How restaurant franchises came together to overcome COVID-19

Transcription:

Leslie Kuban:
Hey everybody. Welcome to another episode of Atlanta Franchise Today. I’m your host to Leslie Kuban. If you ever thought you might like to be in the restaurant business, you definitely want to hear what my guest today has to say. Robin Gagnon is joining me in the studio today. Robin is the co-founder of We Sell Restaurants, the nation’s largest restaurant brokerage firm, and business broker franchise specializing in restaurants. Robin, it’s great to have you. Welcome to the show today.

Robin Gagnon:
Oh, thank you so much. I am thrilled to be here, Leslie.

Leslie Kuban:
Well, you are a busy lady. You wear many hats in franchising and I would love to hear a little bit more about We Sell Restaurants. You guys are a franchisor with franchisees, but you’re also a broker of restaurant franchises. So tell us a bit more about your company.

Robin Gagnon:
So it’s a little bit of an unusual situation because, on the one hand, we do perform a great many services for the franchise community because there are always restaurant owners who want to get into the business and others who want to get out. At the same time, we are a franchise brand. So people are allowed to buy into our concept, our model, our systems, and use our platform that we’ve developed over the years in our database of buyers to then drive buyer and seller activity and really act as mini-mes all over the country.

Leslie Kuban:
And how many franchisees of We Sell Restaurants are there?

Robin Gagnon:
So we are up to 25 territories as of the end of this year. So some of our owners do have multiple territories. And this year we were able to see one of our owners invest in three additional territories. So we’re growing and this year was a big year of growth.

Leslie Kuban:
That’s great.

Robin Gagnon:
Yeah.

Leslie Kuban:
That’s great. So how did you decide to specialize in restaurants? That’s a real niche in the business brokerage world and in franchising. What’s the story?

Robin Gagnon:
Well, you know, Leslie, when we started 20 years ago, this year, by the way, when We Sell Restaurants started, other brokers actually said to us, why would you specialize? You can sell anything. You could sell car washes or daycare’s, but we really believe that the industry deserves someone who understood their needs. We believe that you should get into that vertical in a very deep and necessary way. It would allow us to then ultimately franchise and give our franchisees an experience and level of learning that would be unmatched in the industry. And when someone wants to sell their business, do they really want to go to a Jack of all trades or someone who’s connected within the industry? All the buyers in our database are coming to us to buy a restaurant. We’re so specialized, and now we’re in 45 states, we have about 175 million in listing inventory, and we’ll do about 40 million in transactions each year.

Leslie Kuban:
Congratulations.

Robin Gagnon:
Thank you.

Leslie Kuban:
And you’re right. People think of franchising, they use the word franchising like it’s one big generic type of business, but then there’s the service industry and you’re in the restaurant industry and the nuances and metrics and different levers that matter are so different from one industry to the next, all under the umbrella of franchising.

Robin Gagnon:
They really are. And for me to try to be a broker out there representing one of everything that would become very, very difficult from a standpoint where you’re really weighing the financial picture of a business, because that’s what you’re selling on a resale basis. How did that bit business perform, thus, how is it likely to perform in the future? Very different from selling just new franchises. And we don’t do any new franchise sales. We do a lot of franchise resales however, because franchise brands, trust franchise brands, they know that we have a methodology, we have a process, we have a back office system and we have something that’s going to deliver a similar, excellent experience every single time they refer one of their franchisees to our business.

Leslie Kuban:
So there’re multiple parties, and I’d love to hear about just how you service the needs of there’s the selling franchisee who’s ready to exit their restaurant franchise. There’s that franchisee’s franchisor and then there’s the buyer. So where do you fit with all these different interested parties?

