Franchise Brokers Association BLOG

*Today’s post is from FBA Member Robert Slatkin on his recent deal with CertaPro Painters.

America’s Best Brand

By: Robert C. Slatkin, President

Vantage Franchises – FBA Member

A Division of Vantage Business Group, Inc.

We’ve all seen polls, articles, and studies trying to determine “America’s Best Brand.” Is it Apple, McDonalds, Coke, Google? The arguments go on and on, and each year the same top 5 names seem to just get switched around.

I would like to nominate a Brand that is often overlooked by almost everyone in these discussions, but could possibly be the most relevant one to those of you reading this article. The Brand I am referring to is David Brand. For those of you that don’t know David, you should make it a point to get to know him. He is the Regional Manager of Recruiting for CertaPro Painters; North America’s largest painting company, and a preferred Franchisor with the FBA. David and I just closed a challenging deal together. The way he conducted himself only solidified the high regard I had for him since we first met, and inspired me to write this.

David is what I call “a difference maker.” By that I mean someone who can have a materially positive impact on your business. If there is a problem, and there is a possible solution, he will find it.  He will go out of his way to satisfy your clients, and, because of all this, his knowledge, work ethic, and CertaPro’s attractive, segment leading Franchise, the bottom line is that he will put more money in your pocket (if that’s important to you).

Here are some specific reasons why, to me, David Brand stands out:

• He does what he says he will do. (Okay, this means he already stands above 80%-90% of “the pack”)
• He does not avoid issues, he deals with them.
• He provides intelligent and creative solutions.
• He acts with honesty, directness, and integrity.
• But, the biggest factor that, I believe, sets David Brand apart from other Franchisor Representatives, is that he truly becomes your Partner in the process like no one else I know.

I am not saying there are not some excellent people to work with throughout the franchise business. I know there are, and I have had the privilege of working with some of them. But, I am saying that with David, there are no ego battles, no attitude problems, and no antagonistic behavior, unless you are bringing it.  Again, working with David is a partnership. What a difference that makes! And what a pleasure! Without going into all the details, without David Brand, there is absolutely no way my recent CertaPro deal gets done. Period.

So, for all these reasons, he gets my recommendation and vote for America’s Best Brand!

Contact Information:

Robert C. Slatkin, President

Vantage Franchises

A Division of Vantage Business Group, Inc.

www.vantagefranchises.com

*I consider David my business partner when doing CertaPro deals, a trusted advisor, and a friend.

*I have no financial interest nor receive any kind of compensation for anything I have said or written here.

Final Meeting with Client and Franchisor

The next call we had with the Franchisor, my client came into the office.  He felt more comfortable with interactions in-person rather than over the telephone so I encouraged him to come back in.  He was pleased that I took the time out to see him in the office.  Once inside, we called the Franchisor for our final meeting.  We discussed the territory in detail and the adjustments that we made.  We went over the addendum changes again and confirmed that we were expecting the adjustments back from Eric Riess, our franchise attorney.   At the end of this meeting, my client and I discussed the transfer of funds to attend the next training.  The original training date was scheduled for October 11^th 2010, however the Franchisor indicated his trainer had a challenge with that date and needed to move the training to October 25^th, 2010.  We understood, however my client was extremely excited to start learning the materials.  He put in for the transfer and we made final arrangements to purchase his franchise.

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Discussing Franchise Territory Changes and Approving Agreement Modifications

I had my client come into the office to discuss the territory changes.  It seems his daughter had spoken with him as well and indicated that there were some bad areas in the territory he wanted to be in.  This was excellent because it was a consistent message to what I was telling him.  When we spoke I showed him the territory on the map and the extra areas I had carved out and requested from the Franchisor.  He agreed that the territory was great.  After all, we had negotiated a territory that was almost double of the size of what an average territory consists of with this franchise.  That meant my client has double the opportunity to make a great living with this franchise and that is what I aim for, giving the biggest advantage to my client up front while still being fair.

