Why You Need a Board of Advisors

Do you have a board of advisors? If your answer is “no” or “what is that?” then this podcast is a must listen to for you.

Today’s guest is John Francis, or better known as Johnny Franchise! Johnny Franchise helped build his family business from 1 location to over 1,000 locations, help take it public, and eventually sell the business. He then became the franchisee of the year for PostNet and received the “Franchisee of the Year Award” from the International Franchise Association! John also serves on numerous boards and, most notably, sits on the Board of Directors for Sport Clips.  He has a ton of great lessons and wisdom to share.

Here are some of the links to connect with Johnny Franchise!

Follow Johnny Franchise on his social media channels listed below: 

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.     

Tom DuFore:

You’ve worked hard to build your business, and now it’s time to grow. Welcome to the Multiply Your Success podcast. I’m your host, Tom DuFore, CEO of Big Sky Franchise Team and serial entrepreneur. Join me each week as I interview leading entrepreneurs, executives and experts who share their misses, makes and multipliers. If you’re a growth minded entrepreneur, investor or franchise company, then this podcast is for you.

Tom DuFore:

If there’s one thing I’ve learned in business and in life, it’s that you can always learn something new to make things better. Our purpose for this podcast is for you to glean some wisdom and practical ideas to implement on your expansion journey. We look forward to being your guide to multiply your success.

Tom DuFore:

Welcome to the next great edition of the Multiply Your Success podcast, and as we get going today, I always just want to ask a quick question here, and today’s question is about advisory boards, and do you have one? I don’t know if you do, but if you don’t, after today’s episode, you’re really going to want to be considering it. Today’s guest that we have with us goes by the nickname Johnny Franchise. He’s spent literally his entire life in the franchising business. He is a decorated franchise veteran with all kinds of accolades and awards. He helped build his family salon and haircare business from one location to over a thousand units, become publicly traded, and eventually be sold. And he has been an area developer. He won franchisee of the year from the International Franchise Association. He won the franchisee of the year with the franchise system he was with, and he’s currently serves as on the board of advisors for many, many different organizations around the country and around the world. Most notably, he currently serves on the board of directors for Sport Clips haircuts, and has been doing so for more than 10 years now.

Tom DuFore:

Today you are in for a treat with hearing all kinds of wisdom and expertise from what we refer to as someone with that franchise trifecta. Without further ado, here is my interview with Johnny Franchise.

Johnny Franchise:

My name is John Francis. I live in Minneapolis, Minnesota. Twin Cities. Born and raised up here. I grew up in a franchise business. My nickname I was given a few years ago is Johnny Franchise because if you add an H and an E into my last name, it goes from Francis to Franchise. I used to say, “Well, you can’t spell franchise without Francis.” It was kind of funny.

Johnny Franchise:

And then as a kid, I’m the youngest of five kids in my original family, so I was Johnny growing up. I was little Johnny. All my friends and family and a lot of people call me Johnny Francis. It was easy. And my background, Tom, I grew up in a hair salon franchise. My dad was a barber here in the ’50s. He was cutting hair, old school barbershop. And he was a pretty good barber, but he got frustrated. He said, “This is going to take forever to get rich one head at a time.” Long story short, he really innovated the barbershop industry, and back in those days it was barbershops for men and beauty salons for women. He created a whole new category, a new version of that here at least for the Midwest, and he started a brand called The Barbers, which I guess wasn’t the most creative name, but that’s who it was, and he started cutting hair. It was a high-end salon for men. It started out as a men’s grooming, kind of what you see these days is kind of a resurgence and 50 years later it’s come back.

Johnny Franchise:

He created these barbers and had a great business, worked really hard, and had a lot of good people help him. He grew that brand and then they franchised it in the I guess late ’60s, early ’70s, so he was very much a pioneer in franchising of barbershops, and in the ’70s it grew. He actually took it public over the counter local market here in Minneapolis and raised a bunch of money, and typical entrepreneur, spent all that money doing some crazy things. Probably grew too fast and too far. But again, he had good people and they worked really hard, and they tried to do the right things, and he took care of people that were around him. He had a very loyal following, and he was just a real likable guy, my dad.

Johnny Franchise:

He grew that business and in the ’80s, they developed another brand called Cost Cutters, which was low-end, quick service, low price, I mean, quick service, no appointments. That brand took off like crazy. And then, in the middle ’80s, we developed a brand called City Looks, which was more of what they would call a unisex salon spa, was both for men and women, and updated the look and feel of the whole concept.

Johnny Franchise:

In the ’90s, we did some international work franchising. I got to franchise hair salons in France and other parts of Europe, and actually all the way to Russia. We did some Russian joint ventures in the ’90s, which was absolute chaos. Then we came back and did some acquisitions, some regional brands. We’d buy them and integrate them and convert them and franchise them. We did a bunch of those. We grew that business nicely. We had a lot of help, a lot of talented executives, and a lot of fantastic franchisees. I grew up in a franchise business. I thought everything was a franchise when I was a kid, and I thought everybody worked for themselves except for the people that worked for us, and I thought everybody owned two or three businesses because that’s what we did when I was a kid.

