FRANCHISE TIPS YOU NEED
FRANCHISE TIPS YOU NEED
How can business owners leverage the collective knowledge of franchisees for growth?
I think it goes back to the concept of a mastermind. If you license a business and make everyone follow your exact formula, you're not getting any added value. You miss out on the mastermind effect. Franchising allows more flexibility. Early on, I realized I didn't have all the answers. There are people who are better at certain aspects of the business than I am. They understand the customer base better—the PTA president, the youth groups, the summer camp organizers. They speak the language of these community members, which wasn’t my strength. They know how to connect better, and I loved bringing all that knowledge together. They could teach the rest of the franchise system how to approach different groups, such as a summer camp counselor or a PTA president. This sharing of expertise is the mastermind effect that I believe franchising offers.
How do state regulations impact the process of creating a Franchise Disclosure Document (FDD)?
Franchising is expensive. You have to get licensed in every state and draft a Franchise Disclosure Document (FDD). My FDD started at 49 pages and has grown to about 400 pages. It was initially easy to understand, but now it’s more complicated. It has become a reaction to bad elements that sometimes enter the system. For instance, if someone wanted to sell something unauthorized from the truck, we had to add a paragraph to prevent that. The different state regulations also add complexity. In California, we added 40 or 50 pages just for their requirements. This process is expensive. You need attorneys and specialists to get it all approved.
That said, you can write an FDD for your state, get it approved, and start small. I had a friend who was an attorney who offered to cut and paste an FDD together for $5,000 to $10,000. I was grateful because I had been quoted $50,000 to $100,000. He put it together, and we sent it to the first applicant. The applicant’s attorney tore it apart, and they went back and forth for a while. My friend joked he made about 70 cents an hour doing that work. But he got the core done, and as we submitted it to different states, there were more changes. Since then, we've hired several attorneys to get it done right, spending a lot of early profits on perfecting it.
Franchising is challenging, but you need to be open to help and input. You can choose to license and give up some control or keep everything to yourself and handle every city and hire individually. I prefer input from great people.
What advice would you give to someone who wants to pursue entrepreneurship but lacks practical experience?
Mentorship and internships are incredibly important and often overlooked in the conversation about college education. The cost of education isn't just about paying tuition; sometimes, it’s about working for $15 an hour at a company where you're underpaid but learning a lot. The difference between what you’re worth and what you’re earning—that's the cost of education. So, make sure you're spending your time wisely. Treat each day on the job as an opportunity for education, especially if the pay doesn't justify the work.
I was asked to be on the board of a university where the fastest-growing major is entrepreneurship, and I have a problem with that. I don’t think you can teach entrepreneurship at the college level. If you want to focus on mentorship and internships, then surely, but what about teaching someone to be an entrepreneur in a classroom? There’s some basic stuff, like accounting and finance, that you can learn, but the real lessons come from experience.
How can business owners differentiate themselves in a competitive market?
If you look at people doing incredibly well, like Chick-fil-A, their customer service is on another level. That’s the challenge of being an entrepreneur—you’re often obsessive and constantly thinking, “What’s the problem? What makes us different? What can make us a market leader?” I don’t want to just make another hamburger; too many great people are already doing that. I’m very competitive, but I don’t want to compete with those who have been doing it for a long time. The idea that you can build a better hamburger at scale is egotistical. Sure, you can make a great burger in your backyard, but doing it at scale is a huge learning curve.
Instead, you should be looking for a niche. Is there a market where you can carve out a place and make a living? The key is figuring out how to monetize it to the point where you can sustain yourself. For me, I had three or four years of residual income and no debt, which gave me the confidence and motivation to get my business off the ground. Any profits went toward hiring more staff and improving the experience for Kona Ice franchisees. This allowed the business to grow without me needing to take a large salary.
How can business owners strategically build teams that complement their strengths and weaknesses?
In the early days, the people I hired were crucial because I always hired them to fill my weaknesses. I brought on accountants, organizers, and administrators—people with skills like organization or accounting—where I lacked. This approach is almost the definition of a mastermind.
On another note, there’s a quote from H. Jackson Brown Jr. that hung in my office for years: “Marry the right person. This one decision will affect 90% of your happiness or misery.” I was very fortunate to marry the right person 31 years ago. The mastermind effect in my marriage comes from my wife’s strengths—her caring, kindness, and love—which balance out my more direct, terse, and abrupt nature. She would explain to our kids, “Your dad is this way because he’s very direct and in-your-face. He doesn’t let things lie; he tackles every issue head-on.” That directness has been a strength in business.
The foundation of the mastermind effect of marriage is marrying the right person and understanding who you are. The mastermind principle for building a team is to know what you lack, hire for those areas, and get the job done.
How can business owners actively engage in lifelong learning?
Life is all about learning, and it never stops. When I speak at universities and high schools, I’ve noticed these young students have preconceived ideas about what life is supposed to be like. I tell them, you’re just at the starting gate. You never reach a point where you know everything and don't need to learn anymore. I'm fifty-five years old, and I consume knowledge like a starving man—podcasts, books, conferences—anything I can get my hands on. I love being around smart people and learning from them, seeing what insights I can gain.
I remember a friend of mine who was asked where he went to school. He mentioned the University of Kentucky and then subtly avoided saying that he didn't finish college. I thought to myself, that was a mistake because he's one of the smartest people I've ever met, and he didn't need a degree to prove it. Thankfully, the stigma of not having a college education seems to be fading. These days, it's more about how many followers you have or how much content you're creating. And that's fine by me. I enjoy being around young, smart people and learning from them. I don't want to be the guy stuck in the old ways, resistant to change.
But I hope the stigma of not having a college degree disappears quickly because it’s really about how you learn and apply what you know. That said, I also recognize that education can be challenging—it can show you how much you don’t know. I appreciated that about formal education, especially in challenging subjects like accounting. I started as an accounting major, but when I took advanced courses, I realized how tough it could get. It was overwhelming at times.
How can self-reflection improve a business owner’s productivity and success?
I struggle with this because I never want to discourage anyone. I always aim to be an encouragement. You kind of know who you are. One of my biggest pet peeves, which I've realized in the last 5 or 10 years, is people who lack self-awareness. They have certain traits in their personality and are completely unaware of them. It's frustrating. Do you own a mirror? Can you look in it and realize you don't have this skill set? Either work on it or accept that you don’t have it and move on.
I know my weaknesses—I’m not super organized, and my thinking can be scattered. So, I work against that. I'm very intentional with my alone time to organize my thoughts. I come into the office every Sunday night for 2 or 3 hours to plan my entire week. If you walk in on Monday morning without a plan, you end up like a pinball, bouncing all over the place. That’s my weakness, so I work hard to manage it.
*This interview has been edited and condensed for clarity.*