The attorney, Eric Riess, sent the modifications to the Franchise Agreement directly to the Service Team of Professionals.  Because the FDD was so fairly written, there were only a few things that he requested.  When the Franchisor received it, he said that everything Eric asked for was fair and that they would agree to our terms.  An addendum was created and added to the agreement.  By using our franchise consulting team, we got the client a bigger territory, a better royalty, an easy exit clause and extra protections in the case of business challenges.  It was a win for all parties and we were very excited to see the willingness of the Franchisor to help our client succeed.

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Get to Know Your Client to Ensure Their Success

My goddaughter wrote something on her Facebook page profile, she said, “Be kinder than necessary, because everyone you meet is fighting some sort of battle.”  This statement was really profound to me.  As I thought about it I thought of a visual representation.  Imagine a huge balloon.  This balloon is filled with all the memories, challenges, suffering and joy a person has known.  These things are swirling around constantly inside the balloon.  The outside of the balloon is what we let the world see of ourselves.  At any one moment, all an outsider or even a friend can see is the spot where the balloon is tied.  We are only seeing a very small fraction of the whole and yet that tiny spot is where we make our judgments and assessments of another.  It’s particularly astounding that we believe we have the answers and know exactly what someone else is doing or feeling and, in reality, we don’t even have a clue.

This is the exact same experience that happens when you work with your clients.  You get a few hours worth of phone calls in and you think you know the person, but the reality is we only get to see a tiny spot of the total picture.  This is why it is extremely important that you stay on the calls with the client through every aspect of the franchise purchase process.  You never know what hurdle may appear that you need to be there to help them handle.

You are just like a coach that is there to help his team members to succeed and win the game.  The more you allow your client to wander in the research and data the more lost they will get.  Buying a franchise is one of the biggest decisions of their life.  It can be scary for them and overwhelming.  They enlisted your services to protect them and to keep them safe.  It is your responsibility as a franchise consultant with the FBA to do just that.  Now be that coach for them.  Help them to handle their own fears and struggles, advise them on the ways to become the best player they can be.  This way everyone wins the game and that’s how we like it!

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Final Questions for the Franchisee

In the process of talking to the Franchisor after the attorney review, my client and I realized we didn’t have an answer that we were satisfied with on how a Franchisee accepts payment. We decided that we would call a handful of Franchisees and ask them what their experience was when collecting payment from customers.  Since my client was not available to do the calls with me, I was careful to write down the exact details of what the Franchisees told me, word-for-word. Since I was only asking three questions, it was easy to do. I have tools to help me keep precise records (Livescribe is great, so check it out!). The Franchisees gave me the information and I sent the exact quotes to Eric Riess (the attorney), Brian Clark (the Franchisor), and of course my client. The results were satisfactory in my opinion. It was also another example of a consistent message and system that all the Franchisees were actively using. From all angles, this Franchise is excellent.

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Choosing Your Franchise Territory

After speaking with our franchise attorney, my client and I discussed choosing his territory.  He was interested in the west side of Orange County, FL.  I was a bit concerned by this because I know the area and did not want the large population of low-income housing on the west side to hinder my client’s territory.  I explained that I would like to calculate the population of each side to ensure that my client was getting a good subsection of the county.  We had already negotiated nearly double the average territory for my client and I wanted to give him every opportunity to take advantage of this.

I used our demographics information to pull the population in each zip code and city of Orange County, FL.  I then chose major streets to help identify the lines of where the territory would begin and end.  I calculated the low-income areas and deducted that from the total of the territory.  I also calculated the other territory in the county to ensure that it was not only fair to my client, but also to future Franchisees  in that market.  This is not something that is typically in the scope of my work, however, I always have my client’s best interest in mind.  The Franchisor was not from this market and therefore wouldn’t know the important facts about the low income area; therefore, it was my responsibility to ensure that these details were not overlooked.  My top priority is to protect and serve my client and to ensure their success.

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Andrew Aronson

Franchise Logistics

Franchise Logistic’s Mission:

The commit to ourselves and to our clients that we will provide the level of service and advice required to be in the top 10% of franchise consultants, known for our professionalism and the quality of our advice.

Company Philosophy for Success:

We will reach our goal through self-evaluation, constant education, networking, and bringing to bear the considerable power of a focused approach using the multi-discipline background of Investments, Finance, Economics, Entrepreneurialism, Coaching and Board Level experience.

