July 9, 2025 • 34 mins
Michael Jacobson became CEO of French Florist in late 2018, rescuing the company from near closure and driving it to $10 million in revenue by 2024, making it the largest flower shop in Los Angeles. His leadership has propelled the business into a new era of innovation, with a focus on technology and a robust model for global expansion through licensing.
Before French Florist, Michael honed his strategic skills at Slalom, a $1 billion consulting firm, and as a real estate broker. He also contributed to the Washington Hyperloop project, advising on innovative transportation solutions. These experiences shaped his ability to drive change and create growth across industries.
Outside of work, Michael is an avid swimmer and promotes wellness within his team. He supports the Little Miracles Foundation, helping orphans, and is an active member of the Young Presidents' Organization (YPO), believing true success lies in both business achievements and societal impact.
During the show we discussed:
- Turning a struggling business into an 8-figure success
- The rise of “order aggregators” and why they’re the future
- How lack of innovation can kill your business
- Global floral industry size and future growth potential
- Most profitable floral segments: retail, events, online delivery
- Why tech and retention are key growth drivers
- Floral industry vs. others in market size and growth
- Why floral franchises are cheap and easy to start
- 5 unique ways to boost your business’s value
- The power of branding in a crowded floral market
- How florists use tech to boost efficiency and profits
- Is it easy to enter the floral industry?
- Big opportunity: franchising in the floral space
Resources:
https://frenchfloristfranchise.com/
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to the Business Credit and Financing Show.
Each week, we talk about the growth strategies
that matter most to entrepreneurs.
Listen in as we discuss the secrets to
getting credit and money to start and grow
your business.
And enjoy as we talk with seasoned business
owners, coaches, and industry leaders on a variety
(00:22):
of topics from advertising and marketing to the
nuts and bolts of running a highly successful
business.
And now, to introduce the host of our
show, financial expert and award-winning author, Ty
Crandall.
Hello, and thanks for joining us today.
I'm super excited you could be here because
today we're talking about a topic we've never
talked about before.
We're actually gonna dive into scaling success in
(00:45):
the floral business.
We'll talk about trends, profits, and growth strategies,
but most importantly, this is why I think
you're gonna love this topic.
We are going to talk about franchising today
in a way that you've never heard us
talk about franchising.
You're even gonna learn about franchising, about acquiring
a business, a lot of things along that
line, and you're gonna learn about it from
somebody that literally took a struggling floral shop
(01:06):
and then made it into a multiple eight
-figure business before he even exploded it up
to franchising and many other things.
So with us today is Michael Jacobson.
Now, Michael actually became CEO of French Forest
in late 2018, basically rescuing the company from
near closure and driving to 10 million in
revenue by 2024, making it the largest flower
(01:26):
shop in Los Angeles.
Now, his leadership has propelled the business into
a new era of innovation with a focus
on technology and a robust model for global
expansion through licensing.
Now, before French Forest, he actually honed his
strategic skills at Salam, at $1 billion consulting
firm as a real estate broker.
He also contributed to the Washington Hyperloop Project,
(01:50):
advising on innovative transportation solutions, and these experiences
shaped his ability to drive change and create
growth across industries.
Now, outside of work, Michael's an avid swimmer
and promotes wellness within his team.
He supports the Little Miracles Foundation, helping orphans,
and is an active member of the Young
Presidents Organization, believing true success lies in both
(02:12):
business achievement and social impact.
Michael, thanks for joining us today.
Awesome, Tatai, a hell of an introduction.
Thank you for all of that.
Appreciate it.
Great to be here.
I'm glad you're here, and I'm glad about,
I wanna see how this whole thing works,
but let's start with the beginning.
How do you jump from what you're doing
in tech, you're a tech guy, how do
you jump from tech into floral to begin
(02:32):
with?
Yeah, I mean, I have to be super
real with you.
I mean, a lot of us as humans
are, we think, especially in the business world,
we think we're operating from a place of
logic, and we like to hope that sometimes
we do, but what I've learned is a
lot of the times we make our decisions
based on emotion and we attempt to back
it up, and so I think starting from
a place of how I was feeling is
(02:53):
probably the right way to get you to
understand on why I made that jump.
I was at a college, my first job
in college, like you touched on, was in
a very big corporate consulting firm, and I
learned a lot, don't get me wrong, was
working with big, big companies, but it was
soul-sucking.
I was in a room with a bunch
of old white guys and with linoleum floors
and fluorescent lighting, and it was soul-sucking.
(03:14):
I knew after a couple of months I
didn't wanna be there, but I stuck it
out for a year.
I told myself I would to get back
to the firm that gave me the opportunity
to be there, but as soon as I
hit that one-year mark, I'm like, oh,
I had my ear pretty close to the
ground for additional opportunities.
I've always kind of had the entrepreneurial bug,
I'm sure like a lot of your listeners
do, given the nature of your podcast, but
(03:36):
I got a call.
I was working corporate consulting, and one day
I got a call, and it was my
uncle, and he said, Mike, I've been operating
my flower shop for over 35 years, and
I can't do it anymore.
I have been working 60-hour weeks, six
days a week, taking home 30, 40K, and
just done with it, and no business broker
(03:58):
wants to list my business because it's not
worth their time.
My background's originally in finance, and so he
called me and he said, can you help
me sell the business?
I said, sure, 100%.
And so, kind of very long story short,
ended up working with him for about, the
business needed to be cleaned up a little
bit.
There was an opportunity to make the books
(04:19):
look a little bit better.
I did some due diligence on other flower
shops that were for sale, understanding what they're
doing well, what they're not doing well, what
multiples they're selling for, and the more I
worked with him on his business, I said,
like, holy crap, there's something really, really special
here.
His shop alone is a great, it's a
very typical mom-and-pop shop.
(04:40):
There's green and purple paint on the walls,
there's paper flying everywhere, there's like six-fax
machines.
It's a mom-and-pop flower shop, right?
Not necessarily something that is, not something on
the surface level that you would wanna acquire
as a business, but what I saw was
every single flower shop I went to was
struggling with the same exact problems.
And why that got me so excited is
(05:00):
because when I came from consulting, consultants come
in, whatever you think of consultants, and I
have my own opinion, even coming from the
space, we come in when there's pain, we
come in when people can't solve their problems
and they need some additional to get the
whatever it is that they want solved.
There's so much pain in the floral industry.
The florists are struggling and there's a lot
of different reasons why, but all florists are
struggling with very similar problems and that's the
(05:21):
opportunity that we saw.
So again, kind of the end result is
for about two months of working with my
uncle on originally coming in to help him
sell the company, I said, hey, I wanna
take this over.
I left my corporate job, I worked out
a deal with my uncle and bought the
company from him and we got to work.
And so there's a lot of different rabbit
holes that we could go down from there
on how we achieve what we have from
(05:42):
there.
But that was about six years ago and
we haven't looked back.
So walk me through that.
I mean, you have a business that's struggling,
barely surviving, the owners own 60 hour weeks
and bring in 30K, 40K a year, right?
Which I imagine to your point, when I
think about a floral shop, that's exactly what
I think about.
Like I do not think about those as
$10 million plus businesses, I don't.
I think of it that I can't think
(06:04):
your average floral shop would probably even pull
seven figures.
I would think they're probably considerably less than
that.
So how do you do that?
Because I think there's a lot of principles
and how you did it in that industry
that everyone watching and listening can learn about
for their own business.
So what changes do you make to take
a business like that up to the levels
that you've been able to grow to six
years later?
