¶ Entrepreneurship as an Endless Ball of Problems
Don't look at legal as just legal . Look at it as that is your abiding charter between you and a client , between you and a vendor , between you and a franchisee , whatever it might be . But when you really write those things in like I've grown , I've matured enough now in my career to look at those binding agreements as more than just an agreement .
And it's not about clearing up conflict as much as it is . I understand the expectation of you . You understand the expectation of me .
Builds understanding it does . Hey everybody , this is another episode of that Big Talk About Small Business Business . Yeah , we're here today because our guest is . This is another episode of that Big Talk about small business . Yeah , we're here today because our guest didn't show up .
I specifically asked him not to say that . And there you go , Right out of the gate , right out of the gate .
It's a fact . It is a fact . It's fine , it's okay , yeah it's okay , Everything's going to be okay .
We'll never forgive him but it's fine , everything's fine , it is it's okay .
yeah , it's okay , everything's gonna be , okay , we'll never forgive him but it's fine , everything's fine anyway . Um , so , no , it's great to be here with another beautiful day . It is gorgeous . Um , we're in the studio . We always enjoy talking about business . We never run out of stuff to talk about .
You can't because it Because business is nothing but a freaking massive ball of problems .
You have said that so many times and you know how many times I've quoted you on it , because it is true , so true . It's endless , and there's always something you can work on that's true or that needs to be worked on .
There's always a ball being dropped somewhere . Oh my gosh , it's so true . And you know , I think the thing is is like you have to be like . My wife , for example , is one of these people . It's very structured , she's post-military right .
She's in the medical field where you have to do things a certain way .
Yeah , she's like I could never survive with what you do because it's and like she can close the day , go home and then she has , you know , a separation between work and that . Yeah , we don't have that . No , never .
And you never will .
No , because we're never done . No , that's right . It's like you try to get through the day and get as much done as you can , and then everything else just has to wait a little bit .
It's just the reality of it . I mean you could say I'm done , but you're not . No , Okay , and then your competitor out there is not going to be done okay .
Yeah , always have somebody coming after you , exactly . It's a constant threat .
It's just a big problem and threat in life it's it , I mean it , it , we're not easy to be married to , it's not easy to sustain a relationship when that's your situation , because it's very difficult to focus on the other problem , even though you should . Yeah , you know , but the business just has to take priority so many times .
It really does if you want to survive and thrive . So today we were talking a little bit about what we were supposed to be talking about today , which is franchises and franchising , and I know that's a topic that we have not discussed yet on big talk about small business , and it's got
¶ Three Gateways to Entrepreneurship
a lot . It's pretty complex , it is . It is complex . It is one of the gateways to entrepreneurship . Yeah , of the three , one is start a business . Second is buy a business . Third is buy a franchise . Yes , yeah , and so it's . It's definitely a way for people to get into business I see .
So there's and on franchising , there's two parts . Right , you have a franchisor or a franchisee , and I see being becoming a franchisee , buying into a franchise and owning a territory , is a great way for somebody that's been in the professional career to get into entrepreneurship .
Yes , because the franchisor has produced all the processes , all the sales material , the marketing material , all these things , and has kind of built a plan .
It's a business plan in a can it is business plan in a can yeah , but I mean you say the franchisor has done that , if it's a good franchisor .
That is right , right , that's , that's the thing is , and , and I think that but what's also makes it really great for the professional manager , right , and let's call them that if they've been in a career for the perfect description it really is .
And so they can take all that learning and the way that they do business , which has a lot of benefits to it , and apply that to franchising , because they can go investigate these franchisors . They should be very astute to researching , analyzing , looking at those documents , looking at the terms and conditions , the franchising agreement , I mean .
And there's big trade shows that go on for folks just like that that are ready to you know they've had a career with a major company . Go to one of these shows and you get to meet all these franchisors and you interview them like you look at that right and try to choose your best , one that you feel is a good bet in the market .
Yeah , I think that's a really good point for people who have not owned a business and maybe not worked in a small business . It's a great way to get into business for yourself . Yep , and you are a business owner when you're a franchisee ?
Yeah , 100% , you just have the license to use all the products and processes and brand and all those other things and it's a good stepping stone too , because I think that what maybe a professional manager may not , you know , it's like anything .
If you buy a boat , like it's exciting , you want a boat , you can see yourself using the boat , but then you get the boat and then you realize there's a lot to do to maintain that boat . Now , where do I store it ? How do I maintain ? You know , winterize it . Polish , you know all this crap .
It's funny you say that I was just thinking about that with RVs today . Yeah , it's the same exact scenario .
It's nothing but a big pain in the rear , Just like the first . There's a lot of freaking problems right there's a lot of problems .
You've got a lot of learning to do , for sure .
But if you lease the boat or you lease the RV , you can enjoy it a little bit and somebody else is taking care of it . It's kind of like what franchising is a little bit like in some sense . Right , you can get into the franchise , the franchisor has all these processes and you just kind of start running the business .
