Rapid Fire FAQs w/ Wendi Hill - April 2024

April 18, 2024 00:11:53
Rapid Fire FAQs w/ Wendi Hill - April 2024
All Things Considered Franchising Podcast
Rapid Fire FAQs w/ Wendi Hill - April 2024

Apr 18 2024 | 00:11:53

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Show Notes

Scotty Milas and Wendi Hill of Market Momentum were live on Wednesday, 4/17 with the April Rapid Fire FAQ. Scotty answers questions that come in through his website and social media platforms.

 

To send in a question, email: [email protected]

 

#rapidfirefaq #scottymilas #allthingsconsideredfranchising #podcast #linkedinlive

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Episode Transcript

[00:00:06] Speaker A: Hey, everybody. Welcome to another episode of Rapid Fire Q and A. I am your host, Scott. Scotty Milos, founder of all things considered franchising, powered by scottmylasfranchisecoach.com. And of course, we are here with the wonderful CEO, founder of Market Momentum, Wendy Hill. We put together a compiled. Wendy, I should say, has compiled a list of questions that have come in through various social media channels, website, Facebook, Instagram, website, you name it. And so. Hello, Wendy. [00:00:42] Speaker B: Hey, thanks for having me back on. [00:00:44] Speaker A: Yeah, these seem to be going pretty well. We got, I think, five or six questions. Six questions, I think, came in, and we'll do our best. Just as to remind you to the audience, we do not take questions live. We figured this is a better way. So if you have a question, feel free to go to the website, submit it, go to my LinkedIn page, Wendy Hill's LinkedIn page. And it's Wendy, w e n d I, Hill. And we'll go from there. So fire away, Wendy. [00:01:12] Speaker B: Okay, here we go. Number one, do I have to use my own funds to buy a franchise, or can it be gifted to me the way people get a gift for a down payment on a house? [00:01:22] Speaker A: Wendy, actually, your comparison looking at this as buying a home and buying a business are very similar. So the answer to the question is yes. However, if you're going to also include an SBA loan or outside funding through a bank, a term loan, as you probably know, if you get gifted money from a to buy a home as a down payment, the bank is going to want to know where that money came from, and they're going to want to see it as a gifted letter to make sure that it is not a payable loan. So, yes, the answer to the question is you can have outside help, assistance from family, friends, investors, operation partners, to invest in a franchise. [00:02:08] Speaker B: Okay, great. Great. That's clear. Number two, can my franchise agreement be amended after a certain amount of time? [00:02:16] Speaker A: You know, the immediate answer to this question is no. And in all fairness to all of the other franchisees within the system, everybody is playing on the same level of the same field. So once you've signed your franchise agreements, that is the agreement. Your royalty structure, development schedule, if you invested in more than one, that is what you're going to live with. And. But at the same time, the franchisor can now come back to you and say, hey, we've decided to raise our royalties. They can't do that. They have to commit to the royalties, the fee structure, the services that they have said based on the initial franchise agreement. So if anybody is out there and has a franchise agreement now, the franchisor is trying to push on new fees and it's not in the franchise agreement that they can do that. Then I suggest that you have a conversation with the franchisor or reach out to a franchise attorney to help guide you on that matter. [00:03:18] Speaker B: Okay, that's great. I mean, that. That protects everybody, really? [00:03:22] Speaker A: Yes, absolutely. [00:03:23] Speaker B: So number three is this will be interesting. Do large franchise brands, for example, a McDonald's, have any benefit over a small franchise brand? [00:03:32] Speaker A: You know, this is a great question, wendy, because this goes into part of the consultation I have with my clients about risk reward and their tolerance for risk. If you have a low tolerance for risk, then a brand, or what we call a brand that's out of its early stages, out of its embryonic stage that is solidified, has many locations opened and many is defined many different ways, is everybody's comfort zone. Then if you have a low tolerance risk, you're going to want a solidified brand. If you have a high tolerance for risk or median tolerance, then some of the emerging brands, embryonic brands, may be something to consider. I also like to educate my clients at this way. When you invest in a brand like McDonald's 711, some of the real large ones, the Dunkins, you know, who have thousands of locations, you're not going to get into the corporate office, going into the back, through the back door. You're going to have to go through the front door. And the CEO, the president and some of the high level executives may not know your name or who you are. In a brand that is emerging embryonic, maybe 25, 30 locations, chances are you can get through the back door, get in the back door, into the corporate office, and you're going to have that direct line to the upper management, the founder. So you have to really kind of, through the consultation, really kind of pick your comfort zone. So that's the best way for me to answer it. I've seen people do really well in embryonic brands. I've seen people do really well with, you know, brands that have 100, 150 locations. It's really based on what your comfort is and of course, your tolerance for risk. [00:05:19] Speaker B: Okay, great. And good thing is there's so many brands out there to choose from, you know? [00:05:23] Speaker A: Yeah, with 4000, but again, not all 4000 are good ones. So you have to be careful. [00:05:28] Speaker B: Okay. Number four is, as a franchisee, will I be able to make any changes to the business operation if, for instance, something doesn't work for my specific location? Or customer base? [00:05:39] Speaker A: The answer is yes, but you're going to have to follow the