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16 09, 2022

The Franchise Manual Podcast – Episode #34 – Franchisor Pitfalls

By |September 16th, 2022|Franchise Development, Franchise Recruitment, Franchisee Onboarding and Training, Podcast|0 Comments

My Podner in this episode is Michael Peterson and he’s going to talk with us today about the mistakes that new franchisors typically make during their first year of operation. Some of these mistakes can be quite expensive, while others can lead to the death of your entire system. If you are a newly minted franchisor, or if you are about to start your journey, this is one that you won’t want to miss.

Time Stamps

Michael Peterson Intro 00:00:31
Segment 1 00:02:37
Get to know Michael Peterson
Segment 2 00:18:22
Topic Segment: New Franchisor Pitfalls
Segment 3 01:03:05
Topic Segment: Quick Draw Questions

TOPICS DISCUSSED IN THIS EPISODE:

Key areas franchisors miss in their first year:

Pre-launch

  • Not getting the FDD to fully capture the business model. This leads to something so prevalent that I came up with a name for it; the 2nd year re-write. So many franchisors make massive changes to their second year FDD either because they didn’t capture the existing model in the first year, or they didn’t have someone walk them through the thought processes they should be going through on every item before they commit it to paper.
  • Having “to be implemented” clauses in their agreements. The most common one I have seen here is a national ad fund, though I have seen tech fees quite a few times as well. When your franchisee #1 or #2 has been operating for 3 years, paying you your royalty only, and suddenly you decide your system is big enough to justify the advertising fund of 1-3%, believe me they will not be happy. Start taking this from day one, even if you turn around and spend it in their market.
  • Cutting corners or coming in underfunded. This is probably the #1 cause of failure of young franchisors. Deciding to write an operations manual in-house, find the cheapest franchise attorney possible (or, worse yet, trying to do an FDD without a franchise attorney), not having quality marketing materials, not having funds set aside for franchise sales; these are so self-defeating.
    • A bad operating manual can lead to system problems and even litigation.
    • If you succeed as a franchisor you will end up using a good franchise attorney, if you start out with inexperienced or ineffective counsel, you’ll just pay in negotiation, litigation, or just headaches before you switch to better counsel.
    • Your marketing materials are your first impression, you have to make them count.
    • Franchise sales cost money, period. If you don’t have a good marketing budget, you will struggle to grow. Think about this. Each year, you are going to spend between $6,000 and $25,000 on renewal, depending on how many registration states you go into and how complicated your audit is. I would guess the average is close to $12,000. If your lead generation spend results in one sale, then you have an extra $12,000 in costs for that sale. If you have a robust budget and someone solid handling franchise sales, and you award 3 franchisees, then the renewal is only adding $4,000 cost-per-close. Big difference.

Post Launch

  • Hands down, the biggest mistake a franchisor can make is bringing in the wrong franchisee. If you have been doing all the ‘right’ things, spending money, having a professional franchise salesperson either in-house or outsourced, reaching out to brokers to talk about your brand, and 6 or 12 or even 18 months in you don’t have a franchise sale, that can be frustrating. It also might happen; the first franchisees are the hardest to find (lets delve into that). I have seen this situation cause many franchisors to award a franchise to someone they shouldn’t and regret it for years to come.
  • Not having a culture of compliance from day 1 is another seemly small issue that will come back to haunt you. If your FA calls for quarterly or annual financials from your franchisees, get them even if you don’t know what to do with them! If your franchisees have a required add spend, monitor it from day one. Or better yet, engage with them and help them spend it correctly, but either way make sure they are spending it. If there is a clause you are not enforcing from day one, throw it out.
  • A problem many new franchisors think they wish they had; growing too fast. I have been in this position. I am talking about 4 stores open in January and 120 open that December fast! Trust me, you don’t want this kind of growth out of the gate.
  • Compromising to get a deal. . . I put this one last because it very well may be something you need to do. As I mentioned, first franchisee is HARD! It may be  reasonable, appropriate, or even necessary to ‘give’ on the first franchisee, maybe even on the first few. But be careful. If you are giving a bigger territory, are you really setting that franchisee up so that there is no chance of you putting someone into the same market and putting local brand awareness 100% on their shoulders? Are you offering a refund clause that you can’t really afford, from a capital cost of onboarding stance? Make sure your attorney is involved here and be careful. And again, don’t be afraid to say no and walk away.

