Speaking of Franchise Marketing...

James brings an industry professional on the show that specializes in franchise consulting. They discuss many factors regarding franchising today so whether you are about to franchise, are a new franchise or even a seasoned one... this is a great episode for you to catch.

• If you have marketing questions for James, contact him at: [e-mail]
• If you would like to learn more about James, click here: https://mediavisionadvertising.com/james-danella-strategist/
• If you would like to be considered as a guest on the show… or if you would like James to speak at your event, reach out to [e-mail]

Episode Transcript

Unknown (00:04):
James, welcome back to the marketing perspective. I'm
James donnella, and I'm excitedto be here today because we get
to talk about a topic that hasnot been brought up on this show
as of yet.
Franchises, whether you're afranchisor or a franchisee, how
important it is the decisionsthat you make in your business
can contribute to your successor your failure. And I am

(00:28):
bringing on somebody who's anexpert in franchising, and I'm
only, as you know, I'll alwaystalk about it from a marketing
perspective, never anythingelse. But she's going to open
your eyes on a lot more. So I'mhoping, if you didn't get the
chance to tune in today, or ifyou've gotten to see this and
you know somebody who's thinkingabout franchising, please share
this episode with them, becauseI think it's something that will

(00:51):
be very important to them. Didyou know that there's over
800,000
franchises in the US,
and along with that, it employsover 8.7
million people,
and it brings in over $800billion
every year. That's right.Franchises are a big part of our

(01:12):
economy, and they're veryimportant, and they're growing
every single day.
But don't step into it lightly.There are a lot of factors that
go into it, whether you'rebuying into one, whether you're
starting your own, so manydifferent variables, and it's
important to have the rightpeople around you. I'm bringing
one of those people on today,and I'm very excited about that.
Before I do that, how do younavigate all those rules,

(01:34):
regulations, requirements thatoverfranchise How do you know?
Well, if you don't, you surroundyourself with the people that do
understand to guide youcorrectly. Because if you don't
get it right in the beginning,down the line, it's going to be
a lot worse. I could tell youmultiple horror stories of what
I've seen from my side of thetable again and again, with
franchises that start off greatand fail, or somebody buys into

(01:58):
one and then tries to get outincorrectly and fails, and we
may bring some of that up today,maybe not. My guest today is
chock full of stories like that,so I rather hear hers than me go
on and on.
Franchise owners must protecttheir brand reputation. Imagine
me talking about marketing andbranding, while franchises have

(02:19):
to appeal to the interest oftheir local consumer, they also
have to adhere to the guidelinesof the franchisor, so that
balance that one two punchsometimes isn't always on the
same page, because sometimes thecorporate brand and the
corporate culture doesn't alwaysmatch what's happening in the
backyard of a certainfranchisee, and I've seen it

(02:42):
happen again and again. So howdo you navigate that? How do you
correctly find that balancewhere you're not compromising
the brand of the franchise, yetyou're able to speak into it
locally, so that your messagedoesn't conflict with the brand
message, but speaks to theconsumer you're trying to bring
in the door. And if you don'tknow what I'm talking about,
whether it's a geographic issueor a demographic issue, it could

(03:04):
be economically that happens alot, and you have to be able to
understand who your consumer is.So even before you get into a
franchise, sometimes it'simportant to know, is this the
right franchise in the backyardI'm planning on putting it,
there's a lot of factors that gointo that good franchises
usually have solid research forthings like that. You want to do

(03:26):
your own as well. But again, I'mgetting out of my wheelhouse.
So today I'm going to bring onmy special guest, Catherine
Knapp of Knapp consulting, herarea of concentration is
consulting franchises. So thisshould be extremely insightful
for everybody who's consideringstarting a franchise or already

(03:48):
in a franchise, and trying tonavigate the waters of that. And
I'm excited to bring her on.Let's bring her out right now.
Catherine, I'm welcome to theshow. Thank you very much. I'm
pleased to be here. Oh, I'mreally excited. I know, I know
you're going to bring a lot ofgood information today in our
conversations together. I'vealways, I've been very
enlightened by our dialog,knowing what you know so and you

(04:12):
have a very versatilebackground. So let's start with
tell everyone who you are andhow you got to get to this
point. Sure. Well, as you said,I'm Catherine Nabb. I live in
Memphis, Tennessee, and I'm acertified franchise consultant
under my own brand, NABconsulting, and I'm affiliated
with a membership organizationthat lets me represent 500 plus

(04:37):
brands across over 40categories. So how did I get
here? I started 1000 years agoin poll three accounting, if you
can imagine that. And from thereI went to
foods, conglomerateorganization, where I was
instrumental in converting 28general ledgers to one a.

(05:00):
For an international company,and from there, I got into
systems work. I didn't golf, soI couldn't go the controller
route, so I went the systemsanalyst route, and I became an
expert at Oracle Financial andHR systems. Did all kinds of
project work. My strong suitthrough my entire career was

(05:22):
identifying gaps in process and
strategic things that needed tobe measured that weren't being
measured. And what I wouldtypically do was find
somebody with budget andauthority, convince them what
that what I saw was needed to bedone, they would give me

(05:43):
approval, and then I was off andrunning
a project and then executing tomake sure that that thing came
about. And through the course ofit, I saved companies lots of
man hours, hundreds of 1000s ofman hours, and help them analyze
data that was relevant to whatthey were trying to achieve, and

(06:04):
it helped them make strategicdecisions about what to do with
product, service and so on, todo better about the core
business of that company. So Iworked in payments industry for
a long time, and then finally inthe hospital industry, and
that's where I was when COVIDhappened, and when I saw choice

(06:25):
being taken away from familiesabout what they could do with
their kids, their elders, eventheir own lives. Then I thought
somebody ought to do something.Well, I'm somebody, and I had
all these skills. And rightabout then somebody called me
and asked if I was everinterested in learning about
business ownership. They weren'tasking for my social security

