April 29, 2025 • 38 mins
Episode Summary for The Advisory Board Podcast
Welcome back to The Advisory Board Podcast, where we bring in franchise experts to help you grow brands that stand the test of time — and maybe even scale faster than you thought possible.
Today’s guest? None other than Colt Florence, Senior Vice President of Franchise Development at Five Star Franchising. Colt’s not just a heavy hitter on the business side — he’s literally a big dude (former defensive end!) who’s spent the past decade mastering the art and science of franchise development, including a solid stint at Authority Brands. He's a crypto trader, a top-10 ranked collegiate sales professional, and someone who believes that the secret to great franchising isn't what you might expect.
🎯 In this episode, Colt breaks down the three critical traits of top franchise owners:
Work ethic: No couch potatoes allowed — success is earned through sweat equity.
Entrepreneur vs. Intrapreneur: Why “system-followers” (not big-idea builders) often make the best franchisees.
System Improvement: How the best owners faithfully implement systems and make them 1% better.
Colt and Dave also dig into the myth of "semi-absentee ownership," why most franchise models need hustle (not just investment), and how to spot candidates who can truly thrive inside a proven system. Plus, they geek out over analytics, franchise sales cycle data, and — yes — how Moneyball thinking applies to building unstoppable brands.
Big shoutout to our episode sponsor, ClientTether!ClientTether is the ultimate CRM and client engagement platform that helps you automate lead management, follow-up, and franchisee onboarding. Thanks for making this episode possible and for helping brands run tighter, smarter, and faster sales processes!
Welcome back to The Advisory Board Podcast, where we bring in franchise experts to help you grow brands that stand the test of time — and maybe even scale faster than you thought possible.
Today’s guest? None other than Colt Florence, Senior Vice President of Franchise Development at Five Star Franchising. Colt’s not just a heavy hitter on the business side — he’s literally a big dude (former defensive end!) who’s spent the past decade mastering the art and science of franchise development, including a solid stint at Authority Brands. He's a crypto trader, a top-10 ranked collegiate sales professional, and someone who believes that the secret to great franchising isn't what you might expect.
🎯 In this episode, Colt breaks down the three critical traits of top franchise owners:
Work ethic: No couch potatoes allowed — success is earned through sweat equity.
Entrepreneur vs. Intrapreneur: Why “system-followers” (not big-idea builders) often make the best franchisees.
System Improvement: How the best owners faithfully implement systems and make them 1% better.
Colt and Dave also dig into the myth of "semi-absentee ownership," why most franchise models need hustle (not just investment), and how to spot candidates who can truly thrive inside a proven system. Plus, they geek out over analytics, franchise sales cycle data, and — yes — how Moneyball thinking applies to building unstoppable brands.
Big shoutout to our episode sponsor, ClientTether!ClientTether is the ultimate CRM and client engagement platform that helps you automate lead management, follow-up, and franchisee onboarding. Thanks for making this episode possible and for helping brands run tighter, smarter, and faster sales processes!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Guys, I want to welcome you to another episode of
the Advisory Board podcast where we're bringing experts from the
franchise community to help you learn how to build brands
that last and get you some actionable ideas that can
help you to scale quickly. And I've got Colt Florence
with me today. And guys, if you haven't seen Colt,
big dude looks like a defensive end because he was,
(00:21):
but he's now the senior vice president of Franchise.
Speaker 2 (00:23):
Development of Five Star Franchising. You guys probably know Scott and.
Speaker 1 (00:25):
Chad and Andrew and the gang, but you know it's Mosquito, Shill,
the card, my yard at one hundred, Packouse, Bio one
and got you Covered, five Star, Bath Solutions and probably more.
Speaker 2 (00:34):
You know, like it's a good series of brands.
Speaker 1 (00:37):
So Colt also was an authority brands before that's where
were you and I first met actually.
Speaker 2 (00:43):
Ten years brand of experience.
Speaker 1 (00:45):
He's super into analytics and and we might dive into that,
although it's not in the top of the key topic today,
but if you haven't had a chance to talk to me,
you also find he's an avid cryptocurrency trader and he
when he left college. He actually was ranked top ten
in the nation as a sales professional, which is pretty groovy.
I didn't even know there was a thing to be
(01:06):
ranked in as a sales pro, so surprised there. Tell
us a little bit more about you, tell us a
little bit more about what you're doing a five Star,
and then we'll jump into the topic.
Speaker 3 (01:14):
Yeah, yeah, no, I appreciate that, Dave. Yeah, I mean,
just you saying not too many people knew that there's
that cells let's say cells career or graduate. Probably probably
doesn't look very good for me knowing I was in
the top ten. Maybe there's only ten of us to
begin with, so who knows. But no, Yeah, So, as
you mentioned, senior vice president of franchise development for five
(01:36):
Star Franchising. Been here for almost a year now, is
that authority brands? For four years a vice president of
franchise development ten Honestly, you know, fell into franchising and
franchise development like I'd say most people do, just by chance.
Had a gentleman reach out to me about ten years
ago and said, Hey, I'm starting this franchise development company.
I want you to come work at it. You're a
great salesman and I said, you know what, I don't
(01:59):
know anything about franchising, and he said, well, welcome to
the club. That's what I want. I want somebody who
knows about seals and really doesn't know about franchising. And
lo and behold, that gentleman's name was Ryan Combe. He
became my first mentor within the franchise space. He had
spent a lot of years with Kim Dry and enhance
Wood Renewal, and I fell in love with the industry
and so spent the past really ten years in fran
(02:20):
dev loving what I'm doing, helping people find better trajectories
within their life, whether it be professional or personal, and
have found it extremely fulfilling. So not only happy to
be in the industry, but happy to be here today too.
Speaker 2 (02:32):
Oh thanks man, I appreciate it. Well, guys.
Speaker 1 (02:35):
One of the things that I loved about Colt is
he's got kind of a unique look at what makes
the right franchise owner. Who are the right candidates to
be working with? And so, Colt, maybe what you could do.
Speaker 2 (02:47):
Is walk us through. We're going to talk about three.
Speaker 1 (02:49):
Things that you're looking for, three specific things with franchise candidates.
Do you mind maybe just sharing us a little bit
about those three main categories, and then we'll dig into
each one together today.
Speaker 3 (03:00):
Yeah yeah, great. So when we take a look at
who makes the best franchise owners out there and what
I've seen in my experience with working with the thousands
of franchises we've brought into the systems, you know, the
three different things that I think differentiate candidates pretty quick.
For us, it's going to be one, are they willing
to put in the work and so are they are
they going to be stepping into this knowing gets business
(03:21):
ownership and they're willing to put in the hard work
to be successful. Two is I always have a comparison
between entrepreneurs and entrepreneurs, and a lot of times as
franchise ors, we think we want an entrepreneur to come
in and be a franchise e, when the reality is
we want an entrepreneur somebody that could come in and
follow systems and implement and execute off of those systems
extremely well. And then the last one is based off
(03:43):
of those systems, we want people who will come in,
implement and make them better, can see the flaws within it.
You know, a lot of times, as a franchise or
we tend to think we have the best solutions, and
the reality is sometimes we don't. Our franchises are able
to find better solutions. So we want people that'll implement,
implement systems and make them better. So you know, sum
it up as people that work hard, people that'll follow systems,
(04:04):
and people that'll follow and make systems better than what
they currently are.
Speaker 2 (04:08):
Awesome, you guys, hope you enjoyed the podcast episode today.
And I'm kidding.
Speaker 3 (04:12):
Sorry, you know, no, no, no, You're good.
Speaker 2 (04:14):
You're good. We haven't even scratched the surface there. It's
just the framework, man.
Speaker 1 (04:18):
So I love what you shared, and I'll share just a.
Speaker 2 (04:21):
Personal anecdote about me.
Speaker 1 (04:22):
I'm pretty entrepreneurial, Like when I was five, I started
my first company and didn't you know, register in LLC
at that time, but just went out door to door
knock and try to make money. I find like I'm
not the best. Like I'm a pretty good friend. I
was a franchise franchise e, but I might not be
the best because I'm really not a give me the
systems kind of a guy.
Speaker 2 (04:41):
I'm more like, let me make the systems kind of
a guy.
Speaker 1 (04:44):
And it was there was a little bit of it,
not like mean or anything, but just like you know
with great great I love the guys that ran their antema,
but sometimes we would just find ourselves button heads about
stuff because you know, CEO of Client the other day
was kind of like, yeah, I kind of have this
idea that's probably really good. We should do it, and
it's not my job as the franchise franchise owner, right,
(05:04):
So how did you how did you come up with
this as being kind of a criteria, because I'm guessing
there's a pretty good story or at least a series
of experiences you have where you're like, I see the
difference and now I notice zero and an entrepreneur rather
than entrepreneur. How'd you come up with that differentiation?
Speaker 3 (05:20):
Yeah, you know, it's interesting. So if we were to
go down the list hard worker, entrepreneur and then make
systems better, you know, I think one of the the
difficult things about franchise systems is a lot of people
come in and they think it's guaranteed success because they're
buying into a franchise system. They're looking at it and saying, hey,
because you're providing me a training, support, a successful business model,
(05:41):
this is going to be a very successful venture for me,
and the reality is that couldn't be further from the truth.
Speaker 2 (05:48):
Right.
Speaker 3 (05:48):
So, using your experience, you came in as a hard worker,
but you also had a lot of other ideas and
things you wanted to implement. A lot of people don't
come in with that hard work mentality. They look at
it and say, because I am buying a franchise system,
this is going to be a very successful venture, and
the reality is that doesn't happen. And the comparison I
always like to use that I found best over the
years is, you know, let's say I decide one day
(06:09):
that I want to be extremely fit, and I'm saying,
you know what, I'm going to get in the best
shape of my life. I am going to feel very
confident and attractive within myself, whatever it may be. So
in order to do that, I'm going to hire a
personal trainer who's going to help me along this journey.
And that personal trainer steps in and they say, okay,
based off of our experience, here's all the exercises you
should be doing. Here's how often you should be doing them,
(06:31):
here's the days you're going to be doing them. Here's
the diet you need to follow. Here's why you need
to follow it. Here's the scientific approach behind it. I say, perfect,
that is fantastic, But then guess what. I don't go
to the gym and I don't follow that diet. And
I love that comparison because what we walk each one
of our franchisees through is really saying, hey, even though
(06:51):
we are providing you with the systems, the process, the experience,
the model, if you do not come in and you
do not work hard, you will not notice the progress.
You will not notice the successes that you're gonna have.
