How Does a Franchisor Help With Sales? (Feat. Mike Isakson)
Amanda: Alrighty, so good morning, Mike Isakson, on the line today. How are you?
Mike: I’m good. Great to have the opportunity to visit with you guys this morning.
Amanda: Very well. Looking forward to it. Always look forward to talking with you. Just to kind of fill in you and our listeners on where we’ve been so far, so we’re picking up at the point in the process where you’ve signed your franchise agreement, you’ve gone through the launch process or the, you know, ramp up process of some franchises call it, we’ve gone through training and we’re ready to open our doors. And, you know, through the entire process, we interact with a lot of different folks at the franchisor or the home office as I’ll probably switch back and forth in this conversation as through, you know, I meet these folks at Discovery Day, they come in through the training and teach me different things, but that’s really where my ongoing support is going to lie. And we’ve broken down the different departments that I’m going to interact with as a new franchisee. And we’re talking with Mike today, just really break down those eight departments or teams that I’m going to work with and talk more about that. But before we get into each one of those, Mike, you are what I’ll call a legend in the router franchising, at least from my perspective. How long have you been doing this?
Mike: Well, I started actually in franchising with a service master franchise out of high school and college. And so, you know, it’s probably…age myself here, you know, 15 years that I’ve been involved in franchising and certainly through high school and college work for a franchisee, and then 1977, my wife and I actually purchased our service master franchises, and until 1990 operated those franchises and then joined the service manager corporate office. So, franchising is what I have done, and it is a fabulously wonderful tool to create wealth and to create value in the economy today. So it’s a very efficient way, very positive way to help entrepreneurs build and use businesses using the trademark of, in this case, Griswold. And then using the support systems. So it’s been a great, great process to be a part of franchising.
Amanda: Very cool. And you’re pretty involved with other associations kind of in the franchising route as well, right? With the IFA and some others.
Mike: Right, right, I have been fortunate to be involved in the international franchise association. And that’s an association of about 1,600 franchise companies across the United States and across the world. And we get together regularly and talk about franchising, how we can do it better, how we can serve our franchisees more effectively. I was past chair, and also served on our educational foundation, also served another corporate board that are in franchising. So I have a chance to see franchises and then also I’m a franchisee. Currently, I own 23 Merry Maids franchises. So I am a franchisee, and I pay royalties and make use of the support systems that my franchisor provides. So I’ve kind of gone full spectrum, being a franchisee, being part of a franchise organization, and then today as a franchisee, and also serving on corporate boards that are associated with the distribution system that we call franchising.
Amanda: Very cool. I’m looking forward, you know, just that the wealth of knowledge and experience I’m sure that you’re going to be able to share with us today and 50 plus years of franchising. And not just like you said owning your franchise but really having your hands and experience in all different facets of the franchise business model. So looking forward to it. Again, thanks for being here. So we’ll jump into things. So…
Mike: Great, great.
Amanda: …one of the big questions that we get a lot is what’s the difference between a franchise and a corporate? So whether that’s, you know, an entirely company-owned brand versus a franchise. What is the differences look like in that and help educate our audience a little bit on the difference?
Mike: Well, you know, for example, Starbucks is an example of a distribution model, and they’re all over the country, but they are totally owned by the Starbucks Corporation, by the shareholders of Starbucks. And so the equity that’s built in that Starbucks organization is totally the shareholders of Starbucks. As opposed to the franchise organization, the franchisee owns and build the equity in that business. Now, when the franchisee takes on the capital requirements to buy a Griswold franchise, in this case, but they also take on the risk. They provide the capital they provide the risk. The franchisor provide the intellectual product, a process, the brand. And we’re going to be talking about how a franchisor supports the franchisee. Where in a company-owned operation, then all of the risk is taken on by the corporation. Likewise, the opportunity to grow and expand a business in a corporate-owned situation, you don’t have ownership. Where in a franchise, you own those customers. You’re using the trademark and the intellectual property of the franchisor but you’re building as a franchisee, you’re building the equity in your business. And so because you’re taking risk, because you’re putting capital into the business, you get a better return, you’re more profitable and you have an opportunity to earn more money. And then secondly, you build equity in those businesses, and you build equity in franchising first by serving customers and building a customer base, building reputation. And secondly, by having great caregivers, great employees that are serving your customers.
And someday, all of us will end up selling our franchises. We either pass them to our children or we sell them and that’s when the big different shows because the equity is built. When you’re a franchisee we get to enjoy the equity that we build as opposed to if you’re working in Starbucks as a manager or a regional manager, when you leave, you have no equity. So that’s the principal difference.