Robin Gagnon:
So we are referred to as intermediaries. And that really is a very good description. In some ways, we’re the quarterback in a transaction because to your point, we’ve got the buyer, we’ve got the seller, we have of their attorneys. Often we may have the franchisor in the deal, the landlord, all of those components have to be managed and have to be managed strategically to get a deal to the closing table. But franchisors come to us because they learn of us through other people in the industry, or they become aware of us through our work, in the IFA, or other areas. And they say, we need a model like that. Their franchise development team really shouldn’t be doing internal franchise resales. It’s a different business model.

Robin Gagnon:
It’s a different customer. That person who wants to buy a brand new franchise and start from the ground up will accept a higher level of risk than someone who wants to take something that’s on the ground running and producing cash flow today. And so having their franchise development department actually try to target both elements of that appropriately and then service it appropriately becomes very difficult. So a brand like ours comes in, just handles their resales for them, and then their franchise development can take over that transaction at the point that they’re ready to close and say, how about another unit? So it benefits everyone in the deal, the franchisor, the franchisee who’s exiting, and the incoming franchisee as well.

Leslie Kuban:
What does the mix look like of people coming to you looking for restaurants to buy? Is it largely other restaurateurs, other franchised restaurant owners, or people who are brand new to business ownership? Is there a typical breakdown?

Robin Gagnon:
That is a great question. So we wrote a book. I don’t know if you’re familiar with it. I’ll send you a copy, Appetite for Acquisition. And we talked about the 10 kinds of buyers, and there really are definitely around 10 kinds, but we have the corporate warriors who call us on Friday afternoons and they’re desperate to get out of their cubicle and do something of their own. We have the chefs without a kitchen who have been doing it for someone else and are ready to go out on their own. So we get a mix of people both within the industry and from outside the industry. If they’re from within the industry, often they want to take over an independent operation or maybe a lease space and build out that opportunity. If they are from outside, they love the idea of an existing franchise model that’s already as established cash flow. It’s just that they can come in and go from there.

Leslie Kuban:
And let’s talk about that first category because a lot of our viewers are exactly that people who are working in the workforce, they’d love to own their own business. They’re thinking about franchising and maybe something in the restaurant world. That’s been a dream for a lot of people, but they have no experience in franchising or really the restaurant world. Are there any words of advice or what does someone need to think about if they’re brand new to business ownership and new to food service?

Robin Gagnon:
Well, I would tell them one, they should consider the We Sell Restaurants brand, right? Because we call that the restaurant business with bankers hours. So for somebody come out of corporate America, they’re used to a process, a business practice in a set of systems. They’re comfortable with Excel and numbers and worksheets. They’re a perfect fit to enjoy that hospitality business, but at the same time, not be in the kitchen or filling in if the dishwasher doesn’t show up, right? On the other hand, if they say I did this in my teens or I did it in college and I love it, then let’s have a conversation.

Robin Gagnon:
We’ve got about a 12 point survey that will take them through to help them understand the type of hours, what fits in with their lifestyle. I mean, the restaurant business is a lifestyle business. You have to have a passion for it, but at the end of the day, you’re baking bread, the oldest function on earth, and you’re sharing that moment with someone else. There’s something about that that just drives people into this industry and keeps them coming back. And then if they want to exit over time, we’re here to help them do that as well.

Leslie Kuban:
Full service.

Robin Gagnon:
Yes.

Leslie Kuban:
I love it. So we’re obviously still navigating COVID.

Robin Gagnon:
Mm-hmm (affirmative).

Leslie Kuban:
And there’s so much to say about that, but are there any just sweeping pivots, or what have you seen in the restaurant world at large, from your point of view that are here to stay?

Robin Gagnon:
Well, I will say this, we lost 110,000 restaurants during the course of COVID, about 10% of our restaurants. The majority of those were unfortunately independent operators. And I recently wrote an article that the IFA is going to publish in their Franchise World magazine about the fact that what this crisis really proved was how powerful the franchise model is. So our brand had to pivot during COVID and really stopped talking about selling restaurants because it just wasn’t the time to go out with a large marketing message. We pivoted and started teaching people, particularly those who are independent operators, how do you get PPP money? How do we get restaurant relief money? what is going on? What are the earned income tax credits? We had to just become this knowledge service for the industry and just put sales on the back burner. Franchises, on the other hand, had their own departments that could reach out and do that for their brands and all those people who wondered all these years am I getting my money’s worth for royalties? Learned very quickly that franchising delivers very quickly on that premise.