Johnny Franchise:

My dad has passed away in ’94. He had cancer and that was a tragic loss, but we were more or less prepared for it, and my mother stepped up as chairman, and now we were publicly traded NASDAQ listed company, and my mom doubled the size of the company. 10 times to the value of the company in the 90s. The 90s were pretty wild and fast, and we grew like crazy, and we did a great job. Again, more talented people working really hard together, and we had a great culture, we had great talent, we had great people just doing a great job.

Johnny Franchise:

Then unfortunately, my brother, I had an older brother, he died in a car accident in ’97 just a few years after my dad had passed, and we were just coming out of that. And then my brother dies, and that was the thing that really I would say upset the apple cart and motivations changed and situation changed for my mother. She wanted to retire and she’d had enough of everything. We wound up selling the whole business in 1999. We sold our franchise system to Regis Corporation. We had just over 1000 stores. It was a nice deal. We were both publicly traded, so it was all open book kind of a deal. I went with the deal to Regis for about nine months and did what I could to help with the transition, and at the time, Regis was a different organization 20 years ago.

Johnny Franchise:

We became their franchise division, right? Were primarily a franchisor, and we had a lot of good brands, a lot of great people, a lot of talented experience there, and so I went to Regis. After I got to Regis and things settled down, and it turned out to be a pretty good deal, I had a severance agreement, an employment agreement which I know I’d never had again, so I took advantage of that and left, and took some time off, and they went off to do a few more franchise deals. I did a few more things as a developer, regional developer, area franchisee for PostNet, which is a business center concept in the early 2000s. That was a great place to be. I ran up that for 10 years and built a bunch of stores, and had a lot of fun in that brand. Great people, great culture.

Johnny Franchise:

And then, did a few other franchisor related things and a few other franchisee related things, and in and out of different brands kind of as a partner, as an owner, as an operator. Sometimes as a franchisee, sometimes as a franchisor, sometimes both. I try to help where I can, and there was plenty of opportunity around, and I had a good reputation, a good history, and opportunities were plentiful, I guess. Ran those things for a long time, had a lot of fun working hard and doing my part. Had some great people working with me along with the way, and then when the recession came through 2008, 2009 and 2010, a lot of things changed. The development side really stopped because financing stopped, and so franchising cooled off I would say. The businesses performed, but the growth was really stunted and slowed way down. It takes a lot of the fun out if you can’t build any new ones.

Johnny Franchise:

And then, the real estate industry, the commercial industry, real estate got hit hard by the recession, so we saw that as an opportunity here in my family, and I guess our state planning strategy shifted. We decided to invest in some commercial real estate property, which I had done actually in college, we had a real estate business for our family. I had experience in managing and property and leasing and financing. I sold my franchises and went deep into the real estate business, but I stayed in the franchise industry by serving on boards, serving on boards of directors and boards of advisors, and doing a little bit of speaking and consulting, and now I guess you would call it coaching. I have some clients that I talk to on a regular basis to try to help them with their businesses. I don’t own the company, I don’t work there, I don’t own any units or franchises. But I’m certainly a resource to help these people get it right and help them improve their businesses.

Johnny Franchise:

The one that’s probably the highest profile is Sport Clips hair salons. I got introduced to Gordon Logan, the founder there, the chairman. He’s a fantastic guy, doing a great job. I met him at a leadership conference at IFA. Kind of a funny story. I saw him, and he wears a shirt with his logo on the time, right, a very well-branded, proud of his brand. I sat next to him, and my name tag said PostNet at the time, and I was a franchisee. I was on the IFA Franchisee Forum. I was chairman of the Forum. I was a big high-profile franchisee. I knew who he was, but I don’t think he knew me at the time. I sat down next to him at a dinner, and we started talking, and I started asking him questions about his company, and it didn’t take him long. Gordon is a very sharp guy. He looks at me and he says, “Who are you? How do you know so much about the salon business?” And I told him who I was. I said, “Well, I grew up, and my dad, the barbers, and Cost Cutters.” And, “Oh, okay, okay.” He put it together.

Johnny Franchise:

Then we had a really good conversation once he knew who I really was, I guess, or more about my background. One thing led to another, and he has a son in the business, Edward Logan, who has just now been promoted to CEO just recently, and Edward is doing a great job. This was about 10 or 11 years ago, so Edward was coming into the business as the son of the boss, and I had been the son of the boss in a hair salon franchisor, so I had a lot of the experience and credentials and I had lived the path that they were on. At the time, I think Sport Clips was around five or 600 units, so pretty successful already but growing fast.

Johnny Franchise:

One thing led to another, Gordon invited me to serve on their board of directors. They had a board. And I asked him, “Well, who’s on your board?” That was a great start and that was I think 2009 maybe, 2010. I was transitioning away from I would say the operating level in franchising and transitioning over to more of a consulting advisory coaching kind of work. And then the family business took over and really allowed me to do both of those other things.

