Latest / Reframe First / Bill Krassner, Franchise Consultant at FranNet | Franchise Decision Starts with Better Questions
Transcript
- Oleksij Rak: Hey guys, welcome to another episode of Reframe First. I'm Alexey, the host of the podcast and let me welcome our today's guest, Bill Krasnov. Bill has been in for about 35 years in franchise industry. Bill has opened some franchises, has been a franchisee of quite a big network from what I learned and now is a franchise consultant for Frontnet. So hi Bill, great having you here. Bill: Thank you for having me. Great to be here. Oleksij Rak: Yeah, awesome. Thanks for coming. like from what I learned and my team learned, you've been in franchise industry for quite a bit and you've been running some quite a big network of restaurants or some restaurant chain or something. Could you tell us your story? How you got into franchise industry? Bill: Correct. Sure. Well, I started in the restaurant business at a very young age and you know owned a couple of my own independent restaurants in St. Thomas in the Virgin Islands and also in Florida. And about the time that my four star restaurant in Hollywood was getting the end of its life cycle, I started looking for more corporate positions. Oleksij Rak: Mm-hmm. Bill: And started working for a concept in Fort Lauderdale and was eventually recruited to be an area supervisor for a quick serve restaurant up in Orlando for their their corporate stores. From there, I came to Austin, Texas, where I became an area developer for a franchise, also a QSR restaurant. And I bought the San Antonio, Austin, and South Texas area. And it was my job to really be a mini franchisor. So as an area developer, you share in the royalties and the franchise fees and really administer that territory like you are the franchisor. So I had a territory of about 35 or 40 stores. Oleksij Rak: Okay. Mm-hmm. Bill: I only got up to about 30 stores, but it was a a fairly comprehensive position where I recruited my own franchisees. I got trained them on the system, got them their franchise agreement, helped them build their restaurants, and then kept going with ongoing operations to make sure that they were meeting the standards of the concept. Oleksij Rak: Okay. So. Bill: So I did that for 25 years and at the end of that our company was bought out. I went to work for the corporate group running about 400 units and did that for about two years before I found Frannet and became a franchise consultant. So that's my story in sixty seconds or so. Oleksij Rak: That's That's a whole life, actually. Bill: Yeah, it was a whole life in sixty seconds. Oleksij Rak: And you've been kind of in unique, you are kind of in a unique position of being like from... seeing this industry from three different angles as a franchisee and nowadays as a consultant. So could we explore all of them? Let's try to do it. Bill: Correct. Yeah, certainly. You know, there there are a lot of angles to my career. there's a lot of different places that people can get into the franchise business, working for franchises as well as starting franchises. we'll we can talk a little bit about area developer programs because those are still out there. They're not as prevalent as they once were. because a lot of the franchise are not really interested in sharing the royalties and the franchise fees with people if they have their own corporate structure. So you know, listen, franchising has been very good for me. I still believe strongly that franchising is a better way to start a business and run a business than opening a mom and pop, unless you have something really unique. Oleksij Rak: Yeah. . Bill: To offer or have an idea that that would catch fire, and those are really just few and far between. Franchising gives you that opportunity to have guardrails, policies, procedures, and standards, and proven success before you get involved. And and I think that's really a key aspect of franchising is you're minimizing risk. Oleksij Rak: and Bill: by all the people who have come before you, so that when you are becoming Oleksij Rak: Mm-hmm. Bill: part of a franchise, you have that opportunity to talk to lots of people who are already doing the exact same thing. And I I think that's extremely valuable. Oleksij Rak: So you have this kind of franchise family where you can just consult and take videos. Bill: Right. Well, that's a great point because, you know, when you start Bill's sub shop, you know, entrepreneurship can be very lonely. You don't have a lot of community where some of these franchise systems are extremely close. I had some franchisees that became part of a senior care franchise earlier this year. Oleksij Rak: Mm-hmm. Mm-hmm. Bill: And just the process of becoming a franchisee with that system really showed them the kind of family that there was. So as part of of that discovery process, they brought them out to the CEO's ranch in Idaho. And you know, they went to the the company Christmas party, they rode horses at the ranch in Idaho. With the CEO. And that kind of close-knit community can be very valuable for entrepreneurs who are getting started. because you know, if you