • Don’t bury your franchisees with validation calls
    • How to manage the franchise validation process
    • Validation conference calls
  • Listen to franchisees and build support program around that
    • Supporting single-unit operators versus multi-unit operators and area developers
  • Don’t grow faster than you can support your system
  • Tracking Validation
    • Communicating / Coaching franchisees before the validation call
    • “Download” meeting with prospect after the validation call
    • Evaluate how well candidate assesses information from validation call

 

Pete Baldine

Moran Family of Brands

pbaldine@moranbrands.com

708-297-2240

 

Kit Vinson

FranMan Inc. (Franchise Manuals)

Kit.vinson@franman.net

214-736-3939 x1

Mar 28, 2017

In this episode I speak with Paul Rocchio of the International Franchise Association, www.ifa.org , as he discusses how the IFA is poised to be one of the most useful tools to all franchisors as they work to grow their franchise systems.

 

Segment 1                       Time Stamp

Get to know Paul Rocchio   02:25

Segment 2

Topic Segment – IFA         23:05

Segment 3

Quick Draw                       57:00

 

Topics discussed in this episode:

  • “I wish I had joined IFA MUCH sooner than I did”
  • FranShip Mentor Program
  • FranSocial – Social media platform that only includes IFA members
  • Franchise Business Network (FBN)
  • Certified Franchise Executive (CFE)
  • @ourfranhcise www.atourfranchise.org
  • Francise Action Network – grassroots network
  • FranPAC – Political Action Committee
  • The staff is the most underutilized resource at the IFA
  • How to make the most of the IFA convention

 

Paul Rocchio

International Franchise Association

procchio@franchise.org

202-662-0790

 

Kit Vinson

FranMan Inc. (Franchise Manuals)

Kit.vinson@franman.net

214-736-3939 x1

Feb 22, 2017

Mike gave away most of the company secrets during this interview! I was blown away and you will be too.

In this episode, Mike Drumm of Drumm Law in Denver, Colorado tells us why your company’s FDD might suck. He points out issues in an FDD’s content and style that could make or break an FDD’s ability to help you sell your concept to prospective franchisees.

 

Time Stamps

00:00:42               Podner Introduction

00:02:45               Segment 1: Get to know Mike Drumm

00:26:30               Segment 2: Why Your FDD Sucks

00:55:10               Segment 3: Quick Draw

 

Mike Drumm Show Notes

Why your FDD might suck:

  • It’s not written in plain English
  • You have “over disclosed”
  • You let your attorney or accountant write the first sentence that describes the concept
  • You didn’t brand the document
  • The FDD is not visually attractive and easy to read (pictures, charts, etc)
  • Item 19 doesn’t tell your story well
  • It doesn’t use a data sheet
  • Too many exhibits
  • Item 7 doesn’t include an average
  • It includes outdated technology references

 

BONUS CONTENT

During my visit with Mike, we go off topic and discuss some really important topics that every franchisor needs to know.

  • How to make the delivery of an FDD a memorable experience.
  • What is an FDD
  • Why is an FDD
  • What is the FTC Franchise Rule
  • Franchise Compliance Guide
  • Why do you need a franchise attorney

 

Books mentioned in the episode:

A Confederacy of Dunces

The E-Myth Revisited

 

Michael Drumm

Drumm Law

www.drummlaw.com

mike@drummlaw.com

 

Kit Vinson

FranMan Inc.

www.franman.net

kit.vinson@franman.net

217-736-3939 x 1

Dec 14, 2016

My ponder today is Cordell Riley of Tortal Training and our topic today is Franchisee Training - the positive effects that a well-established training program can have on a franchise system. In this episode we talk about how any franchisor can design and create a franchisee training program that will maximize results to both the franchisees and the entire franchise system.

 

Time Stamps

00:00:52               Podner Introduction

00:02:38               Segment 1: Get to know Cordell Riley

00:20:34               Segment 2: Topic Segment

00:54:04               Segment 3: Quick Draw

 

Cordell Riley Show Notes

People learn at different rates based on the modality of the training being delivered.

VAK: Visual – Auditory – Kinesthetic

What does the start-up franchisor need to think about before developing a training system for the franchisees?

  • Start with a solid foundation (ops manual)
  • Make sure that training is part of your franchise culture – written into the mission and vision statement
  • Measure the amount of training that is being delivered
  • Ensure that training is aligned with business goals
  • Strive for a blended solution – digital, audio visual, classroom format

A solid training program will lead to franchisees feeling supported which leads to higher validation scores.

