Latest / Reframe First / Matt Solomon, Founder of 25/8 Motivate | There Is No Passive Business in Franchising

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Matt Solomon, Founder of 25/8 Motivate | There Is No Passive Business in Franchising · Reframe First

• Oleksij Rak: Hey guys, welcome to another episode of Reframe First. I'm Alexey and let me welcome our today's guest, Matt Salomon from 258MATTIVATE. Hey Matt, great having you here. Matt Solomon: How's it going? Good to see you. Oleksij Rak: Yeah. Thanks a lot for joining. So from what I learned, you've been working in all the places of franchisee industry. So if you started from big corporate, then you were a consultant. You also owned a franchises. You've been a franchisee. And nowadays you run your own business of Tofay Wait, Motivate, where you consult other people. So could you tell us more about your journey? How you got into this business? what to do. Matt Solomon: Yeah, I didn't choose it like a lot of people in their careers. Oleksij Rak: Right. Matt Solomon: but yeah, I I I it was it really all started when I I worked in advertising, you know, as a young advertising executive. And I found myself working for Panda Restaurant Group, which isn't a franchise, but it's a huge organization. and I'm not gonna go into all the details, but I worked for many moons on the corporate side in the marketing department as an executive. On both the franchise sales and the consumer marketing side for some really big brands and some really small ones. So I got to see kind of the inside and out of what a franchise organization looks like, how sales are done, but then also what are the franchise needs? what do franchisees need from a marketing department and a corporate office? And and what are kind of the arguments that go back and forth on that consistently? and then after I left corporate America, I became a franchise consultant. with FranChoice and was there for a short period of time and moved away from that to start my own outfit called 258 Motivate. And so we do a combination of both franchise consulting and marketing programs for franchisees. So it's kind of fun because once I consult someone and they buy a brand, I'm able to also help them drive business to that brand in the first year, which is always the hardest. So it kind of combines all Oleksij Rak: Mm-hmm. Matt Solomon: of my skills into one, but it it's nice because oftentimes in franchising, the franchise salesperson sells the franchise and then doesn't do anything else post franchise sales. So they're not really attached to the outcomes per se. So yeah. So it's it's been a really great, great ride. I've had some amazing clients and loved working with all the people I worked with. It's a really fun environment. And yeah, that's kind of how I got to where I am now. and I own two franchises. You mentioned that. Yeah. I'm the operator. So it's I know what it's like to be in the trenches, also. so I'm the managing partner of two franchise organizations. and it's a lot of work, you know, but it's a lot of fun. So everything in franchising I've done, and I love talking about it. So Oleksij Rak: Yeah, so you indeed were on all the sides of the franchise business. Matt Solomon: Yeah. Oleksij Rak: I don't even know where to start, but maybe from the franchise itself. What does it take to own a franchise and what does it take to find the proper franchisees for your franchise? How do you sell your franchise? Matt Solomon: Great question. that's a great first question. Cause because obviously the the answer to the f the very first question typically is you need some capital, right? You need to have some money to buy a franchise. And I think that's I I've worked with all kinds of people, people who have, you know, lots of money to invest and they're looking to kind of you know extend their portfolio out into franchising. And then I've worked with people who literally have home equity and that's it. and so It's possible to buy a franchise without a lot of money, but it makes it a lot harder. And so people, I think that's the first thing people need to understand is you need to have a little bit of money to invest, not only just to buy the franchise, Oleksij Rak: Mm-hmm. Matt Solomon: because probably the cheapest franchise for sales, somewhere around $100,000. and then you need that first year's budget for you know marketing and overhead expenses. And so you've got to make sure you've got a little bit of capital. So that's number one. Number two is you've got to Be open to some risk. And you know, when I say open to some risk, it's a lot of risk. It's a lot of risk. You're gonna take a lot of risk. it like anything in life, right? People say that all the time. Everything is risky, but this carries a little bit different weight. because you know that the work that you put into this is going to be whatever the outcome is. And so you're in charge, you know, you're you're responsible, so to speak. So the third thing I'd say, besides money being kind of not averse to risk, would be. you got you've got to be able to dig really deep. You've got you've got to be able to do the work. There is no passive business in franchising. you know, I believe that there was, and I talked about it when I was selling franchise businesses before, in my own business now, and our philosophy is that there is no passive investment. You're gonna be involved. And it just matters, it just depends on how much you're gonna be involved. And so that's the big question I ask a lot of my candidates is. You know, how involved in this business do you want to be? because you can hire people to do some of the work, but you're gonna have to, you're gonna have to be involved. there there just is no way to be 100% passive. I've seen it work a few times, but typically it just doesn't work. So I think just being prepared to work, you know, I think it's interesting. A lot of people retire and then buy a franchise. And I think I think it should be the other way around. I think people should invest early in franchising. Oleksij Rak: Mm-hmm. Matt Solomon: And then then retire and sell their businesses or run it while they're working in a corporate environment if they're gonna be you know 50% in. But I would never recommend somebody to retire and then take this on because you're not retiring. you're you're in Oleksij Rak: Thanks Matt Solomon: it. And so and don't let anybody lie to you either. It's it's it's there is no passive investment franchising. You're gonna be involved. So yeah. So those three things are really important. Oleksij Rak: How much do you have to do? Matt Solomon: Go ahead, I'm sorry. Oleksij Rak: How much do you usually have to be involved? And which segments of the franchise industry require more involvement, which require less involvement? How does it work? Matt Solomon: Well, well, you know, it's interesting. you know, when I when I talk to a candidate about their skill set, I want them to be very honest with me about what they're good at. Because Oleksij Rak: Mm-hmm. Matt Solomon: typically, and this is true for me