Amanda: Make sense. So it’s essentially, you know, when you see that independently-owned and operated phrase on things, and that kind of is that indicator could be potentially the indicator of that franchise. But you’re absolutely right. I think that was a really good job of explaining the difference between the two because there is some confusion, right? I may drive by the same Starbucks every day and see a line out the door and think, “Oh, I want to own a Starbucks because it’s busy. It looks like there’s a lot of money to be made.” But that’s, you know, they’re not all companies are franchise companies. And I think a lot of times we see brands all over the country and think, “Oh, that’s a franchise,” but not always the case. There’s a lot of different models and different options for businesses. So thanks for sharing that.
Mike: Right. And companies will make a decision to say, “Hey, we want to do a company-owned brand operation,” and some companies will say, “We want to go a franchise model.” Now in in our Griswold business, we have both company-owned operations and we have franchise operations. So we have both. And many franchise companies do that. They have a combination of both, which gives the franchisor the opportunity to actually run and operate a business and take on all of the roles. And then, in our case, our largest part of the business, of course, is our franchise business.
Amanda: And, Mike, that brings up a good point, because you’re right, there are a lot of franchise companies that do have a mix of things, right? There’s the franchise own side of the business, and then the company own side. What’s the benefit? If I’m looking for a franchise, is there really any benefit to me or is that something that I should be aware of, to say, “Hey, there’s, you know, this particular brand has some company-owned locations?” Does that benefit me as a franchise? You know, talk to me a little bit about things that I might want to tune into with that if I’m looking at a branch that has both.
Mike: Well, I think, one, the franchisor then has to operate to the employment take on the risk to run those businesses. You know, if you will, the franchisor is eating its own cooking, like so having an opportunity to do that. So if I was working at an organization with company-owned stores, I would want to say, “Tell me about that store or that location. Let me look at it. Let me see how it operates. Let me see the people that are included in that.” If an organization does not have franchise or a company-owned stores, one of the things you’d want to ask is, “How do you innovate them? Where do you get the true customer service?” And there are many, many, many successful franchise organizations today that have no company-owned operations and they listen very, very carefully to the franchisees and they’re learning from the franchisees. But that speaks to the character of the franchisor. Are they listening to the franchisees that are closest to the customer? And that’s the key part and closest to the caregivers. Because there’s two sides of this equation, one, the caregivers and also the customers are in serving those folks. And so, you know, it really doesn’t concern me if you do or don’t have company-owned operations. If you do that, fine. Make sure there’s a focus on success in the company operation and also focus on the franchise operation side. But I think it goes more to the character of the franchisor wanting to listen and innovate, whether it’s from a franchise side or company-owned. But to listen to our customers, their needs, and then listen to our employees, in our case, our caregivers, and understanding what we need to do to meet the needs of both of those individuals or those groups.
Amanda: Yeah, that’s a great answer. And I really just want to underscore the last point that you made and really the theme of that whole answer was how closely is the franchisor in tune and in listening to what’s going on the front lines, the boots on the ground, regardless of the industry, and ours it happens to be the clients and the caregivers because those are the folks that are in the home delivering our services. But what does that look like and how much of a connection is there between the two? So I think that’s, again, whether it’s franchisees or company-owned locations, it’s really about that, you know, because it’s easy to get removed from the process and do things in a vacuum and you want to make sure that your franchisor really is in tune with the day-to-day, what’s going on at the different locations and ultimately where the services being provided whether that’s in the home or in a location or whatever that particular industry dictates.
Mike: And I think as we go forward, Amanda, the key thing is what we’re going to be talking about is the different groups of support that are in place for a franchise organization. And all of those groups should be listening and saying, “Okay, as a franchisee, what are you feeling? What are you experiencing? What are the challenges? What are the successes you’re having?” But then asking, what are your teammates or the caregivers? What are your managers? What are your sales people saying? And the franchisor needs to say, what’s the customer feeling in the franchise or has measurement tools to determine customer satisfaction? So that’s one thing is each department they’ve got to always focus. You know, and one of the things is are we focusing on the customer in the caregiver, in the client and the caregiver? And in the support group you hear the focus on those two groups, that’s how you succeed and supporting franchisees.
Amanda: Absolutely, I could not agree more. You know, we say a lot that. I’m in a franchisor, we’re not here without our franchisees and our sole purpose is to support them. So you’ve got to listen to the people that you’re supporting and know what’s going on in their world so you can actually be helpful and be supportive to them. So speaking of…
Mike: Right. But I think is also supporting the franchisee, but good support groups are going to say, “Okay, what are the successes and the issues that you may have but how does it affect the caregivers and how does that affect creating and keeping customers?
