What does the future of franchising look like?

Join restaurant owner, motivational speaker, and innovation expert Sara Frasca this week as she chats with Chris Conner of FMS Franchise about the future of franchising. If you've ever pondered hiring a business coach but want a sample first, come along for the adventure!

Send us a message to join the show for free business guidance: https://pointnortheast.com/contact-us/

Sara Frasca is the founder and owner of Trasca & Co Eatery in Ponte Vedra Beach, Florida, an experienced and engaging motivational speaker, and the CEO of global business coaching firm Point NorthEast.

 

Transcript:

You're listening to level up your business, the podcast where we talk to hardworking business owners and leaders and help them solve real issues in real time. I'm your host, Sarah Frasca restaurant owner, keynote speaker and business coach. I've spent my career not only in corporate America but also as an entrepreneur, carrying on my family's legacy through my restaurant. Now a business coach and consultant. I'm helping other businesses to use creative problem solving and innovative thinking to drive lasting change. Stay tuned to hear some inspiring guidance that will help you to level up your business. Well, hello, everyone. Another Thursday here, Sarah Frasca with the point, northeast team. We've got another great guest for our level up your business podcast, and I'm really excited to welcome Chris Connor. Chris, thanks for joining us. Thank you, sir. So excited to be here. Thank you for having me. Yes. So as you know, we always like to have people that have done something kind of, you know, interesting, astounding, have helped others. And, as you know, and I know, and now our listeners will know, you've helped me on the Trask aside, so I figured it would be important for me to share with folks that your business is the business that will take Tresca from you know, coast to coast, hopefully, and get the panino to be a household name eventually. But tell us a little bit about your past, kind of where you've come from, why did you choose to build this company, I think there's so many things I want to know. So I, I came from a family where all I knew was was being an employee working for a company working on your 401k. And one day, you could retire if you worked at a place long enough and saved up long enough, I thought that was the only track that you could or were supposed to take. When in 2001, I went to work for a franchise development firm, I knew nothing about franchising. I didn't know what really what it meant. And I took a job as an employee working for a company. And I had the opportunity to work with some some brands ended up becoming big franchise brands like Jimmy John's and Culvers, Auntie Anne's, and European wax center. A, I learned what franchising could do and the possibilities and how great this model could be for brands. But B, it also opened me up to entrepreneurship. And it started to expand my mind of what was possible. And I would interact with people who had taken the risk, done something innovative stepped out of that, that career path of corporate America, or whatever they're doing before. And I was like, Man, I would love to be doing this, whatever it might be. And that just kind of got me started with the idea of entrepreneurship. I worked for that company for eight years. And then the place basically collapsed. So I, I got laid off in 2009. And, and it was that kick in the butt that I needed to be okay, well, now I'll start my business. And I really do the same things I was doing before. Franchise development. We also sell franchises, that was a big change from what my previous company was doing. But I I started this in 2009. And at first it was scary. I was, you know, super anxious and just freaking out about everything and worried about not having a paycheck. But it took about a few months. And then I look back and I'm like, that was the best thing that could ever happen to me. I'm so thankful that I had that that push, and that kick in the rear end to be like, start your own thing do it. And and now we've got 30 employees, and we've we've been we've been doing this for 15 years. So it's been it's been a good run, it's been a really good thing. That's really great. And I mean, I from one of your, you know, kind of franchising brand. Client perspectives, I mean, you have such an amazing team that have a really deep service model are really invested in in kind of building it. So thank you for doing it. Right, I would say thank you. Yeah. So tell me I mean, you know, have you. I mean, have you thought about where you want to go in the future? Like what does FMS become what what is the? What is the goal or as we like to call it in the point northeast world? What's your summit look like? What is it that you're trying to achieve? It's an interesting time for this discussion. And I always love talking with you. Because you have been on like all sides of it you at the big corporate experience. you've started your own brand. And now you've been a coach and a consultant for all these different companies. You've got so much different perspective which is which is unique. I mean, not that many people have that. I am definitely a little bit of a crossroads. The business my, my intention, day one was to earn a living, I had a mortgage coming and it was like I need to earn a living and pay my bills. My second Why was my family was at this really weird crossroads, my dad was an alcoholic and whole family kind of fell apart. So then my my second was to take care of my family. And so my brothers work with me and my mom, my aunt and cousin, we've got a lot of family members. And