in my first franchise purchase, when I bought my franchise, I looked at every level of executive leadership from the top all the way, you know, from marketing to accounting, to have a really good understanding of what the franchise was good at and what I was good at. And to compare those skill sets because if they're really great at marketing, well, that's something I'm good at too. So is that something that I need support in? Not necessarily, right? is the brand so powerful that it's not something I could have ever thought about in my head? I, you know, there's no way this differentiator would have been thought up by me. Then you know, then then that's that's another area that you you have to kind of consider. So I think to answer your question, The the the things that you're not good at are the things that you want the franchise to be really good at, right? So, and the things that you're awesome at, you don't have to worry as much about the franchise being good at that because you're not going to need that support. So for me, it's marketing. If they're not good at marketing, I can do that myself. So it really depends on the person. That's that's that that to answer your question. I think the toughest parts for everybody. is IT and technology, unless you come from that background, because that's a skill set that most people don't naturally have, right? You can learn some marketing, you can learn some accounting, and you can learn some IT. But if you're not comfortable with technology and the evolution of technology and where it's going and you're not comfortable leaning into it, you're not going to get any help from the franchise. You have to know that stuff on your own. Otherwise you're going to fall behind. You know, and that's that's what I see a lot of a lot of brands not focused on differentiation. not focus on technology, their franchisees then fall further behind and before you know it, they're no longer a val a viable brand. So yeah. Oleksij Rak: How do you know, how do you identify if the brand is good in marketing or if the franchise is good in certain field? Matt Solomon: Yeah. so I mean, I think we do a thing called validation, which i you know, the way that we do it at two five eight motivate is much different than the way that most consultants provide validation for their so yeah, so validation is a period of time when you get to ask the franchise questions, right? As many questions as you can. Typically what they do is they provide you the franchisees that you're gonna ask those questions to. Which is little Oleksij Rak: Mm-hmm. Matt Solomon: which is a little bit interesting because they're gonna provide you with their best franchisees. You know, they're gonna you're gonna talk to those people that are the cheerleaders for the brand. The way that we do it at 258 Motivate is we kind of circumvent that whole thing. We find franchisees that are close to the territory that you're going to buy, and we make sure that we set up those meetings. And so you you you get to ask a lot of questions. And one of the questions you're going to ask them is, how is the marketing support? Right? How is the marketing support? Tell us about your last campaign. How did it do? How much traffic did it drive? Did you get an ROI document on the money that you invested in that campaign? And so asking the right questions is really critical. That's why using a consultant is really important because if you're gonna go buy a franchise, even if you've worked in a franchise organization, you're gonna need to ask the right questions. And asking the right questions is the most critical part of the process. validation is, and I think most consultants would agree, validation is the most critical part of the process, but validation done right. You're not gonna let the brand dictate who you're gonna talk to. It's because then they're gonna skew it in their direction. So when I represent a candidate, it's my job to make sure they're getting clarity on what they're buying. And I if if I'm getting only one side of the story, they're not gonna get clarity on what they're buying. So I need to make sure that they're asking all the right questions to the right people. And that's how you get the information. You're not gonna get, and you could go online and see if you like the marketing, but again, that's that's that's your opinion. You wanna hear from the franchisees. You wanna know what they're great at. They're gonna tell you. They're terrible at accounting. They mess up my PL every month, or they're amazing at marketing. I don't have to do anything and they're driving traffic every month. Right. Like you're gonna hear those things in validation. And so that's that's that's a critical, critical component, the most critical. Oleksij Rak: Yeah, I see. You mentioned in our pre-call that you built some simple AI tool. Maybe it's not simple anymore, but you built some AI tool which helps you identify which franchise is good for this candidate or which segment is good for this candidate. Could you tell us a bit more about what you built and how it works, what it does? Matt Solomon: Yeah, it's it started out really small. you know, I I think I think I was slightly ahead of the curve with chat GPT, you know, when it came out and I was using it extensively. As a matter of fact, I left corporate partly because you know, I made a presentation about Chat GPT and how it could, you know, change our organization. And everyone looked at me with this blank stare. And I asked them, How many of you are using Oleksij Rak: Ha ha. Matt Solomon: Chat GPT every day? And and I thought everyone would raise their hand. And nobody raised their hand. And my CEO said to me, Are you using it every day? And I said, Yeah, I use it every day. You know, I write all my process documents through it. And I think at that point I realized, you know, this is not, this is this isn't an organization I want to work for any longer. But also that I I had something. I really understood the technology and and how it could be used. And it was kind of ahead of the curve. So lo and behold, I found this thing called Claude. And when I was working for FranChoice. There was they were still using Chat GPT and they were they were they were still dabbling in how to kind of create models and use agents. And what I realized is the one thing that I need assistance with, and and that I have data for that I could punch into this this AI machine would be information about franchisees and their success, right? And what they look like. So when I have a candidate That looks very similar to a previous candidate that bought a franchise and now they're in the top 25% or the top quartile of that franchise. There's a pretty good indication that that might be a good match, right? That might be a really good match. That doesn't happen in franchise consulting. Now it might happen up here in their brains, but do they have the data that they can punch in to this machine that will spit out, you know, the franchise businesses and brands that are best fit for this candidate? And that's what I built. So