Great training versus good training

  • What do you want people to do differently after completing training?

Make training fun

 

Initial Franchisee Training

Dos and Don’ts

  • Don’t try to cover everything in initial training. Only cover the topics that they need to get up and running. Too much at once will lead to lower retention rates.
  • Do include those topics that have a high impact and short time to master.
  • Do use real world training (hands on)
  • Do utilize “Course of Action” – assignment for franchisee trainees where they have to present how they will use the training that they received. (FREE template available by e-mailing Cordell Riley
  • Do use internal Subject Matter Experts – have multiple trainers
  • Conduct the initial training as close to opening as possible
  • Avoid an “All lecture” training program
  • Engage the trainees
  • Vendors can be useful trainers on certain topics – don’t let it become an infomercial.
  • Use quizzes throughout to ensure that franchisees are following what is being taught.

 

Ongoing Training

  • E-learning – online
  • Field support staff
  • Conferences and conventions
  • Include those topics that have a lower impact and longer time to master.
  • Training is not something that happens during the first few weeks of the franchise relationship. Training is a process that should last for the life of the relationship.

 

E-Learning

  • E-learning is a delivery method that you will use to keep a constant flow of training to the franchisees
  • Use prior to initial training to bring new franchisees up to speed before initial training
  • Use as part of your ongoing training program to promote new products or services, etc.
  • Short, logical chunks of training – don’t pump all of your training into one session. 10 minutes or less
  • Make the training role based and relevant.

 

E-learning Dos and Don’ts

  • Do engage primary adult learning senses – Visual – Audio – kinesthetic

 

Repetition is key to high retention

 

Websites mentioned in the episode:

 

Cordell Riley

Tortal Training

www.tortal.net

cordell@tortal.net

 

Kit Vinson

FranMan Inc.

www.franman.net

kit.vinson@franman.net

217-736-3939 x 1

Oct 9, 2016

My ponder today is Rebecca Monet and our topic today is psychometric assessments – how profiling your franchisee candidates can help you Determine Compatibility and Predict Performance. That’s a mouthful for sure. But basically it means profiling your franchisee candidates in order to determine if they 1) fit into your franchise system’s corporate culture, and 2) if they will be more likely to be a top performer in your system.

 

Time Stamps

00:02:33               Segment 1 - Get to know Rebecca

00:21:06               Segment 2 – Psychographic Analysis for Franchisors

00:50:30               Segment 3 – Quick Draw Questions

 

Segment 1 – Get to know Rebecca

Recorded on at the Franchise Expo West, Denver Colorado

Born in Au, a small town in Switzerland

She is NOT related to Claude Monet

Grew up speaking High German (Swiss German) in the house. Lived on a dairy farm as a child. Parents were Baptist missionaries.

Moved to the United States when she was 14 years old.

Moved to California in 1984 as a single mother to seek her fortune.

Founded her first business in 1994, Noodle Metrics

Co-founded her second business called Proven Match in 2009

Founded Zoracle Profiles in 2013

 

Segment 2 – Psychometric Assessments for Franchisors

How franchisors can use psychometric assessments to improve franchisee performance.

To a franchisor, granting a franchise is very much like getting married, with very little courting in order to “get to know” their partner.

Personality style questions are not used at Zoracle because there is less than a 3% correlation between personality and performance.

The science of the process is not in the questions themselves, rather how the participant orders certain words into a hierarchy of preference that is weighted on the back end. This gives clues about motivation, drive, and the decision making process of the participant.

The psychographic analysis is not fool-proof but there are mechanisms in place to report out inconsistencies in the answers of the participant.

Startup franchisors with no existing franchisees can still benefit from a psychographic analysis tool.

A psychographic analysis tool will help a franchisor in the following ways:

  • Faster ramp-up
    • Better quality franchisee and faster ramp-up
  • Better validation
    • Greater franchisee satisfaction, better validation and less litigation
  • Reduced cost to support
    • Reduced cost to recruit, support and train franchisees
  • Greater retention
    • Stronger franchisee compliance and retention
  • Increased performance
    • Increased franchisee performance and profitability

 

Segment 3 -  Quick Draw

Rebecca’s favorite book – The Autobiography of Benjamin Franklin

PC and iPhone

Doesn’t watch TV – doesn’t own a TV

Working on her master list of movies that her friends helped her create in order to learn more about Americana culture.

