Cameron Herold describes the six stages franchisees go through, from initial excitement to frustration with fees. Most who leave the system fail because they lose support and peer networks. He built 1-800-GOT-JUNK and College Pro Painters by finding franchisees willing to follow proven systems while innovating where none existed.
Chapters
I've almost never seen a franchisee do better by breaking away than by staying inside of the system. More often than not, they break away and they realize, oh shit. What I'm going to cover is a system that I introduced to all of the franchisees at 1-800-GOT-JUNK, one that I actually learned from a guy who's actually based in Australia. His name is Greg Nathan. The 6 stages that we naturally go through as franchisees or licensees or partners inside of a larger organization And it's really how we can bring that into the business world to really kind of maximize our benefits. In the first stage with a franchisee and a franchisor, whether you're joining a franchise system, whether you are buying a license in an organization where you're joining a group that have systems for you, you're usually the happiest you're ever going to be in the first month of that relationship. And even prior to the first month when you sign the agreement and you're all excited and you're telling your friends and you just joined this great group, that's probably the happiest you're ever going to be with a group or with a franchise. And our franchisees at 1-800-GOT-JUNK, the day that they got offered the franchise was probably the happiest they'd ever be. And some of our franchisees are doing millions of dollars of sales and revenue, right? We've got franchisees doing $40 or $50 million, making about $8 to $10 million in EBITDA. But still, the happiest they ever were was day one before they even started that franchise. Because they're in that glee stage. And all of a sudden you have to start paying royalties, right? You're, you're paying the money's going out the door. You're paying your monthly fees. You gotta show up at conferences you don't necessarily want to be at. And you're paying out all this money and you're like, why am I doing this? Well, you forget that some of that benefit is going to be given to you over time. Some of the benefit is in that big manual that you might've got on day one, but that ongoing kind of period of time that you're paying fees, starts to drain us a little bit as licensees or franchisees. And it often happens when you're a bigger franchisee and you've been paying franchise fees for a long period of time, you forget that a lot of that front-loading of benefit happened with the manual, with the brand, with the part of the group that you're in. And you can kind of get frustrated with some of those fees. And then we start wanting to do it on our own, right? Well, I'm more important than they are anyway. I'm bigger than they are. I know more than they do. You know, the systems that I can be doing are better. My marketing is better than what they're introducing me to. And we kind of start doing it on our own. And we think, well, maybe I could even do it without them. Maybe I could walk away from working with the franchisor. Maybe it's really not that powerful. Maybe I could do this on my own. And then sometimes people go off and do that. They either leave the system, they exit, and I've almost never seen a franchisee do better by breaking away than by staying inside of the system. More often than not, they break away and they realize, oh shit, now they have no support group. They have no good insights. They have no best practices. They have no peer group to lean on. Um, and, and they realize that that big manual that they never really read, never really studied, probably had most of the best benefits they ever could have leaned on in the first place. I started my business journey way prior to 1-800-GOT-JUNK. I was a partner in a group called Gerber Auto Collision. I was the second in command in the Canadian operation, was what called Boyd Autobody. We built Gerber out to be the largest collision repair chain in the world. And prior to that, I was a part of a group called College Pro Painters, and I opened up the West Coast of the United States for College Pro Painters as a franchisee, and then became part of the franchisor at the head office in coaching and growing franchisees. I was the number 2 franchisee in Canada out of 365 franchisees, coached and trained 120 of their franchisees for them, including Kimbal Musk, Elon's younger brother, worked for me back in 1993. But because that manual was so scary for me when I was kind of given that manual back in the galis stage, I was so scared of going bankrupt that I decided to memorize the 360-page operations manual. And I kind of leaped over the fee stage. I didn't worry about having to pay royalties. I was so scared about going bankrupt. And because I memorized the manual, I didn't try to break free and do it on my own. I never really had that. I just kind of got to the stage that I could see the franchisor was really, really smart and that they were going to give me all of the best systems that they already had. And if there was no system in place, I could figure it out on my own, but I would rely on and lean on their systems. So later, when I started to build 1-800-GOT-JUNK?, I looked for franchisees and I taught the company to hire and find franchisees who had what we called interdependence. They were dependent enough to follow the system if it existed, but if there was no system in place, they could be independent enough to make it up on their own. But we didn't want pure entrepreneurs. We didn't want people who would figure out all the systems on their own because they would ignore the best practices inside of that system. So what we were trying to do is leapfrog over all of the stages to get really good franchisees or really good partners who could right away get into that we stage of the business. Any of the fees, any of the licensing, any of the royalties, showing up at conferences, any of the stuff that kind of grates on you, or any time you think you're smarter than the system, to try to put that aside and remember that you're either in the terrible two stage or you're in the teenager stage or you're in the adolescent stage. But at some point you're going to have kids on your own and you're going to remember that mom and dad were really trying to do the absolute best they could for you. All right. If you're the CEO of a company that does at least $2 million or greater in revenue, or you're the CEO of a company and you're in the United States or Canada, if you would like a copy of my book, The Second in Command, for free, go to cooalliance.com/freebook. That's cooalliance.com/freebook, and I will mail you a copy for free. I will even cover the shipping. Jump on that one today. If I talk to franchisees that are at 1-800-GOT-JUNK, that I awarded their franchise 20 years ago, like Mark Rubin in Washington, D.C., or Tom Ripma in San Francisco, or Dave Harrop in Calgary, Paul Guy in Toronto, who also owns all of Australia and all of Manhattan. They still follow the best practices in the system of 1-800-GOT-JUNK. They recognize that their best systems have become now part of the head office practices. So the things that they invent when they become the best practice get rolled out to everybody. But some of these franchisees are paying millions of dollars a year in royalty and they don't care even though they don't learn anything new over the next, you know, 15 or 20 years. They're so glad to be at that we stage. The faster we can all get through through the terrible twos and the teenagers and the 20-year-olds that are moving out on their own and think they're better than mom and dad. The sooner we can get to that we stage where we hold hands and recognize that we both bring something to the table, that's really where the power is gonna come for you.