then the third was to grow this into a business where it wasn't just me or immediate family members that that were benefiting and helped by this. And we've kind of done that with 38 people that we have now. So I am kind of trying to figure out what is my vision from this point forward, I don't want to just keep doing what we're doing and not have any next level growth. I have thought about starting, like a private equity version of what we do, where we would own brands and, and be part of brands on the on like a true partnership level. And that's something that we've taken some steps to look at doing, I think that would be our, our really big next level goal was to actually own parts of the brands that we're helping develop and be a partner in them. And there's so many opportunities out there that it would make sense to do that to look that direction. So does that. I mean, I'm just thinking of it from again, all sides, is it you know, an opportunity to kind of because you have, again, such smart people that know what they're doing and all of us, now you've actually got a kind of an vested interest in building toward the future in finding brands that you believe in that your team thinks that they can also be a part of. That would be the idea is to leverage our current infrastructure, give the people that we have on the team now more opportunity. My thought would be, I love the idea of an employee owned business, where you basically have like a, like a pool of shares that the team owns part of it. And that would be part of my vision also is just to give everyone that bigger picture opportunity. What we've created with FMS is we have a great business, we've got a whole bunch of people who have great jobs and salaries and employment. I think everyone I know me, I know myself, I love what I do. I love working with entrepreneurs. I love the franchise model. But there's not really any long term equity in what we do. We're like a consulting group. And, and so for this to have a really big exit opportunity at some point or some big end game to it, I think this equity play would definitely be the route and the vision for it. We have started to do some offshoots to the business, which were something I had intention to do for a long time, it just now started to take shape. We started a finance arm to a mass where we can help fund franchisees and help get them the loans that they might need or 401k, rollovers. For a new location when they use financing for it. We also have a real estate arm, too. So we can help find locations for people. And there's some revenue opportunities that come from that. But probably most importantly, as it helps us support the entire deal from from initial contact all the way to close with a new franchise owner because they'll need funding, they'll usually want to know where the location is going to go before they'll sign a franchise agreement before they commit to go to the next step. No, I think that's a really good point. I mean, I am selfishly but also thinking of kind of the point northeast model two which is surrounding them with the business acumen because that's a little bit of our, our value proposition. I mean, we find and we work with a lot of professional service organizations that have great artistry, right, a great command of the legal space or of orthodontics or of architecture and what's needed and what what are the laws and what are the restrictions and all those things, but they don't have the acumen of how to leverage HR principles and keep themselves out of trouble or how to leverage data effectively to manage their business make decisions. So I'm just sort of thinking, you know, I know that your team does some of this, but that might be a good component to to surround a new franchisee with, how do they do this the right way, which offers a little bit more of a success, I would think kind of chance of success. I completely agree and In reality, the kinds of things that you do with point ne the, the depth and the and the value prop, that most franchises that I've worked with even the big ones, they're not doing that level of full scope, business consulting and advice for franchisees, they're giving them the critical things, the marketing side, the branding, how to get the location open, usually, but there's a there's a huge space there for it in the franchise market to Yes. Well, are you? You know, I think that's hopefully one of the reasons why people will want to be a part of Trask is there's that back end kind of support network, you know, support system, network, etc. Okay, tell me, I'm going to switch gears a little bit. Tell me what is going on in the franchising space? I mean, what is exciting you what is making you nervous? What are the trends? Like just talk a little bit about your industry for a minute? Yeah. So I think the start with the bad news first, everyone right now has some anxiety around the economy. I think we have for a long time, it's been a little bit of a awkward middle ground of being since COVID. And I think everyone probably expected some significant Fallout well, before now, yet, things have been pretty darn good. So it's like Where, where are on How stable is our footing now. So there is some anxiety around that the franchise business is enormously based on emotions and level of positivity level of confidence in the market. So those things do impact what we're doing, we do hear that when we're selling franchises, when we're growing brands. So there, there is a level of that. I do think that it's also, I think it's contained a little bit by geography. When you look at markets like Florida, where Trask is based, Florida is in as big of a boom time as any market has