The Franchise Manual Podcast

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Welcome to our podcast page where you'll find informationabout the latest in franchise development as a few unusual surprises.

The Franchise Manual Podcast – Episode #29 – Creating Customer Loyalty

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.

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.

Books Mentioned
Love Marks
By Kevin Roberts

The Effective Executive
By Peter Drucker

Emotionomics
By Dan Hill

Retail is Theater

Andy Erskine
Management 2000
800-847-5763
Kit Vinson
214-736-3939 x 101

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The Franchise Manual Podcast – Episode #28 – Generating Franchisee Leads

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 – Generating Franchisee Leads
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
888-977-4374 x 112
Kit Vinson
214-736-3939 x 101

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By |August 29th, 2019|Tags: , , , , , , , |Comments Off on The Franchise Manual Podcast – Episode #28 – Generating Franchisee Leads

The Franchise Manual Podcast – Episode #27 – Franchising 101

Franchise Manual Podcast #27 - Franchising 101My 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 and why is the FDD and Franchise Agreement?
  •  What are the dangers of a new franchisor using a template to create their own DFF and Franchise Agreement?

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

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

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By |July 25th, 2019|Tags: , , , |Comments Off on The Franchise Manual Podcast – Episode #27 – Franchising 101

The Franchise Manual Podcast – Episode #26 – CRM Software for Franchisors

My Podner in this episode is Stan Friedman and he’s going to talk with us today about Customer Relationship Management software, or CRMs, and boy do we. Stan does a bang-up job too.

Stan Friedman is a 31-year franchise veteran and is passionate about franchising. In fact, this guy lives and breathes it. Stan is the president of a company called FRM Solutions. FRM delivers CRM solutions, designed specifically for franchising, but to call it a CRM is like calling an elephant a mouse, just because they are both gray.

Before FRM Solutions, Stan held C-Level roles at: Blimpie International, Wing Zone, Maggie Moos and Tutor Doctor. Stan also produces and hosts “Franchise Today,” a live, weekly podcast on BlogTalkRadio.

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 Software for Franchisors
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
Gino Wickman

The E-Myth
Michael Gerber

Seven habits of Highly Effective People
Stephen Covey

Spin Selling
Neil Rackham

The Physics of the Impossible
Michio Kaku

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By |June 14th, 2019|Comments Off on The Franchise Manual Podcast – Episode #26 – CRM Software for Franchisors

The Franchise Manual Podcast – Episode #25 – Franchisee Recruitment

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.

Art is the CEO of a company called CGI Franchise, right here in Texas.

Art has served as President of a nationwide children’s technology education franchise where the brand had double-digit sales growth, opened a record number of new franchise territories, and was launched in the U.K., Australia, and Canada.

With a decade of global leadership and sales positions, he has been responsible for driving system-wide revenues and overall business operations for Top 200 franchise brands including a turnaround role in 2012 as the President and CEO for AlphaGraphics.

Art accepted the President and CEO position in May 2015 with Franchise Source Brands International, which owns several brands including: The Entrepreneur’s Source, AdviCoach, and ZorSource. Art is considered one of the top franchise development professionals in franchising.

.

Time Stamps

Art Coley Intro 00:00:27
Segment 1 00:03:00
Get to know Art Coley
Bonus Segment  00:03:00
Near Business Failure – Art’s “E-Myth” Moment
Segment 2 00:32:00
Topic Segment – Franchisee Recruitment
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

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By |May 28th, 2019|Comments Off on The Franchise Manual Podcast – Episode #25 – Franchisee Recruitment

The Franchise Manual Podcast – Episode #24 – Franchisee Compliance

My podner 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 Coté
Segment 2 00:24:34
Topic Segment – Franchisee Compliance
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 www.cultivateadvisors.com

Kit Vinson

FranMan Inc

www.franman.net

kit.vinson@franman.net

214-736-3939 x101

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By |May 9th, 2019|Comments Off on The Franchise Manual Podcast – Episode #24 – Franchisee Compliance

The Franchise Manual Podcast – Episode #23 – Franchising H-Tea-O Part 1

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

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By |March 6th, 2019|Comments Off on The Franchise Manual Podcast – Episode #23 – Franchising H-Tea-O Part 1

The Franchise Manual Podcast – Episode #22 – Franchise Marketing Fund

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 king kong seo, 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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By |February 19th, 2019|Comments Off on The Franchise Manual Podcast – Episode #22 – Franchise Marketing Fund

The Franchise Manual Podcast – Episode #21 – Franchisee Onboarding and Training

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 00:04:30
Get to know Rob Bilotti
Segment 2 00:18:55
Topic Segment – Franchisee Onboarding and Training
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

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By |December 3rd, 2018|Comments Off on The Franchise Manual Podcast – Episode #21 – Franchisee Onboarding and Training

The Franchise Manual Podcast – Episode #20 – Working with Franchise Broker Consultants

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. We will discuss what is a franchise broker consultant, how to make your business ready to utilize their services, and how to effectively work with them once you have hired them.

Time Stamps

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 plus the first time ever Lyrics Quiz

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
lori@lorikiser.com

Kit Vinson
FranMan Inc.
www.franman.net
kit.vinson@franman.net
214-736-3939 x1

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By |October 16th, 2018|Comments Off on The Franchise Manual Podcast – Episode #20 – Working with Franchise Broker Consultants