Episode Transcript
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Lance Hood (FranPro) (00:09):
Welcome
everybody.
Today we have Tom Dufore of theCEO of the Big Sky Franchise
Team.
Tom, welcome to the call.
Tom Dufore (Big Sky Franc (00:18):
Thank
you for having me.
I really appreciate it.
Lance Hood (FranPro) (00:21):
Well, Tom,
can you share a little bit
about the Big Sky and how itgot started?
Tom Dufore (Big Sky Franch (00:27):
Sure
.
So Big Sky franchise team westarted back in 2016 and really
it came out of my background.
I've been helping companiesfranchise their business my
entire career and so I, bychance, just my first job right
out of college happened to be ata management consulting company
(00:48):
that specialized in helpingbusinesses franchise, and so
fell in love with the wholeconcept and the idea and really
loved the vision of anentrepreneur who creates
something, and I've always beena big fan of entrepreneurship.
I always loved that and so knewat some point in time I'd want
(01:09):
to start my own business, and,after going to work for a client
for a little while and gettingback into the franchising
business, ended up starting BigSky franchise team to help
others go through thefranchising process to turn
their business into a franchise.
Lance Hood (FranPro) (01:28):
Well, can
you share for someone who's not
familiar with that, what are allthe services that you provide
in general?
Sure.
Tom Dufore (Big Sky Franch (01:37):
Well
, we have really what I call
three core services.
The first is for thatentrepreneur or small to
mid-sized business owner thatwants to grow their business
through franchising whether it'sthe main objective or main
structure for growth or whetherit's just complementary to what
(01:57):
they're looking for.
And that's going through ourthree step process that we take
our clients through.
Step one is our franchiseblueprint and helping figure out
things like franchise fees androyalties and such.
Step two is the rest of thedocumentation, so helping
prepare franchise manuals andmarketing plans and brochures
and getting clients connectedwith a great franchise attorney.
(02:20):
And step three is helping theclient go through an execution
and implementing their franchiseproject.
So that's our core overarchingservice, coupled along with.
We do offer outsourced smalldivision within our company that
offers outsourced franchisesales support solutions.
And then the third broad bucketat our company is for an
(02:44):
existing franchisor that needssome sort of additional support,
and those are generally tend tobe very unique problems that
these franchisors are facing andneed some help and support to
sort through that and figure itout.
Lance Hood (FranPro) (03:01):
You know,
tom, I have a really good
question for you just fromhearing what you just said.
Two one is if I'm a businesslooking to franchise my business
, what should, how should I beready to be franchisable, and
what is the kind of averageamount of money that people
(03:22):
should really have on handbefore they decide to jump into
franchising their business?
Because anyone that's going towork with you, they're going to
want to know these two thingsSure.
Tom Dufore (Big Sky Franch (03:32):
Sure
.
So I'll start from a broader,more general perspective and
then narrow into some specificsfor you.
So the first is we like to lookwhen we think of a business
being ready for franchising.
Sometimes it's a little bitlike being ready to have a child
in your home.
Sometimes you're never reallyfully ready for what comes with
(03:56):
being a parent, and a little bitof that happens with being a
franchisor as well.
There are some things that youcan have in place to make sure
that you're setting yourself upand putting yourself in the best
position possible to moveforward.
So we like to look for when wethink of the viability or what
you can do to be prepared tofranchise.
(04:17):
If you look at these threethings to help you assess that.
Number one is do you have aprofitable prototype?
That's a pretty basic, simpleone, but we want to replicate
something that's working.
So, from a core, justhigh-level perspective, is the
business profitable?
Are you making an income out ofit, and those kinds of things.
(04:37):
Number two is that you have acustomer base on a national
basis or international basis,meaning you have customers.
If you open up franchises orself-franchises in different
parts of the country or aroundthe world, that they would have
customers that would want to buyyour product or service.
And then we also want to take alook at the third aspect of
(04:59):
this, and that's really just theability to grow the business
and train someone out to run andoperate the business.