have a question, you have somebody to answer. Oleksij Rak: Yeah, for sure. Yeah, that's a lot of benefit for that. Could you tell about being a franchisee? How hard is it to be a franchisee? What does it take to be a franchisee? Because basically you're running two businesses, so you're running your first. your first business and then you on top of that you're selling the system so you're packaging the whole system and selling it to others. Yeah. Bill: Yeah. So as an area developer and a franchiseur, you know, I I I think that probably being a franchisor is very difficult because you are selling and supporting. I think as a franchisee, to be running and have the support if you're a first time business owner is probably a better way to go. You know, I I I Oleksij Rak: you Bill: Think that franchisors need to have a good amount of capital behind them. We're seeing a lot of franchiseors get gobbled up by private equity these days because they do provide decent investment and cash flow. But the difference between a franchise or and a franchisee is just night and day. The franchisee is gonna have the benefit of that franchise or system. and I think that's what helps them be successful. The franchiseur who puts together a program and goes out and sells it across the United States, you have to have deep pop pockets to do that. And and I think that you know certainly an easier path for people is to become a big franchisee. So For instance, there's lots of systems out there where franchisees have gobbled up other lower performing existing franchises. They've opened new franchises so that you get to a point where you have 12, 15, 20, 50 franchises, you're probably gonna be doing better than the franchise or as far as profits, because it can be very profitable. Oleksij Rak: Yeah. Okay, but French is still gets the royalty on. Bill: They do get the royalties, but when you think about it, the franchisora has a limited amount of revenue streams, right? They have the franchise fee and they have royalties. And unless they get rebates from suppliers or have other methods of generating revenue, you know, that's not a business model to me that is easily sustainable. As a franchisor, you definitely need to have more. Oleksij Rak: it Bill: revenue than just those two sources. So I think that you know they're putting together business models for the franchisees that can return double digit earnings. as far as net profit, we're seeing, you know, some of the home services companies are representing, you know, 22, 25% net profit off of off of your gross sales. Now you can be in the restaurant business like I was and have much less revenue, but I would wonder about the franchiseur's percentage of cash flow on sales. I still think being a franchisee and and being a multi unit franchisee is a a great way to go to to jet generate the kind of revenues you're looking for. Oleksij Rak: Yeah. How easy for franchises nowadays is it to acquire new franchises? Because from what I learned, it's market of franchises nowadays. Bill: Well, listen, th there there yeah, there was probably a time where it was well, first of all, franchises are selling very quickly right now. There are lots of people that want to get on board and have the money to do it. So I think it's kind of a little bit of a renaissance going on as far as sales right now. Number one, because you see a lot of the large companies downsizing. Oleksij Rak: Yeah. So. Bill: So those are the people who have big 401ks that can roll over. they do Rob's lending Oleksij Rak: You Bill: rollover from the 401k to fund the franchise. That's very popular. But you know, there was a time when the franchise sold to franchisees with simple advertising. Now the consultants are involved, and it's actually very expensive for Oleksij Rak: . Bill: a franchise to utilize consultants, but if they want to do big volume, you know, it's like having a sales force of a thousand different people working for you versus your in-house franchise development team, which may be one or two or three people. So taking advantage of using the broker franchise consultant network is is great for the franchise or now why did they do that? They do that because, you know, if you look at the value of a 10 year franchise agreement, then the money they're paying for the franchise consultant to bring them the right franchisee seems minimal. But up the franchise consultant gets paid up front. So hopefully that franchisee that the consultant brings to the franchise or will be a good one and will be with the system for those 10 years. Oleksij Rak: Mm-hmm. Bill: So is it hard or is it easy? I think it's probably easier to find franchisees using the consultant networks, but I also think it's much more expensive than it was thirty years ago with just a phone and newspaper advertising. Oleksij Rak: Yeah. Yeah. Yeah, for sure. And how really qualified are the franchises that are selected by the consultants? Which percentage of them do you Bill: So yeah, I mean the reason that we're compensated by a referral fee from the franchise or is because we're pre-qualifying the people we bring to them. So our job is really