They've got training . Yes , many big franchisors have people that will help turn around a franchisee's business that's not doing well , that's right . That is a part of the service that they provide . They don't want anybody failing out there .
No , no , it's bad on the franchisor's plan , their business model , yeah .
I had a friend of mine whose brother that's all he did . He worked for several big franchise franchisors . I think he started out with Burger Chef and then he was working for what's the seafood one that's a big Captain D's . It was not Captain D's , but it was the other one that's also teamed up with Taco Bell . Oh yeah , long John Silver , long John Silver .
So he was doing Long John Silver and then I think he was doing Taco Bell's . But anyway , he would just go in and in six or eight weeks he would completely turn around the business for the franchisee . That's great , and so it was kind of cool and he got paid a lot of money for that . But what a great . You know how many businesses do we have ?
Somebody we can call up in six or eight weeks ? No , even if we have to pay them whatever , they're going to come in and just totally turn our business around .
No , no , no , it doesn't exist .
So there's a lot of tools and help . Yeah , a good franchisor provides to the franchisees .
Well , you know stuff as simple as like what's your accounting system ? Yes , your bookkeeping system . What are the classifications within that bookkeeping system so you can read your books , right ?
If you're starting up your own business , that's the crap that you've got to figure out on your own , because I'll tell you who's not going to figure it out for you are accountants . No , that's so true , they are not going to do that .
You know it's funny you bring that up because I just talked about that in class earlier this week with my students . One of the mistakes I think small business owners make personally this is my view . You may disagree with me , but they give up the accounting too fast .
The benefit of controlling that until you hit like a million or two million dollars or whatever , is you learn where all your money's going . That's right . You just don't have the same sensitivity when somebody else does your books for you . Yep , I know that's a diversion from the topic at hand .
Well , but at the same time I'll be the first to admit like I've neglected that yeah , a lot of people do you know , and it's I've even neglected it .
It's so plaguing to me Because here's the thing what I always have experienced is that even though I have people that might be really great at bookkeeping , great at QuickBooks or any software , or you've got CPAs , accountants they always end up coming to me for a question . And because I'm out of it , I'm just expecting people . It's intuitive .
They should know that this gets classified as that this goes to this client . This is needs to be baked into the cost of goods . For this . It's like why doesn't anybody just get it ? You know , and like I'm they don't understand your business like you understand it right .
The bottom line it is , and so me not being me thinking that somebody else is going to be able to do that is my biggest danger zone , and I'm so guilty of it . Yeah .
I don't think you're unique in that regard at all . Yeah , because most entrepreneurs are good at something . Yeah , or they like to market
¶ Professional Managers as Franchisees
yeah , they like to build businesses , but they don't like getting into the weeds . On accounting yeah , if you wanted to do that , you'd be a freaking accountant , right , exactly .
But you get in the weeds of it . I do you love it , I've always had a thing for numbers .
I don't know why . It's just like you know . It's just something I enjoy . You know , I went all the way through calculus in high school and it is disgusting . I taught statistics at one point in grad school and I just liked accounting . I don't know why , but really I like finance better than accounting .
I don't like doing debits and credits and T-accounts and all that . That's boring as hell . That's called financial accounting . Okay , but what are you ? Managerial accounting , cost accounting ?
You like seeing where things are going , how you can make tweaks , and improves the business , the cashflow , all that kind of stuff , yes , but anyway , back on our subject , franchises .
I think that's a really good point . The , the , the accounting system , the categories , all that's all set up , yeah , and a lot of other things are too . I mean , if you're selling French fries , they're going to tell you exactly how many fries to put in the basket and how many seconds to cook those , at what temperature , how much salt to put on .
Yeah , I mean everything's laid out for you yeah .
You just have to implement the plan , and that's a big deal because , like you know , part of that , the big value , is that they've already spent a year , two , three years , however many , perfecting that , refining it , yeah , refining it . And so now you have this playbook .
Yes , you're basically accelerating the opportunity to drive a successful cash flow in business . Yes , and so it's perfect for a professional manager who is used to having . Here's the pain point I've seen with this Professional managers coming out of corporations are used to having support underneath them , exactly .
And then they don't when they're on their own , when you go on your baby like it's you , you're everything , everything is your fault your problem . No , you're right on with that . I never really clearly articulated that .
But you're right , so you buy into a franchise and you have that support . Yes , right , you just got to fill in a few roles and do some basic operational stuff .
Yeah , you got to select the right people and you got to make sure people are doing what they're supposed to do right , which is most likely what a professional manager is already really excellent at .
That's a great point In which an entrepreneur is not necessarily . It would be hard for me to buy a franchise because I don't enjoy . I've missed all the stuff that I really like to do , which is start a fight . When you're buying a franchise , you're closing the deal , You're in the middle of it and you're trying to end the fight .
