The Franchise Manual Podcast

Kit VInson

The Franchise Manual podcast is a behind the scenes look at all things “Franchise” and the people that make it look easy." Operating a franchise is not the same as running a small business. So, if you are thinking about franchising your business, then you really need to listen to The Franchise Manual Podcast.

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Top 10 The Franchise Manual Podcast Episodes

Goodpods has curated a list of the 10 best The Franchise Manual Podcast episodes, ranked by the number of listens and likes each episode have garnered from our listeners. If you are listening to The Franchise Manual Podcast for the first time, there's no better place to start than with one of these standout episodes. If you are a fan of the show, vote for your favorite The Franchise Manual Podcast episode by adding your comments to the episode page.

Episode #27 - Franchising 101

The Franchise Manual Podcast

07/25/19 • 75 min

My Podner in this episode is Rob Vinson and he’s going to talk with us today about Franchising 101 – Where to start when you backed into franchising by accident, and don’t know where to go.

Rob has been a franchise attorney for 26 years. He was a partner at the prestigious law firm of Strasburger and Price, which is now Clark Hill after an April 2018 merger. Over 13 years he worked his way from associate up to partner. In 2001, he started his own law practice of Vinson Franchise Law and has been doing that ever since. He works, and has worked, with clients all over the United States as well as internationally.

Rob is also a founding partner of FranMan Inc, a company that specializes in producing franchise operating manuals.

In 26 years Rob has accumulated a great deal of experience that he is going to share with us today.

Time Stamps

Rob Vinson Intro

00:00:27

Segment 1

00:02:00

Get to know Rob Vinson

Segment 2

00:22:32

Topic Segment – Franchising 101

Segment 3

01:06:50

Quickdraw Questions

Topics Discussed in this Episode

What is Franchising?
Business Format Franchising versus Product Distribution Franchising
What is the difference between franchising and traditional licensing?
What are the three elements that must be present in order to be considered a franchisor by the FTC?
Just because you may not be considered a franchise by the FTC, you may still be considered a franchisor by the state government.
Why franchise instead of expansion through company owned locations?
What types of business lend themselves to franchising and which don’t?
What elements of a business does Rob look at when advising a client on whether the business is “franchisable”?
What resources are available to a new franchisor to help navigate the waters of franchising?
How can a franchisor find a franchise attorney?
What should the franchisor consider when selecting a franchise attorney?
What services do franchise attorneys offer to franchisors?
What is the FDD and Franchise Agreement?
Why did the FDD come about?
What are the dangers of a new franchisor using a template to create their own DFF and Franchise Agreement?
How important is a well-documented franchise operations manual?

Rob Vinson Vinson Franchise Law www.franchiselaw.net [email protected] Phone - 775-832-5577 Kit Vinson www.franman.net [email protected] 214-736-3939 x 101

Episode #34 - New Franchisor Pitfalls

The Franchise Manual Podcast

09/03/22 • 75 min

My Podner in this episode is Michael Peterson and he’s going to talk with us today about the mistakes that new franchisors typically make during their first year of operation. Some of these mistakes can be quite expensive, while others can lead to the death of your entire system. If you are a newly minted franchisor, or if you are about to start your journey, this is one that you won’t want to miss.

Time Stamps

Michael Peterson Intro

00:00:31

Segment 1

00:02:37

Get to know Michael Peterson

Segment 2

00:20:39

Topic Segment – New Franchisor Pitfalls

Segment 3

01:03:05

Quickdraw Questions

Topics Discussed in this Episode

Key areas franchisors miss in their first year:

Pre-launch

Not getting the FDD to fully capture the business model. This leads to something so prevalent that I came up with a name for it; the 2nd year re-write. So many franchisors make massive changes to their second year FDD either because they didn’t capture the existing model in the first year, or they didn’t have someone walk them through the thought processes they should be going through on every item before they commit it to paper.
Having “to be implemented” clauses in their agreements. The most common one I have seen here is a national ad fund, though I have seen tech fees quite a few times as well. When your franchisee #1 or #2 has been operating for 3 years, paying you your royalty only, and suddenly you decide your system is big enough to justify the advertising fund of 1-3%, believe me they will not be happy. Start taking this from day one, even if you turn around and spend it in their market.
Cutting corners or coming in underfunded. This is probably the #1 cause of failure of young franchisors. Deciding to write an operations manual in-house, find the cheapest franchise attorney possible (or, worse yet, trying to do an FDD without a franchise attorney), not having quality marketing materials, not having funds set aside for franchise sales; these are so self-defeating.
- A bad operating manual can lead to system problems and even litigation.
- If you succeed as a franchisor you will end up using a good franchise attorney, if you start out with inexperienced or ineffective counsel, you’ll just pay in negotiation, litigation, or just headaches before you switch to better counsel.
- Your marketing materials are your first impression, you have to make them count.
- Franchise sales cost money, period. If you don’t have a good marketing budget you will struggle to grow. Think about this. Each year, you are going to spend between $6,000 and $25,000 on renewal, depending on how many registration states you go into and how complicated your audit is. I would guess the average is close to $12,000. If your lead generation spend results in one sale, then you have an extra $12,000 in costs for that sale. If you have a robust budget and someone solid handling franchise sales, and you award 3 franchisees, then the renewal is only adding $4,000 cost-per-close. Big difference.

