Have you ever wondered what it might look like for you to sell hundreds of franchises in just a few years? How would you handle that growth?
Our guest today is David Graham, who built Code Ninjas and went from 0 franchises to more than 800 sold in just 5 years. He shares with us his tips and lessons learned on his franchise journey.
TODAY’S WIN-WIN:
Build a great team and interpersonal connections.
LINKS FROM THE EPISODE:
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ABOUT OUR GUEST:
David Graham is a serial entrepreneur and CEO of the Valhallan Esports Training franchise and its parent company, FranchiCzar. An experienced franchise expert, David previously founded Code Ninjas, the leading children’s coding education franchise, to more than 500 locations. Today, he leads multiple brands including Pinot’s Palette, a paint and sip franchise, and Iron 24, a fitness franchise, in addition to Valhallan. Together, the family of brands totals more than 100 operational franchise locations in three countries. Valhallan is in its high-growth stage, with 30 units expected to be open by the end of 2023 and 100 by the end of 2024. Long-term projections call for 1,000 units or more globally. Combining a tech-forward business model with a people-centric vision, David leverages his franchising expertise to help other franchise owners build and grow their businesses.
ABOUT BIG SKY FRANCHISE TEAM:
This episode is powered by Big Sky Franchise Team. If you are ready to talk about franchising your business you can schedule your free, no-obligation, franchise consultation online at: https://bigskyfranchiseteam.com/ or by calling Big Sky Franchise Team at: 855-824-4759.
If you are interested in being a guest on our podcast, please complete this request form or email podcast@bigskyfranchise.com and a team member will be in touch.
TRANSCRIPTION:
Dr. Tom DuFore, Big Sky Franchise Team (00:01):
Welcome to the Multiply Your Success podcast, where each week we help growth-minded entrepreneurs and franchise leaders take the next step in their expansion journey. I’m your host, Tom DuFore, CEO of Big Sky franchise team, and as we open today, I’m wondering if you’ve ever wondered what it might be like for you to sell hundreds of franchises in just a few years and have you thought, how would you handle that growth? There’s the one part of you that probably thinks, “Boy, that would be amazing. I’d love for that to occur,” but then comes the fulfillment side of how do you handle crane onboarding and get all of these franchisees up and running. And our guest today is David Graham, who built Code Ninjas and went from zero franchises to more than 800 sold in just five years, and he shares with us his tips and lessons learned on his franchise journey, pre-Code Ninjas and post.
Dr. Tom DuFore, Big Sky Franchise Team (00:56):
Now David is a serial entrepreneur and CEO of Val Holland’s eSports training franchise and its parent company, FranchiCzar. He’s an experienced franchise expert. He previously founded Code Ninjas, the leading children’s coding education franchise, to more than 500 open locations and over 800 sold, as we previously mentioned. Today, he leads multiple brands including Pinots Palette, a paint sipping franchise, and Iron 24, a fitness franchise in addition to Val Holland. Together, the family of brands totaled more than a hundred operational franchise locations in three countries, and Val Holland is currently in a high growth stage with 30 units expected to open by the end of 2023 and 100 by the end of 2024. David shares just some phenomenal insight and information on franchising. You’re going to love our interview, so let’s go ahead and jump right into it.
David Graham, FranchiCzar (01:51):
I’m David Graham, I’m the CEO of FranchiCzar.
Dr. Tom DuFore, Big Sky Franchise Team (01:55):
You have a really great background in franchising, having built multiple brands, so talk a little history about your franchise background and past.
David Graham, FranchiCzar (02:05):
I was really fortunate to get started in franchising under the leadership of a powerhouse group, which you’ve almost certainly heard of at Anytime Fitness. I was a franchisee actually, and I got to know the executive team over there because I was also a technologist and that’s rare in the gym industry. And so I had a really unique perspective and they allowed me to build some technology over there that I think they still use today. So in that adventure I got to learn how franchising works, but more importantly, I think that team dynamic that is so important in a culture of success on the backend for a franchise. It’s really, really easy to get negative sometimes and I saw from them firsthand what it took to rally a team behind an ongoing never ending project that we call franchising. And so I took all of that, fast-forward, I started a few companies, sold a few companies, but then I got to Code Ninjas, which was our first franchise brand that we really launched.