ultimately now what I can do is take all my previous history with all franchisees that I've ever worked with, all the information I have. Sometimes it's robust, sometimes it is not. and I put that into Claude, into my model. And what it does for me is it'll spit out the brands and the persona that are best fit. So when candidates come to me, I'm not just guessing. I'm not doing it based on how much money they can invest because I don't think that's right either. I really wanna I wanna tell them what is going to be the best fit for them based on the data. And when the data points tell me that this candidate fits another candidate, again, that was in the top quartile of this brand for 10 years and got out and sold, I know that that's probably gonna be a a good a good fit. Now there's other things that go go into it, obviously, but from a basic level, that's what this model does. and so I just keep dumping data into it. You know, I keep dumping more data into it and it gets better. You know, and that's the thing that I find really fascinating is that, you know, if you if you're not doing this now, I hope you have spreadsheets, right? With all the data. Because you you you that's that's where it gets that's where it gets good. that's where the rubber really meets the road, at least for the model that that I built for two five eight motivate. And you know, it it can absolutely be, you know, this is what I use. I don't other people may use some other I AI models, but I can tell you that I think everyone should be considering this because it's absolutely helpful. I'm very transparent about the fact that I use this with candidates. They need to know that I do this. It's not just a instinctual thing, but there is instinct and then there is data. And I use those two things collectively to come up with the best brand fit. And I think, I think that's the future of franchise consulting. I really do. that's that's my opinion. But I think that franchise consulting and the franchise industry in general, in terms of sales, needs a full overhaul. And they need to be more innovative. We need to be more innovative. And I'm trying to do that for my candidates. So that's kind of where I stand on it. But it's it's been it's been really fun. And again, I started with very little knowledge. I mean, I might have been a ahead of the curve, but these things can be learned online. And if they can't, you know, there's people out there that can help you with this. And once you've built the model, it runs on its own. You know, it really runs on its own. So Oleksij Rak: Yeah, for sure. But how do you compare one person to another? So how do you compare this candidate with previous people you filled into the model? Matt Solomon: Yep. Good qu yeah, good question. I mean I take yeah, I take everything. I mean it's like a dating app, kind of. I I take every every all of the information that I yeah, I mean it's it's kind of a good analogy. I I take all the information, age, I take previous work history, I take all of the things that they tell me during the interview process. So I go through a lengthy consultation, it's like an hour and a half or two hours. I still do that. Because I need all the information I can get that I can then put into my my data set and put it in put it into my machine. And so e everything, psychographics, demographics, everything that I can think of. And again, I ask all the right questions and I ask the hard questions, right? I so once once I get all of that information, you know, what are you good at? What don't you like to do? What are your hobbies? How much time do you want to spend in this franchise? Is your significant other going to be involved? Do you have kids? I mean, the whole it runs the gamut. Once I have all that information and I can put it into my my machine, then it will spit out other profiles that are similar with their franchise of choice. So if you bought a franchise, you know, five years ago and you're doing great, you're humming along, and I know that and I've I've updated your profile, then it will match you with that person. And then I will look at what we recommended for that person based on, you know, their consultation. and I can tell you, I can tell you what brands will be most likely a best fit. And, you know, I I'd like to say it's a hundred percent accurate. I it's it's pretty close. I mean, I it it, you know, I I I I hardly get brands where I think, why did it, why would it match me with this person or this brand? I mean, it's like, yeah, I forgot about Rick in Des Moines, Iowa. That's right. This is a this is a really good match and it'll pull him up. So it's it's it's it's it works really well. but you know, again, you've got to still use instinct in this job, but I think any kind of data point that you can get, is really, really important. So I still do the whole consultation, but to your point, like you need you need age, height, and weight. You need all of it. And once you have all of it, it all matters. Really it all matters too. I mean, you know, There there are things that people probably wouldn't think matter and they do. Like the more the more data you have on someone, the better off you're gonna be matching them with the appropriate Oleksij Rak: Yeah, for sure. For sure. But you match one person to another and then you know that like that other guy has purchased like certain franchise. So do you match your candidate to a franchise segment or to a particular business? How does it work for you? Matt Solomon: So that's where it's that's kind of that's kind of where it starts. but I can drill it, I can drill all the way down to the the specific businesses. So it's it's interesting because you know, a a brand that was really big five years ago, if it matches you with a Oleksij Rak: Yeah. Matt Solomon: brand that's been around for five years or 10 years, then that brand typically doesn't have territory availability. Or, you know, sometimes people specifically tell me they want something emerging. And I love emerging brands. I I I I would much rather work with a brand that's got, you know, two units. than a brand that's got, you know, 600 units. I I just I love Oleksij Rak: Yeah. Matt Solomon: emerging brands. It's more fun. but it also there's more opportunity, you know, there's a lot more opportunity. And so I think for people interested in franchising, there's a lot of cool brands out there. And a lot of the times, so what happens is if someone's been in the business five years, then I would match them with the industry segment. That that that's to answer your question. If somebody's been in window washing, which I don't know why I use that as an example because I don't think it's a great business, but Oleksij Rak: You Matt Solomon: for various reasons, just because I I wouldn't want it. But so yeah, somebody, you know, somebody's been in window washing for five years and they're crushing it and this person's profile happens to match that person to a T, then that might be a segment that we would investigate. And so there's still work to be done, but you know If it's a