Well , some people yeah , I think that's a . It's a good analogy . I think some people feel like it's not very creative or you're not an entrepreneur if you own franchises . I've got a friend , I don't know . He had like 12 of one restaurant and three of another . Maybe he's got 15 or 18 of the one and and got rid of the others .
Now he's got a lot of them . Okay , and is he an entrepreneur ? Well , I think he is , because 20 years ago he started out with $50,000 when he sold his house and today he's got a business that's doing , my God , somewhere around $30 million , I would guess , in total revenue .
It makes an eight percent profit and he's built an incredible amount of value in the business and he's paying off real estate . With every one of those restaurants that he owns , they're all paying off the real estate . Um , my god , I mean , he's going to end up being a very wealthy guy .
Yeah , you can't say he's not entrepreneurial . He totally is . You know , you know he's growing , growing the business , he's growing the opportunity . I mean 100% .
He's really careful about the people he hires and the management systems that he puts in place to control the overall business , not necessarily the individual units .
Well , I think the difference is if a professional manager gets into franchising and I've seen this happen where they want a different style of life , right , they just want to own one unit , they just want to make their income , but they want to have some freedom and they look at it from that perspective .
That's kind of dipping into your solopreneur type of mentality .
Small business owner period , which is not a true entrepreneur .
But if you're getting into it and you're like man , I'm going to open up multiple locations , I'm going to drive growth here , I'm going to make an income , I'm going to provide employment , I'm going to fit this market need , I'm going to dominate . That's an entrepreneurial thing .
Well , and buying distressed yes , I mean , that's another one . There you go . I student , his parents owned 21 mcdonald's . This goes back maybe 15 years ago . They were not based here , okay , the student wasn't . His family was from kansas and each one made an average of 366 000 profit a year .
So they were doing over 7 million a year out of their 21 mcdonald's . But the parents both were school psychologists who worked at mcdonald's when they were in high school . That's where they met . Then they went all the way through school , became school psychologists and then they got back into it and they bought their first McDonald's franchise .
Well , they did so well at it that McDonald's would refer other franchise owners to them who were struggling and say you know , know , and they turned that into acquisition opportunities , nice , so they would buy the distressed mcdonald's , turn them around , integrate them with their system . They were entrepreneurial as hell . I'll tell you that .
I have no idea where they are now . I'm sure they're very successful . Yeah , but , um , but yeah , it's a , it is a way . Um , I think it's a really good point . It's a good doorway for people who are not used to business ownership to get into it .
Yeah , I mean I think that if you're a professional manager , you get into a franchise , over the five-year period you're going to start seeing it's like you backtrack , like you can get in , get off the ground , start professionally managing , doing what your strength is , but then you're learning along the way about these deeper things and that organization that that
franchisor has provided . You'll learn that and then you might be ready and have the confidence to kind of start something brand new . I mean that could be an excellent path , right .
That's a really good point too , because , again my friend , they have one non-franchise restaurant too and I asked him I said , with all your experience in franchise , running franchise restaurants , did the process , did the discipline , all that carry over into your own ? Yeah , he goes absolutely 100% . He learned so much from that .
Yeah , okay so that makes him a better owner of the independent . Yeah , where they ? You know where ?
they started it , yeah , and they'll know a lot of the systems . And this I mean , heck man .
We know , like , as an entrepreneur , business owner , like just knowing what subscriptions you need to have , what softwares , what tools yeah , is is a lot of the battle because you can waste so much money , so much time oh my god time Doing software conversion is one of the most painful things in business . You know , everybody promises the moon .
Few of them deliver on it . Actually , no one really delivers on the moon . You know , speaking of , we just recently , in one of our business , started using Salesforce instead of some of the other CRM tools I have .
Yeah , salesforce is , you know , number one , number one , one , best in class , right , but I start going in there trying to use the thing and it is absolutely cumbersome , yeah , and it's overkill , because there's too many options , there's too many things you can do with it .
It takes a tremendous amount of application programming , which requires a tremendous amount of resources and dollars to get it done right yeah so we need Salesforce consultants yeah . Oh , that was the answer from Salesforce . I'm like hey , I need some help with some simple field updates . They're like oh understand , our system can be quite complex .
We can introduce you to some of our Salesforce partners to help you .
I'm like that is the last thing that I want .
I don't want to talk to them , I want to use the system . But I mean to the point right . The franchisor
¶ The Reality of Entrepreneurial Life
has already invested that energy , has found that model . Vetted those things out . Vetted those things out .
Again , this is only good ones . There are bad ones out there . I mean good ones . You've got a brand that as soon as you open the doors , you're going to have business coming to you because it's so recognized . But there are a lot of new ones that don't necessarily have that power or that haven't been that well thought out , as you're saying . You know .
A lot of times they fail . I mean , I had a student once whose father passed away and he came to me when he was like 19 , and his dad had just recently passed away and his dad left him some money and said the only condition is I want you to use this money to start a business .
