Organizations don’t grow if no one needs it and no one believes in it. The fact that the International Franchise Association (IFA) exists, is a global organization, and is continuing to grow says something about the Franchise Model! The IFA is the world’s largest membership organization for franchisors, franchisees and franchise suppliers. This organization exists to promote the business model, as well as provide education and growth opportunities for the franchise community. Thankfully, we’ve got Matt Haller to enlighten us more about what the IFA has in store for you! Matt is the President & CEO for the International Franchise Association. He has been a key member of the IFA team for 10 years, building extensive relationships with all three segments of the IFA membership: franchisors, franchisees & suppliers. Matt believes that Franchising has something in store for everyone. Finding the opportunity that greatly fits your needs is what the IFA aims to provide, whether you’re already in the franchise community or looking to get your feet wet. Thing is, not everyone knows they have something to gain from being part of the franchise community. People are often hesitant to explore because of misconceptions about franchising – an easy way to miss out on a path towards financial freedom – which the IFA is fully equipped to address through their educational programs. At the top of the list, here’s what you can expect from the IFA: Education on the Foundations of Franchising Win/Win opportunities Continuous growth and education Successful Systems and Processes If you have a dream, a goal, a need or desire, Matt and the IFA can help you achieve them. In franchising, where you come from rarely matters. It’s where you want to go, that does! How does the IFA connect entrepreneurs on a global scale? What can you personally gain from the franchise community? How can the franchise model continue to survive against hurdles like the recent pandemic? Tune in to our Podcast to learn more about everything you WANT and NEED on franchising, investment, financing processes and options. This is Eye On Franchising, where we share our vision for your franchise future. Lance Graulich Franchise Consulting Services from ION Franchising Eye On Franchising
Organizations don’t grow if no one needs it and no one believes in it.
The fact that the International Franchise Association (IFA) exists, is a global organization, and is continuing to grow says something about the Franchise Model!
The IFA is the world’s largest membership organization for franchisors, franchisees and franchise suppliers. This organization exists to promote the business model, as well as provide education and growth opportunities for the franchise community.
Thankfully, we’ve got Matt Haller to enlighten us more about what the IFA has in store for you!
Matt is the President & CEO for the International Franchise Association. He has been a key member of the IFA team for 10 years, building extensive relationships with all three segments of the IFA membership: franchisors, franchisees & suppliers.
Matt believes that Franchising has something in store for everyone. Finding the opportunity that greatly fits your needs is what the IFA aims to provide, whether you’re already in the franchise community or looking to get your feet wet.
Thing is, not everyone knows they have something to gain from being part of the franchise community. People are often hesitant to explore because of misconceptions about franchising – an easy way to miss out on a path towards financial freedom – which the IFA is fully equipped to address through their educational programs.
At the top of the list, here’s what you can expect from the IFA:
If you have a dream, a goal, a need or desire, Matt and the IFA can help you achieve them. In franchising, where you come from rarely matters. It’s where you want to go, that does!
How does the IFA connect entrepreneurs on a global scale? What can you personally gain from the franchise community? How can the franchise model continue to survive against hurdles like the recent pandemic?
Tune in to our Podcast to learn more about everything you WANT and NEED on franchising, investment, financing processes and options.
This is Eye On Franchising, where we share our vision for your franchise future.
Franchise Consulting Services from ION Franchising
SUMMARY KEYWORDS
franchisees, franchise, franchising, brand, franchisors, people, pandemic, business, ifa, locations, existing franchisees, terms, franchise fee, misperception, restaurant, opportunity, money, called, buying, matt
SPEAKERS
Matt, Lance Graulich
Lance Graulich 00:02
Welcome to Eye on franchising. Are you looking for business opportunities? Well, you are in the right place. We represent over 650 franchises and business opportunities. We will help you find your perfect franchise for free. We even have a free assessment on our website that will help us determine the best businesses for you based on your investment level, mindset, skill set, and life experiences. This is Eye on franchising, where we share our vision for your franchise’s future. I'm your host Lance Graulich. Each week, we will speak to fascinating folks from the world of franchising, franchisors and founders, franchise funders and franchisees, are you looking to find your perfect franchise? Or perhaps you are an independent business owner looking to grow and scale your business by setting up a franchise? Either way, our team can help you. Eye on franchising where you will learn the A to Z's of the franchise. Hello, everyone and welcome back to another great episode of Eye on franchising. I'm your host Lance Greylock. And today Yes, I have an incredibly special guest, a special guest today. So founded in 1960. This organization is not only the world's oldest but the largest organization representing franchising globally, globally. And this gentleman has been with this organization for 10 years. And not only that, he's been the president and CEO for the last year. Welcome to the show. Mr. Matt Haller.