perfect match, it's close to 98%, then you can literally take those brands if they're, you know, less than three years old, and you could say, This gentleman in Des Moines, Iowa matched with these brands, you know, and I don't give names, but and then I I tell them the data points that we're using to match him with this, this, this person in Des Moines, Iowa. When you tell them the data points, and they're like, that sounds like me, right? Then you say, Okay, these are the brands, and this is the brand that he chose, you know, and I'm not skewing them. I'm just telling them what I'm what I'm reading from the data points. And so that gives people, I mean, it definitely helps people reflect. It also helps people to make decisions. I mean, because I think in franchise consulting, eliminating brands is just as important as finding the one that works. And I tell my candidates, when you land on a brand or we land on a brand together and you want to investigate that brand, find every way to say no. And that sounds crazy from a franchise consulting perspective, but I want them to poke. As many holes in the brand as they can so they can get to a point where they're about ready to make a decision and say no. Why do I do it that way? Because I want them to be that confident when they say yes. You know, because otherwise it's Oleksij Rak: Mm-hmm. Matt Solomon: not gonna other otherwise it's not gonna work. So we get there a lot faster at 258 Motivate because of our data sets. you know, and I feel very lucky that I've kept good records all my career. I've got a lot of good information. So So yeah, and and I've, you know, again, I have two partners that I work with who also have been in franchising for a really long time. and so we combined our data to to to make this happen. And so it does take a lot of of a lot of data, but I can tell you these algorithms that we create and these agents that are doing the work, it's not hard. It really isn't as difficult as people th think it's gonna be. So I don't want to away all the secrets, but I actually think everyone should use it. I really do. I mean, I I don't I I think people would be better off, I think businesses would be more successful and I think franchisees would be happier. You know. Oleksij Rak: Yeah, yeah, for sure. When you choose a business segment, how would you compare it to two or three or five different franchises? How would you choose the perfect... Matt Solomon: Perfect business segment. Oleksij Rak: No, not the business segment, the perfect business within the sales segment. you're window Matt Solomon: great question. Great question. Yeah. Oleksij Rak: watching, so there are like 10 different window watching cases over there. Matt Solomon: Yeah. Right. Yeah. Totaled. Absolutely. Yeah. Absolutely. I so you know, franchising is funny. It's kind of you know, I don't I don't even know if this is politically correct, but it's kind of like an old boys' club. It's like being at the country club. It's this kind of it's kind of this group Oleksij Rak: Thank Matt Solomon: of people who have been around a long time. They're kind of long in the tooth. and they've been They've been in franchising for 25 years and they've been a sit franchise salesperson all their career. Well, they know the brands that are good and bad. They even know the franchise salespeople that are good and bad. And you can gather a lot of this information. So I know the brands and the people and the leadership at brands that are good. I know those that aren't so good. and and and so I just keep my candidates away from the brands that I don't think are good. And again, that's that's instinct and knowledge. Another reason why people, if you're gonna go buy a franchise, use a consultant. I don't care if it's me or somebody else, it's free. My services are free. So I don't I you do not pay me anything to get a consultation, to get an understanding of what's gonna be a best fit for you. No can no consultant should be charging you. So the reason that you use one is for that, for that knowledge that they have. And so a good franchise consultant has a big network of people that they know and that they reach out to, that they talk to. So It becomes a little bit more difficult when we're talking about emerging brands. And so typically, if someone tells me that they're interested at they're, they're they're, you know, they're not risk, they're they're risk averse, then we're gonna go to a brand that's got a number of units, right? We're gonna go to something that's consistent. If they say, let's go for it, I'm really interested in something that's emerging, then then we're gonna find that great emerging brand that's got leadership that either I know already because they're coming from a different brand, or I've done the research on that brand. As a matter of fact, I recently talked to a gentleman, and I'm not going to tell you the brand, but it's a poke brand, and here in the States, and he doesn't come from franchising, and they hired a CEO from the franchise industry, and it worked, it didn't, it worked terribly. Like he had to fire this person. It was really hard to to to to kind of detach from her. so there are really great people that are realizing not everyone in franchising is great. And just because you come from a franchise doesn't mean you understand it. So you know, this gentleman had hired everybody that was in technology. Why did he do that? Because he can offshore so much of the other work now. And that's what a lot of franchise brands are doing. So it's really keeping your your you know, your ear to the pipeline, having an understanding of of who's doing great work and who's not, what brands are are trending and what's not. and and then just, you know, really having that instinct but also that knowledge and using the data set. So it's it's cool because I have kind of three types of p people I can reach out to. My agent, my AI agent, I can reach out to my network and I can reach out, you know, I can I can reach out to to to other franchisees. So it's it's kind of nice. Oleksij Rak: There, there I see. Why is there no, when I was checking online on the industry, I found all these resources like Gator and so on and so forth, know, on each of them, like for example, me being a potential franchisee, I feel myself being the product of these platforms. Why is there no like transparent, clear? marketplace or some place where me as a potential franchisee can come over to do my own analysis and do this matchmaking with potential franchises. Why is there no such product on the market? Matt Solomon: I I'm gonna be totally blunt about this. Nobody talks about it. It it's because the the job of the franchise consultant is now is now obsolete. And and that's that that's where it's headed. Like this is I I I I can't reiterate enough that this industry is so primed for complete n either complete annihilation or a complete reframe. I'm to to to you know to to to Oleksij Rak: Yeah. Matt Solomon: use your podcast. I mean, it really it is because If you did, if you had something like that, which I think