Why Some Franchise Owners Are Wealthy and Others Are Not

Transcription:

Leslie Kuban:
Scott, it’s great to have you. Welcome to the show today.

Scott Greenberg:
I’m so glad to be here. Thanks.

Leslie Kuban:
I’m so glad you’re here. I just finished reading your book. This is a newer book, and I’m so excited that we’re going to be talking about it today.

Scott Greenberg:
Me as well.

Leslie Kuban:
So tell us a little bit, just a little bit more about your story, your background in franchising and then how did that lead you to write The Wealthy Franchisee, what we’re going to talk about today.

Scott Greenberg:
Sure. Well, as you know, Leslie, no one sets out to get into franchising. They kind of back into it from something else. And so for me, I’d actually been working as a motivational speaker for a number of years, traveling around and talking to people about leadership, but it always concerned me that I was maybe echoing some of the clichés that other speakers were hawking, and I wanted some more real world experience. So I didn’t want to get away from speaking, but I wanted a place where I actually could try out these concepts to see what works and what’s ridiculous.

Scott Greenberg:
And when I had that thought, I saw an airline magazine ad for Edible Arrangements, and I thought, “That’s interesting. We have nothing like that in LA.” And before I knew it, I was putting my signature on all kinds of different documents, and we were up and running and sure enough, some of what I talked about on stage actually worked and a lot of it was totally theoretical and off base.

Scott Greenberg:
So I used the business to help my presentations, but also as a way to make money. So I was there to earn, but I was also there to learn, and that then changed my speaking to focus on giving presentations for the franchise industry and ultimately, writing The Wealthy Franchisee.

Leslie Kuban:
There’s nothing like the OTJ, on-the-job training with that, is there?

Scott Greenberg:
There’s nothing like it.

Leslie Kuban:
So tell us about The Wealthy Franchisee. What is a wealthy franchisee?

Scott Greenberg:
Sure, so when I started getting invitations to speak at franchise events, I always tried to interview as many of the brands’ franchisees as possible, so I could make sure that my message is relevant. And in talking to all these franchisees, especially their top franchisees, I saw what they all have in common and that’s what the book is about.

Scott Greenberg:
And so the idea is we want to be like the top franchisees, what do I call wealthy franchisees, and there’s three criteria. The obvious one is that they’re making good money relative to the investment that they’ve made. But there could be two franchisees, both who are making, let’s say, a quarter million dollars a year, but if one is working 80 hours a week and the other is working 20 hours a week, they’re not quite the same thing.

Scott Greenberg:
So the second criteria of being a wealthy franchisee is that you’re in control of your time, that the business works for you and not the other way around. You do not have to be a slave to the business.

Scott Greenberg:
And the third characteristic of the wealthy franchisee is that they have high quality of life. So the people I write about, the people I help others become more like are the ones who are making good money, who are in control of their time, and who have high quality of life.

Leslie Kuban:
And what’s the difference? As we talked about in the introduction here, that some people achieve that and others do not, and that’s really the main point of your book and would love to have you expand on why some franchisees reach those pillars of wealth and others don’t. What did you find in your research?

Scott Greenberg:
We tend to succeed where we invest the most time, and there are a lot of franchisees. They really focus on marketing. And so they get pretty good at marketing. Some like to focus on customer service. Some love to focus on their problems or on blaming the franchisor, and that’s where we tend to have the most reality.

Scott Greenberg:
What I noticed about all these top franchisees is yes, they market, yes, they have solid operations, but they all have a very obvious mindset about them that separates them from everyone else: their ability to keep a clear head, their ability to not just hire people, but really engage their employees, directing not just the work, but helping their employees advance. And they understand that customer experience can’t just be about facilitating transactions, that it is about elevating their emotions.

Scott Greenberg:
And so what all these things have in common is they’re all based in humanity itself. So they really understand their own mindset, how they think. They’re good at the way they lead, and they’re good at the way they serve. So in addition to operations, they’re masters of these human elements, and that’s what gives them their edge. So all these wealthy franchisees, they’re all different in a variety of ways, but the common denominator is their mastery of these human elements.

Leslie Kuban:
And I loved how you talked about… I think what people are looking for is that magic bullet in marketing or some operations trick, but it really isn’t that. It’s in here that separates the high performers from those who wish they were the high performers. Is that the message?