(06:48):
number so I could learn. And assoon as they said the word
franchise is like, Duh, they'vegot playbooks. I don't have to
invent everything from scratch.I can find a best fit model. And
before I knew it, I was learningfrom a guy and then ended up
wanting to do what he was doing,because it drew on the

(07:09):
analytical skills, it drew onthe mentoring, it drew on the
education that I did. I haddone. I'd been an adjunct
professor before, and
went to the result the researchprocess is a project itself, and
that the result is clarity aboutwhat to do. That's what I
wanted. I wanted people to haveclarity about choices. So I went

(07:31):
throughout a franchiseconsulting, and I've been
learning ever since. So I justheard something for the first
time, and we've had multipleconversations together.
Are you part of a biggerorganization that is kind of
behind you, and you're theyou're a consultant as a 1099,
that's a good question. I lookedat a franchise, brand that had

(07:54):
to do with franchise consulting,and I looked at its competitor,
which is called a businessopportunity, meaning that I
signed, I think it was a fourpage agreement, 10 year
agreement, we can break it atany time and walk away and be
friends, but it's not asrigorous as a franchise

(08:14):
agreement. I didn't know what Ididn't know, so I wanted that
flexibility of being able tolearn and make course changes if
I saw fit to do so. So themembership I'm a part of has
affiliations with 500 brands.It's always changing, and since
their members and I'm a member,I don't have to write contracts

(08:37):
with each of those brandsindividually. I do write
contracts with some that aren'tpart of that membership,
so that I can represent them toclients. But I've got, I've got
over 500 brands through thataffiliation.
So I think that's great, becauseit gives you some strength
behind you, because no oneperson knows everything, right?

(09:01):
Oh, I and continuous learning,
that's right, and it's assumingthat the person is doing that
right. I've been in my industryalmost 40 years. I started when
I was five. You know
it, it's I can't know everythingI do keep up. And that's one of
my strengths. It's one of myadvantages over some

(09:22):
competition, is I, I'mconstantly learning what's new
and more, because I just lovewhat I do so much. I imagine
you're the same, but it's still,you know, I have a team. If
you're nap consulting, and it'syou as the consultant, it's
great to know that you've gotlike, powerhouses behind you,
legal, financial, all that kindof stuff that can really help a

(09:42):
franchisee navigate the waterscorrectly, because I know
there's a lot to it, and I meetregularly with a couple of
groups. Some of them are part of
ifpg, and then some are not, butthey all are seasoned in the
industry, and we're comparingnotes all the time.
Because brands change. So it'sbrand, it changes for them as

(10:04):
well as for me. So we're allhaving to constantly learn and
backfill each other'sinformation, check for red
flags, and make sure that we'redoing our level best to provide
ethical matches to our clients.It wouldn't be a good idea to
match somebody to a brand that'sgot a lot of problems going on.

(10:26):
I wanted to jump up and down inmy chair when you said the word
brands change.
So in my world, that's it'sexciting, but it's stressful. It
is not for the weak heart tochange your brand over time.
There's a lot involved.
A lot of research has to happen.It's got to be done correctly.

(10:47):
And there's so many peopleinvolved, and sometimes too
many.
When it's done right, though, isreally a good call. And then
that transition to launchingthat new brand also has to be
very well planned out, you know?And that's just my side of the
table. Katherine's side of thetable is a lot more complicated.
You probably hate when we go andsay, hey, it might be time for a

(11:09):
branch.
They change every year.
If you think about how a college
generates a new college catalogevery year, the franchise brand
generates a new FranchiseDisclosure Document every year
and files it with a FTC the newincoming franchisees that year.

(11:32):
That's their rule book. That'sthe rule book that dictates what
they must do and not do over thenext five or 10 years, whatever
their contract is. So yeah,every year there's something new
to learn about a brand.
And inside that document there'sbrand guide, style guide,
content planning. There's awhole and it's very strict, and

(11:55):
when it's well done, it's great,and it protects the brand. But
Good Lord, if you're thefranchisee and you decide, oh,
I'm going to use pink instead ofred. Doesn't go well,
let's we're getting ahead ofourselves. So I want to, I want
to give everybody the bigpicture and then drill down a
little bit. So please, let'sstart with, if you're

(12:15):
considering creating a franchisemodel as a franchisor, where do
you begin,
it's that's a big question. Alot of people like to consider
that, especially restaurantowners, they get so passionate
about their food they want toreplicate it.
A very first thing that peopleneed to be aware of. When they

(12:36):
change their brand to become gofrom independent to franchise,
they're turning their onebusiness into two.
They're going from being, let'ssay it is a restaurant, a
restaurant, to now also abusiness that creates additional
restaurant owners and gets thempropped up and supported for

(12:58):
success. So they're running twoseparate businesses. They might
still own some originalrestaurant locations, but now
they're also in the business ofcreating new restaurants. And I
tell people, don't do it andjust learn, learn, learn, but
don't start to execute on ituntil you have replicated a

(13:19):
couple of times and each ofthose units are pulling in net
net profit, and I'm talkingabout, after, say, like a
royalties percentage of over$150,000
because why would anybody walkaway from a job to become a
business owner if it's not goingto net them at least six
figures? So they have to be ableto provide

(13:43):
a profit of at least that muchon a unit to compel anybody to
buy in. Otherwise, it's notworth trouble.
I've had a one horror storyshort, quick flooring company
that the owner inherited it fromhis dad, and he had three
locations.

