Subscribe
Share
Share
Embed
Every day you have a choice. You can wake up and choose to give in to mediocrity and complacency, you can choose bad habits and poor choices, and you can do the bare minimum to get by and fly under the radar. Or you can choose to make today the day that sets you apart from the crowd, you can choose to start doing the right things, the things that will set you up for success. You can choose to create a life that is worth living, worth waking up to, and worth sharing with the world around you. Today You can choose to start with a win.
00:00:00:00 - 00:00:04:21
Speaker 1
So you need to be willing to step up and demonstrate how you want the culture of that organization to be.
00:00:04:21 - 00:00:07:07
Speaker 1
mean, first of all, you have to be willing to put in the work
00:00:07:07 - 00:00:12:02
Speaker 1
you've got to exhibit the leadership that you want your employees to be operating under,
00:00:12:02 - 00:00:18:23
Unknown
Welcome to start with a win where we unpack franchising, leadership and business growth. Let's go.
00:00:18:23 - 00:00:31:01
Speaker 2
And coming to you from start with WIN headquarters at Area 15 Ventures, it's Adam Contos. This is part two of two. With me on the Culture Matters podcast with Jay Doren. Let's jump right in
00:00:31:01 - 00:00:42:14
Speaker 1
curious about the investments. What was the inspiration behind investing in organizations? And for those that are listening, they may be looking for Capital Partners advisory in that
00:00:42:14 - 00:00:51:17
Speaker 1
way. Let's go in that direction. Arthur So what was the inspiration behind going into that next level Ventures 50.
00:00:51:19 - 00:00:53:07
Speaker 2
Area 15 Ventures Yeah.
00:00:53:09 - 00:00:55:09
Speaker 1
So dare I say Ventures.
00:00:55:11 - 00:00:57:05
Speaker 2
Yeah, whatever. I don't know.
00:00:57:07 - 00:01:01:07
Speaker 1
It's area 50 Ventures. There you go. Right. Yeah.
00:01:01:08 - 00:01:21:16
Speaker 2
Yeah. So I left Remax because I wanted to invest in some businesses with the co-founder of Remax. He and I became very good friends, Dave Linnegar. He's my mentor and best friend and because I was the CEO of a public company that he was a large shareholder in, we could not buy companies together. It was a conflict of interest.
00:01:21:18 - 00:01:44:20
Speaker 2
It was this public company rule book of about 40,000 pages called Sarbanes-Oxley. And they said, no, you you work for this guy. You're he's a shareholder of yours. So you can't go buy businesses with them. I'm like, That's fine. I'll retire from Remax and he and I will go buy businesses. Wow. So ultimately, what we you want to start in an industry where you're relatively well versed.
00:01:44:22 - 00:02:13:12
Speaker 2
So, for instance, I know franchising real estate is secondary to franchising for Remax. Remax itself, while, you know, it is a real estate company, it's actually a franchise company that franchises real estate companies. So we had 9000 franchised locations around the world, and I knew franchising very well. It's a a regulated industry by the Federal Trade Commission. And as a result, I was very well versed in.
00:02:13:12 - 00:02:33:02
Speaker 2
I thought, okay, let's go buy some franchise companies or maybe start some up and, you know, absolutely love it. Franchising is fantastic. So franchising is helping build entrepreneurs is ultimately what you're doing. So you have this network of small business owners and your goal is to help them make more money because when they make more money.
00:02:33:04 - 00:02:50:23
Speaker 1
You make more money, and when you make more money, you can grow the brand and it reciprocates and helps them because it creates brand name, awareness, purchasing power, things like that for them to help do their business better. Everybody wins. That's the key thing that we have to focus on here. One of our key tenants in this organization is everybody wins.
00:02:51:05 - 00:03:09:06
Speaker 1
We want everyone to benefit. It's not a we don't want you to buy a franchise just because we want you to buy a franchise. We want you to buy our franchise because we want you to create wealth. So that's that's how the whole thing works. So we got into franchising. We we have a couple of different sandwich companies.
