Unknown: James, welcome back to the marketing perspective.

I'm James donnella, and I'm excited to be here today because we get to talk about a topic that has not been brought up on this show as of yet.

Franchises, whether you're a franchisor or a franchisee, how important it is the decisions that you make in your business can contribute to your success or your failure.

And I am bringing on somebody who's an expert in franchising, and I'm only, as you know, I'll always talk about it from a marketing perspective, never anything else.

But she's going to open your eyes on a lot more.

So I'm hoping, if you didn't get the chance to tune in today, or if you've gotten to see this and you know somebody who's thinking about franchising, please share this episode with them, because I think it's something that will be very important to them.

Did you know that there's over 800,000 franchises in the US, and along with that, it employs over 8.7 million people, and it brings in over $800 billion every year.

That's right.

Franchises are a big part of our economy, and they're very important, and they're growing every single day.

But don't step into it lightly.

There are a lot of factors that go into it, whether you're buying into one, whether you're starting your own, so many different variables, and it's important to have the right people around you.

I'm bringing one of those people on today, and I'm very excited about that.

Before I do that, how do you navigate all those rules, regulations, requirements that overfranchise How do you know?

Well, if you don't, you surround yourself with the people that do understand to guide you correctly.

Because if you don't get it right in the beginning, down the line, it's going to be a lot worse.

I could tell you multiple horror stories of what I've seen from my side of the table again and again, with franchises that start off great and fail, or somebody buys into one and then tries to get out incorrectly and fails, and we may bring some of that up today, maybe not.

My guest today is chock full of stories like that, so I rather hear hers than me go on and on.

Franchise owners must protect their brand reputation.

Imagine me talking about marketing and branding, while franchises have to appeal to the interest of their local consumer, they also have to adhere to the guidelines of the franchisor, so that balance that one two punch sometimes isn't always on the same page, because sometimes the corporate brand and the corporate culture doesn't always match what's happening in the backyard of a certain franchisee, and I've seen it happen again and again.

So how do you navigate that?

How do you correctly find that balance where you're not compromising the brand of the franchise, yet you're able to speak into it locally, so that your message doesn't conflict with the brand message, but speaks to the consumer you're trying to bring in the door.

And if you don't know what I'm talking about, whether it's a geographic issue or a demographic issue, it could be economically that happens a lot, and you have to be able to understand who your consumer is.

So even before you get into a franchise, sometimes it's important to know, is this the right franchise in the backyard I'm planning on putting it, there's a lot of factors that go into that good franchises usually have solid research for things like that.

You want to do your own as well.

But again, I'm getting out of my wheelhouse.

So today I'm going to bring on my special guest, Catherine Knapp of Knapp consulting, her area of concentration is consulting franchises.

So this should be extremely insightful for everybody who's considering starting a franchise or already in a franchise, and trying to navigate the waters of that.

And I'm excited to bring her on.

Let's bring her out right now.

Catherine, I'm welcome to the show.

Thank you very much.

I'm pleased to be here.

Oh, I'm really excited.

I know, I know you're going to bring a lot of good information today in our conversations together.

I've always, I've been very enlightened by our dialog, knowing what you know so and you have a very versatile background.

So let's start with tell everyone who you are and how you got to get to this point.

Sure.

Well, as you said, I'm Catherine Nabb.

I live in Memphis, Tennessee, and I'm a certified franchise consultant under my own brand, NAB consulting, and I'm affiliated with a membership organization that lets me represent 500 plus brands across over 40 categories.

So how did I get here?

I started 1000 years ago in poll three accounting, if you can imagine that.

And from there I went to foods, conglomerate organization, where I was instrumental in converting 28 general ledgers to one a.

For an international company, and from there, I got into systems work.

I didn't golf, so I couldn't go the controller route, so I went the systems analyst route, and I became an expert at Oracle Financial and HR systems.

Did all kinds of project work.

My strong suit through my entire career was identifying gaps in process and strategic things that needed to be measured that weren't being measured.

And what I would typically do was find somebody with budget and authority, convince them what that what I saw was needed to be done, they would give me approval, and then I was off and running a project and then executing to make sure that that thing came about.

And through the course of it, I saved companies lots of man hours, hundreds of 1000s of man hours, and help them analyze data that was relevant to what they were trying to achieve, and it helped them make strategic decisions about what to do with product, service and so on, to do better about the core business of that company.

So I worked in payments industry for a long time, and then finally in the hospital industry, and that's where I was when COVID happened, and when I saw choice being taken away from families about what they could do with their kids, their elders, even their own lives.

Then I thought somebody ought to do something.

Well, I'm somebody, and I had all these skills.

And right about then somebody called me and asked if I was ever interested in learning about business ownership.

They weren't asking for my social security number so I could learn.

And as soon as they said the word franchise is like, Duh, they've got playbooks.

I don't have to invent everything from scratch.

I can find a best fit model.

And before I knew it, I was learning from a guy and then ended up wanting to do what he was doing, because it drew on the analytical skills, it drew on the mentoring, it drew on the education that I did.

I had done.

