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Mr. Biz Radio: Is Franchising Your Golden Ticket

Unedited transcription of the show is included below:

(00:03):

Welcome to Mr. Biz radio Biz Talk for biz owners during the next half hour, Mr. Biz, Ken Wentworth, a leading business advisor, and two time bestselling author we'll cover topics. That'll help business owners run their companies more profitably and more efficiently. If you're ready to stop faking the funk and take your business onward and upward, this show is for you. And now here's Mr. Biz, Ken Wentworth.

(00:27):

All right. Welcome to another episode of Mr. Biz radio with me, Mr. Biz can work and this week we're going to, we're going to tackle a subject that I know a lot of you would be near and dear to your heart. And some of you be at least be considering from a couple of different angles, actually. So I know we've got a lot of people and I use this term and I think I've actually gotten a little bit of grief from listeners about this a little bit about using the term wantrepreneur. And people think that I'm, I'm, I'm being negative. When I say that, I don't mean not at all. I don't mean in a negative way. And what I mean by wantrepreneur is someone who wants to be an entrepreneur. They're just not quite there yet. And they haven't decided, I don't mean that as like, oh my gosh, you know, get off the fence and make a decision that, you know, everyone needs to do things on their own time.

(01:07):

Of course. And so a lot of the folks that are, wantrepreneurs thinking about, gosh, what direction do I take? I'm overwhelmed. You, maybe you have a corporate career and you don't know where to go. Should you start a business from scratch? If so, what, how do I even get started? I don't know where to start. Can you buy an existing business? Well, I don't know if I have the capital for that. Gosh, what should I pay? You know, there's a whole bunch of caveats and all kinds of different things to consider with those two options. And then there's another option and that is to buy a franchise where, you know, it kind of hits the easy button for you and you get past a lot of the hurdles you would face from the other two options. And so with that, I wanted to have a guy who's been on the show before. It's been, gosh, quite some time now since he's been on the show, but he is now working with friend net Columbus. And we're going to talk about if franchising is your golden ticket. So without further ado, welcome to the show, James Minter. Good afternoon, James. You know, I didn't even think about is how long has it been since you've been on, it's been probably what, at least two years, right.

(02:06):

Close. I would say that's well, certainly with pandemic, it was before it was back in 19 or, or later than that. So yeah, it's been probably close to two years. Yeah.

(02:16):

And we've talked about other topics and we haven't talked about some of the things that James does with friend net. And so again, I think it would be a really good thing to talk about. So, so for those who haven't heard, some of the other shows that James has been on, of course you can go back in the archives and check those out. We've talked about a bunch of different things. And I know we did a, a triumvirate at one point with a yourself and me and, and, and good old Paul Rockwell. We did a couple of shows talking about entrepreneurship, et cetera, but I want to stay focused in the franchise world for, for this show. And so James, why don't you talk to us a little bit about your journey into the franchise world, from all the other things that you've done in your entrepreneurial life?

(02:51):

Certainly well, the biggest thing probably, you know, having immediate agency for almost 19 years I had an opportunity to work with a lot of franchises and anyone who was explored the world of franchising know a lot of times they will share with you, you know, what percentage of your revenues should be allocated to marketing and advertising or branding. And sometimes they don't define that in some people getting into the world of franchising, my be confused with a different concern of those things. But as an agency, we were able to help guide a lot of franchises in their efforts, coming into select markets and understanding the best place to advertise and do their marketing and help them in building the brand through those relationships really started to enjoy kind of the behind the scenes activities that happen in the world of franchise.

(03:49):

And so I was reaching a point in my career where I was either going to go a little bit deeper on education for my agency especially in the, the, the digital realm or I was looking at a, a comparable or complimentary type of a business that would make a lot of sense. And, and it didn't take me long. I mean, we have worked in the central Ohio market and throughout the United States with brands like metal boxing club, Quaker steak, and lube, dry patrol ever dry a number of national caterpillar, et cetera, and done a few things with those businesses and understanding the operation what they call discovery days. That's changed a little bit since the pandemic, but the behind the scenes of understanding their systems, their processes how they set their franchisees up for success how they're vetted all of those things.