Amanda: Right. Absolutely. Yep, going all the way down to the front lines and not stopping us today with the franchisee by where those goods or services are being delivered.
Amanda: Awesome. So speaking of support, that takes us into our first group here, which we have is sales. So all the franchisor will have a sales department, a sales team. And when I say sales, you know, a lot of people are talking about…there’s a lot of confusion, there’s a lot of different ways that sales could go whether that’s, you know, franchise development, I know sometimes we talk about sales of the franchise itself. But when we’re talking about sales, in this case, it really is how are you franchisor going to help me sell my business, get out into the community? What kind of, you know, national contracts are being made that are going to help me in my local marketplace to really grow my business? So how does a franchisor or sales department operate typically?
Mike: Well, there’s a couple. You know, there’s a strong linkage as we all know between the marketing side of the business and sales. They go hand in hand. You know, certainly in most franchise organizations, the growth of the business comes because the franchisee is actively engaged in making customer contact, in doing intakes and serving the customer. And in most cases, the franchisor is not actively involved in actually doing the sales. That’s the franchisee or the franchisees organization. And a couple things in the sales side that I would just make sure that as you think about a franchise that you don’t believe that the franchisor is going to provide all of your revenue. In most cases, it is a small percentage of the total revenues come out of the franchisor’s national sales programs. So when you think about sales, I would encourage everyone to look and say, “How big is the national sales organization does want to exist? And what are the costs for a national sales organization?” I think the in most organizations, the sales department helps train franchisees and their staff how to sell effectively, how to use the telephone effectively. Are their checklist, are their sales programs, are there tools on the franchisees learning systems that address how do you sell to clients and overcome objections? And then very, very closely in the sales department is how do you price? How do you put together a competitive bid that will cause a customer to say, “I see the value and I see the price.” So in my mind, I would encourage folks that are thinking about buying a franchise, if you go in thinking that the franchisor is going to provide all of your revenue or part of your revenue, the growth and the sales is dependent upon you driving that sales organization. That’s like any other organization. The consistent follow up of prospective clients, effective referral organizations, and the discipline to stay involved in that process. Now, a good sales organization with a franchise should be looking at closely working with the marketing department within that franchisor. And quite frankly, the marketing department in the good franchise organizations in my opinion is actually more important than the sales department because the marketing group is going to be putting together the strategies of how do you differentiate yourself. And then also in this marketplace today, the use of social media, the whole process of connecting with clients through the internet and social media are so critically important. So that’s a place and I’m kind of jumping a little bit ahead. But the integration of that marketing program is very important that the franchisee understands how will a social media or internet lead, if you will, how does it come in? How is it dispersed to the franchisee and how do we respond effectively to those leads?
Amanda: So, Mike, would you say that it’s accurate to say and just to kind of sum up everything because it was a great answer and I think there is…you’re absolutely right, there is a lot of overlap between sales and marketing but they’re definitely not the same thing? But, you know, if you’re buying a franchise and thinking that the corporate office or the franchisor is going to provide you all the leads that you’re going to need. And I can sit in my office and just feel those phone calls and do what I’m going to do. That’s not what I should expect from a sales department. What I should expect is the training and the educational support to know how to get out in the field and build relationships and generate those referrals or those leads through, you know, my interactions. And we’ll talk more about kind of the internet side when we get into marketing because there’s a difference there, right? But that community aspect, right, when you’re buying your franchise, you are the face of your business and you are in those early stages, especially the boots on the ground, and you need to go out and make these connections, so it’s important that the franchisor provide you with the training and the education and the accountability, I think that you need to do that but not to expect that they’re going to do it for you.
Mike: That’s very, very well said. And now there are some franchise organizations that have very large national sales programs but those come with a cost, those come with, you know, the need to support the national sales program. But in most franchises that I’ve been involved with the franchisee or the franchisees, organization is responsible for that selling process. So, one of the things I asked is, “Show me how will you train me to become and overcome objectives? How will you train me how to relate to the individuals that are going to be making the purchase decision in a care situation and in our Griswold situation? And then also just as important as my business grows, how will you help me train my sales people that may join my organization as I grow?” So that’s an important part. Now, franchise development, selling franchises is an important part of a sales department because they are growing the footprint. And the more franchisees that are in the marketplace and across regions and parts of the country, the greater the opportunity for consumer awareness. So that’s an important part of the process as well.
