April 23, 2025 • 50 mins
Considering entrepreneurship but unsure where to start? Franchising may be your answer - but only if you understand what you're truly signing up for.
The entrepreneurial journey can begin through three main avenues: starting a business from scratch, buying an existing operation, or purchasing a franchise. Each path offers distinct advantages, but franchising provides that magical "business in a can" with established systems, marketing materials, and operational guidance that can significantly flatten the learning curve for newcomers.
Professional managers transitioning from corporate careers often gravitate toward franchising, leveraging their organizational expertise and analytical skills to evaluate opportunities. The structured environment feels familiar and comfortable. However, we explore a critical disconnect that catches many by surprise: the hands-on reality of small business ownership. That prestigious VP title doesn't exempt you from cleaning bathrooms or handling mundane operational tasks when you're the franchise owner. As we discuss, the entrepreneurial mindset requires complete ownership of every business function - something corporate professionals may find jarring.
Beyond operational considerations, we dive deep into the legal relationship between franchisors and franchisees. These agreements shouldn't be viewed merely as contractual obligations but as the foundation for a productive partnership. The proper perspective transforms these documents from necessary paperwork into valuable relationship frameworks that clarify expectations and responsibilities for both parties.
For those considering the franchisor path, we share insights from our own journey preparing PodcastVideos.com for franchising - the extensive documentation, training development, and marketing systems required to create a franchise worthy of investment. The process forces business owners to think five years ahead, refining every aspect of their operation for scalability and replication.
Whether you're exploring franchising as your entry into entrepreneurship or considering franchising your successful business, this episode provides crucial insights to help you evaluate if this path aligns with your goals, skills, and vision for the future. Join us for an honest conversation about the realities of franchise ownership from both sides of the agreement.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Don't look at legal as just legal.
Look at it as that is yourabiding charter between you and
a client, between you and avendor, between you and a
franchisee, whatever it might be.
But when you really write thosethings in like I've grown, I've
matured enough now in my careerto look at those binding
agreements as more than just anagreement.
(00:22):
And it's not about clearing upconflict as much as it is.
I understand the expectation ofyou.
You understand the expectationof me.
Speaker 3 (00:31):
Builds understanding it does.
Hey everybody, this is anotherepisode of that Big Talk About
Small Business Business.
Yeah, we're here today becauseour guest is.
This is another episode of thatBig Talk about small business.
Yeah, we're here today becauseour guest didn't show up.
Speaker 1 (00:55):
I specifically asked him not to say that.
And there you go, Right out ofthe gate, right out of the gate.
Speaker 3 (00:59):
It's a fact.
It is a fact.
It's fine, it's okay, yeah it'sokay, Everything's going to be
okay.
Speaker 1 (01:04):
We'll never forgive him but it's fine, everything's
fine, it is it's okay.
Speaker 3 (01:06):
yeah, it's okay, everything's gonna be, okay,
we'll never forgive him but it'sfine, everything's fine anyway.
Um, so, no, it's great to behere with another beautiful day.
It is gorgeous.
Um, we're in the studio.
We always enjoy talking aboutbusiness.
We never run out of stuff totalk about.
Speaker 1 (01:21):
You can't because it Because business is nothing but
a freaking massive ball ofproblems.
Speaker 3 (01:25):
You have said that so many times and you know how
many times I've quoted you on it, because it is true, so true.
It's endless, and there'salways something you can work on
that's true or that needs to beworked on.
Speaker 1 (01:38):
There's always a ball being dropped somewhere.
Oh my gosh, it's so true.
And you know, I think the thingis is like you have to be like.
My wife, for example, is one ofthese people.
It's very structured, she'spost-military right.
Speaker 3 (01:49):
She's in the medical field where you have to do
things a certain way.
Speaker 1 (01:53):
Yeah, she's like I could never survive with what
you do because it's and like shecan close the day, go home and
then she has, you know, aseparation between work and that
.
Yeah, we don't have that.
No, never.
Speaker 3 (02:04):
And you never will.
Speaker 1 (02:05):
No, because we're never done.
No, that's right.
It's like you try to getthrough the day and get as much
done as you can, and theneverything else just has to wait
a little bit.
Speaker 3 (02:16):
It's just the reality of it.
I mean you could say I'm done,but you're not.
No, Okay, and then yourcompetitor out there is not
going to be done okay.
Speaker 1 (02:23):
Yeah, always have somebody coming after you,
exactly.
It's a constant threat.
Speaker 3 (02:28):
It's just a big problem and threat in life it's
it, I mean it, it, we're noteasy to be married to, it's not
easy to sustain a relationshipwhen that's your situation,
because it's very difficult tofocus on the other problem, even
though you should.
Yeah, you know, but thebusiness just has to take
(02:52):
priority so many times.
It really does if you want tosurvive and thrive.
So today we were talking alittle bit about what we were
supposed to be talking abouttoday, which is franchises and
franchising, and I know that's atopic that we have not
discussed yet on big talk aboutsmall business, and it's got a
(03:13):
lot.
It's pretty complex, it is.
It is complex.
It is one of the gateways toentrepreneurship.
Yeah, of the three, one isstart a business.
Second is buy a business.
Third is buy a franchise.
Yes, yeah, and so it's.
It's definitely a way forpeople to get into business I
see.
Speaker 1 (03:32):
So there's and on franchising, there's two parts.
Right, you have a franchisor ora franchisee, and I see being
becoming a franchisee, buyinginto a franchise and owning a
territory, is a great way forsomebody that's been in the
professional career to get intoentrepreneurship.
Yes, because the franchisor hasproduced all the processes, all
(03:57):
the sales material, themarketing material, all these
things, and has kind of built aplan.
Speaker 3 (04:03):
It's a business plan in a can it is business plan in
a can yeah, but I mean you saythe franchisor has done that, if
it's a good franchisor.
Speaker 1 (04:12):
That is right, right, that's, that's the thing is,
and, and I think that but what'salso makes it really great for
the professional manager, right,and let's call them that if
they've been in a career for theperfect description it really
is.
And so they can take all thatlearning and the way that they
do business, which has a lot ofbenefits to it, and apply that
(04:35):
to franchising, because they cango investigate these
franchisors.
They should be very astute toresearching, analyzing, looking
at those documents, looking atthe terms and conditions, the
franchising agreement, I mean.
And there's big trade showsthat go on for folks just like
that that are ready to you knowthey've had a career with a
major company.
Go to one of these shows andyou get to meet all these
(04:59):
franchisors and you interviewthem like you look at that right
and try to choose your best,one that you feel is a good bet
in the market.
Speaker 3 (05:07):
Yeah, I think that's a really good point for people
who have not owned a businessand maybe not worked in a small
business.
It's a great way to get intobusiness for yourself.
Yep, and you are a businessowner when you're a franchisee?
Speaker 1 (05:22):
Yeah, 100%, you just have the license to use all the
products and processes and brandand all those other things and
it's a good stepping stone too,because I think that what maybe
a professional manager may not,you know, it's like anything.
If you buy a boat, like it'sexciting, you want a boat, you
can see yourself using the boat,but then you get the boat and
(05:42):
then you realize there's a lotto do to maintain that boat.
Now, where do I store it?
How do I maintain?
You know, winterize it.
Polish, you know all this crap.
Speaker 3 (05:52):
It's funny you say that I was just thinking about
that with RVs today.
Yeah, it's the same exactscenario.
Speaker 1 (05:57):
It's nothing but a big pain in the rear, Just like
the first.
There's a lot of freakingproblems right there's a lot of
problems.
Speaker 3 (06:02):
You've got a lot of learning to do, for sure.
Speaker 1 (06:06):
But if you lease the boat or you lease the RV, you
can enjoy it a little bit andsomebody else is taking care of
it.
It's kind of like whatfranchising is a little bit like
in some sense.
Right, you can get into thefranchise, the franchisor has
all these processes and you justkind of start running the
business.
Speaker 3 (06:23):
They've got training.
Yes, many big franchisors havepeople that will help turn
around a franchisee's businessthat's not doing well, that's
right.
That is a part of the servicethat they provide.
They don't want anybody failingout there.
Speaker 1 (06:38):
No, no, it's bad on the franchisor's plan, their
business model, yeah.
Speaker 3 (06:42):
I had a friend of mine whose brother that's all he
did.
He worked for several bigfranchise franchisors.
I think he started out withBurger Chef and then he was
working for what's the seafoodone that's a big Captain D's.
It was not Captain D's, but itwas the other one that's also
(07:02):
teamed up with Taco Bell.
Oh yeah, long John Silver, longJohn Silver.
So he was doing Long JohnSilver and then I think he was
doing Taco Bell's.
But anyway, he would just go inand in six or eight weeks he
would completely turn around thebusiness for the franchisee.
That's great, and so it waskind of cool and he got paid a
(07:24):
lot of money for that.
But what a great.
You know how many businesses dowe have?
Somebody we can call up in sixor eight weeks?
No, even if we have to pay themwhatever, they're going to come
in and just totally turn ourbusiness around.
Speaker 1 (07:35):
No, no, no, it doesn't exist.
Speaker 3 (07:37):
So there's a lot of tools and help.
Yeah, a good franchisorprovides to the franchisees.
Speaker 1 (07:43):
Well, you know stuff as simple as like what's your
accounting system?
Yes, your bookkeeping system.
What are the classificationswithin that bookkeeping system
so you can read your books,right?
If you're starting up your ownbusiness, that's the crap that
you've got to figure out on yourown, because I'll tell you
who's not going to figure it outfor you are accountants.
No, that's so true, they arenot going to do that.
Speaker 3 (08:04):
You know it's funny you bring that up because I just
talked about that in classearlier this week with my
students.
One of the mistakes I thinksmall business owners make
personally this is my view.
You may disagree with me, butthey give up the accounting too
fast.
The benefit of controlling thatuntil you hit like a million or
two million dollars or whatever, is you learn where all your
(08:26):
money's going.
That's right.
You just don't have the samesensitivity when somebody else
does your books for you.
Yep, I know that's a diversionfrom the topic at hand.
Speaker 1 (08:35):
Well, but at the same time I'll be the first to admit
like I've neglected that yeah,a lot of people do you know, and
it's I've even neglected it.
It's so plaguing to me Becausehere's the thing what I always
have experienced is that eventhough I have people that might
be really great at bookkeeping,great at QuickBooks or any
software, or you've got CPAs,accountants they always end up
(08:58):
coming to me for a question.
And because I'm out of it, I'mjust expecting people.
It's intuitive.
They should know that this getsclassified as that this goes to
this client.
This is needs to be baked intothe cost of goods.
For this.
It's like why doesn't anybodyjust get it?
You know, and like I'm theydon't understand your business
like you understand it right.
(09:19):
The bottom line it is, and some not being me thinking that
somebody else is going to beable to do that is my biggest
danger zone, and I'm so guiltyof it.
Yeah.
Speaker 3 (09:30):
I don't think you're unique in that regard at all.
Yeah, because mostentrepreneurs are good at
something.
Yeah, or they like to marketyeah, they like to build
businesses, but they don't likegetting into the weeds.
On accounting yeah, if youwanted to do that, you'd be a
freaking accountant, right,exactly.
Speaker 1 (09:48):
But you get in the weeds of it.
I do you love it, I've alwayshad a thing for numbers.
Speaker 3 (09:52):
I don't know why.
It's just like you know.
It's just something I enjoy.
You know, I went all the waythrough calculus in high school
and it is disgusting.
I taught statistics at onepoint in grad school and I just
liked accounting.
I don't know why, but really Ilike finance better than
(10:13):
accounting.
I don't like doing debits andcredits and T-accounts and all
that.
That's boring as hell.
That's called financialaccounting.
Okay, but what are you?
Managerial accounting, costaccounting?
Speaker 1 (10:24):
You like seeing where things are going, how you can
make tweaks, and improves thebusiness, the cashflow, all that
kind of stuff, yes, but anyway,back on our subject, franchises
.
Speaker 3 (10:34):
I think that's a really good point.
The, the, the accounting system, the categories, all that's all
set up, yeah, and a lot ofother things are too.
I mean, if you're sellingFrench fries, they're going to
tell you exactly how many friesto put in the basket and how
many seconds to cook those, atwhat temperature, how much salt
to put on.
Yeah, I mean everything's laidout for you yeah.
