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Real Talk With Dan Martin: Empathy, Expectations, Systems, and Software
11 Plays1 month ago
What do franchisees really need? Dan Martin, CFE, has been answering that question for decades — not just with tools, but with empathy. In this episode, Curtis chats with Dan about his journey from fast-typing admin to tech entrepreneur, the “gravity-free” thinking that shaped his innovations, and the people-first mindset that powers business success in franchising and beyond. Come for the war stories, stay for the mirror speeches.
About Dan:
Dan Martin stumbled into franchising after college. He’s a pro now, but then, he knew nothing. After learning from the best, he started his own franchise management firm in 1985 to assist startup franchisors, and he became a multi-unit owner, purchasing a large territory franchise and running 18 franchises. Later, he would go on to launch the tech company version of his franchise management firm, IFX, with 10 impressive SaaS modules designed to help franchise organizations grow (and make it so they're yelled at less by their franchisees). These SaaS applications and the Mentoring Strategies bring everything together for both startup and established franchise brands.
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Transcript
Introduction and Purpose
00:00:07
Speaker
Hi everyone. Welcome to today's Fireside Chat, Mustard Hub Voices Behind the Build, where we talk with people building, backing, and running better workplaces. I'm your host, Curtis
Dan Martin's Journey into Franchising
00:00:19
Speaker
Forbes. My guest today is Dan Martin, CFE.
00:00:23
Speaker
Dan stumbled into franchising after college. He's a pro now, but but then He knew nothing, and after learning from the best, he started his own franchise management firm in 1985 to assist startup franchisors and became a multi-unit owner.
00:00:42
Speaker
He purchased a large territory franchise and ran 18 franchises.
Tech Innovations in Franchising
00:00:47
Speaker
And later he would go on to launch the tech company version of his franchise management firm with 10 impressive SaaS modules designed to help franchise organizations grow and make it so they're yelled at less by their franchisees.
00:01:04
Speaker
These SaaS applications and the mentoring strategies bring everything together for both startup and established franchise brands.
Light-hearted Conversation and Hobbies
00:01:13
Speaker
Also, Dan is an absolute delight. Welcome to the voices behind the bill, Dan. Hey, Curtis, are you?
00:01:23
Speaker
I'm great. Before we dive in, ah have to know a couple of things. I know you're an avid guitar player, as am I, so I love seeing that in the background. There you But I love knowing that one of your hobbies is motivational speaking in front of the mirror.
00:01:39
Speaker
Please tell me a little bit more about that. I mean, it's amazing how many gigs I have. There's seven mirrors in my house and then there's a different presentation I'll do for motivation at every mirror.
00:01:53
Speaker
i i practice I practice in the mirror and you know I really don't prepare very much. I just know a lot of stories. And depending when people are asking about a particular problem or how to get past a certain hump, um there's there's just something that i I can dig out of looking in the mirror. but Out of curiosity. Yeah.
00:02:14
Speaker
When you're doing it in front of the mirror, how well does the audience receive it? It's just, it's about the same as I get when I do an actual one.
00:02:24
Speaker
Well, it's ah it's always a trip talking to you. So you are one of the experts in franchising.
Understanding Franchising
00:02:32
Speaker
You've basically done it all. So how do you explain what you do to others, especially those in completely different spaces?
00:02:41
Speaker
ah Yeah, you know, we we just help companies grow. And franchising is is a method of distribution to achieve that. So I get calls from people who who probably are are not necessarily suited to be a franchise, but want to grow. and want to They want to grow and they want to streamline operations and scale.
00:03:02
Speaker
So there's but I take kind of think what we learned in franchising, which is a little more restrictive and regulated, but it certainly has the basis of um if a franchisee is successful running a ah business as a business owner, maybe for the first time, there are all sorts of things that that can benefit a startup of a non-franchise type all day long.
00:03:24
Speaker
So we yeah werere but we kind of explained to them we're ah we're mostly involved in the franchising, but we also help businesses with with streamlining processes and motivational processes and HR processes and you know just kind of strategies on how to grow a business that they never they may never have run a business before. And it's something that wouldn't be a franchise, but it but it is something they call us about.
00:03:47
Speaker
Well, you you mentioned that you got started, you stumbled on it, I guess, as you like to say in in college. How did you get started? How did you stumble? I mean, how does one stumble into franchising? Like what attracted you to the space?
00:04:01
Speaker
I stumble into everything.
00:04:06
Speaker
And yeah, but I used to drink a lot. But anyway, um, yeah When I got out of college, I couldn't get a job. It was Reagan, and it was um I was going to school at a place called Santa Barbara, which is two hours north up the coast from L.A., and just beautiful beaches. and I was used to that for four years, which actually says a lot because I actually graduated.