education as a franchise consultant. We are building a foundation of knowledge because most of the people that come to us are very new into business. They've never owned a business, they've never owned a franchise. So we're really starting from ground zero on the education. So we have videos and learning and such on our website that we use to help kind of guide these people and make sure that they have the knowledge they need to make a good decision about which franchise they want. when I think about qualification, I also think about, you know, you probably are thinking about financial qualification. Oleksij Rak: . Bill: But it's really much more than that because these days franchisors don't want somebody that has the money but can't interact with people or is an introvert or doesn't want to go out and market or has a full-time job and doesn't have the time to dedicate to building this business into a successful venture. So when we talk about qualification, it's not just financial, it is also The other side, which is how are they going to be as an operator? Are they going to grow the system? Because listen, every franchisee that underperforms affects the system in a negative way. You get too many Oleksij Rak: There. Yeah. Bill: underperforming franchisees, then you get a bad reputation, right? And that's a very hard thing to fix. So, you know, just circling back around when I'm interviewing my potential franchisees and looking for matches for them to the right franchise. I talk about three legged stool. The first leg is what are your financial goals and what do you hope to achieve year one, two, three, four, five, and beyond. Number two, what are your lifestyle goals? Because lifestyle is very important. I deal with a lot of people who are coming out of big corporate jobs who are used to having an IT department, an HR department, you know, all the all the support. Oleksij Rak: Mm-hmm. you . Bill: They may not want to be in something that is is gonna be heavy employees. They may want something less with like consulting businesses, which start out very small in scale. So we have the financial goals, we have the lifestyle goals, the lifestyle goals. Once again, if you are used to working Monday to Friday, nine to five, and you buy a food and beverage concept that's open, breakfast, lunch. Oleksij Rak: So Bill: Dinner, holidays, nights, weekends, that's not a great match. So the lifestyle is the second leg of the school stool. And the third leg is really about what exactly do they want to get out of the business? Like, how do they want to feel about their business? You know, do they need to be doing something good for the community? Is it important to them? So I asked them to prioritize those three legs. Which one's more important? I got plenty of people who want to do good. Oleksij Rak: Mm-hmm. Bill: And put that how I feel about the business is more important than the financial part. And that's part of that matching process that helps us pick out the right franchise from our inventory for those people. Oleksij Rak: What other questions do you ask besides for financial, working with people that you mentioned and lifestyle? Bill: Sure. So yep. listen, w we we asked probably a hundred questions because again, having more information is better to pick it out. So for us, it starts with something what we call the entrepreneur profile. And the entrepreneur profile is a kind of like a Briggs Myers personality test that we've kind of worked on for the last 35 years. I think we finally got it right. Oleksij Rak: Okay. Yeah. Bill: But it tells us a lot about their personalities types and which franchises would match closely to what they're looking for. So some of the other questions that we ask are about the franchises themselves. There may be somebody who's definitely allergic to dogs. Well, we don't want to show them dog concepts. So you know, home services, elderly care, pets. Oleksij Rak: Mm-hmm. Mm-hmm. Bill: consulting, full retail, businesses that work out of the small office, health and wellness. So we have quite a few choices when it comes to what they like or what they don't like, so that when we do go into that inventory and find it, we can start just crossing it off. As I said, we have almost a couple hundred franchises in our inventory that we vetted as FranNet. And these are the ones we feel comfortable introducing to our franchisees. Some of the other things are cost. You know, when we talk about franchising, we talk about the 80-20 rule, kind of like when you're buying a residential home here in the United States: 80% debt, 20% equity. Well, every franchise requires a certain amount of liquid capital and net worth. Oleksij Rak: Yeah. Bill: so if somebody comes to me and says I have a net worth of $500,000 and I got $100,000 to invest in a franchise, that tells me which of those 200 businesses in my inventory would be good for them. But SBA is very important to franchising. So with that 20% down, let's say it was a $500,000 business, they put 20% down. Oleksij Rak: Mm-hmm. Bill: Which is a hundred thousand, the SBA will finance that four hundred thousand for them as long as