(04:46):

I really had a unique opportunity to get a good feel for that in working closely with these franchises. And so that led me to start exploring brokers that were out there and how they operated and how they shared information in the franchise world with prospective franchise ease. And that led me to a friend next which they're based out of Louisville, Kentucky, they've been around since the mid eighties they kind of rebranded themselves and in the early two thousands. And you know, there's about 5,000 between 4700-5,000 or so franchise concepts nationwide and FranNet really zones in on about 250 concepts. And I liked the fact that we were offering enough of concepts for prospective clients that leads to have a variety of, of finding one that was a good fit but their process of how they vet franchises and then how they work with clients and customers that really drew me into the world of franchising.

(05:55):

Well, it's interesting because, you know, as you mentioned, the new alluded to earlier is it's sort of a natural extension with a lot of the other things you were doing with your media agency. As you mentioned, you're, you're working with a lot of these organizations anyway, and then is looking at, you know, doing some different things with your business. I think it makes a natural extension to look into that. So I guess what has been, what has been the biggest thing that has been a surprise for you moving into, you know, sort of that franchise world that maybe, you know, 10 years ago working with you know, in your, in your media agency of Buckeye Media Services, that you, you had some, you know, myth in your head of franchises are X, and now that you've gotten into it, you're like, oh, that's not true at all.

(06:38):

I would say in, in it's would probably be eyeopening for a lot of people, but I mean, we use it as a phrase. A lot is, you know, franchises are not just burgers and fries. And I was really surprised when say I got into the world of franchising and understanding the dynamics and the way they were established with the categories of business to business or educational or fitness and nutrition, really expanding all the categories and all the niche type business opportunities that exist within franchising, even understanding you know, we represent a company called Sign World and they technically don't offer royalties. Well, they don't offer royalties or, or charge royalties for their franchisees, but they also are unique in that you don't see very many signing worlds that's because they allow people to choose the name of their business. And that's something that happens that, you know, I always thought, well, if you had a franchise that was that name and that name only, but there's an umbrella in some of those situations where they allow the franchisee to change the name there's franchises that do not charge a royalty. So that's unique. We thought that was just required, or that would just part of the process or understood, but it's not necessarily the case, but I think the biggest thing was getting outside of the food for whatever reason. So many people immediately associate franchising with food businesses, and it's just so much more than that. So it was a true eye opening experience for me, realizing just how deep and wide the world of franchising really is.

(08:13):

Yeah, it's interesting. For sure. And I, I love that it's not just burgers and fries. So again, this week we're talking with Mr. James Minter from friend that Columbus, you can find out, more, check out their website, www.FranNetColumbus.com, that's www.FranNetColumbus.com. And James just actually put on a, a very successful event here a few weeks back. I'm sure he'll be doing similar type events in the near future. So go out and check out www.FranNetColumbus.com. You can sign up to be alerted for future events. Come back after the break, and we're going to be Mr. Biz tip of the week.

(08:46):

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(09:17):

Thank You for listening to Mr. Biz radio. Did you know our show airs seven days a week for more than 30 hours. Now, if you are in the B2B space and would like to reach thousands of business owners every week, including our more than 250,000 social media followers are thousands of daily internet radio listeners, our email list fans and Mr. Biz Solutions members email us at This email address is being protected from spambots. You need JavaScript enabled to view it. to become a sponsor, tap into Mr. Biz nation to help grow your business.

(09:46):

Check out both of Mr. Biz’s national bestselling books, “Pathway to Profits” and “How to Be a Cash Flow Pro” on Amazon. Now, once again, here's Mr. Biz. All

(09:56):

Right. Welcome back to the show. Sexy little funky music it's time for the Mr. Biz tip of the week. This week. It is a quote from from one of the people that I admire a great deal. Jesse Itzler is his name very interesting guy. If you don't follow him on social media I would definitely recommend that he's, he's a super cool guy. Anyway, his quote. Look, we, we talk about everything. This is a non-business quote, but this is about a business owner's life as well. And his quote is don't raise your kids to have more than you had raised them to be more than you were thinking about that one. For, for those of you old enough to remember deep thoughts by Jack handy on Saturday night live that's definitely a deep thought by Jack handy, but again, don't raise your kids to have more than you had raised them to be more than you were again, Jesse Itzler that's his quote.

