Study Hall: How to Turn a Business into a Franchise

You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast easy? Just use Indeed. Stop struggling to get your job posts seen on other job sites. With Indeed sponsored jobs, your post jumps to the top of the page for your relevant candidates, so you can reach the people you want faster. According to Indeed data, sponsored jobs posted directly on Indeed have forty five percent more applications than non sponsored jobs. Don't wait

What's going on?

Earnest Welcome EYL University, the number one place for business education shotty telm what we be bringing Yes.

EYL University already has over one hundred past webinars from all areas of business. It includes weekly webinars from industry leaders It includes access to our investment Facebook group, movie club, our book club. It also includes access to monthly financial planning calls with yours truly. But what has been added has access to MG the Mortgage Guys home Buyers Blueprint over fourteen hours everything you need to know as far

You know its works, don't wait, don't have to take it. We'll see you on the other side.

My graduates from my school being forced.

Back drop drop, drop, drop drop. It's one thing to have a successful business, right, but it's another thing to actually open franchise operation. And I guess it's hard to do. That's why you're the youngest one in the country. Youngest people.

It's not hard to do, it's hard to figure out if you don't have any guidance.

Like obviously we've never I've never met anybody that owned their own franchise, so like yeah, like oh, was like what was the guidance?

Like what was the mental or the moment that you said, this is what I have to do now?

So there, I was really frustrated. One day. I don't remember what was frustrating me, but I went to Barnes and Nobles and I googled the top five franchise consulting for firms and I called all five to see who would call me back first, because at that point, I was like, I don't want to open multiple locations.

Well can you talk about that? Even before so I actually asked you that question. I'm like, what made you say, okay, instead of opening I want to shop in Newark? I want to shop and broken, but it's gonna be What made you want to just say I want to do franchises and have other people?

And I left this out. I did own another location at that point, so I owned two locations and I was working on three. But I was like, I don't I can't handle it on my own.

Why so why did you?

Why did you tell you I wanted to maintain some free time for my family, for my leisure, and for work. So I didn't There's a lot of business owners who just run around all day long to multiple locations and then burn out at night. But I always wanted to leave time for myself because I felt like that's important and I didn't want the business to overrun me. So

Can you talk about that? I just found that out, So you can't. You can't let somebody else use it unless it's a franchise.

And there's a lot of people who like license their method. There's there's stores, but you actually cannot. You're not supposed to, and if you get caught, it's a it's a big fine. You have to become a franchise if they are following your trademarks, logos and name.

So your trademark is the Kika method.

Kika Stretch Studios, the Kika Method. Yeah, so I also franchise, I mean franchise trademarked most of the trademarks myself. I just sat in front of a computer for hours until I figured it out and.

So so all right, so you looked at the consultant firms, right, and what happened at that point?

So the first one that called me back the guy Chris Connor out of Atlanta Franchise Marketing Systems, and he pitched the whole concept of working with me, like I think this could work. I'll be on a flight tomorrow and I'm like, really, okay, mind you. He was the only one that called me back. The other people called me back like three days later. I'm like not. And so he came. He looked at my studio, he listened to the whole model, and he's like, you could definitely

And what do you get put for that? Like, he sets it up.

He sets up the whole franchise model, the FDD.

All right, So okay, so he came and then he's the one that set it up for you.

He's the one that pulled the resources out of me the the procedures. I had the strategies and he helped draft.

The whole So okay that you said the FDD. What does that stand for?

A federal disclosure document?

And that's what you have to do in order to yes, to have.

To open up a franchise, you have to do the first thing I do is an fd D, right disclosure document.

Yes, and you do that.

You do that with the United States government. Yes, And each state has its own.

The same FDD. But each state has its own laws as far as submission. So like New York, you have to submit your FDD. It has to be approved by the state each year before you can sell a franchise New Jersey. I can just give you my fd D and have you sign up on the spot. New York they have to approve it each year.

New York's always the worst and everything.

Seems so all right.

So what's in the FDD.

So within the FDD, it's basically like the role book for the franchise, like, this is what we're gonna do for you. This is your role as a franchisee. This is my role. It basically puts on the table every cost that you could incur with a business like this, It discloses to the franchise e everything they would have to deal with if they decided to join your organization, every possible element of everything.

How long? Like how how long is it?

So mine is about three hundred pages?

Three hundred pages, yes, and that's what he helped you write that?

Yes, so he has a team of people that helped put it all together.

So how do you all right? So is it like a set template to say like or like, how do you come up with three hundred pages of items?

Or was you using that that when you find yourself you had so much writing already built up, like.

I did so within the FDD, so we do three weeks of training for each of the franchisees. So lists how much time is spent on this topic in training, like it spells out the whole training by minutes, thirty minutes on this, thirty minutes on that. It shows you the least possible amount of money you could use to open in the highest so there's a range. It spells out liability of the franchise or like what are we

So that the FDD actually is the instruction manual. Yes, yeah, you don't have like another one on top of that.

