Author: Paul Segreto

Passionate About Fueling Entrepreneurial Spirit; Entrepreneurship Coaching; Management & Development Advisory & Consulting; Franchises, Restaurants, Service Businesses; Thought Leader, Influencer, Content Creator & Author.

Is Franchising the Right Way to Grow Your Restaurant Business… or Any Business, for That Matter?

August 6, 2017February 1, 2019 ·

This past January I presented a webinar for RestaurantOwner.com about the ins and outs of franchising a restaurant business. Special attention was also placed on preparing to franchise and how doing so could significantly improve the business itself and provide a road map for multi-unit operations – even without actually proceeding into franchising.

Well, the response after the event was quite robust and led to us performing a number of franchise feasibility studies for independent restaurant owners in various markets across the country. Our recommendations were split on whether to franchise or stay the course as an independent operation. In the coming months, we’ll be able to see how our recommendations play out. In the meantime, interest remains high, not only for restaurants but also non-foodservice operations across a multitude of industries and industry segments exploring franchising as an expansion or growth strategy.

Last month, in Restaurant Startup & Growth magazine, a RestaurantOwner.com publication, appeared an article by the RS&G staff, taking a deep dive into my webinar and philosophy about franchising a business. The article started out…

Some of the most successful brands – in any sector – are franchises. In the restaurant business, they are household names. For many independent operators, franchising their concept is the so-called “Big Hairy Audacious Goal”. Before you take that leap, there are a lot of small and critical steps to consider.

The rest of the article, Baby Steps – Is Franchising the Right Way to Grow Your Restaurant Business? may be read on pages 42-47 by clicking HERE.

Winning at Poker & Business Starts with the Right Mindset

June 11, 2017June 11, 2017 ·

If you’re not aware of the movie, “Rounders”, it’s basically about the dark side of underground high-stakes poker. Movies like this easily correlate to business. For instance, the main character, Michael McDermott says,

“Why do you think the same five guys make it to the final table of the World Series of Poker EVERY YEAR? What, are they the luckiest guys in Las Vegas?”

Similar sentiment can be expressed about entrepreneurs that start one business after another, and mostly succeed. Do you think that’s luck? Hell, no! It’s knowing when to take a calculated risk, understanding the odds, hedging bets when necessary, being patient, exploring opportunities to increase your bankroll and knowing when to take a competitor head-on. It really is a mindset. Something to think about from the movie as well, “You can’t lose what you don’t put in the middle.. but you can’t win much either.”

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Eight Years on the Air… But Who’s Counting?

January 6, 2017January 6, 2017 ·

celebrating_8_years It’s hard to believe we’re celebrating 8 years on Franchise Today. I’d like to thank all that have made this show, not only possible but what it is today as one the leading podcasts dedicated specifically to sensible, sustainable franchising.

I’d especially like to thank my co-host for the past two years, Stan Friedman who encouraged me to continue with the show at a time when I was losing interest. He pushed until he got the answer he was looking for, knowing it was the right thing to do. It’s definitely an honor getting to work weekly with Stan and developing a bond that is truly special. Of course, I cannot forget Stan’s organization, FRM Solutions who along with Franchise Foundry sponsor the show.

Thank you to the great PR firms in franchising who continue to introduce us to some of the brightest stars in franchising today, and especially to the fantastic team at Fishman Public Relations who have been bringing us guests for well over five years, sometimes on a moment’s notice.

Certainly, I must also thank Joel Libava, The Franchise King who was a co-host in the early years and as franchising’s earliest blogger really did teach me a thing or two – not to mention all his retweets which helped spur more and more to follow our announcements on Twitter. Along those same lines, thank you to Jerry Darnell who is always the first to LIKE and SHARE show announcements on Facebook.

I think back to the early years and I’d be remiss if I didn’t thank Joe Caruso as it was Joe who truly helped reshape the show’s format for the better as producer of the show five or six years ago. Not only did he schedule a new wave of guests, including many great franchise attorneys and finance professionals, but Joe was also instrumental in introducing Franchise Today to the International Franchise Association. Since then we’ve had on the show a number of then current and former IFA Chairpersons as well as the last two to hold the position of IFA CEO & president. To that end, a special thanks goes out to the IFA for continuing to recognize Franchise Today as highly relevant to the franchise community.