(10:46):

So that is the Mr. Biz tip of the week. And now let's get back into talking about franchises is franchising, your golden ticket. So James, you told, you told us a lot of things about the franchise world, your journey into the franchise world during the first segment, let's talk about and of course during the third seven, I want to talk about if you are a prospective franchisee, what are some things you should look for in a franchise opportunity, something, some things to avoid things, some things to make sure you look forward specifically. But before we get into that, let's talk about some of the things that you see that are benefits of, of maybe buying a franchise, you know, even versus some of the other options that are out there that I mentioned at the outset of the show where they're starting a business from scratch or even buying an existing business,

(11:29):

Certainly. Well, I think the majority of people who buy into a franchise, ultimately at the end of the day, what they will say will at least be part of their decision process, is that they were able to look at and see performance. They were able to see activity. They were able to see the systems, they were able to evaluate, you know, the operational systems that were in place and really assess, you know, whether that was a good fit for them, whether they were being a, a, you know, a hands-on manager or they wanted to be an absentee owner, et cetera. So I think with the benefits of buying a franchise, a lot of people will tell you is obviously they, they can see that it's a proven system and then it has worked. If you're working with brokers or companies that are representing certain concepts, a lot of times they will do their own vetting of making sure they have successful concepts within their portfolio that they're sharing with you.

(12:35):

When people are evaluating whether or not they're going to start their own business from scratch or, or buy an existing business considering the purchase of a franchise is a wise choice, at least when you're in that position and the things that I would compare between a franchise and starting your own business from scratch. There's a lot of unproven variables when you're starting from scratch. You know, what happens with the market? Is it, is it a product or service that can withstand recession or now, is it a product or service that can withstand a pandemic? Do you have to count just rooftops or if your product or service requires a number of households with certain demographics or children, or et cetera, you know, there's a short list of those things that you evaluate, you know, as a business owner, what's going to make my business successful.

(13:27):

And then even if you're taking over a business that's been in a market or in your neighborhood or in your community for any length of time, or you're coming in just to make an investment and looking at possibly buying an existing business certainly you can look at the books and as part of the disclosure process to understand, you know, if their profit and loss statements really do match up and in going through that to really make sure you're making a wise decision, and then you have to evaluate, you know, is it a business that can sustain for another five or 10 years? Or how long has it been around? Is there updates to it or has the competition changed? All those types of evaluations certainly go into when you're buying an existing business. But ultimately I think at the end of the day, you also really have to do your due diligence and research to make sure that what you see on paper is legit.

(14:16):

And the performance that they're saying and has been for the past five or 10 years are current currently is, is all up to par. And, and in true, when you take on a franchise, a lot of those checkboxes are taking care of, you know, most franchise owners, you know, have a history to show you how many have been opened, what their performance is, what the annual revenue is. If they've had any bumps in the road, how they've overcome that, what systems they have to support the franchise. E when they're understanding staffing, they've done evaluations to know the hours that are required with a number of, of employees that you need at certain times of the day, certain times of the week, certain times of the year, a lot of that goes into it, and it makes it in my mind a little easier, so that you're not just going into something completely blind.

(15:12):

You actually have a roadmap in front of you with systems that have been tested and are proven, and maybe more importantly, you know, your investment of what you're looking at. It's not as strong of a risk if you can see past performance as indicators. So I think for that reason, those are some of the things that I look at and try to encourage clients that we work with to evaluate, because when we meet with clients, you know, they, they are very much in the middle of either starting a business, buying a business or considering a franchise. So that's a very common conversation, and those are the types of things that I encourage them to evaluate when they're making that decision.

(15:50):

Yeah, I think it's interesting. And so all that being said, and I think everyone's going to be very surprised to hear this James, when you work with someone as part of friend net, and so I'm, I'm, I'm Joe want to be own business owner and I come to you and I say, Hey, I want to explore some franchise opportunities. I know you guys kind of focus in on around 250 or so. And so I wanna have you helped me, you know, kind of narrow that search down and kind of figure out what works for me. What's that going to cost me to work with you?

(16:19):

Absolutely nothing. Yeah, that's one of the main reasons why I was drawn to friend and I didn't want to go into a company where people had to pay to get advice. I, I, as you know, I give a lot of free advice. I like educating people, and this is certainly a type of an industry where you need to educate individuals. And so for, in that, our fees are zero no dollars, no sense. We get paid on the back end when we make the right match, people will oftentimes ask, is there something in it for you when we narrow it down to three or five choices for them to start evaluating for the discovery days and starting to have their, their vetting conversations? They ask me sometimes as, or something in it, if I pick one of these over the other and I'm like, no, it really doesn't matter.