So he started looking at franchises , okay , and he came up with this smoothie franchise . It was based in California . I think it was called Inta Juice , if I recall .
Yeah , yeah , yeah , I don't know who you're talking about .
Yeah , I've seen them . We had one in Fayetteville . Yeah , that was him . Oh , okay , and anyway . So I had a long discussion with the guy . He wasn't even my student , but he's . You know , I go , that's fine , but I go , you got to think about it like , does that brand name carry any weight here at all ?
Yeah , okay , yeah , are we all sitting there going like , oh , my god , I hope they open it into juice ? No , I've never even heard of it . Right , okay , and I've been well traveled , okay , so that that's maybe that's an issue for you .
I said the other thing is you need to go talk with other franchisees , not the ones that the franchisor puts you in touch with . That's right . You need to reach out to other ones and go what's it like ? Yeah , you know , do your due diligence you have to .
You're basically it's you know , in speaking of due diligence , right , if you were going to buy an entire company , the due diligence we actually , um the guests that we had on last week , we talked about this a little bit , about proper due diligence , because she made some acquisitions right and , like she emphasized , if you're going to acquire a company , the due
diligence process is so significant , right ? Yes , it is . And if you're a franchise , if you're looking to be a franchisee your due diligence . You're basically buying another company . You have to really get under that hood and make sure all these things are up to speed .
I think there's some opportunity to buy into a new franchisor because you could be on the front end . You can get more territories , your negotiation leverage is better , very true , and it could be an exciting roller coaster versus , like an established one .
No , that's true . You pay a premium for that . Yeah , the franchisor premium keeps going up and the territory gets smaller and smaller because there's so many of them out there . More competitiveness , right .
And your scalability shrinks . Yeah , good point . But if it's a newer one , your due diligence must be . I mean absolutely impeccable , and which means legal . It means accounting due diligence must be I mean absolutely impeccable , and which means legal . It means accounting , due diligence and audits .
Right , I mean like you really need to dig into that and making sure the process is , and I think I would dig into whoever created the franchise .
You know the franchisors , the head of the franchisor . Do they have a successful track record or they have , like , just nothing but a string of failures ? You're going to be the next one Right . Right , you know what I mean . Yeah , that seems like that would be important too .
But , yeah , I'm glad you brought up legal , because that's another thing that I've learned over the years of teaching this stuff and seeing a number of students who did end up with franchise . You know who are franchisees , you know ? Usually I don't know what they call it today , but it was called traditionally Uniform Franchise Operating Agreement .
I think it was like UFOG or something is the document that the franchisor has the franchisee sign , yeah , and it just lays everything out yeah , all the rules , the , the costs , the , what they got to buy what , how much tribute they pay to the franchise , or you know all that .
And and um , you've got to get yourself an attorney , yeah , who specializes in franchising . Yes , do not go to your regular business attorney . They will not know what to look for in that agreement or what . The common problem pain points , that's true , it's very .
It's like everything else get the specialist yeah , you have to , especially in franchises . I mean they're so , they're so legal . You know there are a lot of legal restrictions to them . I mean it goes by state by state too that's true .
The other point yeah , every state's got different and it has federal guidelines and state guidelines and you know , and you've got their territories .
I mean , there's so much to it that the franchisor has to go through , but then the franchisee needs to have the due diligence to make sure all that's on the up and up right . And what are ? Where are the territories are going ? You know , where are they legally able to do business at ? Because that could stall out a lot of their investment as well .
Good , point , yeah , so there's a lot of stuff in there .
You know , another thing I've learned from my friends that have franchises and again I don't know what else to call it from my friends who are franchisees I don't want to get the terminology screwed up is that usually there's some sort of a franchisee group that you can join with other franchisees that then has power in dealing with the franchisor and may be able
to influence their policies and get things changed . I mean , for him that was critical . One of my friends , he actually became the head of that group and then he was at board meetings sometimes of the franchisor and could voice the concerns and work to get things changed .
I mean , for example , I know they had a number of disputes about things like what's on the concerns . It worked to get things changed . I mean , for example , I know they had a number of disputes about things like what's on the menu .
Like the franchisor wanted them to have too many things on the menu , some of which were very time-consuming to build and they didn't make any money on them . The franchisees didn't like that , but their agreement says they've got to have everything . You see what I mean .
So they would fight to get those taken off the menu , for example , or another time , several times he was involved in trying to lobby to get the pricing changed . The the you know the franchisor , set the pricing standard and at one point they wanted the prices to go down and they had to fight for a while to get the franchisor to let them do that .
And then , after a period of years they wanted the prices to go back up the franchisees . They had to fight for a long time to get the franchisor to let them do that . But anyway , the point of it is there is an org .
Many times for the larger ones there's this organization of franchisees that's probably good to get involved with Many times for the larger ones , there's this organization of franchisees it's probably good to get involved with .