00:03:09:06 - 00:03:32:13
Speaker 1
We have Daddy's Chicken Shack, which is a fried chicken sandwich concept. And then we also have porta subs, which is a sub sandwich concept, and we have a whole bunch of other smaller companies that we're invested in here and there. We're actually a franchisee of Harley Davidson dealerships, so we've got a couple of dealerships there. And then we're we're getting into some tech startups that don't buy.
00:03:32:15 - 00:03:33:22
Speaker 2
Casey Buffet.
00:03:34:00 - 00:03:35:03
Speaker 1
yeah. Yeah.
00:03:35:05 - 00:03:38:23
Speaker 2
Really? I went to my first shareholder meeting 23. It was.
00:03:39:00 - 00:03:39:17
Speaker 1
wow.
00:03:39:19 - 00:03:43:21
Speaker 2
Got to see Charlie before he graduated. Yeah. Yeah.
00:03:44:00 - 00:03:46:12
Speaker 1
Yeah, They they've done some great work.
00:03:46:14 - 00:04:19:05
Speaker 2
So I'm curious about the everybody wins idea is the is part of that that the so is the focus on whatever the franchise is value prop is to the customer as opposed to the franchise or profiting from selling the franchise. It's right that's connected because I've often watched the franchise or grow in revenue at the con to the detriment of whomever is allocating capital into it as a franchisee.
00:04:19:07 - 00:04:25:03
Speaker 2
Right. So like, almost like a the greater fool's theory or something.
00:04:25:05 - 00:04:26:00
Speaker 1
Right. I mean.
00:04:26:00 - 00:04:26:21
Speaker 2
Not see, but.
00:04:26:23 - 00:04:56:01
Speaker 1
You've got this this in a lot of times the franchisee becomes kind of dependent on the franchises or for the rules and regulations because there is a you know, there's a contract there in place for them to to license and operate that franchise. But ultimately, the franchise or if they look at this as I want to make as much money as I can, then they lose sight of the fact that their goal is to help the franchisee grow.
00:04:56:03 - 00:05:26:11
Speaker 1
But if they come into this with, I mean, really franchising, you should focus on two things. Okay. The first one is increasing franchisee revenue. The franchise owner should be 100% interested in increasing franchisee revenue and helping control those expenses that that revenue has to to to reduce. So ultimately, you know, you take the revenue, you take out the expenses, that's where your profit is, the franchise or gets a percentage of the revenue.
00:05:26:13 - 00:05:38:13
Speaker 1
So if I help you increase your revenue, yeah, I win also. But you win at a larger scale than I win. And that's how it should be because I'm winning over the whole bunch of people. You're winning for yourself.
00:05:38:15 - 00:05:42:08
Speaker 2
Is the underlying philosophy that the franchisee that is. They're the client?
00:05:42:14 - 00:05:43:08
Speaker 1
Yes.
00:05:43:10 - 00:05:45:15
Speaker 2
Not me. Right.
00:05:45:17 - 00:05:46:01
Speaker 1
Right.
00:05:46:02 - 00:05:56:16
Speaker 2
The customer. The franchisor. If so, even if it's like below awareness. Right. If I think I'm the client, like, I'm just going to make as many sales as possible.
00:05:56:18 - 00:06:03:05
Speaker 1
Yeah, the. The idea is the franchisee is the customer of the franchise or.
00:06:03:07 - 00:06:12:08
Speaker 2
If that deviates what you what happens, what are some of the ways that that the franchisees zorc and fail the franchisees that we might question?
00:06:12:08 - 00:06:36:08
Speaker 1
Well first of all, not caring about them care more about revenue than their success. And once you start, you know, becoming the police force of the franchise organization, that's when, you know, it turns into a parent child relationship where, you know, you're not partnered with the child. You're enforcing the rules of life on the child. And nobody wants to be in that situation.
00:06:36:11 - 00:06:50:16
Speaker 1
It just it creates a difficult conversation every time you pick up the phone because you don't want to pick up the phone as the franchisee and get chewed out every time going, why aren't you making more money? Why aren't you getting better grades? Why aren't you picking up your room? Things like that. I mean.
00:06:50:17 - 00:06:51:22
Speaker 2
Honestly, the IRS.