Speaker 1 (10:56):
You just have to implement the plan, and that's a
big deal because, like you know, part of that, the big value,
is that they've already spent ayear, two, three years, however
many, perfecting that, refiningit, yeah, refining it.
And so now you have thisplaybook.
Yes, you're basicallyaccelerating the opportunity to
(11:19):
drive a successful cash flow inbusiness.
Yes, and so it's perfect for aprofessional manager who is used
to having.
Here's the pain point I've seenwith this Professional managers
coming out of corporations areused to having support
underneath them, exactly.
Speaker 3 (11:34):
And then they don't when they're on their own, when
you go on your baby like it'syou, you're everything,
everything is your fault yourproblem.
No, you're right on with that.
I never really clearlyarticulated that.
Speaker 1 (11:46):
But you're right, so you buy into a franchise and you
have that support.
Yes, right, you just got tofill in a few roles and do some
basic operational stuff.
Speaker 3 (11:54):
Yeah, you got to select the right people and you
got to make sure people aredoing what they're supposed to
do right, which is most likelywhat a professional manager is
already really excellent at.
Speaker 1 (12:03):
That's a great point In which an entrepreneur is not
necessarily.
It would be hard for me to buya franchise because I don't
enjoy.
I've missed all the stuff thatI really like to do, which is
start a fight.
When you're buying a franchise,you're closing the deal, You're
in the middle of it and you'retrying to end the fight.
Speaker 3 (12:25):
Well, some people yeah, I think that's a.
It's a good analogy.
I think some people feel likeit's not very creative or you're
not an entrepreneur if you ownfranchises.
I've got a friend, I don't know.
He had like 12 of onerestaurant and three of another.
Maybe he's got 15 or 18 of theone and and got rid of the
others.
Now he's got a lot of them.
Okay, and is he an entrepreneur?
(12:49):
Well, I think he is, because 20years ago he started out with
$50,000 when he sold his houseand today he's got a business
that's doing, my God, somewherearound $30 million, I would
guess, in total revenue.
It makes an eight percentprofit and he's built an
incredible amount of value inthe business and he's paying off
(13:11):
real estate.
With every one of thoserestaurants that he owns,
they're all paying off the realestate.
Um, my god, I mean, he's goingto end up being a very wealthy
guy.
Speaker 1 (13:21):
Yeah, you can't say he's not entrepreneurial.
He totally is.
You know, you know he's growing, growing the business, he's
growing the opportunity.
I mean 100%.
Speaker 3 (13:29):
He's really careful about the people he hires and
the management systems that heputs in place to control the
overall business, notnecessarily the individual units
.
Speaker 1 (13:39):
Well, I think the difference is if a professional
manager gets into franchisingand I've seen this happen where
they want a different style oflife, right, they just want to
own one unit, they just want tomake their income, but they want
to have some freedom and theylook at it from that perspective
.
That's kind of dipping intoyour solopreneur type of
mentality.
Speaker 3 (13:59):
Small business owner period, which is not a true
entrepreneur.
Speaker 1 (14:03):
But if you're getting into it and you're like man,
I'm going to open up multiplelocations, I'm going to drive
growth here, I'm going to makean income, I'm going to provide
employment, I'm going to fitthis market need, I'm going to
dominate.
That's an entrepreneurial thing.
Speaker 3 (14:15):
Well, and buying distressed yes, I mean, that's
another one.
There you go.
I student, his parents owned 21mcdonald's.
This goes back maybe 15 yearsago.
They were not based here, okay,the student wasn't.
His family was from kansas andeach one made an average of 366
000 profit a year.
So they were doing over 7million a year out of their 21
(14:37):
mcdonald's.
But the parents both were schoolpsychologists who worked at
mcdonald's when they were inhigh school.
That's where they met.
Then they went all the waythrough school, became school
psychologists and then they gotback into it and they bought
their first McDonald's franchise.
Well, they did so well at itthat McDonald's would refer
(14:58):
other franchise owners to themwho were struggling and say you
know, know, and they turned thatinto acquisition opportunities,
nice, so they would buy thedistressed mcdonald's, turn them
around, integrate them withtheir system.
They were entrepreneurial ashell.
I'll tell you that.
I have no idea where they arenow.
(15:18):
I'm sure they're verysuccessful.
Yeah, but, um, but yeah, it's a, it is a way.
Um, I think it's a really goodpoint.
It's a good doorway for peoplewho are not used to business
ownership to get into it.
Speaker 1 (15:30):
Yeah, I mean I think that if you're a professional
manager, you get into afranchise, over the five-year
period you're going to startseeing it's like you backtrack,
like you can get in, get off theground, start professionally
managing, doing what yourstrength is, but then you're
learning along the way aboutthese deeper things and that
organization that thatfranchisor has provided.
(15:51):
You'll learn that and then youmight be ready and have the
confidence to kind of startsomething brand new.
I mean that could be anexcellent path, right.
Speaker 3 (15:59):
That's a really good point too, because, again my
friend, they have onenon-franchise restaurant too and
I asked him I said, with allyour experience in franchise,
running franchise restaurants,did the process, did the
discipline, all that carry overinto your own?
Yeah, he goes absolutely 100%.
(16:19):
He learned so much from that.
Yeah, okay so that makes him abetter owner of the independent.
Yeah, where they?
You know where?
Speaker 1 (16:26):
they started it, yeah , and they'll know a lot of the
systems.
And this I mean, heck man.
We know, like, as anentrepreneur, business owner,
like just knowing whatsubscriptions you need to have,
what softwares, what tools yeah,is is a lot of the battle
because you can waste so muchmoney, so much time oh my god
time Doing software conversionis one of the most painful
things in business.
(16:47):
You know, everybody promisesthe moon.
Few of them deliver on it.
Actually, no one reallydelivers on the moon.
You know, speaking of, we justrecently, in one of our business
, started using Salesforceinstead of some of the other CRM
tools I have.
Yeah, salesforce is, you know,number one, number one, one,
best in class, right, but Istart going in there trying to
(17:07):
use the thing and it isabsolutely cumbersome, yeah, and
it's overkill, because there'stoo many options, there's too
many things you can do with it.
It takes a tremendous amount ofapplication programming, which
requires a tremendous amount ofresources and dollars to get it
done right yeah so we needSalesforce consultants yeah.
Oh, that was the answer fromSalesforce.
(17:28):
I'm like hey, I need some helpwith some simple field updates.
They're like oh understand, oursystem can be quite complex.
We can introduce you to some ofour Salesforce partners to help
you.
Speaker 2 (17:39):
I'm like that is the last thing that I want.
Speaker 1 (17:42):
I don't want to talk to them, I want to use the
system.
But I mean to the point right.
The franchisor has alreadyinvested that energy, has found
that model.
Vetted those things out.
Vetted those things out.
Speaker 3 (17:56):
Again, this is only good ones.
There are bad ones out there.
I mean good ones.
You've got a brand that as soonas you open the doors, you're
going to have business coming toyou because it's so recognized.
But there are a lot of new onesthat don't necessarily have
that power or that haven't beenthat well thought out, as you're
saying.
You know.
(18:16):
A lot of times they fail.
I mean, I had a student oncewhose father passed away and he
came to me when he was like 19,and his dad had just recently
passed away and his dad left himsome money and said the only
condition is I want you to usethis money to start a business.
So he started looking atfranchises, okay, and he came up
(18:38):
with this smoothie franchise.
It was based in California.
I think it was called IntaJuice, if I recall.
Speaker 1 (18:45):
Yeah, yeah, yeah, I don't know who you're talking
about.
Speaker 3 (18:47):
Yeah, I've seen them.
We had one in Fayetteville.
Yeah, that was him.
Oh, okay, and anyway.
So I had a long discussion withthe guy.
He wasn't even my student, buthe's.
You know, I go, that's fine,but I go, you got to think about
it like, does that brand namecarry any weight here at all?
Yeah, okay, yeah, are we allsitting there going like, oh, my
god, I hope they open it intojuice?
(19:08):
No, I've never even heard of it.
Right, okay, and I've been welltraveled, okay, so that that's
maybe that's an issue for you.
I said the other thing is youneed to go talk with other
franchisees, not the ones thatthe franchisor puts you in touch
with.
That's right.
You need to reach out to otherones and go what's it like?
Yeah, you know, do your duediligence you have to.
Speaker 1 (19:31):
You're basically it's you know, in speaking of due
diligence, right, if you weregoing to buy an entire company,
the due diligence we actually,um the guests that we had on
last week, we talked about thisa little bit, about proper due
diligence, because she made someacquisitions right and, like
she emphasized, if you're goingto acquire a company, the due
(19:51):
diligence process is sosignificant, right?
Yes, it is.
And if you're a franchise, ifyou're looking to be a
franchisee your due diligence.
You're basically buying anothercompany.
You have to really get underthat hood and make sure all
these things are up to speed.
I think there's someopportunity to buy into a new
(20:13):
franchisor because you could beon the front end.
You can get more territories,your negotiation leverage is
better, very true, and it couldbe an exciting roller coaster
versus, like an established one.
Speaker 3 (20:25):
No, that's true.
You pay a premium for that.
Yeah, the franchisor premiumkeeps going up and the territory
gets smaller and smallerbecause there's so many of them
out there.
More competitiveness, right.
Speaker 1 (20:35):
And your scalability shrinks.
Yeah, good point.
But if it's a newer one, yourdue diligence must be.
I mean absolutely impeccable,and which means legal.
It means accounting duediligence must be I mean
absolutely impeccable, and whichmeans legal.
It means accounting, duediligence and audits.
Right, I mean like you reallyneed to dig into that and making
sure the process is, and Ithink I would dig into whoever
created the franchise.
Speaker 3 (20:57):
You know the franchisors, the head of the
franchisor.
Do they have a successful trackrecord or they have, like, just
nothing but a string offailures?
You're going to be the next oneRight.
Right, you know what I mean.
Yeah, that seems like thatwould be important too.
But, yeah, I'm glad you broughtup legal, because that's
another thing that I've learnedover the years of teaching this
stuff and seeing a number ofstudents who did end up with
(21:21):
franchise.
You know who are franchisees,you know?
Usually I don't know what theycall it today, but it was called
traditionally Uniform FranchiseOperating Agreement.
I think it was like UFOG orsomething is the document that
the franchisor has thefranchisee sign, yeah, and it
(21:42):
just lays everything out yeah,all the rules, the, the costs,
the, what they got to buy what,how much tribute they pay to the
franchise, or you know all that.
And and um, you've got to getyourself an attorney, yeah, who
specializes in franchising.
(22:03):
Yes, do not go to your regularbusiness attorney.
They will not know what to lookfor in that agreement or what.
The common problem pain points,that's true, it's very.
Speaker 1 (22:14):
It's like everything else get the specialist yeah,
you have to, especially infranchises.
I mean they're so, they're solegal.
You know there are a lot oflegal restrictions to them.
I mean it goes by state bystate too that's true.
Speaker 3 (22:26):
The other point yeah, every state's got different and
it has federal guidelines andstate guidelines and you know,
and you've got their territories.
Speaker 1 (22:32):
I mean, there's so much to it that the franchisor
has to go through, but then thefranchisee needs to have the due
diligence to make sure allthat's on the up and up right.
And what are?
Where are the territories aregoing?
You know, where are theylegally able to do business at?
Because that could stall out alot of their investment as well.
Speaker 3 (22:50):
Good, point, yeah, so there's a lot of stuff in there
.
You know, another thing I'velearned from my friends that
have franchises and again Idon't know what else to call it
from my friends who arefranchisees I don't want to get
the terminology screwed up isthat usually there's some sort
of a franchisee group that youcan join with other franchisees
(23:14):
that then has power in dealingwith the franchisor and may be
able to influence their policiesand get things changed.
I mean, for him that wascritical.
One of my friends, he actuallybecame the head of that group
and then he was at boardmeetings sometimes of the
franchisor and could voice theconcerns and work to get things
(23:39):
changed.
I mean, for example, I knowthey had a number of disputes
about things like what's on theconcerns.
It worked to get things changed.
I mean, for example, I knowthey had a number of disputes
about things like what's on themenu.
Like the franchisor wanted themto have too many things on the
menu, some of which were verytime-consuming to build and they
didn't make any money on them.