Thank you, Lance. Great to be here.
Matt, it's so wonderful to have you here. So let's kick this off. Let's go back to your history. How did you get into franchising in the first place, like a lot of people sort of found me at a moment in my career when I was looking to make a change? Now, I didn't know much about franchising. I'm in Washington. My background is in government and politics, and advocacy work. And the IFA, whose mission is to protect and promote and enhance franchising, a big part of that is advocacy work, we'll talk about some of those issues, I'm sure they were looking for a communicator, kind of advocate hybrid type person to come into the team. And that's exactly what I was interested in, you know, doing and had the background and doing, it just hadn't done it on behalf of this industry, or that sector of the economy. So that's how it found me had a number of different positions at the association over the decade that I've been here. And, you know, I was fortunate to get an opportunity to lead the organization last year when our previous CEO, Robert croissant, left, so it's a great business model to tell you that you've lived and breathed it from every corner of the sector. But I know part of your audience is people thinking about getting into franchising or how to make more of it. It's an easy job to represent in terms of the story and what we do for, you know, all sorts of all three legs of the stool, as I like to call it franchise brands, franchisees and suppliers, and even employees and sometimes a part of franchising that is, is criticized by thumb for not doing enough, but we have a great story to tell. And it's my pleasure to be able to communicate that to people that don't always fully understand or appreciate what franchising does. Yeah, well, and you hit one thing on the head, we were I wanted to talk about like the mission of the IFA, and you mentioned, you know, the kind of the three-legged stool, if you will, is the franchisor, which is the parent company that's actually doing the franchising. And then you have the franchisees that buy into the franchise, and then as well as the suppliers or the third valuable leg of this stool if you will. So, you know, it's all about protecting, enhancing, and promoting everything within the franchise world. So, you know, when you got into this, tell me more about what your thought process was like, you know, people think of franchising, they think of McDonald's. So, you know, there's a lot of small brands, there's a lot of large brands, and then there are now brands in what 300 different categories. Yeah, I mean, there's really a franchise for almost everything. I think it touches people's lives six or seven times a day, on average. So yeah, people tend to think about the restaurants and particularly the quick service restaurant, what you know is you're staying in a hotel on a business trip, you're likely staying in a franchise property, dropping your kids off after school daycare center, that you know that that could likely be a franchise. Maybe you got maybe your parents are, you know, getting medical treatment or companionship service. A lot of those are our franchises you need maybe have a gym membership. That's probably a franchise you're getting a haircut once a month and maybe you're popping into a franchise to do that. Your dog is getting walked while you're out at the office.
Matt 04:59
If that can be a franchise, there really are so many, you know, I could go on and on across 100 sectors. But you know, some of what it does beyond just advocating and some of the gut lobbying work that we do is, is education, and educating, you know, maybe the person that's got a business or an idea and thinks it's franchisable, you know, we'll teach you, you know, how to do that how-to, and how to not do it, because there are sometimes people that get into this for the wrong reasons. They think, you know, we're just going to sell a bunch of locations and not build the right operational support to support your ongoing franchisees, or maybe they'll hire the wrong type of vendor that, you know, isn't what they need at that stage in the franchise development process. So, you know, that's, that's a big part of what we do at the IFA, and, you know, it's a really dynamic and, you know, growing sector of the economy, you know, there are always new types of businesses being franchised and categories, you're like, Oh, why didn't I think of that? Right?
Lance Graulich 06:06
So, you know, you brought up another great point, you know, growth in general, I mean, the numbers I have here, as you know, $780 billion worth of economic output 8.2 million jobs 3% of Gross Domestic Product, or GDP. And 759,000, franchise-established establishments, 759,000 pretty incredible numbers. So we're talking, even though the pandemic hit and call it March of 2020. When do I know a lot of my friends that were franchisors and franchisees that we're panicking, like, what is going to happen? Now, walk us through the pandemic.