Scott Greenberg:
Yeah, absolutely. For example, when we won a few awards related to my team. So we won Best Customer Service, which is out of 1,000 franchisees. That’s because my team was providing that service and then they introduced a new award: Manager of the Year. They could have picked any manager of the entire system, and they awarded it to mine. Very, very proud of my team for this.

Scott Greenberg:
And so one question I used to get from other franchisees and eventually, Edible Arrangements asked me to go on the main stage at one of our conventions and talk about how to build an all-star team. And the question I used to get a lot is, “Hey, where do you find such great people?” And the question itself was flawed because the premise is that good people are found. So they wanted to know my fishing spot, where I was finding good people, and so what I explained to them, what I write about in the book is it’s not about finding great people. It’s about finding people who are a match culturally, who have the right mindset, but then investing the time to elevate them, really understanding what it takes to coach people and how to train them and how to build a culture, and that’s what makes a difference. And so these great franchisees, they’re just masters at doing this.

Leslie Kuban:
And many of our viewers are aspiring entrepreneurs. They’re looking at franchising as their pathway into business ownership, often for this time, and what you just said is a huge takeaway from your book, kind of as people are thinking about entrepreneurship, thinking about franchising, getting themselves in the right mindset, but what do you want people to take away from reading your book, Scott?

Scott Greenberg:
Certainly, anybody who reads the book, I want them to leave feeling inspired, to feel empowered and understand how nothing impacts their business more than themselves, particularly their mindset. I want everyone to be an asset to their own business and not a liability, whether their business is an individual franchise or a franchise system.

Scott Greenberg:
For the individual franchisee, I want them to understand that it’s mostly in their hands, that yes, marketing is important, sticking to the system is important and hopefully, they’re investing in a proven system, and I know that you help people do that, Leslie. But even with the right tool, it’s only good if you’re using the tool properly, and that means you bringing the right mindset. So I want franchisees to take more responsibility for themselves internally so they can have better external impact on their business.

Scott Greenberg:
For people who are thinking about taking a business they’ve created and franchising it out, I wish them well, but I think to really be successful at every level, it’s about providing value out to the world. It’s not thinking about, “Hey, how can I scale this, so I can maximize my own revenue,” but, “how can I make as much impact as possible? How can I help other people build wealth, achieve their dreams, to really get their minds off themselves and focus on the service of others?” When you think that way, you’re putting a lot more value out in the world and that’s what’s going to come back to you and really help you go the distance with the franchise system.

Scott Greenberg:
So I work with a lot of franchise systems of all sizes. Those who are just out there killing it and making a lot of money as a franchise system themselves are the ones who are really putting great value for franchisees, as well as the end user customer.

Leslie Kuban:
So they’re attracting more franchisees from that pay it service or pay it forward type of mindset, it sounds like.

Scott Greenberg:
Yeah, whereas some brands are constantly having to market and find ways to attract new franchisees, these great brands are having to turn people away. They get to be selective. They won’t just sell to anyone because it’s been proven that they’re really creating cultures, not just companies, and they’re really out there trying to help their people and not just see how much money they can make. In the process, they’re the ones who are making the most money as franchisors.

Leslie Kuban:
Another topic… let’s switch gears for a second. Something that you talked about throughout the book, this can kind of not rub people the wrong way, but be a little counterintuitive is this topic of passion. You talked about what passion is, what it’s not, or what it does or doesn’t have to be. So what do you say to that person who says, “I can only be successful, I can only choose a franchise if I’m really passionate about the product or service.” You seem to have a bit of a different outlook and experience on that. Would you explain that for us?

Scott Greenberg:
Yeah. My attitude about passion is, “eh.” Look, I make a living as a writer and particularly, as a speaker, okay? I really enjoy giving presentations. Am I passionate about it? I wouldn’t say so. I’m passionate about being with my family. I’m passionate about travel. I mean, these things really get me excited. The speaking, I like a lot, but there are things about it that I really. I really do want to help the audience. Creatively, I really enjoy it.

Scott Greenberg:
And what I notice about these great franchisees, it’s not that they love frozen yogurt or killing mosquitoes or taking care of kids or corn dogs. They don’t necessarily love that, but they do love or have a passion something about the business. I actually really, really enjoyed figuring out how to elevate my team. I wanted to build awesome teams in a great culture. That got me excited, but fruit baskets, I could take or leave it. I never was an expert on the fruit. I left that to other people.