00:06:52:01 - 00:07:17:19
Speaker 1
Yeah, exactly. Yeah. I mean, it just turns into a really difficult relationship. But if the franchisee looks forward to the calls of the franchise or because the franchise is interested in their success, then it's a it's a welcomed call. It's a trusted call. And the conversation is productive. So it's it's a hey, we figure it out this way that you can make more money.
00:07:17:21 - 00:07:41:08
Speaker 1
Let's try it together. So everybody has skin in the game in this act like it. So it's like if your trainer lost weight, when you lost weight, do you think they'd be more interested in you losing weight? Absolutely they would. Well, I mean, as a franchise or were we make more money when you make more money. So we are absolutely interested in you making more money.
00:07:41:10 - 00:07:46:06
Speaker 2
Is there a connection with short term you long term you're curious on your thoughts on.
00:07:46:08 - 00:08:09:06
Speaker 1
I think it has to do with I mean, there's yes, you look at short term and long term, but in the short term, you look at how do we create the habits that create the long term returns, because we're looking for, you know, as as a franchise owner, we want our franchisees to create generational wealth. That's really what it's about.
00:08:09:06 - 00:08:36:14
Speaker 1
It's but you you create generational wealth one day at a time by creating by increasing same store sales. So if I can take you from having $3,000 days to 4000 days. Okay. Wow. Let's multiply that by a year or five years. So that's that's what we're shooting for is and that's the first key piece is increase same store sales.
00:08:36:16 - 00:08:48:01
Speaker 1
How do we increase same store sales, whether or not it's a brick and mortar store or a service organization or real estate age or whatever it is, How do we increase your ability to make more money today?
00:08:49:04 - 00:08:54:14
Speaker 1
And then the second piece of franchising is how do we increase the brand together?
00:08:54:16 - 00:08:57:22
Speaker 2
There's balloons also. I'm not sure what That was good.
00:08:57:22 - 00:09:00:01
Speaker 1
That was cool. All right.
00:09:00:06 - 00:09:01:06
Speaker 2
What's the second piece?
00:09:01:12 - 00:09:27:16
Speaker 1
So the second piece is increasing the brand. So growing the brand itself, which means increasing the number of franchises out there. So when you're selling franchises, you grow in three different ways. Okay. One is somebody using an existing franchise, buys another franchise. That's how you increase your footprint. The second one is they refer you to one of their friends who they're like, Hey, I love this franchise company.
00:09:27:17 - 00:09:47:14
Speaker 1
You should, you know, my friend should buy one also. So you you get a referral, get them to. And then the third one is you go out and organically find somebody who's not part of your franchise network to buy a franchise. But you'll notice one thing, the franchisee affects two thirds of your growth. Your existing customer affects two thirds of your growth.
00:09:47:16 - 00:10:05:19
Speaker 1
Now, think about that in any business that you're in. If you looked at your existing clients and said, How can I grow my business? If you thought, Wow, these people affect two thirds of my growth, they're either going to buy more from me, they're going to refer somebody, or the third leg of that machine is I'm out organically finding new customers.
00:10:05:21 - 00:10:10:05
Speaker 1
Two thirds of your success comes from your existing customers.
00:10:10:05 - 00:10:35:09
Speaker 2
The brand piece, that's the Parasocial element. Yep. But that the the sustained ability of it would be rooted in same store sales which is connected to that mentor mentee relationship. Franchise or mentor mentee is the franchisee like Michael I can like who's walk in the door. What's that Chinese proverb? Man who can't smile, don't open shop, Something like that.
00:10:35:11 - 00:10:36:01
Speaker 1
I love that.
00:10:36:01 - 00:11:06:14
Speaker 2
Yeah. So that in that interaction. This is this is a masterclass on franchise. For those that are listening, that have interest in getting involved in that arena, what are some red flags they should look out for when they're interviewing companies to invest their hard earned? Because I'm thinking of like everyday people, maybe they were an exact exact or employee or they've tried entrepreneurship on their like totally on an island.