00:04:28
Speaker
and I came back to L.A., and I just couldn't take it. There's too many cars and too many people. I was actually a big fan of the Padres at the time, and I wasn't a Dodger fan, so I kind of took some flack for that. So I ended up moving to San Diego, but I didn't have a job, and I didn't have a place to live, and I didn't know anybody.
00:04:46
Speaker
But there was a show on TV called Simon simon and Simon, which is was about two detective brothers that lived and supposedly in San Diego. thats ah none sky That looks like a cool place to live, and i'd I'd seen parts of San Diego before. So I moved down there and down here. Hello.
00:05:02
Speaker
and um i I just i pulled up to an apartment building, and old man was putting up a sign, vacancy. Later found out he puts up maybe every 10 years on a small little 12-unit bungalow.
00:05:14
Speaker
And I said, I'm looking to rent. He goes, where are you from? my LA? Do you have a job? No, I don't. Do you have any money? About $1,300. Blah, blah. So he trusted me, let me in. Was my friend who was in his 80s for 10 years, even after I moved out and bought my own home.
00:05:30
Speaker
Answered an ad in local paper for an administrative assistant. That was it. No mention of franchising. i I went in to interview with a law firm that specialized in developing franchise companies and turning a company into a franchise company with the legal documentation and the marketing and all that kind of stuff.
00:05:49
Speaker
And the gentleman that owned the company, he said to me, you said, do you know anything about franchising? And I said, i I've had several large orders at McDonald's.
00:06:02
Speaker
I can see you answering that. I did. this I thought you know being being funny in an interview would make me stand out because I had no clue what he was talking to about. And the only advantageage of me no reason I got the but ah gig was because I could type really fast. And back then, computers were brand new. So yeah I got the job. The man, his name is Carl Jeffers. He was very well known in franchising and in the eighty s and 90s, and he was my mentor, and he got me into franchising, and i've everything that I do now, I thank him for that, and I started my own company, complimentary to what the law firm was doing for marketing. i was doing franchise development, and I started my own company a few years after, so that's how i got it, just out of chance. So so digging into your you know career journey a little bit, you took a lot of steps to get where you are
00:06:54
Speaker
now.
Key Career Milestones
00:06:55
Speaker
So um I'd be curious to hear from you, like, what were these, maybe what were the milestones that kind of took you down this path?
00:07:05
Speaker
You know, what, and why did you make the moves that you, that you did? Well, you know, it's funny. um like i would love to write a book about it. You know, I take this interview and drop it into 16 sections or something.
00:07:19
Speaker
And because I get that, I get asked that a lot. And to be honest, if I made a book of it, out of it would be bestseller, but we'd also be out of business.
00:07:28
Speaker
We had, we had no idea. i mean, we were, it was on the forefront of a lot of things. We were developing a technology company that was in the nineties that was using the internet to communicate with franchisees.
00:07:43
Speaker
So we wanted to develop a ah platform that franchisors and franchisees could use to communicate better with each other. And I was a franchisee. So all we did at the time was was faxes and phone calls, but we barely had like AOL.
00:07:58
Speaker
And it was just, if you send them communication about a new safety policy to your franchisees or or new training agenda or new great new deal on a new product, there was no way of getting it to them. So, and confirming it in case they sued for some reason saying they never got it. So,
00:08:13
Speaker
And the story is kind of neat because I i contacted a DOD firm, a Department of Defense firm in San Diego, just out of the blue. And I said, i'm looking at a number of people I know in franchising, blah, blah. And I'm thinking about this software thing that would use the internet where I had 24 baud modem.
00:08:35
Speaker
And enable franchisors and franchisees to communicate better, blah, blah. So we split it. They developed it. um They brought in their management from Arlington, Virginia.
00:08:47
Speaker
And um we took the customization to franchising and we were first to market and we just were on fire. And so the advantage, a long-winded way answering your question,
00:08:58
Speaker
Is that even to this day, i prefer not to get technical. I think of just crazy, outrageous concepts. Yeah. And the coolest thing is that this DOD firm says, all right, we can do that. And no one had ever done it.
00:09:12
Speaker
And now I've got ideas. We call it gravity free thinking, but you get kind of crazy. We've got ideas we're about to deploy in a new system that no one's ever heard of and that I had trouble describing. And then the problem is that conveying it to the employees, especially developers, was just, you've got do it in bits and pieces.
00:09:32
Speaker
So I know what it can do. And the advantage is the people I work with can actually make it happen, make it real. And that's just sweet. yeah I mean, that's it's remarkable. And you know now with
00:09:48
Speaker
Talk to me about the type of companies that work with. How do you help them? What are the problems that you're obsessed with solving for these companies?
Challenges and Solutions in Franchising
00:09:57
Speaker
Yeah, that's a great question. um they A lot of them are small to medium-sized franchise companies that are that are um overwhelmed now that they're supporting franchisees. It was easier when they had 10 company-owned stores and everybody did what they were supposed to, but franchisees are independent contractors.