·      Choose clients wisely; be sure to define the scope of the engagement clearly and completely to the client.

·      Bring to bear all my education and experience in Finance, Economics, Real Estate and Corporate Management.

·      Have the client commit to the plan and the terms of engagement.

·      Run each source of revenue as an independent profit center.

·      Our success depends on a handshake, always be honest and forthright with Integrity in all your dealings.

·      Success in not achieved in a vacuum, give credit to others.

·      Share your knowledge not your feelings or assumptions.

·      Enjoy life and laugh at yourself!

·      No matter who you meet or their walk in life, we can always pick up a pearl of wisdom from sharing time with them.

Andrew’s Biography:

Graduated from the University of Denver with a degree in History, Economics and with the equivalent hours for another major in Finance, President of Iota Chapter of the ZBT Fraternity.  Comtrac Inc., Columbus Ohio Project Manager, responsibilities included but were not limited to; Serving on the committee that managed the Profit and Pension fund, involved in the merger/acquisitions for the company, integrated the accounting and personnel policies for the parent and child business.  Elected to the Board of Directors.  Other Boards I have or currently sit include, Temple Emanuel, Temple Emanuel Executive Committee, TEPS Pre-School, Carolina Drug Distributors, Emporium Stores Ltd., Digital Lifestyles, Blumenthal Jewish Home for the Aged, BJH Foundation for Senior Services, Synermed Select Laboratories.

Companies that Andrew has started include:

O2Inc. We developed a portable emergency oxygen delivery system sold to non-medical institutions, Carolina Drug Distributors, Emporium Stores Ltd., Kiss & Make Up Cosmetics, The Aronson Group, Inc. Investments & Franchise Logistics, Inc.

Why Andrew became a Franchise Broker:

I became a franchise broker as a response to clients, family and friends that had been downsized asking for jobs or networking with me for employment.  I felt that I was not able to do enough for them.  I believe people are at their best when they can work for their self-interests and achieve their dreams on their own – with just a little help when needed.  Selfishly it brings me pleasure to know that I helped others succeed in reaching their life’s goals.

Request to be connected with Andrew.

Reviewing the FDD with the Client

After receiving the FDD, and reviewing the document independently, my client and I had plenty to cover when he came into my office.  We went through the FDD together and talked about the items that we were going to ask the Franchisor and the franchise attorney to explain.  We looked through the financial statement and the Financial Performance Statement.

This is often called an Item 19 of the FDD (Franchise Disclosure Document); only about 20% of franchises publish a Financial Performance.   Some Franchisors will tell you that they are not allowed to discuss earnings information, this is not true.  A Franchisor IS allowed to present earnings in their FDD.  They are not, however, allowed to discuss earnings that are not written and published in that disclosure.  If a Franchisor has impressive earnings often they will publish and disclose that information.  And, if they do a great job, why shouldn’t they?  Many franchises avoid publishing earnings claims or financial performances because they feel the liability is too great if a Franchisee is not successful.  We always encourage Franchisors to publish earnings claims because they are incredibly useful and important to a prospective Franchisee.  Earnings is why they are interested in franchising in the first place.

At this stage of the process, we could have exercised our right to use one hour of complimentary accounting services provided through our membership with the Franchise Brokers Association, but we chose not to because my client had elected to have our attorney, Eric Riess of Greensfelder Attorneys at Law, negotiate the FDD.  Eric Riess is not only an esteemed franchise attorney, but also an Accountant of 25 years.   We sent Eric and his team a copy of the FDD to review.  We scheduled a meeting to go over the information with Eric, myself and our client.

Now it was time for the good stuff, calling the Franchisees in the system.  We went to the back of the FDD where it lists the names and contact information of all current and past Franchisees.  It was very important to me that we pick the right franchise for this client, so we made the joint decision to call all the Franchisees in the system and all the Franchisees that had left the system.  We went through one by one and spoke to the men and women out on the field operating the S.T.O.P. franchises all across America.