So I think that that topic brings up a point of again what are you , if you're interested in getting into small business or being an entrepreneur , right ? Like that's one of the critical things . Like , if you're really wanting and have a desire to have complete decision-making authority , being a franchisee is not probably the game , so you have to really weigh .
I meet a lot of folks that are interested in being an entrepreneur and , like we've talked about , there's so many different avenues to choose . But you've got your pros and cons . Yes , you can start your own and you can have complete authority , but you're going to deal with every single one of the problems . Yep , or you get into be a franchisee .
You may not be able to make all decisions , but you're not gonna have to deal with all the problems . That's right . Right , yeah , if you want to be a franchisor , you're going to deal with a lot of problems , right , and have decision , have decision making .
But I think it's just really important for an aspiring entrepreneur and honestly , mark , I mean it comes down to spending time with yourself . What are your goals ? What are you trying ?
to do .
What's really your ambition on doing this ? And I think that that's the most important question to ask , because again , why are you doing this ?
Yeah , because what are you looking for ?
In our area we've got so many professional managers Like , I mean , some of the smartest , greatest leaders in the world , I think are here working .
Yeah , you know and , but it's not the same skill set that those of us that just had small businesses and grew up have .
No , it's really not . And I mean there's not a not , because you try to put me in a professional organization as a professional manager . I will not do well , no .
I totally understand exactly what you're saying . You're not criticizing them at all . It takes a lot of skill to rise through these big corporations . Oh my gosh . I mean they're incredible Political skills and communication skills and psychological knowledge .
You know we have a unique space here in our area with Tyson Hunt and Walmart and some massive corporations that some of these folks that are in those executive roles are just some of the most incredible humans .
Takes a lot of intelligence for sure . No , it does .
And dedication yeah , and navigation , and all these things that I admire and I actually learn a lot from . No , you're right , you're absolutely right , but they're intrigued . The funny thing that I've noticed is they're intrigued on the entrepreneurial life .
It's like we all kind of want a little something that each other has , but they'll ask questions about it and it's , and it's like you know , the , the entrepreneurial mindset which I think we , everybody , kind of likes . That you know that mindset , but but the , the problems that are being dealt with as an entrepreneur are just of a , of a different caliber .
It's like you know , I mean literally like people say , well , I'm the janitor too , I mean , but that's , there's a lot of truth to that . You know can , are you ready and willing to literally clean up the bathroom ? You know , anytime I go to the bathroom in my businesses , I'm cleaning .
I know I'm always the same way , like I see , like people throw their paper towel down and miss the trash . Can you wouldn't do that at home ?
No , what's wrong with you ?
I pick it up , throw it in , Absolutely Wipe the sink off . You know it's like the airplanes Like wipe the sink off after use . Yeah , but it is true . You know , this week I had my oldest daughter speaking to my students in Christie and you know , christie , yeah , I think you were actually the one that hired her in the first place .
Yeah , yeah , but Christy , you know , she's got this horse business and she's really grown and it's gotten very successful . She makes her entire living off it . You know , she got out of her MBA job and has replaced that income entirely with her horse business .
That already was making money on the side , on the side , but she showed one of her last slides is here she is standing and pouring cold rain in a in a long coat . That's like wearing a bedspread that's soaked in in a giant pile of manure nice , that is turned into manure soup and it's in your freaking boots all the way up to your knees .
Okay , and guess what you got to do that too . It's not all the glory , right , oh man it's , there's not it's not like I'm going to ireland to pick up a beautiful mare or whatever . You know . That's the fun part that everybody thinks is great .
Well , because you as if you're also cleaning . Oh , totally in the worst weather and you don't want to show up like like . There's a front facing and a a back-house-facing part to the entrepreneurship ,
¶ Creating a Valuable Franchise Experience
and if you show up to an event , you don't show up wearing the manure all over your boots that you've been working all day Like .
You have to dress your best , you have to present , you have to really appear and communicate that you do have your stuff together , but the reality is that you're actually digging in and cleaning up manure all day long and every day , and so that's why I think a lot of folks can be tricked into entrepreneurial life . That seems glamorous but it's not .
I think that's also interesting in light of what you were saying about the professional manager . Yeah , going into buying a franchise as their port of entry . Yeah to entrepreneurship . This is one place where they can fail because , as christy says , I don't ask anybody who works for me to do any job I will not do myself .
I will demonstrate it to them and I tell them if you don't do this job , I'm going to freaking do this job . Okay , now think about that . As a corporate manager , I was high level . I made $400,000 or $500,000 a year at XYZ Corporation or whatever . I got my $3 million retirement package after 30 years of sweating it out .
Now I'm going to go and buy a franchise or another couple franchises okay , operations , and you know a lot of those businesses . In fact , I go back to the kid with the IntaJuice . When he told me that's what he was going to do , I said to him I go . Or ? I asked him . I said are you prepared to have a bunch of high school students as your employees ?