The franchisees didn't likethat, but their agreement says
they've got to have everything.
You see what I mean.
(23:59):
So they would fight to getthose taken off the menu, for
example, or another time,several times he was involved in
trying to lobby to get thepricing changed.
The the you know the franchisor,set the pricing standard and at
one point they wanted theprices to go down and they had
(24:19):
to fight for a while to get thefranchisor to let them do that.
And then, after a period ofyears they wanted the prices to
go back up the franchisees.
They had to fight for a longtime to get the franchisor to
let them do that.
But anyway, the point of it isthere is an org.
Many times for the larger onesthere's this organization of
franchisees that's probably goodto get involved with Many times
(24:43):
for the larger ones, there'sthis organization of franchisees
it's probably good to getinvolved with.
Speaker 1 (24:46):
So I think that that topic brings up a point of again
what are you, if you'reinterested in getting into small
business or being anentrepreneur, right?
Like that's one of the criticalthings.
Like, if you're really wantingand have a desire to have
complete decision-makingauthority, being a franchisee is
not probably the game, so youhave to really weigh.
(25:10):
I meet a lot of folks that areinterested in being an
entrepreneur and, like we'vetalked about, there's so many
different avenues to choose.
But you've got your pros andcons.
Yes, you can start your own andyou can have complete authority
, but you're going to deal withevery single one of the problems
.
Yep, or you get into be afranchisee.
You may not be able to make alldecisions, but you're not gonna
(25:30):
have to deal with all theproblems.
That's right.
Right, yeah, if you want to bea franchisor, you're going to
deal with a lot of problems,right, and have decision, have
decision making.
But I think it's just reallyimportant for an aspiring
entrepreneur and honestly, mark,I mean it comes down to
spending time with yourself.
What are your goals?
What are you trying?
Speaker 2 (25:50):
to do.
Speaker 1 (25:50):
What's really your ambition on doing this?
And I think that that's themost important question to ask,
because again, why are you doingthis?
Speaker 3 (25:59):
Yeah, because what are you looking for?
Speaker 1 (26:01):
In our area we've got so many professional managers
Like, I mean, some of thesmartest, greatest leaders in
the world, I think are hereworking.
Speaker 3 (26:08):
Yeah, you know and, but it's not the same skill set
that those of us that just hadsmall businesses and grew up
have.
Speaker 1 (26:18):
No, it's really not.
And I mean there's not a not,because you try to put me in a
professional organization as aprofessional manager.
I will not do well, no.
Speaker 3 (26:27):
I totally understand exactly what you're saying.
You're not criticizing them atall.
It takes a lot of skill to risethrough these big corporations.
Oh my gosh.
I mean they're incrediblePolitical skills and
communication skills andpsychological knowledge.
Speaker 1 (26:43):
You know we have a unique space here in our area
with Tyson Hunt and Walmart andsome massive corporations that
some of these folks that are inthose executive roles are just
some of the most incrediblehumans.
Speaker 3 (26:58):
Takes a lot of intelligence for sure.
No, it does.
Speaker 1 (27:01):
And dedication yeah, and navigation, and all these
things that I admire and Iactually learn a lot from.
No, you're right, you'reabsolutely right, but they're
intrigued.
The funny thing that I'venoticed is they're intrigued on
the entrepreneurial life.
It's like we all kind of want alittle something that each
other has, but they'll askquestions about it and it's, and
(27:22):
it's like you know, the, theentrepreneurial mindset which I
think we, everybody, kind oflikes.
That you know that mindset, butbut the, the problems that are
being dealt with as anentrepreneur are just of a, of a
different caliber.
It's like you know, I meanliterally like people say, well,
I'm the janitor too, I mean,but that's, there's a lot of
(27:43):
truth to that.
You know can, are you ready andwilling to literally clean up
the bathroom?
You know, anytime I go to thebathroom in my businesses, I'm
cleaning.
Speaker 3 (27:52):
I know I'm always the same way, like I see, like
people throw their paper toweldown and miss the trash.
Can you wouldn't do that athome?
Speaker 1 (27:58):
No, what's wrong with you?
Speaker 3 (28:00):
I pick it up, throw it in, Absolutely Wipe the sink
off.
You know it's like the airplanesLike wipe the sink off after
use.
Yeah, but it is true.
You know, this week I had myoldest daughter speaking to my
students in Christie and youknow, christie, yeah, I think
you were actually the one thathired her in the first place.
Yeah, yeah, but Christy, youknow, she's got this horse
(28:23):
business and she's really grownand it's gotten very successful.
She makes her entire living offit.
You know, she got out of herMBA job and has replaced that
income entirely with her horsebusiness.
That already was making moneyon the side, on the side, but
she showed one of her lastslides is here she is standing
(28:44):
and pouring cold rain in a in along coat.
That's like wearing a bedspreadthat's soaked in in a giant
pile of manure nice, that isturned into manure soup and it's
in your freaking boots all theway up to your knees.
Okay, and guess what you got todo that too.
It's not all the glory, right,oh man it's, there's not it's
not like I'm going to ireland topick up a beautiful mare or
(29:08):
whatever.
You know.
That's the fun part thateverybody thinks is great.
Speaker 1 (29:11):
Well, because you as if you're also cleaning.
Oh, totally in the worst weatherand you don't want to show up
like like.
There's a front facing and a aback-house-facing part to the
entrepreneurship, and if youshow up to an event, you don't
show up wearing the manure allover your boots that you've been
working all day Like.
You have to dress your best,you have to present, you have to
(29:33):
really appear and communicatethat you do have your stuff
together, but the reality isthat you're actually digging in
and cleaning up manure all daylong and every day, and so
that's why I think a lot offolks can be tricked into
entrepreneurial life.
That seems glamorous but it'snot.
Speaker 3 (29:54):
I think that's also interesting in light of what you
were saying about theprofessional manager.
Yeah, going into buying afranchise as their port of entry
.
Yeah to entrepreneurship.
This is one place where theycan fail because, as christy
says, I don't ask anybody whoworks for me to do any job I
will not do myself.
(30:15):
I will demonstrate it to themand I tell them if you don't do
this job, I'm going to freakingdo this job.
Okay, now think about that.
As a corporate manager, I washigh level.
I made $400,000 or $500,000 ayear at XYZ Corporation or
whatever.
I got my $3 million retirementpackage after 30 years of
sweating it out.
Now I'm going to go and buy afranchise or another couple
(30:45):
franchises okay, operations, andyou know a lot of those
businesses.
In fact, I go back to the kidwith the IntaJuice.
When he told me that's what hewas going to do, I said to him I
go.
Or?
I asked him.
I said are you prepared to havea bunch of high school students
as your employees?
What do you think it's going tobe like managing 17 year olds?
(31:06):
Yeah, okay, yeah, how many ofthem are not going to show up?
Yeah, or do somethingunbelievably stupid.
And is that the way you want tospend your day?
Yeah, okay.
Now, we all know that a lot oftimes, as you said, we have to
be the ones to clean the toiletsor whatever.
Whatever the or the, you knowwhatever toilet cleaning
(31:29):
represents in the business right, and so that sets an example
and it shows other people thatyou're not elevating yourself
above them, which is a verycritical point of, I think,
leading people, especially those, let's say, who don't have the
same education or socioeconomicbackground that you have.
Right.
Will those corporate managersget out there and make the
(31:55):
freaking French fries along withthem and have the grease
splattering on them and go workthe drive up window and will
they haul the friggin, nastytrash out to the nasty dumpster
that's out back?
Yep, to gain the respect oftheir people?
That's right.
Or are they too used to beingcorporate managers or they've
got all the stuff?
Speaker 1 (32:16):
it's a think about that.
You know, and I think it's agreat question because here's
the deal in all honesty, likethis kind of ties into.
You know, like my 2.0.
You know, after businessgrowing it, exiting and then
starting other businesses.
I fooled myself and I heard aquote about it the other day.
If you have built a successfulbusiness and you start another
(32:41):
one, it's not going to be anyeasier.
No, to grow and build thatsecond business the only thing
that I know are some warningsigns that are coming down the
road.
I know I've learned some of thepain points to maybe avoid a
little bit, but the fact of thematter is is I still have to
hunt, I still have to clean, Istill have to do all the things
I've got to do, and if you're aprofessional manager looking
(33:03):
into franchising, I think itwould be a really poor mistake
and I've actually seen it whereif you have your $3 million, you
have some money and you'regoing to invest in this.
To think you're going to investsolely into a franchise and you
can take a back seat and watchyour investment grow is is a
very bad, bad, bad idea alwaysupset for failure.
Speaker 3 (33:26):
You're setting yourself up for failure in
misery, yeah, in pain.
Speaker 1 (33:30):
Like you, you work so hard for 30 years.
Now you're looking at this asanother ticket.
You know to continue to buildwealth, which I don disagree
with, but if you're going to dothat solo, you're going to be in
for some poor experiences.
Now I would say, though, if youhave other colleagues that are
in your same position and youpatch your money together, as
(33:53):
long as now you're an investornot necessarily an entrepreneur,
which is okay.
Right, but it's different.
It's a different game, yeahtotally.
You can pull your money togetherand then you go find the people
that you minimize your risk ina way doing that, but you also
minimize your reward, that'sright, yeah, but but you, but,
if you can get a group, if youand I did this, I would say hey,
mark, I don't have any time, Igot some money, you don't have
(34:15):
any time, you got some money.
Right, let's pull our moneytogether, let's find ourselves a
good ceo okay, good cmo.
Speaker 3 (34:21):
Yeah, that could work and maybe that would play to
your skill set as the corporatemanager is what you're saying
exactly now.
Speaker 1 (34:27):
You're a board member , investor, but you have the
talent to run the business.
But I mean like, and so I thinkthat the thing is is like you
have to really think aboutwhat's your time dedication?
Where are you wanting to go?
What's your reward?
What are you trying to do?
What's your reward?
What are you trying to do withyour money and your investment?
What are you trying to do withthe rest of your life?
Those things are really bigquestions.
Before you get into this, youknow there's like different
(34:47):
levels you can take.
I just think the big thing isjust be really honest with
yourself.
Speaker 3 (34:52):
I think that's a really good point, you know.
Now there's one other thing Iwanted to talk about, about
related to being a franchiseethat I think not everybody
thinks about.
So many years ago I think itwas probably 20 years ago I met
a guy in a plane who owned MakoAuto Painting franchises.
I think he had like eight orten of them.
(35:13):
Okay, and I don't know if youknow anything about Mako Auto
Painting.
They're cheap, all right, it'slike they used to.
Ever we'll paint your entirecar for $199.
You know now it's like $499 orwhatever.
But I mean, if I was going togo paint a car this weekend, I
can't even buy the paint, thesandpaper, the primer and
everything else I need for lessthan a thousand bucks Probably
(35:34):
cost like $1 1400 for thematerials alone.
How can Mako paint a car for500 bucks at that point?
Well, they don't do a great job, let's be honest.
Starting, okay.
Secondly, you know they, theyupsell, all right.
But I I the point of all this isI asked him I'm like, how can
you make any money doing that?
(35:55):
He goes.
You know what he goes, you knowwhat he goes.
I don't care whether any of mymakos make any money.
I just want them not to losemoney.
So if they break even, I'mcompletely happy with that, I go
.
Why is that he goes?
They're paying off the realestate every one of those
locations.
I own the building.
You guys think about it.
In 15 or 20 years I'm gonnahave this building in a great
(36:17):
commercial location.
It's completely paid off.
It's worth three times whateverI paid for it.
Okay, and I'm like, ah, now Iget it.
Speaker 1 (36:26):
That's called the real estate play.
That's a real estateentrepreneur.
Okay.
Speaker 3 (36:30):
Yeah, yeah, it makes total sense.
Speaker 1 (36:33):
It does.
Speaker 3 (36:34):
Let's say I want to open up a Burger King franchise.
Let's say it costs me $2.5million to build a Burger King
between the land and thebuilding and that's not in like
a prime location.
Maybe I'm in like one of thesesecond or third tier markets,
but anyway, let's say it's agrowing area and it costs me
(36:55):
$2.5 million.
Well, if I operate that BurgerKing for 20 years, what's that
two and a half million dollarreal estate worth?
Oh yeah, it's going to be worthseven, five, six, seven, eight,
whatever.