David Graham, FranchiCzar (03:06):
That’s when I started FranchiCzar as well. It was supposed to be our shared services technology systems, FranchiCzar was. And then we would spawn off these little brands and I thought I was going to have a multiple little brands. It ended up being that Code Ninjas took off way better than we could have expected. We sold 800 units and opened about 412, I think, in five years. And so that was hyper growth and all the problems and success that comes along with that. And we sold to private equity last year, and now I got to keep all my technology and most of my team, now we have the same shared services at FranchiCzar and we have Iron 24, which is our staff list tech enabled gym model. Learned some things over there at Anytime back when I was there. We also have Val Holland, which is our eSports brand for kids, and it’s like soft skills training for kids. We’ll talk a little bit more about that, I’m sure. We recently bought Pinots Palette, which is a paint and sip concept that we think we can do some innovative and cool things with. So that’s where we are and that’s where we came from.
Dr. Tom DuFore, Big Sky Franchise Team (04:13):
Really exciting. Well, it’s interesting because you have such unique perspective having been a franchisee, franchisor from starting your own brand, now acquiring a brand and growing. And with Val Holland here, I’d love for you to talk about eSports and this whole… It’s something to me that it seems you don’t go many days without hearing something about eSports and what’s going on there, and so I’d love for you to talk about that and youth and kids and what you’re doing.
David Graham, FranchiCzar (04:41):
eSports has been something that I participated in my whole life without calling it that. Anytime I had a bunch of buddies over, we would play Mario until 2:00 AM and try to see who could go through the game as many times without dying, or any kind of competition that, I won’t say only boys, but mostly boys when they get together, they’re going to be competing about something. And so we were using video games before eSports was a thing, but you had to… Basically, the best you could hope for was going down to the arcade in the mall or something and maybe getting a rally of 10 guys together and playing Mortal Kombat. It was pretty low out. And then the turn of 2000, I think some of that started changing. We started seeing more online games, which is a continuation of that, but that idea, that feeling of comradery of sportsmanship and reward, winning obviously is a big part of it, that never was lost on me.
David Graham, FranchiCzar (05:41):
So when we looked at what we did at Code Ninjas and the success that we had there, and that was very STEM oriented and technology oriented, what we said was, and I made a career out of that, so you are not going to find anybody that’s a bigger advocate for STEM than me. But I do think there’s another side of that coin, which is the soft skills and ability to lose, ability to win, all these things that make us fundamentally good human beings and give us that drive and that passion to take it to the next level. I think you learn that through traditional sports most of the time. And so I was like, “How can we do this through a competitive gaming and talking to kids where they’re at?” 75% of kids stop playing an organized sport after 11 years old, and so most of the kids out there don’t play any kind of sport, so they can’t learn to lose, they can’t learn to win, they can’t learn what it is to play on a team and build skills together. And I just think that’s what you’re missing out. You’re missing out on a huge part of life. No matter what they’re going to go into, they’re going to work on a team. And so that’s how we got here. That was the basis of the idea.
Dr. Tom DuFore, Big Sky Franchise Team (06:46):
Since this is the new business model that you’re growing here, talk a little bit more about that.
David Graham, FranchiCzar (06:51):
So most of our kids are going to come in. There’s three different ways that we, let’s say monetize it. The kids come in on a weekly basis a couple of times a week, just like you would in a traditional sports environment. You’re going to practice one time and then you’re going to play the real game one time. If you’re playing T-ball or soccer or whatever, that’s the general model, and so we’ve really mimicked that. We have a monthly fee, we can play year round, so it’s a little bit different than traditional sports like that, but we do put it into four real seasons that you can pick up at any time and get involved in the next season of tournament play. That’s one. That’s how you do it at one level. Each one of our games, we have five different games and each game has 18 months of curriculum. So you’re not just learning mastery, but you’re also learning about how to be a great member of your community. You’re learning how to communicate effectively in the games and outside of the games. We have five different pillars, so four of them have nothing to do with getting better at the video game, so we’re really using these games as a vehicle to get the kids into a better place mentally, emotionally.
