"There are 3-4k brands in America that franchise, and there's hundreds of new brands every year. Which is wonderful, but it's also a little bit dangerous because a lot of those new brands really don't know franchising. You may have a great concept - a pizza shop, a coffee shop, a shoe shine stand - I don't care what it is, you can franchise a lot of things. But once you do that you're in a different business - you're no longer in the haircutting business, you're in the franchising business and it happens to be haircutting."
- John W. Francis
John W Francis runs Next Level Franchise, Inc in Minnesota, where he helps franchisors, franchisees and supplier companies with their business issues by offering perspective, experience, advice and connections to help move them forward. He started back in 1980's helping in his family business, Barber’s Inc, which was the franchisor of Cost Cutters, City Looks, and We Care Hair Salon. Over the next 15+ years he helped to grow the business internationally, eventually selling to the Regis Corporation in 1999. Since then he has directly worked with franchises, as well as served as an advisor, board member, consultant, and speaker to many people and companies in the franchise world. He is known as “Johnny Franchise” and is a Franchise Expert.
Why to Listen:
A while back I had Matt Miller on the show, and in episode BTU #60 he talked about his experience starting the franchise School Spirit Vending. In episode BTU #115 Ray & Sam Allen talked about Direct Marketing and how it is business with some training and assisting to help people like veterans.
Both of these got me thinking about franchises, and how this is really well suited to veterans who want to start a business and have drive, determination, and discipline, but may not have a killer business idea or a background in business.
So, I took to Google and it did not take me long to find at the top of the list when it comes to franchises, my guest today, John W. Francis. John is not a veteran, but he has an immense amount of experience with and knowledge of franchises, and has graciously offered to come on the show to help me - and all our BTU listeners - better understand franchises and why this may be an appealing entrepreneurial vehicle to veterans
- StoryBox - People trust each other more than advertising. StoryBox provides the tools and supports businesses need to take the best things customers say about them, and use them to drive more sales and referrals. StoryBox offers a 10% discount to companies employing veterans of the US Armed Forces.
- Audible is offering one FREE audio book to Beyond the Uniform listeners. You can claim this offer here, and see a list of books recommended by my guests at BeyondTheUniform.io/books
- Let’s start with the basics - if you were taking to someone who is in the military, and they don’t have traditional business experience, how would you explain what a franchise is?
- It's an opportunity - it can take on a number of different dimensions. You've got a model or a brand that you want to operate - McDonalds and Burger King are well known. But there is franchising all around in the US because it works well.
- When you purhcase a franchise a lot is included in it - do your homework and take your time. YOu don't want to make a decision ilke this in a hurry.
- Usually a franchise is a brand (name) that has some value and a series of systems. A system of operating and marketing and training in that business. Often times, there is vendor benefits and relationships with suppliers and otehr companies to reduce your cost since you're buying on a group scale.
- It leverages people motivation and ability - if everyone does their part, it creates mutual success. Franchising wins at all levels when done properly.
- What goes wrong in franchises?
- It happens at different times in the growth of the franchise.
- Oftentimes people convince themselves to buy something that doesn't fit
- I used to sell hair salon franchises - it's a great business - it's been the same for 5,000 years. It's consistent. You wont' get your hair cut at Amazon. Resistant to technology obsolesce.
- If you run a hair salon, there's regulations, licenses, etc. But as an owner if you don't understand the business you're in and what makes it work, you get in trouble.
- There's a lot of things you need to operate well, and it requires different skill sets.
- First - can you afford it? Cash, equity in your house, lending, etc
- Part was the personality fit - will you be successful selling in this environment; they may not have the skills so it may be more difficult for you.
- 8:25 - thousands of franchises, but also dangerous, you may have a great concept
- Is this a good system? It boils down to relationships - do they have integrity and a plan and know how to be successful? It is economic Darwinism - the stronger and faster and the ones who adapt and take care of their people.
- It gives you a great platform for success - people pick the wrong one or for the wrong reason
- You have worked with thousands of individuals who work in a franchise - are there any characteristics you’ve found in the people who succeed as a franchise owner?
- The ability to work hard - when you're the owner, you have a different attitude about things. You can't just work there. Ownership is a lot of responsibility and opportunity and liability. When you have others investing in your deal and you have employees, it raises the bar. You have to have a lot of commitment to never give up.
- The other trait that is often underutilized is the connectivity. In a franchise brand, you can connect with the Franchisor. They've got marketing, training, leadership, etc. You can connect with these people - you're part of the family, part of the network. There are people running this company all over the country and you want ot do what they're doing in a way that makes it successful. Asking for input on what to change - a different attitude and approach.
- Worst mistake is when someone wants to change something - they want to change the part of the brand. We don't sell tires at the hair salon. You don't change the model. When a franchisee starts to adjust things or they say "my market is different" - that's a red flag. You need to talk to people at this point - share hte idea and talk about it before you start doing this. You have to do all of it - not just parts.
- The third thing is hiring people. You need to make sure you get people, it always comes down to people. Often times franchisees have never hired or trained.
- How much capital is typically required to own a franchise?
- Franchises - there ar ebig ones and small ones; they come in all shapes and sizes. There are ones that are $50,000 or less, which is where most brands begin. That would be a total investment - a onetime franchise fee, legal costs, training, travel, contracts to sign, setting up a corporation. If it's a $50,000 investment, many times you can finance the equipment, and for a lot of franchises that are veteran friendly there are discounts on those fees. VetFran is organized through the International Franchise Association. You usually pay the fees in cash and the rest are in financing.