So if your business isn'tprofitable, if it's unique to
only your little area, whereveryou're based out of, and you
have no interest in trainingpeople, franchising is probably
(05:21):
not the business for you.
Now, if we break down in alittle bit more detail some
things in terms of profitability, if you say, well, okay, well,
what does that actually mean?
If I'm profitable, well, whatwe're looking for, what we like
to look for, we start breakingthat down to say, well, what
kind of a return on investmentwould a franchisee earn if they
(05:42):
were to buy your franchise?
And so we like to be able toshow somewhere at, or very close
to, or above, a 20% return on afranchisee's cash investment
into your business.
And we like to speak for afranchisee to be able to see
that in their third year ofoperation, we assume a certain
(06:03):
amount of there's going to be abreak, even for a couple of
years of getting the business upand going Hopefully sooner if
the business is operated well.
So that 20% return on cashinvestment.
And number two, the second partof that is that the owner, if
they're an owner operator, thatthey would be able to make a
manager salary running thatbusiness, so they get an income
(06:26):
plus a return on theirinvestment.
So those are the things that welike to look at and help that
out with our clients.
Some clients may not have thattotally broken down and we do
that in our first step of ourprocess to help run numbers and
validate and really confirmthat's the case.
And then, in terms of dollaramount, to say, well, now I want
(06:48):
to franchise my business.
I think your second question washow much cash or money should I
plan on budgeting or spendingto really make a good effort in
launching or growing my business?
And the number that I usuallylike to use, or a range of
numbers.
(07:08):
I would budget somewhere between$100,000 to $150,000 to be
spent over the course of yourfirst 12 to 24 months, maybe 36
months depending on when youstart marketing for your
franchising, and that wouldcover all of your expenses to
hire consultants, lawyers, cpas,all of the professionals like
(07:29):
us to help you through that.
Plus have a marketing budget, alarge enough marketing budget,
to.
I like to budget around fivefranchisees into your marketing
budget.
So that way then maybe you getlucky and you get seven, eight
or 10, or maybe you underperform, but you still are able to sell
two or three franchisees in theprocess.
(07:52):
In today's world, the averagemarketing spend to acquire one
franchisee is just over $10,000.
And it's been around thatnumber for a few years now a
little less, a little more, butsomewhere in that number.
So that's a kind of a generalrule of thumb.
If you're trying to budget outokay, well, I'm looking for
around five, ten franchiseesjust multiply by 10,000 and
(08:15):
that'll give you a good sense ofabout what kind of a financial
commitment you're going to needto make to acquire those
franchisees.
Lance Hood (FranPro) (08:22):
Right,
because I think some people come
in just thinking I have akiller business, we can knock
this out of the park, but theydon't realize that there's going
to be expenses and also theywere running a successful
business, but learning how tosell a successful business and
then replicate your concept witha completely new person.
(08:43):
Those are new and those arethings that you may not have
necessarily done before, and soyou're going to have to, like,
wear a lot of hats and, you know, work a little harder for the
first couple years.
You know?
Tom Dufore (Big Sky Franch (08:57):
Yeah
, that's exactly right.
We have a free download calledthe nine pitfalls to avoid when
franchising your business andit's at ninepitfallscom and one
of the items on there and thisis just a collection of what
really my team and I haveobserved over the years of doing
this.
Where do new franchisors orstartup companies, where are
(09:21):
those pitfalls?
Where do they?
We consistently see theseproblems and you hit one of them
right on.
You nailed it it's these, thenew franchise or forgets the
startup mindset that they forgetbecause what you just said
they've been operating asuccessful business, oftentimes
for many years and they forgetthat.
(09:42):
Oh, I'm in a startup now.
This is a new business andwhile it's related to my main
business, it's a new business.
I have to learn how to marketand sell and train and onboard
and support.
It's a learning curve and alearning process to sort through
all of that.
So I absolutely agree with youon that.
Lance Hood (FranPro) (10:04):
What makes
Big Sky different from other
companies that do these types ofthings?
Tom Dufore (Big Sky Franch (10:10):
Sure
.