I'd been an adjunct professor before, and went to the result the research process is a project itself, and that the result is clarity about what to do.

That's what I wanted.

I wanted people to have clarity about choices.

So I went throughout a franchise consulting, and I've been learning ever since.

So I just heard something for the first time, and we've had multiple conversations together.

Are you part of a bigger organization that is kind of behind you, and you're the you're a consultant as a 1099, that's a good question.

I looked at a franchise, brand that had to do with franchise consulting, and I looked at its competitor, which is called a business opportunity, meaning that I signed, I think it was a four page agreement, 10 year agreement, we can break it at any time and walk away and be friends, but it's not as rigorous as a franchise agreement.

I didn't know what I didn't know, so I wanted that flexibility of being able to learn and make course changes if I saw fit to do so.

So the membership I'm a part of has affiliations with 500 brands.

It's always changing, and since their members and I'm a member, I don't have to write contracts with each of those brands individually.

I do write contracts with some that aren't part of that membership, so that I can represent them to clients.

But I've got, I've got over 500 brands through that affiliation.

So I think that's great, because it gives you some strength behind you, because no one person knows everything, right?

Oh, I and continuous learning, that's right, and it's assuming that the person is doing that right.

I've been in my industry almost 40 years.

I started when I was five.

You know it, it's I can't know everything I do keep up.

And that's one of my strengths.

It's one of my advantages over some competition, is I, I'm constantly learning what's new and more, because I just love what I do so much.

I imagine you're the same, but it's still, you know, I have a team.

If you're nap consulting, and it's you as the consultant, it's great to know that you've got like, powerhouses behind you, legal, financial, all that kind of stuff that can really help a franchisee navigate the waters correctly, because I know there's a lot to it, and I meet regularly with a couple of groups.

Some of them are part of ifpg, and then some are not, but they all are seasoned in the industry, and we're comparing notes all the time.

Because brands change.

So it's brand, it changes for them as well as for me.

So we're all having to constantly learn and backfill each other's information, check for red flags, and make sure that we're doing our level best to provide ethical matches to our clients.

It wouldn't be a good idea to match somebody to a brand that's got a lot of problems going on.

I wanted to jump up and down in my chair when you said the word brands change.

So in my world, that's it's exciting, but it's stressful.

It is not for the weak heart to change your brand over time.

There's a lot involved.

A lot of research has to happen.

It's got to be done correctly.

And there's so many people involved, and sometimes too many.

When it's done right, though, is really a good call.

And then that transition to launching that new brand also has to be very well planned out, you know?

And that's just my side of the table.

Katherine's side of the table is a lot more complicated.

You probably hate when we go and say, hey, it might be time for a branch.

They change every year.

If you think about how a college generates a new college catalog every year, the franchise brand generates a new Franchise Disclosure Document every year and files it with a FTC the new incoming franchisees that year.

That's their rule book.

That's the rule book that dictates what they must do and not do over the next five or 10 years, whatever their contract is.

So yeah, every year there's something new to learn about a brand.

And inside that document there's brand guide, style guide, content planning.

There's a whole and it's very strict, and when it's well done, it's great, and it protects the brand.

But Good Lord, if you're the franchisee and you decide, oh, I'm going to use pink instead of red.

Doesn't go well, let's we're getting ahead of ourselves.

So I want to, I want to give everybody the big picture and then drill down a little bit.

So please, let's start with, if you're considering creating a franchise model as a franchisor, where do you begin, it's that's a big question.

A lot of people like to consider that, especially restaurant owners, they get so passionate about their food they want to replicate it.

A very first thing that people need to be aware of.

When they change their brand to become go from independent to franchise, they're turning their one business into two.

They're going from being, let's say it is a restaurant, a restaurant, to now also a business that creates additional restaurant owners and gets them propped up and supported for success.

So they're running two separate businesses.

They might still own some original restaurant locations, but now they're also in the business of creating new restaurants.

And I tell people, don't do it and just learn, learn, learn, but don't start to execute on it until you have replicated a couple of times and each of those units are pulling in net net profit, and I'm talking about, after, say, like a royalties percentage of over $150,000 because why would anybody walk away from a job to become a business owner if it's not going to net them at least six figures?

So they have to be able to provide a profit of at least that much on a unit to compel anybody to buy in.

Otherwise, it's not worth trouble.

I've had a one horror story short, quick flooring company that the owner inherited it from his dad, and he had three locations.

They seemed to be doing really well, good, solid companies.

Each location was pretty you know, is very well run.

They came to us and said, Hey, we're thinking about franchising.

Can you help us put everything together and a very, at very high level.

I just looked at their math, you know, because I think one of the first things when you talk about advertising, and if we're going to spend money, we need to understand the gross anticipated revenue, so that we know what, where to keep them financially, not to overspend, not to underspend.

And all three locations were in the red, not nobody's showing a profit.

So I said, this would be a bad time.

I am not a financial advisor, and I don't play one on TV, but I think it's a mistake.

And he's like, Well, that's for me decide.

I said, I know, but in six months, you'll fire my firm because we're not gonna be able to help you.

It will fail.