Amanda: Right. Absolutely. So what if sales department help me in the field? So we talked about the education and the training and the accountability that a sales department would provide to me, is that something I can expect kind of hands-on with me side by side, iss that something that’s more virtual? Typically, what do you see? And I’ll break it down because I’m sure it’s different in that kind of early ramp up phases versus the ongoing training. So initially, what’s typical of sales departments support.
Mike: Well, typically I see the sales activity is very integrated with the operations group. And the operations group is startup programs you oftentimes see where operations managers and support people actually go into the field and go through and help that franchisee learn face to face. And then of course, in the training program as you come most franchisors have a week or two-week training program where you actually come to the home office and go through an intensive training program, and a big part of that is selling. Role playing, many franchisors will videotape and critique sales activity and give you that string. And I think also in the sale side, a franchisee needs to make a decision to say, “Am I mainly a sales type person?” If I am, that’s great. If I’m not, then that franchisee needs to manage around that weakness and either work hard develop those skill sets using sales department, the tools that are available or begin to look very aggressively at adding those kinds of positions. But sales activity is critically important. And the sales department tied closely to operations and marketing are the lifeline of building a great franchise.
Amanda: That was very well said, Mike. And there’s something that I want to kind of expand on in the last part of your answer, which was, you know, knowing innately in yourself what are your strengths? What do you enjoy doing? And how does that play into being a franchisee and purchasing a franchise? Because we talked early, early on in “Franchising with Purpose” about really taking a good look in the mirror and saying, “Is this something that I want to do?” But along with those is, “What skills do I have? What am I naturally good at? What do I want to grow in and willing to put the effort into?” Versus where, you know, we all have our strengths in life and is there a piece that I need to really be aware of when I hire somebody or bring them into my business to balance out? I always hear your hire to your weaknesses. So that’s a really good point. I just kind of want to underscore the importance of being really honest with yourself about…especially when it comes to sales. That is the single most important in my opinion, single most important thing that you’re going to do to get your business off the ground is getting out there and building those relationships with folks in the community. And if that’s not something that you enjoy doing or that you’re good at or that you’re…not that you’re going to be good at everything initially. Some people are more naturally gifted in that than others. But is it something that you’re willing to work through and dedicate the effort to? Or is this saying, you know, “This just isn’t for me. And as I grow my team and grow my business, that’s something that I really need to focus on hiring to those skills and things that I need?” So just, again, wanted to underscore that point.
Mike: And I think a big part of that is the level of motivation that an individual has. A lot of us can overcome many, many things based on the motivation that we have. I’ve seen franchisees that have very low sales skills but are so motivated, are so committed to growing the business because they believe in the business, their health is in business. And as a result, they grow those sales skills or, as you just said, Amanda, very quickly, start to build an organization that compensates for that. I think another piece is the franchisees have to just understand that you’re going to have rejection, you’re going to have folks that will say, “Thank you very much but not interested in the service.” And you are going to just have to say, “Hey, I got to talk to 10 people to get three bids or three opportunities.” And especially in a referral business, oftentimes, the business is not, you know, it’s referral. And the referral has to have the need. Sometimes it’s there and sometimes it isn’t. So it’s just the discipline to keep at it day after day after day and build that business because customers typically do not walk in the door. You have to find them and serve them as you go forward.
Amanda: Absolutely, and build those relationships. And I think it’s important that a franchisor provides you that. You talked about, “Well, if I would need to build three relationships and knowing that I’ve got to talk to 10 or 15 or 20 people to get those three.” That’s a really good…again, we talked a lot about education, but that’s something that I think is fair to expect to say, “Hey, you know, we’ve been through this, that’s why we buy a franchise because those tools are tested and true and we know what to expect.” So that’s definitely, I think, a really good point. So anything else, anything that we didn’t ask about sales that you, you know, think is important to mention and for our listeners?
Mike: Well, I think, again, as I said before, there’s a high level of integration between the sales department, the marketing department. And in the operations group. And in the operations area, a franchisee needs to be asked the question, “How many contacts did you do? How many referral sources did you get?” Exactly what you talked about, Amanda. Because you gotta fill that pipeline at the top. Gotta say, “Hey, I’m averaging three or four or five.” And a good franchisor will have that data to say, “This is what you need to do in terms of contacts to then do the numbers. And I talked to 100 people and this is going to happen. I talked to 50 people and that’s going to happen,” etc., etc. So, the franchisor needs to have an operations department that is focused on, if you will, supporting and holding the franchisee accountable to say…a cadence of accountability to say, “Where are you out on this?” And making sure that there is that contact.