And so you know, going back to that list that
that was always the first thing for me as a
lot of people came in and said, because I'm buying
a franchise system, I will be successful. And the reality
(07:13):
is you will only be successful if you implement and
you get your brought off the couch and you go
work really hard. And it's the same as that comparison
with fitness. If you don't follow the diet, if you
don't make it to the gym, doesn't matter how great
of a personal trainer you hire to help you through
that process, you will stay in your current spot. And
so so going back to your question. I know I
steered a little bit away from the entrepreneur and entrepreneur,
(07:34):
but it's unless somebody is willing to put in the
work from day one, everything else doesn't matter within a
franchise system.
Speaker 1 (07:40):
Yeah, well, I see why that's a major screening element
for you too, right, because well, and tell me.
Speaker 2 (07:45):
How you feel about this.
Speaker 1 (07:46):
There's so many brands that are just in love with
the idea of finding like investors. Okay, we want investors,
we owne people with lots of money, you know, Ivy
League backgrounds, lots of money, who don't who are looking
to just come in and have a business operated forma essentially,
But that's very very There are very few cosms have
legitimate absentee or some absentitee ownership opportunities.
Speaker 2 (08:08):
So how do you feel like that?
Speaker 1 (08:10):
But there's so many people advertising that, So how do
you feel like that's changing expectations in the marketplace and
maybe making it harder to find these guys that are
going to get off the couch.
Speaker 3 (08:19):
Yeah, I mean, it's it's extremely difficult. Semi passive or
passive opportunities are all the rage right now. And the
question I always ask is if there really are business
models out there where you could be passive, invested into it,
and they're going to become ultra successful. What's the reason
that Jeff Bezils hasn't bought up every single one of
those opportunities in the United States?
Speaker 2 (08:38):
Right?
Speaker 3 (08:38):
What's the reason he hasn't just thrown his cash at
and said this is going to ten x no matter
what I'm excited or what's the reason Elon hasn't? And
the reality is because most of the time those do
not exist. It requires somebody to come in and put
in the hard work. And so for these investor models
of people just looking to throw cash behind it, what
do you have to realize is if you're not willing
to put in the work, you have to pay somebody
(08:59):
who is. And so if you are trying to take
that model and be passive within the business, you need
to be prepared to give somebody equity within your business
who is then going to be motivated enough to step
in and grow the company for what it needs to be.
Very few times does it work for somebody to say
I'm just going to give somebody a manager a salary
and they're going to grow my business to my expectations
(09:20):
that just doesn't happen. They don't have enough skin in
the game or motivation to do it. And so you know,
are we open to it, Yes, but if you're not
going to be the one that is willing to put
in the work, you need to find somebody who is,
and normally that's going to be through an equity position
and make them motivated enough to grow the company because
it's theirs now as well.
Speaker 1 (09:37):
Yeah, well, there's a psychological side to that you're talking about.
Speaker 2 (09:39):
It is really important.
Speaker 1 (09:41):
Just hiring you know, Joe Schmoe to run my business
or to manage the firm, it's not the same, right,
The level of commitment, the level of engagement, even the
skill level oftentimes is very different than the owner.
Speaker 2 (09:52):
So have you seen that work well in the past.
Speaker 3 (09:56):
Yeah, I'd say there's two different scenarios. You can look
at the fron day one and from like a year
three aspect, right, And there was a legend in the
space Ron Bender, who I always love to quote things
that he did within the cell cycle and one phrase
he used was we do earned absentee. If you want
to step away from the business, you want to hire
a manager, you earn it your cash flow and you
(10:18):
build your business and able to do it. And the
reason I say that is because normally what works best
is year three, when the business is up and running,
it's operational, it's cash flow positive. At that point you
can bring in a manager because you've made it over
most of the harder hurdles the humps in the business.
From day one. It's always more difficult because you're now
(10:38):
stepping into the difficult process of building a business from
eighteen to twenty four months, and so compensating somebody correctly
to take on all those difficulties within the business has
always been a hard balance, not only from how much
equity do you want to give them, but how much
of the business are you willing to give away? And
so if I'm speaking honestly, it's always the three year
ones who step out that make it work a lot
(11:00):
better because they then built the business themselves and can
step away versus somebody from day one who said I'm
going to bring in a manager. It's just it's a
hard balance to find the motivation through equity for somebody
to make it over those massive hurdles and shortcomings for
the first eighteen to twenty four months of the business.
Speaker 1 (11:16):
Yeah, spot on, dude, spot on, And it aligns well
with my personal experience as a multi unit owner.
Speaker 2 (11:22):
But also just it it's the growth rate.
Speaker 1 (11:26):
Isn't the same. It's just not the same, and it's
not as or one. You want people to be highly successful,
I should be. That's rule the rule number one of franchising,
right is make sure your franchises are wildly successful. And
then everything else happens properly after that, and your validations
get better, right, like the you're producing more royalty revenue,
which means the franchise or has more to reinvest back
(11:47):
into the business to grow it and support it.
Speaker 2 (11:48):
And like everything works right if you do that.
Speaker 1 (11:51):
But if you get guys, guys that think they can
come in without the f yeah, without getting off the couch,
there's a big hurdle still even with the franchise system
a business rolling and yeah, and I think.
Speaker 2 (12:03):
That's that's the faux pat. I still see it all
the time.
Speaker 1 (12:05):
I won't I won't highlight anyone a certain segment of
franchise and it talks about that all the time, and
and boy as it caused some ripples, but I like
this earned absentee ownership and man Ron Ron was awesome,
so you can always quote him.
Speaker 3 (12:19):
He was, yeah, yeah, it's I mean, it's the best
way to look at it is if you want to
step away from the business, earn it through net profitability
and cash flow, right, and then you could justify it.
But nobody's going to grow your business or be as
motivated to do it as you. And so put in
the work, put in the effort, the sweat those first
couple of years, and get to the point to where
you can hire people to take responsibilities off of your plate.
Speaker 1 (12:39):
Yeah, totally agree, totally agree, And it is done through
cash flow or equity.
Speaker 2 (12:43):
Right. So equity structure is good.
Speaker 1 (12:45):
Too, but it's you give someone two percent equity, there's
no incentive. They're not going to work there, but they're right, yeah,
they're gonna walk away from that and go get in
a higher paying job before they're willing to spend weekends
and nights working for you.
Speaker 2 (12:56):
Correct.
Speaker 1 (12:57):
So so slide into the back to the entrepreneur entreprene
So first they've got to be willing to work their
butts off check.
Speaker 2 (13:03):
Totally agree with that, and then then come back to.
Speaker 1 (13:06):
This entrepreneur versus entrepreneur like where help us differentiate between
the two and then then explain like why is that
such a big catalyst or like a big different decision
treat moment for you guys, are as you're deciding who's
a good owner.
Speaker 3 (13:20):
Yeah, So I heard this years ago on a podcast,
and it was the difference between an entrepreneur entrepreneur an
entrepreneurs the person who comes up with the big ideas,
the systems, they start the business, they get it up
and running, and entrepreneurs the person who steps into the
business at that point and the business couldn't survive or
run without them being in place and actually implementing and
(13:40):
running those systems and making them substantially better. And so
I think one of the fallacies within UH franchising and
franchise development has been we want entrepreneurs, we want entrepreneurs,
and the reality is, well, why why do you want
somebody who is going to come in and say I
want to do everything my way from day one, I'm
the big pay guy, I have all the right ideas.
(14:02):
You actually want the opposite. You want somebody who's going
to come in and say, I'm going to follow every
single system you put into place. I'm going to read
every single manual, and I'm going to be dependent on
you guys and the support that you give me to
go out and run my business. I'm going to depend
on the advice that you're giving me. And so what
we always look for isn't necessarily somebody who's going to
be the big picture I want to own my own business.
(14:23):
It's going to be the person who comes in and
actually says, hey, I've been very successful within my job.
I'm very successful because I've followed all the systems, the training,
I've become an expert within the space. I've actually made
my company substantially better through the impact that I'm making
on it. I'm kind of nervous to leave that job
to start my own business. That's like the first trigger
for us of saying, yes, you will be a perfect
(14:45):
franchise e because you've been doing it your entire career already.
You've been taking processes and systems making them better growing companies.
That's exactly what franchise ownership is. And so we actually
have taken an opposite approach of those are the people
we want who will come in on day one, listen
to the training, follow the procedures we have in place,
use the systems and take every single one of those
(15:07):
and grow a company and make it better based off
of it.
Speaker 2 (15:10):
Yeah, I love that. I love that.
Speaker 1 (15:12):
How do you find them, though, Like, how do you
determine if somebody is one or the other? Like it
hows to get a couple of cues you're listening for.
Speaker 3 (15:20):
Yeah, yeah, it's a great question. So normally you find
them because somebody is fed up of no longer having
the correct balance from their professional life to their personal life.
And that happens all the time. You see people who
are in C suites or senior positions within their company
and they're saying, yeah, I'm making great money. I love
those benefits behind it, But I've now entered into a
(15:40):
stage into my life where I'm just not able to
spend time with my kids or my spouse, and so
I'm making the risky mover, or I'm at least considering
the risky move to leave all the security and comfort
for the things that I feel are more important right now,
which is going to be my family and the balance
that I'm experiencing, or even future financial potential. So those
(16:00):
are the first key indicators we hear. Is like great,
So you've actually become very successful within your career. You've
been able to implement those systems and bring a lot
of value to your company. There's no reason you should
be able to do it. What makes us nervous are
the people that come in from day one and they say, yeah, actually,
I started a landscaping company. It's doing about three hundred
thousand dollars a year. I've been in his for twelve years.
(16:23):
Because now we're looking at that saying, okay, so you
started a business, you haven't been successful within that business.
You're bouncing all over the place. This is the other
you know, the fifth time you've considered a diversification within
the past four years, even though your business you're in
right now is not achieving high levels of profitability. Those
are the conversations that actually scare us most of the time,
(16:43):
and so you can find out pretty quick within those
those conversations that we're having whether or not somebody's coming
through from a secure position but they want more in life,
versus somebody who is just used to chaos and they've
never been able to get out of it.
Speaker 2 (16:57):
Yeah, no, no, no, that's yeah.
Speaker 1 (16:59):
He might be working butt off too, right, So we
checked box number one and yeah it's not your guy.
Speaker 2 (17:04):
Also a little ADHD can't focus that one. Not the best,
not the best.
Speaker 3 (17:10):
Yeah, that's exactly it.
Speaker 1 (17:11):
Okay, perfect, Now, now tell me this I mean, and
if you're comfortable sharing obviously no names or even brands,
but have you learned this lesson the hard way before?