channels. Working with the franchisor. I remember many, many years ago when we were, when I was part of the burger industry, burger concept we were building, we had certain regional places that required sauerkraut on hot dogs. But if you go down south, Sauerkraut isn't put on hot dogs. There are certain items that are on a hamburger down south that aren't up north. So certain things like that, yes, there's going to be, you're going to be able to work with the franchisor, but again, you have to work with the franchisor. You can't wake up one morning and decide that, hey, everybody in New England is coming in and asking me for New England clam chowder on Fridays. You just can't add it to the menu. But the franchisor is going to be open, open minded to listen and work with you to help you generate additional income. At least they should. [00:06:34] Speaker B: Okay, great. So number five, if you had a choice and you could afford two franchises, would you buy two within the same company or would you buy one with two separate companies? And why? [00:06:46] Speaker A: I've had, in my, in my career, I've had a, I've had two clients by invest in two different franchises. One was for them and was for their wife. Do I encourage it? No. But if you are an experienced franchise or an experienced franchisee or a multi unit, multi brand operator, then this potentially could work. But if this is your first time, I would concentrate on either one, two or three units with the same brand territories. I wouldn't encourage you to go out and buy initially multiple different opportunities. The other thing is that most franchisors have what's called a non compete. So you have to make sure that the second franchise that you're investing in doesn't compete with the first one. So franchisors don't want that, you know, they want. And again, you really need to concentrate on opening the first one before you start thinking about, you know, the second brand or the second location. [00:07:46] Speaker B: Okay, let's get answered. And then here's our last question for today. Do you see franchises today becoming more semi absentee or more active owner operator? [00:07:57] Speaker A: You know, wendy, this has become, what's the word I'm looking for? A thorn in my backside, because there are many different definitions of semi absentee to so many different people. What you think is semi absentee is different than what I'm thinking and vice versa. So here's my best thought. If you are not in a position that. That you cannot leave your corporate position to own a business, then I would second guess whether you're at the right time to invest in a business. Unless, of course, there's a business that is, you know, has a lot of. Doesn't have a lot of moving parts, maybe one employee or two employees. But the idea to open a business and not be involved in it and kind of turn the keys over. Unless, of course, you're, you know, you're bringing in a family member or you already have a business set up that has a corporate structure to it. You have a team already in place, and you could take some of the team and put it into the new business. But, you know, there are going to be those situations where somebody's going to call you up and say, hey, Wendy. Hey, Scott, you need to get down to the store or you need to come over to the office because so and so called out and, you know, I'm shorthanded. And if you can't leave your corporate position, you know, you're going to be stuck. And so I really am starting to push back on people who think they have amount of time to open a business, but really don't. I just got done working with somebody who told me initially they had 20 to 30 hours additional per week to run a business. And when we started getting into the process, those one to two to 3 hours a week of the due diligence, talking to the franchisees, talking to the franchisors, they found it hard just to find time for that. So the idea that they couldn't find time for that, and then they say they have 20 hours a week to put into a business, well, it just didn't work. So it can be done, but it's not as easy as you think. [00:10:02] Speaker B: Okay. [00:10:03] Speaker A: It's a lot of work. I mean, more work than if you left corporate America and ran the business yourself. [00:10:08] Speaker B: Right. And I feel like in this day and age, people feel like they can do everything just because they have smartphones. And a lot of times they don't. [00:10:15] Speaker A: Have the time or they're just working from home. They think they can just, you know, it's so I'm encouraging people to really be open minded about semi absentee. As you build into multiple units or multiple territories, semi absentee comes into play because you can't be in the same location or the same territory at the same time. So you have to build that management team to run those different territories. So semi absentee becomes more. It's more in place. So I'm really starting to push back, people. Hey, I'm looking to do this as an investment. It's just, it doesn't work. [00:10:51] Speaker B: That's such good advice. That is all the questions we have for now. But we know we'll blink and there'll be a few more to do in a couple of weeks. [00:10:58] Speaker A: Yeah. Well, thanks again. We're not going to see Wendy for probably five or six weeks. We want to congratulate her. She's getting married in June. Congratulations, Wendy. Anybody who is interested in any marketing services, small, medium, large size corporate companies, doesn't have to be in the franchise space. Feel free to reach out to Wendy on LinkedIn. Name of her company is market momentum. I am your host, Scott. Scotty Miles, founder of All Things Considered, franchising, an award winning podcast ranked in the top 15 right now on certain media channels, and also founder of Scott Miles franchisecoach.com dot. Feel free to reach out to me if you want to have any questions about business ownership. This is rapid Fire Q and A with Wendy Hill and Scotty Miles. Until next time, make it a great day. [00:11:45] Speaker B: Have a great day. Thanks.

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