Matt 06:54
Yeah, the pandemic, in many ways, reinforced kind of the whole point of franchising in my mind. Because when you become a franchisee, or you become a franchise, or like, really what you're buying, you know, the thought is, in lieu of going it kind of your own way is you're buying a built-in support network, right? For, you know, marketing, operations, technology, you name it. But in the pandemic, you had this situation where, you know, nobody knew what was going to happen next, you know, particularly that early period of time in Denmark when the shutdowns first happened, it was like, right, like, that wasn't in there were no, there were no franchise agreements that dealt with our operations manuals that dealt with the government is not allowing your business to, you know, take in customers, or, you know, even if you're a mobile business, like, the government is not allowing you to go into somebody's home or business to perform your product or service, let alone if a customer would actually invite you in to do that at a certain point. And so you had the support network, that the brands were working with their franchisees to develop, you know, new ways of delivering their product or service or navigate some of the COVID and government relief program that were out there the ever-changing patchwork of roles. And so, I think that's one of the reasons why, you know, as we've recovered from those shutdowns and the economy, you know, yeah, franchising was impacted, and it was impacted in a negative way, just like everyone else, but it's all relative to what, right, so if you look at, you know, nonfranchise businesses, you know, operating a similar category, whether it's restaurants or gyms, or salons, or you name it, you know, they're all performing better than those nonfranchise, small businesses were. And I think that when I say the pandemic, reinforce kind of the whole point of franchising, you know, you have that built-in support network. You had people in the same situation that you were you had brands, who were ensuring that their franchisees could remain, you know, profitable and an operation relaxing, you know, fees or royalties, and things like that, to get to the other side of this and do it together.
Lance Graulich 09:15
Yeah, I know quite a few franchisors that called their attorneys called their CPAs and said, I'm hearing about this PPP money, we have to do something for our franchisees and help them and they organize some of that for their franchisees, which is pretty incredible because as you know, it was quite confusing. Who's going to get you, you know, the most money who's going to get your money at all, and there were quite a few independent businesses that were pretty stuck with nothing and, and maybe others that took it selfishly that didn't necessarily need it. That's a whole other story. Not for the show, but franchising in general, was so supportive. I couldn't believe some of the things that I saw throughout the pandemic. So let's, let's talk a little bit more about today then, let's kind of switch gears. Franchising certainly made it through the pandemic, I had so many home services brands, Matt, that just killed it during the pandemic, you know, where people were sitting at home during the lockdown, like, like, I need to have my closet redone. I think I need new flooring put in my house. And some of these brands just had incredible growth, not to mention my old restaurant concept Wingstop, I was a multi-unit franchisee of people realized they don't have to go in the restaurant, you know, just more UberEATS orders to the house, more digital online orders, they go and pick it up, etc., etc. So it was a pretty incredible thing to see action now today with inflation. And, you know, a pending recession. I mean, a recession last I looked Matt was defined as two consecutive quarters of negative GDP. And I think we'll probably be experiencing that second-quarter GDP right about now. But how has franchising fared during recessionary times?