- Good advice is to have half of what you borrow - otherwise you're just working for the bank. Try not to borrow more than 50% of the investment. So you'll need some cash - savings, earnings, sold something else, or people go to friends and families and ask for investments or a loan. A loan is easier than an investment, but you need to make sure you write it down. you can borrow from a friend or family member, and when you pay it off that goes away. but an investor, they get equity and they get a say in what decisions you make and may feel entitled to participate at a level you didn't expect.
- Vending machines are common. People will do it for a year or two and then sell it and buy a franchise. You can start with a single vending machine, and it's a lot of hard work but it's a starting point. Then you can sell it and buy and franchise where you're managing employees.
- The ideal is to eventually hire someone who can do the day-to-day activities, but at first you'll likely be doing all of it. You can eventually own the place and not work there.
- Many times starting a franchise can be like buying a job - it takes a lot of work and feels like just a giant obligation. But if you can grow it you can be the owner and hire a manager, and then your job is to own the place. Do the advertising, maybe some sales, manage cash flow, and maybe even start a second or third franchise. But they usually start somewhere much smaller.
- Because veterans are used to systems and checklists this is a great fit for franchises. If you have the right attitude and it's a fit - there's a lot of examples of success with veterans in franchises.
- A lot of franchisees get stuck thinking they have to do everything - that is the beginning of the end. When companies cut back advertising because cashflow is tight, it's the worst you can do. When things are tight financially - who doesn't get paid is a tough decision. This is when a franchisee needs to call the corporate office or another franchisee to see where to go from there.
- "If it doesn't make dollars it doesn't make sense." This is such great advice. You have to know hwat you're spendign and what you get for it and if it's the right trhing to spend on. Ideally you can pay yourself sooner or later, and you have to be careful about continiung to invest all your moeny in the business indefinitely. Some people will use a franchise as an inheritence vehicle - the parent can make the investment nd the child does the work and over time the child buys the franchise from the parent, or the parent gifts shares to the child.
- Find something you're passionate about, and something you can get excited about. If you don't like people, you shouldn't get into a hair salon. But other business I work with have different skill sets. The good news is there are lots of franchises out there, but you hae to know yourself and what you would be interested in.
- If someone is interested in opening a franchise what resources - books, movies, etc - would you recommend they check out?
- Franchising is a big area today. There are over a million franchise outlets and over 3,000 franchises. There are groups who work as a match maker (a broker or agent) just like a real estate agent sells houses. There are companies that sell franchise this way. They don't charge the franchisee - the franchisor pays a referal fee to the person who brings the deal in.
- Fran-choice is good
- Fran-net is great too - their consultants are all over the country
- Entrepreneur Source has been around for a long time
- There are 5-10 more who are like this. Their speciality is to get to know you as the buyer and line you up with brands they know and trust and think will be a good fit. They help you understand what you have and educate you on why it is a good fit and you'll hvae to decide.
- They'll turn you onto three concept and then sell you the franchise. THey prepare you and if you buy they get a referral fee- it's a fair deal and a good value.
- It does take time and takes a committment and the consultants only really know a handful of brands. They are afmiliar with 20-30 - how many can you really know? So there may be others out there that would be a better fit but you may never hear about them.
- The risk is manageable because it's a helpful way to see what's out there, find their strenghts and weaknesses. Just be very careful and make a good choice - do your homework on the brand. You want to validate the idea - check it out and make sure the franchise works the way it is supposed to.
- Before you write a check - go spend a day with someone running the unit and shadow them for the dya and make sure you're co
- Final words
- There are a lot of great people and great opportunities. Find a good brand with good people and a business you really, truly enjoy. You're willing to work harder for somethign you believe in and people you like. Get to know the business and really take the time to know what it will take to be successful.
- My blog has all sorts of things on it
- There are books and magazines - the Franchise Times, Franchise World - all sorts of Expos and shows and seminars. Take as much time as you can. It's a great way to go - ifyou get into a good one follow the model, ask for help, pay attention, and follow the system. Engage fully in the brand.
- Franchise Adviory council - get involved in it. If they host a workshop go to it, never miss an annual convention. Most brands have a big conference for all the owners to come togeterh every year - you need to be there. Make that investment in yo8urself andyour business.
- Fully immerse yourself and follow the good ones. Meet the people who are successful - find the last Franchisee of the Year for the last 5 years and go talk to them. You want ot be the enxt one. SUccess comes in a lot of differnet ways.
- Father's Eve
- This is my giveback project. I'm a dad of two girls and I'm lucky that I can do my fatherhood the way I'd like. THis started as an accident - I got together with other fathers the night of father's day. Then we turned it into a charity event and raise a lot of money. Then we licensed it - everything is a franchise to me - we did it in 12 cities last year. This year we expanded and we did it in 42 cities. We had sponosrs and raised more money for charities.
- Next year we're trying to turn this into a celebration for dads. Father's day is for dads and their families -we don't want to change this. Father's eve is just for the dads the night before, a dad night out. We do a countdown - we can't stay up tll midnight, so at 8pm we do a local toast to the dads.
- Some places we do charity funcitons and auctions, and bag tosses, or poker or golf. One person did an archery event. It's hosted all over the county
- It started in my garage and there are people who do it in their garage
- Connecting dads to each other to celebrate being a dad and connecting them and learn how to be a better father is so important.