All, and I'm just, I'm and he was like, putting loads of money on the table, like, almost literally.

And my sales guy was very mad at me that I'm walking away from this.

I said, it's go and fail.

So turns out, short of a long too late, right?

He never did it.

He never went forward.

He wound up closing the locations because he was in the red and he wanted to do something else as a consultant in the same industry, and is now doing really well.

You know, it's just it wasn't his wheelhouse to do what he was doing, and he had to find what he was good at.

I can't imagine that you ever come across anything like that in your world, right?

Well, people have grand ambitions, and just what I've seen here locally is that people will have, they will have replicated to some degree, but maybe they haven't started doing separate PNLs for each location.

So that's a step.

I tell them, look to start breaking out your accounting by location.

One guy was looking at a restaurant and a food truck.

Said, treat the food truck as a separate location and cross charge the inventory that it's getting from your restaurant as a cost into the food truck, because you need to know what the PNLs are for those different units.

Say, if you did replicate it and turn it into a franchise, the food truck model would be one version of the business, the standing location would be another version.

And it could be that a franchisee would want to start with one and migrate build up to the other, so you have to be able to prove the accounting auditability of the two.

That is excellent advice.

I want to flip the script a little bit here and switch over to the franchisee again, high level.

What are the elements, if I'm if I want to get in the franchise bandwagon, and I'm looking what are key things I should be shopping for, I look first at what the franchisee wants to accomplish.

What do they want their life to look like?

What are their financial goals?

What do they want their work to look like?

135, 10 years from now?

Because whatever that vision is whatever they think franchise is going to do for them.

I need to know what that is, because I need to start looking for brands that's going to match that very well.

I also look at their skills.

So if it's a very introverted person and they've never done any kind of sales at all, then chances are I want to find them something with a call center so that they don't have to go and do active sales for the bread and butter of their business.

They might still have to go and do community networking, but they're not dependent on themselves doing sales, so depending on what people are good at I start weeding things out.

I ask a lot of questions.

Well, why do you like that?

Because there might be an element of something that they like that points me to something or away from something.

And so I start with that portfolio of 500 or so brands, many of which I don't represent to clients, because they do have red flags.

I'm I'm waiting for them to fix something, but I start weeding out brands, and what I hope to arrive at is like a short list of about 10 brands.

Maybe I'll present about five of them and have a few in reserve.

I've talked to the brands to refresh my knowledge of what that brand is doing right now, what it's working on, what it's going to be planning to do over the next year, to make sure I'm doing a good match.

And then I present that short list to the client and ask them to be willing to interview with at least three do you find that they go down that journey and they do their homework and it in it sounds like it's more about the math than it is the passion behind what they do.

And I was always of the mindset like, do what you're passionate about, and the money will come kind of a kind of a thing where I know it doesn't always work that way, but I have come across franchisees.

They hate what they're doing.

Hate it.

They inherited it from their family member.

They're in the business, but good night.

They should not be doing this for a living, you know?

And it shows and what happens.

So again, from my side of the table, their internal culture suffers over time, because if they don't like it, their staff isn't going to like it, and it's just going to go downhill fast.

So how do you from your chair?

How do you navigate that?

How do you guide them?

You know, be sensible, be a business person, and make educated decisions.

Yet you have to like what you're doing.

Otherwise, do something.

Else you do?

You do have to like what you do.

I met a lady recently.

She was introduced to me, actually for networking purpose to help her find a business broker.

She had bought into a franchise by herself because she liked the brand.

It was a Foods brand.

She liked the brand.

She got excited about it.

She and a friend started talking about it.

So the brand showed up on her Facebook page, and she called the brand.

They started selling her she enjoyed the process and became an owner.

She also enjoyed the build process.

Well, then when it came time to hire the employees for opening day.

All of a sudden it dawned on her, now she's going to not be a solopreneur anymore, because she had been, she's going to be responsible for all these employees.

It had never occurred to her what that would feel like, and so now she hated what she had done.

Had, I mean, her her business is doing fine, but she's also actively trying to sell it because it wasn't a good match.

She didn't realize it.

Had somebody been asking her questions and then asking the second, third level down question to really get to the root of the why, they would have realized that her joy was in problem solving or making people happy and things like that, not necessarily in running a bunch of employees.

Yeah, not, not all people are cut out to be business owners.

And I don't mean that as an insult in any way, shape or form.

It just takes a certain tenacity and big shoulders and realizing it's not personal, and knowing that you'll have sleepless nights when you know, oh, payrolls tomorrow, you know, and restaurants.

I love restaurants.

I came from my my family, even to my great grandmother, had restaurants and boarding houses.

But restaurants is 24/7 I would dare say even Chick fil A has some something happening on the seventh day behind the scenes.

It's it's a long, drawn out process.

So you have to be so passionate about food to get into restaurant, otherwise, see if you can be passionate about the people you're serving.

Is your business?

Is this business opportunity going to serve people?

Because people are really the most important thing, no business exists without fulfilling needs of people.

Very true.

What, from your perspective, what would you say are the biggest challenges when it comes to franchising or being the franchisee?

