Scotty Milas' All Things Considered Franchising Podcast w/ Edith Wiseman of FRANdata

May 18, 2023 00:26:32
Scotty Milas' All Things Considered Franchising Podcast w/ Edith Wiseman of FRANdata
All Things Considered Franchising Podcast
Scotty Milas' All Things Considered Franchising Podcast w/ Edith Wiseman of FRANdata

May 18 2023 | 00:26:32

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Show Notes

Edith Weisman is the President of FranData, a company that provides research and information to the franchising industry. She has been involved in the franchising industry for 25 years, and she and Scotty, the host of All Things Considered Franchising, had a chance to reconnect at the I.A. Convention in February. During their conversation, they discussed the importance of data in the franchising industry and how it can help companies make better decisions. Edith explained her role at FranData, which is to provide data-driven analysis and insights that can guide companies in their decision-making process. She also discussed the different types of brands and the various levels of investments that can be made. Finally, Scotty reminded listeners that numbers don't lie, and that data can be a powerful tool when it comes to making decisions.

Scotty and Edith discussed the role of data in franchising. Edith explained that data and information can be meaningless unless it is put into context. They help companies grow in franchising by understanding the business model, which consists of 30 industry categories and 300 sub-sectors. Scotty was impressed with the amount of detail that goes into franchising. Edith also mentioned that some industries are newer to the franchising model, while others like food service have been around for a long time. To illustrate the value of data for franchising, Edith gave an example of looking into financials to see if a franchise is profitable, and if the profits are reinvested or given to shareholders.

The conversation between Scotty and Edith focused on how franchising has evolved beyond just food service-based businesses. Edith highlighted how franchisors can use their services to better execute onboarding training and improve franchisee success in the first 18 months of operation. They discussed the importance of the first stage of entering into the franchise system to ensure profitability and sustainability. Scotty and Edith also shared their experiences in the industry, noting how far it has come in the last 15-20 years.

This conversation is about the success of franchising and how it helps people get into business ownership. Edith explains that there are many new franchise brands coming to market, with food being the largest category. Franchising is an effective model for building wealth and getting into business ownership as it is de-risked. Edith shares the story of one franchisee who had to spend all of their money to get started but now has five locations. They both emphasize that franchising is not easy and requires hard work and grit. They also mention that the IFA conference had 4,000 attendees and there are close to 4,000 types of franchises and over 700,000 businesses that operate in the US that are franchise businesses.

Scotty can be reached at [email protected] and at (860)751-9126.

Edith Weisman can be reached at [email protected].

#allthingsconsidered #scottmilas #franchiseopportunities #businessownership #edithweisman #IFA #frandata #pickleball #shareholders #datadrivenanalysis