00:11:06:18 - 00:11:17:07
Speaker 2
And now they're like, Let me get behind this franchise. So what are some things to look for to say, that's not the right institution. That's not the right franchise.
00:11:17:09 - 00:11:38:02
Speaker 1
Right? Well, I mean, first of all, you have to you have to understand the culture of the organization. I mean, culture matters and ultimately it comes back to can you see yourself in that culture? Because the culture is not going to change to to, you know, around you. You're going to have to fit in that culture of that organization.
00:11:38:04 - 00:12:01:20
Speaker 1
So I would do some research on that organization, particularly on the leadership of that organization. Is there a single video out there of their CEO talking about the culture of their organization? Because if there's not, you have to wonder, okay, what is the what's going on behind the scenes? What's behind the curtain of this organization? If you if you go and sign up for this company and figure out that the culture is not for you, you can't get out of that.
00:12:01:20 - 00:12:27:01
Speaker 1
You're in an agreement of typically a five, seven or ten year franchise agreement. Wow. So I would learn about the culture of that organization before you do anything else. The second one is can you see yourself operating the system that that business operates within? So that system might be let's say it's a service organization where you're, you know, maybe it's a coaching franchise.
00:12:27:03 - 00:12:46:02
Speaker 1
Can you see yourself following that, that coaching or that mastermind concept and buying into it and loving it? If it's a sandwich shop, can you see yourself loving that brand in that product and what it's all about? Because if you're not in love with it, you're not going to give it everything that you've got.
00:12:46:04 - 00:12:50:07
Speaker 2
I don't like sandwiches, but I want money. So let me do sandwiches. Yeah, yeah, yeah.
00:12:50:07 - 00:12:59:15
Speaker 1
You could do so. I mean. Well, here's the reality, though. You have to love the concept and how it operates.
00:12:59:17 - 00:13:04:15
Speaker 2
So you don't have to get high in your own supply to enjoy the supply chain.
00:13:04:17 - 00:13:16:06
Speaker 1
Correct. You got to love. But here's the reality. Is, if you love chocolate, I don't want you owning a chocolate company necessarily, because all you're going to do is eat your product.
00:13:16:08 - 00:13:16:23
Speaker 2
Interesting.
00:13:17:01 - 00:13:30:18
Speaker 1
So, I mean, you'll get sick of it. You have something that you, you know. Sure. You like it? Like I like our sub sandwiches are high quality meats and cheeses. People like I love this. I'm like, okay, can you eat it every day? Now I have fried chicken. I can't eat fried chicken every day.
00:13:30:18 - 00:13:40:02
Speaker 2
Yeah, maybe the founder, the founder of the franchise might have been, like, all hopped up. But maybe those that are operating that that former I.
00:13:40:03 - 00:13:45:06
Speaker 1
I would say I would say you like the product, but you don't have to live on the product.
00:13:46:18 - 00:13:48:09
Speaker 1
You know, it's it.
00:13:48:09 - 00:13:54:14
Speaker 2
So pick the culture. Do you due diligence, see yourself operating the system. Is there another way you'd advise?
00:13:54:16 - 00:14:16:11
Speaker 1
I think, you know, do an adequate amount of diligence and have adequate capital to get going. Don't go into something going. You know, I'm going to try and keep this. There's a pro forma for each of these different franchise companies there. It's there's something called a franchise disclosure document, which is a federally regulated document. There are 23 sections to that.
00:14:16:13 - 00:14:41:14
Speaker 1
They're called items. So there's 23 items in there. And items five, six and seven discuss the financials around opening a franchise organization. If you could see yourself handling those financials, then great. I would add an item 19 is kind of a balance sheet for the whole thing. So you take a look at can I see myself doing this?
00:14:41:16 - 00:15:03:01
Speaker 1
Because if you can't, then you're you just bought yourself another paycheck and you're going to be angry at yourself as your boss because you're the boss. So you'll be angry at yourself. What you're doing when you buy a franchise, you're not necessarily going and working as an employee in a company. You're buying the rights to a system to run your own company.