Johnny Franchise:

Then I guess it’s been since about 2011 I transitioned out of PostNet altogether and actually worked for the corporate office for a few years as an advisor. Helped them with a few issues and strategies they had at the time, and that was a really good experience, and then I started helping other people setting up these boards. Primarily advisory boards, which is less formal than a board of directors, which is more formal. But I’ve become sort of a I guess it’s my niche is the board work and I really enjoy it because I can bring my experience as a franchisor, as a franchisee in this industry for 30 plus years. I mean, I’ve learned a lot, and I’ve made a lot of mistakes, and I’ve seen other people make a lot of mistakes, and you learn from all that experience, so I can bring that experience, I can bring my network, I can bring my point of view, and I can do it in such a way that is valuable, but not busy, right?

Johnny Franchise:

I can show up prepared and do my things at the meetings and follow up and follow through in between the meetings. But I don’t work there. I don’t feel like I have a job so to speak. It’s more of a role, more of a function, and I find it suits me real well and I’ve been doing it now for a long time, served on a lot of boards. Just really kind of found my niche I guess. That’s where I am today.

Tom DuFore:

Wow, what a story. Pretty incredible, John, and thank you for sharing all of that. Really, really amazing. It’s interesting being a part of a high-growth organization with your family business that you grew and helped be a part of growing and expanding that to a thousand locations, and then eventually selling the business and building other companies along the way. And if I remember correctly, you had a highlight as a franchisee, is that right? A franchisee of the year award that we had spoken about?

Johnny Franchise:

Yeah.

Tom DuFore:

You want to share that?

Johnny Franchise:

Yeah, yeah. Well, PostNet was at the time where I was, and I got involved with those fellas. Great company, privately held, and really good leadership and good hard work, good culture. We had a lot of fun. We worked hard but we won. We had some really good success, and one of the things I did here in Minneapolis, I’m born and raised and here, so I kind of know the neighborhood. There was a shopping center near my house that had a UPS store, a competitor, obviously, a direct competitor. And I really wanted to be in that shopping center, but the UPS store was already there and had been there for a longtime. I lobbied the landlord. I kept writing the landlord, “Hey, I’d love to have the opportunity to get in your shopping center.” Honestly, I had owned a Cost Cutters franchise in that shopping center 10 years prior. I already knew the center and already knew the market, and I was like, “This is the spot. I got to be in there.”

Johnny Franchise:

The UPS store that was in there at the time was I would just say a bad example of UPS retail. I mean, I respect UPS. It’s a great big brand and lots of talented franchisees, but this particular location was really I would just say old and tired. It was not looking good. And the center had everything else. It was beautiful. They’d turnover a location, they’d put in something new and shiny. It was great looking, high-end, class A retail. Grocery anchored. It was just had everything with it.

Johnny Franchise:

And so I teased the landlord. I’d send him letters and reminders every time we’d open another store somewhere else, I’d say, “Hey, we got a new unit open over here, and this is number whatever, and I really want to be in your center. Let me have it. Let me have that UPS store.” Or I’d see the center change over, some other tenant slot would switch from one thing to something else. And I’d say, “Well, nice job. That’s a big improvement for the center. When are you going to let me have that UPS store and do the same thing?”

Johnny Franchise:

I just kept on a routine campaign of let me have it, let me have it, let me have it. And finally, I networked my way into the property manager, right? It was different than the landlord. It was some commercial real estate company, and I got, finally got to it. I said, “Who owns that center? Who runs that? Who manages that thing?” And I got to the property manager, and I started writing them these letters saying, “Let me have that spot. That UPS is…” It’s just a terrible example of retail. I said, “You got a beautiful center with all these great stores, and then this one is like a real blemish on your shopping center, and I would come in there and build a brand new store and do it right. We fill the same category, and we do everything they do, plus.”

Johnny Franchise:

Anyway, it took a while, but sure enough I got a call one day from the property manager. Said, “The UPS store lease was up, and went to the file to look up their renewal, and there’s 10 of your letters are in that UPS store file when you asking for the space. Do you still want that location?” I said, “Yes, absolutely. I want that location. Let me have it.” They sent over a lease, we negotiated the lease. It took me about 15 minutes. I mean, I was not going to blow this deal. Wrote the check for the deposit and the first month’s rent, and so we had a deal, and then they went over and gave the guy a notice and said, “We’re not renewing your lease. Your lease is going to expire at the end of next month,” or whatever it was, “And we’re not offering you renewal.”

Johnny Franchise:

I waited for that to settle down for a week or two, and then I actually went into that UPS store, and I’m looking around, and you can kind of figure out who’s the owner. I mean, it wasn’t hard to tell. I started asking questions. I said, “Hey, I understand your store lost its lease.” He kind of looks at me. I said, “Well, look.” He said, “How do you know that?” I said, “Well, because I’m the guy coming in.” He looks at me kind of sideways now, and it’s like, “Well, what do you mean?” I said, “Well, I run the PostNet stores in town, and I’m putting a PostNet store in here.” And then he was like, I thought he was going to attack me.