(17:07):

And, you know, even though there might be a different commission truthfully at the end of the day, if, if, if we do the right thing and we match the right person with the right business, it's a, win-win win for everybody. The franchisee is going to be happy to share that, and we'll get a referral down the road. The business will be successful and that will make the franchise or happy. And then for me personally, just knowing that I've got someone off on the right foot and that they're doing what they want to do that relationship will go a long life. So I I'm, I'm very happy that we don't charge. And that should be a flag. Also anyone that is talking with a broker or a consultant that is wanting you to pay any kind of a fee at all for their services, I would truthfully just walk away. There's plenty of people that do their jobs the right way, and they get paid on the back end after they make the right fit, the right match. And that's how it should be. And that's the way it is with Fran that Columbus. And that's why one reason why I enjoy doing what I do.

(18:10):

Yeah, absolutely. And that's frankly, James, one of the reasons why you're on the show talking about this, because some of the other companies that don't do not operate that way, I don't want them on the show to talk about it because I, I agree with you a hundred percent, what you just said about, you know, there's plenty of resources out there to provide it expert you know, experience free of charge. So again, we've been talking with James Minter from FranNet Columbus, find out more at www.FranNetColumbus.com, that's www.Frannetcolumbus.com. We're going to hit a break here. And James is going to give us some tips on what to look for in a franchise opportunity.

(18:44):

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(19:13):

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(19:44):

To submit questions to the show, email them to This email address is being protected from spambots. You need JavaScript enabled to view it.. Now, once again, here's Mr. Biz.

(19:52):

All right. Welcome back to the show. We learned a lot about franchising

(19:56):

And if it can be your golden ticket and, you know, as I, I guess I didn't really talk much about what James mentioned at the beginning of what the question I asked him at the second in the second segment. And that is if you are an entrepreneur, that probably means that you are struggling with the decision again. What, what direction should I go? And as James outlined, a franchise gives you a lot more typically than you're going to get from definitely from starting from scratch. But even by an existing business, you know, depending on the franchise or you choose, they've got, you know, a track record, they've got a history, different geographies you know, they've made it through the business cycle likely. And they've been in existence for X number of years. So they know what to do when the economy goes down.

(20:42):

Well, here's some of the levers we pull, et cetera, et cetera. So when you face those challenges, you have a support system in place to be able to help you navigate through those, because if you haven't been a business owner before, those could be things that would, you know, would make you reluctant to be a business owner that all being said, James, talk to us about some of the things that, you know, if you're a prospective franchisee, what are some of the things that you should look for? Maybe even some of the things you should avoid when you're considering franchise opportunities.

(21:08):

So I would say first and foremost, you know, whether it's a new or an established franchise you know, it's gonna, you're going to need to look at the support systems they have in place. I'm gonna look at the competition for that particular segment or that category or that niche of whatever that product or service is looking at their performances, you know, today, sometimes you'll you'll address or you'll work with a franchise that, you know, might be five years old, or it could be 15 years old. And so when they started and when their first franchise opened and how many franchises they have sometimes that's that's a nice little roadmap of understanding their history. But those are basic questions to ask right out of the gate. You know, you want to know how many of the franchises are company owned and then how many are, are individually owned or how many are true franchises?

(22:08):

So that's something to look at. The other part is you want to understand the process when they're looking at a franchise and especially if you're working with a broker consultant, you want to understand what the vetting process is. You know, w w what's this going to look like narrowing it down from, in our case 250 concepts down to three or five that are good fit for us. We have a, an entrepreneur profile that, that helps us to narrow that down a little bit in. And everybody has, you know, whatever that system is for them, but for us, it's, it's an evaluation of personal franchise assessment, et cetera. And once we get it down to three or five, then we actually even start opening up the phone calls to allow the person to talk with the franchise, or, and more importantly, they get to talk with some franchise EAs that might be in a different state or a different city for us with this show here in, in Ohio, obviously we know that Cleveland and Cincinnati and Columbus and Dayton and Springfield and Zanesville are all very different markets and the same is true for how franchises perform in different markets.

(23:14):

So that's another area that you certainly would want to make sure is, is an option for you to be able to, to have those conversations with not just the franchise orders, but the franchise E or multiple franchisees in multiple cities and states. There's a a disclosure document, much less, as I was saying the last segment about, you know, when you're asking for disclosure from an existing business to get all their, their profits and losses and understand the good, the bad and the ugly, the positives and the success stories, you know, the disclosure document, which is signed by both it allows you to get some additional information, which is very insightful to helping you to make a more informed decision. So that's another area that I would certainly address and look at. You know, obviously there's, there's franchise fees involved, but sometimes you might have a situation where the franchise may help to offset the cost in some way, and they're each you uniquely different.