they qualify. Credit score sometimes they'll require home ownership. And now this year they've restricted SBA lending to people with green cards, so they have to have citizenship as well. But that opens up, you know, a lot more choices for people if they're willing to. Oleksij Rak: you Bill: get involved in some financing so that they're just not usu using their cash reserves. Oleksij Rak: And you also need some capital for the ramp-up period. Bill: Good question. So, you know, in the franchise disclosure documents that a potential franchisee gets from the franchise or these are mandated legal documents that they have to provide to everybody who is buying a franchise, there's two very important sections. One is item seven. Item seven talks about the range of costs for startup. So let's say we're looking at a franchise that does elderly care and Oleksij Rak: Yeah. . Bill: the range in the FDD, the franchise disclosure document is $100,000 to $250,000. So that tells the franchise that they have to be per franchisee that they have to be prepared for that kind of investment to get involved with this concept. Now the interesting thing is if the franchise fee is $50,000, that's going to be included in that startup range. The other thing that's included in that startup range usually is operating capital. So most franchises will require you to have three to six months of operating capital in the bank as well. So that'll all be broken down by the franchise or as the franchisee goes through the process of learning about the franchise. but item seven is critical to understanding what money you're gonna need. Oleksij Rak: Hmm. Bill: so that you could then go to the bank and say, This is what I I'm gonna need to open this franchise. The second most important, in my estimation, point or part in the FDD is item 19. Item 19 is and not everybody has one in their FDD, it's optional, but if they do have it, it's an earnings claim. And the earnings claim can be presented in a bunch of different ways. Some people do. Oleksij Rak: Yeah. Bill: Audited PLs, some people do quartiles, some people do just their corporate stores. So a little bit of of the Wild West out there when it comes to item 19, that you really gotta make sure that you understand what they're showing you because you need to read between the lines sometimes. But using those two parts of the FDD are critical to understanding. Oleksij Rak: you you Bill: your commitment to the business and what kind of business they're doing as far as revenues and and profits. Oleksij Rak: Yeah, I see, for sure. Out of these 23 items in the FDD, if I'm right, there are 23. Which one do you pay attention the most? And by doing some kind of due diligence of FDD document of some franchise, what rises for you the red flags? By looking at the document, this is definitely wrong. Bill: Sure. So listen, yeah. Well, listen, as a franchise consultant, I'm gonna say every page of that franchise disclosure document, all 400 pages, are very important. And we do recommend some kind of review by a professional. Now, some people do and some people don't, and I'll tell you why. Part of it is that not a lot of the franchise Oleksij Rak: Thank Bill: If you have it your your FDD reviewed by a attorney and he comes back and goes, I don't like this section, and you go back to the franchise or and say, Listen, my attorney doesn't like this section. Can we change it? They'll get a laugh out of that because the franchise don't change the FDD 99.9% of the time for anybody. The only thing they're going to change is the territory, Oleksij Rak: So Yeah. Bill: number of territories, possibly the population in the territory. but yeah, they don't change a whole lot. So I see probably a 50-50 mix of people going to the attorneys and talking to them about it. I think as part of due diligence, what you're asking about what's most important, the FDD is very important, but I think almost as important. Oleksij Rak: . Bill: Is your validation with existing franchisees. And that validation can be run by the franchise or in a couple of different ways. It can be run through group sessions mediated by a representative of the franchise, or it could be one-on-one, just potential franchisee talking to franchisee. Obviously, I like the idea of talking directly to somebody without corporate being in the same room. Oleksij Rak: Yeah. Bill: And being able to ask the hard questions because as a franchisee, the franchiseur cannot answer a lot of the financial questions because they can't make earnings claims. Well, the franchisees that you're talking to don't have that restriction. So franchisees are notorious to give you the inside scoop on the business because they're in it, they've been doing it, and very valuable. Oleksij Rak: So. Bill: Validation and it shouldn't be just one. It should be multiple. You want to talk to somebody who's doing really well. You want to talk to somebody who's in the middle of the pack. You want to talk to somebody who's struggling. You want to talk to somebody who's been with the concept for 10 years, five years, two years, one year. You need to see all those different things. I