Category Archives: Franchises

November 8, 2019 · 2:52 pm

Mental Health Is Business Health

Happy Foodie Friday! One thing I’ve learned in my franchise consulting is that people have a fascination with the food business. A significant percentage of the candidates I speak with want to invest in something food and beverage related. I’m generally fairly blunt with them, reminding them that it’s often a business where you’re open for 14 hours a day and are really busy for about 90 minutes. The margins aren’t great, the labor is often unskilled and sketchy, and there are liability issues hanging around everywhere.

Today it’s those 90 minutes I want to talk about. The really busy time. It’s incredibly stressful from what I remember of my days working in foodservice. The stress precipitates everything from accidents caused by rushing to fistfights. It’s not for the faint of heart! That’s why I was happy to read the following this week:

Chipotle Mexican Grill will be providing access to mental healthcare and financial wellness for more than 80,000 employees in 2020 through Employee Assistance Programs and enhanced benefits offerings. This is just one of the many ways that Chipotle continues to enable its workforce by offering world-class benefits.

By simplifying access to mental health benefits and identifying work-related risk factors, Chipotle is trying to minimize the effect of mental health in the workplace.

So many good things here. First, I’ve worked for bosses to whom employees were disposable cogs in the business machine. Someone burns out and isn’t getting it done? Replace them and move on. It’s frustrating as hell when you don’t share their attitude but your hands are tied with respect to offering a solution to the stressed-out team member. Having also worked in places with an Employee Assistance Program I can tell you that they can be literal lifesavers and well worth the cost.

Second, you probably haven’t forgotten that Chipotle had some issues with e.coli a couple of years ago. You know you have a problem on your hands when research showed that 22% of all respondents and 32% of those who don’t currently eat Chipotle said that “nothing” would make them want to visit more often.  The food issues have been fixed but the bad taste lingers. Demonstrating concern for your employees is part of rebuilding the brand. Happy employees don’t make stress-related mistakes that lead to bacterial contamination, right?

You can never go wrong doing right for your staff. As a manager, they are your eyes, ears, hands, and voice. Keeping them happy and healthy is doing the same for your business.

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October 30, 2019 · 12:42 pm

Something For Nothing

I went to one of the warehouse club stores yesterday to make some bulk purchases. If you’ve ever been in one of them – Costco, BJ’s, Sam’s Club, etc. – you know that one feature of walking around the place is that there are usually free samples. You can taste the latest and greatest in meats, cheeses, and frozen things to cook while you’re too busy to make something yourself. That got me thinking about the fact that you really don’t see a lot of sampling elsewhere.

I’m a fan of the free trial. It gets customers walking through your door and using your product. What I don’t particularly like are those “free” trials that require you to fork over your credit card. Free means without strings, right? In particular, if you’re a business that is built around what I think is the gold standard – recurring revenues – you ought to be spending a good chunk of your marketing dollars on free trials.

It’s relatively simple math, right? What’s the lifetime value of a customer? What does it cost you to offer up a free trial – a visit, a free month, whatever? What is the conversion rate of those freebies – how many of the trials become regular customers? Recurring revenues are predictable and generally pretty stable. I bet you’ve signed up for subscriptions of some sort and forgotten you’ve done so or don’t use them as often as you thought you would. For a business, that’s a customer without costs, and that’s a nice margin!

When I talk to people who are looking at franchise opportunities and who don’t have a particular brand or industry in mind, I usually talk to them about the businesses with recurring revenue models. Things like cleaning services. Not a sexy business, but very profitable and that, in part, is because of the recurring revenues. Same thing with spa businesses or some hair salons that feature memberships. Are those businesses that can offer a free trial? Maybe if you’re an out-of-the-box thinker. Giving a converted customer the ability to give away a free trial to a friend is another great way to expand your base at very little cost.

Here is the thing about free trials leading to recurring revenues. As with any business, you have to maintain a high level of customer service. After all, when someone’s credit card is getting dinged each month and your business appears on their statement, it’s an opportunity for them to reconsider.  If they walk away, no amount of free sampling will get them back most of the time. Everyone loves something for nothing. The opposite – nothing for something – is very much NOT true!

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September 4, 2019 · 9:47 am

For Yourself, Not By Yourself

I left corporate America at the end of 2007. In the dozen years since I’ve worked for myself. Oh sure, I have always considered the clients for whom I consulted to be my bosses, but at the end of the day, I was on my own.

If any of you have been, or are, in a similar circumstance, you know that it’s both a liberating and terrifying feeling. There is the freedom to spend a beautiful day at the beach or on a golf course instead of working. After all, you’re the boss. Along with that freedom, at least for me, there was always guilt that I had taken the day to play or run errands rather than grinding it out as I had done for the 30+ prior years of my business life. I guess the Protestant work ethic applies even to Jews…

While I’m still working for myself, the last year I’ve not been BY myself. As a franchise consultant, I’m a part of a much broader network of several hundred other coaches. We share information, I have access to ongoing education about franchises and how to do my job more effectively, there is someone doing collections for me, and the network actually even finds leads for me if I want. I’m in business for myself but not by myself, as is the case with any franchise.

Candidates (people considering investing in a franchise) sometimes ask why they should go with a franchise instead of using their capital to start up their own business. The statistics answer that question for me. 90% of new businesses fail in anywhere from the first five years to as little as the first four months. 90% of franchises are still in business after five years. There is a reason for that, which is that you’re investing in a proven concept. The mistakes have been made, the operation has been refined, marketing plans have been tweaked, and all of that is being handed to you as part of your investment along with training that can last from a few days to weeks, with ongoing mentoring and education for much longer. Pretty spiffy, and a route I wish I had taken a dozen years ago instead of trying to figure it all out on my own.

So what can go wrong with a franchise? I think the two biggest sources of problems are when franchisees don’t follow the model or when they are undercapitalized. In the first case, ignoring the model is basically throwing away what you paid for and diminishing your success rate quite a bit. In the second case, ANY business will fail if it’s undercapitalized no matter how well-run it is. Counting on immediate cash flow to support the operation (or your ability to eat!) is short-sighted. That’s why franchising makes even more sense since there is a track record of what capital is needed to get the business up and running for the first few months. It’s actually so clear that the franchises put those costs in their Franchise Disclosure Document (item 7) and those are numbers I have and discuss with folks as they are looking at investing.

Being in business for yourself is great. It’s even better when you’re not by yourself. I can show you how to make that happen for you. Just click here and let’s get started.

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