Latest / Glovisor Podcast / Ep. 34: Before You Buy a Franchise, Watch This (Avoid Costly Mistakes) Rick Morgin
Transcript
- Joe: Franchising is a cheat code, but most entrepreneurs ignore it because they think it's only for the big players. Welcome to the Globizer Podcast, where we explore business growth, communication, and personal development through real conversations with people that make an impact. Our guest helps entrepreneurs find the right franchise model for their goals, values, and long-term vision. His work focuses on guiding people into business ownership with clarity, confidence, and a proven process that removes the guesswork. Globizer welcomes Rick Morgan. Rick Morgin: thank you very much for allowing me to be a guest on your podcast. I appreciate it. Joe: Can't wait to find out more about franchising. All right, so let's start off, Rick, with what is it that you do? Rick Morgin: I do a couple of things. I'm a partner and consultant with the franchise consulting company, and I help people find that right franchise, that right investment vehicle to help them reach their personal, professional, and financial goals. I'll also work with business owners who may want to expand and want to explore creating a franchise out of their brand. So that's how my day is spent in in prospecting. Working with current clients and just enjoying myself each day. Joe: Interesting. So what is it that that inspired you to pursue this path? Rick Morgin: Joe, I I really just f fell into it, you know? I Joe: Yeah. Rick Morgin: mean, I've I've been with the franchise cons consulting company almost 10 years. You know, November would be my 10 year anniversary, and the company just celebrated their 10th year. And and so if we go back I was in job transition. I had just been laid off for my last corporate role. And I just had that thought, mindset of I've been in. I've been had a successful career. I've been happy. Corporates treated me well, but isn't there something else I can do with my skill and experience? So that was at the front of my brain, my mind, but I had no idea what it would look like. And I just happened to go to a networking meeting. I was in person at the time, of course, it was pre-pandemic. And met a member of the networking group I had never met before who Explained in her elevator opening that she left her finance career, got into franchise consulting. And she of course explained what that involved and what she's trying to do. And that just struck me. Like, what is that? Maybe that's the variety and the in work I'm looking for. And it took me a couple of months, at least a couple of months, to talk to people, people talk to me. And just to make sure it was the right thing and then I made the leap. Joe: can you get us all on the same page? What is franchising? Rick Morgin: Franchising is you you have a brand with a proven process that allows someone to implement those that brand and a proven process in a market to capture market share. Use the expertise of that company or that franchise to develop and grow their business business. and scale it to however large they want. I look at it as an investment vehicle that allows people to reach their goals. Franchising isn't an automatic income stream. It takes work. Takes especially for a new franchisee. Takes work to to understand the marketplace, how to lead your team. How to market, how to control your inventory if that's required, technology, how to best you utilize technology to reach your target customer, all of that requires work, understanding, and to develop a cadence so that your team knows what to do and they have confidence in you as a leader, and then you have confidence in the franchise company that they know what they're doing in order to move the franchise forward in that particular industry. Joe: why would a business owner choose to go with franchising versus let's just say scaling their business or possibly even licensing? Rick Morgin: I do get the question about licensing versus franchising a a lot. And basically, with licensing, you don't have the control over your brand as you do with franchise. Remember franchising, you have a very detailed contract that specifies how that brand can be utilized, displayed, etc. So you have more control over the brand and the product that or service that you're providing. It it's really a matter of looking at Which is going to be a better approach? Me as the business owner taking on more leases or more real estate or more employees, more working workmen's cop, hiring managers who don't have a vested interest in the business, versus that vested partner who has invested a good size franchise fee and is willing to pay that monthly royalty. In order to tap into the proven processes and be part of this team. Franchisees act as colleagues, peers, and a team to help each other grow. With that vested partner, they're taking on that lease, that building, that land, and the employees. and utilizing their skills to build that team to grow the business. So do do I want to have this on my balance sheet or will do I want invested partner who has invested money and has skin in the game. That that's the Joe: Gotcha, man. Rick Morgin: basic I think decision point Joe: it seems that you get the opportunity to