ever been Texas, Tennessee, Georgia, North South Carolina, these really business friendly states, so much movement of people and capital and resources to those markets, I think we're feeling a whole lot less of that anxiety. In other markets, you know, or maybe hearing a little bit more of it. But on the good side COVID. And the pandemic really pushed people into entrepreneurship, the statistics from the SBA, last time I looked at them, we broke records for new business startups in the US in 2122 23, and 21, and 22 are like double what the highest amount had been before. Now, not all those people are buying franchises, but a percentage of them are. And that has really fueled the market, the franchise industry in it overall has exploded since our business has grown by almost four times three, four times since the start of COVID. And the reality is, we haven't really changed that much, it's just been that many more people coming into the market and investing in businesses. It's been a great time to be in the franchise industry, this year looks to be another year of continuation of that. election year. So it's a little bit who knows what's gonna happen here. But But overall, it's a very good time to be in the business. People want to own their own thing, they want to be an entrepreneur, there's a good section of people who are looking at entrepreneurship, who are not comfortable with the idea of taking the risk like you did, and coming up with your own model your own idea, without having someone to be there to coach you. And that's where the franchise model comes in. And right. A lot of people really, really like the idea of, of give me a blueprint, give me a plan, show me what you've done wrong and right, and make sure that I'm avoiding the wrong and doing the right, worse. And that that's that's where the whole franchise model comes in. And I think there's a good chunk of the of the franchise market. I know there is people that are like corporate refugees, who left a big company, they left an employee position as employee. And for that profile, the franchise model fits exceptionally well, right? They're used to structure they use the guidelines, they see the value in a brand. And that's I think, in large part who we're selling a lot of franchises to and who we've seen a lot of growth with. That's great. I mean, that in all honesty is a little bit of, you know, a kind of a parallel of my profile. I really loved my days at General Mills almost, you know, 15 years, but I was ready, I was ready to run my own world and be my own boss and do things, you know, in a different manner. And so I was able to have that great foundation, but kind of, you know, make it What I wanted so I can I can relate, I think that's a great model. Are you seeing any trends in terms of franchising of whether it's retail or restaurant or hospitality? Or, again, I don't even know what all the kind of verticals are that you've served. But is there anything that's like, hugely popular or? Yeah, you know, food food service will always be one of the biggest segments. It is. I mean, people know franchising in general, because of food service, they associate it with food service. So it will always in my 25 years doing this, it will always be something between 30 and 40 45% of the market. Wow, okay, really big piece. When COVID happened, it did negatively impact the segment, as you might imagine, people were concerned with buying a business that had the potential it could be impacted or not even opened COVID. So we did see a drop in 2021, I think it probably still was sort of down. But it picked up significantly, again, in 20 to 23. Again, and now I think food services is is really on a growth curve. And services really became the top segment. So like painting, roofing, landscaping, mosquito control, anything you could think of, right? Because of those reasons. People didn't have to get a location. There wasn't a huge upfront investment. There were businesses that weren't impacted negatively by COVID. But but food food service now I think is coming way back services kind of got saturated too. So I think we're seeing a level of competitiveness that makes it a little tougher. Yeah, you're fine. But the but the the foodservice space has really been coming back full swing. There's definitely some pockets within foodservice that have have like, grown faster, and I think are showing more opportunity. Anything off premise, delivery, catering, carry out, all of those spaces have absolutely exploded and enter spaces that anyone in food service should be looking to. Quick service simple, smaller footprint quick service has done really well also. So I definitely would recommend that that's been for true for a while. But in general foodservice is a great space to be into. So I think we're gonna see this year, I think we'll see food service, again, be 40% ish of the overall franchise market. And, and you can see it at the shows, you see it in the deal flow, and the brands that were selling a huge percentage of them are, are in the food space. That's wonderful. You know, I mean, I think of the franchises that I remember, as a kid, and I'm just sort of curious, there's some that are still around, and then there's some that aren't. And so, you know, how, how much does innovation? Or how much does kind of the importance of change factor into kind of a franchise or a brand's longevity? I mean, there's so many different evolutions, but I think of some that, like, didn't change. So mean, does that factor in? Are you coaching people on that? Well, it that you would know more about the space than I would add, and it's definitely a critical factor to a brand's longevity. And I, the