Like did you did you go down the road? We're like, eh,
maybe I'll make an exception for Bob, And then you did,
and then you saw the outcome that was not what
you're hoping for.
Speaker 3 (17:28):
Oh my gosh, so many times, so many times. And
that you know, early in my career is actually the opposite.
Every time i'd get on a call with somebody who
was very entrepreneurial minded they're saying those things, I would
get very excited about it because I'm looking at it's like, yes,
this is somebody who's taken destiny into.
Speaker 2 (17:44):
Their own hands.
Speaker 3 (17:45):
They're going to be able to kill it. And what
I've seen time and time again is actually those guys
struggled the most within the system as they stepped into
it because they were less dependent on the franchise or
to help them within the business. They didn't like to
follow the systems because they felt like they had better
options or or a better idea than the systems that
they had in place. And so it was time and
time again where I slowly realized, like, actually, know, the
(18:06):
people who were coming in and are a bit more
tentative on the calls, a bit more reserved, maybe a
bit more nervous, have more fears, are actually the ones
that make the better franchisees, even though within the cell
cycle we don't realize it. And so we had to
switch our train of thought of actually saying, no, let's
spend more time with people who are more nervous, even
(18:26):
though going into business ownership we look at it a
lot of times and say, yeah, nervous, you shouldn't be.
You got to dive into this head first. It's actually
the people who are nervous and more dependent on systems
and be successful that we look for. So, going back
to your question, yes, time and time again, I actually
saw the people I was excited about have more difficulties
within the business, and then the ones who are nervous
(18:47):
that went into it actually take off and become rookies
of the year, franchise e of the year. And that's
when I started drawing the correlations between it that smart.
Speaker 2 (18:55):
Yeah, and you wouldn't think of it. Almost seems counterintuitive,
doesn't it.
Speaker 3 (18:58):
Yep, yeah, hundred percent, that's exactly it. And and so
after you do it so many times and there's a
strong enough correlation, you either learn from it or you
just continue in ignorance. And I said, I'll learn from it.
Speaker 2 (19:10):
Good choice the option A please?
Speaker 1 (19:13):
Well that it almost seems like it's a bit of
a contradiction though this and your third point, which is, Okay,
we want someone who's an entrepreneur, somebody wants to implement
and ferociously follow the program, right and then but the
third thing, you're looking for someone who's willing to kind
of audit and offer improvement recommendations to the system, Which
almost feels like we're swinging towards the entrepreneurial side.
Speaker 2 (19:35):
But it's not the same thing.
Speaker 1 (19:36):
So maybe can you help us differentiate between the person
who's trying to implement and change everything entrepreneur versus the
guy that's just willing to audit and offer up recommendations
through the process. There's something really famentally fundamentally different between
the two.
Speaker 3 (19:50):
Yeah, have you have you seen the movie the founder
about the gentleman that that founded the McDonald's franchise system.
Speaker 2 (19:57):
I have not watched it. No, it is it good.
Speaker 3 (19:58):
Oh my gosh, it is so good because it summarizes
the differences perfectly. So what ends up happening is this
gentleman goes to McDonald's one day, realizes they are doing
things in a revolutionary manner, wants to franchise. It, begins
to franchise, and the first couple of people he goes to,
or his buddies, who are extremely wealthy they own other businesses,
and he says, buy this. I promise you it's going
(20:20):
to make you so much money. So its buddies buy it,
and the next thing you know, he goes to one
of their locations a couple months later and they're offering
fried chicken within the location and he's like, this isn't McDonald's,
this isn't the system in process. Why are you doing this?
Calls his buddy up, and his buddy said, well, my
customers were asking about fried chicken, so I thought that'd
be the best way of going about it. And he says, no,
(20:40):
that is not the McDonald's way, that's not the process
and systems we have in place, well vice versa. He
now starts to transition more towards people who are not
extremely wealthy, didn't come from vast business experience, and those
franchises start doing extremely well. And one night he's going
out to dinner with one of those franchisees with him
and his wife, and they say, hey, we're running into
a lot of issues with our ice cream machine or machine,
(21:03):
and our milkshake machine breaking down all the time, and
our customers are coming in and they're requesting it, and
so we actually found a much better solution. You take this,
you mix it in with milk, you stir it up.
It actually makes a milkshake substantially quicker than what the
machines are offering, and it's a lot cheaper for us
as a franchise e. They give it to him, he trys,
He says, this is amazing. So now they start implementing
(21:23):
that into every single McDonald's franchise location, because not only
is it better than the current one they have in place,
but also it's saving franchises a lot of money. And
so that's the two big comparisons I always like to
bring up. As you have one franchise that said, we
love the system that's in place, we found a better
way to do it, And you have another franchise e
that's saying, I'm not even following the system, I just
think this will be so much better. And so that's
(21:46):
what we always look for with our candidates coming in in.
Our franchisees are the ones that say, we know that
the business model is proven, we know that the process
is in place work. We want to make them one
percent better. Though, what can we do is it? Can
we increase our profitability, can we increase the amount of
usage we're getting? Whatever it is we want to make
the system one percent better, versus coming in and saying, yeah,
(22:07):
I'm just going to scrap everything you're doing and implement
something completely different because now you're just going back into entrepreneurship.
And so hopefully that example kind of summarizes the differences
between the two. It's always been the best one that
I've seen as to what we look for with our
franchises and the feedback they give as to what is
healthy versus not healthy.
Speaker 1 (22:24):
Yeah, no, I really appreciate it. That The hard part
must be, like how do you find people like this?
Speaker 2 (22:29):
Right?
Speaker 1 (22:29):
Like, how do you determine that somebody's really entrepreneurial, but
they're also willing to invest time and resources into being
created within.
Speaker 2 (22:37):
The model versus outside of the model.
Speaker 3 (22:40):
Yeah, yeah, I think their track record speaks for themselves.
Speaker 2 (22:43):
Right.
Speaker 3 (22:43):
So when you get somebody who is in their mid
thirties forties, they're very high up within their current company.
You don't get to a position like that by not
spending your entire career of taking current systems and processes
and making them better, or taking current employees and making
them better. And so when we speak with people who
are in those type of positions, they actually are coming
(23:04):
with a track record of doing this for the past
twenty years. They've just been doing it for the man
rather than themselves. And so we actually take a look
at at people who have been in in a career
for the past twenty years and are in a high
position as a positive because they have a track record
of taking systems and processes and making it better for
their existing company. Now the question is can they do
(23:26):
it within the franchise system. So that's always a key
indicator for us is saying you've been so successful making
other people a lot of money and making those systems
and processes better were excited for you to do it
for yourself.
Speaker 2 (23:37):
Yeah? Amen, and how do you so?
Speaker 1 (23:41):
I'm not sure if you ever read or heard of
the Jersey mic study they did a long time ago
where they were trying to figure out, like, who are
the most successful franchise owners in our system?
Speaker 2 (23:49):
And initially I think the thesis was.
Speaker 1 (23:51):
They thought that well capitalized, well educated people were going
to be the best. Have you seen the results of
this study?
Speaker 3 (23:57):
I don't think I have no.
Speaker 2 (23:58):
I think it's Gary Hayeshus who shared it with me.
Speaker 1 (24:01):
But but in a quick nutshell, they found the people
that were the most successful were actually the people most
passionate about the brand. And Foo Food's different right than
home services. No One's like I'm passionate about bio one. Well,
you have to be pretty morbid to be passionate about
that going in. But it's an incredible business opportunity to
serve so many people, right. But I don't think in
(24:22):
the home services space people are like super passionate about
window coverings, I got you covered, or you know, like
or bathroom or modeling, but they get they really are
passionate about becoming an entrepreneur So I don't know if
it's the same right in the home service space, But
how do you guys determine passion? Because passion was the
one thing when Jersey Mikes people like, I freaking love
Jersey Mikes. I want to own one of these things
(24:42):
that person outperformed the NBA guy quite significantly in their
studying numbers.
Speaker 2 (24:47):
So, but how can you.
Speaker 1 (24:49):
Measure passion if you guys found a way to do
that where you kind of is that a like the
hidden fourth factor that you guys look for too, or
how do you equate that.
Speaker 2 (24:56):
Into the way you guys are looking for candidates.
Speaker 3 (24:59):
Yeah, it's a great question, and you know, within the
home service space, it is rare when you get somebody
who is passionate about what they look at. You know,
a lot of times candidates come to us and they're like, hey,
I just had a friend talk to me about it.
I figured i'd look into it, but I'm not promising
anything special versus like a gym where they're like a
fitness not and they cannot wait to open and run
(25:19):
a gym on a daily basis, or a restaurant. And
so what we always look for is how passionate are
you towards the goals you're trying to achieve. What is
that goal?
Speaker 2 (25:28):
Right?
Speaker 3 (25:28):
Is it? Are you looking for more balance with the family?
Is it financial goals? What is the goal where you
want to be twenty four months from now, five years
from now, ten years from now. Because if those goals
are in place and they feel a lot of passion
for them, they're going to want to find the quickest
vehicle to get to those goals. And so whether it
be through blinds, whether it be through client, you know,
cleaning up crime scenes, whatever it may be, if it's
(25:52):
the quickest vehicle or to get them to those goals
that they feel so passionate about, they will quickly become
passionate about the vehicle that they are in. And that's
always what we take a look at, is what are
your goals, how much passion do you feel towards them?
And then can we reverse engineer back to show you
why this vehicle or this path is going to be
the quickest. And then people become quickly passionate about putting
blinds on somebody's window when they realize it's going to
(26:14):
get them to where they want to be three years
from now.
Speaker 2 (26:17):
One hundred percent.
Speaker 1 (26:17):
And the crazy thing is people savvy franchise buyers, they
get really animated and passionate about the p and ls
in your space, right, because p and ls for restaurants
are not sexy at all. I mean major investment, capital
lease agreements that are long term, like major overhead liability and
then sometimes a lot less cash flow than even the homes,
(26:40):
like putting blinds on people's windows.
Speaker 2 (26:41):
Right, it's crazy. I don't know.
Speaker 1 (26:44):
We can't talk about that on here right disclosures, but man,
I can say from a guy who's not disclosing that
I've looked at my wife and I like like fifteen
or so brands before we decided to buy the one
we did, and what hooked us was the p and L.
Like my wife was the one that pointed that out,
and I'm like the business nerd, you know, push those up.
But she was the one that was like, you know what,
(27:05):
Like we I had a client who was like, i'll
give you three locations.
Speaker 2 (27:08):
I'll give you three territories.