We do.

So what's the other one? You have to time, So there's a reason that. Now we know why you're the youngest one. So what's what's all? Right? So we got the FDD. That's pretty watch the whole instruction manual. So what's on top of that?

So the right So legally it allows you to sell a business to someone. Right, So that's the FDD. Then there's an operations manual. So that's where all my strategies, concepts, all of my material as far as like how to find staff, it's in the operations manual. So the operations Manual is what teaches them what to do. So that's a whole nother document which came hand in hand with the FDD.

And once they signed that document the FDD, they can't deviate from that operational agreement.

No, So how many pages is the operation it's about two hundred, so it's five together. Yes, it's like loaded the rings so okay, so how long how long did it take you to put together all of that?

So, I mean they were prepared to put it together within a month, but I needed more time, so it took me about four months.

So you did you actually write it yourself or you just dictated it to them?

Dictated it to them?

So what you ever suggested, Mike can do it them.

There's some things you don't want to do yourself. One of those things is messed.

With the law. So you really get a professional, get a.

Professional and do your research because a lot of people rip people off just to create that document. So you have to do your research so you know what you're getting into.

All right. So now okay, so you have the FDD done, yes, and then you got approved. It's take to get approved.

So like once it was done, I could sell in many states. Like once it's done here, you go, Kiko, Okay, you want to open in.

New Jersey, Great, but they have to approve it.

No, unless you go to a state like New York California.

So you were in Montclair, Yeah, so if New Jersey.

Jersey imagery fortunately, right, So like to put one in Brooklyn out yes?

Different?

Right?

Requires the state to approve it.

All right, Okay, so you have the you have thed, then you have the operational green. So nowI you're up and running as far as you can. Now you can have people buy your franchise. Right, Well, that's only have to battle because people have to actually buy your franchise. Yeah, so what's the process for that? How did how did you get the word out? How did you get people interested in buying?

Like?

How did that? How was the first the first person that brought a franchise? How did that?

So?

I had so I owned a studio in Westfield, Montclair, in Westfield. So in Westfield, I had a manager that was so amazing. She was she was doing better than I could have. And when I when you see talent like that on your staff, you have to do something about it or else they'll leave, they'll find another job. So I knew this position like she outgrew the position. So I talked to the company. I spoke to you guys about and I was like, how do I open

We have a slight franchise e story, Like twelve years ago, we tried to get into a franchise Coladstone, I said in an earlier episode, but it was like, yo, we needed five hundred thousand, and we're like in our twenties, how are we going to do this? But you've created a different that's for people who wanted to get into the franchise e.

Phsician you want about it, I'm not gonna talk about it.

Interesting because, like you said, a lot of friends like McDonald's I think is the most.

Expensive a million dollars.

I think. Now it's like see what I did, shout out the homemade right all right? So yeah, because it's like a lot of these friends.

This episode is brought to you by P and C Bank. A lot of people think podcasts about work are boring, and I'm sure they definitely can be, But understanding a professionals routine shows us how they achieve their success little by little, day after day.

It's like banking with P and C Bank.

It might seem boring to save, plan and make calculated decisions with your bank, but keeping your money boring is what helps you live or more happily fulfilled life. P and C Bank Brilliantly Boring since eighteen sixty five. Brilliantly Boring since eighteen sixty five is a service mark of the PNC Financial Service Group, Inc. P and C Bank National Association Member FDIC.

Erness What's Up?

You ever walk into a small business and everything just works like the checkout is fast, their seats are digital, tipping is a breeze, and you're out the door before the line even builds Odds are they're using Square. We love supporting businesses that run on Square because it just feels seamless. Whether it's a local coffee shop, a vendor at a pop up market, or even one of our

You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy? Just use Indeed stop struggling to get your job post seen on other job sites. With Indeed sponsored jobs, your post jumps to the top of the page for your relevant candidates, so you can reach the people you want faster. According to Indeed data, sponsored jobs posted directly on Indeed have

My shot is like a million dollars a million and a half, and then you have to some other franchise. You have to buy three locations. But you can't just buy one location. You got to have like a million dollars in investable assets, all kinds of stuff. It's not

Exactly.

So obviously major markets is more, right in the small market is less exactly because the major market is going to do more business.

Yeah, and the real estate is more major yep.

So all right, So but you also have an income is it income based?

Income based financing?

Can we like to?

So can you explain that so that I'm coining? Someone write it down that after this. So basically, like I started with five hundred dollars, I had no networth, right, so if if someone offered me something, they wouldn't and it would prevent me from having the opportunity of what I've done so far, So I kind of had that in my head, like, just because you have a million dollars in assets doesn't mean you're a good business owner.

Dan, you said, but you guys can assist with financing too, right, yes, so can you talk about that?