Scott Greenberg:
So I think that these people need to be passionate about something about the business, but it doesn’t necessarily have to be just about the operation, certainly not about the product or service that they sell.

Leslie Kuban:
And you’re hitting on something that I find myself talking about all the time, which is you’ve got to be passionate about what your business does for your customers, for your community, but it doesn’t necessarily have to be the widget itself. I don’t expect that when you were on that airplane and you opened up that magazine and you saw an ad for fruit baskets that that rocked your world, the idea of making fruit baskets for a living.

Scott Greenberg:
Yeah. When I think about the highlights at Edible Arrangements, besides, obviously, the financial payoffs, those really great moments that made me feel good, especially when I went to bed at night, it wasn’t necessarily seeing a beautiful arrangement, but it was seeing the smile on the recipient’s face when they got it. It was seeing my employees high five each other at the end of a big holiday when they realized we just hit a record for how many arrangements we successfully got out and how invested they were in our combined goal. That was really exciting for me. That really was an emotional payoff that I don’t necessarily get from a lot of areas of my life. So that’s the stuff that excites me, but fruit baskets, not so much.

Leslie Kuban:
I’m glad we’re talking about this because I think it’s a really important distinction that people limit themselves and their options because they think they have to be a devout follower of the widget, and I think we’re explaining how that’s not necessarily true. And I love what you just talked about, about the wins of franchise ownership, but not every day is good. Not every day is easy and maybe speak, Scott, little bit to that first time business owner looking into franchising. What do they need to be honest with themselves about before stepping into franchise ownership?

Scott Greenberg:
I know that so much of your work is helping aspiring franchisees achieve that dream, so you’re certainly qualified to understand this. I think that what people need to be really careful of is an appreciation for the difference between what they want their business to be and what it’s actually going to be. When people aspire to become franchise business owners, they think about making lots of money. Maybe they think about a real loyal team who they’re going to treat like family and think about the pride of being business themselves.

Scott Greenberg:
When people are fantasizing about running their own business, they’re not thinking, “Wow, I can’t wait to have my first employees ghost on me, and I can’t wait for someone to post an unfair Yelp review.” No one’s thinking about those things, about all the headaches that are there, but that is a reality.

Scott Greenberg:
And so I think we need to go into it with our eyes truly open. I think we need to go into it with probably more working capital than we thought. And we have to go into it with a lot of self-awareness. I think a lot of people, they get caught up in their own enthusiasm, again, focusing what they want the business to be, focusing on who they want that job applicant to be, rather than objectively evaluating them. We get confirmation bias. We have a certain belief, and we look for things that reinforce the belief, so if I fall… I had someone call me the other day wanting advice. He’s about buying a franchise. I could tell he already made the decision. He just wanted me to validate that decision. He says that wasn’t the truth, but it was because he kept arguing with me. So what that meant was he wasn’t listening to some of the red flags that I saw in the opportunity.

Scott Greenberg:
So we need a lot of self-discipline going into it with open eyes and really be open not just to liking the business, but to not like the business for a variety of reasons. So that ability to self-manage, I think, is critical so we can make the best decisions possible. So it’s not just about a positive attitude or having a clear head. It’s really about being able to look at the facts, keep your emotions in check, and seeing things as they actually are. That’s the wealthy franchisee mindset, not positivity, faith, or passion, but clarity and being able to look at the data.

Leslie Kuban:
That’s a really good point, Scott. People, when they’re in the exploration process, they may start to fall in love with the idea of owning a certain business, but they really need to be open to the fact that it may not be the right business for them and to walk away from it if the due diligence is really showing them that it’s not going to fulfill their goals or they don’t have the skills to be the owner of that kind of business, so point taken.

Scott Greenberg:
That’s why those validation calls are so important and not just those really happy franchisees the franchisor tells you to call, but maybe some other ones who weren’t on their list. Just to talk to as many people as possible, understanding that they themselves have their biases. It’s like, “look, I’ve been reading online reviews,” but don’t ask them if they like it. Try to find out how many hours do you have to put in? What do you really need to spend on marketing? If you could do it over again, what kind of location would you pick? Try to get more objective information, rather than their opinion because they have their own biases and their own subjectivity. But yeah, getting that validation done is really important part of the process.