(06:25):
Yeah, it's such a comprehensive question.
And so I'll do my best to answer
it in one or two minutes here.
There's really three reasons.
I think it'll be helpful to understand on
how the floral industry got to where it
is today.
The first one is that when I say
French fries, what company do you think of?
McDonald's.
Yeah, the same.
And if I say Starbucks, oh no, I
(06:46):
forgot the punchline.
Sorry, maybe you'll give a different answer.
Coffee.
Yeah, depends.
Maybe on these, because someone says Dunkin'.
I do get different answers on the coffee
one.
Depends where you're from.
If I say Flowers, what company comes to
mind?
I don't know, 1-800-Flowers, I guess?
Totally, yep.
So the dominant market player is 1-800
-Flowers.
And it's a shame because when we think
of 1-800-Flowers, they're not this quality,
(07:06):
consistent, reliable brand that consumers look at.
As a matter of fact, they're not even
a floral company.
And a lot of people don't realize that.
They're what we call in the industry, they're
kind of like an internet broker.
So they take your order.
You're paying $100 for that order for 1
-800-Flowers.
They're syndicating it to a local florist.
The problem is they're taking a 30 to
40% commission out of that order before
it gets to the florist.
(07:27):
So that's problem number one, is that so
many of these florists are reliant on these,
we call them order aggregators for orders, but
the aggregators are stripping out such a tremendous
amount of their margin that like no wonder
they're not making money.
So that's problem number one.
And in a lot of cases, so much
of their revenue is derived, like they're stuck
between a rock and a hard place because
(07:48):
they can't just drop the relationship with the
aggregator, even though they're probably losing money on
those orders, because then their revenue dropped by
40%, like if 40% of the revenue
is coming from the aggregator.
So they're stuck.
And the second one is a little bit
of kind of a derivative of that.
Florists are not super financially, the acumen is
less because they're creatives, they're passionate.
The one thing I have learned is florists
(08:10):
are amazing people.
They're super creative.
They're in the industry for all the right
reasons.
They understand the power of flowers.
And I don't say that lightly, like flowers
are beautiful.
The more time I spend in the industry,
the more I respect and appreciate flowers and
the feelings and emotions that.
It's a powerful message to convey what you
want.
And so not to go down that rabbit
hole, but they're really passionate, emotional people.
And the business acumen is, there's always exceptions,
(08:32):
but generally less.
And 1-800-Flowers is squeezing them financially.
Maybe they've been doing it for 20 or
30 years.
There's this old way of doing things and
this lack of, what I'm trying to get
at is there's a lack of innovation in
the industry because no florist either has the
financial capital or the bandwidth or whatever else
it requires to even have the space to
(08:53):
innovate because there's just not even an opportunity.
There's no innovation happening from within the industry.
And then so the third part of how
the industry has gotten so stagnant and where
it is today is, okay, well, sometimes outside
capital will come in to help an industry
innovate, but you look at our industry, it's
a $19 billion industry.
And it's tough to say the $19 billion
(09:13):
is small, but when you're talking about venture
capital and private equity and any other type
of institutional capital, these folks are looking at
like software as a service, AI, biotech, pharmaceuticals,
like the kind of like the trillion dollar
industries.
And here's this measly $19 billion industry that's
just not worth their time.
And so there's just been such a stagnation
and lack of innovation in the space that
like, so how did we do what we
(09:34):
did?
We basically said, gave the middle finger to
the wire services, the aggregators.
And we said, we're not working with you
guys anymore.
We're gonna, I was kind of coming relatively
fresh out of college.
And so I was kind of living the
ramen profitable life.
I didn't care.
I was happy to reinvest literally every single
penny back into the business, but we invested
in a way better technology.
We invested in a way better supply chain.
We invested in other demand generation and client
(09:56):
acquisition campaigns that didn't rely on the aggregators
and more importantly, client retention tactics.
We shifted most of our revenue now comes
from digital, from heavy search engine optimization, conversion
rate optimization, all of those kinds of digital
infrastructure, fundamentally better web architecture, built a new
website, better operating system on the backend where
designer can come in and now they operate
(10:17):
on an iPad.
All the arrangements are there.
The recipe is there, keeps track of their
productivity, gamifies and it allows the designer not
to worry about the administrative tasks and automates
all of that stuff.
And they get to focus on what they're
passionate about, the creative side.
So we just, we had an incredibly relentless
focus on making operations a lot more efficient,
building a brand where we could acquire the
(10:39):
customer and they become our customers and we
can nurture and have a very long-term
relationship with them.
So we invested super heavily and super aggressively
just for six years and we haven't stopped
all in an effort to provide a better
client experience.
And so, I would love to say that
there's like one secret sauce that's propelled us
to where we are today, but it's probably
an amalgamation of like a few hundred decisions
that have gotten us to where we are
and how we communicate to the marketplace and
(11:01):
how we show up and the messaging that
we bring and why we're special and how
we differentiate.
And I think ultimately, as much as we
wanna be in control of our success, we're
not.
It's up to the, especially in the long
run, it's up to the customer on if
we're successful or not.
And so everything we kind of have done
is a derivative of like, how can we
provide a better client experience?
And I think we're investing on a much
longer time horizon, like a 10 or 15
(11:22):
or 20 year time horizon.
There's an opportunity to fundamentally shift the floral
industry and where it is today compared to
where it could be.
And all the other floral companies out there
are like worried about today's profit and tomorrow's
profit.
And they're making decisions that are optimizing for
that as opposed to the long-term customer
journey.
So it's been a lot of work, but
fundamentally it is very simple.
It's like, we've just made incredible decisions day
(11:42):
in and day out.
Everything has been centered around how can we
create a better client experience.
I love everything you said.
And I think, and I talk about this
all the time, like you're describing the future.
I mean, the future is as plumbers will
have, companies will come in and they will
handle it all, right?
They will be the ones that go out
and get the leads.
They will be the ones that take the
calls and plumbers will ultimately be the ones
(12:04):
that go and do the work.
And I'm just using plumbers as an example,
choose an industry.
I really feel that these, as you're describing
water aggregators, I think that is the future
because the people like florists, they're not good
at running a business typically, not in an
industry in general, right?
And so then what happens, they come in
as they're struggling and then the big companies
will come in and ultimately do the majority
of the work and just pass the work
(12:26):
off to them to actually operate.
I think that is the future.
And there's a lot of people here watching
this that don't want that to be their
future.
So there's so many things you did, where
would you start?
If somebody is watching this and they're like,
man, I'm trying to get my business more
profitable, whatever it is, what do you think
is the best approach for somebody to potentially
look at taking, to take their business from
(12:46):
struggling like you did and then build the
infrastructure, build the systems, build the branding.
And there's so many things to tackle, like
where do they start?
What's a good place for them to start
to try to get that and rescue it
from almost failing to being profitable?
Yeah, I think that it requires an incredible
level of dedication towards how bad do you
(13:08):
want to have your business thrive and an
incredible level of willingness to sacrifice a lot
and the short run for that long-term
gain.
I mean, there were many nights I spent
in the flower shop, payroll was nearly missed,
way too many times that I could count
or I had to pull from my personal
funds to make sure the employees were paid,
(13:30):
but there was never a reduction of passion.
There was never reduction.
I've always had an unwavering commitment and conviction
in our ability to succeed.
And pretty much at any expense, we would
kind of tackle that mission.
And that's not right for everybody.
And I think that we recognize that, we
have put millions and millions of dollars and
(13:50):
an incredible amount of time of dedication.