think I told you in our our pre-interview that I wrote a book about franchise decision architecture. And you know. Oleksij Rak: Mm-hmm. Bill: My opinion is that people get frozen in making decisions when they don't have enough information. So what happens is they don't have enough information, they freeze up because they're nervous about the risk. They don't want to take the the step forward. If you generated 300 questions about this franchise and had all 300 questions answered satisfactorily, I think that you as a franchisee will have a much easier time making a decision about that franchise because you're minimizing risk with the information that you've received from the company, from the franchisees, and from your own due diligence. And I think it's just critical to make the right decision. Oleksij Rak: What are these hard questions that you would ask existing franchisee if you were to start a Bill: absolutely. Well, the first one is going to be how much money did you make last year? You know, because you know, you could see the range on the item nineteen in the FDD, but it's a range and you you really don't know what affected that range of profitability that they may be showing. So certainly that I would absolutely talk about labor issues. Are you having trouble hiring people? How much are you paying them? Oleksij Rak: Yeah Bill: what's your labor cost as a percentage of of your gross sales? How is it to deal with the franchise or that's one that people forget all the time. So, you know, there's some franchisors who are in your life on a daily basis, and there's others that give you a little bit more rope, so to speak. So that I want to know what kind of franchisor they are. Are they doing secret shopper reports on you? Oleksij Rak: Yes. So. Bill: Are they holding you to a standard where if you don't meet it, you're in default of your franchise agreement? Do they have franchise coaches? Do they have meetings with all the franchisees to go over best practices? Do they have a yearly event where everybody comes together and networks and talks about the business? You know, how many people are Is is HQ hiring? Do you have trouble getting through to them? What if you need an answer from for something? How quickly does that happen? So evaluating the franchise or should be a part of that due diligence, just the same as the business model. So back to the business model. How much did you make this year? How much did you make last year? What kind of trends are you seeing in the market that could affect your sales next year? What's your goal for expansion? Oleksij Rak: So Bill: How easy is it to get your market started? How quickly did you reach break even and start making money in your first year? So any question that that you can't ask the franchiser, you ask the franchise. Oleksij Rak: That's important. It seems these questions answer way more... You get way more answers than by reading the FDT. Bill: Yeah. Well listen, the FDD's got a lot of great information, but it's also got pages and pages of the the trademarks and the marks and and you know pages of franchisees. There there's some stuff in there that you may not find useful, but when you're looking at it, but maybe you go back to it. And the nice thing about most franchise agreements or I'm sorry, FDDs is it will have the franchise agreement within the FDD. Oleksij Rak: Legal tech. Bill: So you'll be able to see exactly what you're signing. Oleksij Rak: Okay Okay, yeah, it makes sense what about some red flags about vendor lock-ins or fighting on outdated FDDs What else is there? Bill: So yeah. you know. Oleksij Rak: And probably when they're looking for some areas, for some segments, it's actually good because Franchise cares about his quality in the end. Bill: Sure. Yeah. So, you know, the FTD is required to be refiled every year. Now that doesn't necessarily mean that they're gonna do audited financials or change their financials. Usually they're pretty good about the item seven and keeping that range of investment updated. Really it's about that that item nineteen, which is the profitability. If they had a tough year, are they gonna actually show that in the FDD? Oleksij Rak: Yeah. Mm-hmm. Bill: because again, there's lots of different ways they can they can do that. So I don't see the FDD changing a whole lot in a system other than item seven and item nineteen on an annual basis. Most of it's pretty fixed. but again, you know, you can learn a lot from the FDD. You're gonna learn more from the the franchisees. So I sold a Oleksij Rak: Over. Yeah. Bill: a a maid service to a lady in California late last year. And I still work with her because I like to stay with my my clients as long as possible if they feel that I'm adding value. So she's getting ready to open. But you know for her I think that going out and visiting existing franchisees, which is something that you can request and Hopefully the franchise order will set it up for you, was extremely valuable. So I told her to go find the highest performing made service in this concept that's within 500 miles of her. And I said, go up there and park yourself down with that