Let's, let's stay there, because that's in general.

I think that's going to be our audience, and that's a lot of your area of concentration, too.

One thing is that people aren't prepared for the work that it takes it.

It does take a lot of work to get a business off the ground, and there's a lot of franchise models that sell what's called the passive model.

Nothing's truly passive, especially at the start now, there are plenty of people who own dozens of franchise units of say, like restaurants and whatnot, but they will have managers in place.

They have created that level of separation between the business unit and their executive level of operation.

So they've created a master level of franchise ownership.

But for the regular entrepreneur, they're buying their first unit, or maybe they're buying a three pack.

They need to be ready that to work as hard for themselves as they ever work to get those first promotions when they started their career, they're investing in themselves and in their family's outcomes.

Oh, I just got stressed.

I literally just got a little stressed with that person.

So I did, I did again.

My lane is marketing.

I don't it's what I know really well throughout my career, and that's all I knew.

So I had to prep a little bit more than I normally do for our talk to make sure I understood your side of the table a little bit better to be semi intelligent for this conversation.

Total transparency, y'all, and I learned a little bit about this thing called the franchise rule when it comes to disclosures and key operating and all that kind of stuff.

Can you speak into that a little bit?

Well, I think you're referring to like that, the revenues and and what it takes to run the business if, if the key aspects of the business aren't fairly disclosed.

Those then a franchise opens itself to lawsuits.

So if they make it sound like it's going to work differently than what it in fact, does.

I know of one brand that's probably dealing with class action lawsuits right now because the opening and go live process didn't happen like it was supposed to do for a lot of the investor, buyers, franchise brands, nor I can tell anybody what they're going to make now, when somebody tells me what their their goals are, financial goals are, I'm looking behind the scenes.

I'm looking at the ftds, the franchise disclosure documents to see if there's revenues, audited, revenue amounts reported on the item 19, because I'm looking to see, okay, if somebody is of a average performer, will that brand on an average level, perform at the amount that they need for their financial goals.

It still is up to that person to have the get up and go, work ethic, to follow the process, to do the things that it's going to take to achieve, even just the average returns.

So I can't promise a financial result, neither can the franchise brand to do so is absolutely against the law.

We would get in Federal Trade Commission.

We could be sued out the wazoo for doing that.

But I do look to see, is it worth matching this brand to this person, because if it's not going to perform at the level they need, then I Don't need to match, match that brand to them.

You the other person might take a more executive approach.

They're going to make as many sales as possible.

They're going to hire people to start expanding how much they can make in their unit, and then they're going to buy more units.

Their revenue is going to be decidedly different from the guy who's the semi retired owner operator.

So they don't put those models in the item 19, because how would you compare it?

So they they help people validate one way or the other.

How do you want to run your business?

Okay, we'll let you validate with owners who are running their business that way, and you can ask them what their P and L questions are like, you know, how many units are they doing?

How many?

What's the cost?

So they can build their P and L's from that.

Or if they want to go the executive model, they can do that.

It reminded me of sometimes when, when we were bringing on somebody new, they out of nowhere, we're almost at the end of the proposal process, and all of a sudden they're like, Hey, would you be willing to do rev share when I'm sorry what I've been we've been doing this for like, three months.

It's pretty big account.

And I said, Well, we can have the conversation, but how freely will you disclose your financials with us, it's always my next question, oh, we're not going to do that.

I said, Well, you either want me to be a partner or an investor.

So why would I do either?

If you're not disclosing your financials, you know?

And one specific example, we thought it was a they were just starting to franchise a wash and dry.

They pick up your clothes at your house.

They bring them back all clean and shiny and everything.

It's a really good idea, and it would have taken and there were, there's like, three of them in the country.

I have to be careful.

One of those three is the company I'm talking about, so I'm not going to say it, but they did the same kind of thing in the midnight hour.

Hey, would you all do rev share?

Said sure.

Like, well, let's see your financials, your franchising so show me that document.

They wouldn't.

Not only would they not show me, but they weren't showing the people that were buying in to, oh, yeah, and they're up and running.

So I, I don't understand how a company can operate like that.

You know, without getting you.

Nailed.

I don't either, because if it is a franchise, then they must disclose.

They have to create the new Franchise Disclosure Document every year, and part of that is the audited financials of the brand itself and the appendix.

And just like a publicly held company has to have that audit done, signed off by the accountants.

Same thing here in the Franchise Disclosure Document, there must be that audit of the financials, and they have to give the the this fairly represents the financials, as we've been able to determine blah, blah, blah that accountants will do now.

Could it be that you look at the financials that are reported on the on the Franchise Disclosure Document, and it shows low cash flow, or something else that looks concerning?

Well, then you're having a conversation with a brand like, what are you doing with the money?

And it could be that they're investing so heavily back into the brand that they never have a whole lot of cash.

And then sometimes they have an additional company that does some aspect as a supplier of the franchise, and they're doing some other things through a different entity.

So you have to ask questions like that.

So is it okay when, if they can prove that, because they're they're tight on cash flow, but they're showing that it's all going back into the company, and they're trying to grow the company?