Not just my time, there's a massive team.
I happen to be the one that's sitting
here talking to you, but obviously there's a
massive team that is working just as hard
as I am to drive that mission forward
as well.
And it's a lot of work to do
that.
And so it's interesting where my mind goes
is, it's just a level of commitment, but
the way that we've approached it, because we
(14:11):
agree, I come from the big corporate bureaucracy
and I didn't like it.
And we actually, we don't want to become
that.
And so when our flower shop became very
successful in Los Angeles, we opened up a
few more corporate units.
We were doing north of 10 million in
the Los Angeles shop.
We opened up another shop.
It did about 900K in the first year.
We opened up a third shop.
That one did about 1.2 million in
(14:31):
its first year.
And the average florist is doing about 200
to $300,000 in revenue.
And that's usually after like 10 or 15
years of operating.
So ours, we have something good.
We realized we had something good.
And so, but we had some, we did
some deep thinking and we said, okay, we
can continue to open up.
Say we could open 300 corporate locations across
America, or there was this thing called franchising.
(14:54):
And candidly, I had a quite negative stigma
against franchising.
You can get a Subway in the 7
-Elevens and you hear these horror stories sometimes
about unhappy franchise owners.
But the more I studied it, I thought
that there's a really, similar to how we've
approached the floral industry.
You're like, I'm like, I think there's a
different way to do this.
That's better.
We took a similar approach to the franchise
kind of model.
(15:15):
We said, we think there's a different way
to do this.
And that different way is to enable people
who are kind of entrepreneurs by nature.
Maybe they haven't made the leap yet, or
maybe they've been working corporate for a while.
They've been able to build up their resources.
And like, I didn't come into this business
and started from the ground up.
It was an established business.
It had good bones and we leveraged what
(15:37):
was there to make it an order of
magnitude better.
And I think that that way of operating,
that's what it kind of attracted me to
a franchise system as well.
As like, you don't need to pour millions
of dollars in like tens of thousands of
hours into trying to get your business from
struggling to something great.
I think there's something to be said for
joining forces with somebody or something that, where
(15:58):
there's complimentary skillsets.
Like our CMO is way smarter than I
am in marketing.
Our chief operations officer is way smarter than
I am in operations.
Our chief of staff is way better at
hiring than I am.
And so we've joined forces even internally in
our team with folks that have skillsets that
I don't have that put together, level you
up a lot quicker.
And so for us, franchising, we love that
(16:19):
in a lot of senses.
And I think that franchising is a great
way to kind of potentially get your business,
whatever industry you're in, out of trouble.
And we offer a unique thing called conversion
franchising where we have a florist that can
convert their shop to a French florist.
Or if we have a lot of folks
in our system that are coming in and
they can acquire a flower shop because flower
shops are selling for really cheap multiples.
(16:41):
And then we can put the French florist
engine in and really propel that business.
We have a lot of case studies where
we've been able to, you know, double or
triple revenue literally overnight.
It's incredible with the infrastructure that we built.
And now a quick break to hear from
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(17:03):
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So long winded way of saying, I think
joining forces and understanding that one plus one
is greater than two has been kind of
(17:25):
revelationary for us.
Anytime we have a little bit of cash
or capital sitting around, we see someone great,
whether we are hiring or not, we bring
them into the company and we put our
heads together and we always end up with
a result that seems to be better than
where we started.
I want to dive in a little bit
more about franchising.
And first of all, just kudos, man.
I mean, when I said 10 million, I
honestly did assume that 10 million was multiple
(17:47):
shops, right?
And so to you just said that, like
I'm blown away that you had one shop.
I mean, your average order, I think have
to be like sub $100.
That's really hard to do with such a
low price perishable like type products.
That's just kudos.
I didn't even know it was possible to
get a shop to $10 million at a
four industry.
(18:07):
So let me ask you this.
I'm interested in both because we have a
lot of people here that are thinking about
acquiring a business versus starting a business.
And a lot of the people that I
speak to out there from deal con and
all these events, they're looking at roll-ups.
They like roll-ups.
They like an industry.
They could buy one and buy another and
then duplicate the system and do that.
So let's talk about that.
(18:29):
If somebody's listening and watching this and they're
like, hey, this is cool.
Give me some of the details of the
franchise.
If I wanna start a franchise with you
guys today and I say, hey, this sounds
awesome.
I wanna start from scratch a French florist
franchise.
Give me some insights.
What should I know?
Yeah, I think it's a great question.
So a bunch of different ways to slice
(18:50):
it.
This is one way of looking at it.
Let's look at the cost of building a
French florist from scratch versus acquiring a unit
and converting it.
If you build a French florist, it can
range anywhere from 160,000 to 300 and
some thousand dollars to build from the ground
up.
That includes site selection, lease negotiation, physically building
out the entire store in the first three
months of operating all that stuff.
(19:10):
Or you can acquire a unit and say
you find a florist that's doing 70K in
net operating income.
They're typically selling between two to three X
EBITDA max, usually pretty low.
So say you get it for two X
EBITDA, just for easy math.
70K times two is they're selling their business
for 140K and you want to convert that
to a French florist.
(19:31):
You're going to have to do some upgrades,
maybe call it $80,000 of upgrades.
So you're at, what is that?
Help me out here, $220,000 investment, right?
So you have a startup and an acquisition
that are, I mean, this acquisition number is
kind of right in the middle of what
it costs to build a unit from the
scratch.
Beautiful, beautiful part about the acquisition is there's
(19:51):
two aspects to it.
One is instead of going through the potentially
six month process from site selection, lease negotiation,
physically building it out all the way to
launch, when you purchase that business, you don't
have to wait for revenue.
You're making revenue on day zero basically and
profit as well, hopefully.
In addition to that also, when you open
a unit from the ground up, the average
flower buyer is buying about 2.2 times
(20:13):
per year, just to kind of industry stat.
So for easy math, let's say once every
six months.
And so if you're building a unit from
scratch, the first six months of you operating,
you're going to be investing in a client
acquisition quite heavily.
And we're really good at client acquisition, but
it's still an investment.
And so it's not till the second six
months where you're starting to, you're still investing
in client acquisition, but now you're getting those
repeat customers from the first six months, and
(20:35):
that's where you see revenue ramp.
As opposed to an acquisition, you get to
accelerate that a lot because you're already starting
out with a beautiful client base.
And we're really good at retaining that client
base, getting them excited to having them join
the loyalty program that we have, downloading the
mobile app, which is a really sticky product,
sending them a handwritten notes about what they
can expect about how this brand is transitioning
to joining the French Forest family and get
(20:56):
them excited about the improvements that they'll get
to see.
And so the revenue ramp happens typically a
lot quicker on an acquisition.
So we get really excited.
We do have a lot of folks.
We just signed two business guys, partners that
are based in the Bay Area, and they're
looking to acquire a few flower shops and
they're doing it.
And so we're helping them very deeply.
We've done due diligence on an incredible amount
(21:17):
of flower shops.
We know what to look out for.
We know what makes a great flower shop,
which ones have good bones, how much we
should pay for them.
And so we're helping them with the due
diligence.
Yeah, and ultimately you're gonna help advise them
on making a great buying decision so that
we can put the French Forest engine into
that business, ultimately convert it to a French
Forest and then hopefully see the results that
we've been able to at least achieve historically.
So it sounds like it's easier to acquire
(21:40):
an existing florist than try to build a
new one.
I'm gonna make money a lot faster if
I do that.