00:15:03:01 - 00:15:22:10
Speaker 1
Within that system and brand, you're the boss. So can you see yourself running that business based on those financials and those requirements in order to create those rough profits? And then if you want to scale it, you open another one and you open another one with another one, you become a holding company and that's where you really create wealth.
00:15:22:10 - 00:15:24:19
Speaker 1
Is multi-unit franchising.
00:15:24:21 - 00:15:49:23
Speaker 2
I was just listening to a book by Guy Hands is an investor, and he would mention at the end of the book that he was in his family for general generation or wealth purposes, was interviewing for one time to acquire all of the Scandinavian. I think it was their McDonald's and how that was going to create this generational, you know, it's these hundreds and hundreds of is like this nine figure multi in my view.
00:15:50:01 - 00:16:10:09
Speaker 2
And it's it was pretty amazing to listen that story. And then here we are talking about it. So it is something that people do to set themselves up their families. So my what my follow up on that is for the listeners that would be interested in that as a franchisor investor advisor coach, what are some things you're looking for to say?
00:16:10:11 - 00:16:17:16
Speaker 2
This person may think they're fit for that, but that doesn't suit them. So we could disqualify some of the people that are listed.
00:16:17:18 - 00:16:35:09
Speaker 1
Right? I mean, first of all, you have to be willing to put in the work that a franchise is not an ATM machine you don't walk up to and it hands money to you. You have to put in the work. It is a job and you start off as an owner operator nine times out of ten, even if you wanted to McDonald's, you have to be back behind the register.
00:16:35:09 - 00:16:57:21
Speaker 1
You got to be making fries, things like that. Every franchise company wants you to start as an owner operator unless you're going in and just buying multiple franchises, then you better have some really good management team that is experienced in that franchise brand. But the reality is, you need to be willing to get your your hands dirty a little bit and go in and learn the business.
00:16:57:23 - 00:17:17:15
Speaker 1
And it's fantastic because, I mean, it doesn't take long. Most franchise companies have fantastic training programs. You'd be like, Wow, I just learned a whole bunch about this. Like when we bought the Sub Sandwich Company, I went to Sandwich University. I learned how to make sandwiches and I'm like, Whoa, I you know, I'm 52 years old. I had no idea.
00:17:17:15 - 00:17:36:12
Speaker 1
That's how you make a good tasting sandwich. But that's fantastic. So, I mean, the reality is you need to be willing to stand behind the register and talk to the customers. If you're not willing to do that, I don't necessarily know that you're cut out to be an entrepreneur because entrepreneurs, you need to be willing to talk to customers.
00:17:36:14 - 00:17:58:14
Speaker 1
And they're like, When I want to be a business owner, the reality is you've got to exhibit the leadership that you want your employees to be operating under, and if they see you do it, they will do it. That's how you build a great culture in your small organization, and that is a franchise someplace. How the boss operates, how the boss talks, how the boss reacts.
00:17:58:16 - 00:18:22:18
Speaker 1
I say react because let's say you have a customer who's having a bad day and they come in with a chip on their shoulder. I mean, if you pound on the table and custom out, guess how your employees are going to be treating the next customer pounding on the table and cussing them out. If you're in a team meeting and you're pounding on the table and cussing out your employees, yes, how your managers are going to treat those employees the same way.
00:18:22:20 - 00:18:38:06
Speaker 1
So you need to be willing to step up and demonstrate how you want the culture of that organization to be. And it does take a fair amount for people to do that because they might leave the corporate environment and go, I want to buy a franchise, which is typically where franchisees come from. A lot of times they come from the corporate environment.
00:18:38:08 - 00:18:59:10
Speaker 1
Like I retired, I've got a little bit of money. I'm going to invest it in my future and my family's future, and I don't want to work for anybody but myself. So we always say you're in business for yourself, not by yourself and in franchising. So I mean, that's the idea behind it. You you run businesses, you start scaling those businesses.
00:18:59:10 - 00:19:21:08
Speaker 1
Next thing you know, you have three of them. Five of them, you know, take a single unit franchising. Let's say you're you're making $100,000 a year just for round number. Next thing you know, you own five of them. You've got synergies. So you're not now bringing in 100,000 per store, you're bringing in 125 first store. Things start magnifying.