Speaker 1 (37:09):
Okay, and you had somebody else pay that.
Speaker 3 (37:11):
Yeah, I don't even care if my Burger King goes out
of business at that point.
Yeah, makes no difference.
Speaker 1 (37:16):
Yeah, no, it's true, it's a good play to it.
Yeah, in which kind of?
If we go back to that scenariowhen I was talking about
entrepreneur versus investor,group of investors, that could
be the play.
And there's actually investmentpools that are already built
that do exactly that type ofstuff.
They know that they're realbusinesses and real estate.
Yeah, mcdonald's figured thatout 100%, because the McDonald's
(37:38):
franchisees don't own the realestate.
Speaker 3 (37:39):
Yeah, mcdonald's figured that out.
Because the McDonald'sfranchisees don't own the real
estate, they rent it fromMcDonald's Corporation 100%.
But anyway, that's just kind ofan interesting evidence.
Let's flip the switch now.
Okay, let's talk about if youwant to be a franchisor.
Speaker 1 (37:53):
What are some things that you really need to be doing
in order to create a valuablefranchise experience for
franchisees, where they'll payyou money for it and pay you
royalties a franchise fee to buyin and royalties to to continue
to be a franchise so I I cannotI cannot speak to it as an
(38:14):
expert, but I can speak to it asa practitioner and the fact
that with podcast videos, we arelooking to franchise okay, you
know, as a franchisor, and I cantell you that it's been a a
very intense long-term processto think about this yeah and to
build it out right.
We're in the middle of gettingour documents together, which
(38:36):
takes a long time.
It's very expensive.
Yep to legalize that processesyep and procedures defining all
those defining all that gettingit all, and you have to.
I mean, you're talking aboutreally writing it down, like
taking, like it's a truemanufacturing factory process,
right?
Yes.
Then you have training andonboarding yes, which is also
(38:57):
extremely intense and timeconsuming yes.
And then we're getting into themarketing plan, like the
responsibility to market thesefranchisees when they go to
market.
What our goal is is that afranchisee would come to us and
they can get in with minimalcapital, turn it really fast and
be as profitable as fast aspossible and be that literal
(39:20):
support to them.
And what I'm excited about andthis is my mentality right, and
it kind of hit me about a yearand a half ago when I was
thinking about this, as I waslooking and being a franchisor,
I was like thinking, oh my gosh,this is a lot of work, right?
Am I really interested in?
I'm not really interested inthat amount of work, but what I
am interested in is gettingentrepreneurs or aspiring
(39:41):
entrepreneurs, like we've beentalking about, and helping them
achieve growth and wealth.
To me, that's so.
Speaker 3 (39:50):
that is the core of why I'm doing that.
I totally understand.
I mean, if you keep that inmind, it's going to influence
every decision that you make andit'll help you make that a
reality and honestly mark thiskind of goes into just being an
entrepreneur in general.
Speaker 1 (40:07):
That's what my passion is.
That's where my heart is, that'swhere I want to, and the money
will come yeah, because, likeyou, said it guides every
decision and, like I'm, if I canthink about when we set this
agreement up, we set all theseprocesses about doing the
marketing and all that kind ofstuff and I'm thinking about I
want to help this individual besuccessful and I can be a part
(40:28):
of that and build something thathelps those, that keeps my
decision-making and our team'sculture decision-making in this
on the right track.
Yes, it does.
Now I've set up a goodpartnership for a franchisee, so
now I've just got to award.
Here's the big thing Decidingwho you want to give that to.
Speaker 3 (40:47):
That's exactly right, because if you don't give it to
the right person and they fail,then it makes you look bad.
That's right and sort ofdevalues the thing we are
podcastvideoscom.
Speaker 1 (40:58):
Our goal is to educate, enlighten, engage and
entertain.
Speaker 2 (41:05):
We believe in the power of love and transformation
through storytelling.
Speaker 1 (41:10):
You got to get the right people, and I figured out,
you know, I found out the rightterminology.
I'm not going to sellfranchises, I'm going to award
them, yep.
And so I'm going to do my duediligence on the franchisee as
much as they do with me.
Speaker 2 (41:25):
They can come investigate me, because I've
said it all.
Speaker 3 (41:27):
You're smart.
Speaker 1 (41:28):
Right, you're smart, but who are they?
What's their track record?
What's their ambition withgetting involved in our
franchise?
What's their motivation?
Speaker 3 (41:36):
Exactly.
Yeah, I think that's very smart.
I don't think all franchisorsthink like that.
I think some franchisors justwant to sell the franchise and
get franchise fees, yeah, andthen they hope that somebody out
there is successful and cancontinue to pay them their
royalties.
Speaker 1 (41:52):
Yeah, and on the interviews and the consultation,
and so I've gotten a lot ofconsultation from some experts,
like you know.
Speaker 3 (41:59):
Tom Gordon, you know I've talked with lot of
consultation from some expertslike Tom Gordon's.
I've talked with him a littlebit.
Yeah, sure, tom would be great,freaking, fantastic.
We had him on our show.
Yeah, he's amazing.
He knows what the heck he'sdoing.
Speaker 1 (42:06):
Yeah him and a lot of other folks, one of the best,
yeah, you know, are you able, asa franchisor, you know, to to
make sure that you have thatgood relationship, because
you're basically starting amarriage with that franchisee,
you know, and and how you guysset up that relationship is
(42:27):
absolutely, you know, absolutelycritical.
Speaker 3 (42:30):
No, you make a really good point, you know.
I think the other thing thatfranchisors really need to think
about too is, as the as yousell, um, you know, uh, as you
you get new franchisees, youhave to make sure they're doing
things the way they are supposedto.
So I remember my friend, mikestennett.
(42:51):
He he bought a bunch of steakand shakes and there was one
that was in Joplin that he endedup acquiring.
I might have talked about it inthis show before, but in any
case it was in such bad shape hewas furious with Steak and
Shake Corporate that they wouldallow this franchisee to run
(43:15):
that business the way they did,because it devalued his brand.
Yeah, as far as he wasconcerned, yeah, okay.
So you really got to make surethat your franchisees out there
are operating in a way thatenhances you know, that supports
your program and enhances yourbrand and your value 100%.
(43:38):
And if they're not, like whatteeth do you have?
I guess you can pull thefranchise from them based on
whatever your agreement states.
Speaker 1 (43:45):
Yeah, so I think from what I've seen is it's all in
the agreement, right, like thereare rules and regs to protect,
and the whole thing as afranchisor is to protect that
brand.
Yeah, you know.
And so the franchisee has, theyhave to follow these rules, and
then that's when a franchise orlike rightfully so.
If you're destroying ordiluting my brand, you're
affecting my business andeverybody else.
(44:06):
And every other franchiseewhich I, as a franchisor, have a
responsibility to protect that.
Speaker 3 (44:12):
Yeah, you would be very upset about that.
Speaker 1 (44:13):
Yeah, yeah, and so rightfully so.
I'm honestly like I think that,from my standpoint, is trying
to get this ready forfranchising.
There is so much work involvedin it, like it's really daunting
and it's a commitment, um, andit's not really that much
exciting work.
I'll be honest with you, likeit's not the nature of what you
like, no, no, but but the if theend goal is is that I can help
(44:38):
establish other franchisees tobe successful and I can be part
of that success story right andbuild an ecosystem to where it's
successful and we can createnew media, which is what we want
to do and enable new media tobe created at Podcast Videos,
then that's exciting as hell tome.
That really is.
But I can build an agreementwhere we're on the same page.
(45:00):
That document and I think thisis a big thing for entrepreneurs
Don't look at legal as justlegal right.
Look at it as that is yourabiding charter between you and
a client, between you and avendor, between you and a
franchisee, whatever it might be.
But when you really write thosethings in, like I've, I've have
grown, I've matured enough nowin my career to look at those
(45:23):
binding agreements as more thanjust an agreement like and it's
not about like you know.
You know clearing up conflictas much as it is like.
I understand the expectation ofyou, you understand the
expectation of me.
Builds understandings,understanding it does.
Speaker 3 (45:37):
Yeah.
Speaker 1 (45:38):
It does and that I did not have that perspective
for the longest time.
That makes a lot of sense, youknow.
So that franchise agreement tome, like the thoroughness of it,
the process, you know, andwhat's in there, is establishing
that relationship to befruitful versus conflicting and
negative.
Speaker 3 (45:57):
Yeah, you know what I was also thinking about as you
were talking.
Like all the work you're goingthrough right now to, let's say,
position the podcast videos asa franchisor, it's got to help
the existing business.
It makes you questioneverything, codify everything, I
mean you may not go to thatmuch trouble if you weren't on
(46:18):
that plan, right it?
Speaker 1 (46:20):
it.
It no a hundred percent what itdoes like, like I like as an
entrepreneur, businesses.
Like when I, if I get involvedin a business, most cases it's I
think about how, what its scalecan be.
Speaker 3 (46:32):
Yeah, of course, that's what we all think about.
Speaker 1 (46:33):
Yeah, if it takes off we're real entrepreneurs yeah,
right, right.
And so a franchise is justreally a.
You know, it's a tool.
It's a tool For scaling, it's ascaling business, and so it
does critically make uscritically think do our existing
processes of this studio great,we're able to do the work and
meet profit, but is it scalable?
(46:54):
And so we're always thinkingReplicatable.
Yes, we're always thinkingabout okay, what if Now that
works today?
Yeah, but if I have a hundredstudios, is it going to work?
Yeah, so if it doesn't, like,what do we need to do to get our
software systems in place toachieve that scale?
And so I'm actually in ourbusiness today.
We've been thinking five yearsahead.
Yeah, every day for the lasttwo years that we've been doing
(47:17):
this.
Yeah, and that's why, like whenI look at podcast videos, like,
and people ask me about what wedo, like, yeah, we have this
studio, but we really have avery big, big plan that no one
can see, dude.
Speaker 3 (47:29):
I can see it because you've invested so much, not
just in the facility from youroriginal facility, yeah, but all
the people 100% from youroriginal facility yeah, but all
the people and the sort of theroles that you're creating and
defining in this thing.
Most people wouldn't make theinvestment that you've made.
It's a big investment of timeand money.
Speaker 1 (47:47):
It is but it's also like these people that are in
some of these what we callcorporate roles yeah, are really
non-essential right now.
Right, I understand thattotally, but because of our plan
, we're investing in thatacceleration and scale, and that
is the difference of wherewe're at.
So I know, when I see apotential competitor coming to
(48:10):
the market as a studio orwhatever it might be, I'm not
really too worried about it andI actually support them.
I hope that they do well, butmy plan is not the same as their
.
Oh no, I totally get it.
Speaker 3 (48:21):
They just want to have one studio that makes money
, and that's their goal.
Speaker 1 (48:24):
No 100, yeah right, you know, and they want to grow
the congratulations.
I'll actually send businessyour way, because there's
business I'm not going to takeon today.
Right, because it doesn't fitmy scale point.
Sure, sure, sure.
Speaker 3 (48:36):
Yeah, it makes total sense.
Well, I can see this is a veryinteresting topic we've got
today, I think.
Speaker 1 (48:42):
We need to have a lot more guests.
I'd like to have morefranchisors and franchisees.
Speaker 3 (48:45):
Yeah, I think we can do that.
Keep talking about it, yeah.
Speaker 1 (48:48):
We've got some friends that have been doing it
Sure, sure.
Speaker 3 (48:52):
Well, I think we've going to wrap it up,
Unfortunately we're out of time.
Yeah, it's been anotherfabulous conversation with you.
You too, mort, and it's alwaysgood to see you.
You too, sir, you too, and Ilook forward to our show coming
up next week Yep, as I do all ofour shows, yes, sir.
(49:14):
So check us out at wwwbig aboutsmall businesscom if you'd like
to sponsor our show.
If you have something that youprovide as a product or service
to small businesses, uh, checkus out.
Speaker 1 (49:31):
We've got a pretty good uh followership and
listenership we do, and they'rethe right people that are
looking to find solutions.
So I think right, you know, bea good good match.
Speaker 3 (49:43):
We'd love to have somebody who, as a sponsor,
who's this product or service webelieve in.
Yeah, and we will talk it up ifwe do.
Yeah, absolutely.
If we don't, we're notinterested in you.
Go away, that's right.
Speaker 1 (49:58):
Like slack.
