This is a recorded Mike Minutes Mastermind session (08/25/2023) where Mike Andes answers audience questions. Main points: he recommends an ERC provider reachable via mikeandys.com/erc, notes typical provider fees (~20% and possibly 15% for some firms), warns about ERC scams and stresses correct filing; explains why Augusta uses an industry-standard yellow (New Cat/Caterpillar yellow) instead of custom pigments due to cost and matchability; and analyzes Subway’s private-equity purchase (Roark Capital), describing Subway’s franchise issues—no territorial rights, many closely spaced stores, large store count (~40,000+), and low average unit volume (just under $200,000/year)—as reasons for franchisee dissatisfaction and lessons used when drafting Augusta’s franchise agreement.
Questions this video answers
mikeandys.com/erc
About 20% (he noted some firms claim 15%).
Roark Capital
Just under $200,000 per year
About 40,000+ stores
Chapters
But it's loud Mercy. Let me bring it down a bit for you. All right.
Happy Friday. Let's go and get started.
I know a few questions came in I saw this morning, so let me just take a look.
Cool. All right, let me drop this in the Facebook group and we'll get started.
Bam.
What in the world?
What in the world? Is YouTube down.
In the world?
Okay, that's weird. Sorry. Give me a second. It might be vlogging. Too many Google accounts.
Sorry. I'll get this in here. YouTube's down. What in the world? Okay. All right, well, we're gonna fly without YouTube for a second. I will get YouTube on afterwards. The link onto the. The session. All right. Present Share screen questions. Here we go. All right, there's four. Here we go.
Sandwich. What is the name of the company used for the ERC? I just spoke with a company, ERC only, and they only take. They take a 20 cut. Just curious what your agreement was. Thank you. Yeah. If you go to mikeandy's.com Erc, that's the one I used. I know several of the franchisees have used it, and so far, based on what I can see on my end, all of them have gone through really well. I would just be careful. There are a lot of ERC scam stuff happening. That's the only reason why I shared that link, because I know I used it. It went through fine. They were really professional. I was happy with them. Yeah, 20% is kind of like the standard, honestly, right now. And honestly, I would recommend everyone use a company that actually does it, because if it's not filed correctly, you get in trouble. And. And so, yeah, they really just accommodate the filing process.
So it might be 15% they take. I think. I think ERC specialist takes 15%. Don't quote me on that. But it might be 20% as well. If you do use that link. I do get a little bit of a cut, and it was great. We were able to get quite a bit towards the several thousand dollars towards the June trip by having that. So it's helpful for me, just FYI. But I know ERC specialists did mine. They've done 1, 2, 3, 4, at least 4 or 5 of the franchisees. And it's based on what I've seen so far, been really good. So. Mikeandy.comerc is the one. Ken from Fenton, Michigan, when it comes to color code of our trucks, is there a way to slightly alter the pigment to make it a whole new type of gold, orange, yellow color? Then we could officially name Augusta Gold. I don't, I just, I don't just think this would be really cool, but I think it would be really handy down the road when we go get something painted or uniforms. Couple things. Getting a custom pigment is extremely expensive. If, if you're like thinking about like an actual hue on a uniform, for example, the gold is nice because a lot of uniform companies have this yellow gold color. And then in terms of the trucks, it's similar in that having something that is kind of industry norm like in color, we all kind of that is already associated inside of all their color coding is easier for us to typically match. So like the new Cat or new Caterpillar Yellow for example is what is the Augusta color is actually based on. But what's nice is that color is like universally you're able to find where what those pigments are regardless of the software or computers they're using at your.
Painting company. So almost everyone can find it. It's super easy. Instead of us having a very specialized pigment that for every single software we'd have to figure out certain codes because they're all different. So that's kind of why we've always stuck to that same yellow. It's universally found and if someone ever is in doubt, it's like it's new cat yellow. And you can find that pretty easily.