Does that still make them viable?

Or no, absolutely.

I interviewed with a brand like that early on, when I was doing my initial research, and it was one of those brands where the guy said, Well, I'm rich on Fridays, I'm broke on Monday.

And so because he's always plowing back into the brand, he's got one of the fastest growing brands right now in his industry, and it's doing very well.

And so it's growing.

His units are growing and and it's all because he was plugging so much value back into his brand.

But you have to kind of listen to the heart of it and ask for examples.

What what way are you investing back in?

And they'll tell you what they're doing.

It's a system or a process or a add on to create another revenue stream.

They're always doing something.

So a great referral for me would be so those kind of companies we love, companies that that go that route, because we know they're on a growth path.

We know they're planning to grow become so even just knowing what I know what you were saying, I know that company is just going to keep continuing to grow and like he has an end goal in mind, and he hasn't reached it, which is great.

That awesome.

Okay, let's we have totally gone into disclosure documents.

And I think if you're listening today, you understand how important they are.

And I would venture to say, try not to navigate that alone and make sure you have a professional by your side, absolutely.

And let me add this too, not just any professional you don't want your family lawyer or your most recent divorce lawyer or whatever, reading that Franchise Disclosure Document for you one they're going to pay you, charge you billable hours to read that multiple 100 page document, and they still might not know the things to look For or to look to make sure that it's not there.

So you want to get a bona fide franchise attorney that is good at what they did.

Thank you.

Let's switch channels a little bit and talk about negotiations.

So with franchise and franchisees, how much give is there if you're buying into a franchise, I would say not a whole lot.

When a franchise brand is new, that's probably about the most give you'll get is because the initial franchisees for that brand, they're growing alongside the brand, and so they're going to have maybe more input to decisions that are made.

They're going to be the Advisory Council.

And as time goes on and more franchisees are added to that brand, those ones that have been with the brand the longest are going to have the most input as to decisions and and so on.

And as a brand that matures, then less and less is going to be up for discussion or or addendums I counsel people really about the only thing you should expect.

In the way of addendum is maybe a starting date change so you want to buy in, but because something going on in your life right now, you can't really effectively start till a month out.

So they might give you an additional month before whatever those initial deadlines might be.

That is a maybe something that's fairly common.

I know that some brands will help do their own financing for the franchisees, but not all.

Some will split say, like, when if you're going to get a three pack, maybe they'll let you stage it in some way, but I wouldn't have any of those expectations up front.

The personality of somebody who wants to become a franchisee needs to match the values and the personality of the brand, because if it's somebody who is averse to change and a lot of ebbs and flows, then they probably want to go to something that's firmly established so boiler plate, because they've got so many units, there's no give, hardly anywhere.

They just follow the the process.

If somebody wants a little bit more flexibility, they want to go after a newer brand so that they can have more input on the front end and but there's going to be more risk as well, because you're going to go through more big changes as the brand matures.

I've also seen where a friend like McDonald's, let's just talk about McDonald's.

Maybe I'll get a free burger eventually.

Out of this, I see when they when they implemented the mick cafe.

I knew a franchise owner that owned five or six at the time, and each Cafe set up.

The station cost over $250,000 and they it wasn't an option like you had to do this and and you had to roll it out together.

So imagine how much money he that means he had to have that much liquid or ability to pull the loan to be able to invest it.

And it's McDonald's.

Of course, you can't.

There's a lot of franchisees that can't afford that.

You know, they're living they invested.

They're stretched, cutting it tight.

But when that happens, what do they do?

You know, it's mandated by franchise.

Have you seen it go awry when the state changes rules, the State of the County changes rules, so like that when the minimum wage changed, or some coding, local coding changes, and all of a sudden, what you could do before you can't do any longer.

Or all of a sudden, something opens up, like where I live, there's multiple car washes in a very short amount of space.

And I've talked to car wash owners, because I wanted to see what is it like to own one of these drive through, or like pull through car washes with the vacuum stations on the side.

It's over a million dollar spend in some cases, and if another one lands right on top of you, imagine how many $30 a month memberships you have to sell in order to reach ROI.

So what's going on in the local area?

What happens in the government can affect what's going to happen to your business, whether it's a franchise or not, you still have to do basic marketing studies and feasibility studies, right?

That's a whole nother topic.

It drives me nuts when local government allows five of them within a block, or all the different piece of places and coffee shops, and just there's too many of them, so eventually somebody's going to go under you know, it just doesn't make any sense.

And like, the flip side of it, knowing what goes on behind the scenes and local politics, they'll turn around and say, well, they have the legal right to do whatever they want to do with that piece of property, so they know, but economically, somebody's got to guide them.

You know, there's, it's, it's somebody might have already bought in, like, pay the franchise fee to establish the unit before they bought, bought the property, or lease the property.

A lot of times the franchise brands will help select or approve the property, but not always.

And then when you're dealing with leaseholders, sometimes they want you to do the improvements to the building.

The roof might be damaged, but it's the right location.

So yep, if you want that building, you gotta repair the roof before you move in.

So that'll be an added cost that you aren't weren't expecting when you.