Post Launch

Hands down, the biggest mistake a franchisor can make is bringing in the wrong franchisee. If you have been doing all the ‘right’ things, spending money, having a professional franchise sales person either in-house or outsourced, reaching out to brokers to talk about your brand, and 6 or 12 or even 18 months in you don’t have a franchise sale, that can be frustrating. It also might happen; the first franchisees are the hardest to find (lets delve into that). I have seen this situation cause many franchisors to award a franchise to someone they shouldn’t and regret it for years to come.
Not having a culture of compliance from day 1 is another seemly small issue that will come back to haunt you. If your FA calls for quarterly or annual financials from your franchisees, get them even if you don’t know what to do with them! If your franchisees have a required add spend, monitor it from day one. Or better yet, engage with them and help them spend it correctly, but either way make sure they are spending it. If there is a clause you are not enforcing from day one, throw it out.
A problem many new franchisors think they wish they had; growing too fast. I have been in this position. I am talking about 4 stores open in January and 120 open that December fast! Trust me, you don’t want this kind of growth out of the gate.
Compromising to get a deal. . . I put this one last because it very well may be something you need to do. As I mentioned, first franchisee is HARD! It may be may be reasonable, appropriate, or even necessary to ‘give’ on the first franchisee, maybe even on the first few. But be careful. If you are giving a bigger territory, are you really setting that franchisee up so that there is no chance of you putting someone into the sa...

Episode #19 - Managing You Franchise Agreements with the End in Mind

The Franchise Manual Podcast

09/12/18 • 80 min

My Podner on this episode is Tom Spadea. Tom and I will discuss the benefits of properly managing the FDD and the Franchise Agreement, from the beginning, making sure to keep the end in mind. The "end" he speaks of is a possible acquisition by an investment company. What will they expect to see when they look at your franchisees contracts in your files?

Time Stamp

Tom Spadea Intro 00:00:40

Segment 1 00:03:22

Get to know Tom Spadea

Segment 2 00:24:40

Topic Segment – Managing Your Franchise Agreements with the End in Mind

Bonus Segment 00:57:15

Managing Franchisee Growth

Segment 3 01:02:50

Quickdraw Questions

Topics discussed in this episode:

Where do most franchisors get it wrong? Many franchisors and franchise attorneys focus mostly on the substantive issues of the and forget about procedural issues related to the process - managing latent defects

Item 23 receipt page not being properly executed and filed
Guarantees not properly executed
Individual versus LLC signing FA/lease

You can have the best FDD and franchise agreement in the world, but if you don’t manage the process properly, it can cost you a lot of money in the short term with an unenforceable contract, and in the long run, upon exit.

It’s important to understand who the real audience of the Franchise Agreement is. It is the franchisee, but it is also a prospective private equity investment firm who may want to purchase your system in the future.

What is the process?

Step 1: Make sure that the franchise agreement is up-to-date

Step 2: Geographical Analysis - Ensure that the franchisor is registered in every registration state where the concept will be offered. That includes where the prospect is currently located as well as where they want to open a location. Both states must be registered if required by that state. Deliver the correct FDD for the state.

Step 3: Ensure that 14 days pass between delivery and signing of the Franchise Agreement, not including delivery day and signing day

Step 4: Spend the time to ensure that names are all spelled correctly, along with middle intials. Check the address, LLC name etc

Step 5: Prepare a custom franchise agreement based on the specific agreements made between franchisor and franchisee – do not use the sample franchise agreement that is included in the FDD. Deliver the document to all required recipients and ensure proper signatures

Step 6: Ensure that the lease includes all of the required language as per the franchise agreement

There are many different software packages that can help you with each aspect of the transaction, but Spadea Law has the platform that hits every element. Compliance Map helps franchisors ensure that they are only offering the franchise in the proper states. The link to the Compliance Map software demonstration is below:

https://vimeo.com/260105446

If you haven’t managed the steps of the process well, then it is not too late. Review your documents and get the documents in line now, before you are approached by an investor.