Michael Peterson
Franchise Beacon
michael.peterson@franchisebeacon.com
www.franchisebeacon.com

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

Books Mentioned in the Episode

Think Like a Freak

by Steven D. Levitt, Stephen J. Dubner

The Memory Illusion

By Julia Shaw

Eye of the World

Robert Jordan

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14 04, 2022

The Franchise Manual Podcast – Episode #33 – Maximizing the Franchise Expo

By |April 14th, 2022|Franchise Development, Franchise Recruitment, Podcast|Comments Off on The Franchise Manual Podcast – Episode #33 – Maximizing the Franchise Expo

My Podner in this episode is Tom Portesy and he’s going to talk with us today about how to maximize the return on your investment at a franchise expo, how to avoid the pitfalls, and best practices that will help you represent your brand in the best light.

Time Stamps

Tom Portesy Intro 00:00:27
Segment 1 00:03:41
Get to know Tom Portesy
Segment 2 00:18:22
Topic Segment: Maximizing the Franchise Expo
Segment 3 01:03:42
Topic Segment: Quick Draw Questions

TOPICS DISCUSSED IN THIS EPISODE:

  • What is a franchise expo
  • Short history of the expo
  • How to manage realistic expectations of an expo
  • Know your objective
  • DOs and DON’Ts at an expo
  • Take advantage of the free training offered by MFV
  • Spend time developing your opening line
  • Know the value of a lead
  • Control how much time you spend with each person
  • Which industries do better at an expo

Tom Portesy
MFV Expositions
tom.portesy@comexposium.com
www.franchiseexpo.com

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

Books Mentioned in the Episode

Good to Great
The Fog of Life

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22 08, 2018

The Franchise Manual Podcast – Episode #18 – Franchise Development 101 (Sales)

By |August 22nd, 2018|Franchise Development, Franchise Lead Management, Franchise Recruitment, Podcast, Uncategorized|Comments Off on The Franchise Manual Podcast – Episode #18 – Franchise Development 101 (Sales)

Mike Pollock 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:
    • Background
    • Financial situation
  • Have the Unit Economics Call
    • FDD introduction call (15 minutes)
    • Unit Economics (45 minutes)
    • Receive signed Item 23 (Proof of receipt of FDD)
    • Password
    • Validation instructions
  • Validation Debriefing Call
  • Discovery Day
    • Brand Overview Review
    • Meet the Team
    • Lunch and dinner are the best opportunity to visit with prospects
    • 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

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27 04, 2017

The Franchise Manual Podcast – Episode #14 – Building a solid, emerging franchise model

By |April 27th, 2017|Franchise Development, Franchise Lead Management, Franchise Recruitment, Franchising Basics, Podcast|Comments Off on The Franchise Manual Podcast – Episode #14 – Building a solid, emerging franchise model

Pete Baldine talks 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

Quickdraw 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

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10 10, 2016

The Franchise Manual Podcast – Episode #10 – Psychographic Analysis for Franchisors

By |October 10th, 2016|Franchise Development, Franchise Recruitment, Franchisee Profiling, Podcast|Comments Off on The Franchise Manual Podcast – Episode #10 – Psychographic Analysis for Franchisors

zoracle Rebecca Monet of Zoracle talks about how to utilize Psychographic Analysis, or personality profiling, to assist in franchisee selection and help franchisors select franchisees who will more likely fit into the corporate culture and who are more likely to be the best performers in the 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 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

Books Mentioned in the Episode:

  • Autobiography of Ben Franklin
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