Kyle Tarvin and part of the reason I do I know this is because at Anytime Fitness they have a special purple pigment that we have to use for our paint. And it costs us over $200 per gallon of paint. Because of it. We paid almost 4. It was over $400 per gallon for one part of the gym. And it was because they had a special pigment and you had to nail it. And so it was extremely expensive for them to make that that exact formula.
This. Kyle Tarvin Moore, Oklahoma. Curious to hear your takeaway on Subway being purchased by private equity. Yeah, by Roark Capital. They bought out Subway. Subway is really interesting because they are.
They really do serve as a very small business. And what I mean by that is like the average Subway makes just under $200,000 in annual revenue. It's very, very low. There are obviously ones that are like self standing that probably like a million or million two. But most of them are on one 190 to 250. Especially the ones that are struggling. There's a lot of struggling ones. They've reduced their store count a lot over the past few years just because.
They don't have any territorial rights. So you could literally put Five of them in the same strip mall and there's, there's no, there's no territory rights whatsoever. And so the problem that's created is they use, they had 40,000 plus stores and all of a sudden you have five, six subways in a few block stretch. And it's just hard to compete with a whole bunch of other people. So that's why we've always wanted everyone to get into the growth model is because we have territory rights and it prevents that from ever happening because you are guaranteed that geography.
So there's a lot of unhappy franchisees at Subway, but they have such a powerful brand they're able to get away with it. And that's really the balancing act as a franchisor is you can charge more the stronger the brand gets and you don't have to service your franchisees as much. That's just how it works when it comes to franchise structures. And that's like how they train. And a lot of books will talk about it's like you build up the brand, you use the franchisees marketing dollars to build up your brand. You get franchisees from that and then you're able to reduce your service because of the fact that everyone comes to the brand instead of to the fact that you have a good business model. And that's what Subway did. And it was a good. If you index way too heavily on that like yes, brand is important, but ultimately if you have a bad product and you are pitting all your franchisees against each other and everyone hates each other and hates corporate, then people are going to leave. And so they really have to go for a big change. Over the past 10 years especially, you know, they put so much marketing into what's his name, Jared and that marketing campaign. And then like when all that stuff happened with him that was negative for the brand. But really like the fight the five dollar footlong for example, almost bankrupt many of the the franchisees because they can't make any money. And so they have corporate pushing it down everyone's throat that they're going to, you know, they have to do a $5 foot long. When franchisees like we can't make any money, if I make a million dollars revenue, I can't make any money because they are pushing it. So that's why like when we create our franchise docs, there's lots of things in place to prevent that from ever happening. Even if I got hit by a bus, like in terms of allowing franchisees to leave, allowing you to control your pricing, we cannot control you and tell you what to do. You're on your pricing. We can suggest we can do all that, but we cannot control your pricing and we can't control your marketing. So there are things from Subway, McDonald's and Anytime Fitness that mostly I learned from when we create our franchise docs and I read all of their franchise agreements and I went and talked to other franchisees of what they didn't like and just made sure that like, it's kind of like the constitution of Augusta is our franchise agreement and making sure that regardless of whether I'm here or not, there's certain things in place to prevent what where I feel they have been derailed and also what they fixed in order to be get back on track. Because Subway, Anytime Fitness and McDonald's have had tough times in the past five to 10 years and they figured out what works better. And so that's kind of how I created the franchise agreement. I look, like I said, I look at the franchise agreement as our constitution. And the same way that like, you know, yes, you can have lawmakers and people go off the rails and be weird, but ultimately, if it gets to the Supreme Court, it's going to look back at constitutional law. And so, like, I really look at the franchise agreement as that it is, is what cannot be overruled by any person.
Oh, this is the one from yesterday. You put it in here. I answered this yesterday, Dylan, on about wake up times and morning routines and things like that and saving time and being efficient. So feel free to listen to yesterday's mastermind. I answered it in pretty, pretty in depth. So thanks for putting that on there.
Cool. All right, that's all we got for today. Thanks everyone. Have a great weekend and we'll see you on Monday. Take care.
