The #1 Rule Great Franchisors Never Break (Most Get This Wrong) with Jeff Dudan & Cordell Riley

characteristics and benchmarks make a good franchisor at the emerging phase, which you worked within Tortle, kind of at that intermediate phase, say maybe 100 to 250 units, and then at the mature stages where Maineki and Mako were, you know, billion, bill, over a billion dollars in sales, I think 400 or 500 locations in each of the brands. What are the characteristics that you have learned over the years make a good franchisor, particularly for franchisees to engage with?

Yeah, and I love that, Jeff. Look, so I, when I think about a franchisor, I think a franchisor has 3 key responsibilities and I'll kind of unpack those and then I'll, I'll maybe go back for a second. One is they are the visionary for the brand. This is who we are, this is where we're going, this is how the model is going to work. But they're also looking 2, 3, 5 years down the road. This is what the end user consumer is going to need. This is how the market is going to change. This is how our system is going to need to evolve. So, they are great visionaries for the brand. Now, as part of that, Jeff, they're also great listeners. So I talked about them looking out front, but they're also bringing in their franchise partners and they're doing this in a highly collaborative way. But one's visionary for the brand. Two is they're a, they're a str— So marketing to the end user consumer who's gonna buy the product or service that that franchise concept brings to market. Marketing to new and prospective franchisees. So they're a strong marketing organization. And third, and it's kind of what you and I touched on, they are a strong training organization, making sure that they're having training systems and programs in place that give the franchisee and their team a greater likelihood for success. When we think about franchising, you know, and I have a saying, Jeff, that really still rings true, is the system is the solution. People choose a franchise for a proven system. This is how we do it here. The way that you're gonna convey that system to the franchisees and their team members is through an effective training program. So I always start with those 3 points: visionary, marketing, training. Okay? Great things about a great franchisor, Jeff, they have the right mindset as what it's gonna take to be a great franchisor. Their franchisee success is not optional. A great franchisor is going to be deliberately focused on how successful their franchisees are. Let me also say that the franchisor's role is to make sure that the tools are in the toolbox. The franchisee absolutely has to open it and use it. But if the franchisor has that mindset that we're only going to be as successful as our franchisees are, That's a recipe for success and all the other pieces kind of fall into play.

That is one of the best soundbites I've heard in a long time, and I highlighted it. I'm embarking on an engagement campaign to win the hearts and minds of 20% more of our franchise owners this year in a very personal way. You know, it's like, it's, it's like one at a time, right? You've just gotta build relationship. And the fact that you said franchisee success is not optional. As a franchisor, been involved in a lot of franchising over the years. Sometimes you get tired with a certain owner and you're just, you know, they fight you, they fight you, they fight you. And then finally you just say, well, they're only gonna be so successful. So I guess if they're fine with it, we're gonna have to learn to be fine with it. And you, you give up a little bit because they just, every, every conversation is just like, you're just You're showing them the data, you're giving them the SOP, you're showing them the path, you're letting them emulate with other franchisees and who are doing it well. You're connecting them with these people, you're putting— and you just constantly are just giving them every, every social proof, every financial proof, and every avenue and every tool. And like, they just don't want it. And it's like, you know, and that's, that's a minority of them, obviously. Well, I would hope it would be in a franchise system, but The fact that a franchisor can't give up, you just can't. Like, it no matter, like they have to know and think about it when you have a problem child. Okay. And, um, I did a lot of work with the Charlotte Homeless Shelter after having a personal experience and a, and a related family member where, um, something didn't go well. Somebody ended up basically homeless and then got involved with and understood like When the last person— people become homeless when the last person who will let you sleep on their couch says no. So think about it. You've gone through all of your family. Yeah. And you've alienated them. You've stolen from them. You've embarrassed them. You've resisted their, uh, chance, their help. And then you start going around to friends and then, you know, maybe now you're going around to other people that suffer the same mental state that you're in, whatever that is, or maybe Maybe the same drug habits that you're in and you start going around and now you're, that's your little family now. And then at some point, the last person that lets you sleep on their couch says no. And that there's just, there's no more doors to open to get inside. And now you're outside. And if you're outside, you're homeless. So it's, it feels almost like the same way with a franchisee who you're, you just keep trying to include them in all of the things. And then the friend, the other franchisees get tired of 'em because all they wanna do is complain. They've taken their time to show, to bring them in and show them how to do it. It's like, yeah, but it doesn't work. It doesn't work. And, and then, you know, but like if you, if you had a fundamental value that franchisee success is not optional, then quitting is not an option. You can never quit on these people. And maybe, you know, and sometimes the conversations that I have and sometimes they're great conversation is, look, you, you got into this business. You did okay. You, you tried it. You've had some success, but now you've gone back and taken a $250,000 job and you've got a brother-in-law running the business. They're not running it well. And, and at the end of the day, this isn't the easiest dollar you can make. So you're just, you know, let's, let's help get you out of the business.