scale your business in exchange for some portion of the franchisees who join you. So that way you're always getting a little bit of the c a cut of their money, if you will. as they move on because you're you're sharing your processes and and your systems with them so that way they can not have to go through the whole learning process. They can just go straight into making money. Is that is that the concept? Rick Morgin: yes, it it is execution of the proven processes into the the franchise's marketplace. it reduces the amount of time to open the business because you're tapping into those resources, the the technology, supply chain, operations, marketing. Rather than developing everything on your own. the execution and how well it this roll out of the business and then growth and scaling of the business will determine the amount of money or the amount of revenue that can be driven. So the you have consistent systems and processes that the skill level of the franchisees may vary, but everything is there for them to succeed as as well as they want. That's the that's the difference versus doing everything on your own. Joe: So as a franchisee, when they first sign on with a company, with a franchise or do they immediately have to attend some type of educational groups or meet with someone in order to start the process? How does that work? Rick Morgin: Once they sign and pay their franchise fee, then an onboarding process begins and that is usually followed by training at the corporate location. Training can can involve a week, two weeks or multiple weeks. I have one franchise that that has a thirteen week training. process. So it's it's very ex extensive. Not every franchise has that extensive of a training process, but training at the corporate location, training at the site once they're open, the business is open, and then learning management systems for online access throughout the life of the franchise. And continual training. And that can be semi-annually, annually At conferences, regional meetings, and and so on. So training is a big part of the franchising process and the growth of their franchisees. So a lot has to be reinvested into that training for a successful franchise or to have successful franchisees. Joe: how often does a franchiseor kind of looks into a franchisee's business process to make sure that they are conducting everything in the manner that was provided for them in the franchise documents? Rick Morgin: There's an automated process to collect royalties. So that's a a gauge of a look into the business of the franchisee. And it it could be specified in the franchise agreement that you you're over time you have certain revenue metrics or milestones that you're gonna reach. And so that those that's a general gauge. If By year two, you're supposed to be at f half a million dollars in revenue and the royalty is eight percent. And if the franchisee isn't collecting franchise oursen's collecting the forty thousand dollars by the second year, that that could be an indication. A lot of franchise oars do have field help. They have business development people supporting, or you can look at it as coaches really, supporting their franchisees to help them and they'll Cover geography. It could be a large geography or smaller geography, depending on the density of their of the franchisees. Joe: if one of our listeners wanted to work with you and find out more, what would be the journey that they would experience? Rick Morgin: we would connect, ha have a casual conversation. I'd under understand what I'd try to understand what they're trying to do with franchising, what got them to this point. And then I would ask them to complete a brief it really takes fifteen minutes to a brief franchise questionnaire. That's our baseline of information. Once I receive it, then I reach out, we schedule time for a a consultation. I like to call it a our next step conversation. And that could be 45 minutes to an hour, maybe a little bit shorter, a little bit longer. But from there, I'm getting to the I guess the true motivation and understanding of their goals. In order to align them to the right franchise, I do want understand about how they manage people. What's their leadership style? Communication style? How comfortable are they with sales? Does the image of the business matter to them? Is their spouse on board? Is that that that's that's very important. And towards the end, we talk about you know what kind of money are you trying to make? You're trying to replace your corporate income, exceed it. Is this I work with clients who want to keep the job, so maybe replacing their corporate income isn't the immediate goal, it's additional cash flow. But those are the elements, the basic elements, you know, there's smaller questions in between, to understand in order to be able to gather in my mind what's the best franchises that will align with these goals. Then we'll schedule a Zoom call and walk through four franchises within an hour. It may require a second Zoom call because I'll be prepared to show a lot more, but four is the right amount within that hour. We find that one or two, maybe three, I really recommend no one ever look at at more than three franchises at one time, because that's a lot of time