Were originally pricing things out, right?

I mean, at the end of the day, it's a business, and you have to make money, and you know, when do you actually break even to start actually showing profit?

It's it's a slippery slope.

But so with that said, let's talk a little bit about pros and cons.

In your opinion, what would you say pros are of franchising.

And being in a franchise model, you don't have to figure everything out.

A lot of the things are set up for you.

So a franchise brand will select the systems, they'll have the playbooks in place, they'll have the process work out for a lot of things, not all things, but a lot, and then you can ask the questions of, okay, what, what am I going to have to do of all these regular business ownership activities?

What will the franchise brand do, and what will I need to do so that the pros that you don't have to do it all yourself, The cons are you do have to figure out where the brand is going to do it, where you have to do it and find and fill the gaps in a complimentary way.

It can't be at odds with what the brand's got in place.

Um, I would say a pro is that you get the use of the brand name itself, and hopefully the brand has a marketing plan that when you are new to an area, they're going ahead of you do and doing that pre marketing that coming soon, coming soon, coming soon, and helping you with launch.

That's certainly one thing I would be looking for as a potential franchisee, a con would be you have to follow the rules.

If you're a person who doesn't follow rules very well, then maybe franchise is not for you.

Maybe you want to get into a business opportunity where you get the formula, but you can do what, whatever you want to with a brand, you can take whatever direction you want to to personalize this thing, but you've bought into the supply chain.

You've bought into the formula of the business model.

You're just not paying royalties on a brand that you're not using.

And there's plenty of those out there for more independent minded people.

I I've come across some franchises, especially the smaller ones.

Sometimes I think they franchise too soon.

When you when you look up pros and cons of franchises, one of the pros will say, establish brand recognition.

Well, in theory, that's right.

But I've seen small franchises not they may have recognition in Ohio.

They don't have it in Tennessee or New York or whatever, and you you're buying into it in a market that nobody knows who this brand is, and the franchisor is not act like you said, actively planting seeds and marketing there to let them know that you're coming if you're the first one in the market, and that does not go well, that that brand will fail.

I've seen it again and again, and I can't, I can't say some, some brands are very pleasing.

They provide a lot of joy.

So for instance, there's a brand that gets rave reviews and newspapers and media because it it provides a solution for a very real problem that affects a lot of families, and it does so in a way that is happy and joyous and and also provides kind of like a community vibe as well.

In conjunction with solving that one problem, it's in the space of dementia care and and they make it kind of fun, so that not only can you do the dementia care like it's a daycare center, but you can also do some hosting of events and stuff in the same space, because it's a happy space, and they end up with high retention, very satisfied clients, but it's a niche industry, and it's not covered by insurance, so somebody buys into that because it of passion And a growing need, and it's a great community satisfier because it it just puts smiles on people's faces for the way they do it.

Yeah, I know you're talking about too, because actually just did some research on it, because I have a family member going through that.

Okay, well, I would not be me if I didn't talk a little bit about marketing.

So in this case, we're talking about franchises.

So if you're the franchisor, how do you market a brand to be profitable?

How to get to that place to do that?

And that's we were just touching on that just a little bit.

But you have not only in your backyard, but market by market.

You have to, as you're growing, you have to be marketing in those markets.

And yes, you get a percentage from your franchisee to afford to market in that market.

But if you're putting that percentage in your pocket and you're not growing that brand, that will backfire at some point.

You know, I've seen franchises turn around and say, Well, we're doing SEO, and we have a website.

You have a page on our website and oh, gosh, I hate that model, because then the franchisee, anything that they spend to drive traffic to that site, it's helping the bar, the corporate brand, and it drives to them really isn't helping them, the franchisee specifically, as much as they think.

This drives me insane.

Business model has to easily be replicated, right?

If it's not.

How can be a franchise?

Your brand guide, your content guide, your social guides.

All these things have to be in place and standardized so it is brainless for the franchisee.

It also protects you legally.

It'll not that I'm a lawyer.

I don't play one on TV.

It allows, it allows no, no gray area.

And by doing that, you're making it clear and simple.

It's turkey for the franchisee.

All they have to do is follow the rules.

The only thing that I find as a variable in that is sometimes a brand, if it's created in a, we'll say a high net worth market.

Let's say the Connecticut.

You know, a bunch of you know what I'm saying, and it marketing in a in an area that's not so high net worth, but yet it exists there.

The language, the message that that brand needs to say to drive those people through the door cannot be the same as what you're doing in that other market.

It will fail.

That's absolutely true, even even the content, the written content, the scenarios, the stories that you use in one market might work very well, but it is just foreign to but you see that in the especially between markets for big cities and markets for rural, the same brand can work in both places, and some of the marketing message can be the same, but some of it has to be fit, fitted to that culture and and done in a smart way, so that it's not, uh, degrading, does it look down on one because it's not like the other, everything it should be respectable and honoring of the local culture and make Somebody Yeah, I want to be a part of that because, look, they they like where I am, that they're showing that by doing this in the community.