Where do you guys fit in?
Like if I come in and know that
I wanna make it a French Forest franchise
and I'm acquiring the business, do you help?
Does your team help through the acquisition, negotiation
part of that?
Or I'm coming to you once all that
part's done.
We do, no, absolutely.
(22:00):
So our hands become a little bit tied
because as a franchise, we do have to
follow regulations and they're very healthy regulations to
be in the place.
We're happy to have them in place.
It helps protect especially bad franchise systems out
there from making financial performance representations that aren't
real.
So our hands are a little bit tied
on how much we can help until a
(22:22):
franchise agreement is kind of authorized between us.
But as soon as we're outside of like
the sales process, which in the sales process
from a financial perspective, all we can give
you is historical data.
So we give you all of the historical
data and it's like your job to interpret
whether you think like what you think of
that.
We can give you the data and it's
up to you to make the decisions.
But yeah, but once an agreement is authorized
between us and somebody who is looking to
(22:43):
open a French Forest, we go hand in
hand and we do very, very, very deep
due diligence alongside whoever's the prospect to who's
looking to purchase the businesses.
And yeah, it's been really fun because we
know what it takes to operate a flower
shop.
And a lot of times these owners are
operating in a locale that is local to
(23:05):
them.
And so they have this like local area
knowledge and like the combination of forces there,
we usually are able to, we have incredible
heat maps where we know like what areas
we wanna target and where our French Forest
minded customers are.
So yeah, we advise on a lot of
fronts, but it is a very collaborative process
where like we work together to identify the
right flower shop, make sure the amount that's
being paid is an appropriate amount, making sure
(23:26):
to stay away from just any common red
flags with acquiring any business, right?
Making sure you're not buying the liability, making
sure you're shielded from that, making sure that
if it makes sense to have owner transition
support, make sure the lease isn't up for
renewal in three weeks after signing, right?
Just all of those red flags, we kind
of help walk you through.
And ultimately the most fun part is actually
going through the French Forest transition.
So we have an incredibly robust operations team
(23:48):
is about 180 something steps.
And so we have a dedicated concierge that
walks you through literally every one of those
187 steps in order to transition it to
a French Forest.
And then it's off to the races.
It's like, it's been really fun so far.
So it's not rocket science, but the floral
industry has its nuances and but we've gotten
good at those nuances.
Yeah, and I love it because I've never
(24:09):
heard anybody talk about this before.
I mean, to be honest, I mean, I
talked to a lot of people about acquisition
and franchising, and we do a lot of
financing in those spaces, but to be able
to have a franchise where you're helping them
go out and acquire an existing business versus
an exponential cost.
Like one of my friends from high school
went to prom with her.
She actually builds like all the Taco Bells
(24:31):
and those restaurants.
She builds them.
I mean, it's expensive like to get the
land to build that thing.
I mean, and it's a long time before
you making a return, but what you're describing,
somebody can get in and fairly quickly start
making a pretty good return with the methodology
you guys have, and you are helping every
part of the way, which I've never heard
of something like that before either.
(24:51):
So the next question, I think in a
lot of people's minds is cost.
And I'm not trying to get you to
quote how much certain things are, but do
you have access to financing sources where they
can actually help get the money or what
can someone expect to be able to pay
to be able to get into something like
this, or are there creative ways to be
(25:11):
able to finance their way in?
I think that's one of the top of
mind questions people have.
Yeah, yeah, absolutely.
And I think that debt is a powerful
vehicle if used correctly, right?
We don't wanna make sure it doesn't become
a crisis situation where you can't service your
debt, but given the level of investment, especially
from a historical cash on cash return basis,
if you look at our financials historically are
pretty good to say the least.
(25:32):
The economics work quite well.
And so we don't offer any kind of
type of financing as the franchise work.
We always wanna make sure that we're making
decisions that are clearly in the best interest
of our franchise system and never wanna have
any conflict of interest.
So we always refer out to partners.
I mean, type like folks like yourself, right?
Who understand franchising, who understand the unit economics.
And we have started to develop pretty great
(25:53):
relationships with a couple of different lenders that
understand how our business works and kind of
help accelerate that financing process.
So we help point in the right direction,
ultimately how heavy someone wants to leverage or
take on debt is ultimately at their discretion,
but we point people in the right direction.
To give you an answer on how much
it costs, I mean, it varies.
You could buy a million dollar flower shop
(26:14):
if you wanna start with something huge, you
could also buy a flower shop for a
hundred grand.
We have in the item seven in our
disclosure documents that everybody gets just a very,
very clear kind of high and low estimates
of how much it costs to either build
a unit from scratch and or acquire a
unit and all of the, it depends.
Like there's so many variables.
(26:35):
Like for example, the walk-in cooler is
probably the most expensive asset, but a lot
of flower shops already have a walk-in
cooler.
So you don't need to get a new
one.
So we look at the walk-in cooler
and see the condition of it.
But if you need to, I don't know,
every once in a while we find a
flower shop that doesn't have a walk-in,
which blows my mind, but that could cost
anywhere from 30 to $60,000 to get.
And their assets, they're great.
They last 25 years, they're incredible tech in
(26:57):
those coolers, but it depends.
It can range anywhere from $60,000, I
think it is to $180,000 once you
acquire the shop to kind of outfit it.
The high end being like a large shop
that doesn't have any real heavy infrastructure in
place.
So it varies.
And if there's deeper interest on that, then
it's pretty easy.
We give the document that lays it all
out.
Yeah, and I love that you partner with
(27:18):
banks because when you have banks that really
understand what you do and understand your model
and believe in it, man, it is a
game changer for your franchisees.
I mean, it's way better to work with
brokers or anybody else because that bank, I
mean, if you have the bank that sees
it and loves it, then they will make
it very, not easy per se, but in
(27:38):
the scope of lending, very easy to be
able to get the financing they need.
What haven't I asked you that I should
ask you about people that are saying, wow,
I never even thought about this before, never
thought about the florist industry, never even thought
that kind of money was there.
Like what is some parting advice that you
have for anybody that's listening or watching this
saying, wow, oh my gosh, this could actually
be something with maybe questions I haven't asked
(27:58):
that we should answer for them to be
able to jump in and maybe take advantage
of this industry, get into the industry, or
even take advantage of what you have for
an easier path to get into the industry?
Yeah, I think that's a great, great, great
thing.
There's two things that come to mind immediately,
at least.
The first one is that where a lot
of folks don't see opportunity, to your point,
(28:19):
this isn't something that a lot of people
have thought of before, that's exactly where the
opportunity lies.
And that's what we found.
So it's unsuspecting, but very real.
And we're excited to be the ones that
seem to be, at least at this point,
leading the charge and helping elevate the floral
industry as a whole.
We don't have, I don't want to say
we don't have competition.
There's always folks that are there, but we're
here to make the company the best that
(28:39):
we can, and we seem to be paving
the way.
We would love additional competition to come in
and try to compete with us.
I think that further stokes innovation, and we'd
welcome that in, but we're excited to be
the ones that are doing it right now.
The second thing that I would say is,
I think a good question to ask me
would be like, what keeps me up at
night as the franchisor?
What risks are there?
And I think that's a good question to
be asking.
And I think that, from my perspective, what
(29:01):
keeps me up at night is our rate
of expansion needs to be relatively controlled.
And if we expand too quickly, and we've
been approached by investor-minded folks, and they've
said, hey, we'll take all of Manhattan, or
we'll take half of South Carolina, and here's
a $700,000 shack.