(14:05):
They seemed to be doing reallywell, good, solid companies.
Each location was pretty youknow, is very well run.
They came to us and said, Hey,we're thinking about
franchising. Can you help us puteverything together and a very,
at very high level. I justlooked at their math, you know,
because I think one of the firstthings when you talk about

(14:26):
advertising, and if we're goingto spend money, we need to
understand the gross anticipatedrevenue, so that we know what,
where to keep them financially,not to overspend, not to
underspend. And all threelocations were in the red,
not nobody's showing a profit.So I said, this would be a bad
time. I am not a financialadvisor, and I don't play one on

(14:48):
TV, but I think it's a mistake.And he's like, Well, that's for
me decide. I said, I know, butin six months, you'll fire my
firm because we're not gonna beable to help you. It will fail.
All, and I'm just, I'm and hewas like, putting loads of money
on the table, like, almostliterally. And my sales guy was
very mad at me that I'm walkingaway from this. I said, it's go

(15:10):
and fail. So turns out, short ofa long too late, right? He never
did it. He never went forward.He wound up closing the
locations because he was in thered and he wanted to do
something else as a consultantin the same industry, and is now
doing really well. You know,it's just it wasn't his
wheelhouse to do what he wasdoing, and he had to find what

(15:31):
he was good at. I can't imaginethat you ever come across
anything like that in yourworld, right? Well, people have
grand ambitions, and just whatI've seen here locally is that
people will have, they will havereplicated to some degree, but
maybe they haven't started doingseparate PNLs for each location.
So that's a step. I tell them,look to start breaking out your

(15:55):
accounting by location. One guywas looking at a restaurant and
a food truck. Said, treat thefood truck as a separate
location and cross charge theinventory that it's getting from
your restaurant as a cost intothe food truck, because you need
to know what the PNLs are forthose different units. Say, if

(16:16):
you did replicate it and turn itinto a franchise, the food truck
model would be one version ofthe business, the standing
location would be anotherversion. And it could be that a
franchisee would want to startwith one and migrate build up to
the other, so you have to beable to prove

(16:37):
the accounting auditability ofthe two. That
is excellent advice. I want toflip the script a little bit
here and switch over to thefranchisee again, high level.
What are the elements, if I'm ifI want to get in the franchise
bandwagon, and I'm looking whatare key things I should be

(17:00):
shopping for,
I look first at what thefranchisee wants to accomplish.
What do they want their life tolook like? What are their
financial goals? What do theywant their work to look like?
135, 10 years from now? Becausewhatever that vision is whatever

(17:22):
they think franchise is going todo for them. I need to know what
that is, because I need to startlooking for brands that's going
to match that very well. I alsolook at their skills. So if it's
a very introverted person andthey've never done any kind of
sales at all, then chances are Iwant to find them something with
a call center so that they don'thave to go and do active sales

(17:47):
for the bread and butter oftheir business. They might still
have to go and do communitynetworking, but they're not
dependent on themselves doingsales,
so depending on what people aregood at I start weeding things
out. I ask a lot of questions.Well, why do you like that?

(18:08):
Because there might be anelement of something that they
like that points me to somethingor away from something. And so I
start with that portfolio of 500or so brands, many of which I
don't represent to clients,because they do have red flags.
I'm I'm waiting for them to fixsomething, but I start weeding

(18:28):
out brands, and what I hope toarrive at is like a short list
of about 10 brands. Maybe I'llpresent about five of them and
have a few in reserve. I'vetalked to the brands to refresh
my
knowledge of what that brand isdoing right now, what it's
working on, what it's going tobe planning to do over the next

(18:50):
year, to make sure I'm doing agood match. And then I present
that short list to the clientand ask them to be willing to
interview with at least three
do you find that they go downthat journey and they do their
homework and it in it soundslike it's more about the math

(19:12):
than it is the passion behindwhat they do. And I was always
of the mindset like, do whatyou're passionate about, and the
money will come kind of a kindof a thing where I know it
doesn't always work that way,but I have come across
franchisees. They hate whatthey're doing. Hate it. They
inherited it from their familymember. They're in the business,
but good night. They should notbe doing this for a living, you

(19:35):
know? And it shows and whathappens. So again, from my side
of the table, their internalculture suffers over time,
because if they don't like it,their staff isn't going to like
it, and it's just going to godownhill fast. So how do you
from your chair? How do younavigate that? How do you guide
them? You know, be sensible, bea business person, and make
educated decisions. Yet you haveto like what you're doing.

(19:58):
Otherwise, do something.
Else you do? You do have to likewhat you do. I met a lady
recently. She was introduced tome, actually for networking
purpose to help her find abusiness broker. She had bought
into a franchise by herselfbecause she liked the brand. It

(20:19):
was a Foods brand. She liked thebrand. She got excited about it.
She and a friend started talkingabout it. So the brand showed up
on her Facebook page, and shecalled the brand. They started
selling her she enjoyed theprocess and became an owner. She
also enjoyed the build process.Well, then when

(20:40):
it came time to hire theemployees for opening day. All
of a sudden it dawned on her,now she's going to not be a
solopreneur anymore, because shehad been, she's going to be
responsible for all theseemployees. It had never occurred
to her what that would feellike, and so now she hated what

(21:02):
she had done. Had, I mean, herher business is doing fine, but
she's also actively trying tosell it because it wasn't a good
match. She didn't realize it.Had somebody been asking her
questions and then asking thesecond, third level down
question to really get to theroot of the why, they would have

(21:23):
realized that her joy was inproblem solving or making people
happy and things like that, notnecessarily in running a bunch
of employees. Yeah, not, not allpeople are cut out to be
business owners. And I don'tmean that as an insult in any
way, shape or form. It justtakes a certain tenacity and big
shoulders and realizing it's notpersonal, and knowing that

(21:45):
you'll have sleepless nightswhen you know, oh, payrolls
tomorrow, you know, andrestaurants. I love restaurants.
I came from my my family,
even to my great grandmother,had restaurants and boarding
houses.
But
restaurants is 24/7

(22:07):
I would dare say even Chick filA has some
something happening on theseventh day behind the scenes.
It's it's a long, drawn outprocess. So you have to be so
passionate about food to getinto restaurant, otherwise,
see if you can be passionateabout the people you're serving.