Speaker 1 (27:09):
You don't have to pay me a fee because I
want you to operate one of my things.
Speaker 2 (27:13):
I was like, that's cool, hey.
Speaker 1 (27:14):
Hunt, and she's like, well, where's this item nineteen, and
I was like, well, he doesn't have one, yeah, and
we ain't buying that one. So like I think that
people we're like when they've got a goal, like they
know where they want to go and they're passionate about
it doesn't really matter what.
Speaker 2 (27:29):
The vehicle is at the end of the day, if
it's if it's going to get them where.
Speaker 3 (27:32):
They want to be amen to that. Yeah, And that's
the thing is, And what a lot of people don't
realize is when you get into business ownership, you're going
to feel passion no matter what. You get passionate about
the customers that you're servicing, you get passionate about the
employees that you hire and the impact you're making on
their life. And a lot of people don't realize that.
But yes, at the end of the day, the financials
behind the business should actually be the driving factor behind
(27:55):
majority of the decisions that you make, because why are
you going into business ownership if you're not going to
be propable and achieving goals based off of it. Home
services provide that I'd say better than most from what
I've seen.
Speaker 1 (28:06):
Oh yeah, I mean, especially when you look at cash
in to cash out and the ramp to cash. It's
hard to beat, honestly, it is. Ye, when you get
the right brands behind them. Five Star has a pretty
good track record of building brands that can generate good
revenue and good support systems.
Speaker 2 (28:22):
So they've been doing that for what twenty years or something.
Speaker 3 (28:24):
Now, Yeah, yeah, they're they're they're really good at what
they do. Yeah, they are, and.
Speaker 2 (28:28):
They give a day. Brand presidents I know.
Speaker 1 (28:30):
I think almost all your brand presidents solid humans, right,
so they are. Now that's from a buyer side, That's
another thing you got to look at, and I'm sure
reason why you were excited to come work with this
group is what a good leadership team like, people you
can trust to take care of the people that are
going to be signing up to put life and finances
on the line to then start their own business. Like
it's it's easier to make that path open up for
(28:53):
people when you're comfortable with the people taking care of them.
Speaker 3 (28:56):
It is, And now it's it's actually funny you say
that our core focus five Star franchising is empowering our
franchise partner success. And to your point, that is one
of the main reasons that I aligned with them.
Speaker 1 (29:05):
Was.
Speaker 3 (29:05):
I was taking a look at it saying knowing you
guys are so focused on franchise e success is important,
especially where I'm the one out there putting my name
on the line, my team's name on the line of saying, guys,
trust us, this is a great brand. And so yes,
our brand presidents, our leadership team, all of us truly
believe and bleed that on a daily basis, we do
everything we can to support our franchisees.
Speaker 2 (29:28):
Yeah. No, and I see it. I see it.
Speaker 1 (29:29):
I've been to one of your conferences before. I know
a bunch of the people there as well to own
your brand. So yeah, you guys do well. You know,
tell me, we've got a couple of minutes. You mentioned
as in our preamble before we started recording, that you're
really into analytics and frandev.
Speaker 2 (29:43):
It's funny you say that because a lot of the
folks I talk to they're not, like, really analytics driven.
Speaker 1 (29:47):
So I'm curious, like, maybe what are a couple of nuggets,
Like what are the things that you're doing, is you're
leading these franchise development teams now that you know lead
to success.
Speaker 3 (29:57):
Yeah, it's a great question. So I think one of
the worst things anybody, especially in franchise development, could do,
is make a decision without the data to provide it
or to support it. And so you know, it's it's
so often we're trying to make adjustments to our cell
cycle and the content we're sending out and the approach
that we're taking, but we have no data on the
back end to see whether or not we're actually focusing
(30:19):
in the right areas. And so every every decision made
within franchise development should be an educated decision based off
of what the numbers are telling us. And when when
you actually take a look at sales, it's a very
simple mathematical equation and if it's not adding up, you
see where you're missing within that equation. And so what
we've done is we've we go really in depth with
(30:42):
tracking cell cycle performance, attrition rate, within the different stages
within our cell cycle where candidates are dropping off lead source,
total lead source spend momentum increases within that lead source
spend cost per lead, especially with broker networks, total territory
checks coming in events that we've done, increases or decreases
within ter y checks, and so every single aspect of
(31:03):
what we do is data driven first, and then we
make changes to our strategy through that data. A comparison
I've always given that I like is it's like, if
you're a coach going into a game and you're just
keeping your fingers crossed that you outscore the other team,
you've failed as a coach.
Speaker 2 (31:21):
Right. Yeah.
Speaker 3 (31:22):
If you're a coach going into a game and you
know what your player's average from a field goal percentage,
you know where they're shooting, how often they're shooting, and
you're designing plays around the strengths that they have and
making sure that you're going to create enough attempts, enough
shots leading to a field goal percentage that's going to
outscore the other team. Plus on defense, doing everything you
need to, you have successfully fulfilled your position as a coach.
(31:45):
And that's our approach. We take at five stars. We
know exactly what's working, what's converting the best, what's not
converting the best, and then we're making decision and coming
up with plays against that.
Speaker 2 (31:53):
Yeah, you know, have you watched Moneyball?
Speaker 3 (31:55):
Oh? I love Moneyball, Love Moneyball.
Speaker 1 (31:57):
Well, so I had a Moneyball moment. My daughter is
a figures. She's seventeen and started when she was thirteen,
so she's like eight years behind most girls that are
in her age group, and she's caught up to them.
You have to go to required, you have to pass
all these skills you can start competing at that level. Well,
so now she's competing with girls her age which and
she's and she's placing and doing well, and she's eight
(32:19):
years behind these girls as far as training, but she's
she's been pushing it hard to get caught up. But
we went to a recent competition and I was like,
she didn't score very well, Like she ended up getting
I think seventh or sixth out of a group eleven,
like just a little below midway point. And I was like,
that's not normal for her. So she and I sat
down with a spreadsheet and I was like, all right,
(32:39):
let's analyze everyone who scored better than you, and worse,
let's figure out how because I don't know, I've never
been a figure skater, you know, like I don't know
how this works. So we kind of took the moneyball approach.
We just like broke down everybody's performances and realized even
if she'd scored perfectly on all the elements in her performance,
she would have not even gotten third place, she would
have maybe gotten fourth.
Speaker 2 (33:00):
Uh. And I was like, well, this is kind of
screwed up.
Speaker 1 (33:03):
And then I so we're going to meet with her
coaches to coach them on the on the analytics, like
she needs this move, this move, this move, and this
move in her routines, and she's even gonna have a
prayer at placing in the top three. And and it
surprises me though it's it's they're really good coaches on
technique right, technique, technique, technique, and yet like it blew
(33:24):
my mind. I realized they had no idea how they're
building routines is impacting these girls' ability to perform and compete.
Speaker 2 (33:30):
That's anyway again money, I guess money.
Speaker 3 (33:32):
Perfect example. Yeah, I mean she went into the competition
with no chance of winning, regardless of how much practice
she put into it, right, and so perfect example of
how you should approach every situation when there's data to
support it, and if you're not tracking the data, you're
doing something severely wrong.
Speaker 1 (33:48):
Yeah, and you mentioned a couple of key mentris I
want to circle back to briefly. You talked about deal momentum,
as some of your guys are measuring. I'm not sure
if that was quite the same phrase you use, but
how are you and you talked about I think like
the time people are spending in sale cycles. Can you
break that down? These are areas that we coach people,
and I coach them on all the time, but it's
surprising to me how few people are thinking in these terms.
(34:11):
Would you mind sharing a bit on that.
Speaker 3 (34:13):
Yeah, So when you take a look at i'd say
an average cell cycle within franchise development, it's going to
be made up of anywhere between eight to nine stages.
And when you look at it, average sales cycle length
in the industry right now is about six months, which
is absolutely atrocious, right, And so what we do it
at five Stars, when we take a look at our
sales cycle, we say how many leads have entered in
and how many have closed, and what was the average
(34:35):
length between those two and are we happy with that number?
So right now, our average cell cycle length is about
fifty eight days. So from the time of a first
conversation with us to the time of them actually signing
agreements with us, it's fifty eight days. We use that
as a benchmark to see how current leads are trending
within the cell cycle to make sure are they actually
becoming an ideal candidate through how quickly they progress. So
(34:57):
now with the individual stages, you can start to track
how quickly do they progress from one stage to the other,
and what are the dropout rates within each one of
those stages. And so we know, on average between those stages,
somebody should be spending about six to ten days, depending
on the stage. If they're past that, something is wrong.
If they're moving quicker, we know they're a hot candidate
for us, which is fantastic. We know on average we're
(35:18):
going to see an attrition rate within each one of
the stages of twenty five to fifty percent. So then
we know if we're losing more than fifty percent of
our people that touch validation, then something is happening within
the validation stage and we need to address it. If
we are losing less than twenty five percent of people
of validation, we know we have very strong validation within
that brand. And so going back to your question, everything
(35:39):
leads to momentum of ensuring not only are enough people
making it through the stages, or are they making it
through quick enough? And are we seeing red flags along
the way.
Speaker 2 (35:47):
Yeah, I love that.
Speaker 1 (35:48):
And then what are you guys doing when you start
to see let's say you saw deals start to stall
at a certain stage and a certain brand.
Speaker 2 (35:54):
What do you do because you.
Speaker 1 (35:55):
Know there's the red flag. Analytics and insights don't always
tell us the answers, It just tell us where look. So,
what do you do when you start to see, let's
say the validation stage, you see a higher drop off
than you expect it, or you see that stage the
long as it's not six to ten days, it's now
becoming ten to fifteen days, right, what do you then
do when you start to see the change in that metric?
Speaker 3 (36:15):
Yeah, yeah, great question. The moment the red flag goes up,
we say, great, let's audit it. Now, let's take a
look at the process and the system we have in
place and where the drop off is. So if we're
using validation, for example, and our validation process is we
send them a list of franchisees and say call whoever
you want, and it's taking people three weeks to make
it through that list because franchises are busy within their
(36:37):
business and it's not not progressing as quickly as we
would like. We now pivot and we say, great, well,
what if we did one on one introductions. We have
that person tell us who they want to speak to,
We reach out to that franchise e. We do a
one on one introduction to make sure that it's going
to go more efficiently and effectively moving forward. So it's
really unique on the situation. But the red flag goes
up and we audit it and then we try new
(36:58):
things within it to see whether or not it increases
the performance or decreases it. And you know, going back
to that coach example, the moment you have a player
who averages forty percent from the three point line and
then we're three games in and they're now at twenty percent,
that's when you take a look at it and say, okay,
is it you're guarded every single time you're shooting. Is
it your technique has changed and we have to work
on that. You audit, come up with the solution going
(37:20):
into the next game, And that's what we do every
time a red flag comes up.