Books:

Exponential Organizations

By by Salim Ismail and Michael S. Malone

Seven Habits of Highly Effective People

By Stephen Covey

The E-Myth

By Michael Gerber

Khan

Conn Iggulden

Podcasts:

Dan Carlin’s Hardcore History

Tom Spadea

Spadea Lignana

www.spadealaw.com

610-662-0192 (cell)

Kit Vinson

FranMan Inc.

www.franman.net

214-257-7685 x1

Kit Vinson

Episode #12 Why your FDD Sucks

The Franchise Manual Podcast

02/22/17 • 63 min

Mike gave away most of the company secrets during this interview! I was blown away and you will be too.

In this episode, Mike Drumm of Drumm Law in Denver, Colorado tells us why your company’s FDD might suck. He points out issues in an FDD’s content and style that could make or break an FDD’s ability to help you sell your concept to prospective franchisees.

Time Stamps

00:00:42 Podner Introduction

00:02:45 Segment 1: Get to know Mike Drumm

00:26:30 Segment 2: Why Your FDD Sucks

00:55:10 Segment 3: Quick Draw

Mike Drumm Show Notes

Why your FDD might suck:

It’s not written in plain English
You have “over disclosed”
You let your attorney or accountant write the first sentence that describes the concept
You didn’t brand the document
The FDD is not visually attractive and easy to read (pictures, charts, etc)
Item 19 doesn’t tell your story well
It doesn’t use a data sheet
Too many exhibits
Item 7 doesn’t include an average
It includes outdated technology references

BONUS CONTENT

During my visit with Mike, we go off topic and discuss some really important topics that every franchisor needs to know.

How to make the delivery of an FDD a memorable experience.
What is an FDD
Why is an FDD
What is the FTC Franchise Rule
Franchise Compliance Guide
Why do you need a franchise attorney

Books mentioned in the episode:

A Confederacy of Dunces

The E-Myth Revisited

Michael Drumm

Drumm Law

www.drummlaw.com

[email protected]

Kit Vinson

FranMan Inc.

www.franman.net

[email protected]

217-736-3939 x 1

Episode #30 - Site Selection, Real Estate, and Build-Out

The Franchise Manual Podcast

02/04/20 • 89 min

My Podner in this episode is Brendan Charles and he’s going to talk with us today about what franchisors should be teaching their franchisees about site selection, real estate negotiations, and build-out. Bad decisions in these areas can be detrimental to the success of the location. Everybody has some skin in the game here. This discussion will benefit both new and seasoned franchisors.

Time Stamps

Brendan Charles Intro

00:00:28

Segment 1

00:02:44

Get to know Brendan

Segment 2

00:15:38

Topic Segment – Site Selection, Real Estate, and Buildout

Segment 3

01:25:10

Quickdraw Questions

Topics Discussed in this Episode

You only get one chance to get the real estate right.
Real estate is one of the three main controllable in a franchise business model but real estate is only a “controllable” until you sign the lease.
If you don’t know what your break even is BEFORE you start looking for real estate, then your real estate decision could break you.
#1 rule in site selection – Never fall in love with a space.
The real estate brokers’ incentives are not necessarily aligned with yours – the more you pay in rent, the more the broker gets paid on commissions
Know exactly what your site selection criteria are BEFORE you start your search
How do you develop site selection criteria when you only have one location to go by?
Utilize the free services of your real estate broker to provide the demographic reporting
Once you have multiple locations in operation (data points), then you can compare performance with location attributes and fine tune your site criteria
Onboard your broker about the brand – make sure they share the enthusiasm of the brand’s potential as they will be your #1 sales person when presenting the concept to potential landlords
Spend a full day viewing all available locations in the “Market Tour”. Take copious notes on the good as well as the bad locations
Boil your options down to 3-5 locations
Time kills all deals. You have to move FAST after your market tour and get the letters of intent out quickly.
The franchisor should be very involved in the site selection process – don’t sit on the sidelines
Submitting a good letter of intent is the most important step in the whole landlord negotiation process – rent, term, tenant improvements, etc.
If you don’t get the Letter of Intent right, there is no way you will get the build out right, and if you don’t get the build out right, you’ll be behind schedule and way out of budget
Once the letter of intent is delivered, the landlord is on notice to respond, however, that doesn’t mean that you can stop looking.
Always have backup sites in your pocket
Use two LOIs to leverage the deals against each other.
Once you reach the lease stage, the due diligence of the space continues – make sure that the space is exactly what the landlord advertised it to be. This is done with a site survey
The drawings from the landlord aren’t always accurate so don’t rely on them
It is best to utilize a national architect for every franchised location rather than local architects
Floor plan design in a restaurant – the dining room is your money maker and should be maximized
Familiarize yourself with the design review process – go down to the city offices and meet the people who will be doing the plan review
Identify general contractor bid pool – qualify them – Have they built in the market you are in? – Do they have the relationships with the city officials, etc. Avoid too many GCs in the bid pool
At the time of the build-out, the interests of the landlord are in line with yours because they get rent money once you open your doors for business, so they can be a good source of referrals of general contractors.
Poorly planned design submitted to the city will stall the process
Be aware of a TAP Fee – a fee by the city in order to tap into the utilities. This can be very expensive
Ensure you have a plan to get your FF&E paid for and delivered on time according to the contractors timeline
Qualify the bids by ensuring that everything in the bid is supposed to be there and nothing is there that isn’t supposed to be there. Be sure to clarify who will be responsible for what activities and purchases. Make sure there is a clear matrix of responsibility.
No hammer can swing until the building permit is issued
There is no return on investment for the franchisee to be on site every day once hammers start swinging, rather, they should be focused on the bigger picture of doing the activities in preparation for the opening day such as hiring staff and marketing for the grand opening