(22:30):
Is your business? Is thisbusiness opportunity going to
serve people? Because people arereally the most important thing,
no business exists withoutfulfilling needs of people. Very
true. What,
from your perspective, whatwould you say are the biggest
challenges when it comes tofranchising or being the
franchisee? Let's, let's staythere, because that's in

(22:52):
general. I think that's going tobe our audience, and that's a
lot of your area ofconcentration, too.
One thing is that
people aren't prepared for thework that it takes it. It does
take a lot of work to get abusiness off the ground, and
there's a lot of franchisemodels that sell what's called

(23:13):
the passive model. Nothing'struly passive, especially at the
start now, there are plenty ofpeople who own dozens of
franchise units of say, likerestaurants and whatnot, but
they will have managers inplace. They have created that

(23:34):
level of separation between thebusiness unit and their
executive level of operation. Sothey've created a master level
of franchise ownership. But forthe regular entrepreneur,
they're buying their first unit,or maybe they're buying a three
pack. They need to be ready thatto work as hard for themselves

(23:56):
as they ever work to get thosefirst promotions when they
started their career, they'reinvesting in themselves and in
their family's outcomes.
Oh, I just got stressed.
I literally just got a littlestressed with that person.
So I did, I did again. My laneis marketing. I don't it's what

(24:19):
I know really well throughout mycareer, and that's all I knew.
So I had to prep a little bitmore than I normally do for our
talk to make sure I understoodyour side of the table a little
bit better to be semiintelligent for this
conversation. Totaltransparency, y'all, and I
learned a little bit about thisthing called the franchise rule

(24:40):
when it comes to disclosures andkey operating and all that kind
of stuff. Can you speak intothat a little bit? Well, I think
you're referring to like that,the revenues and and what it
takes to run the business if, ifthe key aspects of the business
aren't fairly disclosed.
Those then a franchise opensitself to

(25:04):
lawsuits. So if they make itsound like it's going to work
differently than what it infact, does. I know of one brand
that's probably dealing withclass action lawsuits right now
because the opening and go liveprocess didn't happen like it
was supposed to do for a lot ofthe investor, buyers,

(25:28):
franchise brands, nor I can tellanybody what they're going to
make now, when somebody tells mewhat their their goals are,
financial goals are, I'm lookingbehind the scenes. I'm looking
at the ftds, the franchisedisclosure documents to see if
there's revenues, audited,revenue amounts reported on the

(25:51):
item 19, because I'm looking tosee, okay, if somebody is of a
average performer, will thatbrand on an average level,
perform at the amount that theyneed for their financial goals.
It still is up to that person tohave the get up and go, work

(26:12):
ethic, to follow the process, todo the things that it's going to
take to achieve, even just theaverage returns.
So I can't promise a financialresult, neither can the
franchise brand to do so isabsolutely against the law. We
would get in Federal TradeCommission. We could be sued out

(26:33):
the wazoo for doing that. But Ido look to see, is it worth
matching this brand to thisperson, because if it's not
going to perform at the levelthey need, then I Don't need to
match, match that brand to them.You

(27:43):
the other person might take amore executive approach. They're
going to make as many sales aspossible. They're going to hire
people to start
expanding how much they can makein their unit, and then they're
going to buy more units. Theirrevenue is going to be decidedly
different from the guy who's thesemi retired owner operator. So

(28:06):
they don't put those models inthe item 19, because how would
you compare it? So they theyhelp people validate one way or
the other. How do you want torun your business? Okay, we'll
let you validate with owners whoare running their business that
way, and you can ask them whattheir P and L questions are
like, you know, how many unitsare they doing? How many? What's

(28:29):
the cost? So they can buildtheir P and L's from that. Or if
they want to go the executivemodel, they can do that.
It reminded me of sometimeswhen, when we were bringing on
somebody new, they out ofnowhere, we're almost at the end
of the proposal process, and allof a sudden they're like, Hey,
would you be willing to do revshare when I'm sorry what I've

(28:51):
been we've been doing this forlike, three months. It's pretty
big account. And I said, Well,we can have the conversation,
but how freely will you discloseyour financials with us, it's
always my next question, oh,we're not going to do that. I
said, Well, you either want meto be a partner or an investor.
So why would I do either? Ifyou're not disclosing your

(29:12):
financials, you know? And onespecific example, we thought it
was a they were just starting tofranchise a wash and dry. They
pick up your clothes at yourhouse. They bring them back all
clean and shiny and everything.It's a really good idea, and it
would have taken and there were,there's like, three of them in
the country. I have to becareful.
One of those three is thecompany I'm talking about, so

(29:34):
I'm not going to say it, butthey did the same kind of thing
in the midnight hour. Hey, wouldyou all do rev share? Said sure.
Like, well, let's see yourfinancials, your franchising so
show me that document. Theywouldn't. Not only would they
not show me, but they weren'tshowing the people that were
buying in to, oh, yeah, andthey're up and running. So

(29:55):
I, I don't understand how acompany can operate like that.
You know, without getting you.
Nailed. I don't either, becauseif it is a franchise, then they
must disclose. They have tocreate the new Franchise
Disclosure Document every year,and part of that is the audited
financials of the brand itselfand the appendix. And just like

(30:18):
a publicly held company has tohave that audit done, signed off
by the accountants. Same thinghere in the Franchise Disclosure
Document, there must be thataudit of the financials, and
they have to give the the thisfairly represents the
financials, as we've been ableto determine blah, blah, blah

(30:38):
that accountants will do now.Could it be that you look at the
financials that are reported onthe on the Franchise Disclosure
Document, and it shows low cashflow, or something else that
looks concerning? Well, thenyou're having a conversation
with a brand like, what are youdoing with the money? And it

(31:00):
could be that they're investingso heavily back into the brand
that they never have a whole lotof cash. And then sometimes they
have an additional company thatdoes some aspect as a supplier
of the franchise, and they'redoing some other things through
a different entity. So you haveto ask questions like that. So

