Episode Transcript
[00:00:00] Welcome to american wealth enfranchising and Kim Daley tv. I am your host, Kim Daley. I want to educate, motivate, and inspire your business ownership journey by interviewing business leaders, coaches, and exceptional franchisees to learn their valuable insights and strategies that we can apply to our own business ownership dreams. Now onto the show.
[00:00:29] Welcome back to american wealth and franchising and Kim Daley TV. I am your host, Kim Daley. And in this episode, I want to talk about a scenario that's been happening with one of my candidates because I think that the questions that he's been asking me, if I answer them to you, it's going to help a lot of people out there listening to this episode as well. So this is the scenario we've built, his model, and we are funneled down to fitness and senior care as the two industries that seem to be the most appealing to him. Now, for me, when I'm matching opportunity to a candidate, it's regardless of the industry. The industry is like the cherry on top of the sundae. I'm way more interested in the role that you play as the owner, the people that you serve, the types of jobs that you get to create and the people that you get to lead and manage, the time commitment that you have to put in, the level of investment that's required relative to your net worth and the liquidity that you have to put into a business. Like, all of those things are fundamentally more important to the matching process than because you say you like to work out than me saying, okay, well, then I've got to go look at fitness franchises for this candidate. If all of those other criteria are methadone and I happen to have a great fitness franchise or that has open territory where you live, I look at that matching as the cherry on top of the Sunday, if you will, versus that being the Sunday itself. Okay, but so in this particular scenario, we've been around and around, and this candidate keeps coming back to fitness and senior care, mainly because he really likes the impact that both of these businesses have on people's lives. Okay, so in the fitness space, here's what happened. He went out and did his own research on franchising and came back with a fitness franchise, or that he said, I think I'm interested in this Fitness franchisor because they only have a few locations open, so I think that means that they'll have more time to spend with me, and that feels good to me. And then he sent me an email and said, am I thinking about this correctly?
[00:02:50] Okay, so there's so much more that goes into selecting a good franchisor than thinking about it from the perspective of how much time do they have to devote to me, to you as a young franchisee, a good, solid franchisor is what you are paying for when you pay to a franchise fee. The whole idea of investing in a franchise is that you are buying down the learning curve of starting a business because you're partnering yourself with people who've already figured it out. Right. They've packaged up that model, and they're giving it to you for the price of a franchise fee. That buys you access to the business plan, the initial training, vendors, technology, all that they've created to help you get up the learning curve of becoming a business owner. Right. That's not the cost of opening the business. That's the cost of buying down the learning curve of starting that business. And then after the franchise fee, you have the actual cost, in this case, build out a gym, and then the working capital to market to find customers and to pay all of the fixed cost of your gym until you have enough revenue from your customers that can pay those monthly fixed expenses. Okay, so the question he was asking to me is, is he thinking about it correctly? Because it's a young franchise, they only have a few locations, so that means they're going to have a lot of time to put into me, and that makes me feel safe. Well, the number one thing that should make you feel safe about selecting a franchisor is their depth of knowledge, not just in the fitness space, but in building and scaling a franchise system. So when you work with a consultant like Kim Daley, all of the companies that I bring to you have been vetted by Fran choice, and then they've been vetted by Kim Daley. Right. So Fran choice has 24 years of experience in working with franchisors. Kim Daley has 22 of those. 24 experience at, years of experience as a franchise consultant. And so we sort of know, we're experts at knowing what a good, solid franchisor looks like, sounds like, feels like, what they have in terms of experience, how much money it takes to build and support a franchise system. All of those things are critically important to your success.
[00:05:25] So when you come to me and I bring you options, all of that is already a given. You don't ever have to second guess the caliber of the franchisors that I'm bringing. So that's what this candidate misunderstood. He just went doing his own research, thinking that all franchises are created equal. So I'm bringing this company to Kim Daley alongside the company she showed me, and they're immediately equal. Okay, that is completely untrue. They're not equal in any way. Building a franchise system requires leadership and experience from within the franchise industry. Learning how to not just sell franchises, but to support those franchisees, that's an art, and that's a business in and of itself. That's why any young company, that's a young, like, say, fitness franchisor, that comes to Franchoice, it must be represented by what we call an FSO, a franchise support organization, or a franchise development company. There are these consulting companies that partner, typically, I think, for equity with young entrepreneurs that have great franchisable models. And these franchise companies, or franchise support companies, they are the mentors to the franchisor, because, as I said, that's a business in and of itself. So, yes, I work with emerging franchisors, but emerging franchisors that are partnered with consulting companies that know how to support franchisors in the growth and development of this company as a franchise. So this company that this candidate brought to me, I have no knowledge of. They're just another fitness franchisor. I don't know who their customer avatar is. I don't know what their competitive advantages. I don't know how much money the franchisor has, because it costs millions of dollars to bring a brand from a few locations to become a national brand. And if you're in a customer facing, like, a retail brand, like fitness is, if you don't have national brand name recognition, it's okay. But you have to know that the franchisor is building toward that in a relatively short amount of time. Otherwise, is it really worth your money? Like, if the brand never wakes up and becomes a national brand with 500 locations, you're missing out on a big part of building a franchise, which is the equity in your brand, right. You have to think about from the customer's perspective, why do we love franchises? Because we know the brand. We know what to expect. So I know what to expect when I walk in an orange theory, which is why I'm walking in orange theory right now. There was a time where we didn't know what to expect from orange theory. I remember people asking me, what is an orange theory? Right? But because orange theory was successful in selling and then getting locations up and operating and producing a consistent consumer experience in a workout in a very short amount of time, orange theory became a brand. And now we all know what an orange theory is. I hope if you're listening you know what an orange theory is? Do you know what an orange theory is? The orange theory is that you're training in your cardiovascular zone on your heart rate monitor, which is your orange zone. Okay? For those of you who might not know what orange theory actually means, that's what it is. It's training in your cardiovascular zone, which is going to optimize your fat loss. Okay, side note right there. But so we all know the brand orange theory, fitness, because they successfully opened hundreds, thousands of franchise locations in a short amount of time. And so as consumers, we know the brand. The brand has equity in our mind. So that means that those franchisees have brand equity when they go to sell their locations. Their locations can be sold for a multiple significantly higher than if you just own, you know, Kim's theory, right. Any mom and pop franchise, it doesn't really have value out in the big market like a franchise brand. So when you're thinking from a candidate perspective, these things should be critically important to you, especially if you're in a retail brand like fitness.