00:10:17
Speaker
and can kind of do their own thing if they really wanted to and or refuse to do things that you tell them. So we went to, we found that they um they were running into problems covering um questions from franchisees. They didn't know if they should answer a call from franchisee at 10 o'clock on a Sunday night.
00:10:36
Speaker
um They didn't know certain ways of of how to manage franchisees being very different from managing employees. Right. So we'll come in and we'll we'll help them um with technology, which is great. But the they the advantage is that it's not really the technology as much as it is the way that it's applied.
00:10:54
Speaker
So their needs were we're growing. we added 10 new franchises. Now we have to get the moment. ah We have 10 new franchises that are at soft opening that need on-site assistance for for hard opening, for grand opening.
00:11:10
Speaker
Uh, we need a system in place for how to manage, um, the hot summer months versus how to manage the cold months. You know, there's all sorts of stuff that just was like this, just grows. So we're, we're kind of a checklist company. We will take a checklist. We'll develop it. We've got one existing and we'll help a company manage the growth. And, and that's our nation is really just, um, startup and established companies that are looking for guidance relative to how to run a franchise company.
00:11:38
Speaker
And in this case, what what could be conceivably using one of or more of 10 SaaS applications. And then we started getting large clients, Curtis, because we um some clients like Dunkin' Donuts, Yum Brands, which is Dunkin', KFC, and Pizza Hut, they signed us up because they had they grown very, very fast, as you can imagine. And then they had franchisees that were all on different POS systems, and they wanted to aggregate all of their royalty processing in North America.
00:12:10
Speaker
So can we as a company integrate with nine different POS systems here, two accounting systems here, different rates for the central association in Midwest, different rates for the West Coast co-op, and each week um invoice or ACH automatically out of these franchisees accounts, tons and tons of money to go to the franchisor.
00:12:33
Speaker
And it was not only a challenge to to put together, but the word aggregate was was the goal. And that made it everything worthwhile. And then it was also giving franchisees a value at the franchisee level for why would I give you my money early? Why would I give you my money through ACH? Why can't I just continue to write a check?
00:12:54
Speaker
We gave them instant reports. that They could see how they're doing compared to other franchisees. And then second you say, here's how you're doing compared to other franchisees, some which you're doing better than you. Oh my God, where is it? And they we don't mail it. We don't fax it. You have to go on the internet.
People-related Challenges
00:13:08
Speaker
but in your So in in these you know decades of of of guiding you know franchise growth, how often, and this is just kind of pivoting more into sort of people as ah as a byproduct of this work. I mean, how often have you seen people related challenges stall or even like quietly sabotage an otherwise solid strategy?
00:13:34
Speaker
it it's In tech, it's maybe not, you you know more than I do about this, but in technology, it's whacked out. It's it's totally whacked out. i i Our company was first marketing franchises and we had just regular running a business and the usual employee motivation and things like that, HR needs.
00:13:54
Speaker
But in um in technology, a lot of the times the you you don't, as the owner, know the specifics of the code. Right. yeah Yeah. You can say things and they can come back and say, well, Dan, the way the T3 protocol is aligned with the binary indexing of the Oracle database, the backups on the D3 server couldn't run that smoothly. So it would take too long in terms of latency to make that happen realistically.
00:14:19
Speaker
And I have no idea what I just said. I'm actually surprised that you just came up with that. Yeah. And they that's what they talk like. And so I have to break it into elements.
00:14:34
Speaker
Say what I but i do, and this is a secret that I normally would not tell, but I'll tell it here ah because it's such a limited audience, what the heck. I would come up with an idea, which is great.
00:14:47
Speaker
And um I would say, ah normally I'd put on the board and map it out and say, here it is. And everyone everyone in the room who's a developer, all of which worked for us for seven, eight, 10 years, say can't be done can't be done boss i was just that's the attitude and because they and they well how come it can't be done well they can say what i just said and it sounds pretty pretty much like they've thought about it tell them like they know that like they know what they're talking about so they said can't be done so i learned very quickly to do this i've come in and sit them all down the comment from drawing on the whiteboard now this we've kind of seen before we do actually do part of this set on the board
00:15:22
Speaker
And I'm writing another set. And this set here, I've seen one of our clients has this. They showed me this the other day. It's not theirs and not ours, but it's kind of a cool thing. I've never seen before. And our business would be, if we could merge those with our system and add a center component between this and this, i was that would be huge.
00:15:42
Speaker
And they're all in. And they're in because when they see that someone else is dancing, he saw that somewhere. Well, someone else has done this. Oh yeah, they did this. I saw this at the the client's convention. They just did it like this and this and it looked like that and that.
00:15:58
Speaker
And we just merged with our system. Really? Someone's done this. So they start taking the notes. I think they go out and they're all high and positive. And I never saw that thing from anybody. Yeah. I just made it up.