So there are a lot of greatservice providers in this space.
So you know, if you're hiringand working with a great,
reputable company, you can't gowrong when you're engaging with
someone.
I'd like to describe how wework, and what makes us a little
unique and different is wereally are purpose-driven in
(10:30):
terms of our focus.
Our overarching purpose is toinspire and foster greatness.
We have a core belief thatevery person and organization
can and should be great, and welive that through our three
values.
Number one win-winrelationships, and we really
really take that to heart.
So we want to find the win-winin all situations and obviously,
(10:55):
franchising.
You're always looking for thatwin-win-win along the way, and
so those are some of the piecesthat make us different.
And then our three-step provenprocess that I did touch on
lightly there, that we take ourclients through to help them go
through and franchiseeffectively and efficiently.
And the last piece that I guessI would say is really our focus
(11:20):
and emphasis on educating ourprospective clients, or just
people who never even hire us,but just producing content, much
like what you're doing withyour program.
We really consider ourselveseducators and we are a
content-producing organization.
(11:41):
We produce typically two, one,two, three new pieces of content
every single week that's comingout.
We've produced almost 300 totalpodcasts, webinars, you name it
that we have available out inthe space and it's all available
for free.
(12:01):
There's no cost for it and it'snot some cheesy infomercial.
Our goal is to really helpeducate and differentiate.
So for anyone that's interestedin that, our podcast is
Multiply your Success, and wehave a second podcast, franchise
your Business, and we've gothundreds of YouTube videos and
all kinds of things availablefor someone who's interested in
(12:24):
just learning more or startingto gather more information on
franchising or just in growingyour business in general.
Lance Hood (FranPro) (12:31):
Well,
thank you, tom, and can you
share some examples of somebrands that you've helped like,
what's happened for them, whatyou helped them with and all
that?
Tom Dufore (Big Sky Franch (12:43):
Yeah
, sure.
Well, I'll highlight just a few.
One that I always findinteresting is a brand called
Lean Kitchen Company.
They're a healthy meal preporganization.
You go in.
You basically buy pre-madehealthy meals that you can take
home and many of their customerslike to actually take that.
That becomes their lunch forthe week ahead, or sometimes
(13:07):
it's dinner, whatever it mightbe for them.
And when they came to us theyhad a couple locations and
started selling franchises andreally took off.
They sold a whole bunch offranchises.
In the very beginning theyactually had to pause because
they wanted to make sure thatthey were onboarding the
franchise.
I think the electricity thatthey caught caught them by
(13:29):
surprise a little bit.
So they paused growth for awhile and got things going back,
and today they have over 70franchises in their system and
growing.
So it's really exciting to seewhat they're doing from just a
couple of locations, and I'd sayanother one is a house flipping
franchise called New AgainHouses.
That one's really, really fun.
(13:50):
It was involved with them fromthe very beginning, early on,
and worked with their leadershipteam and growing and building
and helping them grow, and todaythey're a fast approach.
I believe it's about 80 or sofranchises in their network and
going, and one that'sinteresting is called Shoe
Beauty.
You probably have never heardof that.
(14:12):
They do eyebrow threading andthey've grown really, really
quickly over the last few yearsas well, and they're up over 100
franchises from just a few whenthey had started working with
us.
So some pretty exciting growthto see organizations like that
go through.
And I always like sharing someof the fun stories where a brand
goes from zero to 50 or zero to75 in a over the course of a
(14:37):
few years.
And the reason I like it isit's a pretty sizable
organization at that point thatfor the most part many people
still have not heard of yet.
It's not a household brand name, and so I always think it's
exciting for someone that'smaybe thinking of franchising to
realize that it's not that farout of reach.
It's hard to look at a companylike a McDonald's or one of the
(15:00):
other mega franchise brands andthink, boy, how do I get from my
one or two locations, whateverI have, to thousands or tens of
thousands that it's hard tofathom that.
So, anyway, just just a fewexamples to share there.
Lance Hood (FranPro) (15:16):
No, I love
that, and you know there are
companies out there that arethey.