00:19:21:10 - 00:19:36:23
Speaker 2
Real estate, lot of uncertainty. You had tremendous amount of guests on in the last year and a half. You're behind the scenes now in that industry. There's some disruption going on. Where is the opportunity? What advice do you have for the listeners that are in and around real estate?
00:19:37:01 - 00:20:04:19
Speaker 1
Well, first of all, if you're if you're a real estate agent, I think you need to take a hard look at how you justify your value proposition to your customer, because given all the class action lawsuits going on in the space, they are questioning, okay, what am what are you doing for me for that commission? So you need to have a hard conversation with yourself and say, and I just making a commission or I'm actually delivering value that deserves that commission.
00:20:04:21 - 00:20:27:05
Speaker 1
And I think that's really one of the key points in real estate right now. If you're a consumer, I would say make sure you're getting the value from your real estate agent in order for them to earn that commission, because what what is a commission? It is an exchange of money for value delivered. Okay. So let's justify our value in this marketplace.
00:20:27:07 - 00:20:52:01
Speaker 1
Now, where are the opportunities here? Well, ultimately, there's there's a lot of opportunity showing up in in the explanation of that value. The National Association of Realtors suffered a big loss in a class action lawsuit recently. You know, they're probably going to appeal it and things like that, as have several other players are like 18 lawsuits going on, class action lawsuits going on in the real estate space right now.
00:20:52:01 - 00:21:17:15
Speaker 1
It's really, really overwhelming. But ultimately, it's calling into question how people operate. And is that ecosystem closed out where people are required to operate that way, or is there antitrust going on? We as people in the real estate space, I'm I don't sell houses. I run real estate companies. I run right now I'm involved in some startups that are looking at what are the opportunities available in the real estate space.
00:21:17:17 - 00:21:51:12
Speaker 1
But ultimately what it comes down to is how is the consumer being treated and is the value being justified to the consumer by the agent for that commission and some of the control of the information in the process? You know, I think there's going to be some decoupling going on, meaning the people have to be a member of National Association of Realtors and their state association realtors and their local board of realtors in order to be part of the MLS, in order to to be able to sell and display listings from that MLS.
00:21:51:14 - 00:22:06:01
Speaker 1
But ultimately, I think some of that is going to create some opportunities for disruptors to come in, some new tech plays to come into the space. So I keep an eye on the real estate space. I think it's going to be exciting over the next couple of years.
00:22:06:03 - 00:22:13:08
Speaker 2
But that alignment will break could be misaligned. So new opportunities are coming to serve the people that want to be in those roles as they changes.
00:22:13:08 - 00:22:34:14
Speaker 1
And yeah, every time there's change happening, every time there's some sort of, you know, some change, a rule change or law change or anything like that that happens in an industry, it opens the doors for new entrants into the business space. So what's going on right now is absolutely going to change the real estate space. Will we see new entrants?
00:22:34:16 - 00:22:58:12
Speaker 1
Yes, we will. We will see different companies pop up. We will see different tech providers pop up. We will see different opportunities for consulting pop up. But realistically, it's going to come down to value delivery like any other business is. There must be value for money in any business. And where is that value gap going to occur in the real estate space?
00:22:58:14 - 00:23:14:00
Speaker 2
If you're listening to this podcast, I challenge you to share this episode, leave a comment, leave a review on the Culture Matters podcast. Final word. How do we start with a win? I don't want a CEO in 2024.
00:23:14:02 - 00:23:38:01
Speaker 1
Awesome. Thanks, Jay. I appreciate you having me on here. And thanks to everybody for listening. Here's what I would say. Don't settle, okay? Always go out and be the best that you can and don't settle when you're when you're done something, go. Am I settling for what I've got right now or can I do more? That's where you find that magic space is above settlement.
00:23:38:03 - 00:23:57:23
Speaker 1
It's we only show up with 25 to 40% of our capability. Where's the rest of it? Look in that bucket. You brought the work and go, I can do two more deals. I can make five more calls. I can make three more people smile today by picking up the phone and contacting my customers. And as a result,