00:16:12
Speaker
Yeah. So once they hear that someone else has done it, they're all gung-ho about doing it. Yeah. um Speaking about franchising specifically, you know, when you see the franchisors, you know, chase fixes in ops or tech or marketing, I'm kind of curious, like,
00:16:32
Speaker
What human dynamic do do will or you know will they most often sort of misdiagnose or ignore? Do you find like a consistent blind spot that you've seen across across brands?
00:16:44
Speaker
That for franchise companies that they ignore? Yeah, with franchisors, you know, oftentimes I think that we see issues in in their tech or their marketing, right, operations that are actually really people-related issues more so than that other thing.
00:17:02
Speaker
And I'm kind of curious, right, Do you see some consistent blind spots across brands, you know, that, you know, often sort of misdiagnosed those things?
00:17:13
Speaker
Yep. I see two things all the time. And this works at every level, franchisee, prospective franchisee, franchisee, uh, franchise, employees of franchise, or two things are, um, one is, um, communication.
00:17:28
Speaker
And the other one is expectations. Yeah. And, Well, I tell you, when you have that first meeting with an employee or a franchisee or a franchisee with an employee, ah you know, the sales guy is in there in the middle getting a commission and he, you know, he has to set realistic expectations.
00:17:47
Speaker
employee that works for me or works for any company, you've got to communicate well with them and you've got to make sure that they understand what the expectations are and you've got to kind of spoon feed them. You've talked about incremental training or incremental advisory or incremental tactics that say, this guy's going only understand this much.
00:18:07
Speaker
It's impressive if we tell him more, but let's just focus him on a milestone that he can achieve his first month of employment or his first month as a franchisee. And let's go back and say, let's find out what his expectations are based on the pitch or the ad that he read it or whatever his expectations are and and so define that up front.
00:18:29
Speaker
And then come back. I have to come back and continue reinforce it. i have to I have to say, why are you doing this? What is our goal of this project? Um, what will this do to benefit our clients or in franchising? Um, how do you get a franchise candidate qualified?
Training and Expectation Management
00:18:49
Speaker
What is the profile we're looking for? And do we stick to that? Because if we don't stick to that five years down the road, this franchisee is going to say, well, the reason I didn't make it in this business was because the sales guy told me this and this and this.
00:19:03
Speaker
Yeah. And the the expectation has to be documented and communicated. And, I've always had it where the franchisee comes in and no matter how much you say it's hard work, yeah they they buy a franchise and they go, holy smokes, this is a lot harder work than you They think it's just the the business in a box that they don't have to, you know, it runs itself.
00:19:26
Speaker
So I havent um have program and and the 12-step program, which I won't go into, is um is just a way of saying, Mr. Potential franchise candidate who wants to own a franchise and run it correctly, but doesn't know what they don't know.
00:19:41
Speaker
That's totally cool. That's where that's what I want. They're buying a franchise. They're going to learn a system. the The first thing I need them to do before I give them a big big pitch about disclosure and how much money you can make, I need them to go out and analyze within a 30-mile radius of where they want to be or live every what they think is competitor in the area.
00:20:01
Speaker
Who is it? What is it? How many customers have you can get me copy their menu, that kind of thing. And it's, it's important, but it's also, that's what that's, that's hat. That's going to be what they have to do when they become a franchisee. And if they can't do it, when they're looking to become a franchisee, they're out. Yeah. They come back and do it. I give them a reward. It's it's just increments.
00:20:21
Speaker
If I hit them with 10 things, Oh my God, you know, they they can't see the, they can't see the tunnel, let alone the train inside it. Right, right, right. When you roll out your tools, whether it's this 12 steps or your SaaS tools and your mentoring frameworks, what does i mean what distinguishes the teams that that that that run with your playbook versus those that sort of fumble with the execution?
00:20:52
Speaker
ah That's a great question. um
00:20:56
Speaker
One of the things that happens in fumbling is that the expectations of the company when they were started and and we're we're seeking out, let's say financing or a private equity company um had way different expectations than were we either realistic or then they told the company they were investing in.
00:21:20
Speaker
And there's also a certain amount of ego involved. And you know that sometimes the client wants to do this and it's their way or the highway. But, you know, we we just have clients that they they um they realize it's much more work as a franchisor than they thought.
00:21:40
Speaker
They realize it's much more legal than they thought. it's It's something that is, um for a small company as a franchisor, as a franchisor, your income source is royalties from franchisees.
00:21:53
Speaker
So you sell them a franchise and you've got six months before they open. yeah And the franchisor may never really, but it's kind of easy think, well, they'll be open in couple weeks, right? don't how tough could it be. And it's six months, but then that six months is delayed because the franchisee was kind of wishy-washy about sites they and they get the final say. So if they're not, even with skin in the game, if they're not jumping onto the schedule for timing, for getting this done, we're not going to get them open. We're not going to get our 6%. Now we're down ah year and a half.