Dr. Tom DuFore, Big Sky Franchise Team (08:03):
Fantastic. Well, and how has expansion been going with the new brand? Where are you open? Where are you looking to expand into?
David Graham, FranchiCzar (08:11):
On the sales side, franchise development side, we’re not quite as fast as Code Ninjas was, but on the opening side, apparently we learned some stuff on opening so many because we’re opening faster. So we have 60 units sold and by the end of the year, we’ll have 30 or 40 open. We just sold a master franchise to the UK. We learned some stuff there too. It’s really hard to support franchisees seven hours ahead of us or whatever. It’s just logistically a problem. So we found a really great team to be master franchisees in the UK. Excited about that. Actually, one of our VP of franchise development is over there right now hosting two or three discovery days, and those are going fantastic. We should have 10 or so units in the next couple of months there springing up. So North America is our main focus. We’re looking to be everywhere in the United States. Obviously we’re going to have a big presence in California, Florida, Texas, New York, New Jersey, Illinois, but we’re also going to have a lot of Midwestern towns that have fewer opportunities for kids to participate in things like this. And I think it really does go from big market to small market. There’s no real particular limit on it depending on the number of factors obviously, but I think small towns can support something like this, sure.
Dr. Tom DuFore, Big Sky Franchise Team (09:28):
I love what you’re doing. Certainly eSports is a thing, it’s here, it’s growing, it’s only getting bigger, and I have three kids right in the sweet spot age that you’re targeting, and I know two of my three, my two boys would absolutely love to be participating in this in addition to their other activities and things that they’re involved with. Well, one thing you had mentioned just a moment ago, which was learning about your experience from starting and scaling Code Ninjas and being involved in franchising. So what are some of those things you’ve maybe learned or that you’re applying now to the new eSports franchise?
David Graham, FranchiCzar (10:03):
Well, I learned that I personally don’t want to work 18 hours a day, seven days a week for two years. I mean, that was untenable. I definitely learned that I need to scale my team a lot faster and broader, and fortunately we did it the other way this time. We were able to have a really great team in place already and then we built brands around that. But I learned the value of having that team fully trained and fully engaged and with that culture of success, building and supporting each other all the time. And these people, you’re spending so much time with them probably more than most of your kids or something, you’ve got to be here for each other and really taking advantage of all of our strengths and supplementing each other’s weaknesses.
Dr. Tom DuFore, Big Sky Franchise Team (10:53):
Why have you gravitated toward the franchise business model? What have you found are its benefits and challenges there?
David Graham, FranchiCzar (11:00):
Well, initially I thought I could go to a private equity group with my idea that has zero units open and just pitch this idea about coding for kids and whatever the idea is and try to open up conventionally, I guess just corporate owned locations everywhere. And I just thought no matter what I hire or who I hire in that market, there’s nothing like an owner spending his own money in his own space. I mean, when you do that, you’re minding your dollars and cents and you’re making sure that the optimal output for your customer experience is there. And so I just think it really aligns everybody perfectly. If I was to raise that money and do it, I couldn’t hire that person, not quite the same person. And so even if you have an owner that is not an owner operator, they’re there present in the business enough to see, “Hey, my manager’s not working out,” then you can fine tune it on the ground there a lot better. And so I just thought that was the best way to allocate capital, was to get buy-in from a larger group of people who are actually going to be owners and most of the time operators, just because the closest money is usually the best money spent.
Dr. Tom DuFore, Big Sky Franchise Team (12:21):
I’ve seen that as well. And as you mentioned that with these franchisees being the local owner operators and having been a franchisor and supported and helped franchisees grow their business, what are some things that you found, maybe some secrets or tips that you found that you think every franchisee that’s opening up might want to know to be successful?