So marketing is, yes, it's, it's visible, it's, it's written, but it's also coming up, coming alongside, and doing something that is active as well, I think so I'm not off base in what I'm saying.

You're You're reiterating, I would add to that the planning and budgeting all has to be part of that, so that you make it easy on the franchisee.

I do.

I do think that when you said there's no, there's really no flexibility when a franchisees tries to push back, and I've seen that in marketing, while they have to adhere to brand standards, I think there's a little bit of flexibility when it comes to how they're speaking to their people, if if they're being respectful and sometimes the collateral, while they have to stay within the brand, localizing it to that backyard, like so.

So we live in the great state of Tennessee, and, you know, can't get enough seen orange everywhere?

No, because, you know, we understand Memphis, the bride blue, if you remember, but we don't talk about that here in Nashville.

And definitely not Knoxville.

So so we understand, you know, based on the College of the city that you're in, it's kind of important.

So how do you add that and localize it and still not hurt the brand?

And that's important, and I see some franchises do that very successfully.

You know, to allow local community.

Hey, we're here.

We're here for you specifically, and I think it's important, and I know, I know that, so your side of the table, I'm on the other side of the table that may push back once in a while, you know, can we just do this little thing and here, and we'll send you an example, we'll actually show you what we wanted to do, you know, like, yeah, if can you just make that a little bit smaller, you know, so as pure franchise, we understand that, you know, you can localize the brand.

You don't break the brand standards, but you can speak to the people that are walking through your door specifically.

And it's interesting what you're bringing up, because.

It.

I think a brand should plan for multiple types of scenarios, big city, smaller suburbs, very rural.

If they want to appeal to all those markets, they need to be ready to be able to market to those markets and also uptick their franchisees, knowledge about marketing, what works, what doesn't work, and listen to what's going on in the culture of that place.

Because there might be something that's real and unchangeable in the culture of that particular town that is unique, that has to be dealt with.

But then there's some physical stuff as well.

A brand will come in and have to deal with the city's local codes.

I just drove by a McDonald's the other day.

There were no golden arches anywhere.

There was a single eyebrow, a golden eyebrow across the front of the restaurant and underneath the roof line, and it was just like a single arch above the above the doorway and across the above the windows.

And it was in the McDonald's gold but it was, it certainly wasn't the McDonald's arch.

It was a flat arch, and that was what was allowed by the city.

Wow, yeah.

Loved it flying the wall in the planning committee conversation, I'm sure, because that's understand the same city is gone.

It's been in conversation for about a year and a half with an insurance agency that has branding issues and branding demands and whatnot.

So yeah, expect that that will crop up from time to time as well.

Wow.

Well, we, we touched on this earlier.

We didn't go into I'd love to close out with this.

If you're a franchisee and you're in a market or a couple of markets, you know, you do have to try to figure out how that brand fits in that community and how you can grow that business.

You know, your portion of that business.

But how do you adhere to the brand standards and the corporate guidelines and rules and regulations of the franchisor, and still be able to show value of that brand and for yourself, you know, it's a real difficult balance.

I think, what would you say about that?

It might be a little bit easier than than what we think when somebody buys into a brand, they buy into it for a reason, that something about that brand has drawn them and convinced them that it's a good fit.

Maybe it's relational.

Maybe it's something about the business model itself, or the way that they've rolled out to other places.

There is a camaraderie that can be had between franchisees and some franchisors are better than others at doing that camaraderie from the franchisor to the franchisee, maybe some are a little have a few more layers between and harder to have that kind of relationship that happens the more units you have.

But at least for small and medium sized franchise brands, there's a great potential for for camaraderie, and that camaraderie helps people stay uh, passionate about what that brand is doing.

Stay engaged in the guidelines that are being set.

And also can help, you know, in numbers, when something doesn't fit the franchise very well, and it's a new change, they can kind of push back to some degree.

And don't forget, they've always got their FDD.

The FDD can be used to make the franchisee do a thing, but after a few years that FDD also helps the franchisee say, all right, brand, you're making a new change that's not in my FDD.

I said that.

I signed the one that said this.

This is what you can make me do.

You can't make me do these new things because it's not in my FDD.

So they get, they get some breaks here and there because of the language in the FTD.

So it's when you compare buying into a franchise versus doing it all yourself.

Yes, there's going to be some pros and cons on either side, but if you are getting the lift of the process, most of the systems the brand.

Itself, and a lot of the marketing that's been out there, then that's a pretty significant lift.

It's worth a lot.

And if they're also adding additional revenue streams over time, that's that's a winner.

And I know some brands that seek to add additional revenue streams for as long as a franchisee wants to take it on.

As soon as they can learn enough to take on that revenue stream, they can add it and they add the next one and add the next one.

They some brand structure for continuous growth throughout the 10 year contract.

I love that.

That's I think that's important.

Otherwise it gets flat over time, like, where you're going to go, you know, where do you take it?

Companies will max out, and they don't know how to make more.

I mean, they're making money, but how do you keep growing that brand?

I think that's great.

One of the key questions I ask brands is, how frequently are you having conversations with all the franchisees?

Are you having weekly calls?

Are you having monthly calls?