And we say, no, this is not the
right fit for us.
So I think it's important for us.
(29:21):
We have strong principles that we operate the
company by, and we're looking for right partners
to come in that aren't just looking to
make money.
And don't get me wrong, that's an incredibly
important part.
It's actually a critical part, because we're not
able to keep the lights on without it.
But we like to think of that as
a means, and not quite the ends.
I think we're here to drive our industry
forward.
And we typically like to align with folks
(29:41):
that are aligned with the mission, and vision,
and values, and culture that we are creating,
and the principles that we operate by.
So an important part for us is inviting
folks to what we call a discovery day,
to come and meet our team.
Life is short, and we try to separate
our business life from personal life.
The reality is it's all one life.
And it's important who we talk to.
(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to the Business Credit and Financing Show.
Each week, we talk about the growth strategies
that matter most to entrepreneurs.
Listen in as we discuss the secrets to
getting credit and money to start and grow
your business.
And enjoy as we talk with seasoned business
owners, coaches, and industry leaders on a variety
(00:22):
of topics from advertising and marketing to the
nuts and bolts of running a highly successful
business.
And now, to introduce the host of our
show, financial expert and award-winning author, Ty
Crandall.
Hello, and thanks for joining us today.
I'm super excited you could be here because
today we're talking about a topic we've never
talked about before.
We're actually gonna dive into scaling success in
(00:45):
the floral business.
We'll talk about trends, profits, and growth strategies,
but most importantly, this is why I think
you're gonna love this topic.
We are going to talk about franchising today
in a way that you've never heard us
talk about franchising.
You're even gonna learn about franchising, about acquiring
a business, a lot of things along that
line, and you're gonna learn about it from
somebody that literally took a struggling floral shop
(01:06):
and then made it into a multiple eight
-figure business before he even exploded it up
to franchising and many other things.
So with us today is Michael Jacobson.
Now, Michael actually became CEO of French Forest
in late 2018, basically rescuing the company from
near closure and driving to 10 million in
revenue by 2024, making it the largest flower
(01:26):
shop in Los Angeles.
Now, his leadership has propelled the business into
a new era of innovation with a focus
on technology and a robust model for global
expansion through licensing.
Now, before French Forest, he actually honed his
strategic skills at Salam, at $1 billion consulting
firm as a real estate broker.
He also contributed to the Washington Hyperloop Project,
(01:50):
advising on innovative transportation solutions, and these experiences
shaped his ability to drive change and create
growth across industries.
Now, outside of work, Michael's an avid swimmer
and promotes wellness within his team.
He supports the Little Miracles Foundation, helping orphans,
and is an active member of the Young
Presidents Organization, believing true success lies in both
(02:12):
business achievement and social impact.
Michael, thanks for joining us today.
Awesome, Tatai, a hell of an introduction.
Thank you for all of that.
Appreciate it.
Great to be here.
I'm glad you're here, and I'm glad about,
I wanna see how this whole thing works,
but let's start with the beginning.
How do you jump from what you're doing
in tech, you're a tech guy, how do
you jump from tech into floral to begin
(02:32):
with?
Yeah, I mean, I have to be super
real with you.
I mean, a lot of us as humans
are, we think, especially in the business world,
we think we're operating from a place of
logic, and we like to hope that sometimes
we do, but what I've learned is a
lot of the times we make our decisions
based on emotion and we attempt to back
it up, and so I think starting from
a place of how I was feeling is
(02:53):
probably the right way to get you to
understand on why I made that jump.
I was at a college, my first job
in college, like you touched on, was in
a very big corporate consulting firm, and I
learned a lot, don't get me wrong, was
working with big, big companies, but it was
soul-sucking.
I was in a room with a bunch
of old white guys and with linoleum floors
and fluorescent lighting, and it was soul-sucking.
(03:14):
I knew after a couple of months I
didn't wanna be there, but I stuck it
out for a year.
I told myself I would to get back
to the firm that gave me the opportunity
to be there, but as soon as I
hit that one-year mark, I'm like, oh,
I had my ear pretty close to the
ground for additional opportunities.
I've always kind of had the entrepreneurial bug,
I'm sure like a lot of your listeners
do, given the nature of your podcast, but
(03:36):
I got a call.
I was working corporate consulting, and one day
I got a call, and it was my
uncle, and he said, Mike, I've been operating
my flower shop for over 35 years, and
I can't do it anymore.
I have been working 60-hour weeks, six
days a week, taking home 30, 40K, and
just done with it, and no business broker
(03:58):
wants to list my business because it's not
worth their time.
My background's originally in finance, and so he
called me and he said, can you help
me sell the business?
I said, sure, 100%.
And so, kind of very long story short,
ended up working with him for about, the
business needed to be cleaned up a little
bit.
There was an opportunity to make the books
(04:19):
look a little bit better.
I did some due diligence on other flower
shops that were for sale, understanding what they're
doing well, what they're not doing well, what
multiples they're selling for, and the more I
worked with him on his business, I said,
like, holy crap, there's something really, really special
here.
His shop alone is a great, it's a
very typical mom-and-pop shop.
(04:40):
There's green and purple paint on the walls,
there's paper flying everywhere, there's like six-fax
machines.
It's a mom-and-pop flower shop, right?
Not necessarily something that is, not something on
the surface level that you would wanna acquire
as a business, but what I saw was
every single flower shop I went to was
struggling with the same exact problems.
And why that got me so excited is
(05:00):
because when I came from consulting, consultants come
in, whatever you think of consultants, and I
have my own opinion, even coming from the
space, we come in when there's pain, we
come in when people can't solve their problems
and they need some additional to get the
whatever it is that they want solved.
There's so much pain in the floral industry.
The florists are struggling and there's a lot
of different reasons why, but all florists are
struggling with very similar problems and that's the
(05:21):
opportunity that we saw.
So again, kind of the end result is
for about two months of working with my
uncle on originally coming in to help him
sell the company, I said, hey, I wanna
take this over.
I left my corporate job, I worked out
a deal with my uncle and bought the
company from him and we got to work.
And so there's a lot of different rabbit
holes that we could go down from there
on how we achieve what we have from
(05:42):
there.
But that was about six years ago and
we haven't looked back.
So walk me through that.
I mean, you have a business that's struggling,
barely surviving, the owners own 60 hour weeks
and bring in 30K, 40K a year, right?
Which I imagine to your point, when I
think about a floral shop, that's exactly what
I think about.
Like I do not think about those as
$10 million plus businesses, I don't.
I think of it that I can't think
(06:04):
your average floral shop would probably even pull
seven figures.
I would think they're probably considerably less than
that.
So how do you do that?
Because I think there's a lot of principles
and how you did it in that industry
that everyone watching and listening can learn about
for their own business.
So what changes do you make to take
a business like that up to the levels
that you've been able to grow to six
years later?
(06:25):
Yeah, it's such a comprehensive question.
And so I'll do my best to answer
it in one or two minutes here.
There's really three reasons.
I think it'll be helpful to understand on
how the floral industry got to where it
is today.
The first one is that when I say
French fries, what company do you think of?
McDonald's.
Yeah, the same.
And if I say Starbucks, oh no, I
(06:46):
forgot the punchline.
Sorry, maybe you'll give a different answer.
Coffee.
Yeah, depends.
Maybe on these, because someone says Dunkin'.
I do get different answers on the coffee
one.
Depends where you're from.
If I say Flowers, what company comes to
mind?
I don't know, 1-800-Flowers, I guess?