owner and spend two or three days and learn, learn, learn. And she did that. She was very appreciative of it because. Oleksij Rak: Mm-hmm. Bill: She got a lot out of it. She took pages and pages of notes and had great ideas for her market. So I I think thinking outside the box a little bit on how better to get ready to open your franchise. The franchiseora will train you and will probably do a very good job of it. But what else can you do? You can read, you know, made services for dummies books. You can go visit somebody. Oleksij Rak: Yeah. Bill: You you continually ask questions of of high performing franchisees. Oleksij Rak: Yeah, after all, you're running a business. You got the playbook, but it's a business you run. Bill: Well listen, it's it it's a big investment for people and we understand that, but you know, I always think about it like how I bought my house. We came out with a realtor and we looked at it once. maybe we're here for 15 or 20 minutes, and we narrowed it down to this house and one other. We came and looked at it for five minutes, and then we paid multiple hundred thousands. For for this house after 25 minutes of looking at the house. And to me, it's it's almost crazy that we spent that kind of money after only doing diligence of 25 minutes. Franchising Oleksij Rak: Yeah. Yeah. Bill: should be the absolute opposite of that. It is a huge investment. You want to make sure that you're getting the right one, but you also want to make sure that you're spending the time. So when I present franchises to a client, I'll go through and I'll I'll maybe present four or five that I think are appropriate for their goals. And you know, I tell them that you gotta be ready to spend 12 to 16 hours on each of these concepts to get to the point where you can even decide whether they should be in the consideration set. Because you can't make a decision until you have the information. You can't have the information until you've given the time and effort to get that information. So fifteen, sixteen hours on each concept to learn about it before you make your decision? Absolutely. Oleksij Rak: Mm-hmm. you Okay, awesome, Coming back to franchisees, because we didn't really touch them much. Especially since you have this experience of being a franchisee and working for a huge one. What are the biggest operational challenges for them? Because they represent a different spectrum. Bill: Your Oleksij Rak: this market and they care about Bill: we'll listen, yeah. Oleksij Rak: the brand name, quality, about bringing the best franchisees possible. Bill: Yeah, and and I think you hit it right on the head there. I think the most important thing is recruiting the right franchisee. Because if you start with the wrong person, you know, you're you're never gonna get to where you need to be. So there was a time when, you know, we used to call it if you have a pulse and a check, you got a franchise. But franchise ours very different these days. They understand that. Oleksij Rak: Mm-hmm. and Mm-hmm. Bill: value of having good franchisees because it makes their life easier, it makes their oversight easier, it grows their brand, and it it it makes for a positive impact in the franchise community when you bring on great people. So I think the oversight of the franchisees and picking the franchisees is is the biggest challenge that franchise ours face today. I think the second part of franchise or challenges is gonna be growing their organization to keep pace with the size of their system. So we have a brand new franchise, a health and wellness one, that started selling about three months ago, has zero, that's zero franchises open, and they've sold, I think 120 in four months. Oleksij Rak: Mm-hmm. Whoa. Bill: So there is no validation. There is no concept. They have pretty pictures, but nothing's open yet. So how is that franchisor staffing their HQ when they don't even have a store open yet? It's crazy. But that's how people how excited people are about that concept. They are very excited because there's a couple of big names associated with it. And health and wellness is just a huge segment right now in in franchising. So keeping pace with the growth of your system is really important. And there's you need lots of people to do that. You need social media, you need marketing, you need public relations, you need purchasing, you need operations, you need training. I mean, there it's it's top heavy for sure. Oleksij Rak: And it's quite a big sales team, I guess, to be able to just qualify. Bill: Well, listen, you can do it with one salesperson if you're willing to bring on the broker, the consultant network, because they'll do the selling for you. But even that's expensive. So, in order to be part of inventories and come to events sponsored by the consultant companies, you know, you pay a fee to do that. So, and you gotta stay in front of us because we're we're we're like squirrels. You know, we see a bright shiny object, we're going That way they want us to stay focused over here. So they do need to stay in front of us in order for us to keep them top of mind when we're showing our clients concepts. Oleksij