is i that's exactly really what I'm trying to build, right? And the reason why I don't make it public is because it's my data and my candidates' data that I can't share. But Oleksij Rak: Yep. Matt Solomon: if you had a platform like that, I I wouldn't you no longer need me as a consultant. You know, so it's like this secret thing. Yeah, my knowledge is important. That's really critical. But if you could go online and use my data to match yourself with a great franchise brand, And it gave you three or four choices, just like a franchise consultant is gonna do, which I also totally disagree with. you know, they give you they give you three brands typically. That's what they're told to provide you. That's it. They do that for a reason. but I think I I never start with three. I always I'm always giving people five brands. I mean, if you could go online and do that, now you don't need a consultant to walk you through the process necessarily, right? Until you get to validation. The only benefit to using a consultant if you had a platform kind of like the one you're describing would be because they have a network of people that they can reach out to to see about leadership and things like that. But to do your initial research, it's crap online. There's nothing out there that's good. All of it really is to generate it's Oleksij Rak: There is something. Matt Solomon: it's to generate leads for consultants because consultants are willing to pay, you know, upwards of a hundred dollars for a lead. so that's really what those platforms do. Don't they don't help the person, the consumer, they help the franchise consultant. Their business is on their own. And so all this money that goes into franchising and franchise consulting and franchise sales, it's it it's it's not really there's been nothing built to really help the consumer that I know of. And clearly you've done some of your research too. I don't know anything out there that's being built just to help the consumer. I mean, and and to be honest, like wouldn't you pay 25 bucks to use it once? I mean, it'd be worth it, right? Totally worth it. So Yeah, it's it's I think that's something that's going to emerge. I think that some of the consultants who are in the younger age demographic, which isn't me, but some of them that are, are finding it to be very old school. And it's just kind of it's like this secret society of people that don't want to tell you that most of what they do is bullshit. And and I hope it's okay if I use that term. It it's the truth. They're not they're not being wholly honest about it. And They want to sell you franchise businesses. That's the name of the game. So closing is the name of the game and selling is the name of the game. And it doesn't matter if you sell a franchise to somebody and they fail because it's not any of your business after that. And so that to me is wrong. That to me is not the way that I could ever run my life. so I think that there's there's opportunity to what exactly what you're saying. I mean, how frustrating is it for you to go online and say, here's all my information, right? I put it into a form that I know is gonna go to a franchise consultant, but here's all my information. Tell me what, tell me what you think I'd be a great match for. What's emerging, what's trending, what's existing. Like give me all that stuff and let me make a decision on who I want to validate with. Maybe that's when I use a consultant. I call the consultant and say, okay, I found these brands. What do you think? Right. the problem is the consultant's gonna want to know how you got there. Right. How did you get to these brands? Let's use my process. My process is tried and true. It's been around for twenty five years and it's, you know, la da da da da da and it's it's crap. They don't have a they don't have a a tried and true process that's good for the consumer. It's good for the consultant because it helps them close, but it's not good for the consumer. And and I I mean I I'll probably get destroyed online for saying that, but it is the truth. And anybody with worth worth their salt would stand up and say that. It's It they're they all do it the same way and it's wrong. You know, that's that's what I'll say. I think it's wrong. Oleksij Rak: Yeah. Look, in my opinion, it feels like one of the biggest lies of the industry is that it's cost free for the franchisee. It doesn't cost franchisee anything. Actually, the franchisee pays for everything. So even for Matt Solomon: Everything. Oleksij Rak: the consultant, in the end of the day, the consultant is being paid by the franchisor, but franchisee is buying the franchise, it's part of the cost. Matt Solomon: Yes. You're right. That's right. It's baked in. It's baked in, right? Exactly. I mean, it's it's again one of those things that like if you've got any wits about you, yeah, yeah. I'm free, right? I'm not free. You know, I get paid for every every f brand that I sell. I'm not free. And Oleksij Rak: Yep. Matt Solomon: they bake those they bake those costs either into royalties or somewhere, marketing fund. You know, it's it's there somewhere. You're gonna pay for it. you know, and and I and I Franchisees pay for everything. And it's the truth. Like I one of the things I would tell anybody buying a franchise is whatever your budget is, just double it. Double it. Cause it's I mean, that's that's what you're gonna need, right? It's it's not they're gonna tell you, you know, you can margins should be here, and depending on where you live, so much of this is is variable. And I yeah, so you're right. You're you're gonna pay for it. Franchisees pay for everything, and that's that's the truth. you know, this business is. You none of the other things that people don't talk a lot about is, you know, buying one unit of something is totally worthless, I think. I mean, you could start with one unit to understand the business, but don't think you're gonna make any money with one unit because you're not. Because franchising you know, it it's it it's all done at scale. You need to scale a business in order to make money. You have to have multiple units in order to make good money. You're not gonna buy one and get rich. So people who think that. You know, it's it's it's a mis it's not true. It's misinformation. you know, and there's and it's funny, and I love talking about brands, and and one that I I I I talk about a lot, but I'm not gonna name it again. It's a cookie brand that sells cookies. you might know which one I'm talking about. Like the the brands like that that people bought 16 units of, that that is not gonna be around for for much longer. I can't imagine. It's a novelty. It's it's cool for a week. People like it for a week and then that's it. And so Anytime you know a franchise consultant is suggesting a novel brand that's new and very emerging and cool, it's one to avoid unless you know that it's got some some legs. and typically food brands don't have legs like that anymore because of all the you know the food truck culture and and so it you just have to be very careful. And I think