and a lot of data. When we find those that one, two, or three, that's when I introduce them to the franchise companies. And then together, in this three-way conversation, we move through the franchise companies step-by-step process. And and it's a it's a layering effect of gathering information. It's not a data dump from a fire hose. You have that initial webinar with the franchise. Then you go into the the numbers, what they call unit economics. Estimated cost, a full understanding of the estimated cost and the franchisee performance, their financial performance. Then you may have marketing, operations, and supply chain conversations. You'll you'll be disclosed the business by you'll you'll receive the franchise disclosure document, given time to read it, get those questions answered. Then you go into what's called validation. And that's where you talk to franchise current franchisees. And from there, I always recommend talk to people that who are in business a year or less and then longer so you can understand how it's affected their life if they're hitting their numbers and and if they would do it again. Once they're the once they're satisfied with the validation, the amount of validations they they're they do, and you know, it's kind of a an agreement with the franchise or of now we're done with validation. Let's have that CEO or founder call. Let's invite you to meet us. Come to us. Spend a day and a half. Let's see if this last dance is the right one. So they'll they'll be invited to many franchise or describe it differently, meet the team, confirmation day, discovery day, whatever. And then then I always tell my clients, you know, when you're headed home after that and you're not feeling it in your 100% in the pit of your stomach, don't do it. We'll move it away. That's it's you have to be fully committed, you have to have that vision of excitement and That you'll have fun, you'll be able to grow your business and make the money you want. If you don't feel that way, let's not let's not just do it to just to do it. I even say that a couple days later, after you get home and you receive that call and you're awarded the franchise, that's that decision is still in your hands. Of course everybody wants you to move forward. We want you to become but again, if you're if you're not feeling it in a hundred percent That decision is still your call. Well, you do move forward. Well, congratulations. Now that onboarding and training and and getting ready to launch the business starts, you fall underneath the umbrella of that franchise or. Joe: And to get started with you are there any fees to initially find out whether franchising is the right direction for us to take? Rick Morgin: I'm glad you asked that question. Thank you, Joe. There are no fees. I don't charge anything up front. I don't charge a retainer. In our space, we get paid just like a real estate broker. The candidate has to sign that agreement and pay that franchise fee before I get paid. I get paid by the franchise owner. That's why I will always say that I will never charge my clients a single penny. And it doesn't cost them any more or less to work with me or find a franchise on their own. Joe: now I I have a little seed money. I'm considering franchising, but I don't have all of the money. Is your financing available? Rick Morgin: yes. During the that discovery process, that beginning to end of connecting with me to going to that discovery day and being awarded the franchise. Once we settled on the one or two that we're really interested in, I'll introduce my client to financing companies. They're not banks, but they're the again middlemen to financing because they represent or work with seventy, eighty, ninety banks. And have other financing options. But it's a pro it's a it's a another information gathering session for the candidate to understand what's the best option for them to finance the business. They want to put some cash down and finance the rest. We can provide them with their best options so that they they can make that decision. And one can leverage, there are other resources to so you don't have to take on that loan. to all of that is explained thoroughly by that by those referrals that I make. Joe: Now, as a prospective franchiseer, I have a business. I have a process that I'm working on within my own business, and I think is amazing. And I want to take this to market, and I think franchising might be the way to go. Is that something that you can help with? Rick Morgin: yes, several years ago we implemented a second portion of the company. I I say we, it's the franchise consulting company, second portion of the business and put together this entire ecosystem to help business owners develop that franchise. I call it build it, and move into the franchise consulting company's inventory and our marketing assets to grow and scale it. And then If the it's scaled to a point where they receive an a buyout offer, we have the legal resources to help them exit too. So that is that is a a big portion of what we do, what I do in trying to find business owners who may want to entertain creating that franchise model. Joe: Now, would you be the person that handles the whole process all the way through? Because I'm thinking, here I am