franchise markets interesting because the consumer sees these franchise brands as as in some cases, global brands, I mean, they're, they're in every market. In a certainly so many examples of brands that are in every market across the US or Canada. Most of these franchise brands are owned by one person. So there's a very privately owned section of franchising, where it's a lot of times it's one person, it's a family that started this thing and then a franchise out. And when you have that dynamic, I think you are probably more susceptible to not looking forward and not thinking hey, we can't just rest on our laurels here. We can't just do the same things we did interesting in 1985 and still get the same response and engagement. Why? Every once in a while you see a franchise brand that has done it. They've beaten the the innovation, risk or threat of not innovating. Brands like Holiday Inn, McDonald's Dairy Queen. There's a lot of them that have withstood the test of time. They have come out with new menu items, new ways of doing business, they've required franchisees to invest in locations and come up with with new model because you're seeing it in like Wendy's now, for example, with all the self order kiosks, and a completely new restaurant design, the franchisor has the right to dictate that to the franchisee. And if it's a good franchise where they're investing in these things, and then pushing it out to the system saying, Hey, guys, we, we found a new technology, we found a new product line, you have to do it now. Level. But you do see a lot of brands that that were at one point, major names and super successful. And then they just kind of fade. And maybe we're kind of seeing that with subway now. You know, we're at one point they dominated, right, the space and now you've they've kind of been dipping a little bit I think they could certainly resurface here, but yeah, I've actually been impressed lately with their advertising of their footlong pretzels and cookies and things. And I thought that's kind of fun. But I'm not an avid subway eater. Owning a, you know, restaurant business of my own. Hmm, interesting. Yeah, I mean, it is it I've I've, you know, certainly I am passionate about innovation and thinking forward and challenging the status quo. But I mean, I think about like a Quiznos, I don't even know if they exist anymore. I loved them when they first came out. They were innovative, they had these, you know, hot and toasty, sandwiches, and then it kind of vanished as far as I know. So, and Quiznos is a good example of what what we were just talking about where they had the largest class action lawsuit in franchise history. Now, it's probably been 15 years ago or so. But you had private ownership, making decisions that that serve them and not the franchisees, you had to buy products through them at a drastically increased cost. And ultimately, like, like, it sounds like you feel to I felt like the product was better than really anyone else out on the market. Like I always chose to go there, too. But literally overnight, a 5000 unit franchise system basically disappeared, you'll see in a while, but that comes back to just ownership making the right or wrong decisions. And in franchising, you have to make sure that the franchisee is winning, if they're not winning, then this is short lived success. And really, what what happened there? Yeah, you know, it's an interesting, I would say, game or plan or get, you know, thinking about it strategically, it's not a short term, you know, get rich scheme, in my opinion, it's a long term, like you planned for your very planful for the things that you want to influence, which is, in my case, you know, really good ingredients, really good service in a restaurant that just happens to be my family's food. But, you know, I think if you're true to your brand, and if you're true to your kind of core values, I think it can work really well. And then the nimbleness is, again, the key, but I really, I, every time I go past the noodles and company, I shake my head now. I mean, I used to seek them, I used to love them. And I think you know, again, they've been, in my opinion, diminished by chasing profit, which I think is again, a short term fix drug addict, if you're only searching that next quarterly profit, you're not making good decisions for the long term of your team, your business, your brand, your cell. I don't know how you feel about it, but I'm very biased. Well, I mean, I love the Treska story. I think when you have a family legacy, where there's history, there's there's there's there's blood, sweat and tears that have been poured into this brand over decades. Not just yours, but but your whole families and, and a great history behind it. We've got unique products, we've got a place that people can come to for lunch or dinner multiple times a week because a wide menu selection and product selection. And and we're in a space that to me can work in just about any market that we have the right graphics, the right income levels and traffic count and things your work and what you have done and what you are doing outside of Tresca is absolutely to me the kind of the silver bullet here where you are interacting with 1000s of people through your speaking engagements and your coaching. You're also front and center and looking and being involved in what company is doing for innovation. So not not just the long term but short term, there are opportunities that you will be able to help people see new menu items, new ways of doing business, that if they were working with another company, they wouldn't have that opportunity to so I think there's a huge advantage to it, we need to get the first