Speaker 2 (37:23):
Yeah, I love that great insights man, And this is
you know, not really on topic.
Speaker 1 (37:27):
With the three things you look for. But when you said,
I was like, we should dig into that because I
know you'd have to. I appreciate that.
Speaker 2 (37:35):
Cool.
Speaker 1 (37:35):
Well, cool, thanks for joining us and all the great insights.
I think maybe if we sum this up the three things, right,
will you're looking when you when you look for an
ideal candidate, you're looking for somebody who's willing to work
their butt off, right, put in the personal sweat equity
to build the opportunity.
Speaker 2 (37:50):
Are they an entrepreneur entrepreneur? Obviously, we're looking for entrepreneurs.
Speaker 1 (37:53):
Somebody's willing to work hard within the process and make
those processes better. And then we've got somebody who's willing
to audit the current systems in place and work within
them to make them better, not work outside of them, right,
to try to build new ones, but to continually improve
the system that they're working in.
Speaker 3 (38:10):
Yeah, fantastic summary. That's exactly it.
Speaker 1 (38:12):
Rock On man, Well, you've been awesome. I look forward
to seeing against Une Colton. Thanks for joining us on
the podcast.
Speaker 3 (38:18):
Yeah, thanks, Dave, I loved it.
Guys, I want to welcome you to another episode of
the Advisory Board podcast where we're bringing experts from the
franchise community to help you learn how to build brands
that last and get you some actionable ideas that can
help you to scale quickly. And I've got Colt Florence
with me today. And guys, if you haven't seen Colt,
big dude looks like a defensive end because he was,
(00:21):
but he's now the senior vice president of Franchise.
Speaker 2 (00:23):
Development of Five Star Franchising. You guys probably know Scott and.
Speaker 1 (00:25):
Chad and Andrew and the gang, but you know it's Mosquito, Shill,
the card, my yard at one hundred, Packouse, Bio one
and got you Covered, five Star, Bath Solutions and probably more.
Speaker 2 (00:34):
You know, like it's a good series of brands.
Speaker 1 (00:37):
So Colt also was an authority brands before that's where
were you and I first met actually.
Speaker 2 (00:43):
Ten years brand of experience.
Speaker 1 (00:45):
He's super into analytics and and we might dive into that,
although it's not in the top of the key topic today,
but if you haven't had a chance to talk to me,
you also find he's an avid cryptocurrency trader and he
when he left college. He actually was ranked top ten
in the nation as a sales professional, which is pretty groovy.
I didn't even know there was a thing to be
(01:06):
ranked in as a sales pro, so surprised there. Tell
us a little bit more about you, tell us a
little bit more about what you're doing a five Star,
and then we'll jump into the topic.
Speaker 3 (01:14):
Yeah, yeah, no, I appreciate that, Dave. Yeah, I mean,
just you saying not too many people knew that there's
that cells let's say cells career or graduate. Probably probably
doesn't look very good for me knowing I was in
the top ten. Maybe there's only ten of us to
begin with, so who knows. But no, Yeah, So, as
you mentioned, senior vice president of franchise development for five
(01:36):
Star Franchising. Been here for almost a year now, is
that authority brands? For four years a vice president of
franchise development ten Honestly, you know, fell into franchising and
franchise development like I'd say most people do, just by chance.
Had a gentleman reach out to me about ten years
ago and said, Hey, I'm starting this franchise development company.
I want you to come work at it. You're a
great salesman and I said, you know what, I don't
(01:59):
know anything about franchising, and he said, well, welcome to
the club. That's what I want. I want somebody who
knows about seals and really doesn't know about franchising. And
lo and behold, that gentleman's name was Ryan Combe. He
became my first mentor within the franchise space. He had
spent a lot of years with Kim Dry and enhance
Wood Renewal, and I fell in love with the industry
and so spent the past really ten years in fran
(02:20):
dev loving what I'm doing, helping people find better trajectories
within their life, whether it be professional or personal, and
have found it extremely fulfilling. So not only happy to
be in the industry, but happy to be here today too.
Speaker 2 (02:32):
Oh thanks man, I appreciate it. Well, guys.
Speaker 1 (02:35):
One of the things that I loved about Colt is
he's got kind of a unique look at what makes
the right franchise owner. Who are the right candidates to
be working with? And so, Colt, maybe what you could do.
Speaker 2 (02:47):
Is walk us through. We're going to talk about three.
Speaker 1 (02:49):
Things that you're looking for, three specific things with franchise candidates.
Do you mind maybe just sharing us a little bit
about those three main categories, and then we'll dig into
each one together today.
Speaker 3 (03:00):
Yeah yeah, great. So when we take a look at
who makes the best franchise owners out there and what
I've seen in my experience with working with the thousands
of franchises we've brought into the systems, you know, the
three different things that I think differentiate candidates pretty quick.
For us, it's going to be one, are they willing
to put in the work and so are they are
they going to be stepping into this knowing gets business
(03:21):
ownership and they're willing to put in the hard work
to be successful. Two is I always have a comparison
between entrepreneurs and entrepreneurs, and a lot of times as
franchise ors, we think we want an entrepreneur to come
in and be a franchise e, when the reality is
we want an entrepreneur somebody that could come in and
follow systems and implement and execute off of those systems
extremely well. And then the last one is based off
(03:43):
of those systems, we want people who will come in,
implement and make them better, can see the flaws within it.
You know, a lot of times, as a franchise or
we tend to think we have the best solutions, and
the reality is sometimes we don't. Our franchises are able
to find better solutions. So we want people that'll implement,
implement systems and make them better. So you know, sum
it up as people that work hard, people that'll follow systems,
(04:04):
and people that'll follow and make systems better than what
they currently are.
Speaker 2 (04:08):
Awesome, you guys, hope you enjoyed the podcast episode today.
And I'm kidding.
Speaker 3 (04:12):
Sorry, you know, no, no, no, You're good.
Speaker 2 (04:14):
You're good. We haven't even scratched the surface there. It's
just the framework, man.
Speaker 1 (04:18):
So I love what you shared, and I'll share just a.
Speaker 2 (04:21):
Personal anecdote about me.
Speaker 1 (04:22):
I'm pretty entrepreneurial, Like when I was five, I started
my first company and didn't you know, register in LLC
at that time, but just went out door to door
knock and try to make money. I find like I'm
not the best. Like I'm a pretty good friend. I
was a franchise franchise e, but I might not be
the best because I'm really not a give me the
systems kind of a guy.
Speaker 2 (04:41):
I'm more like, let me make the systems kind of
a guy.
Speaker 1 (04:44):
And it was there was a little bit of it,
not like mean or anything, but just like you know
with great great I love the guys that ran their antema,
but sometimes we would just find ourselves button heads about
stuff because you know, CEO of Client the other day
was kind of like, yeah, I kind of have this
idea that's probably really good. We should do it, and
it's not my job as the franchise franchise owner, right,
(05:04):
So how did you how did you come up with
this as being kind of a criteria, because I'm guessing
there's a pretty good story or at least a series
of experiences you have where you're like, I see the
difference and now I notice zero and an entrepreneur rather
than entrepreneur. How'd you come up with that differentiation?
Speaker 3 (05:20):
Yeah, you know, it's interesting. So if we were to
go down the list hard worker, entrepreneur and then make
systems better, you know, I think one of the the
difficult things about franchise systems is a lot of people
come in and they think it's guaranteed success because they're
buying into a franchise system. They're looking at it and saying, hey,
because you're providing me a training, support, a successful business model,
(05:41):
this is going to be a very successful venture for me,
and the reality is that couldn't be further from the truth.
Speaker 2 (05:48):
Right.
Speaker 3 (05:48):
So, using your experience, you came in as a hard worker,
but you also had a lot of other ideas and
things you wanted to implement. A lot of people don't
come in with that hard work mentality. They look at
it and say, because I am buying a franchise system,
this is going to be a very successful venture, and
the reality is that doesn't happen. And the comparison I
always like to use that I found best over the
years is, you know, let's say I decide one day
(06:09):
that I want to be extremely fit, and I'm saying,
you know what, I'm going to get in the best
shape of my life. I am going to feel very
confident and attractive within myself, whatever it may be. So
in order to do that, I'm going to hire a
personal trainer who's going to help me along this journey.
And that personal trainer steps in and they say, okay,
based off of our experience, here's all the exercises you
should be doing. Here's how often you should be doing them,
(06:31):
here's the days you're going to be doing them. Here's
the diet you need to follow. Here's why you need
to follow it. Here's the scientific approach behind it. I say, perfect,
that is fantastic, But then guess what. I don't go
to the gym and I don't follow that diet. And
I love that comparison because what we walk each one
of our franchisees through is really saying, hey, even though
(06:51):
we are providing you with the systems, the process, the experience,
the model, if you do not come in and you
do not work hard, you will not notice the progress.
You will not notice the successes that you're gonna have.
And so you know, going back to that list that
that was always the first thing for me as a
lot of people came in and said, because I'm buying
a franchise system, I will be successful. And the reality
(07:13):
is you will only be successful if you implement and
you get your brought off the couch and you go
work really hard. And it's the same as that comparison
with fitness. If you don't follow the diet, if you
don't make it to the gym, doesn't matter how great
of a personal trainer you hire to help you through
that process, you will stay in your current spot. And
so so going back to your question. I know I
steered a little bit away from the entrepreneur and entrepreneur,
(07:34):
but it's unless somebody is willing to put in the
work from day one, everything else doesn't matter within a
franchise system.
Speaker 1 (07:40):
Yeah, well, I see why that's a major screening element
for you too, right, because well, and tell me.
Speaker 2 (07:45):
How you feel about this.
Speaker 1 (07:46):
There's so many brands that are just in love with
the idea of finding like investors. Okay, we want investors,
we owne people with lots of money, you know, Ivy
League backgrounds, lots of money, who don't who are looking
to just come in and have a business operated forma essentially,
But that's very very There are very few cosms have
legitimate absentee or some absentitee ownership opportunities.
Speaker 2 (08:08):
So how do you feel like that?
Speaker 1 (08:10):
But there's so many people advertising that, So how do
you feel like that's changing expectations in the marketplace and
maybe making it harder to find these guys that are
going to get off the couch.