Mm-hmm.

And move, move it onto somebody else.

But.

I just want to double-click on that for any of the franchisors listening. Wow. What if franchisee success is not optional or a principle or a core value?

Yeah, Jeff, can I make a couple of comments on that? Because you just said so many great gems here and I'll just maybe double down. So a couple of different things. And I know your audience or you kind of maybe have some emerging, some established, or you kind of got a couple of different segments out there. Throughout the time that I've been blessed to be in this this world of franchising, I've met some very, very successful franchisors, yourselves, the Ken Walkers, the Shelley Sons. I can keep going down the list of just great franchisors, the Gordon Logans of the world of Sport Clips. And from that, I've put together this list of what I call Success Leaves Clues. And I have 20 clues that I see great franchisors do. And I'm gonna go back to this one that we were just talking about. And the first principle is stack the deck with ace franchisees. I'm gonna say that again. Stack the deck with ace franchisees. Franchise recruitment versus sales. Okay. Recruiting the right franchisees into your system. Really, really key, particularly for those emerging concepts, uh, Jeff. Those first 5, 10 franchisees, oh my goodness.

Yes.

They're signing into the vision. They're gonna be the brand champion at the local level. Getting that right is super critical. So stacking the deck with right franchisees, franchise recruitment versus sales, and two big differences between those two words. The other side, Jeff, that you said too, and look, at the end of the day, if there's somebody that's not a right fit, then how do you help him or her exit the system? You know, is that something that you're going to buy out as a corporate location? Is there another franchisee that wants to expand and can take on that location? But at the end of the day, if it's not a right fit, how do you help that person exit the system is really, really key. And that all goes into stacking the deck with ACE franchisees, which is super, super important.

You had mentioned the 3 things, the vision, being great visionary, being a great marketer, and being a great trails or, uh, training organization. Specifically with marketing and with training, those are shared obligations with between the franchisor and the franchisee. We can provide the training materials as a franchisor depending on the business, sometimes depending on the state. We have limited access to the actual employees of the franchisee because joint employer law, we don't want to break any, any rules or any regulations or laws in that way. And, you know, in marketing, it's— there are things that only the franchisee can do. Community-based marketing, belly-to-belly marketing. Uh, but there's things that as a great marketer, the franchisor needs to establish the programs, take advantage of buying power, create the technology systems, uh, and make sure that there's good data that's accurate, that's specific, that's timely, that's actionable, all of those things. So, you know, one of the th— my own concepts that I kind of came up with was there's a perfect balance. Between the fees that a franchisee pays a franchisor and who does what. And observationally, over the last 5 to 7 years, we've seen, you know, private equity wave the flag of excess profits. So lots of people standing up lots of things very, very fast. They see a niche in the— they either see a niche in the marketplace or they invent the specter of a niche in the marketplace, right? And oh, by the way, we are at Homefront Brands launching a Pet Rock franchise. Be First to get your Pet Rock franchise. These things are gonna sell. I, I believe it.