franchisees in. That's right, to prove that there's duplicates. But I know once we do that the market opportunity and the upside for the brand is enormous. Yeah. Well, thank you, Chris. I certainly appreciate all of your kind words, they think we've been good partners on this so far. And I, I'm very optimistic it's going to be fun. Okay, back to you and FMS, you, you know, is there anything that you see coming up that you could use some help on or want me to kind of think about and the way that I tee this up for folks is, what's keeping you up at night? What are the challenges that are, you know, on the tip of your brain? Or, Oh, I wish I could come up with this. And I'd love to even in the moment, see if I can help you with those. I love it. I love it. So I think like every business on the planet in the history of businesses, I'm always worried about continuing to drive the top line. You know, how do we how do we keep that funnel of business working and going. And new opportunities to drive business into that funnel, and then also new services and value that we can give to the people that we work with to potentially have more revenue streams. I mentioned the funding, I mentioned the real estate, but I am always looking for other ways that we can add value to someone that we're working with. So that would be one. Two, I am not a great leader. I am a I'm a doer, you know, I'm if like Michael Gerber, the E Myth, I'm the guy that is still digging the ditch. And you know, in it so far, it's hard for me sometimes to step back and give the team the resources, the time, and the and the tools that where they could a take some off my plate, but be be more successful and, and have and be more empowered, I think would be the right word for it. Yeah. So that's something that weighs on me and I, I'm constantly aware of it and constantly trying, but I, you know, I just end up usually doing it. But that's, that's an interesting challenge, I want to address both of both of the things that you brought up. But I would say on the, you know, E Myth perspective, which is great book, by the way, we're maybe having a hard time kind of driving the, the team forward. And I think you probably are a better leader than you're giving yourself credit for, by the way, but you know, it might, it might be beneficial to bring in someone that could almost be, you know, a CEO, and then you end up as kind of a chairman. And on the seat of doers. You may be, you know, kind of the board that the CEO ultimately is responsible to kind of come back and make sure there's buy in and those sorts of things. Because in my understanding, you're the owner, is that right? Yeah, that's what I thought 100% equity. And yeah, so I mean, ultimately, the CEO, is responsible and reports up to you. But that might be a really interesting way of, you know, continuing to find the growth continuing to kind of bring on people that can help to kind of push the strategy forward. I find in a lot of, again, in a lot of these organizations, that, you know, the owner or the founder has to make a decision. And so this actually is an analogy that I did not come up with, but I'm going to use it in this moment, which is, are you an hourglass leader, or a top hat. And so if you think about an hourglass, the sand, of course, starts in the top. And if you are the bottleneck that everything has to flow through, it's a really slow moment. I mean, it takes a long time for all the sand to go through. So if you think about work, product, work, output, etc. But a top hat, you flip it over and everything falls out. And so in this kind of moment of you reflecting on how can I grow my business, it might be important for you to get yourself out of that hourglass bottleneck, and just be a doer and have someone that can orchestrate the type of communication. Again, just kind of you know there the orchestra leader that is telling all the different teams what they need to do and you're just you know a person on that whether you're doing business development or coaching on the strategy of the franchising in your ops team or on the HR side or whatever. So I think it's a really like a that is a very vulnerable you know, kind of comment, but I really Appreciate it, I think that humility will take you very far. And there's some things that you might look at doing. And no, and I totally appreciate that. And I don't think I have have an ego. I've never felt like I was one of those guys, but, but thank you for saying. And it's, that's something that definitely weighs on me, you know that. I guess I lose sleep over, but well keep thinking because there might be someone in your midst that's like ready to take that spot, and they might be a good partner for you, you know, however, on the ideas front of how to build top line revenue, I was just thinking through and this is like, in the case of, kind of, you know, it would almost be an interesting model to bring in a team of folks. And again, I've worked with so many of your folks. So I know they could do this. But a suite that helps to surround a franchisee, especially in the beginning. And so I think of, you know, the functional areas that they need to develop a sustainable business. So you think about marketing, business development, you think about, you know, there's an operations leader that's necessary to make sure it's efficient and effective. There's a finance leader, or, you know, a finance component. There's HR, there's technology, there's innovation, there's facilities, and these are all hats worn by an owner when they start a new business. Yeah. So if you are, and I'll just again, use my example, I came from General Mills, where I didn't have to know finance, I just