By Kit Vinson|October 16th, 2018|Podcast, Uncategorized|Comments Off on 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.
Lori Kiser Intro
Get to know Lori Kiser
Topic Segment – How to work with Franchise Broker Consultants
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:
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.
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.
Be able to show GREAT unit economics – meaning, be able to show that the franchisees are making money.
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.
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.
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.
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.
By Kit Vinson|September 12th, 2018|Podcast, Uncategorized|Comments Off on The Franchise Manual Podcast – Episode #19 – Managing Your Franchise Agreements with the End in Mind
My Podner on this episode is Tom Spadea. Tom and I will discuss the benefits of properly managing the FDD and the Franchise Agreement, from the beginning, making sure to keep the end in mind. The “end” he speaks of is a possible acquisition by an investment company. What will they expect to see when they look at your franchisees contracts in your files?
Tom Spadea Intro 00:00:40 Segment 1 00:03:22
Get to know Tom Spadea Segment 2 00:24:40
Topic Segment – Managing Your Franchise Agreements with the End in Mind Bonus Segment 00:57:15
Managing Franchisee Growth Segment 3 01:02:50
Topics discussed in this episode:
Where do most franchisors get it wrong? Many franchisors and franchise attorneys focus mostly on the substantive issues of the and forget about procedural issues related to the process – managing latent defects
Item 23 receipt page not being properly executed and filed
Guarantees not properly executed
Individual versus LLC signing FA/lease
You can have the best FDD and franchise agreement in the world, but if you don’t manage the process properly, it can cost you a lot of money in the short term with an unenforceable contract, and in the long run, upon exit.
It’s important to understand who the real audience of the Franchise Agreement is. It is the franchisee, but it is also a prospective private equity investment firm who may want to purchase your system in the future.
What is the process? Step 1: Make sure that the franchise agreement is up-to-date Step 2: Geographical Analysis – Ensure that the franchisor is registered in every registration state where the concept will be offered. That includes where the prospect is currently located as well as where they want to open a location. Both states must be registered if required by that state. Deliver the correct FDD for the state. Step 3: Ensure that 14 days pass between delivery and signing of the Franchise Agreement, not including delivery day and signing day Step 4: Spend the time to ensure that names are all spelled correctly, along with middle intials. Check the address, LLC name etc Step 5: Prepare a custom franchise agreement based on the specific agreements made between franchisor and franchisee – do not use the sample franchise agreement that is included in the FDD. Deliver the document to all required recipients and ensure proper signatures Step 6: Ensure that the lease includes all of the required language as per the franchise agreement
There are many different software packages that can help you with each aspect of the transaction, but Spadea Law has the platform that hits every element. Compliance Map helps franchisors ensure that they are only offering the franchise in the proper states. The link to the Compliance Map software demonstration is below:
My Podner in this episode is Mike Pollock and he’s going to 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.
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
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:
Have the Unit Economics Call
FDD introduction call (15 minutes)
Unit Economics (45 minutes)
Receive signed Item 23 (Proof of receipt of FDD)
Validation Debriefing Call
Brand Overview Review
Meet the Team
Lunch and dinner are the best opportunity to visit with prospects
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.
By Kit Vinson|October 26th, 2017|Podcast|Comments Off on The Franchise Manual Podcast – Episode #17 – Insurance for Franchisors
In this episode, Doug Groves and I talk about insurance, specifically, what types of business insurance are out there, the importance of finding a rep that knows your industry, and what role does insurance play in the relationship between franchisor and franchisee.
Doug Groves Intro 00:00:40
Segment 1 00:02:41
Get to know Get to know Doug
Segment 2 00:16:17
Topic Segment – Insurance 101 for Franchisors
Segment 3 00:38:19
Topics discussed in this episode:
Basic coverage that all business owners should have:
Property (property, fixtures, furnishings, and equipment)
General liability (slips and falls)
Workers’ Comp (employees injuries and lost wages)
Auto (company owned vehicles)
Employment Practices (HR related risks)
Umbrella (covers over and above the above mentioned)
Every insurance policy has a purpose.