What do you think it's going to be like managing 17 year olds ? Yeah , okay , yeah , how many of them are not going to show up ? Yeah , or do something unbelievably stupid . And is that the way you want to spend your day ? Yeah , okay . Now , we all know that a lot of times , as you said , we have to be the ones to clean the toilets or whatever .
Whatever the or the , you know whatever toilet cleaning represents in the business right , and so that sets an example and it shows other people that you're not elevating yourself above them , which is a very critical point of , I think , leading people , especially those , let's say , who don't have the same education or socioeconomic background that you have . Right .
Will those corporate managers get out there and make the freaking French fries along with them and have the grease splattering on them and go work the drive up window and will they haul the friggin , nasty trash out to the nasty dumpster that's out back ? Yep , to gain the respect of their people ? That's right .
Or are they too used to being corporate managers or they've got all the stuff ?
it's a think about that . You know , and I think it's a great question because here's the deal in all honesty , like this kind of ties into . You know , like my 2.0 . You know , after business growing it , exiting and then starting other businesses . I fooled myself and I heard a quote about it the other day .
If you have built a successful business and you start another one , it's not going to be any easier . No , to grow and build that second business the only thing that I know are some warning signs that are coming down the road .
I know I've learned some of the pain points to maybe avoid a little bit , but the fact of the matter is is I still have to hunt , I still have to clean , I still have to do all the things I've got to do , and if you're a professional manager looking into franchising , I think it would be a really poor mistake and I've actually seen it where if you have
your $3 million , you have some money and you're going to invest in this . To think you're going to invest solely into a franchise and you can take a back seat and watch your investment grow is is a very bad , bad , bad idea always upset for failure .
You're setting yourself up for failure in misery , yeah , in pain .
Like you , you work so hard for 30 years . Now you're looking at this as another ticket . You know to continue to build wealth , which I don disagree with , but if you're going to do that solo , you're going to be in for some poor experiences .
Now I would say , though , if you have other colleagues that are in your same position and you patch your money together , as long as now you're an investor not necessarily an entrepreneur , which is okay . Right , but it's different . It's a different game , yeah totally .
You can pull your money together and then you go find the people that you minimize your risk in a way doing that , but you also minimize your reward , that's right , yeah , but but you , but , if you can get a group , if you and I did this , I would say hey , mark , I don't have any time , I got some money , you don't have any time , you got some money .
Right , let's pull our money together , let's find ourselves a good ceo okay , good cmo .
Yeah , that could work and maybe that would play to your skill set as the corporate manager is what you're saying exactly now .
You're a board member , investor , but you have the talent to run the business . But I mean like , and so I think that the thing is is like you have to really think about what's your time dedication ? Where are you wanting to go ? What's your reward ? What are you trying to do ? What's your reward ? What are you trying to do with your money and your investment ?
What are you trying to do with the rest of your life ? Those things are really big questions . Before you get into this , you know there's like different levels you can take . I just think the big thing is just be really honest with yourself .
I think that's a really good point , you know . Now there's one other thing I wanted to talk about , about related to being a franchisee that I think not everybody thinks about . So many years ago I think it was probably 20 years ago I met a guy in a plane who owned Mako Auto Painting franchises . I think he had like eight or ten of them .
Okay , and I don't know if you know anything about Mako Auto Painting . They're cheap , all right , it's like they used to . Ever we'll paint your entire car for $199 . You know now it's like $499 or whatever .
But I mean , if I was going to go paint a car this weekend , I can't even buy the paint , the sandpaper , the primer and everything else I need for less than a thousand bucks Probably cost like $1 1400 for the materials alone . How can Mako paint a car for 500 bucks at that point ? Well , they don't do a great job , let's be honest . Starting , okay .
Secondly , you know they , they upsell , all right . But I I the point of all this is I asked him I'm like , how can you make any money doing that ? He goes . You know what he goes , you know what he goes . I don't care whether any of my makos make any money . I just want them not to lose money .
So if they break even , I'm completely happy with that , I go . Why is that he goes ? They're paying off the real estate every one of those locations . I own the building . You guys think about it . In 15 or 20 years I'm gonna have this building in a great commercial location . It's completely paid off . It's worth three times whatever I paid for it .
Okay , and I'm like , ah , now I get it .
That's called the real estate play . That's a real estate entrepreneur . Okay .
Yeah , yeah , it makes total sense .
It does .
Let's say I want to open up a Burger King franchise . Let's say it costs me $2.5 million to build a Burger King between the land and the building and that's not in like a prime location . Maybe I'm in like one of these second or third tier markets , but anyway , let's say it's a growing area and it costs me $2.5 million .
Well , if I operate that Burger King for 20 years , what's that two and a half million dollar real estate worth ? Oh yeah , it's going to be worth seven , five , six , seven , eight , whatever .