Tom DuFore:

Oh my goodness.

Johnny Franchise:

I’m like, “Look man. I’m not here to cause trouble.” I said, “I’ve been working on this opportunity. I want to take care of your people. I want to hire your employees. I want to keep your customers. I want to keep serving your clients. I want to do the right thing. I’m just trying to be upfront about it. Can we negotiate? Can I buy some of this equipment? Can I pay you something for the customer list? Can I try to do…” Trying to do the right thing, even though I’m trying to pull the rug out from underneath him.

Johnny Franchise:

Anyway, he didn’t throw me out of the store, but let’s just say I wasn’t there very long. I left. I wanted him to know what was happening before he started telling his customers, “Well, we’re gone. It’s over.”

Johnny Franchise:

Anyway, long story short, I get to the IFA… Well, I guess I should say… Finish the story. He moves out. I did give him something. I went in there and said, “Look, here. I don’t feel good about this if I’m just taking it from you, so I want to give you something.” I tried to give him something. I said, “I’ll hire your employees. Give them my card. Get the applications. We’ll get them hired right now so they don’t miss a paycheck or anything.” We did all that.

Johnny Franchise:

I got the store on a Thursday night. The dude closed at 6:00 at night. I went in there about 8:00 at night and tore out the front half of the store and pushed everything back. We had crowbars and I had some of my friends, construction guys, and we pushed everything back about 30 feet and put floor to ceiling banners so it looked like a PostNet store was going to look like, like a rendering I guess you’d call it, like the drawing. And then we pulled the sign down, and I had a banner up, I had the sign being made. We did everything we could to keep that door open.

Johnny Franchise:

On Friday morning, customers would come in and pull the door, and the door opens, and they’d come in and say, “Oh my God. What happened?” And well, I’m here. Here’s PostNet. We had a folding table with a point of sale, we had the mailboxes, I had as much as I could in there to operate on what I would call temporary conditions. But we never wanted the door to be locked for customers because it’s retail. High quality service is what they want.

Johnny Franchise:

We transitioned that store, and then we started construction the next week. They started ripping out the whole thing, and we operated through the construction. Took about six weeks I think to do the whole thing because we never closed, right? We moved stuff around and everything was on wheels. Anyway, it turned out to be a great location because we’d had the built-in customers and we knocked it out with service, and it was a beautiful brand new store with new equipment and new everything. We did it right. We really did a great job. Turned out to be a good win.

Johnny Franchise:

Six months later, I’m at the IFA convention, and I don’t remember where it was, but I’ve been around the IFA since I was a teenager, so I’m used to going IFA, and I’d go to IFA and I’m a franchisee. I had won the franchisee of the year at the PostNet conference for that year for doing that, I would call it a non-hostile takeover, but I took it over and converted it. It was like a David and Goliath, right, where a little scrappy little PostNet took down a giant UPS.

Johnny Franchise:

The franchisees in my brand were thrilled that somebody could pull that off, right? And then I told my story, and we had a lot of pictures before and after, and it was a complete transformation. I was feeling good as franchisee of the year, and I go into the IFA conference, and the president of UPS happened to be there, was a friend of mine, and I knew the guy. We had served on the IFA Board of Directors together. He comes over, and he’s mad at me. He’s like, “You, you.” And he’s pointing his finger, and I’m like, “What? What?” I had kind of forgot about it. I didn’t really expect this guy to come after me. He’s like, “I heard what you did. You did that deal in Minnesota.” I’m like, “Well, what do you mean? Oh, yeah. Yeah. Yeah. I did.” Then I realized why he was so upset. He said, “Look, you really embarrassed me in front of my franchisees.” And I said, “Well, what do you mean?” And he said, “Look, because of you, we’ve changed our whole real estate strategy.” He said, “Now we had riders on every lease that if the landlord is not going to renew or not extend or whatever, they have to give us notice. We want another franchisee to take that location. We don’t want somebody like you coming in.”

Johnny Franchise:

He said, “You embarrassed me in front of my advisory council.” And he said, “When I heard it was PostNet doing a thing and then I was that upset. Then when I heard it was Minnesota and I didn’t know, and then when I heard your name.” He said, “And I know you.” I’m like, “I’m sorry. I apologize. I wasn’t trying to hurt anybody.” I said, “I’m just taking advantage.” I said, “Look, honestly, you should be mad at the other franchisees in the marketplace because they let this poor guy operate on those kind of conditions and they should have taken him out or bought that store or done something to improve it. I took advantage because somebody was asleep at the wheel, and I managed to get into the landlord and take the location.”