00:22:22
Speaker
from what we expected to get in terms of cash flow. And now we're in a hole. So it's one one of the reasons why businesses, no matter what I say, don't make it is, is that that they don't have the, the, um the understanding that this is a a three year turnaround before you as a franchise, or you're going to make any money.
00:22:44
Speaker
Yeah. Because of amortization. You, You work primarily with leadership, right? In some capacity,
Cultural Traits and Mindset
00:22:52
Speaker
right? Leadership ah of these organizations and ah among the most you know resilient or high performing franchise systems that you've encountered or work with specifically, what shared cultural or behavioral traits stand out?
00:23:09
Speaker
Great. um You know we have some great, the but the fastest growing company, fastest growing a sector of franchising, which is, which is, you know, a channel as opposed to an industry. Industry, the the assisted living sector is huge.
00:23:27
Speaker
And the assisted living is very rewarding. for franchisees who are serving a really good, or offering a very good service, then there's a lot of satisfaction from um doing that for them. And that carries through to the franchisor.
00:23:44
Speaker
And the franchisors that are in businesses that help other people in particular, they have regular meetings with the entire company of the franchisor. And franchisees are jumping in as well. And everybody's talking about um how this franchisee in New Orleans or this franchisee in Yonkers had run into a situation where a neighborhood was flooded.
00:24:09
Speaker
ah There's a big fire. And the um the caregivers, were being flown in by the company to not only help the people that were displaced who weren't even customers of the caregiver, but to help the caregivers whose house was burned down.
00:24:27
Speaker
And everybody communicated every week as a, as a community. And everybody had a say, and it was it just was a, it wasn't a top-down do this, do this, because I'm the CEO and I want to be on all the videos and do what I say and blah, blah.
00:24:42
Speaker
It was the people that opened these conferences were a franchisee that no one knew. It was never the one number one that had a story about here's what happened in Yonkers.
00:24:52
Speaker
True story. And everyone in the room was just going, holy smokes, what do we buy into here? I mean, it's it's not it's not like running a hot dog stand.
00:25:03
Speaker
Yeah, that's a that's pretty powerful. um that's ah That's actually, but I didn't know that story. I'd probably like to hear a little bit more of that. on Another time when we connect, you'll have to give me all the details. But I mean, what consistently separates those franchisors who follow through on transformation from those who stall after the kickup kickoff call. I mean, you've you've walked entire organizations through your systems, right? and and And they've been transformative, but I would imagine there's probably some that don't quite end the way that you would have predicted.
00:25:48
Speaker
I'll tell you something that's that's real simple. There's many things, but the one that stands out the most it's is like happens every single time. it goes to the mind of a franchise where every single time is that, um, especially if you're new franchisor is that they follow the plan about, qualifying the franchise candidate and going through the hoops and disclosure and all that kind of stuff.
00:26:08
Speaker
And they follow the plan as far as concentric marketing, where they want to build a brand in a certain region. They let's hold on the Western region, the United States has built one of the Southeastern region and make the brand recognized recognized in the area. Let's get more franchises there.
00:26:21
Speaker
And um when a franchisor awards the franchise, they get a check for 50 or 60 or $75,000. And the attitude of the franchisor is that, mean, needs to be, you need, this is not, you're not gonna make any money off of this. This takes care of training, this takes care legal, this takes care of site selection.
00:26:40
Speaker
It is spent. But their mentality says, I sold five franchises this week. That's five times $75,000. I'm gonna go get a car. I'm gonna go buy a house. i going to buy house And they're not thinking franchising, which is, this is losing. That's a losing proposition, $75,000. That's spent. Half of it could go to, $50,000 of it could go to a broker the brought in the lead.
00:27:04
Speaker
And so I've got to train this guy. I've got to get him set up on the system. I've got to find his site. I've got to get him open. And a month after he opens, he starts paying me 6% of $80,000 a month. And I spent all the money up front.
00:27:19
Speaker
and they have no more resources. Their attitude kind of is i getting a check for 75 grand for a lot of these people who were just a regular yogurt store, two or three unit operator, 75 grand times five is very um alluring. Yeah.
00:27:35
Speaker
So it's a lot of reframing their perception. I think so you now you've built tech that's designed to reduce, you know, operational friction and and franchisee frustration.
Community-building and Engagement
00:27:50
Speaker
Are there any new or or unconventional ways that you've seen companies, not your clients or others, but use software to strengthen the human side of of the business?
00:28:00
Speaker
Yeah, we do. Because, um, Our software, ah we ah we have clients that are franchisors, they pay money, but they only pay money if their franchisees use the software. They really need to use the software to run their business better.
00:28:14
Speaker
What was interesting, that what led them to use the software was the ability to to not be alone, be with other franchise other like-minded franchisees in the same brand and talk to each other and coalesce and compassionate you listening to stories and all that kind of thing.
