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21 04, 2023

Challenges of Scaling to Over 50 Units – The Franchise Manual Podcast – Episode #35

By |April 21st, 2023|Franchise Development, Franchise Recruitment, Franchisee Onboarding and Training, Podcast|Comments Off on Challenges of Scaling to Over 50 Units – The Franchise Manual Podcast – Episode #35

My Podner in this episode is Tom Wells and he’s going to talk with us today about the challenges of scaling a brand over 50 units. It’s a moving target and things change, and he’s going to share some REALLY COOL stuff with us today.

Time Stamps

Tom Wells Intro 00:00:31
Segment 1 00:02:13
Get to know Tom Wells
Segment 2 00:27:05
Topic Segment: Scaling your brand to over 50 units
Segment 3 01:06:27
Topic Segment: Quick Draw Questions

TOPICS DISCUSSED IN THIS EPISODE:

  • This ultimately comes down to People, Process, and Prioritization. Many entrepreneurs didn’t become entrepreneurs to focus on process and structure – the most successful ones hire around this need.
    • People: have to get the best team and figure out where to hire over time. Requires culture of accountability which sounds easy but is difficult to implement. Additionally, the founder(s) need to manage their people, but also give them authority to execute.
    • Process: what works at 10 units or 20 units, doesn’t work at 50+ units. A leader or team can run around putting fires out at 10 units, but you can’t do this at 50+ units. Many organizations never think about what process is needed to make better decisions over time. Additionally, need to want to get and understand the right data which is hard with limited resources.
    • Prioritization: Everyone has a day job; can only take on a few big strategic initiatives at a time. Most founders have a list of 20 major initiatives they want their team to do at any time. Some get done, some don’t – all of them are not done at the highest level. We spend a lot of time focusing each year on what are the main ones to provide the biggest benefit to the business (this is very hard) and then helping the teams focus on these items. Do this repeatedly and the business constantly evolves nicely.
  • Being Ready to Grow: To grow from the concept stage, you need the below but I always start with “If it’s a great investment for the franchisee, the brand will generally do very well”:
    • Great unit economics. This is almost impossible to fix along the way. If the concept doesn’t work from the start, it’s unlikely to have better unit economics along the way. Our view is 3 year or better payback is top 25%. Anything better is best in class. We also look at store level margin as it provides insight into cushion for franchisee performance (ie: very low margin has limited room for error).
    • Differentiation: It’s important to have something that sets a brand apart from its competitors. This applies to all concepts regardless of industry. Tons of competition in restaurants, how are we getting a competitor to pick us vs their 100 other options (product, service, experience, technology). In services, there are tons of local companies that can do plumbing, why pick a franchise (marketing, service, answer phones, clean looking techs, technology, etc.)
    • Structure / Process / Re: different from the process above. This is being able to sign franchise agreements knowing that you are growing a repeatable concept (ops manuals and guides, trade design, product, branding). You don’t want different menus at different locations, different store designs, etc. Key to have something where there is benefit of scale and franchising.
  • How brands scale: most grow without a lot of thought of who the franchisee is and where they are growing. Need to be thoughtful here.
    • Who the franchisee is: over the first 10 or 20 locations, you really figure out who is the best operator for a brand. Additionally, you learn who is not a fit. These need to be addressed thoughtfully otherwise a brand will struggle with bad franchisees as it gets larger.
    • Where you grow: It’s easy to sign franchise agreements with interested franchisees that are far away. This depends on complexity of the concept. For example, restaurants require distributions centers and are hard for corporate to help with when far away. Generally easier to go concentrically with restaurants, especially with brand loyalty.
    • How you develop: Growth is great, but ultimately the franchisee needs to succeed. It’s better to make sure you have the right operator and right site, rather than compromising just to grow. We see so many brands that are great, but have struggling units where they compromised early – this doesn’t show up for a few years.

Tom Wells
10 Point Capital
twells@10pointcapital.com
www.10pointcapital.com

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

Find this podcast on:

      

You can find a transcription of this podcast here.

16 09, 2022

Franchisor Pitfalls – The Franchise Manual Podcast – Episode #34

By |September 16th, 2022|Franchise Development, Franchise Recruitment, Franchisee Onboarding and Training, Podcast|Comments Off on Franchisor Pitfalls – The Franchise Manual Podcast – Episode #34

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

Find this podcast on:

      

You can find a transcription of this podcast here.

3 12, 2018

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

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

Robert Bilotti talks 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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15 12, 2016

The Franchise Manual Podcast – Episode #11 – Franchisee Training

By |December 15th, 2016|Franchisee Onboarding and Training, Podcast|Comments Off on The Franchise Manual Podcast – Episode #11 – Franchisee Training

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

Time Stamps

00:00:52 – Podner Introduction

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

00:20:34 – Segment 2: Topic Segment

00:54:04 – Segment 3: Quick Draw

Cordell Riley Show Notes

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

VAK: Visual – Auditory – Kinesthetic

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

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

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

Great training versus good training

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

Make training fun

Initial Franchisee Training DOs and DON’Ts

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

Ongoing Training

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

E-Learning

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

E-learning DOs

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

Repetition is key to high retention

Websites mentioned in the episode:

Books mentioned in this episode:

Good to Great

by Jim Collins

Cordell Riley’s Contact Information

Tortal Training

www.tortal.net

cordell@tortal.net

Kit Vinson’s Contact Information

FranMan Inc.

www.franman.net

kit.vinson@franman.net

217-736-3939 x 1

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