And what would Franchise Today be without such fantastic franchise professionals who unselfishly share their time, knowledge and experience so that others may learn the right way, the best way to succeed at this great thing we call franchising? The list goes on and on and without being able to name all for fear of missing just one, I’ll just say I’m blown away by the list as it is truly a Who’s Who in the world of franchising!

Last, but certainly not least I’d like to thank all of our loyal listeners who either listen LIVE or on-demand week in and week out, many without fail, even taking us on vacation with them. Yes, you truly are the reason we’re still here today. Your notes of appreciation and comments across social media make me want to continue Franchise Today for years to come.

To all I’ve referred to above and to all I may have left out, I say, Thank you!

Do Transitioning Corporate Executives [Really] Make Good Franchisees?

October 24, 2016September 14, 2017 · 4 Comments ·

This question was discussed on Linkedin approximately a year and a half ago and there were some interesting responses. However, the further we drift from the onslaught of transitioning executives caused by the 2008-2012 economic downturn, maybe we should now pose a different question… How have franchisors fared since awarding focusing on transitioning executives?

We often look at franchise success as up to the franchisor, i.e. it’s the franchisor’s job to be sure franchisees succeed. But of course, we know that not all franchisees, including transitioning executives, are created equal. Some are better than others! People in transition may, in fact, not make very good decisions – maybe they may panic and jump into a franchise too quickly and they don’t do all the homework that’s necessary or possibly don’t ask all the right questions. Some actually have limited skill set to their former job.

It would be interesting for franchisors to reveal how “transitioning executives” have fared, though that’s probably asking a bit too much. Because again, even if the transitioning executives have failed, it doesn’t mean the franchise system is bad. Maybe the system is just not right for certain individuals?

It really doesn’t matter whether a candidate is a transitioning executive or an immigrant national or even a mom exploring business ownership instead of returning to the workforce. What matters is how well prepared a candidate is for franchising (and business ownership) and whether or not the candidate is a right-fit for a particular franchise, and the franchise for him or her. Because we also know that all candidates are not created equal. Nor are franchisors! It’s all the more reason to identify and develop ideal candidate profiles, and keep in mind, there may be several.

Any thoughts?

Entrepreneur vs. Businessperson: Is there a Difference?

June 17, 2016August 24, 2016 ·

This year the hit ABC reality television show Shark Tank aired its 100th episode, making it the highest rated show on Friday night. Shark Tank, now in its sixth season, is amongst the top most watched reality shows on television. The shows panel usually consists of it’s recurring millionaire and billionaire venture capitalists: Kevin O’Leary, Robert Herjavec, Daymond John, Barbara Corcoran, Lori Greiner and Mark Cuban.

If you haven’t already seen the show, the way it works is that these venture capitalists are presented with new ideas, inventions and services from new businesses that are seeking investments. The people that enter the “Tank” are given the chance to present these VC’s, or “Sharks” as they are known on the show, with an opportunity to invest in their companies.

Many of the people who walk into the “Tank” are told by the “Sharks” that their business is not a business and that they are not even entrepreneurs. Some are dumbfounded when they hear this because they believe that they are serious entrepreneurs—not just another businessperson looking to make a buck.

So what exactly differentiates an entrepreneur from a businessperson? An entrepreneur is defined as, “a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.” A businessperson is defined as, “a man or woman who works in business or commerce, especially at an executive level.” Although the two seem closely related, they actually differ on a major level. In order to understand this concept, we’ll have to use the “Sharks” themselves as examples.

Kevin O’Leary earned his way to fame and fortune by building his educational software company SoftKey, right out of college. As his empire grew, he eventually acquired The Learning Company for over $600 million—taking the name as well. Eventually, O’Leary sold his business to a company called Mattel for $3.8 billion in a stock swap. In 2003, O’Leary moved on to his next venture, Storage Now, which was later acquired for $110 million.

O’Leary now sits on several boards and operates as an advisor to many companies. O’Leary eventually made his way to the Shark Tank after the success of his other show Dragon’s Den, which Shark Tank is modeled after. O’Leary is known as “Mr. Wonderful” on the show for his outlandish and often brutal honesty—as he so puts. He approaches his investment decisions with the cold hard truth that he believes some ideas are just not meant to be businesses.