00:28:33
Speaker
But where we saw this first, which is really, really neat, is um we had just been in business for about a year when 9-11 happened. So we were, this is a way back.
00:28:44
Speaker
And back then we had nine or 10 clients and we have a document feature and we have a pay your royalties feature and we have a chat. And the chat was used a little bit, but this company called Decorating Dang comes in and I went into their to their chats and our CPUs were maxed out.
00:29:02
Speaker
Back then we didn't know what to anticipate. And I'm checking the sites and every site we have, every franchise is logged in saying, are you OK? I understand you're out in Long Island. I understand you're out in um and New Jersey.
00:29:16
Speaker
I understand you are your father was in the building. I mean, there was all these conversations about this you bringing together people to comfort each other and and inform each other in our system.
00:29:28
Speaker
And I would go from client to client to client to client to client. And they were all, um oh, I heard your your family, your elderly parents were in the middle of flying from l a to Nashville.
00:29:39
Speaker
And they got they landed in Fort Worth and their elderly don't know anybody. and Back then it's pay phones, guys. It's not whole lot of cell phone stuff. Right, right. And a franchisee and logs into the chat for another decorating dem franchise. He says, I live there.
00:29:56
Speaker
give me their number or tell me, if tell them to wait by the counter United. i will be there in a half hour, pick them up. They can stay with us for as long as they'd like. Wow. Now this is on our intranet thing, which was relatively new concept in franchising, but it was,
00:30:13
Speaker
Across the board, there was everybody was helping everybody.
Data and Risk Management
00:30:15
Speaker
It was unbelievable. The franchisor just went, I don't believe it. So what happened then is we engage franchisees with business ideas that are best suited to come from another franchisee.
00:30:27
Speaker
Even though with ah the author is the franchisor and they want to get on a video and say, I'm the CEO and this is the system and aren't I great? Follow the system. he's not the tren People don't think he's in the trenches. you know The franchisees say, well, wants a 6%.
00:30:42
Speaker
When they talk to other franchisees, the franchisee says, well, why i tried this and this and this, and I kind of bent the rules here, but I made that work like this. Everyone does it. Everyone does it. Everyone listens. Everyone does it. Another franchisee gets up and hears what I tried. and we're We're used to those chats these days. Go into any chat that you're a member of.
00:31:00
Speaker
but But this one was proprietary recipes, which are all secret behind this chat. Payroll, what do I pay my employees, which is all secret and encrypted and and trackable so that the franchisor could take the issues that were coming up and say, you know, let's address these issues as a company for you guys because you guys are really passionate about this. So franchisees go on to see other franchisees, to see other franchisees' sales versus their sales.
00:31:26
Speaker
What did you do to get to that? they that they um The sense of community that we established from day one, we don't say again, we say it's not the technology, it's the way that it's applied.
00:31:37
Speaker
Franchisees don't know what they don't know. They don't have time to learn W-2 forecast planning for logging into a planetary ah access point for an intranet.
00:31:48
Speaker
They just need to press a button and see other franchisees. And that's the first thing they see. So franchisees helping franchisees. All we had to do to to get this to happen was tell the franchise or suck it up because their ego was all the way to a franchise, 200 franchisees. want to be on a video that says, we've just opened our fifth franchise.
00:32:08
Speaker
We sold 20 franchises in Dubai and I'm in Louisville, Kentucky as a franchisee. I'm going, well, I'm glad to hear you're succeeding in Dubai because I'm sucking wind here in Dubai.
00:32:20
Speaker
you you You mentioned something really interesting about you know tracking ah tracking these things. And with the data systems in place, you ever find that what companies track doesn't always line up with what actually drives performance on the ground?
00:32:36
Speaker
Oh, yeah, sure. Yeah. the way what what we do, we never know. Sometimes the client has multiple databases or they come over from a competitor and I've got all this information, this disparate information. And, um, I'm just a fan of getting everything. i I like, I'll get anything. I'll put it in there and just have it.
00:32:56
Speaker
I have the data. I can do something with it. Um, but I don't need, um what are we trying to accomplish? it I want to know what that data set is. And I want to get as broad ah pictures I can and as often as I can.
00:33:08
Speaker
but um, and They, they, um, they, the, the auditing data was originally designed the tracking and stuff like that was because franchisees is, it's very high litigation in franchising.
00:33:21
Speaker
Franchisees sue for all sorts of reasons. And so I built the system when I was a franchisee. I came up with the idea because we were sending memos to my AT location saying that the ah ah that the convection oven manufacturer said that if you clean the convection oven a certain way, we baked croissants. So if you clean the convection oven a certain way and it's plugged in you'll be electrocuted.
00:33:44
Speaker
And so that comes to me and I've got to get this out to my 18 locations and have some kind of receipt, some kind of reduce my liability here. And we, we don't have anything with facts or FedEx or something.