They've been successful with alocation, but maybe their brand
just isn't taking off.
And you've probably seen someexamples of what makes a brand
catchy, what makes people drawnto it, you know, versus just
(15:37):
seeming like everybody else.
What are some ideas that youcould share with people to make
their business stand out?
So what might catch on likethat?
Tom Dufore (Big Sky Franch (15:48):
Yeah
, that's a great question and I
used to think that I would havea great answer for you on that
over the years ago.
The longer I do this, the moreI realize that some of the real
electric growth in franchisingthat allows someone to go from
zero to hundreds of units in afew years is—I don't know what
(16:11):
that magic secret recipe is.
If I could bottle that andfigure it out, we'd be doing
some things different.
Obviously, there are somethings that you can do to help
better manage that.
If you're not catching thatelectric growth, if you don't
just catch on fire for somereason.
That's part of it.
To give a direct answer,certainly being able to clearly
(16:37):
articulate your offer and to tieinto what the consumer
preferences are.
I would say that for many ofthese brands that have taken off
even some of the groups that Imentioned earlier, where some of
their initial growth reallyhappened by tapping into their
own referral base, meaning theirfriends, family, customers,
(17:02):
people who are connected to thebrand, that already have an
affection, a trust, an affinitywith their group.
That's one thing.
I guess I would say thatorganizations that do grow, that
is common, that they aregrowing from within
It's—franchising is no differentthan any business that you
(17:22):
might currently be in.
Your best customer generallycomes from a referral A referral
from a satisfied customer, froma family member, a friend
Somehow there was a referralconnection, and franchising is
no different.
Your best connection is goingto come from a referral.
If you really want to tap intoit to help take control of your
(17:43):
own destiny for growing morerapidly is spending time
developing that social communityor your social capital that
you've already established.
It's sitting right there.
The hard part is that the owner, the founder, oftentimes
doesn't want to give up theirtime to tap into that.
If you're willing to give up alittle bit of your time, because
(18:05):
only the founder or the peoplethat are close in the
organization that have thatsocial capital that you're able
to tap into that Again, I don'twant this to—the goal is to not
manipulate or take advantage ofyour friends and family.
That is not the goal.
The goal is to basically letthem know what you're doing,
because you'd be surprised howmany people have been thinking
(18:29):
about maybe starting their ownbusiness sometime and they
already know like and trust youas a person that they know that
they can use your firm businessmodel to accomplish their goal
or their dreams.
Lance Hood (FranPro) (18:49):
When I
work with different companies.
So as a broker, I'll work withclients.
Those clients are looking tofind a franchise.
The thing that I have to tellthem if you're working with a
younger brand, they're going tohave less organization or
structure.
When you work with, the biggerthe brand, the more structure
and sometimes it seems likequite a bit of structure, almost
(19:12):
like it's a job.
You might have a six-stepprocess.
With more of a developed brand,it'll be broken down
specifically by training andmarketing and economics and all
this.
When you work with a very youngbrand, especially if the owner
(19:33):
himself is trying to sell ithimself, they're just like they
want to talk it out for 20minutes and then say I'll see
you in two weeks and we'll getthis baby signed.
That's not a sales process.
People don't make $250,000decisions on a simple
conversation.
(19:53):
Can you give me your thoughtson advising people on that whole
thing of having that structure,what it should be and why it's
important?
Tom Dufore (Big Sky Franch (20:08):
Yeah
, that's a great question.
That problem that you describedis one we've seen over and over
and over and over again.
It's one of the reasons weactually created our franchise
sales training workshop toactually take our clients
through it, and we createdspecifically a workshop.
And it's not a class, it's nota course, it is a workshop
(20:31):
because it is a seven-hourworkshop with a 160-plus page
workbook that when they gothrough they're actually doing
work during that, because I'veworked with enough founders and
owners that if they're not doingit while they're sitting still,
it's not going to get done atthat exact moment.
They're not going to come backto it later.
(20:52):
This is helping them build outand map out a sales process to
achieve, ultimately, the goal ofhelping them sell a franchise.