Rak: Yeah Yeah, yeah I've heard that only about 20 % of all the sales goes through consultant and So the rest is self-exploration and... it true? Okay. Yeah. Bill: Mm, I don't know those numbers, but that sounds off like there are some that do business with Frannet that don't do any organic lead generation themselves. They only deal with brokers. So for them, it's a hundred percent. Now there are other companies, FSOs, franchise service organizations who have multiple brands. Typically, they'll have multiple salespeople and do organic and consultant to try and get Defray the cost of the consultants by doing some of their their own recruiting as well. But recruiting success. Oleksij Rak: What? do you... Yeah, sorry. I've seen over the internet... I was trying to search for resources on the internet where I can learn about franchises. or something, but it does feel to me that, like, franchisee is a product of these platforms. It is a funnel that just sells you off to the franchisors. But what's the quality of these leads? the sense that why are franchisors buying these leads? Bill: Yeah, no, absolutely. Yeah. you know, listen, leads are very expensive to buy. I can attest to that. And you know, a lot of these leads that we're paying hundreds of dollars for are not qualified. They just expressed maybe interested in a franchise. you know, haven't thought about it, may or may not have the money, may or may not be ready to go in the next Oleksij Rak: Yeah. Bill: one to three years. So buying leads is very important. You know, every franchise consultant out there is looking for that silver bullet where it doesn't cost an arm and a leg to get a client and get across the line. But it's very expensive. Oleksij Rak: Yeah, yeah, I can imagine. Because there are plenty of resources out there, but wherever I try to go and find some franchise and just explore something, all these gators and so on, it feels like you are part of the funnel and you are the end product. So leave your contact information, all your bank details, whatever. Bill: Yeah, well listen. Yeah. Well, you you know, you look at my email every day or you go on LinkedIn every day, there's somebody trying to sell me a better mousetrap to get clients. and you know, I think as a consultant, the best idea is to spread your advertising spend around because you never really know where a good lead's gonna come from. I mean, all these companies may stumble upon a good lead. Oleksij Rak: Hahaha Yeah. Bill: so it's a numbers game to a degree. But I also think that Friend distinguishes itself because of the way that it takes people through the process. It's a much more curated matching process. it's not AI-driven, it's person-to-person. We develop incredible relationships with our clients who actually become friends after a period of time, and you know, because We care, we're with them not just up until the sale, but even after the sale. the people who bought the elderly care franchise having a call with tomorrow, they're getting ready to open. we bounce ideas back and forth. And I think that that customer focused dedication and concern and care as opposed to just making money is what makes a good franchise consultant. They need to really have care and concern for their clients. and I also think, you know, experience. You know, I think my experience as a franchise or a franchisee building you know, FDDs, franchise agreements gives me the credibility to give a client a good feeling that they're in good hands. And that's what I want. I love it when somebody says. Oleksij Rak: Yeah, it makes up. Yeah. Bill: You know, Bill, you've exceeded my expectations and that's what I'm here for. Oleksij Rak: Yeah, awesome. Yeah, it really makes sense because it's kind of reverse market. You are being paid by the franchise source and that's why you're trying to help franchisee make the best decision and you're... Bill: Well, it also makes us an independent voice. You know, we're we're you know, we're gonna present them five or six different concepts. It's up to them which ones they want to find out more about and pursue. But you know, I get asked that all the time. Well, how do I know you're not gonna give me something that's not good for me? I'm gonna give you five or six of them and I'm gonna let you do the choice. And you know, the difference between Oleksij Rak: Yeah. Bill: The referral fees on these things are negligible. So there's really no benefit in steering somebody into not that I would ever do that, but there's no benefit to me. The benefit to me is my reputation and the referral that I'm gonna get from this franchisee saying that I exceeded their expectations. That's the thing that's important to me, the money secondary. Oleksij Rak: Yeah. Yeah. With regards to giving them 5 or 6 options, how labor intensive is it for you to make this choice for a franchisee based on their expectations? Bill: So I probably spend yeah, I probably spend about five or six hours with the franchisee and researching using our our entrepreneur profile, our conversations together, and going through and looking at each of the franchises. Then what I need to do is check