literally said, Hey, finance person helped me with this, or, you know, hey, HR person, I need help with this. And so all of a sudden, you're thrust into this moment where you have to wear all the hats. So FMS could come with, hey, you know, FMS, HR person, what do I do in this case? Or, you know, what do I do technology leader, and maybe they have a, you know, a phone and an internet service or So those might be some, you know, components that you could bring, that would be, again, a nice supplement to your revenue, helping the franchisees to be more successful, which again, is just, I call it the snowball of love. I love that the snowball, I love it. We do get that that is requested. Because, yeah, we will facilitate getting the franchisee in, you know, taking them all the way to that finish line. And then they sign up. And then the client that the brand owner, if they're certainly capable, I mean, they've they've they're experienced, they're intelligent, smart business people, but they don't have a team in place yet. We first start franchising so that that definitely could be a great value prop to save, let us be that team, at least in the in the intermediate stages, during your in house people in at some point, but that'd be a great idea. Maybe it's like a subscription model for the first year or something, you know, it's like leverage just as much as you need for making this up $10,000 a month, and then we'll wean you off of it will be your training wheels and weaned off as you, you know, continue to develop. And I'm curious to know how many folks start out with just one franchise location? Or are they starting with multiple? All the above? And we have some that? Not very many, but some that will start with lots of locations. Okay. And, and others that start with one? Yeah, and the whole, the whole range of spectrum. The, I would say the majority, the brands that we work with only begin with one, they had one good location that we use as the prototype type that's flagship that we're basing our model off of, that's what we're selling off of. Right. And, and using that as our, you know, our pitch point and, and selling off that single unit. Okay, I think maybe I stated the question wrong, but that was helpful, too. How many of the new franchisees coming in want one? How many want many? Got it? So the majority of what we're selling is units one through 50. Okay, that's where we are heavily involved is those initial early stage ramp ups. And in that range, the majority of the people that buy are single owner operators, it's one location. A lot of times it's it's a husband and wife, it's a it's an operator who's going to work in the business, they love the brand, they love the food and they want to they want to be part of it. As these grow that's when we tend to see more multi unit investors come in and when we have validation we have proof we have sure versus under a belt. That's where we've seen more of a multi unit deals come together. With we've definitely sold them. But it's usually been at the later stage a little bit that next level of maturity, they have some track record, then I found new see multiunit buyers come in and okay, we've had some by countries, if it's on by whole states, and then yeah, I was still trying to think through whether the kind of the suite of offerings would be helpful, because presumably, presumably, if they're buying 50 units, they've got a little bit more sophisticated kind of front office, but it's the single or the, you know, they're buying two or three locations, they just might not have, you know, the capital and the capacity to have the leadership at the functional areas. So, anyway. Yeah, definitely, the majority of the people that we are selling to would not have any real resources behind them. So, right, that that point? Yep. Makes sense. Well, okay, I'll keep thinking about your challenges. But I think those are two, you know, good ones that again, you know, I definitely don't think you have an ego, you are such a humble person. And, you know, it's, it's a little bit of, I think the right thing will happen to help you, especially in that kind of CEO role. I think, keep thinking, look around the office, kind of see if there's somebody that might be able to take that. Take that home. So that's cool. That's really neat. Well, thank you for I mean, everything. You're trusting me with the task of business, but also coming on to the podcast to share with folks kind of what you're up to what you're thinking about. It's really interesting part of kind of the business world is this franchising space, and thank you. Well, I absolutely adore you. Thank you, and your whole team, James and the whole team. And I love your brand. And it's just been so great to work with you. I think we will have so many wins here in our future together. And I it's awesome to be part of this. I haven't seen you it outside of our Treska. Roles and nametag on Yeah. Well, thank you. Yeah. I look forward to the future to Chris. I'm very optimistic, very excited. And if you end up with this kind of equity position, if you're thinking about it, then Tasker wants to be on your list of considerate consideration. So you let me know. That's great. All right. Well, have a great rest of the day. And good luck with your travels. And thank you again for being on the show. Thank you, sir. All right. Thanks so much for tuning into this episode of level up your business with me, Sarah Frasca. If you have a problem in your business that's keeping you up at night. Please join us in a future episode so we can help get you unstuck. Just clicking the link in the show notes and send us a message. Please remember, stay innovative friends.