A franchise is just a series.
Selling a franchise, in myexperience, is it's a series of
just many steps along the way.
But new, emerging franchisorsstruggle with and you, you, you
(21:14):
encapsulated it so well is thethese new franchise or stinker?
I just have my one little whata minute call or an hour call,
or maybe two.
And why haven't they bought?
Why aren't they buying this?
Don't they see all the amazingthings that are possible with it
.
The reality is they don't,because the founder sees it,
(21:35):
because they created thebusiness and they got Years and
years of experience of workingday to day in that business.
So of course the founder seesthat, but that prospect doesn't.
And so there's a lot more thatquestions Scheduling, things
like discovery days and havingmeetings and meeting with
training staff.
It's something that it's notjust a sales pit, that that that
(21:59):
maybe that happens very earlyon where you're trying to get
someone excited about your brand.
But the sale, franchise salecycle is long.
This, this, it's not uncommonfor franchisee to enter your
sales pipeline and take twelvemonths to close.
That's not uncommon Becauselife happens.
For for these buyers in thefranchise, buyers and plants you
(22:20):
know this with your experiencein the franchise brokerage world
they they have their own mentalhurdles to overcome and get
through about buying a franchise.
A lot of times it's not notnecessarily Can I make money
doing this or can I make areturn that I'm looking for.
A lot of times they see thevalue in that.
It's the mental hurdle Can Iconvince my husband or my wife?
(22:45):
Are they convinced?
Or maybe I'm caring for analien parent and mom and dad?
Mom or dad took a spill andwhat that really set me back for
three months or I've seen thishappen.
This has been one of the thingsfor these buyers that that the
founders or the franchise or newfranchise or stone maybe
(23:05):
recognizes that there thatcandidate is one promotion away
from leaving the franchisecandidacy pool.
You know they get thatpromotion or that bonus at work
that they've been waiting fortheir, their spouse does, and
now all of a sudden they say youknow what?
I'm not as motivated anymore todo this.
(23:28):
So it's a really fragile thingfor that butting entrepreneur
and I always describefranchising is the confidence
elixir to a butting entrepreneur.
It helps them realize that theycan do this if they follow
someone else's system and asthat new franchise or your job.
(23:50):
When you're selling them, it'snot really sales education, it's
educating them on how you, youand your system, will be able to
help them accomplish theirgoals and what they're looking
to achieve.
So understanding, do they wantto?
If?
Are they motivated by?
Are they really interested forearning potential?
(24:11):
My experience for a lot offranchisees they're really
looking for, oftentimes alifestyle.
How does this fit in with mylife and how do I want to be
able to coach my kids baseballteam or participate in whatever
it might be, whatever stage oflife there in, and Franchise or
is new franchise or isespecially that have a hard time
(24:32):
taking off, miss the boat onthat because they're focused on.
I'm so great as this franchiseoffering.
Everyone wants to buy my, mybusiness and and you're very
often the business is great.
But we need to communicate thatin a different way to that
candidate so that theyunderstand the value that you're
(24:53):
, you're actually providing andhow what you offer franchising.
They're just there borrowingthe rent in your name and
business system.
So your it's your name andbusiness system is for rent.
So when you're renting it tothem, how does what you're
renting help that franchisecandidate accomplish their goals
for what they're doing?
So I don't know if that'shelpful, but I who, I guess,
(25:16):
leave it at that.
Lance Hood (FranPro) (25:17):
Yeah, no,
that's awesome and you know
there's so, like you said,there's so many variables that
hold things up.
You said the job thing.
You know getting fired could bea positive or a negative.
You know getting a promotionpositive or negative, that the
other spouse could be thetalking them into it or talking
them out of it and and fundingit, depending on their credit
(25:42):
and their ability to get a loan.
I've seen loans take forever.
It's just.
I've seen car accidents.
I've seen people get get cancer, just every single thing.
Life is happening while they'regoing through this and you're
not always their number onepriority.
So it's it's.
It's a Something to just beready for, have your mindset
ready, you know, and and befocused on it.