Robert Herjavec got his start by building up his Internet security empire, BRAK Systems, until he eventually sold it to AT&T Canada in 2000. After an early retirement, Herjavec found his way back to the Internet security world when he founded The Herjavec Group in 2003, where he currently operates as the CEO. Herjavec also started out on Dragon’s Den with O’Leary and now holds a recurring spot on Shark Tank. Herjavec appears to be more optimistic than the other “Sharks”, with more of a sensitive side. Maybe it’s the fact that his working-class father immigrated to America in pursuit of the “American Dream” and taught him that hard work pays off—which he’s used as the model for his success.

Daymond John, who is most famously known for his start-up company FUBU, which he grew with the help of celebrity endorsement and a mortgage from his Mother’s house. John built FUBU into the global empire it is today, with global sales at over six billion to date. Although he is known to be a more reserved “Shark,” taking careful consideration before jumping on a deal, John is known to have a compassionate side and one that has been seen before on Shark Tank.

Barbara Corcoran built her empire with nothing more than a mere $1,000 loan that she used to start her real estate company The Corcoran Group—which she co-founded. In 2001, Corcoran sold her company to NRT Incorporated for $66 million. Corcoran is responsible for pioneering many revolutionary techniques that changed the real estate market. Corcoran is a wild one—the fun-loving “Shark,” who astounds the others with her business decisions but somehow always proves that she still has her business swagger.

Lori Greiner began her career with the invention of a revolutionary jewelry box that was capable of holding over 100 earrings. Greiner is now known as the “Queen of QVC”, since she has helped launch over 400 products via the network and holds over 120 U.S. and international patents. She is also the president and CEO of the company For Your Ease Only. Greiner is a savvy investor who has helped grow hundreds of companies. She is a force to be reckoned with—despite her physical appearance she is not to be underestimated.

Mark Cuban, the richest of the “Sharks”, made his billions despite some claims that were ultimately defeated in court, with the start of his company MicroSolutions in the 1980’s. In 1990, Cuban sold his company for $6 million. After that, Cuban moved on to his next venture AudioNet, which became Broadcast.com and eventually sold to Yahoo! for $5.7 billion. Cuban is probably the deadliest of the “Sharks,” with the biggest bite. He’s known for his ruthless execution and ability to swoop in at any moment and steal a deal right from another “Shark’s” mouth. Although this is true, Cuban has been known to drop out of the race if he feels he can’t contribute more than another “Shark.”

As far as the term entrepreneur is concerned, assuming that it’s not as subjective an idea, but more literal: Mark, Kevin and Robert seem to fit this definition best as opposed to Barbara, Lori and Daymond. The reason for this is due to the fact that these people have started their companies, sold them and started new ones, continuing this trend indefinitely. Daymond is sort of in the middle since his claim to fame is mostly FUBU. Barbara and Lori predominantly gained success from one business, which generated most of their wealth, later allowing them to invest in future companies.

At some point in their lives I believe that all of these “Sharks” were full-time entrepreneurs but as time progressed and success achieved, Barbara and Lori, and to some extent, John actually “switched” positions and became businesspeople, just managing their day to day operations, investing in some other companies, but letting others follow through on the vision, actually passing the entrepreneurial torch on to the next eager person, or better stated, igniting the entrepreneurial torch for others.

Please visit www.FranchiseFoundry.com for more information on emerging brands and entrepreneurs.

6 Key Points to Strong Franchise Relationships

July 20, 2015April 14, 2017 · 3 Comments ·

Validation and multi-unit ownership are strong indicators that positively memorable experiences exist within your franchise system. Another way to confirm the existence of these experiences is simply to ask your franchisees: would you do it all over again? However, as a franchisor you must first earn the right to even be taken seriously if you ask this question.

As you head down the path of creating positively memorable experiences with each and every franchisee, be sure to consider ALL touch points – even those beyond the obvious mediums of in-person, by phone and via email. Think digitally!

How do you interact with franchisees on Facebook? How do you come across to your franchisees in LinkedIn discussion groups? Is there common courtesy? Are you proud of each other’s actions within these platforms?

Many will refer to all of this as being great in theory, and not really practical. But just think what could happen if every touch point were seen as another opportunity to create or enhance a positively memorable experiences. How would that change the culture of your system? How would that lend towards growing your brand? Think of the ripple effect.