(31:22):
is it okay when, if they canprove that, because they're
they're tight on cash flow, butthey're showing that it's all
going back into the company, andthey're trying to grow the
company? Does that still makethem viable? Or no, absolutely.
I interviewed with a brand likethat early on, when I was doing
my initial research, and it wasone of those brands where the

(31:47):
guy said, Well, I'm rich onFridays, I'm broke on Monday.
And so because he's alwaysplowing back into the brand,
he's got one of the fastestgrowing brands right now in his
industry, and it's doing verywell. And so it's growing. His
units are growing and and it'sall because he was plugging so

(32:12):
much value back into his brand.But you have to kind of listen
to the heart of it and ask forexamples. What what way are you
investing back in? And they'lltell you what they're doing.
It's a system or a process or aadd on
to create another revenuestream. They're always doing

(32:33):
something.
So a great referral for me wouldbe
so those kind of companies welove, companies that that go
that route, because we knowthey're on a growth path. We
know they're planning to growbecome so even just knowing what
I know what you were saying, Iknow that company is just going
to keep continuing to grow andlike he has an end goal in mind,

(32:54):
and he hasn't reached it, whichis great. That awesome. Okay,
let's we have totally gone intodisclosure documents. And I
think if you're listening today,you understand how important
they are. And I would venture tosay, try not to navigate that
alone and make sure you have aprofessional by your side,

(33:15):
absolutely.
And let me add this too, notjust any professional you don't
want your family lawyer or yourmost recent divorce lawyer or
whatever, reading that FranchiseDisclosure Document for you one
they're going to pay you, chargeyou billable hours to read that
multiple 100 page document, andthey still might not know the

(33:38):
things to look For or to look tomake sure that it's not there.
So you want to get a bona fidefranchise attorney that is good
at what they did.
Thank you. Let's switch channelsa little bit and talk about
negotiations. So with franchiseand franchisees, how much give

(34:00):
is there if you're buying into afranchise,
I would say not a whole lot.
When a franchise brand is new,that's probably about the most
give you'll get is because theinitial franchisees for that
brand, they're growing alongsidethe brand, and so they're going

(34:23):
to have maybe more input todecisions that are made. They're
going to be the AdvisoryCouncil.
And as time goes on and morefranchisees are added to that
brand, those ones that have beenwith the brand the longest are
going to have the most input asto decisions and and so on. And

(34:46):
as a brand that matures, thenless and less is going to be up
for discussion or or addendums Icounsel people really about the
only thing you should expect.
In the way of addendum is maybea starting date change so you
want to buy in, but becausesomething going on in your life

(35:07):
right now, you can't reallyeffectively start till a month
out. So they might give you anadditional month before whatever
those initial deadlines mightbe. That is a maybe something
that's fairly common. I knowthat some brands will help do
their own financing for thefranchisees, but not all. Some

(35:29):
will
split say, like, when if you'regoing to get a three pack, maybe
they'll let you stage it in someway, but I wouldn't have any of
those expectations up front.
The personality of somebody whowants to become a franchisee
needs to match the values andthe personality of the brand,

(35:53):
because if it's somebody who isaverse to change and
a lot of ebbs and flows, thenthey probably want to go to
something that's firmlyestablished so boiler plate,
because they've got so manyunits, there's no give, hardly
anywhere. They just follow thethe process. If somebody wants a

(36:15):
little bit more flexibility,they want to go after a newer
brand so that they can have moreinput on the front end and but
there's going to be more risk aswell, because you're going to go
through more big changes as thebrand matures.
I've also seen where a friendlike McDonald's, let's just talk

(36:38):
about McDonald's. Maybe I'll geta free burger eventually. Out of
this,
I see when they when theyimplemented the mick cafe. I
knew a franchise owner thatowned five or six at the time,
and each
Cafe set up. The station costover $250,000

(36:59):
and they it wasn't an optionlike you had to do this and and
you had to roll it out together.So imagine how much money he
that means he had to have thatmuch liquid or ability to pull
the loan to be able to investit. And it's McDonald's. Of
course, you can't. There's a lotof franchisees that can't afford
that. You know, they're livingthey invested. They're

(37:21):
stretched, cutting it tight. Butwhen that happens, what do they
do? You know, it's mandated byfranchise.
Have you seen it go awry whenthe state changes rules, the
State of the County changesrules, so like that when the
minimum wage changed, or somecoding, local coding changes,

(37:46):
and all of a sudden, what youcould do before you can't do any
longer. Or all of a sudden,something opens up, like where I
live, there's multiple carwashes in a very short amount of
space. And I've talked to carwash owners, because I wanted to
see what is it like to own oneof these drive through, or like

(38:07):
pull through car washes with thevacuum stations on the side.
It's over a million dollar spendin some cases, and if another
one lands right on top of you,imagine how many $30 a month
memberships you have to sell inorder to reach ROI. So what's
going on in the local area? Whathappens in the government can

(38:32):
affect what's going to happen toyour business, whether it's a
franchise or not,
you still have to do basicmarketing studies and
feasibility studies, right?That's a whole nother topic. It
drives me nuts when localgovernment allows five of them
within a block, or all thedifferent piece of places and

(38:53):
coffee shops, and just there'stoo many of them, so eventually
somebody's going to go under youknow, it just doesn't make any
sense. And like, the flip sideof it, knowing what goes on
behind the scenes and localpolitics, they'll turn around
and say, well, they have thelegal right to do whatever they
want to do with that piece ofproperty, so they know, but
economically, somebody's got toguide them. You know,

(39:14):
there's, it's, it's somebodymight have already bought in,
like, pay the franchise fee toestablish the unit before they
bought,
bought the property, or leasethe property.
A lot of times the franchisebrands will help select or

(39:35):
approve the property, but notalways.
And then when you're dealingwith leaseholders, sometimes
they want you to do theimprovements to the building.
The roof might be damaged, butit's the right location. So yep,
if you want that building, yougotta repair the roof before you
move in. So that'll be an addedcost that you aren't weren't