IFA – Dentate YES!

Hobbies: golf, painting, cooking

Dog person: Bernese Mountain Dog

She used to be a car collector – 1967 Cougar

In a time machine she would go to 1955 when cars were sexy

She has wanted to be a psychologist her entire life

 

Rebecca Monet’s Contact Information

 

Kit Vinson’s Contact Information

  • e-mail:                 kit.vinson@franman.net
  • Phone: 214-736-3939 x1
  • Website: www.franman.net

  

Books Mentioned in the Episode:

  • Autobiography of Ben Franklin

 

Aug 11, 2016

Timestamp:

0:00:41    Jim Richardson Introduction

0:03:15    Segment 1 - Get to know Jim Richardson

0:16:58    Bonus Segment: Franchising 101

0:40:00    Segment 2 - Franchising is a Partnership (Business/Branding)

1:05:44    Segment 3 - Quick Draw Questions

 

Show Notes:

Segment 1 – Get to know Jim Richardson

Recorded on location at Jim Richardson’s house in Parker, Texas – just a few miles away from the famous Southfork Ranch (Who shot JR?)

Born in Rockwell, Iowa

Jim’s first real job was as a grocery man

Studied chemistry and finance.

Small town boy makes it big – Ford Motor Company, Pizza Hut, and Panda Express

 

Bonus Segment – Franchising 101

Franchising allows you to expand your concept by utilizing the resources of others.

Money

The franchisee pays his part of the investment capital that is necessary to expand in exchange for the majority of the revenue.

People

In many cases, people is a more constraining resource than money

The franchisee will source the people that will make them and your brand successful

Time

A franchisee can duplicate you, working on his/her side of the expansion investment as you continue to grow your business form the franchisor side.

Connections

In this conversation the term connections refers to real estate connections. A franchisee will have a closer tie to the local market in order to maximize potential from the real estate selection. This is particularly important with international franchising.

 

When is a good time in the lifecycle of a business to start franchising? How do I know it’s time?

When you attempt to franchise before you have all of your systems in place then you are asking a prospective franchisee to take bet on you when you have taken only a limited bet on yourself.

Don’t franchise until you have the answer to all of the questions:

  • What has made me successful? Why is my concept successful?
  • When you know what it is that made you successful, then you know what you need to impart to others to make them successful.
  • Why do customers like you?
  • Why do customers come back?
  • Can I duplicate a customer experience?

 

Do I have what it takes to be a franchisor?

What is your leadership style?

  • Command and control versus collaborative
  • You will be entering multiple long-term relationships. Are you ready to do your part in the relationship? Can you work well with others?
  • Personality profile tests can help you determine your leadership style as well as evaluate how a new franchisee will fit into the system.
  • Biggest myth in franchising: I don’t franchise because I want to have total control of the business. Franchisees have more incentive to follow a system standard than an employee
  • If you are a command and control style of manager, you can still franchise but you won’t like it as much, and neither will your franchisees.
  • Command and control franchisors will also miss out on many innovations that come from franchisees (e.g. paper cups at Starbucks, pan pizza, and the Big Mac)
  • Most franchisee relationships last longer than the average marriage.
  • To be successful in franchising a concept, you have to have both a business that is ready for franchising and a leadership team that is ready for franchising.

What is your growth strategy?

  • Fail to plan, plan to fail.
  • Be able to pay equal attention to both company owned and franchise locations.
  • Can you remove yourself from your business for 1-2 years and still have it operate efficiently? Do you have the infrastructure to franchise?

 

Segment 2 – Topic Segment

Franchising as a Partnership

Franchising is an extreme relationship and your franchisees will need your attention

Franchising is a bilateral relationship where each party should be able to learn from each other.

How to find the best franchisees: When you build a solid reputation, the people that you want will come to you.

Just because a prospective franchisee has something that you want (access to prime real estate or lots of money) doesn’t necessarily mean that they will be a good franchisee.

Look deeper into a prospective franchisee before you decide to accept of decline them. It is not just about access to money. It is about character and integrity. You want franchisees with the following characteristics:

  • Character
  • Trustworthiness
  • Have something to teach you
  • Open to learn from you

The relationship between franchisor and franchisee must me complimentary. If they knew and had everything that you know and have then why would they need you? If you knew and had everything that they know and have, why would you need them?

If all you are looking for in franchisees are carbon copies, then don’t franchise. You probably already have that in your corporate staff.