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Episode Transcript

Speaker 1 00:00:05 Hello everybody, this is Scotty, my, your host of All Things Considered Franchising. Welcome to another episode. All Things Considered Franchising is a podcast dedicated to the franchising industry, talking to people within the industry outside the industry, franchisees, franchisors, and people have an influence within the franchising industry. All things Considered Franchising is powered by Scott Mylo, franchise coach.com. I am the president and c e o. We provide a free service helping people research and explore business opportunities, preferably franchises, helping them outline and plan, and they build a roadmap and introduce them to the brands that actually fit. Uh, we won't get into all the different types of brands, but there are over 500 brands that I work with in many different categories and investment levels. And I have a super duper guest with me today. Um, and I was actually kind of reminiscing this morning about this because when I think back when I first got into the development side, let's just call it franchise sales for people to better understand. And the first conference I ever went to, I sat next to Edith Weisman. Welcome Edith. Speaker 2 00:01:19 Thank you, Scott. It's so great to be here. I I, I can't believe how long it's been since we've known each other. Yeah. Um, and when I saw you at the i a convention, it was like a homecoming Speaker 1 00:01:33 <laugh>, it was Speaker 2 00:01:34 Back in February. Speaker 1 00:01:35 Yeah. It was. If you are president of Fran Gata, uh, and anybody who likes analytics, like I do data information that drives the franchising industry. Frand data is that big. Blimp on the radar. I mean that this is where companies go and, uh, for research information, uh, you started out in the operation side. I think this is the only position you have ever had. Uh, again, you just look like you graduated high, uh, uh, college. So <laugh>, uh, but you 25 Speaker 2 00:02:11 Years was Franta. Speaker 1 00:02:12 Yeah. So, um, so numbers are important. My father taught me a long time ago that numbers don't lie and remember to carry the one. That's the two things he taught me about numbers. So data and franchising, Fran data. Tell us a little bit about your role, the importance of data, uh, and we'll go from there. Speaker 2 00:02:35 Yeah, so thanks. I think the way we like to think of ourselves is a little bit more oriented to discovering insights. So information and data, um, sometimes is meaningless unless you can put it into context. So, I mean, you know, I use the example all the time when we're looking at say, Frenchs or financials and, um, and you look to see if they're a profitable franchise, well, you actually have to dig into the details to find out, okay, are they reinvesting in the business or are they taking out and giving it to their shareholders? So you have to put that quote unquote data into context. Um, and so we help companies grow in franchising by really understanding the business model, um, and how it's being executed by brands across 300, um, different, or I'm sorry, 30 different industry categories and 300 sub-sectors. Speaker 1 00:03:36 Wow. That's a lot of, uh, that's a lot of dotting the i's and crossing the tents and a lot of road mapping, as they say, <laugh>, that's, uh, <laugh>. Speaker 2 00:03:47 That's true. And it, it's, you know, a lot of, um, franchising is, is learning what's been done before. Um, you know, it is, uh, in, in certain industry categories, it's newer. Um, franchising is a newer growth model versus others like food, food service has been around in franchising forever. Um, and so people wanna understand like how it's being done so that they can transfer best practices over into their business to really better execute the business model. Speaker 1 00:04:23 Is there an example that you can give to our audience without kind of, you know, uh, releasing private information, information privileged or confidential information on how the data really will help a franchise or potentially a franchisee? Speaker 2 00:04:41 Yeah, sure. So we've got some testimonials on our website, so I'll, I'll speak to those. Um, you know, if a franchisor is trying to improve, they see that maybe their franchisees aren't being as successful in the first 18 months of operation. And so they might come to us and say, help us understand how we can better execute our onboarding training to really get high performance out of franchisees in the beginning. Cuz that first, that first stage of, um, entering into franchise system is critical, um, to really learn the business. And, um, and it might not be the most profitable part of your business ownership, right? <laugh>, but it's the most critical to get you on that path to profitability and sustainability. So, um, in that, in that instance, we do best practices to kind of draw out where are the areas that this, that the brand who's asking us, um, can improve on to get more results and to ensure that that training is really instilled into their franchisees. Speaker 1 00:05:53 Interesting, interesting. Um, Speaker 2 00:05:55 But that's just one, one example, Speaker 1 00:05:57 Right? Right. Um, you and I had a conversation or have had conversations over the years, uh, and, and we, we shared one yesterday, uh, just to kind of, you know, get on the same page for this, uh, podcast. And you and I were kind of chuckling about the industry, if we went back 15, 20 years ago or when we first started in the industry, that, and I think you just alluded to this, that the industry is a lot more than just the golden arches McDonald's and the $5 footlong. And of course the $5 footlong didn't exist back then. Uh, subway, the, the industry has emerged way past food service-based businesses. Uh, we were just chatting before we, uh, you know, uh, started this