Robin Gagnon:
But after the crisis passed, then we switched back into helping people either come in or get out of the business and that still carries through. But sweeping in the industry, efficiency, efficiency, efficiency. We saw menus shrink and get smaller, which was not necessarily a bad thing because to a certain extent they were bloated and oversized and increasing food costs. We saw labor hours shrink, but that could mean that operators just got a little bit better about what they were doing and went ahead and modified practices that should have been automated sooner and started being smarter about how they were measuring and anticipating customer levels and par levels. And we are also continuing to see obviously the carry-out delivery model. And again, that’s where franchises were ready to shine, because they jumped in and negotiated better deals for their brands than somebody going out and saying, I have a thousand stores I’m going to deliver them onto your delivery platform tomorrow and this is the deal I need versus the single unit operator out there saying, how do I get on the x, y, z platform?

Leslie Kuban:
You know, you mentioned IFA a minute ago and we both have been active with the International Franchise Association. And I saw what you saw as well, brands that even compete head to head with each other, came together through the IFA, through their industries to collaborate on how do we create more efficiencies? How do we work together and get on these platforms that get in front of the eyeballs of that customer that’s now eating at home? So I saw that across many industries, restaurants, including it’s a really beautiful thing to see that collaborative nature of franchising.

Robin Gagnon:
It absolutely is. And I will tell you when we first considered the idea of franchising, our consultant at the time said, you will be shocked that franchising is the most generous community in the business world. And I didn’t really understand what that meant until I got into it. But it’s the only place in America where you can sit across from somebody and own a hundred units and sit across from somebody that controls 1500 units and you’re on the same level and they’re sharing advice and they’re truly giving, and we did see that really rise to the occasion during the COVID crisis.

Leslie Kuban:
So let’s talk about your activity within the franchising world, speaking of generosity and collaboration. And you’ve been very active in the Women’s Franchise Network and you have an incoming leadership role within the organization. Tell us about that and the power of the women’s aspect of the IFA.

Robin Gagnon:
So the Women’s Franchise Committee was formed at the International Franchise Association two decades ago to really have one goal in mind, to mentor and grow and provide opportunities for women to grow through franchising. And one offshoot of that are the local Women’s Franchise Network events, which I started in Atlanta chairing the Women’s Franchise Network here and then grew onto the Women’s Franchise Committee at the national level. And I am the incoming chair of the Women’s Franchise Committee for this year, which I’m so humbled and honored and blessed to be, and I also host an event on clubhouse every week for women in franchising. So I’m very committed to helping grow, mentor, and aid anyone I can in this industry, male, female, anyone who wants advice, give me a call. I’m open.

Leslie Kuban:
For women specifically, how does franchising uniquely provide a good entrepreneurial opportunity?

Robin Gagnon:
Well, I think the first thing is that you get that instant credibility because you’re buying the right to the use of a trademark and a set of systems. So if that brand already has that credibility, every woman I know has a little bit of that heckler in the back of their mind saying maybe I’m not as strong or as powerful, but do you know what? That heckler goes out the door when you’ve got a big brand behind you. So I think women are uniquely positioned to be assisted. One of the key initiatives of the IFA going forward is to really work through the channels of diversity to bring everybody into the franchise community and grow diverse voices within this industry. I mean, so many people think about franchising as big business, but it is your local mom and pop who are simply borrowing the systems and trademarks of a larger provider and doing it in their community with their own dollars invested and hoping to make that payoff not only for themselves but for the folks around them.