00:33:58
Speaker
So then it came to what if a master franchise and they have a lot of money, and a lot of clout. What if someone sues for a reason that they, they know isn't real, but they know I didn't document.
00:34:10
Speaker
we're We'll settle for that. we um they'll They'll get me to settle. And that happens a lot. Probably happens 80% of the time. It's not really there, but the franchisee knows that just to get me out of their face, because they probably didn't write it down.
00:34:22
Speaker
Our system writes everything down. It stores everything for the duration of the contract. It gives everything back to client. A document that was deleted in 1974,
00:34:33
Speaker
maybe a little later than that, is still there with who accessed it and when and what version it was and who took it down, who put it up and who accessed it when. so That's smart. Every franchisee that long since been terminated or just left, all their communication is there because franchisees come back five years after the fact and say, oh, by the way, you never gave me this, you never gave me that, send me $5 million. So we built it for that.
00:34:55
Speaker
But that's a tough system but that's a tough angle say, oh, by the way, you need to use internet so so that you, if you think about suing, you can pretty much toss that out the window. We don't want to say that. We just want to say, we want to know, we want to say, we have a report that says you need something and we need to get you this.
00:35:13
Speaker
Did you get it? We know they didn't get, we know that they got it, they didn't open it. So we don't say big brother. We say, we want to help you use our latest a fall marketing program.
00:35:24
Speaker
And we see that you didn't see it yet, but we want to help you. Maybe we can help you um with a one-on-one. And the guys call on the carpet. We're not going to say that. but yeah And then we got a record of it. So it's it's there's three things in franchising and this subject that we're talking about that apply to everything we do, political, practical, and legal.
00:35:43
Speaker
Everything we do, political, does it make franchisees feel like they're special? Yes. Practical, can franchisees who are not computer literate use it? Yes. Legal is attracting absolutely everything in case something comes back and bites us so we have some kind of documentation.
00:35:59
Speaker
And does it pass the mustard test? um No pun intended actually there. but But curiously, I mean, across your career then, one enduring insight you've gained about people, not processes, not platforms, but just raw human behavior in business.
Empathy in Leadership
00:36:21
Speaker
ah one The one that I'm not exhibiting very well today.
00:36:26
Speaker
and Which is Which is listening. ah Well, that's because i'm answered I'm asking all the questions. So I think you're doing pretty good. And who are you?
00:36:39
Speaker
Yes, exactly. um So, all right question. Looking ahead, right? i'm I'm kind of really curious to sort of reflect a little bit. and maybe provoke some some some future future focused thinking. What do tomorrow's franchise leaders, what do they need to understand about people in culture that many of today's leaders just still overlook or at least undervalue?
00:37:06
Speaker
Franchise or leaders, um they they're getting better at empathy.
00:37:15
Speaker
They don't know empathy. That's a huge leadership trait. Because the franchisee is terrified. Yeah. Is a franchisee really an entrepreneur? don't know. They're not inventing a system out thin air. they' mean, I'm not ragging on I'm just saying it's a system to follow for a reason.
00:37:34
Speaker
And system's constantly developing to get better. And it's two or three steps ahead of the franchisees. And, man, for 6%, if I'm making more following your system and I'm paying you 6%, I'm making a ton.
00:37:46
Speaker
And I was thinking about going on my own and I would lose all that. Man, I'll give you 6% to keep this. I mean, i'm I'm on a roll because your point of view is that I'm terrified. I'm probably only going to implement 70% of what you're going to tell me.
00:38:02
Speaker
I'm going to fall asleep in training. I'm think this is a lot harder work than the sales guy kind of represented. And the franchisor, they have an agreement that says, well, you need to open now.
00:38:13
Speaker
And you can't do this. You can't sell the products. You've got to do this. And the real world is, man, I forgot it all. I was nervous. You know, it so we took all our four one k It's my first location. I've never been in retail before.
00:38:27
Speaker
We need to understand that. as the french If the franchisor doesn't have that, there's no point. No matter what it is. Senior care doesn't matter. As these systems, as these franchise systems, right as a franchisor, as they evolve and get more deliberate about supporting you know their people or the franchisees, how does that change the way you shape your own work and tools?
Training Strategies for Franchisors
00:38:51
Speaker
Yeah. we We actually have ah course for courses for the franchisor before we let them loose on our system. Really?
00:39:02
Speaker
And what happened in the early days, what happened was people come to San Diego for training. We do hands on training long before there was a whole lot of zoom stuff. And this is in the and early two thousands.
00:39:13
Speaker
And what would happen was we explain a feature of this software and then they would say, well, how was that used in franchising? And I will, if you're franchise, you have this, this, and this ad fund, the tech fee, the royalty and the, um, whatever.