Johnny Franchise:

He was a little upset, and I explained it, and then he kind of understood it. He says, “Look, man, if I was in the franchisee, I probably would have done the same thing.” I said, “Yeah, I think you probably would have.” At the end, I think he didn’t like what I did. Obviously it was a black eye for him, I mean, but it’s one unit of I don’t know, how many thousand that they have. But what it did is it caused them to reconsider their whole real estate location management process. They improved their system so that’ll never happen again, or at least not that easily. And I think they tightened up their compliance programs because this guy was way, way out of compliance. I mean, it was an embarrassment what the UPS was doing at that spot. It was just terrible.

Johnny Franchise:

I think he realized that yeah, I took advantage of it, but they created the opportunity by letting this franchisee operate at that level, and it should have never been.

Johnny Franchise:

Anyway, I won franchisee of the year at IFA that year along with a few other franchisees, but I got recognized for outstanding performance as a franchisee. It was a pretty great opportunity. I mean, it was only that. I had done a lot of other good things in my franchise business with the PostNet brand for a long time, and I guess my attitude is people don’t just accidentally win those awards. Those kind of awards and recognition are earned, and it’s not just one thing that you do that makes that happen. I think it’s a pattern of success and a pattern of contributions back to the brand you’re in. I had been the advisory council president and I had done just a lot of things inside of that brand as a regional guy and as a multi-unit guy. I was all in about as far as a guy could go into a brand, and I know I made a difference in that brand for a long time while I was there, and it was a lot of fun, and really enjoyed it. And being recognized for that success, that’s a beautiful thing.

Tom DuFore:

Wow, that’s impressive. That’s really, really impressive. I mean, truly, all facets of franchising you’ve seen so much from being a franchisor and growing a multinational publicly traded franchise organization to a thousand locations, to being the franchisee of the year in your system and as recognized by the International Franchise Association, and being a supplier and an advisor to the industry in what you’re doing. It’s really that true franchise trifecta that people often times talk about. It’s really impressive and I’m glad and I’m thankful that you’ve been able to share a little bit of your background here with us.

Tom DuFore:

Johnny, one of the things we like to ask all of our guests as we get into a little bit of some of the questions here is we like to ask about maybe a miss or two that happened along the way that you could share with the audience and what you learned from it.

Johnny Franchise:

Yeah, well that’s certainly I’ve had my share of misses and losses and frustrations. I guess the first one that comes to mind is a store that I owned here in Minneapolis that I had… Well, I’ll tell you the whole story. A franchisee had bought the store. I’d sold him the… I didn’t technically sell him the franchise, but I was the area developer, so I was his guy. He bought the franchise, opened the store, and really overbuilt the store. The guy had a lot of time and a lot of money, and very capable, smart guy. Probably a little overqualified frankly, and I went up there to look at the store. It was under construction. I’m like, “Hey, how’s it going?” And I’m looking around like, “Boy, this looks big, man. What’d you do?” I had negotiated the lease and the location while it was under the center. It was a brand new shopping center, and while the center was being developed, I had already secured a spot and then sold the franchise, and then I come back while they’re building it out. And I said, “Well, this looks a lot bigger than what I had.” I go, “What’d you do?”

Johnny Franchise:

He said, “Oh, I’m going to add a conference room.” I’m like, “What do you mean you’re going to add a conference room?” He said, “Yeah, I need a conference room and I need an office too in my store.” I’m like, “What are you doing? We don’t have conference rooms and offices in our stores. This is retail. You’re paying AAA retail rent here. What are you trying to do?” He says, “Well, I have consulting clients and I need to be able to work with my clients while I’m working in the store.” I said, “Oh, that’s not a good idea.”

Johnny Franchise:

We started talking about it, and I said, “Well, what other choices have you made?” He had hired two full-time managers. Two full-time managers. Where you don’t need that, not at the start. He had overbuilt the store physically, he had over equipped the store, he added all kinds of top-shelf equipment, which is great, but and then overstaffed the store with too many people, too much overhead. I said to him, I said, “Look, man. I think you’re making a lot of mistakes here. Let’s try to unwind some of these choices because you’re building an albatross. You’re never going to make money. You’re going to push your break even way, way out with all this overhead, and rent, and equipment, and leases, and staff, and payroll, and everything else.” “No, no, no. I know what I’m doing. I know what I need. I’m going to do it this way.”

Johnny Franchise:

Like I said, he was a nice guy, a very smart guy. I mean, I really liked the guy. Excuse me. He could afford this, right? It wasn’t like he was borrowing all the money. I mean, he had made a lot of money, and a very successful guy, so okay. He gets into it, gets it open, and sure enough, didn’t take him long and he realized that he had made all these mistakes. I’m meeting with him, I’m like, “Well, what are you going to do, man? What’s your break even?” His break even was double what it should have been. It was just ridiculous. I said, “Look, remember the conversation we had when those contractors were in here and I’m trying to tell you to move the walls back and get it, shrink it down and forget about this?”