conversation about some of the new things you're seeing in franchising. And it, and it's kind of wild if you really think about it. Do you think that the success of franchising, and let's face it, franchising is a suc, uh, is successful in the sense of helping people, uh, get into business ownership. Uh, it's not for everybody and we'll, we'll talk about that in a little bit, but, um, the data that people are able to, for example, you and I were just chuckling there are pickleball concepts now coming out. Do you think that the data that you've encompassed or the research over the years has helped ideas and concepts like that formulate into a franchising system? Speaker 2 00:07:27 So I think that we're seeing a lot more new brands come to market. So, um, we just released a report of new concepts where we're tracking, we track new concepts that we enter into our database and report on that quarterly. And we just had 118 new franchise brands, of which about 50% 50 had information on financial performance. Interesting. So, um, you know, it, and, and there's across all categories, um, food is still the largest category of, uh, of new brands coming to market, surprisingly enough. Um, but you know what, we all have to eat three times a day, right? So, um, <laugh>, so it makes sense that, um, there are new food, food options and more fusion options. But I think the reason why we're seeing more new brands come to market is because there's a recognition that franchising is a very effective model for helping people to build wealth. Speaker 2 00:08:35 And I say it, it, it enables people to build wealth and to get into business ownership in a way that is de-risk. Now it takes time for a franchise system to be able to offer that value proposition, right? <laugh>, right. It's not like they, but, but, but obviously the brands who are willing to talk about financial performance in a very upfront way, it does allow you to see what's possible without the promise. Um, I, I just met a franchisee the other day who is telling me their story. They have, um, they have I think five different, um, tropical smoothies and they decided to, uh, buy when they were retiring because they didn't have enough retirement funds mm-hmm. <affirmative>. Um, and in the first six months of their starting their first business, um, they thought they were gonna have to live in a trailer because they had spent Wow. Speaker 2 00:09:38 All of their money. And they were not, um, seeing the results. But here they are years later with five locations. Um, so it takes a lot of hard work and grit and a lot of times I do kind of talk people out of getting into franchising, um, because I just wanna make sure that they're willing to actually put in the effort. Um, not all business models are right, are owner, owner operator. Um, but, but there's, there's a recognition that this isn't like buying a stock. This is Exactly, you still have, it's still a business. Yeah. Speaker 1 00:10:14 I think there's a mis you're absolutely right. I think there's a misnomer here that when people start, or, or people that haven't really kind of educated them on themselves on what a franchise is, there's a misnomer that they're gonna pay a free and then the franchise war's gonna find them. Clients do all the work for 'em, and they're just gonna sit back and kind of pull their car up to the Brinks truck and put the cash in the trunk and drive away. I think you hit the nail on the head that this is a lot of work. I mean, this isn't, you know, and I'm not gonna say it's, it, it's, it, it's difficult work. You're building a business and anybody who steers you in a direction that this is gonna be easy or can guarantee you something. Uh, I, I've always said run and run fast <laugh>, Speaker 2 00:10:58 Right? But if doing business ownership is the, the benefits that come with a franchise system just outweigh the other alternatives. Um, so we're, we're likely going to be doing a study about, um, Latinos in franchising and, um, the gentleman who's asking us to do this, to really kind of assess the market of how, how, what's the, the involvement of Latinos in franchising. So, you know, there's, there's certain, um, sets of immigrants that really, um, gravitate towards franchising cuz they've seen it's worked with other family members. Um, but he said, you know, his Hispanics, and this is an overgeneralization like to start their own business and then fail, um, versus franchising <laugh>, right? Yeah. So, so the whole purpose is to like be able to show, um, that franchising is a way, uh, that, that there's a way to, to have business ownership and have a better likelihood for success Speaker 1 00:12:00 Now in the franchising industry, I think the, at the recent I f a conference, the annual conference, uh, which had 4,000 attendees, just about 4,000 attendees, and correct me if I'm wrong, just to give our audience a perspective of what we're talking about as an industry over close to 4,000 types of franchises and over 700,000 businesses that operate in the US that are actually franchise businesses franchisees. Is that correct? Am I, did I get that right? Speaker 2 00:12:35 That is correct. Those are, those are round numbers, but those are, um, that's accurate. Speaker 1 00:12:40 So when we take those numbers and kind of shift a little gears right now, what is Frand data seeing as far as the types of people that are getting into franchising? And now I can speak on the consulting side, you know, the, the person that's displaced, the person that's, uh, tired of being in corporate America. Uh, we're, we, we've, we, we've talked about over the last two and a half, three years going on three and a half years now that, uh, I wanna work from home, uh, person, the one that's saying, I'm not going back to the office. So what are we seeing where, where is, where are our franchisees coming from and any idea, you know, is there a kind