there is still value using consultant because if I, you know, because I know more about franchising than you do, but I agree with you that there needs to be some platform or something done about the early research that you know that a consumer does so that their information isn't always being sent over to a franchise consultant as a lead. Yeah, it's just, you know, and in every industry does it, but it's unfortunate. you know, senior home care is an industry where they they do the same thing, right? You want to go look up home care for your parent, well, you're gonna end up being becoming somebody's lead, right? And so Everybody does it. I don't think it's right. I think as it relates to buying a product like a franchise that's gonna be more expensive than any car you've ever purchased, you can do research on a car and and find out what car would be a best fit for you, right? And and you can know the exact price of that car. When it comes to franchising, it's more expensive. You'd think you'd have more ability to do that for yourself and it just doesn't exist. You're right. You're right. So that was a long winded answer, Oleksij Rak: Yeah. Matt Solomon: but Love that conversation because I think that's where, again, that's really the big conversation that needs to be had in franchising and franchise consulting is, you know, how do we help the consumer? Like it's not about that bottom line. I mean, I I I just it's not about closing. It's about how how do we help the person that came to us to begin with? So yeah. Oleksij Rak: What other problems do French Azis have when they start the business? Besides, I don't know, choosing the right segment, choosing the right business, comparing them one for the other, what else? Matt Solomon: You know, yeah, I mean it's yeah. Oleksij Rak: What else can be automated and done on the initial step? Matt Solomon: Yeah. So I'll tell you about just kind of my experience as a franchisee. I think that's really important because Oleksij Rak: Yeah. Matt Solomon: you know, I I I have two businesses, one's in an industry that's been around for a really long time, and it's it's not a tech savvy industry. and it's it's there's not a lot of innovation being done in in this industry. And so when I was looking at You know, when I was looking at at things like HubSpot, a CRM like HubSpot or Pipe Drive, I wanted something that was specific to this business. You know, there's gotta be somebody out there that's built a CRM platform that does everything I need it to do, right? This industry is a bit multi-billion dollar industry. Well, it didn't exist, it exists now, but it's not good. and so I, you know, one of the things franchisees have to deal with is understanding their operations. They have Understand their operations from start to finish before they can invest in technology in a tech stack. They you have to. So again, you talk about reframing things. You can't purchase hubs a seat in HubSpot and think that that's going to be right for your business from start to finish unless you wholly understand what your operations look like from start to finish. And do you know how long that takes when you buy a business? You probably do. A long time. It takes a year. I mean If you're lucky, it's six months, but you've got to learn, you've got to fail, you've got to figure it all out. And so for that first year, you don't have a tech stack, you don't have a marketing system. You you might be using something. And I have a friend very smart who used spreadsheets because he knew this. He knew that he would need all the information, but he wasn't going to invest in a tech stack and start here when he knew he he was he wasn't sure where he was going to be six months from now. And so one of the problems franchisees have is Taking recommendations from the franchise on what they should use for their operation. And I'm going to say that again because it's really important. Taking recommendations from the franchise on what types of software and platforms they should use and taking that recommendation as the holy grail because it's it's different for everyone. Because I had mentioned it earlier. I'm really good at marketing. Okay, great. Well, I don't need HubSpot. Because I I I I understand how that all works. I can do that. So I don't need HubSpot. HubSpot's really great for somebody who doesn't know how to do marketing, right? And it's expensive because of it. So what do I need? Well, I need to figure that out. And so a lot of franchisees, they don't think that way because they want to get up and running as quickly as possible. But that's a mistake. I think that unless you have a franchisee a franchisee that is so good and they've totally crushed systems, which you'll hear about a lot. There's very few of them that have. If their systems are so good and they can tell you your ROI on that system and and show you everything you need to see, then maybe you take their recommendation, but I'd still do my homework. I mean, everything from billing to payroll, right? To you know, to again CRM and marketing. you really need to understand your business. And so in my business, we do recruiting and we also we do sales. So we've got kind of two things. We recruit employees at a rapid pace and we try and sell at a rapid pace. It's pretty equally the same. We put in the same effort on both ends. Whereas a lot of businesses hire one or two people, we are always hiring, always a 24 hour hiring cycle. And so I needed a CRM that could do both. Should be pretty easy to figure that out, right? Like, let's do a CRM that captures my pipeline for recruiting and captures my pipeline for selling. Well, I had to build it. I had to build it. And I and this industry's been around for a hundred years. I had to build this CRM and I built it in PipeDrive with the help of a friend of mine. And then we connected everything else to it. You know, make.com. We connected you know, everything connects sales message. Everything connects to Pipe Drive, you know, and I and I and even sales message, like that's something handpicked by me because I liked the platform. I understood what it did. I I know that I could t send text videos for free through that platform. So I was able to integrate that into pipe drive. Everything that I needed is different from every other franchisee. No one uses my system. and and even my friend who I mentioned who had spreadsheets, like he uses a completely different, he uses yeah, he uses a completely different CRM and a completely different system. And it works for him. It does basically the same thing that mine does. But this is something that franchisees are not prepared for. And it's something that nobody talks about. You know, they just say, well, just use what the franchise prescribes. That might be good at the beginning, but don't get into any long-term contracts because it's going to change for you. And you're going to find that there's better options out there, or you're going to dream up. And this is what I did. What would work best for me? Like, what do I need to make this business run so I don't