Speaker 3 (08:19):
Yeah, I mean, it's it's extremely difficult. Semi passive or
passive opportunities are all the rage right now. And the
question I always ask is if there really are business
models out there where you could be passive, invested into it,
and they're going to become ultra successful. What's the reason
that Jeff Bezils hasn't bought up every single one of
those opportunities in the United States?
Speaker 2 (08:38):
Right?
Speaker 3 (08:38):
What's the reason he hasn't just thrown his cash at
and said this is going to ten x no matter
what I'm excited or what's the reason Elon hasn't? And
the reality is because most of the time those do
not exist. It requires somebody to come in and put
in the hard work. And so for these investor models
of people just looking to throw cash behind it, what
do you have to realize is if you're not willing
to put in the work, you have to pay somebody
(08:59):
who is. And so if you are trying to take
that model and be passive within the business, you need
to be prepared to give somebody equity within your business
who is then going to be motivated enough to step
in and grow the company for what it needs to be.
Very few times does it work for somebody to say
I'm just going to give somebody a manager a salary
and they're going to grow my business to my expectations
(09:20):
that just doesn't happen. They don't have enough skin in
the game or motivation to do it. And so you know,
are we open to it, Yes, but if you're not
going to be the one that is willing to put
in the work, you need to find somebody who is,
and normally that's going to be through an equity position
and make them motivated enough to grow the company because
it's theirs now as well.
Speaker 1 (09:37):
Yeah, well, there's a psychological side to that you're talking about.
Speaker 2 (09:39):
It is really important.
Speaker 1 (09:41):
Just hiring you know, Joe Schmoe to run my business
or to manage the firm, it's not the same, right,
The level of commitment, the level of engagement, even the
skill level oftentimes is very different than the owner.
Speaker 2 (09:52):
So have you seen that work well in the past.
Speaker 3 (09:56):
Yeah, I'd say there's two different scenarios. You can look
at the fron day one and from like a year
three aspect, right, And there was a legend in the
space Ron Bender, who I always love to quote things
that he did within the cell cycle and one phrase
he used was we do earned absentee. If you want
to step away from the business, you want to hire
a manager, you earn it your cash flow and you
(10:18):
build your business and able to do it. And the
reason I say that is because normally what works best
is year three, when the business is up and running,
it's operational, it's cash flow positive. At that point you
can bring in a manager because you've made it over
most of the harder hurdles the humps in the business.
From day one. It's always more difficult because you're now
(10:38):
stepping into the difficult process of building a business from
eighteen to twenty four months, and so compensating somebody correctly
to take on all those difficulties within the business has
always been a hard balance, not only from how much
equity do you want to give them, but how much
of the business are you willing to give away? And
so if I'm speaking honestly, it's always the three year
ones who step out that make it work a lot
(11:00):
better because they then built the business themselves and can
step away versus somebody from day one who said I'm
going to bring in a manager. It's just it's a
hard balance to find the motivation through equity for somebody
to make it over those massive hurdles and shortcomings for
the first eighteen to twenty four months of the business.
Speaker 1 (11:16):
Yeah, spot on, dude, spot on, And it aligns well
with my personal experience as a multi unit owner.
Speaker 2 (11:22):
But also just it it's the growth rate.
Speaker 1 (11:26):
Isn't the same. It's just not the same, and it's
not as or one. You want people to be highly successful,
I should be. That's rule the rule number one of franchising,
right is make sure your franchises are wildly successful. And
then everything else happens properly after that, and your validations
get better, right, like the you're producing more royalty revenue,
which means the franchise or has more to reinvest back
(11:47):
into the business to grow it and support it.
Speaker 2 (11:48):
And like everything works right if you do that.
Speaker 1 (11:51):
But if you get guys, guys that think they can
come in without the f yeah, without getting off the couch,
there's a big hurdle still even with the franchise system
a business rolling and yeah, and I think.
Speaker 2 (12:03):
That's that's the faux pat. I still see it all
the time.
Speaker 1 (12:05):
I won't I won't highlight anyone a certain segment of
franchise and it talks about that all the time, and
and boy as it caused some ripples, but I like
this earned absentee ownership and man Ron Ron was awesome,
so you can always quote him.
Speaker 3 (12:19):
He was, yeah, yeah, it's I mean, it's the best
way to look at it is if you want to
step away from the business, earn it through net profitability
and cash flow, right, and then you could justify it.
But nobody's going to grow your business or be as
motivated to do it as you. And so put in
the work, put in the effort, the sweat those first
couple of years, and get to the point to where
you can hire people to take responsibilities off of your plate.
Speaker 1 (12:39):
Yeah, totally agree, totally agree, And it is done through
cash flow or equity.
Speaker 2 (12:43):
Right. So equity structure is good.
Speaker 1 (12:45):
Too, but it's you give someone two percent equity, there's
no incentive. They're not going to work there, but they're right, yeah,
they're gonna walk away from that and go get in
a higher paying job before they're willing to spend weekends
and nights working for you.
Speaker 2 (12:56):
Correct.
Speaker 1 (12:57):
So so slide into the back to the entrepreneur entreprene
So first they've got to be willing to work their
butts off check.
Speaker 2 (13:03):
Totally agree with that, and then then come back to.
Speaker 1 (13:06):
This entrepreneur versus entrepreneur like where help us differentiate between
the two and then then explain like why is that
such a big catalyst or like a big different decision
treat moment for you guys, are as you're deciding who's
a good owner.
Speaker 3 (13:20):
Yeah, So I heard this years ago on a podcast,
and it was the difference between an entrepreneur entrepreneur an
entrepreneurs the person who comes up with the big ideas,
the systems, they start the business, they get it up
and running, and entrepreneurs the person who steps into the
business at that point and the business couldn't survive or
run without them being in place and actually implementing and
(13:40):
running those systems and making them substantially better. And so
I think one of the fallacies within UH franchising and
franchise development has been we want entrepreneurs, we want entrepreneurs,
and the reality is, well, why why do you want
somebody who is going to come in and say I
want to do everything my way from day one, I'm
the big pay guy, I have all the right ideas.
(14:02):
You actually want the opposite. You want somebody who's going
to come in and say, I'm going to follow every
single system you put into place. I'm going to read
every single manual, and I'm going to be dependent on
you guys and the support that you give me to
go out and run my business. I'm going to depend
on the advice that you're giving me. And so what
we always look for isn't necessarily somebody who's going to
be the big picture I want to own my own business.
(14:23):
It's going to be the person who comes in and
actually says, hey, I've been very successful within my job.
I'm very successful because I've followed all the systems, the training,
I've become an expert within the space. I've actually made
my company substantially better through the impact that I'm making
on it. I'm kind of nervous to leave that job
to start my own business. That's like the first trigger
for us of saying, yes, you will be a perfect
(14:45):
franchise e because you've been doing it your entire career already.
You've been taking processes and systems making them better growing companies.
That's exactly what franchise ownership is. And so we actually
have taken an opposite approach of those are the people
we want who will come in on day one, listen
to the training, follow the procedures we have in place,
use the systems and take every single one of those
(15:07):
and grow a company and make it better based off
of it.
Speaker 2 (15:10):
Yeah, I love that. I love that.
Speaker 1 (15:12):
How do you find them, though, Like, how do you
determine if somebody is one or the other? Like it
hows to get a couple of cues you're listening for.
Speaker 3 (15:20):
Yeah, yeah, it's a great question. So normally you find
them because somebody is fed up of no longer having
the correct balance from their professional life to their personal life.
And that happens all the time. You see people who
are in C suites or senior positions within their company
and they're saying, yeah, I'm making great money. I love
those benefits behind it, But I've now entered into a
(15:40):
stage into my life where I'm just not able to
spend time with my kids or my spouse, and so
I'm making the risky mover, or I'm at least considering
the risky move to leave all the security and comfort
for the things that I feel are more important right now,
which is going to be my family and the balance
that I'm experiencing, or even future financial potential. So those
(16:00):
are the first key indicators we hear. Is like great,
So you've actually become very successful within your career. You've
been able to implement those systems and bring a lot
of value to your company. There's no reason you should
be able to do it. What makes us nervous are
the people that come in from day one and they say, yeah, actually,
I started a landscaping company. It's doing about three hundred
thousand dollars a year. I've been in his for twelve years.
(16:23):
Because now we're looking at that saying, okay, so you
started a business, you haven't been successful within that business.
You're bouncing all over the place. This is the other
you know, the fifth time you've considered a diversification within
the past four years, even though your business you're in
right now is not achieving high levels of profitability. Those
are the conversations that actually scare us most of the time,
(16:43):
and so you can find out pretty quick within those
those conversations that we're having whether or not somebody's coming
through from a secure position but they want more in life,
versus somebody who is just used to chaos and they've
never been able to get out of it.
Speaker 2 (16:57):
Yeah, no, no, no, that's yeah.
Speaker 1 (16:59):
He might be working butt off too, right, So we
checked box number one and yeah it's not your guy.
Speaker 2 (17:04):
Also a little ADHD can't focus that one. Not the best,
not the best.
Speaker 3 (17:10):
Yeah, that's exactly it.
Speaker 1 (17:11):
Okay, perfect, Now, now tell me this I mean, and
if you're comfortable sharing obviously no names or even brands,
but have you learned this lesson the hard way before?
Like did you did you go down the road? We're like, eh,
maybe I'll make an exception for Bob, And then you did,
and then you saw the outcome that was not what
you're hoping for.
Speaker 3 (17:28):
Oh my gosh, so many times, so many times. And
that you know, early in my career is actually the opposite.
Every time i'd get on a call with somebody who
was very entrepreneurial minded they're saying those things, I would
get very excited about it because I'm looking at it's like, yes,
this is somebody who's taken destiny into.
Speaker 2 (17:44):
Their own hands.
Speaker 3 (17:45):
They're going to be able to kill it. And what
I've seen time and time again is actually those guys
struggled the most within the system as they stepped into
it because they were less dependent on the franchise or
to help them within the business. They didn't like to
follow the systems because they felt like they had better
options or or a better idea than the systems that
they had in place. And so it was time and
time again where I slowly realized, like, actually, know, the
(18:06):
people who were coming in and are a bit more
tentative on the calls, a bit more reserved, maybe a
bit more nervous, have more fears, are actually the ones
that make the better franchisees, even though within the cell
cycle we don't realize it. And so we had to
switch our train of thought of actually saying, no, let's
spend more time with people who are more nervous, even
(18:26):
though going into business ownership we look at it a
lot of times and say, yeah, nervous, you shouldn't be.