Matt 11:09
Yeah, it's a great question. It's always compared to what, right, so we won't, we will have, you know, slower growth this year, probably next, given, given the inflationary impacts and the likely recession, I think we're in a recession, you know, whether it's technically or not yet, but at the same time, you know, it depends where you are, right, in terms of, you know, what, what sector you're in, you know, a lot of restaurants that are, you know, lower costs, you know, consumers will trade down, as they say, you know, into some of these, these types of businesses. So that can actually, you know, be a good thing. You also, depending on the type of recession, like in 2009, you know, we saw a lot of people leaving the workforce, and going into franchising. So, you know, new franchise business starts, we're, you know, pretty good coming out of that one. Now, that was more of a credit crunch. So access to capital was a real challenge in 2008 2009 10, we're not seeing that now. I mean, people have cash, you know, talk to the bank, you know, they're ready to lend to small businesses. I think the issue right now is kind of cost of goods and labor. And the lead time from franchise, you know, lead to deal is really being extended out right now. And I think that is just a result of the overall uncertainty and what's going to happen with the economy and the cost of, you know, if it's a build-out in terms of a retail or a restaurant situation, you know, that is kind of pushing things out a little bit right now. And so, you know, there are some things in the economy right now, that is, that is a challenge, but, you know, franchising is, is very resilient. And we always overperform in terms of the broader economy. And I fully expect that we will see that, you know, whenever we get to the other side of this, this period that we're in, you know, a lot of people are watching what the Fed is going to do with interest rates. You know, I think the biggest challenge in franchising is, you know, our franchisors, especially those early-stage franchisors that that need to do an ad unit growth, are they going to be more focused there? Or are they going to, you know, really hunker down and ensure the profitability of their existing franchisees? And I think that you know, it often selling that next location can feel really good, but are you overextending your ability to support you know, who you have in your system today. And, you know, that's, that's as if not more important, because, you know, a new franchisee a smart one who's doing the right research is going to look at that profitability of those existing locations. And that profitability is really what, you know, lends itself to the long-term success of that franchisor system.
Lance Graulich 13:58
So you bring up another great point, Matt, because what I preach to people on a regular basis and educate them on as a franchise broker is a fact that, you know, I'm gonna find you your perfect business, whether you believe it or not, and, and most people don't believe it. In the beginning, they think I'm crazy. It's like, how's this guy going to know this? And the reality is this franchise system, you know, with the FTD, knowing there's an item 19, knowing there's an earnings claim that you get to investigate or go through some of them quite simple, and others have a lot more detailed, depending on many factors. But then you now have the ability to talk to existing franchisees and you hit on a lot of important things that can give people great comfort, knowing when you talk to existing franchisees and validate with the brand, you know, especially, let's say the pandemic because now we've just come through a pandemic. Thankfully, I think it was just announced yesterday that there's no longer any COVID testing for people coming into the country. So I think that just stopped yesterday. So yep, clearly, there are big changes. So with the validation, tell me how you were treated as a franchisee during the pandemic? What did the brand do for you? Did you? You know, did it exceed your expectations, etc. So you and I both know that the system for franchising is set up as well as possible to bring people the information they need. So they can make, you know, draw a conclusion that, hey, I think this brand is for me, I think this brand or not, and I'm gonna move on and look at another brand. What do you say to that, you know, when people are talking about, I mean, there's not really a mystery in a lot of cases with existing franchise brands.
Matt 15:42
Yeah, I mean, the Franchise Disclosure Document, it really is, you know, a great tool, but it requires, you know, you to go through it as an individual and hire counsel, you know, to go through it on your behalf, right, like, don't take the front, don't take the franchisors word for it, like their job is, is to do the sale, kind of like buying a home or a car, if somebody's trying to sell you something too hard. You know, it, if it doesn't feel right, like, you know, there asks the question, and if you don't want to go through that process, you know, maybe franchising is not right for you. Because you're entering into, in most cases, you know, a 10-year relationship over the term of that agreement, and hopefully longer, right, if things go well, or maybe you're going to add, you know, additional units with that same system, if you're interested in becoming a multi-unit or location owner. And a lot of these platforms now have multiple brands. So there's a lot there. It's, it's kind of like life like it's what you make out of it. It's the questions you're asking on the front end to really, you know, get the information. And, and so yeah, the FTD, and the government has, you know, doing a good job of, you know, finding the right balance between, you know, what they require brands to do and what they, you know, what they make optional. You know, you mentioned item 19, which is the earnings claim, you know, that's not a required disclosure, for a brand, but it's increasingly becoming that in, in the course of going through the franchise sales process. If a brand doesn't have an item 19 Like, that should immediately be a question that you're asking the brand. Why? Or asking your advisor why now, if it's an early, super early-stage brand, it could be misleading or a slam if they have one or two locations. And so there's inherently more risk with a brand that you're going to franchise with, then, you know, something with like a Wingstop, with a, you know, incredibly proven track record of 1000s of locations over, you know, 20 plus years now. And so that, you know, it is risky, but it's all about, there's information that you would not get with other types of investments.