pull my hair out? and that is, you know, a s a system built specifically for the way that I operate the business. And that doesn't never come up in franchising. And and again, I I want to reiterate some brands will tell you that their systems are great, but you gotta be able to ask the right questions. What does that mean? Systems are great. Systems are, you know, I I I need to know what that means specifically. Is it make it easier for me? And how does it make it easier? So at the end of the day, bus businesses, franchise businesses are complicated, they're hard, and they need to be simplified. And that's what kind of how you need to think about your business when you're when you're starting it. How can I make it as easy as possible? Because the more complicated you make it, the worse it's gonna be. Oleksij Rak: Yeah, yeah, you're absolutely right. But on the other hand, it's probably hard to build like software that's a good fit for everyone. it really depends on everybody's need, like at this point of time and like for this specific business. Matt Solomon: Yeah, I think I think so. I mean, I think like for this business, you could easily, and this person that I worked with on Pipe Drive, you could easily take a you know a 30,000 foot view and say, what are the things that you have to have in a CRM for this industry and build it? And it just seems like people people just aren't thinking that way. So and there's lots of industries like that. It's amazing to me how much business there is, how much business opportunity there is out there. I mean, we just talked about two different industries. franchise consulting and then I'm talking about senior home care, two industries where they're ripe for some innovation. You know, people aren't just are people are trying, but they're just not getting it right. So yeah. So it's time Oleksij Rak: down. Matt Solomon: for you and I to start a business. Oleksij Rak: Sure, That's something we will discuss. Matt Solomon: Yeah. So Oleksij Rak: Coming down to another interesting question of this huge FDD document. How hard is it to read it? And what do you typically read there? And what information do you try to extract from this FDD? Because it's so much regulated on one hand, Matt Solomon: You know Oleksij Rak: but on the other hand, it has so much hidden in the document. Matt Solomon: and it can be manipulated. I mean, the thing about math is that like Oleksij Rak: It could be, yeah. Matt Solomon: averages I'm not good at math. And so I'm very, I'm very c I'm always concerned when I see numbers because I want to know how you got to these numbers, right? And you know, formulas can be manipulated to make things look a lot better than they are. And so franchise consultants always talk about item 19, and it's you know, it's the disclosure of your revenue. And it's it it honestly. It's a it's a single number that can be manipulated to make the franchise look a lot better than it is. If you don't read the fine print in a 235-page document, the real fine print that says we pulled out the bottom quartile of our franchises and the top, you know, we're giving you an average. There's so many things that are wrong with the FDD. And one of the things I will say is that that's another reason why people hold on so tightly to this franchise consulting process. The FDD. Well, everybody now has a summarize button in their browser that summarizes documents, most likely, I hope you do, that'll summarize a document and pull out the things that are most important. And and if you if you teach it right, you can even tell the agent to find things that are inaccurate or find things that seem like they could be inaccurate, right? And it'll show you in the FDD areas where you need to do further exploration. Do not read an FDD from top to bottom. It's a really important document that you should understand. But you don't need a franchise consultant to take you through it. You know, they're gonna hand it off to you. They typically won't take you through it. They're gonna tell you to read it. And then they're gonna say, Did you read the FDD? Did you because you have to sign that you received it? That's really important to think about. You're signing just that you received this document. You're binded to the fact that they gave you all the information that you needed to make a good decision. Why? Right? Why? And I know it's legal, obviously. There's been lawsuits about these types of things, but in a perfect world, I shouldn't need to do that really. it should be transparent. I should be able to I if you're still selling franchise businesses and territories, then you should be really proud of what you've accomplished and you should show me your numbers, period. And I want to know. And I should be able to ask all the questions that I need to ask. Otherwise, what are you hiding? Right. And that's why I tell my candidates, I want you to get to a place where you can say no, right? And if the FDD doesn't seem correct, or you have questions that aren't being answered, then you know they're hiding something. Then you just pass. I mean, I pass, pass, pass. The FDD is another thing that we use as consultants. I don't use, I say we because I'm included in that pool to frighten, you know, candidates into thinking that I have the answers, you know, or I know what I'm, you know, I know what I'm doing. Just follow my process. The FDD can be summarized. Use AI. Go into Claude. Have it summarized them the most important pieces for you, have it find those areas that don't seem correct or seem incorrect and the areas that you need to further explore to get a solid and clear answer on this franchise brand. You don't need to read the whole thing. I mean it's just a it's just a bunch of it's a bunch of it's a bunch of gibberish really for most people. It's gonna put you to sleep. so I I I highly recommend finding or creating an agent online that can do that for you if you're in the midst of Of of going through FDDs. I don't do that for my candidates, but I tell them exactly what I just told you. Don't don't read the whole thing, but find find areas, you know, and if they need help, I'll help them along. But you can pop that right into my wife uses Chat GPT. She, you know, and she's she's a stay-at-home mom, home engineer. She was a teacher, so she's not like super big on technology, but she uses it. And so like anybody can do this. don't read the FDD. The FDD is It's a l it's a legal document that just is it's not always accurate. It's not always true. So unfortunately it's not always true. Oleksij Rak: and probably do not go to the attorney and do not pay them $3,000 for it. Matt Solomon: no, no way. No, no, no, no, no way. I mean, no way. I I to I mean, I hate to say I haven't used an attorney for anything, I at all, you know, and luckily I haven't run into any legal problems, but I I don't need an attorney, I don't need an attorney. I have an agent who is my attorney. Like I don't, you know, the they can do an agent to online can do the exact same things that an attorney does and do it faster with more data. So