David Graham, FranchiCzar (12:44):
Well, I don’t even know if it applies to franchisees specifically, but in the franchising space, follow the model. I mean, I can’t say that enough. Somebody built that model. A team of people thought about it, the plan is there. You didn’t buy into a franchise to go off the happy path. That’s what we call it around here. You’re on the happy path. Think of it as a line laid highway. There’s a line on this side and a line on that side. You can drive between those lines, but when you get off the lines, it makes it basically impossible for us to help you out. And then generally speaking, in business, what I always think about is are you under capitalized? Do you have enough money to actually pull off what you’re trying to do?
David Graham, FranchiCzar (13:24):
So making sure that… It’s a very generic general rule, but take your prospectus and cut the money in half on the top line, and then take the prospectus and increase your expenses by 25%. If in a couple of years you break even and you got enough cash flow to do that, then it might be a good idea. And it is not given, it just might be a good idea. I mean, so it is going to take a lot of hard work in between there, but be very conservative in your projections because as soon as you write it down, you’re wrong. And so you’d write the error on the conservative side rather than the field of dreams side.
Dr. Tom DuFore, Big Sky Franchise Team (14:10):
I think that’s great advice and hearing you describe that, I was a multi-unit franchisee in a system in a home services franchise for a little while, and I had these grandiose dreams that I thought I was really going to just conquer the world with, and the business did fine. The business model was fine. I followed the system, but it really ultimately came down to I got out of it what I put into it, exactly what you’re saying. So your advice would’ve been very well received maybe eight or 10 years ago.
David Graham, FranchiCzar (14:39):
Well, getting out of it what you put into it, that goes for a lot more than just franchising, relationships, friendships, all of those things. It’s always a reciprocal environment.
Dr. Tom DuFore, Big Sky Franchise Team (14:51):
You had mentioned technology and your background in technology and how has this lifelong interest and really sounds almost like a passion for technology, how has that helped shape your approach with entrepreneurship and franchising?
David Graham, FranchiCzar (15:05):
There’s nuance in franchising that makes it specifically important to have the right technology in place so that you can scale effectively. I mean that’s really what starting a fast-growing franchise is all about, is how effective can you scale? And those efficiencies almost always, and not always, but almost always, are going to come through some kind of technical advantage you have over your competition. And so if you don’t have the right technology in place, you don’t have the right team in place that can use that technology, I think you’re setting yourself up for a slow grow, at least, I would say that. You can do it, but it’s going to be more difficult. And how I’ve used that, let’s just say in an acquisition of a company or something, I usually go around and look at it through a technical lens first and say, “How can I pour my jet fuel into this using the technologies that we have today, and is it going to be better for it?”
David Graham, FranchiCzar (16:03):
And that’s not just on the franchise development side, but specifically on the consumer side. How do we ensure that we can use the tools and technology that we’ve built over the last 10 years to create a better customer experience or to let our customers know about opportunities to engage with us in more creative ways? And so that’s really how I look at those opportunities to acquire, and the more I do this, the more I realize there’s no silver bullet, man. There’s no replacement for real ingenuity and innovation, and a team that can do those things on the fly is like… That’s pretty impressive. And so using the things that we already have but then also knowing, “Hey, this isn’t the right tool. This is going to be a heavy lift. We probably shouldn’t get into that one.” That’s harder to do as an entrepreneur, as a builder, as a grower, as a guy that just thinks we can do basically anything with technology, but my team says, “Yeah, I don’t think we can do this one.” That’s hard for me to back off on. So learning when to say no is also something that I’m still working on, let’s say.
Dr. Tom DuFore, Big Sky Franchise Team (17:16):
Absolutely. Well, David, this is a great time in the show, we ask every guest the same four questions before they go, and the first question we always like to ask is, have you had a miss or two on your journey and something you’ve learned from it?