After you have brought in franchisees that are unlike you, then don’t forget that they are unlike you.

Examples of how franchisees with complimentary management styles can benefit the organization:

  • Price: Ted Swan in Lansing, Michigan – Introduced the coupon pricing model with pizza when nobody else was doing it. Ted had knowledge that corporate didn’t have.
  • Place: Dick Freeland in Ft Wayne, Indiana – Discovered a method of expansion that had his future customers paying for his expansion costs.
  • Promotion: P’zone by pizza hut – The campaign failed because the word P’zone was dangerously close to the Spanish word for nipple. The franchisees in Latin markets knew this – corporate didn’t.
  • Product: Many product innovations have come from franchisees versus corporate.
  • Purpose: The purpose of a franchisees business may or may not be complimentary to yours. This refers to the questions, “Why did they decide to become a franchisee?”
  • Accept the differences. Just because differences exist between franchisor and franchisee, this doesn’t make you unequal.
  • Demand that your relationship with franchisees be one of equality.
  • Franchising is where servant leadership thrives.

Success in franchising takes more preparation than success in your own business.

  • Inspect your success. What is it that made you successful?
  • Spend time reflecting instead of projecting forward.
  • Determine how you are going to transfer your knowledge to franchisees?
  • Franchising is all about knowledge management.
  • Know what you know. “If HP only knew what HP knows.”
  • Put metrics in place that measure the activities that lead to your success.
  • Know your benchmarks so that you can document them into a “playbook” that the franchisees can use to replicate your success.

 

Segment 3: Quick Draw

Jim’s favorite book – The Hobbit

Jim would love to travel back in time to see Leif Ericson – he is fascinated with archeology

Whataburger versus In & Out – WHATABURGER WINS!!!!!! Take that Mike!

Favorite movies: The Matrix and The Jason Bourne series.

iPhone all the way – Yahoo Sports is his most used app

  • Texas Rangers
  • Minisota Vikings
  • Iowa Hawkeyes
  • Dallas Maverics
  • Texas Longhorns

If Jim had $1 billion, he would give it to his wife. Go figure.

 

Jim Richardson Contact Information

  • e-mail:  richardson411@icloud.com
  • cell:      214-551-1514

 

Kit Vinson’s Contact Information

e-mail:       kit.vinson@franman.net

Phone:       214-736-3939 x1

Website:    www.franman.net

 

Listener Highlight

Angela Cote

Angela Cote Consulting Inc.

Business growth and franchise specialist

Victoria, British Columbia, Canada

www.angelacote.com

 

Books Mentioned in the Episode:

  • Pour Your Heart Into It – Howard Schultz
  • The E-Myth – Michael Gerber
  • Can’t buy me Like – Bob Garfield

 

Jun 23, 2016

Timestamp:

0:00:48    Yendy Khayat Introduction

0:02:58    Segment 1 - Get to know Yendy Khayat

0:20:02    Segment 2 - How to expand a franchise system into the Middle East region

0:51:40    Segment 3 - Quick Draw Questions

 

In this episode of The Franchise Manual Podcast we speak with franchise consultant Yendy Khayat on the topic of how to expand a franchise system into the Middle East region. It is a complicated topic that would probably require 10 episodes in order to cover thoroughly. In this episode we attack the topic from 65,000 feet.

 

Segment 1: Get to know Yendy

In segment one of this episode we spend a little time getting to know the person Yendy Khayat. We learn a little about what it was like growing up in Beirut, Lebanon, her multinational educational path leading to an MBA with an educational emphasis in hospitality, and how she has successfully leveraged her impressive education and work experience into a successful franchise consulting career. By the way, she is fluent in three languages.

 

Segment 2: Expanding a franchise into the Middle East region.

In segment 2 Yendy and I try to logically attack the very complex topic of expanding a franchise system into the Middle East region. There are a lot of moving parts to this endeavor that would certainly be considered a “black diamond” run in franchising. However, we learn that with the proper prior planning and a good helping hand it can be a very fruitful expansion project for certain franchise concepts. The topics of discussion are:

Why the Middle East region is worth considering

  • Large market and growing
  • Favorable laws
  • Young and upwardly mobile consumer market
  • Strategically located

 

How to move forward with expansion in the region

  • Expansion models with local partners
  • Funding options
  • Intellectual property protection
  • Multinational law firm
  • Cultural considerations
  • Logistic considerations
  • The importance of proper infrastructure
  • Modification of training and support programs

 

Challenges that can hinder or halt expansion progress

  • Some concept categories experience more success than others
  • Brand offering modification
  • Halal certified food
  • Design modifications
  • Language barrier
  • Reacting to leads versus logical business decision
  • Time zone allowances
  • Expansion into the Middle East region is “advanced franchising” and not for the beginner

 

Segment 3:  Quick Draw Questions

Segment 3 is a fun way to wind down the episode with quick, fun questions such as favorite movie, favorite book, etc. We find out what Yendy would do if she had enough money to never have to work again.