Speaker 3 (50:00):
No, we hate slack, eric Neifel, it's a pet peeve
Slack.
Speaker 1 (50:04):
Oh yeah.
Speaker 3 (50:05):
Just one more program for me to follow every day,
that's right One more channel.
That's right, all right.
Well, thanks a lot everybodyfor tuning in and until next
week.
This has been another episodeof Big Talk About Small Business
.
Speaker 2 (50:28):
Thanks for tuning into this episode of Big Talk
About Small Business.
If you have any questions orideas for upcoming shows, be
sure to head over to our website.
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Be sure to head over to ourwebsite,
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Stay connected with us onLinkedIn at Big Talk About Small
(50:49):
Business and be sure to headover to our website to read
articles, browse episodes andask questions about upcoming
shows.
Don't look at legal as just legal.
Look at it as that is yourabiding charter between you and
a client, between you and avendor, between you and a
franchisee, whatever it might be.
But when you really write thosethings in like I've grown, I've
matured enough now in my careerto look at those binding
agreements as more than just anagreement.
(00:22):
And it's not about clearing upconflict as much as it is.
I understand the expectation ofyou.
You understand the expectationof me.
Speaker 3 (00:31):
Builds understanding it does.
Hey everybody, this is anotherepisode of that Big Talk About
Small Business Business.
Yeah, we're here today becauseour guest is.
This is another episode of thatBig Talk about small business.
Yeah, we're here today becauseour guest didn't show up.
Speaker 1 (00:55):
I specifically asked him not to say that.
And there you go, Right out ofthe gate, right out of the gate.
Speaker 3 (00:59):
It's a fact.
It is a fact.
It's fine, it's okay, yeah it'sokay, Everything's going to be
okay.
Speaker 1 (01:04):
We'll never forgive him but it's fine, everything's
fine, it is it's okay.
Speaker 3 (01:06):
yeah, it's okay, everything's gonna be, okay,
we'll never forgive him but it'sfine, everything's fine anyway.
Um, so, no, it's great to behere with another beautiful day.
It is gorgeous.
Um, we're in the studio.
We always enjoy talking aboutbusiness.
We never run out of stuff totalk about.
Speaker 1 (01:21):
You can't because it Because business is nothing but
a freaking massive ball ofproblems.
Speaker 3 (01:25):
You have said that so many times and you know how
many times I've quoted you on it, because it is true, so true.
It's endless, and there'salways something you can work on
that's true or that needs to beworked on.
Speaker 1 (01:38):
There's always a ball being dropped somewhere.
Oh my gosh, it's so true.
And you know, I think the thingis is like you have to be like.
My wife, for example, is one ofthese people.
It's very structured, she'spost-military right.
Speaker 3 (01:49):
She's in the medical field where you have to do
things a certain way.
Speaker 1 (01:53):
Yeah, she's like I could never survive with what
you do because it's and like shecan close the day, go home and
then she has, you know, aseparation between work and that
.
Yeah, we don't have that.
No, never.
Speaker 3 (02:04):
And you never will.
Speaker 1 (02:05):
No, because we're never done.
No, that's right.
It's like you try to getthrough the day and get as much
done as you can, and theneverything else just has to wait
a little bit.
Speaker 3 (02:16):
It's just the reality of it.
I mean you could say I'm done,but you're not.
No, Okay, and then yourcompetitor out there is not
going to be done okay.
Speaker 1 (02:23):
Yeah, always have somebody coming after you,
exactly.
It's a constant threat.
Speaker 3 (02:28):
It's just a big problem and threat in life it's
it, I mean it, it, we're noteasy to be married to, it's not
easy to sustain a relationshipwhen that's your situation,
because it's very difficult tofocus on the other problem, even
though you should.
Yeah, you know, but thebusiness just has to take
(02:52):
priority so many times.
It really does if you want tosurvive and thrive.
So today we were talking alittle bit about what we were
supposed to be talking abouttoday, which is franchises and
franchising, and I know that's atopic that we have not
discussed yet on big talk aboutsmall business, and it's got a
(03:13):
lot.
It's pretty complex, it is.
It is complex.
It is one of the gateways toentrepreneurship.
Yeah, of the three, one isstart a business.
Second is buy a business.
Third is buy a franchise.
Yes, yeah, and so it's.
It's definitely a way forpeople to get into business I
see.
Speaker 1 (03:32):
So there's and on franchising, there's two parts.
Right, you have a franchisor ora franchisee, and I see being
becoming a franchisee, buyinginto a franchise and owning a
territory, is a great way forsomebody that's been in the
professional career to get intoentrepreneurship.
Yes, because the franchisor hasproduced all the processes, all
(03:57):
the sales material, themarketing material, all these
things, and has kind of built aplan.
Speaker 3 (04:03):
It's a business plan in a can it is business plan in
a can yeah, but I mean you saythe franchisor has done that, if
it's a good franchisor.
Speaker 1 (04:12):
That is right, right, that's, that's the thing is,
and, and I think that but what'salso makes it really great for
the professional manager, right,and let's call them that if
they've been in a career for theperfect description it really
is.
And so they can take all thatlearning and the way that they
do business, which has a lot ofbenefits to it, and apply that
(04:35):
to franchising, because they cango investigate these
franchisors.
They should be very astute toresearching, analyzing, looking
at those documents, looking atthe terms and conditions, the
franchising agreement, I mean.
And there's big trade showsthat go on for folks just like
that that are ready to you knowthey've had a career with a
major company.
Go to one of these shows andyou get to meet all these
(04:59):
franchisors and you interviewthem like you look at that right
and try to choose your best,one that you feel is a good bet
in the market.
Speaker 3 (05:07):
Yeah, I think that's a really good point for people
who have not owned a businessand maybe not worked in a small
business.
It's a great way to get intobusiness for yourself.
Yep, and you are a businessowner when you're a franchisee?
Speaker 1 (05:22):
Yeah, 100%, you just have the license to use all the
products and processes and brandand all those other things and
it's a good stepping stone too,because I think that what maybe
a professional manager may not,you know, it's like anything.
If you buy a boat, like it'sexciting, you want a boat, you
can see yourself using the boat,but then you get the boat and
(05:42):
then you realize there's a lotto do to maintain that boat.
Now, where do I store it?
How do I maintain?
You know, winterize it.
Polish, you know all this crap.
Speaker 3 (05:52):
It's funny you say that I was just thinking about
that with RVs today.
Yeah, it's the same exactscenario.
Speaker 1 (05:57):
It's nothing but a big pain in the rear, Just like
the first.
There's a lot of freakingproblems right there's a lot of
problems.
Speaker 3 (06:02):
You've got a lot of learning to do, for sure.
Speaker 1 (06:06):
But if you lease the boat or you lease the RV, you
can enjoy it a little bit andsomebody else is taking care of
it.
It's kind of like whatfranchising is a little bit like
in some sense.
Right, you can get into thefranchise, the franchisor has
all these processes and you justkind of start running the
business.
Speaker 3 (06:23):
They've got training.
Yes, many big franchisors havepeople that will help turn
around a franchisee's businessthat's not doing well, that's
right.
That is a part of the servicethat they provide.
They don't want anybody failingout there.
Speaker 1 (06:38):
No, no, it's bad on the franchisor's plan, their
business model, yeah.
Speaker 3 (06:42):
I had a friend of mine whose brother that's all he
did.
He worked for several bigfranchise franchisors.
I think he started out withBurger Chef and then he was
working for what's the seafoodone that's a big Captain D's.
It was not Captain D's, but itwas the other one that's also
(07:02):
teamed up with Taco Bell.
Oh yeah, long John Silver, longJohn Silver.
So he was doing Long JohnSilver and then I think he was
doing Taco Bell's.
But anyway, he would just go inand in six or eight weeks he
would completely turn around thebusiness for the franchisee.
That's great, and so it waskind of cool and he got paid a
(07:24):
lot of money for that.
But what a great.
You know how many businesses dowe have?
Somebody we can call up in sixor eight weeks?
No, even if we have to pay themwhatever, they're going to come
in and just totally turn ourbusiness around.
Speaker 1 (07:35):
No, no, no, it doesn't exist.
Speaker 3 (07:37):
So there's a lot of tools and help.
Yeah, a good franchisorprovides to the franchisees.
Speaker 1 (07:43):
Well, you know stuff as simple as like what's your
accounting system?
Yes, your bookkeeping system.
What are the classificationswithin that bookkeeping system
so you can read your books,right?
If you're starting up your ownbusiness, that's the crap that
you've got to figure out on yourown, because I'll tell you
who's not going to figure it outfor you are accountants.
No, that's so true, they arenot going to do that.
Speaker 3 (08:04):
You know it's funny you bring that up because I just
talked about that in classearlier this week with my
students.
One of the mistakes I thinksmall business owners make
personally this is my view.
You may disagree with me, butthey give up the accounting too
fast.
The benefit of controlling thatuntil you hit like a million or
two million dollars or whatever, is you learn where all your
(08:26):
money's going.
That's right.
You just don't have the samesensitivity when somebody else
does your books for you.
Yep, I know that's a diversionfrom the topic at hand.
Speaker 1 (08:35):
Well, but at the same time I'll be the first to admit
like I've neglected that yeah,a lot of people do you know, and
it's I've even neglected it.
It's so plaguing to me Becausehere's the thing what I always
have experienced is that eventhough I have people that might
be really great at bookkeeping,great at QuickBooks or any
software, or you've got CPAs,accountants they always end up
(08:58):
coming to me for a question.
And because I'm out of it, I'mjust expecting people.
It's intuitive.
They should know that this getsclassified as that this goes to
this client.
This is needs to be baked intothe cost of goods.
For this.
It's like why doesn't anybodyjust get it?
You know, and like I'm theydon't understand your business
like you understand it right.
(09:19):
The bottom line it is, and some not being me thinking that
somebody else is going to beable to do that is my biggest
danger zone, and I'm so guiltyof it.
Yeah.
Speaker 3 (09:30):
I don't think you're unique in that regard at all.
Yeah, because mostentrepreneurs are good at
something.
Yeah, or they like to marketyeah, they like to build
businesses, but they don't likegetting into the weeds.
On accounting yeah, if youwanted to do that, you'd be a
freaking accountant, right,exactly.
Speaker 1 (09:48):
But you get in the weeds of it.
I do you love it, I've alwayshad a thing for numbers.
Speaker 3 (09:52):
I don't know why.
It's just like you know.
It's just something I enjoy.
You know, I went all the waythrough calculus in high school
and it is disgusting.
I taught statistics at onepoint in grad school and I just
liked accounting.
I don't know why, but really Ilike finance better than
(10:13):
accounting.
I don't like doing debits andcredits and T-accounts and all
that.
That's boring as hell.
That's called financialaccounting.
Okay, but what are you?
Managerial accounting, costaccounting?
Speaker 1 (10:24):
You like seeing where things are going, how you can
make tweaks, and improves thebusiness, the cashflow, all that
kind of stuff, yes, but anyway,back on our subject, franchises
.
Speaker 3 (10:34):
I think that's a really good point.
The, the, the accounting system, the categories, all that's all
set up, yeah, and a lot ofother things are too.
I mean, if you're sellingFrench fries, they're going to
tell you exactly how many friesto put in the basket and how
many seconds to cook those, atwhat temperature, how much salt
to put on.
Yeah, I mean everything's laidout for you yeah.
Speaker 1 (10:56):
You just have to implement the plan, and that's a
big deal because, like you know, part of that, the big value,
is that they've already spent ayear, two, three years, however
many, perfecting that, refiningit, yeah, refining it.
And so now you have thisplaybook.
Yes, you're basicallyaccelerating the opportunity to
(11:19):
drive a successful cash flow inbusiness.
Yes, and so it's perfect for aprofessional manager who is used
to having.
Here's the pain point I've seenwith this Professional managers
coming out of corporations areused to having support
underneath them, exactly.
Speaker 3 (11:34):
And then they don't when they're on their own, when
you go on your baby like it'syou, you're everything,
everything is your fault yourproblem.
No, you're right on with that.
I never really clearlyarticulated that.
Speaker 1 (11:46):
But you're right, so you buy into a franchise and you
have that support.
Yes, right, you just got tofill in a few roles and do some
basic operational stuff.