David Graham, FranchiCzar (17:28):
Sure. I think if anybody tells you they haven’t had any swings and misses, they’ve probably not been in business for very long. What I always do, and this isn’t like I made this up so I’m not trying to steal this idea, but it’s a principle of we’re not going to fear failure. Failure is going to be a learning tool for sure, and we’re not going to strive for it, but when it happens, let’s look at it and figure out how to get past that as a productive thing. It’s like the Edison styles of light bulbs. Nobody talks about the 999 that he built before the one that worked, it’s just the thousandth one happened to pull it off. I think we go through these fantasies and especially in the press and things, you look at Elon Musk or somebody like him, you’re like, “Oh my God, he must have just had the magic touch,” and nobody really knows about the 10,000 little failures that happened along the way and the swings and the misses. And those are healthy and not thinking about them in a negative context, that’s the power that comes from it.
Dr. Tom DuFore, Big Sky Franchise Team (18:37):
Yeah, absolutely agree. Let’s talk about a make or two. You’ve shared a few but highlights or wins that you’d like to share along the way?
David Graham, FranchiCzar (18:46):
Yeah, I mean we’ve certainly had a bunch of wins. Obviously on the franchise development side, we’ve always been very successful. I’ve been able to keep a really solid team together, and I think that’s a win in itself. We’re really tight here. When we bring in somebody, everybody on the team has the ability to kibosh them. It’s just like, “Did you get the bad feeling? Are they not going to jive with the team?” It’s got to be a hundred percent, or we’re just like, “No, it’s not worth it.” At this point, we know what we can do and what we can pull off, and if that’s not going to work, then we definitely do that. But just strong wins, I mean, building a company over six years and then selling it to private equity in a down market after COVID, I thought that was a pretty good win. It’s a hard thing to quantify. You try with every single one to do success, that criteria is different for everybody.
Dr. Tom DuFore, Big Sky Franchise Team (19:47):
Let’s talk about a multiplier. The show is called Multiply Your Success and have you used a multiplier to grow yourself personally, professionally, or companies you’ve worked for or owned?
David Graham, FranchiCzar (19:58):
Yeah. I mean obviously I’ve talked a lot about my team and I think that’s probably the generic go-to answer. You cannot do these things by yourself in a vacuum. One of my old bosses told me a long time ago is like, “Dave, you’re never going to become successful if wealth is your success metric, you’re never going to hit that sitting behind a computer.” And I thought that… At the time I was like, “What does he know?” I just thought, “You’re just some old guy, you don’t know anything about the technology.” But I realized more and more over the years that making those interpersonal connections and then being genuine in those connections, good and bad, when things go bad, you got to be genuine, that’s definitely a multiplier. Now, it can be a divider, if you’re too upfront and divisive, literally, it can go both ways, and I’ve learned that too. So my real multiplier, I guess is that I have a team and we know when I shouldn’t be talking to people and we put the right team member in front of the persons to which we’re talking. At certain times, I’m definitely not the right person. And so that’s my multiplier.
Dr. Tom DuFore, Big Sky Franchise Team (21:12):
Fantastic. Well, and it’s interesting, just as a side discussion on this team for you, one of the things that I’ve noticed for franchisors and people that have had success that’s been replicated in the franchise space as a franchisor, multi-unit operators, keeping that core team together is a trend or something that I tend to notice exactly how you described, even when you ended up selling Code Ninjas, you were able to keep the core of your team together, which I find very interesting. Have you found that to be consistent as well or what you’ve seen?
David Graham, FranchiCzar (21:48):
It’s certainly consistent if you want to replicate success that you bring the successful team along with you. I think that’s actually one of the harder parts about selling your brand, because that’s very rare. What happened for me is that I got to eventually… It took a long time to get the whole team back because we had to train and replace everybody and do that, but our group that we worked with was on board with that strategy. So I think that’s rare, and it’s unfortunate because I do think teams who have worked together and had a level of success in the past don’t have to go through that honeymoon phase where you’re like, “Oh, if I give this guy this thing to do, are they actually going to do it?” We know, I can kick this over the fence and they’re going to get it done. Full trust. And that’s so important. I do see that teams though, like you said, multiple different… If the same team can work on multiple different projects, you almost always have the same level of success.