This is a FANTASTIC episode and a MUST LISTEN if you have ever considered expanding your franchise system into the Middle East region. We don’t provide all of the answers but we cover enough to get you on your way if Middle East expansion is part of your plans to grow your system.

 

Yendy Khayat

The Franchizery

Al Wahda City Tower,

 Hazza’ Bin Zayed the 1st Street,

 P.O. Box 96115, Abu Dhabi,

 United Arab Emirates.

+971 2 8186736, +971 2 8186737

yendy@thefranchizery.com

 

Kit Vinson

FranMan Inc.

214-736-3939 x1

kit.vinson@franman.net

 

Jun 6, 2016

Timestamp:

0:00:50    Joseph Adler Introduction

0:03:50    Segment 1 - Get to know Joseph Adler

0:33:25    Segment 2 - How to expand a franchise system into Canada

1:11:07    Segment 3 - Quick Draw Questions

 

In this episode of The Franchise Manual Podcast we speak with Canadian attorney Joseph Adler on the topic of how to expand a franchise system into Canada while avoiding the common pitfalls that hinder many franchisors.

Segment 1: Get to know Joseph Adler

In segment one of this episode we spend a little time getting to know the person Joseph Adler. We learn a little about his childhood growing up on Hamilton, Ontario, his first job, and his pathway to law school.

Segment 2: Expanding a franchise into Canada

In segment 2 Joseph Adler outlines some of the common pitfalls that many non-Canadian franchisors experience when they attempt to expand their franchise system into Canada. The topics of discussion are:

  • Maximize the U.S. market first - maintain domestic focus
  • Ensure that your IP is protected
  • Be proactive rather than reactive
  • Ensure necessary supply chain - Import issues
  • Market analysis - Canadian taste preferences
  • "Canadianize" the FDD and Ops Manual
  • The importance of engaging a Canadian franchise attorney
  • Understanding the competition
  • Finding the right franchisee

Segment 3:  Quick Draw Questions

Segment 3 is a fun way to wind down the episode with quick, fun questions such as favorite movie, favorite book, etc. We find out what Joseph would do if he had $1 billion to make the world a better place. We also find out if this Toronto attorney is a closet spaghetti western fan.

 

This is a FANTASTIC episode and a MUST LISTEN if you have ever considered expanding your franchise system into Canada, or if you just want to get to know Joseph Adler a little more than you already do.

 

Joseph Adler

Hoffer Adler LLP

425 University Ave., Suite 300

Toronto, Ontario M561T6 Canada

www.hofferadler.com

jadler@hofferadler.com

416-977-3444

 

Kit Vinson

FranMan Inc.

www.franman.net

kit.vinson@franman.net

214-736-3939 x 1

 

 

Apr 28, 2016

Podcast Segment Timestamps:

00:02:00               Get to know Doc Cohen

00:36:00               How to be the Best Franchisor

00:52:00               The Fun Questions

 

Doc Cohen was an absolutely fantastic guest on The Franchise Manual Podcast. If you miss this podcast you will be missing one of the best ones yet.

If you already know Mr. Cohen then I’ll bet that you will still learn something about him that you didn’t know in the “Get to know Doc Cohen” segment. If you didn’t already know Doc Cohen then you will definitely learn a lot about one of the finest men in the world of franchising. Find out why they call him “Doc”. Find out what Mr. Cohen has in common with Ray Kroc and Dave Thomas.

In “The Fun Questions” segment you will learn what Mr. Cohen’s favorite movies and TV shows are. You will be surprised when you find out. I surely was. (Did he say that he wants to be a zombie?)

Most importantly, in the topic segment, “Being the Best Franchisor from the Perspective of the Best Franchisee”, find out what advice Mr. Cohen gives to all franchisors in order to help their franchisees flourish and reach their success potential.

Special thanks to Jerry Darnell for introducing me to Mr. Doc Cohen.

www.franman.net

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