of a mainstay category that these people are going to? Speaker 2 00:13:25 So we have, um, a database of 500,000, um, locations and we know who their owners are. So I love spending time in this, um, in this database, we call them playbooks, playbooks of franchisees. And I love spending time really reading about who these people are because there's such a broad range. Um, the other day I was looking at a hotel owner, he's part owners of, uh, LA Clippers. Um, so you've got that as one extreme, uh, or the 10 unit Wendy's franchisee whose daughter married, um, you know, the founder of Napster. So, you know, there's that <laugh> and then there are the franchisees where, you know, if I see a franchise system that has a franchisee who is either a former executive with the company or is, uh, just a former franchise executive, I'll call them a franchise insider, um, those to me speak volumes because like these people know a little bit more than everybody else. And if they're investing in this franchise, there's something to be said for that. Um, or contractors, contractors who actually saw the business because they did a buildout for them, right. And then they realized, wow, this is a great thing. Um, or second generation. Speaker 1 00:14:54 Yep. Speaker 2 00:14:54 Franchisees, because they grew up, they might have grown up in their parents' franchise business, they saw what it did for their life and now they're going out and being franchise owners themselves, oftentimes in different businesses and different franchises than what their parents were in sometimes in the same. Um, but they might have different values. You know, dad owned a a a a a restoration business, but I'm, you know, that's not where I wanna Right. Spend my time. So, um, to me those are the most, those are the in very interesting franchisees because they tend to know a little bit more. Yep. Um, so if they're gravitating towards a certain industry, there's a reason to pay attention to that. Um, but you know, there's, so second generation is, um, I think, uh, we're seeing a a lot more now because interesting, franchising had a big growth spurt, um, where they've got baby baby boomers who are starting to sell out. And, um, seeing those, those kids come, come into the, into the space. Speaker 1 00:16:02 You know, it's interesting cuz we talk about legacy, uh, people building a legacy and we talk about the multi-unit, multi-brand, uh, franchisee operator owner, uh, you know, multiple concepts, multiple locations. Uh, I'm seeing a lot of that legacy where they're, as you just said, their children are starting to come into the business, uh, not only being interested in running the existing brands that they have, but expanding, whereas the, the parent, uh, the mother or father that is the corporate, the professional, um, uh, the, you know, who may be a lawyer or a doctor, we're not finding that, uh, trend, that legacy children following in those footsteps. Um, so it's interesting, you know, because when you look at it, there's a shortage of doctors, a shortage of lawyers, and the reason is obviously it's very expensive to go to school now for those, and I'm not saying that you shouldn't, if that's what you wanna do, but you could definitely get into your own business for what it costs you to go to law school and college and kind of build an empire. Speaker 1 00:17:08 So, I mean, that's something to, you know, the think about. And the funny thing is, is that, you know, we grow up as children and we're educated by our parents in school to get an education, to find a job. We're not educated to go out and buy a business or start a business. It's kind of interesting. And I think that's where franchising really kind of lends a helping hand as far as giving people the opportunity at all investment levels, all categories. So it's interesting what you're seeing new concepts, Edith. I know we're, we're, we're, we're getting close to the wire here and, um, new concepts. You and I were talking about this. I mentioned one, we talked about pickleball and, um, there's, there's been a, a, an upshoot of new concepts, uh, franchise sales organizations known as FSOs, uh, franchising companies or helping companies franchise. What are you seeing? I mean, is it's exciting. I mean it's, it's it's really growing, uh, the number of brands that are out there and the different types of concepts. Speaker 2 00:18:07 Yeah. You, you hit the nail on the head. Um, so it's coming from different areas. One area is a, let's say it's a home service franchise company, and they want to be able to, um, meet the needs of homeowners in every area of the home. And so if they find a business that's operating at a high performance, they might buy that business and then start to franchise it. So that's one way where we're seeing new franchises. The other is just following consumer trends. Pickleball is popular writ large. Um, I shooting ranges, we've just started to see an upshot. I've never seen a shooting range franchise period until this year. Something interesting to be said about what's going on with our consumers. Um, but we're also seeing a lot of, uh, preventative care. Yes, I'd say what we used to see as only medical services are now being transferred into franchising. Um, and I mean the number of laser therapy, infusion therapy, um, basically beauty, uh, stem cell, uh, I mean, it just, it's really reaching into areas that predominantly we're, we're, um, covered by medical professionals and they are now today too, but just it, it's been figured out how to bring that into franchising. Speaker 1 00:19:39 Yep. That's interesting. So it, it, it, there's a wide spectrum. Last question for you. You know, some of our listeners are people that are considering, uh, getting into franchising for the first time. We're starting to research. Um, some people like to kind of do their own research, find their own data before they