Totally, yep.
So the dominant market player is 1-800
-Flowers.
And it's a shame because when we think
of 1-800-Flowers, they're not this quality,
(07:06):
consistent, reliable brand that consumers look at.
As a matter of fact, they're not even
a floral company.
And a lot of people don't realize that.
They're what we call in the industry, they're
kind of like an internet broker.
So they take your order.
You're paying $100 for that order for 1
-800-Flowers.
They're syndicating it to a local florist.
The problem is they're taking a 30 to
40% commission out of that order before
it gets to the florist.
(07:27):
So that's problem number one, is that so
many of these florists are reliant on these,
we call them order aggregators for orders, but
the aggregators are stripping out such a tremendous
amount of their margin that like no wonder
they're not making money.
So that's problem number one.
And in a lot of cases, so much
of their revenue is derived, like they're stuck
between a rock and a hard place because
(07:48):
they can't just drop the relationship with the
aggregator, even though they're probably losing money on
those orders, because then their revenue dropped by
40%, like if 40% of the revenue
is coming from the aggregator.
So they're stuck.
And the second one is a little bit
of kind of a derivative of that.
Florists are not super financially, the acumen is
less because they're creatives, they're passionate.
The one thing I have learned is florists
(08:10):
are amazing people.
They're super creative.
They're in the industry for all the right
reasons.
They understand the power of flowers.
And I don't say that lightly, like flowers
are beautiful.
The more time I spend in the industry,
the more I respect and appreciate flowers and
the feelings and emotions that.
It's a powerful message to convey what you
want.
And so not to go down that rabbit
hole, but they're really passionate, emotional people.
And the business acumen is, there's always exceptions,
(08:32):
but generally less.
And 1-800-Flowers is squeezing them financially.
Maybe they've been doing it for 20 or
30 years.
There's this old way of doing things and
this lack of, what I'm trying to get
at is there's a lack of innovation in
the industry because no florist either has the
financial capital or the bandwidth or whatever else
it requires to even have the space to
(08:53):
innovate because there's just not even an opportunity.
There's no innovation happening from within the industry.
And then so the third part of how
the industry has gotten so stagnant and where
it is today is, okay, well, sometimes outside
capital will come in to help an industry
innovate, but you look at our industry, it's
a $19 billion industry.
And it's tough to say the $19 billion
(09:13):
is small, but when you're talking about venture
capital and private equity and any other type
of institutional capital, these folks are looking at
like software as a service, AI, biotech, pharmaceuticals,
like the kind of like the trillion dollar
industries.
And here's this measly $19 billion industry that's
just not worth their time.
And so there's just been such a stagnation
and lack of innovation in the space that
like, so how did we do what we
(09:34):
did?
We basically said, gave the middle finger to
the wire services, the aggregators.
And we said, we're not working with you
guys anymore.
We're gonna, I was kind of coming relatively
fresh out of college.
And so I was kind of living the
ramen profitable life.
I didn't care.
I was happy to reinvest literally every single
penny back into the business, but we invested
in a way better technology.
We invested in a way better supply chain.
We invested in other demand generation and client
(09:56):
acquisition campaigns that didn't rely on the aggregators
and more importantly, client retention tactics.
We shifted most of our revenue now comes
from digital, from heavy search engine optimization, conversion
rate optimization, all of those kinds of digital
infrastructure, fundamentally better web architecture, built a new
website, better operating system on the backend where
designer can come in and now they operate
(10:17):
on an iPad.
All the arrangements are there.
The recipe is there, keeps track of their
productivity, gamifies and it allows the designer not
to worry about the administrative tasks and automates
all of that stuff.
And they get to focus on what they're
passionate about, the creative side.
So we just, we had an incredibly relentless
focus on making operations a lot more efficient,
building a brand where we could acquire the
(10:39):
customer and they become our customers and we
can nurture and have a very long-term
relationship with them.
So we invested super heavily and super aggressively
just for six years and we haven't stopped
all in an effort to provide a better
client experience.
And so, I would love to say that
there's like one secret sauce that's propelled us
to where we are today, but it's probably
an amalgamation of like a few hundred decisions
that have gotten us to where we are
and how we communicate to the marketplace and
(11:01):
how we show up and the messaging that
we bring and why we're special and how
we differentiate.
And I think ultimately, as much as we
wanna be in control of our success, we're
not.
It's up to the, especially in the long
run, it's up to the customer on if
we're successful or not.
And so everything we kind of have done
is a derivative of like, how can we
provide a better client experience?
And I think we're investing on a much
longer time horizon, like a 10 or 15
(11:22):
or 20 year time horizon.
There's an opportunity to fundamentally shift the floral
industry and where it is today compared to
where it could be.
And all the other floral companies out there
are like worried about today's profit and tomorrow's
profit.
And they're making decisions that are optimizing for
that as opposed to the long-term customer
journey.
So it's been a lot of work, but
fundamentally it is very simple.
It's like, we've just made incredible decisions day
(11:42):
in and day out.
Everything has been centered around how can we
create a better client experience.
I love everything you said.
And I think, and I talk about this
all the time, like you're describing the future.
I mean, the future is as plumbers will
have, companies will come in and they will
handle it all, right?
They will be the ones that go out
and get the leads.
They will be the ones that take the
calls and plumbers will ultimately be the ones
(12:04):
that go and do the work.
And I'm just using plumbers as an example,
choose an industry.
I really feel that these, as you're describing
water aggregators, I think that is the future
because the people like florists, they're not good
at running a business typically, not in an
industry in general, right?
And so then what happens, they come in
as they're struggling and then the big companies
will come in and ultimately do the majority
of the work and just pass the work
(12:26):
off to them to actually operate.
I think that is the future.
And there's a lot of people here watching
this that don't want that to be their
future.
So there's so many things you did, where
would you start?
If somebody is watching this and they're like,
man, I'm trying to get my business more
profitable, whatever it is, what do you think
is the best approach for somebody to potentially
look at taking, to take their business from
(12:46):
struggling like you did and then build the
infrastructure, build the systems, build the branding.
And there's so many things to tackle, like
where do they start?
What's a good place for them to start
to try to get that and rescue it
from almost failing to being profitable?
Yeah, I think that it requires an incredible
level of dedication towards how bad do you
(13:08):
want to have your business thrive and an
incredible level of willingness to sacrifice a lot
and the short run for that long-term
gain.
I mean, there were many nights I spent
in the flower shop, payroll was nearly missed,
way too many times that I could count
or I had to pull from my personal
funds to make sure the employees were paid,
(13:30):
but there was never a reduction of passion.
There was never reduction.
I've always had an unwavering commitment and conviction
in our ability to succeed.
And pretty much at any expense, we would
kind of tackle that mission.
And that's not right for everybody.
And I think that we recognize that, we
have put millions and millions of dollars and
(13:50):
an incredible amount of time of dedication.
Not just my time, there's a massive team.
I happen to be the one that's sitting
here talking to you, but obviously there's a
massive team that is working just as hard
as I am to drive that mission forward
as well.
And it's a lot of work to do
that.
And so it's interesting where my mind goes
is, it's just a level of commitment, but
the way that we've approached it, because we
(14:11):
agree, I come from the big corporate bureaucracy
and I didn't like it.
And we actually, we don't want to become
that.
And so when our flower shop became very
successful in Los Angeles, we opened up a
few more corporate units.
We were doing north of 10 million in
the Los Angeles shop.
We opened up another shop.
It did about 900K in the first year.
We opened up a third shop.