Here are six key points to creating positively memorable experiences in a franchise organization:

Understanding the true meaning AND spirit of interdependent franchise relationships. This must be shared and exemplified at every point of contact with franchisees.
Developing the right culture at all levels. Be careful- culture is also defined as bacteria! This takes time and commitment, and is a reflection of how people, whether franchisees, employees, suppliers or others, are treated at all times.
Creating an environment of truth, trust and transparency based upon open, two-way communications – the cornerstone of creating the right culture. Think of a three-legged stool that could hold a great deal of weight when fully intact, yet would immediately fall under its own weight if one leg was compromised.
Establishing your franchise system as family. Treat them as such but understand that this is not the typical type of family of yesteryear with subservience to the head of the household. Mutual respect is paramount!
Building an environment of bottom-up profitability and growth with ALL parties to the franchise agreement and other related agreements focused on mutual goals and objectives. All must sing out of the same hymnal, and not just for dress rehearsal – so be sure to give them the hymn book.
Positively Memorable Experiences – Live it and breathe it every day for optimum results!

Social Networking & Franchise Lead Generation Revisited

July 18, 2015July 18, 2015 · 1 Comment ·

In light of discussions at this year’s International Franchise Association Convention about “new” ways of generating franchise candidate leads, and as I continue to field an influx of questions from start up and emerging franchisors trying to find a “silver bullet” to jump-start franchise sales, I am again sharing the following article I wrote back in 2011 as the principles continue to apply to this day. Actually, they may apply even more today as more and more have adopted social networking platforms as major sources of securing information and for communicating.

Social Networking and Lead Generation

We’re often asked if social networking can be utilized effectively for franchise lead generation purposes. Well, the answer is a resounding, “Yes!”

When working on a lead generation project, establishing objectives is paramount to the success of the overall strategy. Assuming the strategy has been developed, complete with establishing an ideal candidate profile and identifying specific geographic areas for expansion, we typically proceed as follows:

First, we focus on networking groups that include individuals that best fit our client’s ideal candidate profile. From there we drill down to individuals in the geographic area we’re targeting per our plan. Let’s say teachers fit my candidate profile. we would search out networking groups specific to teachers, education, etc. Then, we would participate in discussion groups to get a feel for the group and to be noticed and subsequently accepted within the group. There’s always a spin one could use to achieve this objective.

Next, we seek out members from the specific geographic areas we’re targeting and begin communicating what we’re ultimately trying to accomplish… to generate interest in a specific franchise opportunity. Sometimes there’s interest right there in the group. Often, it’s a referral that we get that makes the effort within that group worthwhile.

We also focus on groups that can provide me with referrals such as insurance agents, realtors, financial planners and attorneys. Again, if you’re proactive within networking groups it’s relatively easy to enlist support and gather information. Again, there has been some interest from members of these groups but it’s amazing how many times we’ve been referred to an interested party who lives in another part of the country that is willing to jump at an opportunity in my target area. You see, the fact that it stems from a referral is key!

Lead generation through social networking takes time and effort no doubt. However, once you’re proactive within networking groups, you almost end up with a snowball effect as the leads come in bunches. Some leads start out by simply posting a thought provoking discussion with some back and forth interaction with a responder and the responder saying,”what is it that you do?” Next thing you know, you’re discussing an opportunity and the door is wide open.

Most times however, it takes considerably more effort, but we’ve found people are networking online and participating in discussion groups for specific reasons. They’re all looking to expand their business, improve their position, seek out various types of opportunities, and make money. Attracting these individuals online sure beats running an ad in the local paper and waiting for the phone to ring!

Financial Performance Representations in Digital Space – Friend or Foe to Franchising?

June 25, 2015August 3, 2015 ·

At what point do you believe a Financial Performance Representation crosses the line outside franchise disclosure requirements?

As discussed at various break-out sessions during the recent IFA Convention, social media has created many opportunities to present and discuss franchise opportunities across and through multiple channels, often linking from one social media platform to another. As many franchisors jockey for a competitive edge and increase their social media efforts, it’s important not to lose sight of franchise disclosure requirements.

The practice of embedding financial information within online press releases, blogs and even within Facebook posts, appears to be growing. Certainly, publishing this information by itself doesn’t create an FPR. But, directly or indirectly referring candidates to the information is an FPR, and if the information is not part of a franchisor’s Item 19, it becomes an improper FPR.