Umbrella policies are a cheap way to purchase vast amounts of insurance for a much lower price
When you are deciding on limits for each type of insurance:
Property: The property limits should be equal to the replacement cost of the property it is covering
All other: The rule of thumb is that you make the value of the insurance policy to be more attractive to a would-be plaintiff than your personal assets.
Best Practice: Select an insurance broker who has experience in providing insurance for companies in your same industry. They will know which questions to ask in order to recommend the right options for you.
The question is answered, why does this line appear in all franchise agreements and franchise operating manuals: “All liability insurance policies must name us (the franchisor) and any subsidiaries that we designate as additional insured.”
We answer the question, why do franchisors require franchisees to carry certain levels of insurance.
What is the EZCert program and how does it help franchisors manage all of the insurance certificates from all of their franchisees – for FREE.
Book: Killing the Sacred Cow
By Garrett B. Gunderson
Our culture is riddled with destructive myths about money and prosperity that are severely limiting the power, creativity, and financial potential of individuals. In Killing Sacred Cows, Garrett B. Gunderson boldly exposes ingrained fallacies and misguided traditions in the world of personal finance. He presents a revolutionary perspective that can create unprecedented opportunity and wealth for thoughtful, mission-driven individuals.
By Kit Vinson|August 4th, 2017|Podcast|Comments Off on The Franchise Manual Podcast – Episode #16 – Is Three-Party Franchising Right for Your System?
In this episode, Brian Schnell and I talk about Three Party Franchising – that’s using Area Developers and Master Franchisees to grow your franchise system. Many people misuse these two terms, or use them interchangeably – Brian’s going to clear it all up for us.
Brian Schnell Intro 00:00:40 Segment 1 00:02:28
Get to know Brian Schnell
Segment 2 00:23:53
Topic Segment – Is Three Party Franchising Right for Your System?
Segment 3 01:00:51
Topics discussed in this episode:
What is the difference between a Master Franchisee and an Area Developer
What is the Three-Party Franchise model?
Three Party Franchise model works very well internationally
Avoid the temptation of “0-100 franchisees quick” through three party franchising without a full understanding of what is involved. Don’t try to sprint before you know how to walk.
The conversation about Three Party Franchising shouldn’t take place without a full understanding of risks and benefits to all parties.
What is the necessary infrastructure before diving into a three-party franchising model? A full understanding of:
The infrastructure must exist somewhere; either on the franchisor side or the area developer side.
The functions of managing a franchise system are usually carried out by a team of corporate employees. It is not realistic to expect an area developer to fulfill the same functions plus operate a unit without the proper infrastructure.
Finding an area developer that is good at EVERYTHING is not likely. Try focusing on an area developer’s core competencies and supporting the area developer in the areas where he/she is weaker.
Don’t offload functions of managing a system to an area developer that can be more efficiently executed by the corporate office.
After you sign a master franchisee or an area developer, the system DOES NOT go into autopilot. The franchisor must stay involved and active.
Trying to fix problems in the three-party franchise relationship are much easier to correct early on, so stay connected and involved.
Educate yourself before trying to utilize a three-party model by talking to attorneys and consultants who have experience.
Manage expectations up front through a well-written agreement and ops manual
Paul Rocchio – IFA Procchio@Franchise.org
Contact Paul for information about joining the International Franchise Association
Book: Dare to Serve By Cheryl Bachelder
Servant leadership is sometimes derided as soft or ineffective, but this book shows that it’s actually challenging and tough minded—a daring path. Bachelder takes you firsthand through the transformation of Popeyes and shows how a leader at any level can become a Dare-to-Serve leader.