Lance Graulich 17:51
So let's, let's talk more about let's call it misconceptions about the franchise industry, you know, validation and having an item 19, or earnings claim to look at is always a wonderful thing, doing research with tons of franchisees, like a brand like Wingstop that we use as an example. But what you know, there's a lot of misconceptions, you know, about franchising costs so much, there are fees, and you have to be a millionaire to own one and, you know, things like that. So what do you say to that? What is the IFA doing in the educational process? I know, there's a lot that you guys do on a regular basis?
Matt 18:31
Yeah. Well, from a purely, like, what are the fees? Or what are the costs? Like, again, back to the FTD? Right, it's all disclosed. So and if it's not, then, you know, that's another problem. That's another problem, right, like, then that the brand needs to be, you know, held accountable to that. But in terms of misperceptions, just generally, like, if you're, you know, even before you're talking maybe to one specific brand, you know, there's a misperception that it is, you know, only, you know, millions of dollars of, of the network that I need to go into a franchise, not the case. I mean, there can be, you know, franchise investments for the low five figures, that now that may be, you know, something that is more part-time, you know, maybe not, maybe not quite a business opportunity, per se, but a word biz op as it's thrown around. But, you know, you can be buying into a mobile franchise, you know, something that's part-time, you know, all the way up to some of these commercial residential services franchises can be in the low six figures in terms of investment to own a territory, you know, selling a product or, or a service. So, there, there really is a range of investments, obviously, the restaurant industry and the hotel industry are much more, you know, sophisticated in most cases in terms of the type of investor that those brands are really looking for. And, you know, the restaurant business, you know, is really tough, right, like margins are very small on an on a per box, you know, per unit location. So, it typically to really, you know, build equity you Want to be in multiple locations? You know, or at least get there over time. So, so that's kind of on the investment side, misperception on the policymaker side, like, we can go there, if you want to go there a little bit. Sure, sometimes, you know, there's a perception that the brand is really controlling, you know, the business, right. And that, you know, franchisees are, you know, effectively just, you know, glorified middle managers, you know, who are just sort of taking orders from the franchisor. And it's not really their business. I mean, you are Wingstop, franchisee I probably count on zero fingers, how many times Wingstop told you, you know, what to pay your employees who to hire, you know, how to how to do this. Now, there's a playbook, there's a, there's, you know, hundreds of other people running that same business that you can talk to, and bounce, you know, ideas off of, but you know, your market, you know, who, who you're employing that is, you know, sometimes the misperception that that is out there. The other misperception is that, that these are big, big, or only big brands, and we touched on this earlier in terms of the full range of types of businesses that are out there, not just in the restaurant world, but, you know, commercial services, residential business, the business services, real estate. So, there's a ton in franchising. You know, I guess one more that, that we deal with, is, you know, that franchising, you know, is really not diverse and isn't doing, you know, enough to promote diversity. In fact, franchising has doubled the number of women and immigrants, and minorities as business owners in the broader small business ecosystem. So we really do have a great story to tell on that front, too, you know, franchisees, they're kind of the these, like hidden small business owners, you know, all throughout the economy. And I think that is sometimes because of, you know, the brand itself, you know, is really what the consumer is looking for. They're not necessarily patronizing. You know, Lance's Wingstop, because, because they know, Lance, they're going there because of, you know, a convenience, like the quality and, you know, the product, right. And so, I do think that as the business model has grown and evolved over many decades, it continues and continues to, you know, it has lost the like, local ownership piece of it that sometimes gets overlooked by we're kind of a victim of our own success. In franchising in that regard.
Lance Graulich 22:34
People always tend to forget that it's like, oh, it's a big company like McDonald's. It's a local owner, in pretty much all cases. I mean, there are some out-of-town owners, but in most cases, it's its local ownership. people chose to do it in a certain area of Kansas because that's their hometown. Right?
Matt 22:56
Right. And we've got launched a campaign at the IFA called open for opportunity, which is all about educating, you know, really media and influential influencers, whether it's members of Congress, state, elected people, other kinds of business organizations, in communities that we've identified, as, you know, politically important to some of the work that we're doing around the country about exactly that. What franchising does for the workforce, what kinds of corporate local charities, these local corporations or local franchisees, you know, support, you know, you're never going to, you're never going to own the brand. If you're working, you know, an at a Chipotle. But you know, if you're, if you're working on a most up with grill, like, you could own that. That's right, and telling that story, and reminding people that they are local businesses is really, really important in the franchise model.