starting as a small business owner with, again, the best business possible, but I want to work with someone that's long term. I don't want to just go ahead and and turn my business over to someone else. Are you the person that would deal with us all the way through? Rick Morgin: Yes, I am. There there is a bit of a handoff. So in that build it stage, there's not much for me to do. So I will hand it off to our sister company, Franchise Genesis. And they have the legal team that will write that franchise disclosure document. They have their team to help the business owner develop and complete that f operations manual. They'll work with the business owner, develop some training. And some marketing materials to help launch them launch the business, that can take on average three to four months. So I'm not the attorney. I really can't I can't help writing that F franchise disclosure document. but once they're a legal franchise, then they have the option of coming back into the inventory of the franchise consulting company. And then because they're a can they're a client of our Sister Company Franchise Genesis, they get a full year's access to these marketing programs and no extra cost. So we always explain the total package value of what you receive over that approximate year and a half as much more than what you pay up front to become a franchise. in that essence, so you know, once they're a legal franchise, then I connect with them and then I can stay with them. you know, however long they want to be for for the life of the franchise. Joe: Now, would you be able to share with us a client success story? Rick Morgin: Yes, I I I like telling this story. in fact, I've written a couple of articles. We own a a magazine, online magazine called the Franchise Journal. It's a free subscription. So if if any of the listeners want to subscribe, I can always get them that. So it starts with us connecting via LinkedIn and then having that conversation. And then that conversation was My husband and I moved from New York City to Florida. He he accepted a new job. I would in in this in New York City, I was in the beauty industry, major beauty companies. Couldn't maintain that down in Florida. And I was also at an inflection point of I should really should do something for myself. So we had that that conversation. We started with the process. went through it exactly as as I described earlier. We were looking at several franchises. It came down to two. And then she went into her own validation of even going a step beyond of the the typical Discovery Day. For example, she was she flew out to Utah for this one franchise that that's the one that she ended up going with and and ended up spending multiple days out there. Go sitting in on a training session for franchisees, going through that confirmation day process. Spending more time out in the field. She is now completing her third year of business. Painter Bros just sent out an email maybe earlier this week or last week about their top performers. And she was amongst those. Now there are other franchisees within that system that Or doing a little more business, but for her to make that transformation out of corporate and be within that top six, top five, whatever, I f I forget, that's a great success story. And that's a story I love telling over and over. But it was really understanding herself, the the desire to do something different, having the whiteboard to take a look at different things, narrow it down, do the due diligence, believe in herself, move forward. And now in her third year, she's a top performer. Joe: If listeners remember only one thing from this conversation, what do you hope that message is? Rick Morgin: Don't go at this process of finding the right franchise on your own. I always say when I do a webinar or a seminar up front, I always say, if you take away one thing, work with a consultant that you trust, that will have your best interest in mind. But work with somebody who can be a neutral party and start have a good process to create that match and help educate you throughout the whole process. work with a consultant. And of course, I hope it's me. Joe: So finally, where where can our audience connect with you, learn more about your work and and continue this conversation? Rick Morgin: I would love for listeners to go to my website. Rick Morganfranchising.com R I C R I C K O R G I N Franchising.com LinkedIn In LinkedIn it's Richard Morgan. So LinkedIn dot com forward slash N forward slash Richard Morgan. Or call me nine two five three two four six three seven one. I am not afraid of giving out my mobile number. Joe: Rick, thank you so much for joining us and and sharing your insights. we appreciate your time and the value that you brought to our audience. Rick Morgin: I should be thanking you. I appreciate it. Joe: Ha ha ha. Rick Morgin: I I I've got to know you over the past couple of months and I I I really respect what you do, not only with this podcast, but you as a businessman and it's a privilege to be on your show. Joe: Thank you. Thanks everyone for listening. If this episode inspired you, share it with someone who needs it. And don't forget to follow the Globizer Podcast for more conversations that make an impact. Till the next time.