Considering the linking capabilities within social media, often to the point of creating a cross-platform, multi-tiered effect, some so-called, self-professed industry professionals apparently believe they can get away with improper FPRs. Especially, as social media is still “relatively new” and growing into new areas, misunderstood by many, and virtually under the radar of most authorities.

It appears the thought is, if enforcement of franchise disclosure is lacking in traditional areas, social media has become the new wild west!

Beyond the obvious illicit practices and potential ramifications to unsuspecting franchise candidates, what also causes reason for concern is the impression it makes upon start-up franchisors that follow suit – often, not even realizing the practice may be improper. After all, they see it being done by individuals who they believe are reputable franchise professionals. So, why not follow the same practice that they unsuspectingly come to believe is actually a best practice?

Sure, everyone is responsible for their own actions, and ignorance is not a legal defense. However, if these illicit practices continue within franchising, more and more will participate to the point of it becoming a common practice, with many believing it has become a best practice. Momentum picks up with so-called thought-leaders promoting the practice as an effective lead generation strategy, influencing even more franchisors. Some will be unsuspecting. Some will just jump on the bandwagon.

At what point will these practices be considered to be out-of-control and intolerable, and detrimental to franchising?

Controlled Growth Key to Success for New Franchise Concepts!

June 12, 2015August 3, 2015 · 2 Comments ·

Working with entrepreneurs exploring franchising as a business expansion strategy, I’m often asked the question, “How does a new franchise company sell franchises without brand recognition?” Here are my thoughts…

Initially, the founder is the brand. It’s his or her passion for the business. It’s how he or she treats customers and employees alike. It’s how the business is promoted within the local market. Not just through typical advertising efforts, but through solid grassroots, organic efforts.

The initial franchise candidates are actually the “low hanging fruit” of the original business. These are the customers that inquire whether or not the business is a franchise and how they can learn more about owning their own. Most are interested because the business appears to be thriving and they’ve seen the owner (founder) time and again, always smiling and shaking hands. Public Relations efforts should ensure this occurs.

They admire the owner a great deal and will base their decision to open a franchise location, on the potential of establishing a relationship with the owner. They’ll compare the opportunity to other franchises and justify to themselves that they’re in on a ground floor opportunity with a direct line to the founder. As such, they feel their probability of success is greater because their location will be in the home office city and if they need help, they could easily approach the founder and the home office because of the proximity to their franchise location.

Ideally, the next few franchisees will also be in the same market as the original business and the first franchise location. It’s prudent to only expand locally until critical mass is established in the market, ad cooperative is developed and support systems are perfected. Now the concept is ready to expand outside the initial market.

However, it is often financial suicide to entertain requests from candidates all over the country. Instead, development efforts should be concentrated on one or two cities relatively close to home office city. For instance, if original business and home office is in Houston, the natural progression would be to promote the opportunity next in San Antonio/Austin and Dallas/Fort Worth areas.

As these markets start to become established with franchise locations, it’s advisable to promote the concept in another two or three areas. Maybe, explore another “hub” and “spoke” scenario. Let’s say, Atlanta as the next hub.

Expansion efforts should be the same as they were in Houston and expansion out of that market shouldn’t occur until Atlanta has a critical mass. Then, when that occurs, the opportunity could be promoted close by in Nashville and Charlotte. Now, you see the spokes of national expansion beginning to form.

While this is going on, maybe inquiries start coming in from the San Francisco area. So, the next phase of expansion might be in the Bay Area. The Bay Area becomes another hub, and once developed, the franchise opportunity could be promoted up the road in Portland and to the East in Sacramento and the process continues.

It’s all about controlled growth and the founder exhibiting tremendous restraint in expanding too fast and in areas far away from his core group and subsequent hubs to be able to provide ample support, create ad cooperatives and build the brand geographically. Chances of franchise success are far greater at all levels of the franchise organization within the parameters of a controlled plan of development.

So, to answer the often-asked question directly, I suggest everyone in the system having a clear understanding of the founder’s vision and if it includes anything but a controlled development plan with his or her firm commitment to actively participate in the franchise sales process, the chances of selling the first ten to twenty franchises will be a frustrating, monumental task that most likely will fail miserably.

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