By Kit Vinson|June 9th, 2017|Podcast|Comments Off on The Franchise Manual Podcast – Episode #15 – Franchising Failure – A Case Study
In this episode, Nancy Friedman shares with us her experiences as a franchisor and what she believes were the reasons for its ultimate failure. This is going to be a really good episode because we always hear about people telling us how they succeeded, but rarely do we get to hear from the other side of that coin. The episode is filled with great “take-aways” and is a must-listen for any emerging franchisor.
Segment 1 02:54
Get to know Nancy Friedman
Free gift for listeners
Segment 2 28:33
Topic Segment – “Franchising Failure” A Case Study
Segment 3 50:00
In this episode, Nancy discusses the five steps to ultimately fail in franchising.
Proper vetting of prospective franchisees is key. Do your due diligence. Trust but verify
Make sure you have the proper infrastructure in place before you begin the journey down the road of franchising. You can’t do everything all by yourself.
As a training document, a reference document, a master document for the system standards, as a sales tool, have your franchise operations manual in place. As a successful Startup ‘we’ make it look easy. It’s not.
Steps 4 and 5:
Don’t be too hot for the deal. Speed is not success. Have a growth plan in place. When you grant a new franchise, ensure that it fits into your well thought-out plan. A shotgun approach may have worked for some companies, but it doesn’t mean that it’s the easiest, most efficient, or best method of expansion. Franchising isn’t for everyone.
By Kit Vinson|April 27th, 2017|Podcast|Comments Off on The Franchise Manual Podcast – Episode #14 – Building a solid, emerging franchise model
In this episode, Pete Baldine talks to us 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.
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
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
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
Communicating / Coaching franchisees before the validation call
“Download” meeting with prospect after the validation call
Evaluate how well candidate assesses information from validation call
By Kit Vinson|March 28th, 2017|Podcast|Comments Off on The Franchise Manual Podcast – Episode #13 – IFA
How the International Franchise Association (IFA) can help startup franchisors, emerging franchisors, and mature franchisors to be more successful
In this episode I speak with Paul Rocchio of the International Franchise Association, www.ifa.org , as he discusses how the IFA is poised to be one of the most useful tools to all franchisors as they work to grow their franchise systems.
Segment 1 Time Stamp
Get to know Paul Rocchio 02:25
Topic Segment – IFA 23:05
Quick Draw 57:00
Topics discussed in this episode:
“I wish I had joined IFA MUCH sooner than I did”
FranShip Mentor Program
FranSocial – Social media platform that only includes IFA members
By Kit Vinson|February 23rd, 2017|Podcast|Comments Off on The Franchise Manual Podcast – Episode #12 – Why Your FDD Sucks
Mike gave away most of the company secrets during this interview! I was blown away and you will be too.
In this episode, Mike Drumm of Drumm Law in Denver, Colorado tells us why your company’s FDD might suck. He points out issues in an FDD’s content and style that could make or break an FDD’s ability to help you sell your concept to prospective franchisees.
00:00:40 Podner Introduction
00:02:24 Segment 1: Get to know Mike Drumm
00:26:34 Segment 2: Why Your FDD Sucks
00:55:06 Segment 3: Quick Draw
Mike Drumm Show Notes
Why your FDD might suck:
It’s not written in plain English
You have “over disclosed”
You let your attorney or accountant write the first sentence that describes the concept
You didn’t brand the document
The FDD is not visually attractive and easy to read (pictures, charts, etc)
Item 19 doesn’t tell your story well
It doesn’t use a data sheet
Too many exhibits
Item 7 doesn’t include an average
It includes outdated technology references
During my visit with Mike, we go off topic and discuss some really important topics that every franchisor needs to know.
How to make the delivery of an FDD a memorable experience.
By Kit Vinson|December 15th, 2016|Podcast|Comments Off on The Franchise Manual Podcast – Episode #11 – Franchisee Training
How to create a world class franchisee training program.
My podner in this episode is Cordell Riley of Tortal Training and our topic today is 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.
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.
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 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