Brendan Charles

...

Episode #29 - Creating Customer Loyalty

The Franchise Manual Podcast

10/30/19 • 77 min

My Podner duo in this episode is Andy Erskine and Bob Gappa of Management 2000, and they’re going to talk with us today about the importance of customer loyalty, what drives it, and how to manage it. This discussion will benefit both new and seasoned franchisors.

Today’s episode will be unique. This will be the first time to have a returning podner with the GREAT, Mr. Bob Gappa. You may remember Bob Gappa from Episode #2 where we discussed the nature of the relationship between franchisor and franchisee.

Andy has been Bob’s Protégé for 8 years now as he’s been learning franchising from the master and taking Bob’s accumulated knowledge and adding his own flavor to it.

Time Stamps

Andy Erskine Intro

00:00:29

Segment 1

00:02:36

Get to know Andy

Segment 2

00:11:20

Topic Segment – Creating Customer Loyalty

Segment 3

01:05:10

Quickdraw Questions

Topics Discussed in this Episode

What is customer loyalty?

Transaction count is NOT the same as customer loyalty.
Another term for disloyalty (brand adultery)
Customer loyalty is tightly woven into Brand, which is made up of the emotion that you create with your customers

What makes customers loyal?

Loyalty is built around emotions and emotions come from the customer experience
The way that you interact with your customer (operating system) is what creates positive or negative emotions.
Repeat customers are a result of your team members creating an emotional bond with the customer through the delivery of your product or service.
Brand standards should focus on creating the emotions that make customers want to talk about their experience with their sphere of influence and go back.
The Operations Manual is in place to create customer loyalty.
To understand what creates positive or negative emotions in a customer, we need to understand the customer journey.
The customer journey is literally every interaction that a potential customer has with you before, during, and after doing business with you
Visible versus invisible standards – both affect the customer and loyalty. Invisible standards are those not customer facing, like ordering a sufficient amount of material to deliver the product.
The issue with system standards is that there isn’t enough forceful compliance when they aren’t being followed and there isn’t enough positive reinforcement when they are, and so they don’t seem important to either the franchisee or franchisor.
Brand icons are as important to customer loyalty as brand standards. Brand icons are the aspects of your business that you are absolutely known for.
Emptions are what create the brand rather than a well-known company.

How do you measure customer loyalty?

Technology is how to track customer loyalty through cell phones and credit card transactions
Knowledge is power. Know your customers behavior data and use that to create the emotional connection in them to make them loyal.
By understanding what customers value, we can create customer loyalty
Prism will segment your credit card transactions into demographics and behaviors

What do you do with customer loyalty data after you get it?

Data helps you refine your message to your real customers – understanding what they value so you can deliver the value that they want, which in turn creates loyalty
Don’t confuse frequency due to convenience with loyalty.

What should I be doing today as it relates to customer loyalty?

Start enhancing what it is that the customer values by understanding who the customer is.
Stop thinking of yourself as a franchisor and start thinking about yourself as a steward of a brand.
Stop having a franchisee advisory council and start having a brand advisory council
Answer three critical questions. Know who your customers are. Know what they value. Know how to enhance what they value.
Know how to make their experience personal.
Help the customer make a connection to your brand
Select employees, don’t simply hire them.
Focus on how to create a great place to work
Team members should know that their job is to create an experience that makes the customer want to come back
Training a team member is usually only focused on the activity, which is simply skills, knowledge, and abilities. In addition to that, you should focus on developing people’s understanding and emotional commitment to the purpose of their job, which is to get the customer to want to come back.

Andy Erskine

Management 2000

www.mgmt2000.com

[email protected]

Phone - 800-847-5763

Ki...

Episode #25 - Franchisee Recruitment

The Franchise Manual Podcast

05/28/19 • 93 min

My Podner in this episode is Art Coley and he’s going to talk with us today about how to develop a franchisee recruitment system that will attract higher quality franchisees to your system.

Time Stamps

Art Coley Intro