The results of this research were overwhelmingly positive.  Every Franchisee said the same thing: the system works!  They said that they were profitable within 3 months.  They said that the Franchisor was there to help them at every turn.  They said that they were pleased with the Franchisor and their decision to move forward with STOP.  They were all extremely nice and helpful.  Of course we didn’t reach all of them, but we certainly tried.

The Franchisees that had left the system were almost entirely still in the same business.  They had used STOP to become good business owners and have a system to follow and then left when their franchise agreement was up.  All that we spoke to said that they were profitable.  Even the one that had closed his business for personal reasons indicated that he was grossing over $1 million a year and was successful at the business.  This was great information and absolutely exciting for my client and for me.  I love working with franchises that have a great track record.

Once we finished up with the calls, we scheduled our next appointment with the attorney.

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Follow Up to the Call with the Franchisor

After getting off the call with the Franchisor, my client and I scheduled a next meeting to call Franchisees together.   The FDD was sent to both my client and myself.   We began reviewing the website and materials that the franchise provided.  The Franchisor overnighted the FDD (Franchise Disclosure Document) so that we would have it before our next meeting which was just a couple days away.

We received the FDD in perfect timing.  We immediately signed and sent back the receipt; we do this so that the franchise can stay compliant.   Franchises are required by the FTC to have a signed acknowledgment or “receipt” that identifies when the prospective Franchisee received the FDD.  The receipt must be sent back to the franchise and held for a minimum of 14 days before the prospective franchise buyer is even allowed to purchase the franchise.  The FTC does this to ensure the prospective Franchisee is given enough time to do their proper due diligence before making this life changing purchase.  From what you learned earlier in this case, you understand that all franchises are not created equal and some have a much higher chance of success than others.  Good Franchise Consultants can help you identify the difference.

Once received, I read the FDD and highlighted any areas of caution that I saw and wanted to bring up to the Franchisor and our franchise attorney.  This process only took me a few hours because I am skilled at reading FDDs and have been properly trained on what to look for in the FDD.  As a Consultant I do not give legal advice, our attorneys do that, however I do have the responsibility to protect my client and I intend to do that.   After reading the entensive document I was prepared for the next meeting with the client.

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Introducing Your Client to the Franchisor

After researching available franchise concepts, we started preparing for the calls with the Franchisor and I provided my client with a list of quality questions they should ask.  I proceeded to set-up phone introductions between my client and 2 of the 4 concepts they decided to investigate further.  I scheduled the calls back-to-back so the client could easily compare the concepts.

Before we conducted the calls with the Franchisors, I prepared my client for what to expect and ensured they had reviewed the questions.  I had already developed an introductions for the Franchisor that explained my client’s qualifications; this is helpful because it makes the Franchisor more eager to speak with my client.  I connected the two parties, did the introduction and let the interview begin.  This part of the process is always particularly interesting.

The Franchisor, like any business, has an ebb and flow of staff and processes.  I love hearing what questions they ask my client and vice versa.  It also feels good to hear my clients asking quality questions.  I can’t tell you how many times I have had a Franchisor call me and express how impressed they were that my client was well-versed and educated as a result of providing those questions.

The two franchises that we spoke to on this day were Service Team of Professionals (S.T.O.P.) and Furniture Medic.  Brian Clark from S.T.O.P. was animated, passionate and transparent in his conversations with my client.  He talked about the process a Franchisee goes through with a S.T.O.P. franchise.  He discussed the marketing, training and support and territory availability.  My client enjoyed the conversation and was very impressed with S.T.O.P.  He asked to proceed to the next steps with them.  We received a list of action items that needed to be completed during the due diligence process and a time line of when and how they should be completed.

The next call was with Furniture Medic.  My client was also impressed with this concept.  He felt good about the stability of the company and the opportunities they provide for cash flow and upfront financing.  He felt that Furniture Medic did a good job of explaining the concept and had an interesting model.  Ultimately, he favored Service Team of Professionals because he felt it better matched his skill set.  We put Furniture Medic on hold as we continued to research S.T.O.P.

This is a fun job because as my client is investigating the franchise, I also get to investigate it.  In seeing all of the opportunity available today, it really opens my eyes to a whole new world of possibilities.  We live in a great time, where anyone with drive and ambition can become successful.  What a wonderful thing!

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