Leslie Kuban:
Now, in your work as a speaker and coach, you work with a lot of franchisors, franchise organizations, so let’s go back to that side of the fence. Many of our viewers are entrepreneurs looking at franchising as a way of scaling their company, looking at that strategy, but give that audience some real tough love, some hard advice about what does an entrepreneur need to be prepared for if they’re going to step into that role of being a franchisor.

Scott Greenberg:
So here’s the two common mistakes that I see a lot of emerging franchisors make. First of all, they’re so eager for the revenue and so eager for growth that they lower their standards for who they’ll sell the opportunity to. Anybody who’s financially qualified, it’s like, “You know what? Welcome to our system.” The problem is it’s a marriage, at least for the term of the franchise agreement and that person, they may not run an operations that’s going to reflect well on your company. You’re not just building a business. You’re building a culture. And if you’re playing the long game, that culture’s really important.

Scott Greenberg:
And so I would say is set some standards for what kind of people you want to be part of the system and be willing to say no. All the best brands do because again, all those people who say yes to, that chunk of money that they pay you is going to be nice for a while. But then when they start providing bad customer service, when they deviate from the brand standards, when they argue with you, it is a nightmare that ultimately is going to hurt the brand. So that’s really, really important.

Scott Greenberg:
And then I see a lot of brands, they just try to, again, they try to grow wide rather than grow deep. I think it’s really great when franchisors focus on unit level profitability, focusing the economics unit level, that if you can help individual franchisees be successful not just with the top line sales, but the bottom line, they’re going to want to buy more and that’s going to be much easier to sell and word is going to spread. So that’s really important.

Scott Greenberg:
And then, of course, I’ll get back to what I said before of don’t just scale because you want to make more money. Scale because you have a system that you know can be replicated. You need to prove it multiple times in multiple markets so we know that it’s not just a fluke, but I think franchising provides incredible opportunities for someone who doesn’t just have a good idea, but a good system that could be replicated and taught to others.

Scott Greenberg:
And the last thing I’ll say for franchisors, Leslie, is that you’re going to have to let go a little bit. I know a lot of people who would think about it, but they don’t like the idea of having their concept in someone else’s hands. Well, that’s the whole basis for franchising. So you want to encourage people to stick to the system, but you also need to be willing to let go a little bit so that they can take the system and run with it.

Leslie Kuban:
I think that’s a really important point because it’s not just your business anymore. You have a business partner and then a second and then a third and a fourth, and it’s all of a sudden a shared entity, not just your baby anymore. That’s a great point.

Scott Greenberg:
Right, so you’re no longer in the business of that widget. You’re in the business of helping other people succeed with that widget. It’s something very different, and I think franchisors need to remember that.

Leslie Kuban:
Shift into that other mindset. Exactly.

Leslie Kuban:
Well, before we wrap up, Scott, what’s in stock for you? What are your plans for the rest of 2022?

Scott Greenberg:
Well, I’m very grateful to have a good calendar of presentations booked, both live and virtual, so I’ll be on the road a bit, getting a lot of presentations. Writing a lot of articles right now and kind have some other opportunities brewing. So after the pandemic year and a half, two years ago, it was definitely difficult for us speakers, but now, there’s very exciting things happening and excited to see what’s coming in the very near future.

Leslie Kuban:
Well, I can’t wait to see you live on the stage soon, I hope. Absolutely.

Leslie Kuban:
Well, Scott, how can viewers get in touch with you and buy your book? I’m encouraging franchisors, franchisees to really tune into what you have to say about what defines a wealthy franchisee, so I’d love for others to have the opportunity to pick it up. Where can they find it?

Scott Greenberg:
Well, so my website to find out more information about me and my presentations is ScottGreenberg.com. You can get information on me and see demo video footage. The book is available in all the usual places, wherever books are sold, so in certainly Amazon, but in addition to the regular book, there is also an audio book. It is me narrating it. I had to audition to narrate my own audio book, but I do a pretty good impression of myself and I got the gig, so it is me narrating it, and a lot of people have enjoyed the book that way.

Scott Greenberg:
So wherever books are sold, you should be able to find The Wealthy Franchisee.

Leslie Kuban:
Well, I really appreciate you coming on the show. This has been a fantastic interview, and I really look forward to feedback that I know we’ll get from it. So thanks so much for joining today, Scott.

Scott Greenberg:
You do such great work. It’s been an honor to be a part of it.

Leslie Kuban:
Folks, I hope you’ve enjoyed this episode as much as I have, and I really look forward to seeing you next week again on Atlanta Franchise Today.