Franchising Basics

25 07, 2019

The Franchise Manual Podcast – Episode #27 – Franchising 101

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

Franchise Manual Podcast #27 - Franchising 101 Rob Vinson talks with us 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 businesses 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

Find this podcast on:

6 03, 2019

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

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

Justin Howe of H-Tea-O allows us to follow him through the process of franchising his business. This will be the first episode of that series. He discusses his journey in franchising; his successes and challenges in franchising.

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

Find this podcast on:

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

Find this podcast on:

11 08, 2016

The Franchise Manual Podcast – Episode #9 – Franchising as a Partnership

By |August 11th, 2016|Franchising Basics, Podcast|Comments Off on The Franchise Manual Podcast – Episode #9 – Franchising as a Partnership

Jim Richardson, a franchising veteran from Pizza Hut (20 years) and Panda Express (15 years) discusses some foundational franchising theory in a “Franchising 101” segment. Afterwards Jim expands on fundamental best practices for franchisors as they develop their franchise system.

Timestamp:
0:00:41 – Jim Richardson Introduction
0:03:15 – Segment 1 – Get to know Jim Richardson
0:16:58 – Bonus Segment: Franchising 101
0:40:00 – Segment 2 – Franchising is a Partnership (Business/Branding)
1:05:44 – Segment 3 – Quick Draw Questions

Jim Richardson

Show Notes:

Segment 1 – Get to know Jim Richardson

Recorded on location at Jim Richardson’s house in Parker, Texas – just a few miles away from the famous Southfork Ranch (Who shot JR?)

Born in Rockwell, Iowa

Jim’s first real job was as a grocery man

Studied chemistry and finance.

Small town boy makes it big – Ford Motor Company, Pizza Hut, and Panda Express

Bonus Segment – Franchising 101

Franchising allows you to expand your concept by utilizing the resources of others.

Money

The franchisee pays his part of the investment capital that is necessary to expand in exchange for the majority of the revenue.

People

In many cases, people is a more constraining resource than money

The franchisee will source the people that will make them and your brand successful

Time

A franchisee can duplicate you, working on his/her side of the expansion investment as you continue to grow your business form the franchisor side.

Connections

In this conversation, the term connections refers to real estate connections. A franchisee will have a closer tie to the local market in order to maximize potential from the real estate selection. This is particularly important with international franchising.

When is a good time in the lifecycle of a business to start franchising? How do I know it’s time?

When you attempt to franchise before you have all of your systems in place then you are asking a prospective franchisee to take bet on you when you have taken only a limited bet on yourself.

Don’t franchise until you have the answer to all of the questions:

  • What has made me successful? Why is my concept successful?
  • When you know what it is that made you successful, then you know what you need to impart to others to make them successful.
  • Why do customers like you?
  • Why do customers come back?
  • Can I duplicate a customer experience?

Do I have what it takes to be a franchisor?

What is your leadership style?

  • Command and control versus collaborative
  • You will be entering multiple long-term relationships. Are you ready to do your part in the relationship? Can you work well with others?
  • Personality profile tests can help you determine your leadership style as well as evaluate how a new franchisee will fit into the system.
  • Biggest myth in franchising: I don’t franchise because I want to have total control of the business. Franchisees have more incentive to follow a system standard than an employee
  • If you are a command and control style of manager, you can still franchise but you won’t like it as much, and neither will your franchisees.
  • Command and control franchisors will also miss out on many innovations that come from franchisees (e.g. paper cups at Starbucks, pan pizza, and the Big Mac)
  • Most franchisee relationships last longer than the average marriage.
  • To be successful in franchising a concept, you have to have both a business that is ready for franchising and a leadership team that is ready for franchising.

What is your growth strategy?

  • Fail to plan, plan to fail.
  • Be able to pay equal attention to both company-owned and franchise locations.
  • Can you remove yourself from your business for 1-2 years and still have it operate efficiently? Do you have the infrastructure to franchise?

Segment 2 – Topic Segment

Franchising as a Partnership

Franchising is an extreme relationship and your franchisees will need your attention

Franchising is a bilateral relationship where each party should be able to learn from each other.

How to find the best franchisees: When you build a solid reputation, the people that you want will come to you.

Just because a prospective franchisee has something that you want (access to prime real estate or lots of money) doesn’t necessarily mean that they will be a good franchisee.

Look deeper into a prospective franchisee before you decide to accept of decline them. It is not just about access to money. It is about character and integrity. You want franchisees with the following characteristics:

  • Character
  • Trustworthiness
  • Have something to teach you
  • Open to learn from you

The relationship between franchisor and franchisee must be complimentary. If they knew and had everything that you know and have then why would they need you? If you knew and had everything that they know and have, why would you need them?

If all you are looking for in franchisees are carbon copies, then don’t franchise. You probably already have that in your corporate staff.

After you have brought in franchisees that are unlike you, then don’t forget that they are unlike you.

Examples of how franchisees with complementary management styles can benefit the organization:

  • Price: Ted Swan in Lansing, Michigan – Introduced the coupon pricing model with pizza when nobody else was doing it. Ted had knowledge that corporate didn’t have.
  • Place: Dick Freeland in Ft Wayne, Indiana – Discovered a method of expansion that had his future customers paying for his expansion costs.
  • Promotion: P-zone by pizza hut – The campaign failed because the word P-zone was dangerously close to the Spanish word for nipple. The franchisees in Latin markets knew this – corporate didn’t.
  • Product: Many product innovations have come from franchisees versus corporate.
  • Purpose: The purpose of a franchisees business may or may not be complimentary to yours. This refers to the questions, “Why did they decide to become a franchisee?”
  • Accept the differences. Just because differences exist between franchisor and franchisee, this doesn’t make you unequal.
  • Demand that your relationship with franchisees be one of equality.
  • Franchising is where servant leadership thrives.

Success in franchising takes more preparation than success in your own business.

  • Inspect your success. What is it that made you successful?
  • Spend time reflecting instead of projecting forward.
  • Determine how you are going to transfer your knowledge to franchisees.
  • Franchising is all about knowledge management.
  • Know what you know. “If HP only knew what HP knows.”</