(39:58):
expecting when you.
Were originally pricing thingsout, right? I mean, at the end
of the day, it's a business, andyou have to make money, and you
know, when do you actually breakeven to start actually showing
profit? It's it's a slipperyslope. But so with that said,
let's talk a little bit aboutpros and cons.
In your opinion, what would yousay pros are of franchising. And

(40:23):
being in a franchise model, youdon't have to figure everything
out. A lot of the things are setup for you. So a franchise brand
will select the systems, they'llhave the playbooks in place,
they'll have the process workout for a lot of things, not all
things, but a lot, and then youcan ask the questions of, okay,

(40:45):
what, what am I going to have todo of all these regular business
ownership activities? What willthe franchise brand do, and what
will I need to do
so that the pros that you don'thave to do it all yourself, The
cons are you do have to figureout where the brand is going to
do it, where you have to do itand find and fill the gaps in a

(41:08):
complimentary way. It can't beat odds with what the brand's
got in place. Um,
I would say a pro is that youget the use of the brand name
itself,
and hopefully the brand has amarketing plan that when you are
new to an area, they're goingahead of you do and doing that

(41:30):
pre marketing that coming soon,coming soon, coming soon, and
helping you with launch. That'scertainly one thing I would be
looking for as a potentialfranchisee, a con would be you
have to follow the rules. Ifyou're a person who doesn't
follow rules very well, thenmaybe franchise is not for you.

(41:53):
Maybe you want to get into abusiness opportunity where you
get the formula, but you can dowhat, whatever you want to with
a brand, you can take whateverdirection you want to to
personalize this thing, butyou've bought into the supply
chain. You've bought into theformula of the business model.
You're just not paying royaltieson a brand that you're not

(42:16):
using. And there's plenty ofthose out there for more
independent minded people.
I I've come across somefranchises, especially the
smaller ones. Sometimes I thinkthey franchise too soon.
When you when you look up prosand cons of franchises, one of
the pros will say, establishbrand recognition. Well, in

(42:38):
theory, that's right. But I'veseen small franchises not they
may have recognition in Ohio.They don't have it in Tennessee
or New York or whatever, and youyou're buying into it in a
market that nobody knows whothis brand is, and the
franchisor is not act like yousaid, actively planting seeds

(42:59):
and marketing there to let themknow that you're coming if
you're the first one in themarket, and that does not go
well, that that brand will fail.I've seen it again and again,
and
I can't, I can't say
some, some brands are verypleasing. They provide a lot of
joy. So for instance, there's abrand

(43:21):
that gets rave reviews andnewspapers and media because it
it provides a solution for avery real problem that affects a
lot of families, and it does soin a way that is happy and
joyous and and also provideskind of like a community vibe as

(43:43):
well. In conjunction withsolving that one problem, it's
in the space of dementia careand and they make it kind of
fun, so that not only can you dothe dementia care like it's a
daycare center, but you can alsodo some hosting of events and
stuff in the same space, becauseit's a happy space, and they end

(44:05):
up with high retention, verysatisfied clients, but it's a
niche industry, and it's notcovered by insurance, so
somebody buys into that becauseit of passion And a growing
need, and it's a great communitysatisfier because it it just
puts smiles on people's faces

(44:27):
for the way they do it.
Yeah, I know you're talkingabout too, because actually just
did some research on it, becauseI have a family member going
through that. Okay, well,
I would not be me if I didn'ttalk a little bit about
marketing. So in this case,we're talking about franchises.
So if you're the franchisor,

(44:49):
how do you market a brand to beprofitable? How to get to that
place to do that? And that's wewere just touching on that just
a little bit. But you have notonly in your backyard, but
market by market.
You have to, as you're growing,you have to be marketing in
those markets. And yes, you geta percentage from your
franchisee to afford to marketin that market. But if you're

(45:09):
putting that percentage in yourpocket and you're not growing
that brand, that will backfireat some point. You know, I've
seen franchises turn around andsay, Well, we're doing SEO, and
we have a website. You have apage on our website and oh,
gosh, I hate that model, becausethen the franchisee, anything
that they spend to drive trafficto that site, it's helping the

(45:29):
bar, the corporate brand, and itdrives to them really isn't
helping them, the franchiseespecifically, as much as they
think. This drives me insane.
Business model has to easily bereplicated, right? If it's not.
How can be a franchise? Yourbrand guide, your content guide,

(45:50):
your social guides. All thesethings have to be in place and
standardized so it is brainlessfor the franchisee. It also
protects you legally. It'll notthat I'm a lawyer. I don't play
one on TV. It allows, it allowsno, no gray area. And by doing
that, you're making it clear andsimple. It's turkey for the
franchisee. All they have to dois follow the rules. The only

(46:14):
thing that I find as a variablein that is sometimes a brand, if
it's created in a, we'll say ahigh net worth market.
Let's say the Connecticut. Youknow, a bunch of you know what
I'm saying, and it marketing ina in an area that's not so high
net worth, but yet it existsthere. The language, the message

(46:37):
that that brand needs to say todrive those people through the
door cannot be the same as whatyou're doing in that other
market. It will fail. That'sabsolutely true,
even even the content, thewritten content, the scenarios,
the stories
that you use in one market mightwork very well, but it is just

(47:03):
foreign to but you see that inthe especially between markets
for big cities and markets forrural, the same brand can work
in both places, and some of themarketing message can be the
same, but some of it has to be
fit, fitted to that culture andand done in a smart way, so that

(47:26):
it's not, uh, degrading, does itlook down on one because it's
not like the other, everythingit should be respectable and
honoring of the local cultureand make Somebody Yeah, I want
to be a part of that because,look, they they like where I am,

(47:47):
that they're showing that bydoing this in the community. So
marketing is, yes, it's, it'svisible, it's, it's written, but
it's also coming up, comingalongside, and doing something
that is active as well, I think
so I'm not off base in what I'msaying. You're You're

(48:08):
reiterating, I would add to thatthe planning and budgeting all
has to be part of that, so thatyou make it easy on the
franchisee.
I do. I do think that when yousaid there's no, there's really
no flexibility when afranchisees tries to push back,
and I've seen that in marketing,while they have to adhere to
brand standards, I think there'sa little bit of flexibility when

(48:30):
it comes to
how they're speaking to theirpeople, if if they're being
respectful and sometimes thecollateral, while they have to
stay within the brand,
localizing it to that backyard,like so. So we live in the great
state of Tennessee, and, youknow, can't get enough seen
orange everywhere?