Okay , and you had somebody else pay that .
Yeah , I don't even care if my Burger King goes out of business at that point . Yeah , makes no difference .
Yeah , no , it's true , it's a good play to it . Yeah , in which kind of ? If we go back to that scenario when I was talking about entrepreneur versus investor , group of investors , that could be the play . And there's actually investment pools that are already built that do exactly that type of stuff . They know that they're real businesses and real estate .
Yeah , mcdonald's figured that out 100% , because the McDonald's franchisees don't own the real estate .
Yeah , mcdonald's figured that out . Because the McDonald's franchisees don't own the real estate , they rent it from McDonald's Corporation 100% . But anyway , that's just kind of an interesting evidence . Let's flip the switch now . Okay , let's talk about if you want to be a franchisor .
What are some things that you really need to be doing in order to create a valuable franchise experience for franchisees , where they'll pay you money for it and pay you royalties a franchise fee to buy in and royalties to to continue to be a franchise so I I cannot I cannot speak to it as an expert , but I can speak to it as a practitioner and the fact
that with podcast videos , we are looking to franchise okay , you know , as a franchisor , and I can tell you that it's been a a very intense long-term process to think about this yeah and to build it out right . We're in the middle of getting our documents together , which takes a long time . It's very expensive .
Yep to legalize that processes yep and procedures defining all those defining all that getting it all , and you have to . I mean , you're talking about really writing it down , like taking , like it's a true manufacturing factory process , right ? Yes . Then you have training and onboarding yes , which is also extremely intense and time consuming yes .
And then we're getting into the marketing plan , like the responsibility to market these franchisees when they go to market . What our goal is is that a franchisee would come to us and they can get in with minimal capital , turn it really fast and be as profitable as fast as possible and be that literal support to them .
And what I'm excited about and this is my mentality right , and it kind of hit me about a year and a half ago when I was thinking about this , as I was looking and being a franchisor , I was like thinking , oh my gosh , this is a lot of work , right ? Am I really interested in ?
I'm not really interested in that amount of work , but what I am interested in is getting entrepreneurs or aspiring entrepreneurs , like we've been talking about , and helping them achieve growth and wealth . To me , that's so .
that is the core of why I'm doing that . I totally understand . I mean , if you keep that in mind , it's going to influence every decision that you make and it'll help you make that a reality and honestly mark this kind of goes into just being an entrepreneur in general .
That's what my passion is .
That's where my heart is , that's where I want to , and the money will come yeah , because , like you , said it guides every decision and , like I'm , if I can think about when we set this agreement up , we set all these processes about doing the marketing and all that kind of stuff and I'm thinking about I want to help this individual be successful and I can be
a part of that and build something that helps those , that keeps my decision-making and our team's culture decision-making in this on the right track . Yes , it does . Now I've set up a good partnership for a franchisee , so now I've just got to award . Here's the big thing Deciding who you want to give that to .
That's exactly right , because if you don't give it to the right person and they fail , then it makes you look bad . That's right and sort of devalues the thing we are podcastvideoscom .
Our goal is to educate , enlighten , engage and entertain .
We believe in the power of love and transformation through storytelling .
You got to get the right people , and I figured out , you know , I found out the right terminology . I'm not going to sell franchises , I'm going to award them , yep . And so I'm going to do my due diligence on the franchisee as much as they do with me .
They can come investigate me , because I've said it all .
You're smart .
Right , you're smart , but who are they ? What's their track record ? What's their ambition with getting involved in our franchise ? What's their motivation ?
Exactly . Yeah , I think that's very smart . I don't think all franchisors think like that . I think some franchisors just want to sell the franchise and get franchise fees , yeah , and then they hope that somebody out there is successful and can continue to pay them their royalties .
Yeah , and on the interviews and the consultation , and so I've gotten a lot of consultation from some experts , like you know .
Tom Gordon , you know I've talked with lot of consultation from some experts like Tom Gordon's . I've talked with him a little bit . Yeah , sure , tom would be great , freaking , fantastic . We had him on our show . Yeah , he's amazing . He knows what the heck he's doing .
Yeah him and a lot of other folks , one of the best , yeah , you know , are you able , as a franchisor , you know , to to make sure that you have that good relationship , because you're basically starting a marriage with that franchisee , you know , and and how you guys set up that relationship is absolutely , you know , absolutely critical .
No , you make a really good point , you know . I think the other thing that franchisors really need to think about too is , as the as you sell , um , you know , uh , as you you get new franchisees , you have to make sure they're doing things the way they are supposed to . So I remember my friend , mike stennett .
He he bought a bunch of steak and shakes and there was one that was in Joplin that he ended up acquiring . I might have talked about it in this show before , but in any case it was in such bad shape he was furious with Steak and Shake Corporate that they would allow this franchisee to run that business the way they did , because it devalued his brand .