That one did about 1.2 million in
(14:31):
its first year.
And the average florist is doing about 200
to $300,000 in revenue.
And that's usually after like 10 or 15
years of operating.
So ours, we have something good.
We realized we had something good.
And so, but we had some, we did
some deep thinking and we said, okay, we
can continue to open up.
Say we could open 300 corporate locations across
America, or there was this thing called franchising.
(14:54):
And candidly, I had a quite negative stigma
against franchising.
You can get a Subway in the 7
-Elevens and you hear these horror stories sometimes
about unhappy franchise owners.
But the more I studied it, I thought
that there's a really, similar to how we've
approached the floral industry.
You're like, I'm like, I think there's a
different way to do this.
That's better.
We took a similar approach to the franchise
kind of model.
(15:15):
We said, we think there's a different way
to do this.
And that different way is to enable people
who are kind of entrepreneurs by nature.
Maybe they haven't made the leap yet, or
maybe they've been working corporate for a while.
They've been able to build up their resources.
And like, I didn't come into this business
and started from the ground up.
It was an established business.
It had good bones and we leveraged what
(15:37):
was there to make it an order of
magnitude better.
And I think that that way of operating,
that's what it kind of attracted me to
a franchise system as well.
As like, you don't need to pour millions
of dollars in like tens of thousands of
hours into trying to get your business from
struggling to something great.
I think there's something to be said for
joining forces with somebody or something that, where
(15:58):
there's complimentary skillsets.
Like our CMO is way smarter than I
am in marketing.
Our chief operations officer is way smarter than
I am in operations.
Our chief of staff is way better at
hiring than I am.
And so we've joined forces even internally in
our team with folks that have skillsets that
I don't have that put together, level you
up a lot quicker.
And so for us, franchising, we love that
(16:19):
in a lot of senses.
And I think that franchising is a great
way to kind of potentially get your business,
whatever industry you're in, out of trouble.
And we offer a unique thing called conversion
franchising where we have a florist that can
convert their shop to a French florist.
Or if we have a lot of folks
in our system that are coming in and
they can acquire a flower shop because flower
shops are selling for really cheap multiples.
(16:41):
And then we can put the French florist
engine in and really propel that business.
We have a lot of case studies where
we've been able to, you know, double or
triple revenue literally overnight.
It's incredible with the infrastructure that we built.
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So long winded way of saying, I think
joining forces and understanding that one plus one
is greater than two has been kind of
(17:25):
revelationary for us.
Anytime we have a little bit of cash
or capital sitting around, we see someone great,
whether we are hiring or not, we bring
them into the company and we put our
heads together and we always end up with
a result that seems to be better than
where we started.
I want to dive in a little bit
more about franchising.
And first of all, just kudos, man.
I mean, when I said 10 million, I
honestly did assume that 10 million was multiple
(17:47):
shops, right?
And so to you just said that, like
I'm blown away that you had one shop.
I mean, your average order, I think have
to be like sub $100.
That's really hard to do with such a
low price perishable like type products.
That's just kudos.
I didn't even know it was possible to
get a shop to $10 million at a
four industry.
(18:07):
So let me ask you this.
I'm interested in both because we have a
lot of people here that are thinking about
acquiring a business versus starting a business.
And a lot of the people that I
speak to out there from deal con and
all these events, they're looking at roll-ups.
They like roll-ups.
They like an industry.
They could buy one and buy another and
then duplicate the system and do that.
So let's talk about that.
(18:29):
If somebody's listening and watching this and they're
like, hey, this is cool.
Give me some of the details of the
franchise.
If I wanna start a franchise with you
guys today and I say, hey, this sounds
awesome.
I wanna start from scratch a French florist
franchise.
Give me some insights.
What should I know?
Yeah, I think it's a great question.
So a bunch of different ways to slice
(18:50):
it.
This is one way of looking at it.
Let's look at the cost of building a
French florist from scratch versus acquiring a unit
and converting it.
If you build a French florist, it can
range anywhere from 160,000 to 300 and
some thousand dollars to build from the ground
up.
That includes site selection, lease negotiation, physically building
out the entire store in the first three
months of operating all that stuff.
(19:10):
Or you can acquire a unit and say
you find a florist that's doing 70K in
net operating income.
They're typically selling between two to three X
EBITDA max, usually pretty low.
So say you get it for two X
EBITDA, just for easy math.
70K times two is they're selling their business
for 140K and you want to convert that
to a French florist.
(19:31):
You're going to have to do some upgrades,
maybe call it $80,000 of upgrades.
So you're at, what is that?
Help me out here, $220,000 investment, right?
So you have a startup and an acquisition
that are, I mean, this acquisition number is
kind of right in the middle of what
it costs to build a unit from the
scratch.
Beautiful, beautiful part about the acquisition is there's
(19:51):
two aspects to it.
One is instead of going through the potentially
six month process from site selection, lease negotiation,
physically building it out all the way to
launch, when you purchase that business, you don't
have to wait for revenue.
You're making revenue on day zero basically and
profit as well, hopefully.
In addition to that also, when you open
a unit from the ground up, the average
flower buyer is buying about 2.2 times
(20:13):
per year, just to kind of industry stat.
So for easy math, let's say once every
six months.
And so if you're building a unit from
scratch, the first six months of you operating,
you're going to be investing in a client
acquisition quite heavily.
And we're really good at client acquisition, but
it's still an investment.
And so it's not till the second six
months where you're starting to, you're still investing
in client acquisition, but now you're getting those
repeat customers from the first six months, and
(20:35):
that's where you see revenue ramp.
As opposed to an acquisition, you get to
accelerate that a lot because you're already starting
out with a beautiful client base.
And we're really good at retaining that client
base, getting them excited to having them join
the loyalty program that we have, downloading the
mobile app, which is a really sticky product,
sending them a handwritten notes about what they
can expect about how this brand is transitioning
to joining the French Forest family and get
(20:56):
them excited about the improvements that they'll get
to see.
And so the revenue ramp happens typically a
lot quicker on an acquisition.
So we get really excited.
We do have a lot of folks.
We just signed two business guys, partners that
are based in the Bay Area, and they're
looking to acquire a few flower shops and
they're doing it.
And so we're helping them very deeply.
We've done due diligence on an incredible amount
(21:17):
of flower shops.
We know what to look out for.
We know what makes a great flower shop,
which ones have good bones, how much we
should pay for them.
And so we're helping them with the due
diligence.
Yeah, and ultimately you're gonna help advise them
on making a great buying decision so that
we can put the French Forest engine into
that business, ultimately convert it to a French
Forest and then hopefully see the results that
we've been able to at least achieve historically.
So it sounds like it's easier to acquire
(21:40):
an existing florist than try to build a
new one.
I'm gonna make money a lot faster if
I do that.
Where do you guys fit in?
Like if I come in and know that
I wanna make it a French Forest franchise
and I'm acquiring the business, do you help?
Does your team help through the acquisition, negotiation
part of that?
Or I'm coming to you once all that
part's done.
We do, no, absolutely.
(22:00):
So our hands become a little bit tied
because as a franchise, we do have to
follow regulations and they're very healthy regulations to
be in the place.
We're happy to have them in place.
It helps protect especially bad franchise systems out
there from making financial performance representations that aren't
real.
So our hands are a little bit tied
on how much we can help until a
(22:22):
franchise agreement is kind of authorized between us.
But as soon as we're outside of like
the sales process, which in the sales process
from a financial perspective, all we can give
you is historical data.