(48:52):
No, because, you know, weunderstand Memphis, the bride
blue, if you remember, but wedon't talk about that here in
Nashville.
And definitely not Knoxville.
So so we understand, you know,based on the College of the city
that you're in, it's kind ofimportant. So how do you add
that and localize it and stillnot hurt the brand? And that's

(49:16):
important, and I see somefranchises do that very
successfully. You know, to allowlocal community. Hey, we're
here. We're here for youspecifically, and I think it's
important,
and I know, I know that, so yourside of the table, I'm on the
other side of the table that maypush back once in a while, you
know, can we just do this littlething and here, and we'll send
you an example, we'll actuallyshow you what we wanted to do,

(49:38):
you know, like, yeah, if can youjust make that a little bit
smaller, you know,
so as pure franchise, weunderstand that, you know, you
can localize the brand. Youdon't break the brand standards,
but you can speak to the peoplethat are walking through your
door specifically. And it'sinteresting what you're bringing

(49:59):
up, because.
It. I think a brand should planfor multiple types of scenarios,
big city,
smaller suburbs, very rural. Ifthey want to appeal to all those
markets, they need to be readyto be able to market to those
markets and also

(50:20):
uptick their franchisees,knowledge about marketing, what
works, what doesn't work, andlisten to what's going on in the
culture of that place. Becausethere might be something that's
real and unchangeable in theculture of that particular town
that is unique, that has to bedealt with. But then there's

(50:41):
some physical stuff as well.
A brand will come in and have todeal with the city's local
codes. I just drove by aMcDonald's the other day. There
were no golden arches anywhere.There was a single eyebrow, a
golden eyebrow across the frontof the restaurant and underneath

(51:02):
the roof line, and it was justlike a single arch above the
above the doorway and across theabove the windows. And it was in
the McDonald's gold but it was,it certainly wasn't the
McDonald's arch. It was a flatarch, and that was what was

(51:24):
allowed by the city.
Wow, yeah. Loved it flying thewall in the planning committee
conversation, I'm sure, becausethat's understand the same city
is gone.
It's been in conversation forabout a year and a half with an
insurance agency that hasbranding
issues and branding demands andwhatnot. So yeah, expect that

(51:51):
that will crop up from time totime as well.
Wow. Well, we, we touched onthis earlier. We didn't go into
I'd love to close out with this.
If you're a franchisee andyou're in a market or a couple
of markets, you know, you dohave to try to figure out how
that brand fits in thatcommunity and how you can grow

(52:14):
that business. You know, yourportion of that business. But
how do you adhere to the brandstandards and the corporate
guidelines and rules andregulations of the franchisor,
and still be able to show valueof that brand and for yourself,
you know, it's a real difficultbalance. I think, what would you

(52:34):
say about that? It might be alittle bit easier than than what
we think
when somebody buys into a brand,they buy into it for a reason,
that something about that brandhas drawn them and convinced
them that it's a good fit.
Maybe it's relational. Maybeit's something about the

(52:56):
business model itself, or theway that they've rolled out to
other places. There is acamaraderie that can be had
between franchisees and somefranchisors are better than
others at doing that camaraderiefrom the franchisor to the
franchisee, maybe some are alittle have a few more layers

(53:19):
between and harder to have thatkind of relationship
that happens the more units youhave. But at least for small and
medium sized franchise brands,there's a great potential for
for camaraderie, and thatcamaraderie helps people

(53:40):
stay
uh, passionate about what thatbrand is doing. Stay engaged in
the guidelines that are beingset. And also can help, you
know, in numbers, when somethingdoesn't fit the franchise very
well, and it's a new change,they can kind of push back to

(54:01):
some degree. And don't forget,they've always got their FDD.
The FDD can be used to make thefranchisee do a thing, but after
a few years that FDD also helpsthe franchisee say, all right,
brand, you're making a newchange that's not in my FDD. I

(54:22):
said that. I signed the one thatsaid this. This is what you can
make me do. You can't make me dothese new things because it's
not in my FDD. So they get, theyget some breaks here and there
because of the language in theFTD. So it's
when you compare buying into afranchise versus doing it all

(54:46):
yourself. Yes, there's going tobe some pros and cons on either
side, but if you are getting thelift of the process, most of the
systems the brand.
Itself, and a lot of themarketing that's been out there,
then that's a pretty significantlift. It's worth a lot. And if

(55:09):
they're also adding additionalrevenue streams over time,
that's that's a winner. And Iknow some brands that seek to
add additional revenue streamsfor as long as a franchisee
wants to take it on. As soon asthey can learn enough to take on
that revenue stream, they canadd it and they add the next one
and add the next one. They somebrand structure for continuous

(55:32):
growth throughout the 10 yearcontract. I love that. That's I
think that's important.Otherwise it gets flat over
time, like, where you're goingto go, you know, where do you
take it? Companies will max out,and they don't know how to make
more. I mean, they're makingmoney, but how do you keep
growing that brand? I thinkthat's great. One of the key
questions I ask brands is, howfrequently are you having

(55:56):
conversations with all thefranchisees? Are you having
weekly calls? Are you havingmonthly calls? What's the
frequency? Because if that isnot very frequent at all, I
would say there's a lot ofcommunication not being had
and and I would ask a lot ofgood questions about that,
because why, why not have morecommunication? Right?