Lance Graulich 23:50
Yeah. And I always get the other misconception I always get is, well, I don't want to just buy a job. And I always kid people about that as well as like, well, you know, you, you get to leverage your money with usually an SBA loan, you, you definitely work hard for a period of time until you put a team in place. And then you have the opportunity to sell or exit at a really nice multiple because franchising has, you know, that's a scenario in franchising is a great secondary market to be able to sell your business. So what are your thoughts on that? I mean, you know, it's another nice benefit.
Matt 24:26
Yeah, it really is. And, like, the people who think that way, are probably not the people that you know, you're probably the people on your broker business that you're having to do maybe more work than the while and, you know, maybe the brand need not been looking at some of those people that have those some of those misconceptions now they are over. You do have the ability to overcome that. But yeah, again on the secondary market and the transaction piece. I mean, there's a lot of that going on right now. I'll just you know, not any different than everybody in the workforce thinking about, you know, their next thing. So we have a lot of people coming in labial, they're in buying locations of people that, you know, have gotten a really nice career and build some equity and you know, maybe want to get out, maybe they're not going to pass it on to their kids, or their kids want to do something different. And again, back to the FTD. And some of the other financial information that that's available in the franchise model more so than, you know, some, you know, traditionally, you know, pure independent business, there's information about, you know, how these, these locations are doing, from a financial performance perspective, in most cases. And so you can really kind of situation plan, or financial plan yourself, you know, over a long period of time.
Lance Graulich 25:51
Yeah, the information out there, if you want to, if you want to see it. I mean, that's basically what it comes down to. Exactly. Working with a broker, like myself and my friends, I mean, we always recommend using a franchise attorney. Some people do take us up on that some people don't. And it's different from a regular attorney. I want to hit Matt on you were talking about diversity a little bit earlier. And one of the things that some people don't even realize, is veterans. Yeah, I mean, last I look, the last stat was 14% of franchisees if I remember correctly,
Matt 26:24
That is exactly what Yeah, according to the most recent government data, it's probably higher because it is actually some sometimes veterans don't self-report who they are when they do this government reporting the on the small business census. And, you know, if you think about the following playbook of a franchise in terms of scale, it's very similar to, you know, a team-based approach that is very well taught in the military. And so the skills are very transferable. We've also for 30, plus years now at the IFA had a program called vet friend, and that friend, has about 600 brand, members of ours, who have discounts off initial franchise fees for the qualified veteran. So you know, 1020, sometimes 50% off of that initial franchise fee that could be, you know, upwards of $50,000. In some cases, you know, a not insignificant discount, because brands know that if they can recruit the right vet into the system, they're going to be some of their highest performers. So they're not worried about giving that up on the front end. And veterans also face greater access to capital and financial challenges given, you know, they've been in the military often a lot of transition with their spouses and families. So it's a great program, something we're really proud of, and we've been talking about that story, yeah, really, this year as the 30th anniversary. So you can check out friend.org, for more information about the ISA vet brand program, if that's of interest,
Lance Graulich 27:52
I love it. That's fantastic. Let's talk about the changing times with technology and how that's impacted. You know, when I think of franchising, I've been in a long time myself, you know, I want to know, your opinion, besides technology, and we can talk about technology that's made a heck of a difference, you know, with a lot of brands and how they're selling and getting in touch with people. And not only that, just managing the process with learning management systems, and I mean, everything across the board. So what are your thoughts on the changing times, if you will?