Johnny Franchise:

Anyway, it didn’t take him long to realize he had overdone it and he wanted to sell the unit. I’m like, “Great, let’s sell the unit.” I said, “But what’s it worth?” He said, “Well, here’s what I put into it.” I said, “Look, you’re not going to get someone to pay you for your mistakes. You made those mistakes, you’re going to pay for those mistakes. I can get you a buyer, but they’re going to pay what it’s worth, not what it cost.” And he got pretty upset with me, and I’m like, “Look, I’ll do my best. I’ll bring you a buyer.” I get a few qualified leads, I bring them up there, and say, “Well, we’ve got an opportunity. You don’t have to build a new one, you can buy this guy’s store. I think he’s going to have to take a discount on the cost because he created all… You go in and reset the equipment, you can changed the staffing model. You’re stuck with the rent.”

Johnny Franchise:

Anyway, I took him three buyers, and of course, none of them… They couldn’t make a deal because he didn’t want to take the loss. And so, I’m up there again with him. I said, “Look, I’m done. I’m not bring you anymore buyers because you just blew out three qualified deals I could have sold new stores but I’m trying to help you sell your store.” Then he said something to me that really kind of made me upset. He said, “Well, you know what? If I just shut it down and walk away, I’ve lost more, I can afford to take the loss. I need to offset the stock market gains.” He was like, “Oh, I don’t really care.” I’m like, “Are you kidding? After all of this, right?” After months of hard work trying to get him out of there in a reasonable way. He says, “Well, I don’t really care. I think I’m just going to shut it down.” I said, “Okay, fine. Go ahead.” I was really upset. I mean, that wasn’t the right thing, but it was a brand new store. The thing was six months old, not even.

Johnny Franchise:

And so, he starts going through the wind down procedure, and I exercised the first right of whatever it is in the franchise agreement. I said, “I don’t want the unit to close. I don’t want to have a black eye on the brand.” It was a great location and a great store, even if it was a little too big. I bought the store from him for asset value, which was a fraction of what he put into it, right? I’m like, “Look, you told me you don’t mind taking the loss. Now that it’s me, I’ll write the check.” I wrote him a check for I don’t know, it wasn’t much. I mean, it was probably 20% of what he put into it. It was like wow, poor guy, but I didn’t feel bad for him because he was kind of arrogant now, and he had mode those choices when I advised him not to. He had a chance to correct it but he never did.

Johnny Franchise:

Anyways, so now I’m in the store. I’m tearing the walls out and I put in new equipment, and I restaffed it with new people, and we tried really hard to turn that store into a success. But what I recognized is he had destroyed that brand reputation, even while he was there for just the first six months of that unit’s operation, customers had come in and he had pretty much scared them off. It was just a bad situation, and I tried real hard to turn that thing around. And I’d actually sold it to another franchisee and said, “Look, here’s your chance. I right sized the investment and you can have it for what I’ve got into it,” and I made it what I would call a swinging deal. Seller financed. And that new owner couldn’t turn the corner and couldn’t get it going.

Johnny Franchise:

I guess the miss is that the franchisee, the original franchisee got in there and got in there wrong in the first six months, destroyed the reputation of the location. I took it over, struggled with it for about a year, really didn’t move the needle a little, but not much, and I put a third owner in after me who struggled for another year and couldn’t move the needle, and we wound up closing that store. I was on the lease with the landlord, so I went and negotiated a settlement with the landlord.

Johnny Franchise:

I think I said, “Look, man. I can’t pay everything.” I said, “I’ll pay $1000 a week until it’s paid off.” And they’re like, “Fine, whatever. Go ahead. Empty the place.” We filled a dumpster. I wound up filling a dumpster with hardly used equipment. It was three years old, but it had never been throttled up. It had never really been busy as a location. It was a great location. Again, AAA, grocery anchor. I mean, it had everything on the surface, but what was underneath, the bad reputation from the start from the first original owner could never overcome it, and that was a bad sad day, a tragic loss. It lost a ton of money, it lost a lot of momentum, frustrated a lot of people, but I did my best. At the end, it really wasn’t enough, and that was definitely a big miss in my career.

Tom DuFore:

Sure. Well, thank you for sharing that with us. Part of what we like to do on our program is just share some of these instances that happen where the spotlight isn’t as often a part of being highlighted. It’s just not part of it. It’s just not on there.

Tom DuFore:

Well, let’s turn things on the other side and talk about a make. I know you’ve shared several here. Is there a make or anything you’d like to share or talk through that… another one you’d like to share with us.

Johnny Franchise:

Well, yeah, sure. I’m thinking I guess what’s coming to mind is the organization that we built here and I had two states as an area developer, which is a lot of territory for one guy to cover. But I was pretty qualified and I was ambitious, and I had the guess the horsepower to get it done. I built a nice organization around me as an area developer in two states. I kind of had two groups. One for Minnesota and one for Wisconsin. I guess what’s coming to mind is the culture that I created with those franchisees and the regional staff who helped me with training and marketing and the support that we provided on the local basis. As an area rep, I was responsible for a lot of the field work, I would say.