Tom Dufore (Big Sky Franch (26:05):
Yeah
, yeah.
It is one of those things wherethe Oftentimes the new emerging
franchise or that the founderis used to Working hard and
basically if they put a littlesweat, equity and and and elbow
grease Into the business, thatjust magically stuff starts
happening, sales start happening, because that's how they
(26:26):
started their company.
Then franchise sales thefounder can get discouraged
quickly if they're expectingimmediate results, and so
patience really is a virtue whenit comes to in most things in
life, but especially infranchise sales.
Lance Hood (FranPro) (26:42):
Mm-hmm,
and I got one last question for
you that I think would be reallygood and that is People who
want to buy a franchise as afranchise, or there's this
balance, because some of themare looking for somebody who
Exactly follows the system andkind of does stays within the
(27:02):
the rails really tight, but as aWith a franchise, people really
look at these are, these areentrepreneurs.
They're entrepreneurs thatdon't want to just go out and
figure it out on their own, butthey still they're not looking
for the boss they just had wherethey were working.
They're still looking to havesome sort of autonomy and and
(27:25):
Run this business, even thoughit is your brand and your
structure.
So what's your advice with thefranchise?
Or is on Understanding thatbalance of they are looking for
people who will follow thesystem, but they are
entrepreneurs and they do notwant to boss.
Tom Dufore (Big Sky Franchi (27:40):
Yes
, that that's exactly right.
So it is my.
My take on the first tenfranchisees that come into a
system sometimes is a littledifferent than other Other folks
advice in in our industry andin our space of franchising, but
I'm a big believer that whenyou're a franchise, or bringing
on your first ten franchisees,it's essential to get those
(28:04):
folks into your system, andnaturally these people
oftentimes will be moreentrepreneurial versus a
franchisee that buys in atnumber 100 or number 500 as your
system grows and develop, evendifferent from franchisee number
20.
Oftentimes, these first tenthey like being into the new
(28:26):
business, in a new franchiseopportunity, and because they
have that, they're a little bitmore willing to take risks or
accept risk.
They're also going to operateyour business that way.
They're probably going to bedeviate from your system a
little more often.
You're going to have somecorrecting to do with them.
Those franchisees are also,though, going to provide to you
(28:50):
new ideas and ways to reinventwhat you're doing or make what
you're doing better for the nextfranchisee, because those first
ten franchisees help teach youhow to be a franchise, or they
teach you how to effectivelybuild your training.
So training we can only giveour one.
We want to get spilt outinitially, before you have any
(29:11):
franchise, it's your best as youeducated guess on how to do it.
It's usually fairly close.
But you're going to learn a lotfrom these first ten as you
sell, train and support them sothat the beyond those ten you
really are able to startidentifying now what kind of
background or Profile,franchisee profile, is
(29:34):
successful in your system andyou can learn a lot from there,
from that.
So you have to be willing to.
That just my opinion.
You need to be willing torecognize that every franchisee
is not going to be you thefounder.
In fact most won't.
Most founders I described therethey're going to be in the.
They would be in the top 10%out of a hundred or a thousand
(29:55):
franchises in their network.
They'd be a top 10%.
Most franchisees, you know.
You look at a bell curve, it'sthey're going to be around that
50th percentile and so you haveto accept that reality that
comes in and there will be somethose that come in.
Out of those 10 You'll probablyhave one or two that are
absolute superstars that run thebusiness way better than you do
(30:16):
, and one or two that areProbably going to drive you nuts
and that just really Aredifficult to manage and work
with and support.
So Anyway, that that that's, Iguess how I'd, how I'd answer
that question there, absolutelywell.
Lance Hood (FranPro) (30:37):
I learned
a lot today.
Thank you, tom, for joining us.
Anybody who's interested inSpeaking with Tom and learning
more about Big Sky go herehttps://Franpro.
vip/GoBigSky.
Tom, thanks again for joiningus.
Tom Dufore (Big Sky Franc (30:56):
Thank
you, lance, for the opportunity
really appreciate you and allthe work you're doing.