and make sure they're available where the franchisee is. So if I'm dealing in Chicago. And there's no availability. so I'm compiling a list of maybe twenty to twenty-five. I do a territory check on them to make sure they're available in the area that you're in, and then I'll start whittling them down. And I may have seven or eight that I may present and I may ask additional questions during the presentation and so ask them various questions and decide which ones I am gonna present. Because again, I'm always tweaking their Oleksij Rak: Yeah. Bill: business model to make sure I'm giving them the right concept. Oleksij Rak: Do you some kind of side-by-side comparison of these options? Bill: So I I do kind of my own comparison, but mine is really matching to the personality and the goals. I think once the franchisee starts their due diligence, we do have a great forum which compares different franchises. So what are the franchise fees? What are the royalties? Is there any marketing? Is there a franchise coach? You know, so you Franchisee, when they get to that diligence point, may fill that out, and I'll get on the phone with them and we'll we'll talk back and forth. Well, what do you like about this one? What do you like about this one? I have a guy up in Chicago who is down to two concepts. One's a consulting concept, and one's a a beauty suites concept. And you know, today on the phone we were going, well, what do you like about this one? What do you like about that one? Oleksij Rak: Mm-hmm. Bill: And at the end of the call we decided that we needed a little bit more information on both of them to make the decision. But our next call, because I I have calls with them my clients, either every week or every other week, we're gonna go through and go back and forth and and try and facilitate that decision. Oleksij Rak: Yeah, awesome. Maybe my last one would be, where do you think there is a room for technology for some automation for anything? I'm running a technology company, so I'm always looking for what's and where. Bill: Sure. Listen, I Yep. You know, a lot of the franchisors these days when they present to us will say we are recession resistant and AI resistant. So what that means is listen, there's n AI is not gonna go to your mom's house and make sure she takes her medicine on time and help her up and down the stairs or to the bathroom or to the doctor or get groceries. That's You know, that's just not gonna happen. So technology for some of the franchise concepts is more important than others. A lot of the home services, and the elderly care that's never gonna get touched by technology on the operational side of it. Where I think it will help is on in the back office with efficiency, organization, hiring, advertising, all those kind of things, because I think Oleksij Rak: . Bill: The last thing that a franchisor wants to do is office work and and all the back office stuff. They always like to be out front, interacting with the customers, taking care of business and operations. Not a lot of people who go, I can't wait to go do QuickBooks. You know, that that's just not really what franchisees want. So I think that Oleksij Rak: Yeah. Bill: You know, and and lastly on AI, because I'm a big fan of AI, but I also think that, you know, there's still a a ways to go before we get what we call fair and balanced responses from AI large language models. I'm seeing that a lot of it is Oleksij Rak: Okay. Bill: slanted towards the way that you ask the question, and it's almost like the the model wants to please you. Oleksij Rak: Yeah. Mm-hmm. Bill: The opposite of that is when you ask a a large language model about a franchise, they're gonna poke 75 holes in why you shouldn't buy it. It's kind of like your friend you meet at the bar and you go, I'm gonna buy this franchise, and he's got a hundred reasons why you shouldn't buy it. That's not fair and balanced. So I think that technology has a place in franchising, but most likely not so much in the operational. Oleksij Rak: I rather meant this whole back office of consultants, brokers, franchisees, exploration of this part of the funnel. Probably there, but I got your point. Awesome. Thanks a lot for great discussion, Bill. Before we wrap it up, is there anything you would like to add on top of what we discussed? Bill: I don't think so. I think you know, just like when you're hiring a realtor, if you're out there looking for a consultant, find somebody with experience, find somebody that's got some business acumen, not somebody who just got trained for twenty hours and has a a certificate behind them. I think that's really important for you to have a level of comfort with the consultant. Oleksij Rak: Yeah. Bill: before you start the search. And with 4,000 franchises out there, we have a saying you don't buy a house without a realtor, you shouldn't buy a franchise without a consultant. Oleksij Rak: Yeah, makes sense. Awesome. Thanks a lot for great discussion. Bill: There we go. Well, appreciate your time and and look forward to further chats together and good luck to you and your business as well. Oleksij Rak: Thank you. Bill: Bye bye now.