What's the frequency?

Because if that is not very frequent at all, I would say there's a lot of communication not being had and and I would ask a lot of good questions about that, because why, why not have more communication?

Right?

Because they don't want to have to pull that thing out from under the rug.

So we, you know, I had a feeling we were going to cover.

It feels like we've been talking only for five minutes, but we've been going on for a bit, so we may have to revisit this.

And I know that I'm going to have you on for a different topic, on some on something else that you're passionate about, but we'll have to see how this edits and what it looks like to our listeners.

And listeners, if you're listening, please, if you want to reach out to the marketing perspective, there's a lot of ways to do that.

You can click on any of the links and get get to anybody.

Ask questions.

Ask questions, get more information.

It's important you should be armed.

That's what this is about.

It's education and information on the idea is it makes you better at what you do, no matter how you do it and who you do it with.

Okay?

And it's important to me that you take that so please take advantage of it, if you have the opportunity ask questions before we close out Catherine, is there anything that we did not cover that you felt was important, that we should touch on?

Well, your last point was very important to ask questions.

That's what a franchise consultant is for.

You can use a franchise consultant.

It doesn't have to meet me.

Of course, I would like to it, but, but a franchise consultant is like a real estate agent.

You ask all the questions of that consultant, get them to pull the PDFs from the various websites, get them to collect the spam mail, and you learn, learn, learn until it's time to talk to the brands that are a good match to you, otherwise you're being sold by a lot of different people.

Who's interested is to sell another unit, not necessarily first, to create a good match.

Make the good match first.

So learn, learn use the resources of a franchise consultant by and large.

It's free, and when the franchisor, when you go all the way to invest in the brand, the franchisor will pay a commission at the end, and it's against the law for them to charge that back to you.

So why would you not use a consultant to mitigate the risk?

Yeah, I feel the same way.

In my world, sometimes we're a really good fit.

There's some that I won't take on, but we'd love franchises.

Any business that has multiple locations at some point will have a marketing challenge.

It depends on how geographically they're spread out, and that's something that we're really good at.

But I've also seen really bad marketing happen in franchises, and it's It breaks my heart, because I know that it'll be less expensive for you to do it this way, but you'll do better and your ROI will be higher.

And what, sometimes, what corporate or somebody else is saying, and they're making them buy into these models, can't imagine why.

Wink, wink, nudge, nudge.

That is not necessarily in the best interest of the franchisee, that it will be much more cost effective if they're not required to do what they're doing, to do it themselves, and they'll save money, they'll grow their own franchise.

It's very hard to watch, you know, and I can imagine you go through the same thing from your side of the table.

All right, people are navigating stuff on their own, don't you just want to, like, let me just help you, right?

Drew, I mean, like that lady that invested in the one brand, and she's got this restaurant going now that she wants to sell.

It's like all you had to do was ask if there's a resource available.

You know.

Know it, I don't people are independent.

I love independence, but asking for help is something that people should do more often.

Just what do you know that would be helpful to me?

Thank you for that, and if you are listening today, just know that Catherine is somebody I respect.

We're growing a relationship.

She knows her stuff.

I can tell you that if you are in hunting mode, if you want to be a franchisee, I would highly recommend the conversation with her.

And you don't have to be in state.

You could be anywhere in the country, right?

We're not in the same room right now.

We're talking technology made our lives a lot simpler.

Please reach out.

You take do you take anybody in the continental US?

That's true.

And I can even help people outside of the US, depending on what brands are located where.

Oh, that's good to know.

I didn't know that.

So we stay within the US, and I try not to go out of the US for lots of reasons.

I think there's plenty of opportunity inside the United States.

There's no reason necessarily to do but I have recently dealt with some clients who are in process of creating another home in another country.

So it could be that that crops up, becomes a real factor, sure, and then they started growing that mortgage.

Well, I wouldn't be me.

Let me be shameless for a second.

Please.

Catherine, tell everybody how to reach you.

Should they have the wherewithal?

Sure you can reach me through email, C, A, T, H, at NAB consulting.

Nab is spelled K, N, A, B, B is in Boy.

Boy Cath at NAB consulting.com and my website is NAB consulting.com amazing to find.

Thank you very much, and we'll make sure to push that out in our socials.

When, when this was released, you'll have a copy of it so you can use it shamelessly yourself.

So thank you very much for being on today.

I appreciate your time.

I really appreciate the opportunity.

Thank you so so much.

This is a lot of fun, so if you're listening today, thank you again for being on the marketing perspective.

I hope this blessed you in some way, gave you some information to empower you to make better decisions.

If this is a topic that's of interest to you, again, ask questions, reach out, find the right people that can help you, even if it's just hey, let's just get some virtual coffee and have a quick conversation.

You know, the right people would be willing to do that with you.

And I say that because I think you have to find people that are passionate about what they do and understand they do have your best interest in mind.

Do they want to work for free?

No, they don't, but they'll at least give you some guidance.

And then then it's up to you if you're going to take that next step or not.

So please consider doing that, and I really look forward to seeing you again next time.

Don't forget.

Like us.

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Put it out there.

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