Speaker 3 (11:54):
Yeah, you got to select the right people and you
got to make sure people aredoing what they're supposed to
do right, which is most likelywhat a professional manager is
already really excellent at.
Speaker 1 (12:03):
That's a great point In which an entrepreneur is not
necessarily.
It would be hard for me to buya franchise because I don't
enjoy.
I've missed all the stuff thatI really like to do, which is
start a fight.
When you're buying a franchise,you're closing the deal, You're
in the middle of it and you'retrying to end the fight.
Speaker 3 (12:25):
Well, some people yeah, I think that's a.
It's a good analogy.
I think some people feel likeit's not very creative or you're
not an entrepreneur if you ownfranchises.
I've got a friend, I don't know.
He had like 12 of onerestaurant and three of another.
Maybe he's got 15 or 18 of theone and and got rid of the
others.
Now he's got a lot of them.
Okay, and is he an entrepreneur?
(12:49):
Well, I think he is, because 20years ago he started out with
$50,000 when he sold his houseand today he's got a business
that's doing, my God, somewherearound $30 million, I would
guess, in total revenue.
It makes an eight percentprofit and he's built an
incredible amount of value inthe business and he's paying off
(13:11):
real estate.
With every one of thoserestaurants that he owns,
they're all paying off the realestate.
Um, my god, I mean, he's goingto end up being a very wealthy
guy.
Speaker 1 (13:21):
Yeah, you can't say he's not entrepreneurial.
He totally is.
You know, you know he's growing, growing the business, he's
growing the opportunity.
I mean 100%.
Speaker 3 (13:29):
He's really careful about the people he hires and
the management systems that heputs in place to control the
overall business, notnecessarily the individual units
.
Speaker 1 (13:39):
Well, I think the difference is if a professional
manager gets into franchisingand I've seen this happen where
they want a different style oflife, right, they just want to
own one unit, they just want tomake their income, but they want
to have some freedom and theylook at it from that perspective
.
That's kind of dipping intoyour solopreneur type of
mentality.
Speaker 3 (13:59):
Small business owner period, which is not a true
entrepreneur.
Speaker 1 (14:03):
But if you're getting into it and you're like man,
I'm going to open up multiplelocations, I'm going to drive
growth here, I'm going to makean income, I'm going to provide
employment, I'm going to fitthis market need, I'm going to
dominate.
That's an entrepreneurial thing.
Speaker 3 (14:15):
Well, and buying distressed yes, I mean, that's
another one.
There you go.
I student, his parents owned 21mcdonald's.
This goes back maybe 15 yearsago.
They were not based here, okay,the student wasn't.
His family was from kansas andeach one made an average of 366
000 profit a year.
So they were doing over 7million a year out of their 21
(14:37):
mcdonald's.
But the parents both were schoolpsychologists who worked at
mcdonald's when they were inhigh school.
That's where they met.
Then they went all the waythrough school, became school
psychologists and then they gotback into it and they bought
their first McDonald's franchise.
Well, they did so well at itthat McDonald's would refer
(14:58):
other franchise owners to themwho were struggling and say you
know, know, and they turned thatinto acquisition opportunities,
nice, so they would buy thedistressed mcdonald's, turn them
around, integrate them withtheir system.
They were entrepreneurial ashell.
I'll tell you that.
I have no idea where they arenow.
(15:18):
I'm sure they're verysuccessful.
Yeah, but, um, but yeah, it's a, it is a way.
Um, I think it's a really goodpoint.
It's a good doorway for peoplewho are not used to business
ownership to get into it.
Speaker 1 (15:30):
Yeah, I mean I think that if you're a professional
manager, you get into afranchise, over the five-year
period you're going to startseeing it's like you backtrack,
like you can get in, get off theground, start professionally
managing, doing what yourstrength is, but then you're
learning along the way aboutthese deeper things and that
organization that thatfranchisor has provided.
(15:51):
You'll learn that and then youmight be ready and have the
confidence to kind of startsomething brand new.
I mean that could be anexcellent path, right.
Speaker 3 (15:59):
That's a really good point too, because, again my
friend, they have onenon-franchise restaurant too and
I asked him I said, with allyour experience in franchise,
running franchise restaurants,did the process, did the
discipline, all that carry overinto your own?
Yeah, he goes absolutely 100%.
(16:19):
He learned so much from that.
Yeah, okay so that makes him abetter owner of the independent.
Yeah, where they?
You know where?
Speaker 1 (16:26):
they started it, yeah , and they'll know a lot of the
systems.
And this I mean, heck man.
We know, like, as anentrepreneur, business owner,
like just knowing whatsubscriptions you need to have,
what softwares, what tools yeah,is is a lot of the battle
because you can waste so muchmoney, so much time oh my god
time Doing software conversionis one of the most painful
things in business.
(16:47):
You know, everybody promisesthe moon.
Few of them deliver on it.
Actually, no one reallydelivers on the moon.
You know, speaking of, we justrecently, in one of our business
, started using Salesforceinstead of some of the other CRM
tools I have.
Yeah, salesforce is, you know,number one, number one, one,
best in class, right, but Istart going in there trying to
(17:07):
use the thing and it isabsolutely cumbersome, yeah, and
it's overkill, because there'stoo many options, there's too
many things you can do with it.
It takes a tremendous amount ofapplication programming, which
requires a tremendous amount ofresources and dollars to get it
done right yeah so we needSalesforce consultants yeah.
Oh, that was the answer fromSalesforce.
(17:28):
I'm like hey, I need some helpwith some simple field updates.
They're like oh understand, oursystem can be quite complex.
We can introduce you to some ofour Salesforce partners to help
you.
Speaker 2 (17:39):
I'm like that is the last thing that I want.
Speaker 1 (17:42):
I don't want to talk to them, I want to use the
system.
But I mean to the point right.
The franchisor has alreadyinvested that energy, has found
that model.
Vetted those things out.
Vetted those things out.
Speaker 3 (17:56):
Again, this is only good ones.
There are bad ones out there.
I mean good ones.
You've got a brand that as soonas you open the doors, you're
going to have business coming toyou because it's so recognized.
But there are a lot of new onesthat don't necessarily have
that power or that haven't beenthat well thought out, as you're
saying.
You know.
(18:16):
A lot of times they fail.
I mean, I had a student oncewhose father passed away and he
came to me when he was like 19,and his dad had just recently
passed away and his dad left himsome money and said the only
condition is I want you to usethis money to start a business.
So he started looking atfranchises, okay, and he came up
(18:38):
with this smoothie franchise.
It was based in California.
I think it was called IntaJuice, if I recall.
Speaker 1 (18:45):
Yeah, yeah, yeah, I don't know who you're talking
about.
Speaker 3 (18:47):
Yeah, I've seen them.
We had one in Fayetteville.
Yeah, that was him.
Oh, okay, and anyway.
So I had a long discussion withthe guy.
He wasn't even my student, buthe's.
You know, I go, that's fine,but I go, you got to think about
it like, does that brand namecarry any weight here at all?
Yeah, okay, yeah, are we allsitting there going like, oh, my
god, I hope they open it intojuice?
(19:08):
No, I've never even heard of it.
Right, okay, and I've been welltraveled, okay, so that that's
maybe that's an issue for you.
I said the other thing is youneed to go talk with other
franchisees, not the ones thatthe franchisor puts you in touch
with.
That's right.
You need to reach out to otherones and go what's it like?
Yeah, you know, do your duediligence you have to.
Speaker 1 (19:31):
You're basically it's you know, in speaking of due
diligence, right, if you weregoing to buy an entire company,
the due diligence we actually,um the guests that we had on
last week, we talked about thisa little bit, about proper due
diligence, because she made someacquisitions right and, like
she emphasized, if you're goingto acquire a company, the due
(19:51):
diligence process is sosignificant, right?
Yes, it is.
And if you're a franchise, ifyou're looking to be a
franchisee your due diligence.
You're basically buying anothercompany.
You have to really get underthat hood and make sure all
these things are up to speed.
I think there's someopportunity to buy into a new
(20:13):
franchisor because you could beon the front end.
You can get more territories,your negotiation leverage is
better, very true, and it couldbe an exciting roller coaster
versus, like an established one.
Speaker 3 (20:25):
No, that's true.
You pay a premium for that.
Yeah, the franchisor premiumkeeps going up and the territory
gets smaller and smallerbecause there's so many of them
out there.
More competitiveness, right.
Speaker 1 (20:35):
And your scalability shrinks.
Yeah, good point.
But if it's a newer one, yourdue diligence must be.
I mean absolutely impeccable,and which means legal.
It means accounting duediligence must be I mean
absolutely impeccable, and whichmeans legal.
It means accounting, duediligence and audits.
Right, I mean like you reallyneed to dig into that and making
sure the process is, and Ithink I would dig into whoever
created the franchise.
Speaker 3 (20:57):
You know the franchisors, the head of the
franchisor.
Do they have a successful trackrecord or they have, like, just
nothing but a string offailures?
You're going to be the next oneRight.
Right, you know what I mean.
Yeah, that seems like thatwould be important too.
But, yeah, I'm glad you broughtup legal, because that's
another thing that I've learnedover the years of teaching this
stuff and seeing a number ofstudents who did end up with
(21:21):
franchise.
You know who are franchisees,you know?
Usually I don't know what theycall it today, but it was called
traditionally Uniform FranchiseOperating Agreement.
I think it was like UFOG orsomething is the document that
the franchisor has thefranchisee sign, yeah, and it
(21:42):
just lays everything out yeah,all the rules, the, the costs,
the, what they got to buy what,how much tribute they pay to the
franchise, or you know all that.
And and um, you've got to getyourself an attorney, yeah, who
specializes in franchising.
(22:03):
Yes, do not go to your regularbusiness attorney.
They will not know what to lookfor in that agreement or what.
The common problem pain points,that's true, it's very.
Speaker 1 (22:14):
It's like everything else get the specialist yeah,
you have to, especially infranchises.
I mean they're so, they're solegal.
You know there are a lot oflegal restrictions to them.
I mean it goes by state bystate too that's true.
Speaker 3 (22:26):
The other point yeah, every state's got different and
it has federal guidelines andstate guidelines and you know,
and you've got their territories.
Speaker 1 (22:32):
I mean, there's so much to it that the franchisor
has to go through, but then thefranchisee needs to have the due
diligence to make sure allthat's on the up and up right.
And what are?
Where are the territories aregoing?
You know, where are theylegally able to do business at?
Because that could stall out alot of their investment as well.
Speaker 3 (22:50):
Good, point, yeah, so there's a lot of stuff in there
.
You know, another thing I'velearned from my friends that
have franchises and again Idon't know what else to call it
from my friends who arefranchisees I don't want to get
the terminology screwed up isthat usually there's some sort
of a franchisee group that youcan join with other franchisees
(23:14):
that then has power in dealingwith the franchisor and may be
able to influence their policiesand get things changed.
I mean, for him that wascritical.
One of my friends, he actuallybecame the head of that group
and then he was at boardmeetings sometimes of the
franchisor and could voice theconcerns and work to get things
(23:39):
changed.
I mean, for example, I knowthey had a number of disputes
about things like what's on theconcerns.
It worked to get things changed.
I mean, for example, I knowthey had a number of disputes
about things like what's on themenu.
Like the franchisor wanted themto have too many things on the
menu, some of which were verytime-consuming to build and they
didn't make any money on them.
The franchisees didn't likethat, but their agreement says
they've got to have everything.
You see what I mean.
(23:59):
So they would fight to getthose taken off the menu, for
example, or another time,several times he was involved in
trying to lobby to get thepricing changed.
The the you know the franchisor,set the pricing standard and at
one point they wanted theprices to go down and they had
(24:19):
to fight for a while to get thefranchisor to let them do that.
And then, after a period ofyears they wanted the prices to
go back up the franchisees.
They had to fight for a longtime to get the franchisor to
let them do that.
But anyway, the point of it isthere is an org.
Many times for the larger onesthere's this organization of
franchisees that's probably goodto get involved with Many times
(24:43):
for the larger ones, there'sthis organization of franchisees
it's probably good to getinvolved with.
Speaker 1 (24:46):
So I think that that topic brings up a point of again
what are you, if you'reinterested in getting into small
business or being anentrepreneur, right?
Like that's one of the criticalthings.