It's time.

So, but I mean like that people franchise things that maybe shouldn't be franchised or, you know, and, and, and what they do is they upset the balance, the perfect balance. They either charge too much for things, which you can get for a little while, but after a time that becomes a problem. Or they try to provide services that they shouldn't and monetize those. So there's this— I mean, if you, if you look back at Meineke, Mako, the cleaning authority, service, all of these things, like there are these fundamentals to franchising that if you break them, they don't appear right away. But after 2 or 3 years, when franchise owners understand the program, they'll be like, you know, that's not right. Or You know, and also too, if you let the franchisees do everything, like for example, just running Facebook campaigns, do you really want— if you have 100 franchisees, do you want 100 franchisees spending all day, every day managing campaigns on their computer? No, you want them out there selling, fulfilling, building a team, being a leader, being the face of the business, the community. So when it comes to marketing or training, whichever one you might want to speak to, Like, what is the perfect balance for those things on who does what? Yeah.

Yeah. You know, Jeff, I think it comes down—

maybe let's do training. Maybe we go to training. That, that's a strength for you. I'd, I'd love to hear how, if you were gonna, if you were gonna coach an emerging brand right now to set up their training program, what would that look like? Who would do what?

Yeah. It's the franchisor's responsibility to set up the training program. It's the franchisor's responsibility to create the training materials, what's gonna be online, what's gonna be in person. I do suggest a blended approach to training and having some things online, some things in person, multiple aspects to reach your franchisees. It's the franchisor's responsibility. It should derive, Jeff, from the business system, the business model, the operations manual that we all talked about. That's the system. This is how we do it here. So, your training should be coming from that. Then you certainly go through a needs assessment. What pieces need to be in what format? What needs to be out there for franchisees, for their team members, whatever the case might be? The franchisor understands and does that level of work and then makes it available to the franchisee. I'm gonna go back to this analogy that I used earlier on, and I just believe it's so true. Franchisor's role is to make the tools available. The franchisee literally has to open the toolbox and utilize the tools in order to get the benefit of them. I do think there are other pieces that kind of go along with this, Jeff, and we just stay on training for a second. You know, one of the things that we did inside of the Driven Brands organization is we measured the amount— first of all, let me go back. We had a goal of how much training that we wanted to deliver inside of our system. We would set an hour goal. Throughout our year of this is how much training we want to deliver, how much is gonna be online, how much is gonna be developed and delivered by our operations people are out working with the franchisees. So it was part of our DNA as a franchisor that we're going to be a training organization, and we had a key metric associated with it. Once we did that, we would measure the performance of those that were utilizing the training versus those that didn't. And guess what? We saw performance improvement changes from those that were taking the training versus those that weren't. We use that data as we're talking to our franchisees and sharing that you need to be following the system, utilizing the tools that are there by showing performance improvement. I mentioned the term of the operations manager. That role is so key, Jeff, and you know this, but there is a term that I really believe in, you know, leading through influence. And the relationship that your field staff, business consultant, operations manager, whatever the title is that you use inside of your organization, leading through influence is absolutely critical and key. So that person, he or she, that has responsibilities for working with franchisees, building a relationship with that franchisee. Hey, Jeff, let me understand what your goals and objectives are. Yes, you're a franchisee here. What are you looking to do for your family? What are you looking to do for your lifestyle? How does this business fit into it? Where are you going with this? I truly know what's important to you. So I'm leading through influence by working on that relationship. So that gives me much more credibility to coach. And I'm gonna use that word. I think it's really, really key inside of this relationship. Coaching franchisees to do things that are in their best interest. I.e., take that training, i.e., get your people trained. So I think there's several different aspects that go along with it, Jeff, that really you have to have all of these moving parts going concurrently to really get the benefit of all these pieces that are out there. And at the same time, constantly communicating with your franchisees. We're making things available. It's to your benefit to follow the system. You chose a franchise organization for the system. Follow the system. Taking the training is part of the system.