Johnny Franchise:

We had a very successful overall other than that one I just mentioned, that was a terrible disaster. Overall we had a pretty good run with these franchisees. And what I’m remembering is we would do these events, these summertime events. I’d say, “We have to get together and celebrate the success.” I mean, whoever is having a good year, let’s celebrate. One night I’m thinking of, we were in Wisconsin Dells, Wisconsin, which is big resort town and waterpark because I had little kids. I’m like, “I’m going to bring my wife and kids and we’re going to make a weekend out of it.”

Johnny Franchise:

We got both groups together for a weekend. And we did a few things, and had some workshops, and then we had a big dinner. We did kind of our own awards dinner for the regional thing. I guess the big win there is how much fun we had and how much fun these owners had with each other. I guess the conclusion is I brought that cultural expectation with me from my family’s business. We had that kind of culture in our hair salon franchise, and I brought and created and developed the same or similar culture in a completely different industry and in a different market, and at a different level. I wasn’t the franchisor, but I was the regional guy. I guess what it means to me is that it can be done and the culture matters, the people matter, and it wasn’t all about the money. I mean, it was really never about the money. I mean, clearly you want to make money and be successful, but we focused on the people and helping each other do the right things and run those units to the best of our abilities, and I think these people really understand that. It was a team effort.

Johnny Franchise:

I like to say franchising is a team effort. When the franchisor does their part, the franchisee does their part, and the supplier companies do their part. Everybody gets it right. There’s nothing more powerful than a successful franchise brand. We definitely embrace that culture and that approach, and we had a good system and good people all the way around us, and I’m just remembering that weekend in Wisconsin Dells. We had a lot of fun, and for a lot of those franchisees, I followed up with them later and I’d be with them a few weeks or a few months later in their stores, and they were talking about it. They had never had that kind of experience, some of them. They were never part of something that felt like that. They had had a job or they had done whatever they had done, but they hadn’t had that feeling of a team or an organization that is truly committed to mutual success. Where I’m successful only if you’re successful, and everybody understood that, I mean, and that’s just how it was. And that’s how we did it.

Johnny Franchise:

I guess, I’ve taken that as a highlight reel of that ten year span. We did that a few times, but it was really meaningful to me to know that I had created that and led that effort, and recruited these people, and the team that I had and the franchisees and their people. And that they understood and appreciated and recognized that that was really valuable. It wasn’t about the economics and the profit margin sand everything else. It was the organization and the people and the way that those people worked together to really help each other. That was very powerful.

Tom DuFore:

Well, I really like that, and it’s just another, sounds just like another… I don’t mean this at just a random another, but I mean you have just a lot of great makes in your career, and it’s really impressive with what you’ve been able to do. Along those lines, what about let’s talk about this idea of multipliers. In franchising, we’re basically multiplying through franchising. Maybe talk about is there any multiplier that you used that you’d like to share or talk about that helped you grow, whether it’s personally, professionally, individually, company-wide, anything you’d like to talk a little bit further about?

Johnny Franchise:

I appreciate that, and you’re right, those wins don’t happen by accident. Those kind of outcomes are no accident. It takes a lot of hard work and it takes a long time to get there, and to do it over and over and over is really unusual. I’m a lucky guy. I think the multiplier that is coming to my mind now, kind of a strategy that seems to show up again and again and again for me is this concept of an advisory board. I don’t mean an advisory council, which would be an internal thing of franchisees inside of a brand previewing new ideas and dealing with grievances and helping with policies. An advisory council I think is a powerful thing for a brand internally.

Johnny Franchise:

But I’m talking about an advisory board, which really helps the owner, the founder or the owner or the leadership team make better decisions as an organization, and I’ve done advisory board or board work for franchisors and for franchisees. I’ve done them for small businesses that are single units and that owner is struggling, and I get ahold of them, and I say, “Well, who do you trust? Who do you trust? Let’s help you make better decisions.” And they’re like, “What are you talking about?” I say, “We put a board around you. They’re not voting. They don’t have any shares. They’re not investors. They’re not shareholders. They don’t have any real power. They’re there to help you make better decisions and how you accountable for what happens or what doesn’t happen because it’s your business. You’re supposed to be in charge of this thing. Believe it or not, it’s up to you.”

Johnny Franchise:

I’ve spent a fair amount of time and energy helping setup and organize advisory boards for franchisors and those founders or CEOs that are running those brands, and for franchisees, some of them small, some of them large, multi-unit, multi-state franchisees who have sometimes bigger than some of the franchisors I work with. I see the power and value that comes from these advisory boards to be really a tremendous advantage, and I think often times underestimated or underutilized technique for helping those founders and CEOs and really leaders, whatever their title might be, again make better decisions on a more timely basis, focus on what matters, strategy prioritization, people, infrastructure, I call structured accountability is a process we brought through it through a board. It takes time, it takes effort, it’s not overnight. I guess I’m thinking about a handful of businesses where I’ve seen it before a board was in place, and then you look at it a year or two later after a board has been in place, and it’s transitioned. A transformation of that business’s effectiveness.