You got to dive into this head first. It's actually
the people who are nervous and more dependent on systems
and be successful that we look for. So, going back
to your question, yes, time and time again, I actually
saw the people I was excited about have more difficulties
within the business, and then the ones who are nervous
(18:47):
that went into it actually take off and become rookies
of the year, franchise e of the year. And that's
when I started drawing the correlations between it that smart.
Speaker 2 (18:55):
Yeah, and you wouldn't think of it. Almost seems counterintuitive,
doesn't it.
Speaker 3 (18:58):
Yep, yeah, hundred percent, that's exactly it. And and so
after you do it so many times and there's a
strong enough correlation, you either learn from it or you
just continue in ignorance. And I said, I'll learn from it.
Speaker 2 (19:10):
Good choice the option A please?
Speaker 1 (19:13):
Well that it almost seems like it's a bit of
a contradiction though this and your third point, which is, Okay,
we want someone who's an entrepreneur, somebody wants to implement
and ferociously follow the program, right and then but the
third thing, you're looking for someone who's willing to kind
of audit and offer improvement recommendations to the system, Which
almost feels like we're swinging towards the entrepreneurial side.
Speaker 2 (19:35):
But it's not the same thing.
Speaker 1 (19:36):
So maybe can you help us differentiate between the person
who's trying to implement and change everything entrepreneur versus the
guy that's just willing to audit and offer up recommendations
through the process. There's something really famentally fundamentally different between
the two.
Speaker 3 (19:50):
Yeah, have you have you seen the movie the founder
about the gentleman that that founded the McDonald's franchise system.
Speaker 2 (19:57):
I have not watched it. No, it is it good.
Speaker 3 (19:58):
Oh my gosh, it is so good because it summarizes
the differences perfectly. So what ends up happening is this
gentleman goes to McDonald's one day, realizes they are doing
things in a revolutionary manner, wants to franchise. It, begins
to franchise, and the first couple of people he goes to,
or his buddies, who are extremely wealthy they own other businesses,
and he says, buy this. I promise you it's going
(20:20):
to make you so much money. So its buddies buy it,
and the next thing you know, he goes to one
of their locations a couple months later and they're offering
fried chicken within the location and he's like, this isn't McDonald's,
this isn't the system in process. Why are you doing this?
Calls his buddy up, and his buddy said, well, my
customers were asking about fried chicken, so I thought that'd
be the best way of going about it. And he says, no,
(20:40):
that is not the McDonald's way, that's not the process
and systems we have in place, well vice versa. He
now starts to transition more towards people who are not
extremely wealthy, didn't come from vast business experience, and those
franchises start doing extremely well. And one night he's going
out to dinner with one of those franchisees with him
and his wife, and they say, hey, we're running into
a lot of issues with our ice cream machine or machine,
(21:03):
and our milkshake machine breaking down all the time, and
our customers are coming in and they're requesting it, and
so we actually found a much better solution. You take this,
you mix it in with milk, you stir it up.
It actually makes a milkshake substantially quicker than what the
machines are offering, and it's a lot cheaper for us
as a franchise e. They give it to him, he trys,
He says, this is amazing. So now they start implementing
(21:23):
that into every single McDonald's franchise location, because not only
is it better than the current one they have in place,
but also it's saving franchises a lot of money. And
so that's the two big comparisons I always like to
bring up. As you have one franchise that said, we
love the system that's in place, we found a better
way to do it, And you have another franchise e
that's saying, I'm not even following the system, I just
think this will be so much better. And so that's
(21:46):
what we always look for with our candidates coming in in.
Our franchisees are the ones that say, we know that
the business model is proven, we know that the process
is in place work. We want to make them one
percent better. Though, what can we do is it? Can
we increase our profitability, can we increase the amount of
usage we're getting? Whatever it is we want to make
the system one percent better, versus coming in and saying, yeah,
(22:07):
I'm just going to scrap everything you're doing and implement
something completely different because now you're just going back into entrepreneurship.
And so hopefully that example kind of summarizes the differences
between the two. It's always been the best one that
I've seen as to what we look for with our
franchises and the feedback they give as to what is
healthy versus not healthy.
Speaker 1 (22:24):
Yeah, no, I really appreciate it. That The hard part
must be, like how do you find people like this?
Speaker 2 (22:29):
Right?
Speaker 1 (22:29):
Like, how do you determine that somebody's really entrepreneurial, but
they're also willing to invest time and resources into being
created within.
Speaker 2 (22:37):
The model versus outside of the model.
Speaker 3 (22:40):
Yeah, yeah, I think their track record speaks for themselves.
Speaker 2 (22:43):
Right.
Speaker 3 (22:43):
So when you get somebody who is in their mid
thirties forties, they're very high up within their current company.
You don't get to a position like that by not
spending your entire career of taking current systems and processes
and making them better, or taking current employees and making
them better. And so when we speak with people who
are in those type of positions, they actually are coming
(23:04):
with a track record of doing this for the past
twenty years. They've just been doing it for the man
rather than themselves. And so we actually take a look
at at people who have been in in a career
for the past twenty years and are in a high
position as a positive because they have a track record
of taking systems and processes and making it better for
their existing company. Now the question is can they do
(23:26):
it within the franchise system. So that's always a key
indicator for us is saying you've been so successful making
other people a lot of money and making those systems
and processes better were excited for you to do it
for yourself.
Speaker 2 (23:37):
Yeah? Amen, and how do you so?
Speaker 1 (23:41):
I'm not sure if you ever read or heard of
the Jersey mic study they did a long time ago
where they were trying to figure out, like, who are
the most successful franchise owners in our system?
Speaker 2 (23:49):
And initially I think the thesis was.
Speaker 1 (23:51):
They thought that well capitalized, well educated people were going
to be the best. Have you seen the results of
this study?
Speaker 3 (23:57):
I don't think I have no.
Speaker 2 (23:58):
I think it's Gary Hayeshus who shared it with me.
Speaker 1 (24:01):
But but in a quick nutshell, they found the people
that were the most successful were actually the people most
passionate about the brand. And Foo Food's different right than
home services. No One's like I'm passionate about bio one. Well,
you have to be pretty morbid to be passionate about
that going in. But it's an incredible business opportunity to
serve so many people, right. But I don't think in
(24:22):
the home services space people are like super passionate about
window coverings, I got you covered, or you know, like
or bathroom or modeling, but they get they really are
passionate about becoming an entrepreneur So I don't know if
it's the same right in the home service space, But
how do you guys determine passion? Because passion was the
one thing when Jersey Mikes people like, I freaking love
Jersey Mikes. I want to own one of these things
(24:42):
that person outperformed the NBA guy quite significantly in their
studying numbers.
Speaker 2 (24:47):
So, but how can you.
Speaker 1 (24:49):
Measure passion if you guys found a way to do
that where you kind of is that a like the
hidden fourth factor that you guys look for too, or
how do you equate that.
Speaker 2 (24:56):
Into the way you guys are looking for candidates.
Speaker 3 (24:59):
Yeah, it's a great question, and you know, within the
home service space, it is rare when you get somebody
who is passionate about what they look at. You know,
a lot of times candidates come to us and they're like, hey,
I just had a friend talk to me about it.
I figured i'd look into it, but I'm not promising
anything special versus like a gym where they're like a
fitness not and they cannot wait to open and run
(25:19):
a gym on a daily basis, or a restaurant. And
so what we always look for is how passionate are
you towards the goals you're trying to achieve. What is
that goal?
Speaker 2 (25:28):
Right?
Speaker 3 (25:28):
Is it? Are you looking for more balance with the family?
Is it financial goals? What is the goal where you
want to be twenty four months from now, five years
from now, ten years from now. Because if those goals
are in place and they feel a lot of passion
for them, they're going to want to find the quickest
vehicle to get to those goals. And so whether it
be through blinds, whether it be through client, you know,
cleaning up crime scenes, whatever it may be, if it's
(25:52):
the quickest vehicle or to get them to those goals
that they feel so passionate about, they will quickly become
passionate about the vehicle that they are in. And that's
always what we take a look at, is what are
your goals, how much passion do you feel towards them?
And then can we reverse engineer back to show you
why this vehicle or this path is going to be
the quickest. And then people become quickly passionate about putting
blinds on somebody's window when they realize it's going to
(26:14):
get them to where they want to be three years
from now.
Speaker 2 (26:17):
One hundred percent.
Speaker 1 (26:17):
And the crazy thing is people savvy franchise buyers, they
get really animated and passionate about the p and ls
in your space, right, because p and ls for restaurants
are not sexy at all. I mean major investment, capital
lease agreements that are long term, like major overhead liability and
then sometimes a lot less cash flow than even the homes,
(26:40):
like putting blinds on people's windows.
Speaker 2 (26:41):
Right, it's crazy. I don't know.
Speaker 1 (26:44):
We can't talk about that on here right disclosures, but man,
I can say from a guy who's not disclosing that
I've looked at my wife and I like like fifteen
or so brands before we decided to buy the one
we did, and what hooked us was the p and L.
Like my wife was the one that pointed that out,
and I'm like the business nerd, you know, push those up.
But she was the one that was like, you know what,
(27:05):
Like we I had a client who was like, i'll
give you three locations.
Speaker 2 (27:08):
I'll give you three territories.
Speaker 1 (27:09):
You don't have to pay me a fee because I
want you to operate one of my things.
Speaker 2 (27:13):
I was like, that's cool, hey.
Speaker 1 (27:14):
Hunt, and she's like, well, where's this item nineteen, and
I was like, well, he doesn't have one, yeah, and
we ain't buying that one. So like I think that
people we're like when they've got a goal, like they
know where they want to go and they're passionate about
it doesn't really matter what.
Speaker 2 (27:29):
The vehicle is at the end of the day, if
it's if it's going to get them where.
Speaker 3 (27:32):
They want to be amen to that. Yeah, And that's
the thing is, And what a lot of people don't
realize is when you get into business ownership, you're going
to feel passion no matter what. You get passionate about
the customers that you're servicing, you get passionate about the
employees that you hire and the impact you're making on
their life. And a lot of people don't realize that.
But yes, at the end of the day, the financials
behind the business should actually be the driving factor behind
(27:55):
majority of the decisions that you make, because why are
you going into business ownership if you're not going to
be propable and achieving goals based off of it. Home
services provide that I'd say better than most from what
I've seen.
Speaker 1 (28:06):
Oh yeah, I mean, especially when you look at cash
in to cash out and the ramp to cash. It's
hard to beat, honestly, it is. Ye, when you get
the right brands behind them. Five Star has a pretty
good track record of building brands that can generate good
revenue and good support systems.
Speaker 2 (28:22):
So they've been doing that for what twenty years or something.
