Episode 421: How to Vet a Franchise Deal

Corey Kupfer00:00:02The Franchise Guy, Matt Stevens, is among the more experienced franchise consultants in the country, with more than 30 years in the industry. He has had four businesses, has been rookie franchisee of the year, turned around struggling divisions, and served as a quality board member and partner inside a $2 billion franchise group. Matt is a franchise gold and century club member, a Business First Columbus 40 Under 40 honoree, and authored a three-hour course about thorough franchise review. He holds three business degrees from Florida Southern College and Wake Forest University and is a MENSA member.

Today he uses his depth of experience to help serious candidates cut through franchise hype and see their choices clearly. His step-by-step process walks people from the first conversation to confident decision using real world validation, insider questions, and practical coaching. For listeners who are serious about understanding their best franchise options, Matt offers clear direction, honest feedback, and a proven path to ownership. Matt, welcome to the podcast.

Matt Stevens00:01:08Corey, thank you so much for having me. I appreciate it. Looking forward to this.

Corey Kupfer00:01:12Well listen, as our listeners know, we cover all types of deals on this show, from m&a deals and m&a transactions to franchising, and franchising is certainly one of them. We've had some folks on in the past and I love talking about it as one of the options. Before we get into all of that, all the past experience you've had, what you see in the industry going forward, the do's and don'ts and mistakes that people make, I want to take you back to when you were a little kid growing up, maybe ten, twelve years old. What did you want to be? Because I'm pretty sure franchise consultant, and maybe even franchisee, was not it. But you tell me.

Matt Stevens00:01:50Sure. The first one, consulting, I don't even know if that existed back then. Maybe it did somewhere. But I wanted to be a baseball player or a statistician, honestly. So if you've ever seen the movie Moneyball, pretty much every main character's role at any level in that movie, I wanted to be at one time or another.

I love the numbers, love baseball. I was a coach for one season. And frankly I would have been a coach a second season, but I started a business that year. So I stopped coaching.

Corey Kupfer00:02:27Well, awesome. So many of us had sports dreams when we were younger. For me it was pretty early. When my growth stopped at five eight, being a professional basketball player was, I mean I guess there are some examples of the Muggsy Bogues of the world and that kind of stuff, but I was not that talented.

Matt Stevens00:02:50Yeah, it'd be slim pickings there. I grew up in New Hampshire. I couldn't skate. I still can't skate. There were a lot of things I couldn't do, but I was okay with a bat and a ball. And I found out when I went to college there are a lot of people good with a bat and ball. My sophomore year of college in Florida, ten players were drafted and signed by the pros. Well, there's only nine on a starting team, so it's pretty impressive.

Corey Kupfer00:03:15Wow. Okay, one other question looking back. What was your first deal of any type? Could have been early in your franchise career, or maybe there's something before that.

Matt Stevens00:03:26Yeah, I had the little advantages that I picked apart, but I think the best first one was, I was a fan of Carlton Sheets and I read Ron LeGrand and all those guys in my youth. I used to have 14 rental units, and my first one, I walked away from the closing table controlling two properties, two duplexes, and I had a check for forty seven hundred bucks while putting nothing down. So that was my first real deal. And it made me realize that things I didn't think were possible were actually possible.

Corey Kupfer00:04:01I love it. So how long did you spend in that world?

Matt Stevens00:04:02Yeah, I was in that world for nineteen years, nineteen, twenty years. I sold my last property in twenty seventeen, after two of the fourteen burned down. They weren't in the best neighborhoods in town. They burned down during the prior decade and I dealt with insurance and all that, and it just wasn't the funnest thing. I've not been in love with insurance companies since, but it's a necessary evil.

I learned a lot there. I would still go back to it in the right situation, but I know much better what to look for the next time through. I did have some wonderful deals there and I sold some good deals as well.

Corey Kupfer00:04:45Got it. So how did you come to franchising?

Matt Stevens00:04:50I was walking through the hallways of Wake Forest University for one semester of my life. And on the walls I saw an advertisement and it just happened to be right up my alley. I'm one of those people who in college, my goal was to say yes to everything unless it was going to kill me. So first time I ever had a canoe ride, first and only time I ever rode a horse, things like that. I just said yes to everything.

So lo and behold, I was out there running a business, the precursor to CertaPro Painters, which is a behemoth now in franchising. But at the time I jumped on, there were just 67 of us gunslinging in Canada and New England and the Mid-Atlantic. We had some excellent training and frankly it was an amazing experience, a real solid foundation for not dozens, but hundreds of people now who are in their 40s, 50s, and 60s and are in leadership positions throughout franchising and the non-franchised world.

So the deal on that one, Corey, is that there was a zero investment, zero dollar investment, but a 25% royalty, which is a lot. So that was a trade-off and that was our training. We had to invest our time. Those of us who did well worked our tails off.

Corey Kupfer00:05:54Wow. Okay. Yeah, that's a high royalty. But I guess that's the trade off, right?

Matt Stevens00:06:11And we learned a lot of stuff. Then I became a coach in that and a franchisor in that. I was with them for about ten years.