kind of jump in the boat, uh, or reach out to somebody like me or pick up the phone and start talking to a, a brand directly. Um, and that's, and that seems to be the trend. I mean, this whole idea of being people being able to do research before they start those conversations. Um, how does brand data, or how can brand data, uh, maybe pointing somebody to the website, is there information through brand data that will help people get a better understanding of the data, uh, as, as you call it, that context, um, information, uh, you know, to decide if franchising is right for them to help them prepare for those conversations. Speaker 2 00:20:39 So I'd say we're, we're not very well suited for helping prospective franchisees. Meaning, um, there's, there's usually, um, more time and attention. Someone has to be a really serious buyer to say, okay, I wanna spend resources to pay Fran data to help me analyze what's the best direction for me. I usually point, uh, perspective franchisees to folks like you to say, you know, you really need some handholding, um, to discover brands that'll fit the various things that are important to you, whether it's lifestyle or type of business, um, income potential or income replacement. So, um, however, we do credit risk rate every single franchise brand, um, and lenders rely on that, right? So if you're, if you're talking to a franchisor, just make sure, or you can ask them whether they know their fund credit score, because that will impact the credit worthiness of you and your ability to get financing. Um, and so just helpful to, to know that in advance. Um, so that's one way that if they have a, a good credit score, then the cost, your cost to capital will be less as a prospective franchisee. Speaker 1 00:22:04 You know, you bring up an interesting point, uh, digging into the details, asking questions like you said for, you know, funding, credit scores, things like that. Um, is it safe to, to say educating our audience right now, there's a lot of information, I shouldn't say a lot of information, but there's critical information to make a validated decision outside of the f d D, you know, the item seven, the item 19, that the validation really comes from talking to existing franchisees. What was your investment level? You know, where did you fit into the F D D at that time? Where did you fit in or where are you fitting into the item 19? Are those fair questions to be asking? Speaker 2 00:22:48 Yeah. And, and those are questions you must ask. Um, it, depending upon the size of the brand, and even in today's environment, it's really critical to find out what is it really gonna cost you to start up. So you wanna try and get as likelike as possible. So if there's someone who's in a similar market demographic, um, because opening up a location California is just gonna cost you more than opening up in Montana or, you know, so, right. Um, you wanna make sure that, that you really zero, narrow in to what your cost is. Always tell people, don't quit your job until you have secured financing. Yep. And until you have, um, and don't go to training until you've secured financing. Um, so just a couple of little tips and trades here Absolutely. Speaker 1 00:23:42 Here. And don't sign your franchise agreements or pay your franchise fee until you know you've gotten financing Speaker 2 00:23:48 <laugh>. Yes. Make sure you've done all of all of what you need to do. And frankly, um, I'm gonna speak a little bit on behalf of bankers. Um, when they ask you for things, get it to them. Yes. Because, um, a lot of times what I hear is that the process goes very slowly because, um, they're waiting on, on, on franchisees or prospects to get them information. So take the process seriously and um, and really, uh, yes, ask the hard questions. And um, if someone tells you, um, you're asking too many questions, then that's a sign. Speaker 1 00:24:25 Yeah. Yeah. You know, the other thing on the financial side is, is that, um, you know, be transparent about your, your, your history, your financial history, um, the idea that somebody's not gonna find out, um, especially if you're applying for an SBA loan or a term loan, um, you're a little naive to think that that skeleton is not gonna pop out of the closet. Uh, you're better off being transparent and upfront than having a banker or a financial person call you up and say, Hey, by the way, did you know <laugh> Speaker 2 00:25:00 That you've defaulted on another government loan? Right, Speaker 1 00:25:04 Right, right. So, uh, well if this has been great, uh, we've been talking to either Whiteman, who's president of FRAND data, the, uh, franchise business intelligence, uh, organization, uh, a big player in the industry, uh, uh, for information, uh, especially on the franchisor side, uh, and the relationships and what goes on within the industry and always ma looking to make it better, uh, edit any closing, uh, statements? Anything you'd like to address before we, uh, sign off here? Speaker 2 00:25:32 No, um, other than the, if a is gonna be coming out with our economic forecast next week, and it's a positive one. I mean, it is a positive one. So franchising will continue to grow, um, throughout this year. So, um, in spite of interest rates, in spite of inflation supply chain, um, it's still, uh, a growth area for the US economy. So, um, really encouraging news. Speaker 1 00:26:01 That's great. Well, again, this is Scotty, my all things considered franchising. We've been speaking with Edith Weisman, president of Fran Data. Edith, have a great, great time. We hope to get you back in the next six to 12 months. Give us an update on the industry, but thank you again for your time. Speaker 2 00:26:19 Thank you, Scott. Speaker 1 00:26:20 This is Scotty my all Things Considered franchising, powered by Scott, my franchise coach.com. Signing off.

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