(56:21):
Because they don't want to haveto
pull that thing out from underthe rug.
So we, you know, I had a feelingwe were going to cover. It feels
like we've been talking only forfive minutes, but we've been
going on for a bit, so we mayhave to revisit this.
And I know that I'm going tohave you on for a different

(56:41):
topic, on some on something elsethat you're passionate about,
but we'll have to see how thisedits and what it looks like to
our listeners. And listeners, ifyou're listening, please, if you
want to reach out to themarketing perspective, there's a
lot of ways to do that. You canclick on any of the links and
get get to anybody. Askquestions. Ask questions, get

(57:05):
more information.
It's important you should bearmed. That's what this is
about. It's education andinformation on the idea is it
makes you better at what you do,no matter how you do it and who
you do it with. Okay? And it'simportant to me that you take
that so please take advantage ofit, if you have the opportunity
ask questions
before we close out Catherine,is there anything that we did

(57:26):
not cover that you felt wasimportant, that we should touch
on? Well, your last point wasvery important to ask questions.
That's what a franchiseconsultant is for. You can use a
franchise consultant. It doesn'thave to meet me. Of course, I
would like to it, but, but afranchise consultant is like a
real estate agent. You ask allthe questions of that

(57:48):
consultant, get them to pull thePDFs from the various websites,
get them to collect the spammail, and you learn, learn,
learn until it's time to talk tothe brands that are a good match
to you, otherwise you're beingsold by a lot of different
people. Who's interested is tosell another unit, not

(58:09):
necessarily first, to create agood match. Make the good match
first. So learn, learn use theresources of a franchise
consultant by and large. It'sfree, and when the franchisor,
when you go all the way toinvest in the brand, the
franchisor will pay a commissionat the end, and it's against the
law for them to charge that backto you. So why would you not use

(58:33):
a consultant to mitigate therisk?
Yeah, I feel the same way. In myworld, sometimes we're a really
good fit. There's some that Iwon't take on, but we'd love
franchises.
Any business that has multiplelocations at some point will
have a marketing challenge. Itdepends on how geographically
they're spread out, and that'ssomething that we're really good

(58:55):
at. But I've also seen reallybad marketing happen in
franchises, and it's It breaksmy heart, because I know that
it'll be less expensive for youto do it this way, but you'll do
better and your ROI will behigher. And what, sometimes,
what corporate or somebody elseis saying, and they're making
them buy into these models,can't imagine why. Wink, wink,

(59:20):
nudge, nudge. That is notnecessarily in the best interest
of the franchisee, that it willbe much more cost effective if
they're not required to do whatthey're doing, to do it
themselves, and they'll savemoney, they'll grow their own
franchise. It's very hard towatch, you know, and I can
imagine you go through the samething from your side of the
table. All right, people arenavigating stuff on their own,

(59:42):
don't you just want to, like,let me just help you, right?
Drew, I mean,
like that lady that invested inthe one brand, and she's got
this restaurant going now thatshe wants to sell. It's like all
you had to do was ask if there'sa resource available. You know.
Know it, I don't

(01:00:02):
people are independent. I loveindependence, but asking for
help is something that peopleshould do more often. Just what
do you know that would behelpful to me?
Thank you for that, and if youare listening today, just know
that Catherine is somebody Irespect. We're growing a
relationship. She knows herstuff. I can tell you that

(01:00:23):
if you are in hunting mode, ifyou want to be a franchisee, I
would highly recommend theconversation with her. And you
don't have to be in state. Youcould be anywhere in the
country, right? We're not in thesame room right now. We're
talking technology made ourlives a lot simpler. Please
reach out. You take do you takeanybody in the continental US?

(01:00:45):
That's true. And I can even helppeople outside of the US,
depending on what brands arelocated where. Oh, that's good
to know. I didn't know that. Sowe stay within the US, and I try
not to go out of the US for lotsof reasons. I think there's
plenty of opportunity inside theUnited States. There's no reason

(01:01:06):
necessarily to do but I haverecently dealt with some clients
who are in process of creatinganother home in another country.
So it could be that that cropsup,
becomes a real factor, sure, andthen they started growing that
mortgage.
Well, I wouldn't be me. Let mebe shameless for a second.

(01:01:29):
Please. Catherine, telleverybody how to reach you.
Should they have thewherewithal? Sure
you can reach me through email,C, A, T, H, at NAB consulting.
Nab is spelled K, N, A, B, B isin Boy. Boy Cath at NAB
consulting.com
and my website is NABconsulting.com

(01:01:51):
amazing to find. Thank you verymuch, and we'll make sure to
push that out in our socials.When, when this was released,
you'll have a copy of it so youcan use it shamelessly yourself.
So thank you very much for beingon today. I appreciate your
time. I really appreciate theopportunity. Thank you so so
much. This is a lot of fun, soif you're listening today, thank

(01:02:15):
you again for being on themarketing perspective. I hope
this blessed you in some way,gave you some information to
empower you to make betterdecisions. If this is a topic
that's of interest to you,again, ask questions, reach out,
find the right people that canhelp you, even if it's just hey,
let's just get some virtualcoffee and have a quick
conversation. You know, theright people would be willing to

(01:02:38):
do that with you. And I say thatbecause I think you have to find
people that are passionate aboutwhat they do and understand they
do have your best interest inmind. Do they want to work for
free? No, they don't, butthey'll at least give you some
guidance. And then then it's upto you if you're going to take
that next step or not. So pleaseconsider doing that, and I
really look forward to seeingyou again next time. Don't

(01:02:59):
forget. Like us. Share us, sharethe wealth. Put it out there. If
you think this is something ofvalue to somebody that you know,
please share it with them. I'msure they will be happy you did.
And thank you once again, andwe'll see you next time on
marketing perspective.

(01:03:22):
You