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The Franchise Manual Podcast

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Now displaying: 2019
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

 

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