Like, if you're really wantingand have a desire to have
complete decision-makingauthority, being a franchisee is
not probably the game, so youhave to really weigh.
(25:10):
I meet a lot of folks that areinterested in being an
entrepreneur and, like we'vetalked about, there's so many
different avenues to choose.
But you've got your pros andcons.
Yes, you can start your own andyou can have complete authority
, but you're going to deal withevery single one of the problems
.
Yep, or you get into be afranchisee.
You may not be able to make alldecisions, but you're not gonna
(25:30):
have to deal with all theproblems.
That's right.
Right, yeah, if you want to bea franchisor, you're going to
deal with a lot of problems,right, and have decision, have
decision making.
But I think it's just reallyimportant for an aspiring
entrepreneur and honestly, mark,I mean it comes down to
spending time with yourself.
What are your goals?
What are you trying?
Speaker 2 (25:50):
to do.
Speaker 1 (25:50):
What's really your ambition on doing this?
And I think that that's themost important question to ask,
because again, why are you doingthis?
Speaker 3 (25:59):
Yeah, because what are you looking for?
Speaker 1 (26:01):
In our area we've got so many professional managers
Like, I mean, some of thesmartest, greatest leaders in
the world, I think are hereworking.
Speaker 3 (26:08):
Yeah, you know and, but it's not the same skill set
that those of us that just hadsmall businesses and grew up
have.
Speaker 1 (26:18):
No, it's really not.
And I mean there's not a not,because you try to put me in a
professional organization as aprofessional manager.
I will not do well, no.
Speaker 3 (26:27):
I totally understand exactly what you're saying.
You're not criticizing them atall.
It takes a lot of skill to risethrough these big corporations.
Oh my gosh.
I mean they're incrediblePolitical skills and
communication skills andpsychological knowledge.
Speaker 1 (26:43):
You know we have a unique space here in our area
with Tyson Hunt and Walmart andsome massive corporations that
some of these folks that are inthose executive roles are just
some of the most incrediblehumans.
Speaker 3 (26:58):
Takes a lot of intelligence for sure.
No, it does.
Speaker 1 (27:01):
And dedication yeah, and navigation, and all these
things that I admire and Iactually learn a lot from.
No, you're right, you'reabsolutely right, but they're
intrigued.
The funny thing that I'venoticed is they're intrigued on
the entrepreneurial life.
It's like we all kind of want alittle something that each
other has, but they'll askquestions about it and it's, and
(27:22):
it's like you know, the, theentrepreneurial mindset which I
think we, everybody, kind oflikes.
That you know that mindset, butbut the, the problems that are
being dealt with as anentrepreneur are just of a, of a
different caliber.
It's like you know, I meanliterally like people say, well,
I'm the janitor too, I mean,but that's, there's a lot of
(27:43):
truth to that.
You know can, are you ready andwilling to literally clean up
the bathroom?
You know, anytime I go to thebathroom in my businesses, I'm
cleaning.
Speaker 3 (27:52):
I know I'm always the same way, like I see, like
people throw their paper toweldown and miss the trash.
Can you wouldn't do that athome?
Speaker 1 (27:58):
No, what's wrong with you?
Speaker 3 (28:00):
I pick it up, throw it in, Absolutely Wipe the sink
off.
You know it's like the airplanesLike wipe the sink off after
use.
Yeah, but it is true.
You know, this week I had myoldest daughter speaking to my
students in Christie and youknow, christie, yeah, I think
you were actually the one thathired her in the first place.
Yeah, yeah, but Christy, youknow, she's got this horse
(28:23):
business and she's really grownand it's gotten very successful.
She makes her entire living offit.
You know, she got out of herMBA job and has replaced that
income entirely with her horsebusiness.
That already was making moneyon the side, on the side, but
she showed one of her lastslides is here she is standing
(28:44):
and pouring cold rain in a in along coat.
That's like wearing a bedspreadthat's soaked in in a giant
pile of manure nice, that isturned into manure soup and it's
in your freaking boots all theway up to your knees.
Okay, and guess what you got todo that too.
It's not all the glory, right,oh man it's, there's not it's
not like I'm going to ireland topick up a beautiful mare or
(29:08):
whatever.
You know.
That's the fun part thateverybody thinks is great.
Speaker 1 (29:11):
Well, because you as if you're also cleaning.
Oh, totally in the worst weatherand you don't want to show up
like like.
There's a front facing and a aback-house-facing part to the
entrepreneurship, and if youshow up to an event, you don't
show up wearing the manure allover your boots that you've been
working all day Like.
You have to dress your best,you have to present, you have to
(29:33):
really appear and communicatethat you do have your stuff
together, but the reality isthat you're actually digging in
and cleaning up manure all daylong and every day, and so
that's why I think a lot offolks can be tricked into
entrepreneurial life.
That seems glamorous but it'snot.
Speaker 3 (29:54):
I think that's also interesting in light of what you
were saying about theprofessional manager.
Yeah, going into buying afranchise as their port of entry
.
Yeah to entrepreneurship.
This is one place where theycan fail because, as christy
says, I don't ask anybody whoworks for me to do any job I
will not do myself.
(30:15):
I will demonstrate it to themand I tell them if you don't do
this job, I'm going to freakingdo this job.
Okay, now think about that.
As a corporate manager, I washigh level.
I made $400,000 or $500,000 ayear at XYZ Corporation or
whatever.
I got my $3 million retirementpackage after 30 years of
sweating it out.
Now I'm going to go and buy afranchise or another couple
(30:45):
franchises okay, operations, andyou know a lot of those
businesses.
In fact, I go back to the kidwith the IntaJuice.
When he told me that's what hewas going to do, I said to him I
go.
Or?
I asked him.
I said are you prepared to havea bunch of high school students
as your employees?
What do you think it's going tobe like managing 17 year olds?
(31:06):
Yeah, okay, yeah, how many ofthem are not going to show up?
Yeah, or do somethingunbelievably stupid.
And is that the way you want tospend your day?
Yeah, okay.
Now, we all know that a lot oftimes, as you said, we have to
be the ones to clean the toiletsor whatever.
Whatever the or the, you knowwhatever toilet cleaning
(31:29):
represents in the business right, and so that sets an example
and it shows other people thatyou're not elevating yourself
above them, which is a verycritical point of, I think,
leading people, especially those, let's say, who don't have the
same education or socioeconomicbackground that you have.
Right.
Will those corporate managersget out there and make the
(31:55):
freaking French fries along withthem and have the grease
splattering on them and go workthe drive up window and will
they haul the friggin, nastytrash out to the nasty dumpster
that's out back?
Yep, to gain the respect oftheir people?
That's right.
Or are they too used to beingcorporate managers or they've
got all the stuff?
Speaker 1 (32:16):
it's a think about that.
You know, and I think it's agreat question because here's
the deal in all honesty, likethis kind of ties into.
You know, like my 2.0.
You know, after businessgrowing it, exiting and then
starting other businesses.
I fooled myself and I heard aquote about it the other day.
If you have built a successfulbusiness and you start another
(32:41):
one, it's not going to be anyeasier.
No, to grow and build thatsecond business the only thing
that I know are some warningsigns that are coming down the
road.
I know I've learned some of thepain points to maybe avoid a
little bit, but the fact of thematter is is I still have to
hunt, I still have to clean, Istill have to do all the things
I've got to do, and if you're aprofessional manager looking
(33:03):
into franchising, I think itwould be a really poor mistake
and I've actually seen it whereif you have your $3 million, you
have some money and you'regoing to invest in this.
To think you're going to investsolely into a franchise and you
can take a back seat and watchyour investment grow is is a
very bad, bad, bad idea alwaysupset for failure.
Speaker 3 (33:26):
You're setting yourself up for failure in
misery, yeah, in pain.
Speaker 1 (33:30):
Like you, you work so hard for 30 years.
Now you're looking at this asanother ticket.
You know to continue to buildwealth, which I don disagree
with, but if you're going to dothat solo, you're going to be in
for some poor experiences.
Now I would say, though, if youhave other colleagues that are
in your same position and youpatch your money together, as
(33:53):
long as now you're an investornot necessarily an entrepreneur,
which is okay.
Right, but it's different.
It's a different game, yeahtotally.
You can pull your money togetherand then you go find the people
that you minimize your risk ina way doing that, but you also
minimize your reward, that'sright, yeah, but but you, but,
if you can get a group, if youand I did this, I would say hey,
mark, I don't have any time, Igot some money, you don't have
(34:15):
any time, you got some money.
Right, let's pull our moneytogether, let's find ourselves a
good ceo okay, good cmo.
Speaker 3 (34:21):
Yeah, that could work and maybe that would play to
your skill set as the corporatemanager is what you're saying
exactly now.
Speaker 1 (34:27):
You're a board member , investor, but you have the
talent to run the business.
But I mean like, and so I thinkthat the thing is is like you
have to really think aboutwhat's your time dedication?
Where are you wanting to go?
What's your reward?
What are you trying to do?
What's your reward?
What are you trying to do withyour money and your investment?
What are you trying to do withthe rest of your life?
Those things are really bigquestions.
Before you get into this, youknow there's like different
(34:47):
levels you can take.
I just think the big thing isjust be really honest with
yourself.
Speaker 3 (34:52):
I think that's a really good point, you know.
Now there's one other thing Iwanted to talk about, about
related to being a franchiseethat I think not everybody
thinks about.
So many years ago I think itwas probably 20 years ago I met
a guy in a plane who owned MakoAuto Painting franchises.
I think he had like eight orten of them.
(35:13):
Okay, and I don't know if youknow anything about Mako Auto
Painting.
They're cheap, all right, it'slike they used to.
Ever we'll paint your entirecar for $199.
You know now it's like $499 orwhatever.
But I mean, if I was going togo paint a car this weekend, I
can't even buy the paint, thesandpaper, the primer and
everything else I need for lessthan a thousand bucks Probably
(35:34):
cost like $1 1400 for thematerials alone.
How can Mako paint a car for500 bucks at that point?
Well, they don't do a great job, let's be honest.
Starting, okay.
Secondly, you know they, theyupsell, all right.
But I I the point of all this isI asked him I'm like, how can
you make any money doing that?
(35:55):
He goes.
You know what he goes, you knowwhat he goes.
I don't care whether any of mymakos make any money.
I just want them not to losemoney.
So if they break even, I'mcompletely happy with that, I go
.
Why is that he goes?
They're paying off the realestate every one of those
locations.
I own the building.
You guys think about it.
In 15 or 20 years I'm gonnahave this building in a great
(36:17):
commercial location.
It's completely paid off.
It's worth three times whateverI paid for it.
Okay, and I'm like, ah, now Iget it.
Speaker 1 (36:26):
That's called the real estate play.
That's a real estateentrepreneur.
Okay.
Speaker 3 (36:30):
Yeah, yeah, it makes total sense.
Speaker 1 (36:33):
It does.
Speaker 3 (36:34):
Let's say I want to open up a Burger King franchise.
Let's say it costs me $2.5million to build a Burger King
between the land and thebuilding and that's not in like
a prime location.
Maybe I'm in like one of thesesecond or third tier markets,
but anyway, let's say it's agrowing area and it costs me
(36:55):
$2.5 million.
Well, if I operate that BurgerKing for 20 years, what's that
two and a half million dollarreal estate worth?
Oh yeah, it's going to be worthseven, five, six, seven, eight,
whatever.
Speaker 1 (37:09):
Okay, and you had somebody else pay that.
Speaker 3 (37:11):
Yeah, I don't even care if my Burger King goes out
of business at that point.
Yeah, makes no difference.
Speaker 1 (37:16):
Yeah, no, it's true, it's a good play to it.
Yeah, in which kind of?
If we go back to that scenariowhen I was talking about
entrepreneur versus investor,group of investors, that could
be the play.
And there's actually investmentpools that are already built
that do exactly that type ofstuff.
They know that they're realbusinesses and real estate.
Yeah, mcdonald's figured thatout 100%, because the McDonald's
(37:38):
franchisees don't own the realestate.
Speaker 3 (37:39):
Yeah, mcdonald's figured that out.
Because the McDonald'sfranchisees don't own the real
estate, they rent it fromMcDonald's Corporation 100%.
But anyway, that's just kind ofan interesting evidence.
Let's flip the switch now.
Okay, let's talk about if youwant to be a franchisor.