Matt 28:27
Yeah, I mean, COVID accelerated a lot of it, and, you know, probably for the good in most cases. So whether it's the franchise development side of thing, where, you know, brands used to host things called discovery days where they'd fly, you know, 20, franchisees that are, you know, interested in the system, you know, into their corporate headquarters or some other, you know, site and all the corporate team would be there, and you'd meet and greet people, and they're still brands that are doing that. And, you know, I'm still a huge fan of face-to-face interaction. But, you know, maybe whittling that list down a little bit further through, you know, virtual discovered is like, that's something we're seeing, there's a huge amount of technology that goes into the franchise lead development process, you know, I was a couple of weeks ago at the International Franchise Expo in New York City, and, you know, expos are still you know, a good source of talking to early prospects or meeting with somebody that's later on that system. But most brands are spending more than 50% of their franchise development budget, on digital and, you know, meeting people where they are, you know, on, you know, something like this, right, where you may be getting served an ad, you know, watching videos and, you know, filling out lead forms online. And then, you know, on the customer side, you mentioned, you know, Wingstop and some of the impact during COVID. But it's not just the restaurant industry with mobile delivery. I mean, all the commercial and residential platforms are heavily investing in a better customer experience for people that are constantly on the go and are dealing with a barrage of information. and being thrown at them all day every day. So I think as you're investigating a franchise system like asking those questions like, how is your brand, you know, dealing with the digital revolution and what are the things that you're investing in that are gonna help me as a potential franchisee become profitable and find and keep customers. So there's, it's really dynamic and there's a ton going on we do a ton of the IFA, and our, our events to teach franchisors you know, best practices and you know, information share. The next industry conference, I'll be out next week in Atlanta, is a customer experience conference that we're putting on with a group called franchise update media. And it's the intersection of technology and marketing and operations, which are three of the five or six disciplines that every franchisor has, you know, on their senior leadership team.
Lance Graulich 30:49
Sounds wonderful. Yeah, there's no doubt when people are paying their franchise fee. Do some people really have to be educated on what will Why do I pay that fee? And a lot of what you just mentioned, there are some brands spending an absolute fortune on not only technology but proprietary systems, that, you know, they hope to recoup a little bit of that when they charge a franchise fee. I mean, is that the purpose of a franchise fee? Does anybody have that out there in writing anywhere? What is the purpose of a franchise fee?
Matt 31:22
I mean, it's a great question. If, if it's not, you know, really out there, it probably should be in a more, you know, sort of simplified version we get, we use industry-speak a lot right in franchising, but that that would be a good, a good piece to have, you know, out there and educate the prospective franchisee in layman's terms, why am I spending 25 or $50,000? You know, before I'm even open beyond what I have to spend, like, do the build-out. And the reality is, it's to make sure that the brand has the resources financially to set you up for success and ensure that success over the long term, not just, it's not just we got to get your doors open, and you know, okay, now you're doing it all yourself. Right, it really is a win-win, and that fee is to help create a win-win. Now, if we talked about earlier, you know, not every franchise or greater equal? And, you know, asking those types of questions. You know, , in the courting phase, the dating phase is really important.
Lance Graulich 32:28
I love the dating phase. Exactly. No, I also educate people on the fact that you know, if you were going to do a business, not a franchise, you're going to create your own, most people don't have an original idea that needs to be born. But if you did, you're going to have to hire quite a few people to match the experience and the proven history of a good franchise, and you're going to be spending the money anyway. And in some cases, even more so. So you're getting a deal when you're paying a franchise fee for that experience if you've investigated, right? And hopefully, you work with a broker, but that's another story. So what do you see in the future? I mean, look, if you look at the growth trajectory of franchising, even though the pandemic, there was probably I mean, you know, I mean, was there still growth through the pandemic? If you look at the history, it still seems to be pretty straight up as far as I'm concerned?
Matt 33:24
Yeah, I think that will continue. I think the thing that we're seeing the most in terms of trends right now is, is consolidation. You know, both, you know, probably for your audience, it's more consolidation at the, at the brand level, into well, you know, being sort of brands being bundled into so-called platform companies. So it can be, you know, five, it could be 10, it could be 30, you know, in some cases, and that's, that's a big trend and something you know, that that I think is a net positive for the industry because, you know, a franchise or infrastructure is very similar, you know, from brand to brand, especially in the same sector, restaurant, commercial or residential service hospitality, and that creates an economy of scale and opportunities for you know, customer acquisition and experience across that platform. So, I think that for a lot of reasons prospective franchisees existing franchisees, you know, is a trend that we're going to continue to see you know, there is a consolidation and more kind of outside money happening at the franchisee level more so on the restaurant hospitality and to a degree on some of the retail concepts and on food retail with private equity and, you know, venture capital money kind of making its way into the business model. You know, that's something I worry about, because as we were talking about earlier land, you know, it is a business model that It is all about, you know, small business owners and, you know, the opportunity for people of lesser means to get into franchising, and who may not be able to go into business for themselves or have their own unique idea. And so, you know, I do worry about that a little bit in terms of what the future of franchising is. But there's still a lot of individuals that have, you know, built, you know, great wealth and opportunity. And I think that will continue for some time.