So the franchise fee is thirty thousand dollars. However, say you have twenty thousand, usually you would never be able to own a franchise because you don't have enough money. So we might finance that other ten for you, depending on the situation over time. So the biggest thing is there's a pull of people who are being left out of this whole franchise concept due to financial reasons. So we're making it easier for people who still have potential to get in.

And so right now you have twelve franchises, right, yes, eleven of them.

Yes, And you said that there's a certain demographic of franchises that you're looking for.

Why millennials? What makes them the target audience here?

It's another loaded question why millennials. Well, so millennials have been told by their baby booming parents, get a good job, work there your whole life, save for retirement, and that's it. You're a good person. However, we know that's not the case nowadays most people. Most people. That's why you see, speaking of Mickeyde's right, you see fifty year old, sixty year olds working there because they don't have enough money to live off of their retirement plan did not carry

To do it.

One of the good things about franchise is that it allows you to So somebody said, we had a guest and he said, Chris Senegal. He said that in school, they teach you not to cheat, but in business you get rewarded for cheating. Not cheating people, but like cheating as far as you see what somebody else has done and you copy that, right, like I should use that word copy. You get rewarded for copying. Right, You copy somebody's paper in glass and you can keep that at school.

Right, So we collect the franchise fees upfront or through our income based financing program and then we collect royalties each month six percent royalties off of their gross income. So the benefit of doing a percentage is that if they it encourages us to make sure they're making money, because if they don't make money, our six percent is very small. If they're being very lucrative and successful, our six percent is much larger. So we're constantly coaching them

It's like what you said, like their success is your success exactly.

I mean, so, how long is the agreement? How long does that last?

It lasts for ten years year period?

Yes? Okay, okay, so all right, So okay, I want to open a franchise. I meet with you, I get approved. It costs thirty thousand. Let's say I give you thirty thousand, and then I you get some help too though, right, like what's the what after that? You said you provide training and what else do you provide?

So that includes three weeks of initial training, ten years of support, and from Monday through Friday, constant support.

What is the support like website support.

Website support, publicity. We provide graphics for the franchises to use. We provide it like basically every tool you can think of with the SEO for their location.

So they're not going to stables like you did.

They're not going to staples. They're much more sophisticated than I ever was.

Right. And then as your brand grows, obviously to brand recognition. That's the recogniz that's another plus of being a franchise on it. So okay, so now I pay the thirty thousand, I get the shop. I'm making ten thousand a month. I give you six hundred. I keep ninety four hundred.

And that's finances, yes, okay, all right?

And then for the people that are finance, so the people that don't have all the money upfront that you finance or your company finances, how do they pay you back over there?

So we work out an agreement twenty four months, thirty two months, it depends of whatever. The balance is broken up over time, so they would pay that balance and then they would pay the six percent.

Of course, got to do that.

It depends on the situation. So that was a good question email to find out.

One thing. One thing I always wondered about having like a franchise, like even like a McDonald's who has millions of franchises all over the world, how do you know if somebody's like deviating from like you're sending spies in there to like check more people, Like, how do you know you might have?

Really we send out secret shoppers. We actually just did that to two studios and they were there was surprise. And also with social media nowadays, you can like we spot stuff sometimes like bro, why are they wearing a pink shirt when they're supposed to wear a black shirt? You know, things like that, But we focus it's like its own little department.

We focus on that just making sure that Yeah, so all right, so what's the process is Like, okay, you have like you mess up too many times and you're done yes, that's also in the FDD Okay we strikes you out. Yeah, it's basically three st yeah okay, and then so you strip them up using the name and all that you can. Yes, it's important people to know because it's like, like I said on men, I don't

You have to be the type of person that is okay with running with something that already exists. Right, you can make it your own because there's a lot of log room. You can choose who you hire, you can choose business perks that you would give your clients, but you have to be willing to follow an existing model. So if you're the type of person to take something and just completely rip it apart because you just want to do your own thing, then franchising is not for you.

So would you consider a franchise owner as an entrepreneur or a manager?

Good question both, because that's essentially what we're doing. What I do manage the locations on a higher level to ensure that they're following our systems. So as far as me as the franchise or I have monthly cause with each studio, I'll fly out a few times per year to like visibly see it.

Just so.

The biggest thing about my job is making sure it's just like my little studio in Montclair. We're all the same. We're all because we have clients that travel from state to stay and they expect the same experience. And because it's a service business, you know, people are very verbal about if they're dissatisfied. But so far we've been doing a really good job through reviews and things like that on Google. Check it out.

My graduates from my school being forced bad. Drop drop drop drop drop.

You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast?

Easy?

Just use Indeed. Stop struggling to get your job posts seen on other job sites. With Indeed sponsored jobs, your post jumps to the top of the page for your relevant candidates, so you can reach the people you want faster. According to Indeed data, sponsored jobs posted directly on Indeed have forty five percent more applications than non sponsored jobs.