So we give you all of the historical
data and it's like your job to interpret
whether you think like what you think of
that.
We can give you the data and it's
up to you to make the decisions.
But yeah, but once an agreement is authorized
between us and somebody who is looking to
(22:43):
open a French Forest, we go hand in
hand and we do very, very, very deep
due diligence alongside whoever's the prospect to who's
looking to purchase the businesses.
And yeah, it's been really fun because we
know what it takes to operate a flower
shop.
And a lot of times these owners are
operating in a locale that is local to
(23:05):
them.
And so they have this like local area
knowledge and like the combination of forces there,
we usually are able to, we have incredible
heat maps where we know like what areas
we wanna target and where our French Forest
minded customers are.
So yeah, we advise on a lot of
fronts, but it is a very collaborative process
where like we work together to identify the
right flower shop, make sure the amount that's
being paid is an appropriate amount, making sure
(23:26):
to stay away from just any common red
flags with acquiring any business, right?
Making sure you're not buying the liability, making
sure you're shielded from that, making sure that
if it makes sense to have owner transition
support, make sure the lease isn't up for
renewal in three weeks after signing, right?
Just all of those red flags, we kind
of help walk you through.
And ultimately the most fun part is actually
going through the French Forest transition.
So we have an incredibly robust operations team
(23:48):
is about 180 something steps.
And so we have a dedicated concierge that
walks you through literally every one of those
187 steps in order to transition it to
a French Forest.
And then it's off to the races.
It's like, it's been really fun so far.
So it's not rocket science, but the floral
industry has its nuances and but we've gotten
good at those nuances.
Yeah, and I love it because I've never
(24:09):
heard anybody talk about this before.
I mean, to be honest, I mean, I
talked to a lot of people about acquisition
and franchising, and we do a lot of
financing in those spaces, but to be able
to have a franchise where you're helping them
go out and acquire an existing business versus
an exponential cost.
Like one of my friends from high school
went to prom with her.
She actually builds like all the Taco Bells
(24:31):
and those restaurants.
She builds them.
I mean, it's expensive like to get the
land to build that thing.
I mean, and it's a long time before
you making a return, but what you're describing,
somebody can get in and fairly quickly start
making a pretty good return with the methodology
you guys have, and you are helping every
part of the way, which I've never heard
of something like that before either.
(24:51):
So the next question, I think in a
lot of people's minds is cost.
And I'm not trying to get you to
quote how much certain things are, but do
you have access to financing sources where they
can actually help get the money or what
can someone expect to be able to pay
to be able to get into something like
this, or are there creative ways to be
(25:11):
able to finance their way in?
I think that's one of the top of
mind questions people have.
Yeah, yeah, absolutely.
And I think that debt is a powerful
vehicle if used correctly, right?
We don't wanna make sure it doesn't become
a crisis situation where you can't service your
debt, but given the level of investment, especially
from a historical cash on cash return basis,
if you look at our financials historically are
pretty good to say the least.
(25:32):
The economics work quite well.
And so we don't offer any kind of
type of financing as the franchise work.
We always wanna make sure that we're making
decisions that are clearly in the best interest
of our franchise system and never wanna have
any conflict of interest.
So we always refer out to partners.
I mean, type like folks like yourself, right?
Who understand franchising, who understand the unit economics.
And we have started to develop pretty great
(25:53):
relationships with a couple of different lenders that
understand how our business works and kind of
help accelerate that financing process.
So we help point in the right direction,
ultimately how heavy someone wants to leverage or
take on debt is ultimately at their discretion,
but we point people in the right direction.
To give you an answer on how much
it costs, I mean, it varies.
You could buy a million dollar flower shop
(26:14):
if you wanna start with something huge, you
could also buy a flower shop for a
hundred grand.
We have in the item seven in our
disclosure documents that everybody gets just a very,
very clear kind of high and low estimates
of how much it costs to either build
a unit from scratch and or acquire a
unit and all of the, it depends.
Like there's so many variables.
(26:35):
Like for example, the walk-in cooler is
probably the most expensive asset, but a lot
of flower shops already have a walk-in
cooler.
So you don't need to get a new
one.
So we look at the walk-in cooler
and see the condition of it.
But if you need to, I don't know,
every once in a while we find a
flower shop that doesn't have a walk-in,
which blows my mind, but that could cost
anywhere from 30 to $60,000 to get.
And their assets, they're great.
They last 25 years, they're incredible tech in
(26:57):
those coolers, but it depends.
It can range anywhere from $60,000, I
think it is to $180,000 once you
acquire the shop to kind of outfit it.
The high end being like a large shop
that doesn't have any real heavy infrastructure in
place.
So it varies.
And if there's deeper interest on that, then
it's pretty easy.
We give the document that lays it all
out.
Yeah, and I love that you partner with
(27:18):
banks because when you have banks that really
understand what you do and understand your model
and believe in it, man, it is a
game changer for your franchisees.
I mean, it's way better to work with
brokers or anybody else because that bank, I
mean, if you have the bank that sees
it and loves it, then they will make
it very, not easy per se, but in
(27:38):
the scope of lending, very easy to be
able to get the financing they need.
What haven't I asked you that I should
ask you about people that are saying, wow,
I never even thought about this before, never
thought about the florist industry, never even thought
that kind of money was there.
Like what is some parting advice that you
have for anybody that's listening or watching this
saying, wow, oh my gosh, this could actually
be something with maybe questions I haven't asked
(27:58):
that we should answer for them to be
able to jump in and maybe take advantage
of this industry, get into the industry, or
even take advantage of what you have for
an easier path to get into the industry?
Yeah, I think that's a great, great, great
thing.
There's two things that come to mind immediately,
at least.
The first one is that where a lot
of folks don't see opportunity, to your point,
(28:19):
this isn't something that a lot of people
have thought of before, that's exactly where the
opportunity lies.
And that's what we found.
So it's unsuspecting, but very real.
And we're excited to be the ones that
seem to be, at least at this point,
leading the charge and helping elevate the floral
industry as a whole.
We don't have, I don't want to say
we don't have competition.
There's always folks that are there, but we're
here to make the company the best that
(28:39):
we can, and we seem to be paving
the way.
We would love additional competition to come in
and try to compete with us.
I think that further stokes innovation, and we'd
welcome that in, but we're excited to be
the ones that are doing it right now.
The second thing that I would say is,
I think a good question to ask me
would be like, what keeps me up at
night as the franchisor?
What risks are there?
And I think that's a good question to
be asking.
And I think that, from my perspective, what
(29:01):
keeps me up at night is our rate
of expansion needs to be relatively controlled.
And if we expand too quickly, and we've
been approached by investor-minded folks, and they've
said, hey, we'll take all of Manhattan, or
we'll take half of South Carolina, and here's
a $700,000 shack.
And we say, no, this is not the
right fit for us.
So I think it's important for us.
(29:21):
We have strong principles that we operate the
company by, and we're looking for right partners
to come in that aren't just looking to
make money.
And don't get me wrong, that's an incredibly
important part.
It's actually a critical part, because we're not
able to keep the lights on without it.
But we like to think of that as
a means, and not quite the ends.
I think we're here to drive our industry
forward.
And we typically like to align with folks
(29:41):
that are aligned with the mission, and vision,
and values, and culture that we are creating,
and the principles that we operate by.
So an important part for us is inviting
folks to what we call a discovery day,
to come and meet our team.
Life is short, and we try to separate
our business life from personal life.
The reality is it's all one life.
And it's important who we talk to.
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