Dr. Tom DuFore, Big Sky Franchise Team (22:48):
Very, very interesting. Well, the final question we ask every guest is what does success mean to you?
David Graham, FranchiCzar (22:55):
It’s changed over the years. I mean, I think as a young person, you always just want to be rich, and then you get a certain level of wealth and success and you’re the dog that caught the car. What that means to me is I think the people around me, the people that have helped me build these systems, all feel appreciated, whether that’s my wife or my kids or our staff. When you live… At some point, monetary means you’re all met, you’re done. You’ve got everything you need to be happy. And so after that, you’re looking at the people around you feeling fulfilled, feeling like they’ve got a place and have the right burden to bear. I think that’s success to me.
Dr. Tom DuFore, Big Sky Franchise Team (23:42):
As we bring this to a close David, is there anything you were hoping to share or get across that you haven’t had a chance to yet?
David Graham, FranchiCzar (23:49):
I love franchising. I think it’s one of the best inventions of our modern business cycle. It’s still pretty novel. It’s been around for 80, 90 years, maybe 80 years, something like that. I think it’s still the best way to do this in a scalable way, and I appreciate you having me on.
Dr. Tom DuFore, Big Sky Franchise Team (24:10):
Well, thank you. And what’s the best way for someone whose maybe interested in wanting to connect with you, find out a little bit more about what you’re doing or maybe get involved with what you’re doing?
David Graham, FranchiCzar (24:20):
Yeah, I mean, you can certainly look at all of our brands at 4e.co, that’s 4e.co, the number four, the letter E .co, and that has a list of our brands that we’re currently working with. And yeah, you can get in touch with me at david@franchiczar.com. Just shoot me an email.
Dr. Tom DuFore, Big Sky Franchise Team (24:39):
David, thank you so much for a fantastic interview, and let’s go ahead and jump into today’s three key takeaways. So takeaway number one is when David talked about building a team faster around him, and he said he worked for 18 hours a day for two years before he had built an appropriate team around him to help support the growth. And while he was able to sell 800 franchise units in roughly five years and get over 400 of those open during that time period, he said he was working way too much and he said that was a lot of stress and time that was put in on it, and building that team sooner was a key takeaway. Takeaway number two is why he chose franchising as an expansion vehicle, especially for these next brands that he’s looking to grow. He said he originally thought about using private equity to grow, but he said franchising provides that local ownership to have someone with vested interest in the success of that local franchise.
Dr. Tom DuFore, Big Sky Franchise Team (25:41):
And I thought that the key nugget here is that he said the closest money is the best money spent. Takeaway number three is that he said to franchisees out there, if you’re an existing franchisee or someone that’s thinking about buying a franchise, he gave a few bits of information. I’ll try to summarize those quickly. He said, follow the model and he said that they call that in their system ,the happy path. And you don’t want to buy a franchise and go off the happy path, stay on that happy path to follow the system. And when you’re considering buying a franchise, he said, look at the financials that are provided in the item 19 or the prospectus, and he said, cut the top line in half and increase the expenses by 25% as you start to build out your franchise projections for your franchise units. And now it’s time for today’s win-win.
Dr. Tom DuFore, Big Sky Franchise Team (26:36):
So today’s win-win comes from when David shared with us about building a great team and interpersonal connections. And I know we mentioned this in our first takeaway from the day about him working 18 hours a day for two years, but he said he didn’t want to do that and should have built a team sooner, and he learned the value of building a great team around him. And when he talked about what success means, he said, it’s about having people around you to feel fulfilled, including your family, friends, and the staff and people you’re working with. I thought those were great nuggets, great takeaways, and it really is the win-win that as you are building this franchise system, to have team with you to help grow and implement together. And so that’s the episode today, folks. Please make sure you subscribe to the podcast and give us a review. And remember, if you or anyone you know might be ready to franchise their business or take their franchise company to the next level, please connect with us at bigskyfranchiseteam.com. Thanks for tuning in and we look forward to seeing you back next week.