Speaker 1 (37:53):
What are some things that you really need to be doing
in order to create a valuablefranchise experience for
franchisees, where they'll payyou money for it and pay you
royalties a franchise fee to buyin and royalties to to continue
to be a franchise so I I cannotI cannot speak to it as an
(38:14):
expert, but I can speak to it asa practitioner and the fact
that with podcast videos, we arelooking to franchise okay, you
know, as a franchisor, and I cantell you that it's been a a
very intense long-term processto think about this yeah and to
build it out right.
We're in the middle of gettingour documents together, which
(38:36):
takes a long time.
It's very expensive.
Yep to legalize that processesyep and procedures defining all
those defining all that gettingit all, and you have to.
I mean, you're talking aboutreally writing it down, like
taking, like it's a truemanufacturing factory process,
right?
Yes.
Then you have training andonboarding yes, which is also
(38:57):
extremely intense and timeconsuming yes.
And then we're getting into themarketing plan, like the
responsibility to market thesefranchisees when they go to
market.
What our goal is is that afranchisee would come to us and
they can get in with minimalcapital, turn it really fast and
be as profitable as fast aspossible and be that literal
(39:20):
support to them.
And what I'm excited about andthis is my mentality right, and
it kind of hit me about a yearand a half ago when I was
thinking about this, as I waslooking and being a franchisor,
I was like thinking, oh my gosh,this is a lot of work, right?
Am I really interested in?
I'm not really interested inthat amount of work, but what I
am interested in is gettingentrepreneurs or aspiring
(39:41):
entrepreneurs, like we've beentalking about, and helping them
achieve growth and wealth.
To me, that's so.
Speaker 3 (39:50):
that is the core of why I'm doing that.
I totally understand.
I mean, if you keep that inmind, it's going to influence
every decision that you make andit'll help you make that a
reality and honestly mark thiskind of goes into just being an
entrepreneur in general.
Speaker 1 (40:07):
That's what my passion is.
That's where my heart is, that'swhere I want to, and the money
will come yeah, because, likeyou, said it guides every
decision and, like I'm, if I canthink about when we set this
agreement up, we set all theseprocesses about doing the
marketing and all that kind ofstuff and I'm thinking about I
want to help this individual besuccessful and I can be a part
(40:28):
of that and build something thathelps those, that keeps my
decision-making and our team'sculture decision-making in this
on the right track.
Yes, it does.
Now I've set up a goodpartnership for a franchisee, so
now I've just got to award.
Here's the big thing Decidingwho you want to give that to.
Speaker 3 (40:47):
That's exactly right, because if you don't give it to
the right person and they fail,then it makes you look bad.
That's right and sort ofdevalues the thing we are
podcastvideoscom.
Speaker 1 (40:58):
Our goal is to educate, enlighten, engage and
entertain.
Speaker 2 (41:05):
We believe in the power of love and transformation
through storytelling.
Speaker 1 (41:10):
You got to get the right people, and I figured out,
you know, I found out the rightterminology.
I'm not going to sellfranchises, I'm going to award
them, yep.
And so I'm going to do my duediligence on the franchisee as
much as they do with me.
Speaker 2 (41:25):
They can come investigate me, because I've
said it all.
Speaker 3 (41:27):
You're smart.
Speaker 1 (41:28):
Right, you're smart, but who are they?
What's their track record?
What's their ambition withgetting involved in our
franchise?
What's their motivation?
Speaker 3 (41:36):
Exactly.
Yeah, I think that's very smart.
I don't think all franchisorsthink like that.
I think some franchisors justwant to sell the franchise and
get franchise fees, yeah, andthen they hope that somebody out
there is successful and cancontinue to pay them their
royalties.
Speaker 1 (41:52):
Yeah, and on the interviews and the consultation,
and so I've gotten a lot ofconsultation from some experts,
like you know.
Speaker 3 (41:59):
Tom Gordon, you know I've talked with lot of
consultation from some expertslike Tom Gordon's.
I've talked with him a littlebit.
Yeah, sure, tom would be great,freaking, fantastic.
We had him on our show.
Yeah, he's amazing.
He knows what the heck he'sdoing.
Speaker 1 (42:06):
Yeah him and a lot of other folks, one of the best,
yeah, you know, are you able, asa franchisor, you know, to to
make sure that you have thatgood relationship, because
you're basically starting amarriage with that franchisee,
you know, and and how you guysset up that relationship is
(42:27):
absolutely, you know, absolutelycritical.
Speaker 3 (42:30):
No, you make a really good point, you know.
I think the other thing thatfranchisors really need to think
about too is, as the as yousell, um, you know, uh, as you
you get new franchisees, youhave to make sure they're doing
things the way they are supposedto.
So I remember my friend, mikestennett.
(42:51):
He he bought a bunch of steakand shakes and there was one
that was in Joplin that he endedup acquiring.
I might have talked about it inthis show before, but in any
case it was in such bad shape hewas furious with Steak and
Shake Corporate that they wouldallow this franchisee to run
(43:15):
that business the way they did,because it devalued his brand.
Yeah, as far as he wasconcerned, yeah, okay.
So you really got to make surethat your franchisees out there
are operating in a way thatenhances you know, that supports
your program and enhances yourbrand and your value 100%.
(43:38):
And if they're not, like whatteeth do you have?
I guess you can pull thefranchise from them based on
whatever your agreement states.
Speaker 1 (43:45):
Yeah, so I think from what I've seen is it's all in
the agreement, right, like thereare rules and regs to protect,
and the whole thing as afranchisor is to protect that
brand.
Yeah, you know.
And so the franchisee has, theyhave to follow these rules, and
then that's when a franchise orlike rightfully so.
If you're destroying ordiluting my brand, you're
affecting my business andeverybody else.
(44:06):
And every other franchiseewhich I, as a franchisor, have a
responsibility to protect that.
Speaker 3 (44:12):
Yeah, you would be very upset about that.
Speaker 1 (44:13):
Yeah, yeah, and so rightfully so.
I'm honestly like I think that,from my standpoint, is trying
to get this ready forfranchising.
There is so much work involvedin it, like it's really daunting
and it's a commitment, um, andit's not really that much
exciting work.
I'll be honest with you, likeit's not the nature of what you
like, no, no, but but the if theend goal is is that I can help
(44:38):
establish other franchisees tobe successful and I can be part
of that success story right andbuild an ecosystem to where it's
successful and we can createnew media, which is what we want
to do and enable new media tobe created at Podcast Videos,
then that's exciting as hell tome.
That really is.
But I can build an agreementwhere we're on the same page.
(45:00):
That document and I think thisis a big thing for entrepreneurs
Don't look at legal as justlegal right.
Look at it as that is yourabiding charter between you and
a client, between you and avendor, between you and a
franchisee, whatever it might be.
But when you really write thosethings in, like I've, I've have
grown, I've matured enough nowin my career to look at those
(45:23):
binding agreements as more thanjust an agreement like and it's
not about like you know.
You know clearing up conflictas much as it is like.
I understand the expectation ofyou, you understand the
expectation of me.
Builds understandings,understanding it does.
Speaker 3 (45:37):
Yeah.
Speaker 1 (45:38):
It does and that I did not have that perspective
for the longest time.
That makes a lot of sense, youknow.
So that franchise agreement tome, like the thoroughness of it,
the process, you know, andwhat's in there, is establishing
that relationship to befruitful versus conflicting and
negative.
Speaker 3 (45:57):
Yeah, you know what I was also thinking about as you
were talking.
Like all the work you're goingthrough right now to, let's say,
position the podcast videos asa franchisor, it's got to help
the existing business.
It makes you questioneverything, codify everything, I
mean you may not go to thatmuch trouble if you weren't on
(46:18):
that plan, right it?
Speaker 1 (46:20):
it.
It no a hundred percent what itdoes like, like I like as an
entrepreneur, businesses.
Like when I, if I get involvedin a business, most cases it's I
think about how, what its scalecan be.
Speaker 3 (46:32):
Yeah, of course, that's what we all think about.
Speaker 1 (46:33):
Yeah, if it takes off we're real entrepreneurs yeah,
right, right.
And so a franchise is justreally a.
You know, it's a tool.
It's a tool For scaling, it's ascaling business, and so it
does critically make uscritically think do our existing
processes of this studio great,we're able to do the work and
meet profit, but is it scalable?
(46:54):
And so we're always thinkingReplicatable.
Yes, we're always thinkingabout okay, what if Now that
works today?
Yeah, but if I have a hundredstudios, is it going to work?
Yeah, so if it doesn't, like,what do we need to do to get our
software systems in place toachieve that scale?
And so I'm actually in ourbusiness today.
We've been thinking five yearsahead.
Yeah, every day for the lasttwo years that we've been doing
(47:17):
this.
Yeah, and that's why, like whenI look at podcast videos, like,
and people ask me about what wedo, like, yeah, we have this
studio, but we really have avery big, big plan that no one
can see, dude.
Speaker 3 (47:29):
I can see it because you've invested so much, not
just in the facility from youroriginal facility, yeah, but all
the people 100% from youroriginal facility yeah, but all
the people and the sort of theroles that you're creating and
defining in this thing.
Most people wouldn't make theinvestment that you've made.
It's a big investment of timeand money.
Speaker 1 (47:47):
It is but it's also like these people that are in
some of these what we callcorporate roles yeah, are really
non-essential right now.
Right, I understand thattotally, but because of our plan
, we're investing in thatacceleration and scale, and that
is the difference of wherewe're at.
So I know, when I see apotential competitor coming to
(48:10):
the market as a studio orwhatever it might be, I'm not
really too worried about it andI actually support them.
I hope that they do well, butmy plan is not the same as their
.
Oh no, I totally get it.
Speaker 3 (48:21):
They just want to have one studio that makes money
, and that's their goal.
Speaker 1 (48:24):
No 100, yeah right, you know, and they want to grow
the congratulations.
I'll actually send businessyour way, because there's
business I'm not going to takeon today.
Right, because it doesn't fitmy scale point.
Sure, sure, sure.
Speaker 3 (48:36):
Yeah, it makes total sense.
Well, I can see this is a veryinteresting topic we've got
today, I think.
Speaker 1 (48:42):
We need to have a lot more guests.
I'd like to have morefranchisors and franchisees.
Speaker 3 (48:45):
Yeah, I think we can do that.
Keep talking about it, yeah.
Speaker 1 (48:48):
We've got some friends that have been doing it
Sure, sure.
Speaker 3 (48:52):
Well, I think we've going to wrap it up,
Unfortunately we're out of time.
Yeah, it's been anotherfabulous conversation with you.
You too, mort, and it's alwaysgood to see you.
You too, sir, you too, and Ilook forward to our show coming
up next week Yep, as I do all ofour shows, yes, sir.
(49:14):
So check us out at wwwbig aboutsmall businesscom if you'd like
to sponsor our show.
If you have something that youprovide as a product or service
to small businesses, uh, checkus out.
Speaker 1 (49:31):
We've got a pretty good uh followership and
listenership we do, and they'rethe right people that are
looking to find solutions.
So I think right, you know, bea good good match.
Speaker 3 (49:43):
We'd love to have somebody who, as a sponsor,
who's this product or service webelieve in.
Yeah, and we will talk it up ifwe do.
Yeah, absolutely.
If we don't, we're notinterested in you.
Go away, that's right.
Speaker 1 (49:58):
Like slack.
Speaker 3 (50:00):
No, we hate slack, eric Neifel, it's a pet peeve
Slack.
Speaker 1 (50:04):
Oh yeah.
Speaker 3 (50:05):
Just one more program for me to follow every day,
that's right One more channel.
That's right, all right.
Well, thanks a lot everybodyfor tuning in and until next
week.
This has been another episodeof Big Talk About Small Business
.
Speaker 2 (50:28):
Thanks for tuning into this episode of Big Talk
About Small Business.
If you have any questions orideas for upcoming shows, be
sure to head over to our website.
Or ideas for upcoming shows?
Be sure to head over to ourwebsite,
wwwbigtalkaboutsmallbusinesscomand click on the Ask the Host
button for the chance to haveyour questions answered on the
show.
Stay connected with us onLinkedIn at Big Talk About Small
(50:49):
Business and be sure to headover to our website to read
articles, browse episodes andask questions about upcoming
shows.
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