if people tell you that AI is not a valid use of it's it won't work in consulting. It's not true because I'm using it to work to make it work. So yeah. Oleksij Rak: Looking into the future, where do you think this industry will be in like five years time? Because everything is changing nowadays and it's changing quite rapidly. This industry being called, it doesn't mean that it should not be changed. It will change. Matt Solomon: I mean, I hope my hope is that it's less than five years. I I've got to think that it's gonna take somebody who has a lot of influence. I think it it's like politics in franchise consulting. Like the Oleksij Rak: Yeah. Matt Solomon: big politicians are the ones who get the most respect, but they also owe people a lot of favors. And I it's just I I scratch your back, you scratch mine, leaving the consumer out of that scratching of the back. Because like I said, it's it's just kind of an old industry that needs a refresh. Somebody with influence is going to have to stand up and say, okay, enough's enough. This is BS. The things that you're using, the tools that you're using are so old and outdated. The training that you're providing consultants was used 25 years ago and it's not tried and true anymore. People are smarter than this. you know, it's it's just it it's so to me. I think that franchise consultants are further behind than even some of their consumers. I work with really smart people who who who, you know, some of them have, you know, built these these machines. Some of them have built these agents and they understand how it all works. So I think in five years, what's gonna happen is you're gonna see some of the younger consultants, their business is taking off. I have a feeling there's gonna be new franchise networks popping up frequently, which there already are, that are more diverse. That that that are more open-minded and that have a better pool of consultants that really understand what today's franchisee is looking for. they're not they're not necessarily looking for window washing passive income, you know, types of opportunities. because again, those don't exist. So I think that's what's gonna what you're gonna see is somebody with influence standing up and saying enough's enough. I'm gonna start up my own franchise network, and here's how we're gonna do things. It's completely different. And they're gonna give give away a lot of the secrets of the industry. I already have today given away a lot of the secrets, but I don't, to me, they're not secrets. These are things that people should know. you know, a franchise consultant might feel like your best friend, but at the end of the day, all they care about, and and and and they can argue this, all they care about is you buying a franchise. That's all they care about. Oleksij Rak: Yep. Matt Solomon: And I And I think part of the reason why I added marketing on as a department in our organization was because of that. When we sell a franchise, one of the things I tell my candidates is that you get a free consultation with our team about what your first year marketing plans should look like for this industry and this business. Now that's something no franchise can, and there's no guarantees, right? Again, this is all risk, but at least I'm following up on what I believe to be true, right? Like I know that this is a great brand for you. You can do this work. Now let me help you market that business in the first year. People are people realize that there's there's real value in that. There's real value in that because now I'm on board with it. I'm I I want you to win, you know. I wonder how many franchise consultants follow up with the people that they sold franchises to within the first six months to see how they're doing. I bet you very few. Maybe zero. I mean, there are out there people are gonna say, I do it, Matt, I do it. There aren't very many because those first six months are hard. And when you call a franchisee who you sold a franchise to in month three, they're gonna hate you. Because it's hard. It's hard work. But if you've helped them along and you've given them some ideas on how to market their business and you've done a great job of matching them through data, instinct and your network, then you know, you're good to go. You're good to go. So that's what I see really changing is that connection to The success of the business in year one. So let's say we were going to change everything about franchise consulting and franchising. That's what would change. I am now bought into that first year of your business in a way that's that's we've never been bought in before. So if I'm on the franchise sales side at Dave's Hot Chicken, guess what? My entire bonus is based on how our franchisees do year one, year three, and year five. That's how I get paid. So if I sell somebody a business and they don't know how to run it, that's on me. Also, not just on them. And right now, all of the negativity about franchising falls on the franchisee. It's because you're not working hard enough. It's because you're not following the systems. It's because, well, guess what? It might be because it's a shitty match. Pardon my French. It's not a good match, right? It's a it's not a good match. And so it all starts with that. How do we get consultants aligned with the outcomes, not with the sign the paperwork, and I'm done. So I think that's the biggest change that needs to happen. And from a technology perspective, yeah, everything needs to change. everyone's process needs to include some data points that help them make a better decision. Oleksij Rak: Yeah, yeah, that's true. Awesome, awesome. Thanks a lot for great discussion. And it was interesting. Matt Solomon: Yeah, thank you so much. It was cool. I loved your questions and it was always great talking to you and and thanks for having me on. I really appreciate it. Oleksij Rak: Yeah, because these questions... I was the first person probably where I had these direct answers, you know. Matt Solomon: Well, it might get me in trouble, but I it's just how I it's it's really how I feel. and I don't want it to Oleksij Rak: Yeah. Matt Solomon: be a soapbox, but it's it's the truth. And I think people who really listen to what I'm saying would agree that like there's a disconnect here and it needs to be solved for. And you mentioned it. I mean, you're a consumer who who has looked at franchise businesses and you can't get what you want out of it. And before you know it, you got eight consultants calling you, and it's it's really unfortunate. So yeah, I think that there needs to be more transparency. There needs to be more consumer involvement as opposed to just the consultant and the franchise or and so I think those two things don't always go hand in hand. And I think you need to have the consumer involved. So yeah. But thank you again. It's been Oleksij Rak: Yeah, yeah, for sure. Matt Solomon: really fun. I love talking franchising with you. Oleksij Rak: Awesome. Thanks a lot for coming and have a great Matt Solomon: You got it. Oleksij Rak: one. Matt Solomon: You too, take care.