Yeah , as far as he was concerned , yeah , okay . So you really got to make sure that your franchisees out there are operating in a way that enhances you know , that supports your program and enhances your brand and your value 100% . And if they're not , like what teeth do you have ?
I guess you can pull the franchise from them based on whatever your agreement states .
Yeah , so I think from what I've seen is it's all in the agreement , right , like there are rules and regs to protect , and the whole thing as a franchisor is to protect that brand . Yeah , you know . And so the franchisee has , they have to follow these rules , and then that's when a franchise or like rightfully so .
If you're destroying or diluting my brand , you're affecting my business and everybody else . And every other franchisee which I , as a franchisor , have a responsibility to protect that .
Yeah , you would be very upset about that .
Yeah , yeah , and so rightfully so . I'm honestly like I think that , from my standpoint , is trying to get this ready for franchising . There is so much work involved in it , like it's really daunting and it's a commitment , um , and it's not really that much exciting work .
I'll be honest with you , like it's not the nature of what you like , no , no , but but the if the end goal is is that I can help establish other franchisees to be successful and I can be part of that success story right and build an ecosystem to where it's successful and we can create new media , which is what we want to do and enable new media to be
created at Podcast Videos , then that's exciting as hell to me . That really is . But I can build an agreement where we're on the same page . That document and I think this is a big thing for entrepreneurs Don't look at legal
¶ Legal Agreements as Relationship Foundations
as just legal right . Look at it as that is your abiding charter between you and a client , between you and a vendor , between you and a franchisee , whatever it might be .
But when you really write those things in , like I've , I've have grown , I've matured enough now in my career to look at those binding agreements as more than just an agreement like and it's not about like you know . You know clearing up conflict as much as it is like . I understand the expectation of you , you understand the expectation of me .
Builds understandings , understanding it does .
Yeah .
It does and that I did not have that perspective for the longest time . That makes a lot of sense , you know . So that franchise agreement to me , like the thoroughness of it , the process , you know , and what's in there , is establishing that relationship to be fruitful versus conflicting and negative .
Yeah , you know what I was also thinking about as you were talking . Like all the work you're going through right now to , let's say , position the podcast videos as a franchisor , it's got to help the existing business . It makes you question everything , codify everything , I mean you may not go to that much trouble if you weren't on that plan , right it ?
it . It no a hundred percent what it does like , like I like as an entrepreneur , businesses . Like when I , if I get involved in a business , most cases it's I think about how , what its scale can be .
Yeah , of course , that's what we all think about .
Yeah , if it takes off we're real entrepreneurs yeah , right , right . And so a franchise is just really a . You know , it's a tool . It's a tool For scaling , it's a scaling business , and so it does critically make us critically think do our existing processes of this studio great , we're able to do the work and meet profit , but is it scalable ?
And so we're always thinking Replicatable . Yes , we're always thinking about okay , what if Now that works today ? Yeah , but if I have a hundred studios , is it going to work ? Yeah , so if it doesn't , like , what do we need to do to get our software systems in place to achieve that scale ? And so I'm actually in our business today .
We've been thinking five years ahead . Yeah , every day for the last two years that we've been doing this . Yeah , and that's why , like when I look at podcast videos , like , and people ask me about what we do , like , yeah , we have this studio , but we really have a very big , big plan that no one can see , dude .
I can see it because you've invested so much , not just in the facility from your original facility , yeah , but all the people
¶ Scaling Through Franchising
100% from your original facility yeah , but all the people and the sort of the roles that you're creating and defining in this thing . Most people wouldn't make the investment that you've made . It's a big investment of time and money .
It is but it's also like these people that are in some of these what we call corporate roles yeah , are really non-essential right now . Right , I understand that totally , but because of our plan , we're investing in that acceleration and scale , and that is the difference of where we're at .
So I know , when I see a potential competitor coming to the market as a studio or whatever it might be , I'm not really too worried about it and I actually support them . I hope that they do well , but my plan is not the same as their . Oh no , I totally get it .
They just want to have one studio that makes money , and that's their goal .
No 100 , yeah right , you know , and they want to grow the congratulations . I'll actually send business your way , because there's business I'm not going to take on today . Right , because it doesn't fit my scale point . Sure , sure , sure .
Yeah , it makes total sense . Well , I can see this is a very interesting topic we've got today , I think .
We need to have a lot more guests . I'd like to have more franchisors and franchisees .
Yeah , I think we can do that . Keep talking about it , yeah .
We've got some friends that have been doing it Sure , sure .
Well , I think we've going to wrap it up , Unfortunately we're out of time . Yeah , it's been another fabulous conversation with you . You too , mort , and it's always good to see you . You too , sir , you too , and I look forward to our show coming up next week Yep , as I do all of our shows , yes , sir .
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Just one more program for me to follow every day , that's right One more channel . That's right , all right . Well , thanks a lot everybody for tuning in and until next week . This has been another episode of Big Talk About Small Business .
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