(24:19):

So that varies from franchise to franchise. As I mentioned earlier, one of the concepts that we represent they don't offer, or they don't have a true royalty fee involved because part of their system has you buying their equipment and such that's true with a number of franchises that, you know, if they have equipment or products that they ask you to, to use, or you know, services that they have in place already, then they get paid on the backend in a, in a unique way. So they don't, they don't require royalties, which again, that doesn't happen all the time. Most of the time, there's probably a, a five to a seven max would probably be 10, but I would say the window is probably a five to 7% royalty is pretty standard in the industry, but you want to ask those questions and understand what true fees are involved with royalties they should expect to pay, you know, is it a seven year renewable?

(25:12):

Is it a five-year renewable is a 10 year renewable. That's something that a lot of people aren't asking, those questions certainly would ask those questions. You want to find out if you know, what other financing's available as a SBA registered business. Is it a veteran or a minority option of getting some additional benefits from that, or discounts from that? One of the things I mentioned last segment also is whether or not it's a business, it can be run as a semi absentee or an absentee. You know, those are the things that I would certainly ask. It's just things that come top of mind for me. And it might be some more things if you have any other questions on that, I can be more specific, but that's certainly a good starting point of things to evaluate when you're looking at a franchise.

(25:57):

I think there's a great one question that popped in my head, as you were speaking, James is, so you mentioned the renewable piece of that. So let's say for example, I buy into a franchise, a franchise ABC, and it's, it's a, it's a, five-year renewable. When I come up to that, let's say for four and a half years, and then we start to talk about you know, beyond that five year horizon, you know, what are, I mean, again, I know there's every agreement's different or whatever, but generally speaking, what does that look like? Do you have the opportunity to start? Can I start, you know, Ken's ABC company I'm sure there's restrictions on that. Do they have to renew you, right? Are there restrictions on that? Maybe they say, you know what? You don't operate the franchise in the, in the way that we'd like, we don't want to renew you. And then you know, where that leave you

(26:44):

And you are right. And I should definitely put that as a strong disclaimer on the front end so that everyone knows that that is probably going to be different with every franchise and every agreement. And, you know, each one they operate and there are many that may not make it to a renewable period. You know, if they are underperforming and, or they are not following a franchise model or a franchise pot process, they may be asked to surrender or to give up their franchise in that particular market. One thing that some people may, may or may not be aware of is a lot of times for franchises, you can come in and you'll buy a single unit or multiple units, or they might bundle three or five or an entire territory. And if someone is within their first year or two or first five years before the renewable, if they've underperformed or sometimes they'll have a clause where you have to open your second one within 24 months of your first one being opened.

(27:46):

If they haven't met that criteria or not on track to do that, they may be asked to surrender some of their other territories, a lot of that. And all of that can be a possibility. And certainly when it comes time for renewables, some people can just walk away and then it becomes an open territory, or it gets resold or again, if it doesn't make it to the five or seven years or whatever, the, the contract of the clause is for that particular franchise, you know, they may be able to sell it ahead of time or just get rid of it and drop it. But yeah, a little bit of all of that takes place and it is uniquely different. So you have to really ask those questions and understand it's always good. And, you know, with all this legal stuff, you always, we don't have attorneys that work for us per se, but we try to have good relationships in the communities where we are working with clients to give them a couple of options that they can interview and find out if they want to have legal representation, that they can go and talk to someone that can help them to also evaluate the finer points within the agreement of what that really means and what their rights are and what their expectations should be at the beginning and throughout the process.

(28:58):

And if it comes time for renewal or if they want to get rid of it beforehand, one of their options, all that stuff's important. And I would strongly recommend that you have a good franchise attorney in those situations. Yeah,

(29:11):

Definitely, definitely important stuff. We talk about that all the time, legal representation, super, super important. Well, we are, unfortunately out of time, James, I really appreciate you coming on. Check out www.frannetcolumbus.com for more information, James, thanks again for coming on. Appreciate it. Thank you for having me.

Yeah, no worries. Thanks for listening guys. Have a great week and don't forget as always cash flow is king.

(29:32):

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