Johnny Franchise:

And honestly, I think it also goes a long way to reduce the drama and the frustration that often times happens when a founder gets in their own way. It’s an unconscious thing. There’s a thing called founder’s syndrome, which you can actually look it up in Wikileaks or whatever. It’s out there. It’s a real thing where the founder is because they’re the founder, they think they need to control and touch and handle every single thing that goes through the business, and that creates a bottleneck, and it really creates a lot of frustration, and it actually can drive away some of your high performing executives because they’re not allowed to do their jobs.

Johnny Franchise:

Sometimes, not always, but sometimes as a board setting up these advisory boards, again, they’re informal. They don’t vote. They don’t have shared. They’re not investors. You got to structure it right and you got to pay them something, but this advisory board can reduce the opportunity for that to happen and simplify the strategies and the execution and the accountability, and really unleash the power inside that organization. And you look at it a year or two later, and it’s like wow, there they go. Finally that business is structured properly, and the internal workings are put in such a place that the performance just really comes through. That’s very satisfying to me to see the impact of number one, setting up the board, and then sometimes serving on the board, but really looking at the results after a year or two later and saying, “Now, look at your company. Look at what you’ve done here.” I say, “We turned a founder into a CEO and use a board as a mechanism to help make that happen.” That’s a multiplier, certainly, in my experience, that’s a clear multiplier that is relatively affordable, relatively low-risk, and high potential for positive impact.

Tom DuFore:

Well, that’s a great suggestion, and that’s a really great suggestion, and you can see the power of that. Having a quality board of advisors or advisory board that can help you as an entrepreneur or a leader to make those tough decision or leverage the board’s experience and leverage their network, and just get other vantage points and viewpoints. I think it’s fantastic.

Tom DuFore:

Johnny, as a final question as we like to close out with, we always like to ask every guest what does success mean to you?

Johnny Franchise:

Well, that’s a great question. I think success means to me that I get to do what I want kind of the way I want, and I feel pretty blessed, really very blessed, very lucky. I work from home because I want to be around my kids. I still have young kids. I get to manage my own schedule, right? I mean, I have plenty of work to do and lots of clients and lots of opportunities, but I manage my schedule best I can so that I have that freedom and flexibility to I guess do what I want and when I want. Not always, but for the most part, I have the ability to do what I want the way I want. I think that’s success.

Tom DuFore:

I love that. I love that. Well, Johnny, I really appreciate you being here as we close out. Thank you so much for your time, and you’ve just provided such valuable information and I think some valuable inspiration as well for our listeners here. Thank you so much for being on the podcast here.

Johnny Franchise:

You’re welcome, Tom. I appreciate it. Thank you for the opportunity to tell my stories and share some ideas. I can go on and on and on sometimes. I hope it wasn’t too much too fast, but I appreciate the opportunity. Really I think everything I’ve done is nothing that’s that unusual or that special. I think a lot of people can do what I’ve done and I’ve never been the smartest guy in the room, I guarantee that, but I’m willing to do what’s necessary and I hope it helps other people recognize that they can do the same things and achieve their own level of success, and I think franchising is a fantastic method of business, and I’ve been in it for so long. I just love everything about it. I love seeing people have success. If I can be part of that or be valuable in that process, I welcome the opportunity, so thanks for letting me share my story.

Tom DuFore:

Well, John, thank you so much for being here, and let’s go ahead and jump into today’s three key takeaways. First, Johnny mentioned a phrase that I thought was really great. He said, “People don’t just win awards.” And I thought that was a great point. If you see kind of this consistent theme or recognition, it’s most likely not by accident.

Tom DuFore:

Number two, he made a point about talking about how a business is worth what the valuation says and what someone will pay for it, not necessarily what you put into the business. I know very often for entrepreneurs, we have this mindset that because we’ve put literally our blood, sweat and tears in some cases into the business that it is magically worth more than what the valuation actually calls for. Just a sobering reminder that your valuation is what the valuation is.

Tom DuFore:

And number three, the key takeaway here is the power of advisory boards, and Johnny’s become an expert at creating and implementing advisory boards, and seeing the fruit that comes from the seeds that get planted when you start an advisory board. If you don’t have an advisory board as an entrepreneur and a business owner, you should get one and create one. Johnny, thank you for that great advice.

Tom DuFore:

And now it’s time for today’s win-win. Today’s win-win is what Johnny had mentioned when he said he always tries to look for the mutual gain. Well, I couldn’t think of a better way to say win-win in other words, mutual gain. Make sure as you’re going through this, be looking for the mutual gain. What’s in it for them? Not just for you, but for them as well. How can both parties or all parties gain from this? And so, that’s our episode today, folks. Thanks for tuning in. We appreciate it. Please forward this to your friends and we’ll see you back here next week.

Posted in
big-sky-franchise-team-logo-alpharetta--182

Multiply Your Success®

Franchise Your Business