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[00:10:14] Now, on the senior care side, which is the other industry that this particular candidate was looking at, everything I just said about brand equity is less important because senior care is a personal experience. People want a personal relationship. They don't necessarily care about the big brand name recognition. They care about meeting somebody who genuinely seems to care about them and their family member, and then being introduced to a caregiver that's bonded and insured has experience, a great personality, right? So it's more about that personal relationship. So the big brand name of the franchise, it's less valuable than in fitness, where it's, in my opinion, incredibly valuable. And again, that doesn't mean that because it's a no name brand right now, he shouldn't look at it. The reason I would encourage him not to look at it is because I don't know the people. I can't vouch for them. They may be great in fitness, but what have they ever done in franchising? How much money do they have? Right? Do they have millions of dollars to build and support the growth of this organization as a franchise? Because if they think they're going to exist off a royalty, they're going to be bankrupt. Because royalties are not meaningful until you have hundreds of locations open and those locations are at their max financial revenue, because if you're a franchisor and you're collecting 7% on average, the what has to be pretty significant in order for 7% to be a meaningful number. And you need to multiply that times hundreds. Right. So franchise wars are not existing off of royalties for years. That is a long term value, not an upfront value. So how do you build and support your franchise system if you don't have deep pockets? You need private equity. So to wind this conversation down, this is what I do for you as a consultant, this candidate did not need to go out and do his own research, but by doing it, it allowed me to have a deeper conversation about the value that I bring to him. And now to you, it's implied when I bring a franchise or to you, it is implied that they are the who, that they know what, that they have the money, that they are on a trajectory, a growth track, that this brand is going to wake up. Right? I heard it said that only 3% of all businesses that are franchises get to 100 units. 3%.
[00:12:57] 100 units doesn't even make it a national brand. I mean, maybe that means they have locations in most of the major markets, but 500 locations is where we start to wake up as consumers and go, ooh, what is this? I'm starting to see these pop up everywhere. So 100 units only 3%. Is a franchisor worth your money if they're not at 100 units? Not if they don't have all the other things I've already mentioned. So the value that a good franchise consultant is bringing to you is, I guess you don't even realize it unless questions like this come up. But you can take for granted that any franchisor that I bring to you meets all of these criteria and more and more, because it's not just this. It's like, I have 22 years of up close and personal experience with franchisors. I know the people, in many cases, these franchisors that I work with, they're like my best friends in life. I mean, we've grown up together. We've been together for 1520 years. Not in all cases, because I certainly meet new people every day and every year in franchising. And so, you know, I'm taking a chance on emerging brands again. But emerging brands backed by consulting companies. And then oftentimes the consulting companies are the people that I've been friends with for 20 years. So I know that they know what a good franchisor needs to look like and how to help grow and support that brand. So there's many, many layers in franchising. It is not a surface level conversation. All franchisors are not created equal. All franchise consultants are not created equal. So when you work with Kim Daley, you're getting years of experience, knowledge, relationships. You don't have to worry about all the things that if you're out there on your own, you better believe you better be worried about. I hope this episode was helpful to you, clear to you in terms of the value, but also clear in terms of like why he went out and did what he did and how it's not good or bad, it just is. But how I could use that to help him understand my value better and then use it now to help you understand my value. If you're out there on the sideline and you are ready to begin your journey and you want Kim Daley to be your franchise consultant, well, you know that I want to be your daily coach. Please reach directly out to inquireimDaily TV. That's inquireimdaily TV. And until next time, my name is Kim Daley and I want to be your daily coach.
[00:15:58] You can find more content just like this on my YouTube channel at Kimdaily TV. And if you're inspired to take the next step to explore franchises matched to you, please email me right now at inquireimdaily TV. That's enquireimdaily TV.