00:39:29
Speaker
Oh yeah. Can you have a real thing like that? Can you have a graduated real thing? So we started talking about the technology does this worldly thing. And then they'd be, now they're given a, an open opening for a, well, do people ever raise that fee? So it's half with strategies and half was the software.
00:39:46
Speaker
So then it took, started taking up of two day training, started strategies, started taking up a day of it. So we produced a CD series that the client had to watch before coming to San Diego.
00:39:59
Speaker
So how often did they actually follow through and watch that before they showed up? You know, they, they had to watch it because I would grill the hell out of them. Okay. Okay. Because but quite honest with you, I'm sitting there doing training, our people doing training and we're peeing ourselves.
00:40:14
Speaker
Yeah. It's not productive. yeah It's, it's training, but it's advanced training on their sites, but it is. But the advantage was is that we trained the franchisor first on how to you' not recognize the email often comes off in an unintended manner.
00:40:33
Speaker
yeah We all know that. Chats. A chat goes on and some franchisees are going to I know we're talking about productive products and margins, but this franchise sucks. And I'll tell why it sucks because the logo is red, I know, but it's not the right red.
00:40:48
Speaker
And I know it's a chain that's been here 20 years, but the reason my sales suck is because the Danton logo is not the right red. And every franchisee in the chat is going, get rid of this guy. It's just a pain.
00:41:01
Speaker
So we teach franchisors how to deal with this guy. We have a delete button. We have a oust button. and We have electrocuted mouse button and all this kind of stuff. And he can't come in anymore. And to be honest with you, you can hear a silent applause from every other franchisee saying, you know,
00:41:17
Speaker
Get rid of this guy. He's bringing us down. ah we teach So that's before we released the franchisees. And then within the franchise, there was as an understanding of what, oh, can we show them everything IFX did? you always Let's show them all the modules. that I'm saying, no, you you go like this.
00:41:33
Speaker
It won't work. So then we talked that we teach the franchisee as well, what are their expectations? I don't want them playing games in the system. and Get in, get the information, get their royalty report, get out, go meet people, run the business.
00:41:47
Speaker
So there's that, that, that probably became the biggest asset we offer compared to our competitor. Who's out of overseas. It doesn't focus on franchise humanness.
00:41:58
Speaker
Uh, they just say, read the manual. Yeah. And then I would say, if a person calls up and says, well, i want to do this. i know i hadn't been I know I've been told I do it before and I was going to do it like this. i was looking to drag and drop it and I wasn't sure exactly.
00:42:12
Speaker
And the franchise tech guy at the at the competitor says, quite honestly, well, I'm sorry, ma'am, but you're not technical enough to call technical support. yeah That's a not sure how I would have reacted.
00:42:29
Speaker
to So what I have one
Advice for Leaders
00:42:33
Speaker
more question. um I love this ah ah this scenario. So you're youre on a plane.
00:42:41
Speaker
You just landed. You're sitting next to founder, maybe a CEO of a large you know organization. and um you know he asks you,
00:42:53
Speaker
how to get the people and the culture right from day one. You guys are exiting the plane. He grabs his bags and you have an opportunity.
00:43:05
Speaker
What's the single piece of advice you wouldn't you know let him leave without? And he's about to walk down the jetway. So what do you leave him with? and Lead by example.
00:43:17
Speaker
I love that. I think those are those are good, powerful words. and to but It means a lot. Oh, but that's demeaning. No, man, if you're emptying the trash with a franchisee that's in training emptying trash, you can walk the walk and you can talk the talk. and The issue is I'm going to make these residuals based on the franchise. The franchisee is sitting in front of me. Each one I had is a residual.
00:43:40
Speaker
but they're real people. And, uh, if they don't see the CEO or the CFO or the COO at the level that they can understand, not only helping them, but the franchisee, but really painting a picture of Holy smokes.
00:43:56
Speaker
Yeah. This guy's, he's walking the walk that I buy into that. I don't buy into people that PC or VC companies or PE companies that think, well, you know, we've,
00:44:08
Speaker
hope they work hope they work out. yeah this is a it's a very Because of the empathy, I just think it's important to take a a couple that's never been in business, giving all their life savings to be a franchisee in whatever business, and the franchise CEO, franchisor CEO says, I want to just call you and talk to you about how you're doing what I can do. and Would you mind if I came by your store and helped you just ah talk about where we're going and I can help you sweep the floor?
00:44:38
Speaker
Love that, love that. Well, thank you so much, Dan.
Conclusion and Resources
00:44:42
Speaker
I feel like every time I get to chat with you is ah is my favorite time, is my next favorite conversation. um And thank you all for tuning in to Mustard Hub Voices Behind the Build. If you got something out of this conversation,
00:44:57
Speaker
Share it with a friend or teammate. Check out mustardhub.com to see how we help companies become destinations for workplace happiness and turn culture into a competitive edge.
00:45:08
Speaker
Until next time, thank you.