Speaker 3 (28:24):
Now, Yeah, yeah, they're they're they're really good at what
they do. Yeah, they are, and.
Speaker 2 (28:28):
They give a day. Brand presidents I know.
Speaker 1 (28:30):
I think almost all your brand presidents solid humans, right,
so they are. Now that's from a buyer side, That's
another thing you got to look at, and I'm sure
reason why you were excited to come work with this
group is what a good leadership team like, people you
can trust to take care of the people that are
going to be signing up to put life and finances
on the line to then start their own business. Like
it's it's easier to make that path open up for
(28:53):
people when you're comfortable with the people taking care of them.
Speaker 3 (28:56):
It is, And now it's it's actually funny you say
that our core focus five Star franchising is empowering our
franchise partner success. And to your point, that is one
of the main reasons that I aligned with them.
Speaker 1 (29:05):
Was.
Speaker 3 (29:05):
I was taking a look at it saying knowing you
guys are so focused on franchise e success is important,
especially where I'm the one out there putting my name
on the line, my team's name on the line of saying, guys,
trust us, this is a great brand. And so yes,
our brand presidents, our leadership team, all of us truly
believe and bleed that on a daily basis, we do
everything we can to support our franchisees.
Speaker 2 (29:28):
Yeah. No, and I see it. I see it.
Speaker 1 (29:29):
I've been to one of your conferences before. I know
a bunch of the people there as well to own
your brand. So yeah, you guys do well. You know,
tell me, we've got a couple of minutes. You mentioned
as in our preamble before we started recording, that you're
really into analytics and frandev.
Speaker 2 (29:43):
It's funny you say that because a lot of the
folks I talk to they're not, like, really analytics driven.
Speaker 1 (29:47):
So I'm curious, like, maybe what are a couple of nuggets,
Like what are the things that you're doing, is you're
leading these franchise development teams now that you know lead
to success.
Speaker 3 (29:57):
Yeah, it's a great question. So I think one of
the worst things anybody, especially in franchise development, could do,
is make a decision without the data to provide it
or to support it. And so you know, it's it's
so often we're trying to make adjustments to our cell
cycle and the content we're sending out and the approach
that we're taking, but we have no data on the
back end to see whether or not we're actually focusing
(30:19):
in the right areas. And so every every decision made
within franchise development should be an educated decision based off
of what the numbers are telling us. And when when
you actually take a look at sales, it's a very
simple mathematical equation and if it's not adding up, you
see where you're missing within that equation. And so what
we've done is we've we go really in depth with
(30:42):
tracking cell cycle performance, attrition rate, within the different stages
within our cell cycle where candidates are dropping off lead source,
total lead source spend momentum increases within that lead source
spend cost per lead, especially with broker networks, total territory
checks coming in events that we've done, increases or decreases
within ter y checks, and so every single aspect of
(31:03):
what we do is data driven first, and then we
make changes to our strategy through that data. A comparison
I've always given that I like is it's like, if
you're a coach going into a game and you're just
keeping your fingers crossed that you outscore the other team,
you've failed as a coach.
Speaker 2 (31:21):
Right. Yeah.
Speaker 3 (31:22):
If you're a coach going into a game and you
know what your player's average from a field goal percentage,
you know where they're shooting, how often they're shooting, and
you're designing plays around the strengths that they have and
making sure that you're going to create enough attempts, enough
shots leading to a field goal percentage that's going to
outscore the other team. Plus on defense, doing everything you
need to, you have successfully fulfilled your position as a coach.
(31:45):
And that's our approach. We take at five stars. We
know exactly what's working, what's converting the best, what's not
converting the best, and then we're making decision and coming
up with plays against that.
Speaker 2 (31:53):
Yeah, you know, have you watched Moneyball?
Speaker 3 (31:55):
Oh? I love Moneyball, Love Moneyball.
Speaker 1 (31:57):
Well, so I had a Moneyball moment. My daughter is
a figures. She's seventeen and started when she was thirteen,
so she's like eight years behind most girls that are
in her age group, and she's caught up to them.
You have to go to required, you have to pass
all these skills you can start competing at that level. Well,
so now she's competing with girls her age which and
she's and she's placing and doing well, and she's eight
(32:19):
years behind these girls as far as training, but she's
she's been pushing it hard to get caught up. But
we went to a recent competition and I was like,
she didn't score very well, Like she ended up getting
I think seventh or sixth out of a group eleven,
like just a little below midway point. And I was like,
that's not normal for her. So she and I sat
down with a spreadsheet and I was like, all right,
(32:39):
let's analyze everyone who scored better than you, and worse,
let's figure out how because I don't know, I've never
been a figure skater, you know, like I don't know
how this works. So we kind of took the moneyball approach.
We just like broke down everybody's performances and realized even
if she'd scored perfectly on all the elements in her performance,
she would have not even gotten third place, she would
have maybe gotten fourth.
Speaker 2 (33:00):
Uh. And I was like, well, this is kind of
screwed up.
Speaker 1 (33:03):
And then I so we're going to meet with her
coaches to coach them on the on the analytics, like
she needs this move, this move, this move, and this
move in her routines, and she's even gonna have a
prayer at placing in the top three. And and it
surprises me though it's it's they're really good coaches on
technique right, technique, technique, technique, and yet like it blew
(33:24):
my mind. I realized they had no idea how they're
building routines is impacting these girls' ability to perform and compete.
Speaker 2 (33:30):
That's anyway again money, I guess money.
Speaker 3 (33:32):
Perfect example. Yeah, I mean she went into the competition
with no chance of winning, regardless of how much practice
she put into it, right, and so perfect example of
how you should approach every situation when there's data to
support it, and if you're not tracking the data, you're
doing something severely wrong.
Speaker 1 (33:48):
Yeah, and you mentioned a couple of key mentris I
want to circle back to briefly. You talked about deal momentum,
as some of your guys are measuring. I'm not sure
if that was quite the same phrase you use, but
how are you and you talked about I think like
the time people are spending in sale cycles. Can you
break that down? These are areas that we coach people,
and I coach them on all the time, but it's
surprising to me how few people are thinking in these terms.
(34:11):
Would you mind sharing a bit on that.
Speaker 3 (34:13):
Yeah, So when you take a look at i'd say
an average cell cycle within franchise development, it's going to
be made up of anywhere between eight to nine stages.
And when you look at it, average sales cycle length
in the industry right now is about six months, which
is absolutely atrocious, right, And so what we do it
at five Stars, when we take a look at our
sales cycle, we say how many leads have entered in
and how many have closed, and what was the average
(34:35):
length between those two and are we happy with that number?
So right now, our average cell cycle length is about
fifty eight days. So from the time of a first
conversation with us to the time of them actually signing
agreements with us, it's fifty eight days. We use that
as a benchmark to see how current leads are trending
within the cell cycle to make sure are they actually
becoming an ideal candidate through how quickly they progress. So
(34:57):
now with the individual stages, you can start to track
how quickly do they progress from one stage to the other,
and what are the dropout rates within each one of
those stages. And so we know, on average between those stages,
somebody should be spending about six to ten days, depending
on the stage. If they're past that, something is wrong.
If they're moving quicker, we know they're a hot candidate
for us, which is fantastic. We know on average we're
(35:18):
going to see an attrition rate within each one of
the stages of twenty five to fifty percent. So then
we know if we're losing more than fifty percent of
our people that touch validation, then something is happening within
the validation stage and we need to address it. If
we are losing less than twenty five percent of people
of validation, we know we have very strong validation within
that brand. And so going back to your question, everything
(35:39):
leads to momentum of ensuring not only are enough people
making it through the stages, or are they making it
through quick enough? And are we seeing red flags along
the way.
Speaker 2 (35:47):
Yeah, I love that.
Speaker 1 (35:48):
And then what are you guys doing when you start
to see let's say you saw deals start to stall
at a certain stage and a certain brand.
Speaker 2 (35:54):
What do you do because you.
Speaker 1 (35:55):
Know there's the red flag. Analytics and insights don't always
tell us the answers, It just tell us where look. So,
what do you do when you start to see, let's
say the validation stage, you see a higher drop off
than you expect it, or you see that stage the
long as it's not six to ten days, it's now
becoming ten to fifteen days, right, what do you then
do when you start to see the change in that metric?
Speaker 3 (36:15):
Yeah, yeah, great question. The moment the red flag goes up,
we say, great, let's audit it. Now, let's take a
look at the process and the system we have in
place and where the drop off is. So if we're
using validation, for example, and our validation process is we
send them a list of franchisees and say call whoever
you want, and it's taking people three weeks to make
it through that list because franchises are busy within their
(36:37):
business and it's not not progressing as quickly as we
would like. We now pivot and we say, great, well,
what if we did one on one introductions. We have
that person tell us who they want to speak to,
We reach out to that franchise e. We do a
one on one introduction to make sure that it's going
to go more efficiently and effectively moving forward. So it's
really unique on the situation. But the red flag goes
up and we audit it and then we try new
(36:58):
things within it to see whether or not it increases
the performance or decreases it. And you know, going back
to that coach example, the moment you have a player
who averages forty percent from the three point line and
then we're three games in and they're now at twenty percent,
that's when you take a look at it and say, okay,
is it you're guarded every single time you're shooting. Is
it your technique has changed and we have to work
on that. You audit, come up with the solution going
(37:20):
into the next game, And that's what we do every
time a red flag comes up.
Speaker 2 (37:23):
Yeah, I love that great insights man, And this is
you know, not really on topic.
Speaker 1 (37:27):
With the three things you look for. But when you said,
I was like, we should dig into that because I
know you'd have to. I appreciate that.
Speaker 2 (37:35):
Cool.
Speaker 1 (37:35):
Well, cool, thanks for joining us and all the great insights.
I think maybe if we sum this up the three things, right,
will you're looking when you when you look for an
ideal candidate, you're looking for somebody who's willing to work
their butt off, right, put in the personal sweat equity
to build the opportunity.
Speaker 2 (37:50):
Are they an entrepreneur entrepreneur? Obviously, we're looking for entrepreneurs.
Speaker 1 (37:53):
Somebody's willing to work hard within the process and make
those processes better. And then we've got somebody who's willing
to audit the current systems in place and work within
them to make them better, not work outside of them, right,
to try to build new ones, but to continually improve
the system that they're working in.
Speaker 3 (38:10):
Yeah, fantastic summary. That's exactly it.
Speaker 1 (38:12):
Rock On man, Well, you've been awesome. I look forward
to seeing against Une Colton. Thanks for joining us on
the podcast.
Speaker 3 (38:18):
Yeah, thanks, Dave, I loved it.
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