Leslie Kuban:
And I would add, a part of the benefit is the local network of franchisees, which we’re women, we’re social, we’re natural connectors. And I’ve heard many, many franchisees male and female, of course, that in your first couple of years in business, you really rely heavily on the franchisor and there needs to be continued value there. But then your fellow franchisees from there are of equal if not greater value, that being a part of something, the fiber and the fabric of something for men and women. But I think women can especially appreciate and enjoy that experience.

Robin Gagnon:
I think you’re dead-on, Leslie. Absolutely. I mean, because women are natural networkers. We nurture, we care, we gather, we share. And all of that is part of the franchise community and it’s something that you get from franchising uniquely different. You can certainly go and start a business on your own, but it takes so much grit and determination and it’s so great to have a power of thousands behind you.

Leslie Kuban:
And speaking of thousands, you’ve been a mentor to many, but we all have mentors. I always like to ask who do you look up to? Who’s maybe been a mentor or a role model for you as a franchisor and a very active participant in the franchise world?

Robin Gagnon:
Oh my goodness. So many. I’ve been so blessed to be on the Women’s Franchise Committee. I was counting it up. I think it’s my eighth year on the Women’s Franchise Committee. There are so many amazing women that have come through that committee and have ultimately been a crystal compass winner, Clarissa Bradstock who you recently interviewed from Any Lab Test Now. Yeah. Marian O’Connell, Michelle Rowan from Franchise Business Network that is the current chair of the IFA Women’s Franchise Committee. And there’s so many amazing men in franchising who have reached out and helped us on so many levels. Dave Barr who’s local to the Atlanta community. I can’t name one. There’s just been so many because if you place your hand out in franchising and you say I have a need, someone’s going to step up and help you feel that need yeah.

Leslie Kuban:
Yeah, back to the generosity.

Robin Gagnon:
Yes.

Leslie Kuban:
That you just mentioned earlier. Well, I like to end on a success story. Tell us a success story in your business, a franchisee or a client, just who comes to mind.

Robin Gagnon:
Oh my gosh. So, my clients, we tell our business owners who are buying from us, we’re selling the American dream one restaurant at a time. So there are so many success stories there. But what I’m really proudest of are my franchisees. You know, they take this thing that you thought, hey, this could be a good idea 20 years ago and then there are just out there crushing it. I have a franchisee with five children, his wife doesn’t work, and he’s a former multi-unit firehouse franchisee. And he said do you know what? I’m selling my stores and I’m going to do the We Sell Restaurants model and for somebody to take that leap of faith and have that much trust and faith in our model, and he is just blowing the doors off, he’s multiplied his territory many times since he came on board, and continues to grow, just to see that model replicate and succeed, that’s what’s exciting in this industry.

Leslie Kuban:
To see your baby continue on and thrive.

Robin Gagnon:
Yes.

Leslie Kuban:
That’s really exciting, Robin. Well, how can people get in touch with you if they’re interested in buying a restaurant, selling a restaurant, or owning one of your franchises? What’s the best way to reach you?

Robin Gagnon:
It’s so easy. WeSellRestaurants.com. W-E-S-E-L-L restaurants with an s.com. And we have all kinds of information about our franchise, we have over 500 restaurants for sale listings out there, opportunities, eBooks downloads, guides, anything you’d want to know about the restaurant industry. We try to service it through the We Sell Restaurants portal and, of course, we’re on LinkedIn, Facebook, TikTok, Clubhouse, anywhere you can be on social media, you can find We Sell Restaurants there.

Leslie Kuban:
And that’s the truth. I see you all the time. Well, Robin, thank you so much for joining. A lot of information that we covered today.

Robin Gagnon:
So much, Leslie. You primed me with all these great questions and I feel like we could probably talk for hours. So thank you for what you do for the industry, your production of this show to put a spotlight on franchising. It’s amazing.

Leslie Kuban:
It’s my pleasure. My pleasure. Well, thanks for coming.

Robin Gagnon:
All right.