Lance Graulich 35:27
Yeah. And the way I see it is private equity always goes where the money is. So and in many instances, it's a big compliment, that they love to get involved in the world of franchising. And you know, the fact of the matter is that I think I think there are ways to see the positive in it, there are still mom and pops every day, I'm talking to two founders of a barbecue chain, and we're setting up for franchising, and, you know, their hope and wish one day is gonna get bought out by private equity. Well, why not? You worked really, really hard. Why not? Right, when for a great exit?
Matt 36:01
Yeah, I mean, private equity hasn't done a set of misperceptions. I'm not saying that it's bad. Yeah. It's that what I worry about is the ability for us to tell our story changes when I went when franchisee locations are, are owned by private capital, and not true, you know, locally owned and operated.
Lance Graulich 36:24
And so you know, that that to a degree is total, I totally understand that in most cases. You know, it is sometimes hard for the private equity guys to do that. They rather buy the brand and manage the executive team. Exactly. So tell me Well, and then sell for their 10 Multiple, which has been the history right. So tell me, what did we miss today, man? I mean, we've covered quite a few things. What do we miss? What's what is the future hold? What do you see? Once we get past this inflation? Where it's we're in the midst of, unfortunately.
Matt 37:00
Yeah, I mean, I think the future's bright, I think, you know, the business model continues to evolve. And, and, you know, I think, what, what we need to focus on, you know, at the IFA, and people that are already in franchising is kept our house in order, right? Franchising, it's pretty simple, when franchisees are making money, franchisors are making money, and, you know, having the right suppliers, enables the business model and continue to grow without, you know, outside disruption, you know, which is, you know, something that will always be a threat, because, as you say, you know, follow the money, right, you know, so where we're, you know, private equity firms are, you know, putting money, it's because they see a return on investment. And the things that are going to continue to be a threat to our business model are things like organized labor sees us as a, as a growth opportunity, you know, they want to change policies for their, for their benefit. That's something that we've been fighting at the federal level, we're fighting it right now. And that's pretty much Number One On The List probably right. It is number one on the list, it will probably be number one on the list until the Service Employees International Union says, you know, you know what, this fight is not worth having, because we can't prevail. And it's our job to make sure that they can't do that. Because if we don't have a separation between franchisor and franchisee we don't have franchising. And you know, that is the unique special thought that makes franchising work is, you know, brands go find people who can operate in local communities and perform better than they believe they can perform, you know, owning new locations, themselves, just using somebody else's system.
Lance Graulich 38:38
That's it. You know, there's nothing, you know, leave franchising alone, for God's sakes.
Matt 38:47
Amen to that Lance.
Lance Graulich 38:49
So final thoughts for you today, Mr. Matt Haller?
Matt 38:55
Well, look, franchising can take you anywhere you want to go in your journey like there's, there's a, there's something for everybody, you know, maybe you want to maybe you've got a concept, you'd think it's franchisable. Maybe you want to become a franchisee or work with a great broker network, or you're somebody that's interested in technology, law or marketing, or sales. You know, there are all sorts of roles, whether it's, you know, out of brand or you know, as a supplier. And so, you know, you can start your journey, all sorts of places, but a shameless plug-in for starting it, you know, through the ISA, and Robert eyes.org is a great place to poke around and learn a little bit more about what we do and who our members are and some of those stories that are out there. So I appreciate the time to share my story in franchising, and some of what we're working on at the IFA, and appreciate the opportunity with you.
Lance Graulich 39:43
My pleasure, Matt, thank you so much, and I look forward to meeting you live soon enough.
Sounds great. Take care.
Bye now.
Thank you very much for listening today. Please like follow and subscribe so you don't miss anything here at Eye on franchising. Visit our website at eyeonfranchising.com, e y e o n franchising.com, and complete our free assessments so we can assist you in finding your perfect franchise. This is Lance Graulich. Until next time