Corey Kupfer00:06:18Wow. This is going to air a while after we record this, but while we're recording this, we just released the solocast this past week. One of the things I was talking about was these sayings or myths or accepted wisdom that are in deal making, and how some of it's true or only true in certain circumstances, some of it's not true, and there are no blanket rules. A lot of it applies just as much to m&a strategy as it does to franchising.

But one of the things that I did talk about is this concept of, give me a price, I'll give you a structure. Give me a structure, I'll give you a price. That's a great example here. You want to attract people who don't have any money up front. Okay, well, we'll take more on the back end.

Corey Kupfer00:06:59So it's a higher royalty. It's all deal structuring, and the same trade shows up constantly in the m&a space.

Matt Stevens00:07:00Yeah, it's true. It worked out. It worked out very well for me and many, many others. For some folks, they didn't get it or they didn't work hard enough or what have you. They thought it was too much. But there are a number of people now in the franchise world especially that I know, and I have a lot of LinkedIn friends from the non-franchise world who I coached or who I was a franchisee with, who are in leadership positions literally from Seattle and California through Maine and Orlando. It's amazing what that training twenty five, thirty years ago did for us. We just maintained that path straightforward.

Corey Kupfer00:07:39So let's talk about this a little bit. A lot of people have different views on franchises. Some people are very pro it, some people have this conversation that true entrepreneurs aren't going to be in a franchise because they want their independence and they don't want to have to be under these rules and systems. Everybody's going to have an opinion one way or another, bad or good, about anything.

But you have an interesting path, because some people come to franchising later, whether they're in other businesses or they're employed and then they're looking for something different but they don't want to make the full jump. You sort of grew up in it in a way. You came in on this no money down, the franchisee side, the franchisor side, moved into management. So what are some of the advantages or lessons of coming up through the franchise model in a franchise system?

Matt Stevens00:08:44Right. I would have people forget that it's a franchise and instead just consider it as another type of business model. You're looking at A, B, C, D, and E. And this could be one or five of those types of business models. We all compare current situations or current opportunities against every other opportunity presented or findable by us. So I tell every candidate the same thing. If you determine that this opportunity in its grand picture can help you get where you want to go faster and easier and less expensive or with more opportunity than another one, then you might be a franchise owner. If you don't deem that, you might not.

The inherent advantages of franchising are that it bolts you through the learning curve. It does provide foundation and advantage. You don't have to hire outside help. You always have someone to go to with a question. You're trained on things that are going to happen, that you're going to find in that business early on, so that when you encounter them you can step over or around them.

I'm a huge fan of franchising, but I also understand why someone might not want a territory limitation. Or they might not want to be limited by what they can sell at the front counter. Or they might not be able to buy a sister company in a different industry for some reason that's restricted by the franchise agreement. So there are wonderful reasons to jump in and there are reasons not to.

The longest tenured franchisee I can think of, Lawn Doctor, is a 60-year-old brand. It's just lawn nutrition. They have a franchisee out east in New Jersey who's been there 50 plus years. The family has taken it over. I've placed people in CertaPro, my alma mater. I've placed people in there who are going on their 30th year there, and they don't have to do that. They could quit, but they've renewed their agreement every 10 years. The same with that Lawn Doctor example.

So there are some wonderful ideas in franchising, wonderful models. You end up being with people you want to be with. They end up becoming at least one of your friend circles. And you can really gain some fantastic advantages when there are 20 or 300 or a thousand heads, all with similar mindsets.

Matt Stevens00:11:06Who are now helping each other not only with that business, but also with outside opportunities you may never have found without knowing these people.

Corey Kupfer00:11:15Love that. Because you've played so many different roles, I'm always curious. Sometimes we have folks who have been on the sell side of m&a and then they end up on the buy side, or folks who are on the investment banking side and then they go in house and they start their own company and they become the client when they were the consultant or the broker or the banker. A sell side m&a advisor who crosses over to the buying side tends to see the whole m&a industry differently afterward.

So you have these perspectives, franchisee, franchisor, franchise consultant. I'm always curious as to what, I'll give you an example. When I worked in big law and then medium sized law, before I hung out a shingle at age thirty and said I don't want to work for somebody the rest of my life, I had all these things that I didn't think the firms were doing right. And I thought I could do better as an entrepreneur. You know what, I think I did have a vision for a different way, especially back then. And even I hear now in big law as well, it was very hierarchical and people weren't treated well, and a certain way clients were approached.

A lot of that proved out to be, let's say maybe eighty percent of what I thought I could do differently proved out to be different. But then there was that twenty percent when I got to the other side of the table where I was like, that's why they do that. Or I didn't do that and it turned out to be a problem and I started doing whatever that was.

So I'm always curious when people have been on different sides of the table or different roles, different perspectives, whether there were things like that as you moved from a franchisee to a franchisor, now to a consultant, where you were like, now I get it.

Matt Stevens00:12:48It's interesting. Every piece of human behavior is driven by inputs and outcomes. It's not rationale. It's not common sense. It's inputs and outcomes. So if you want to see why someone is behaving in a certain way, you have to see it from the other side. You have to see, what's the outcome of this? Why are they doing that? And you're absolutely right. So I learned, when I keyed into that, it allowed me to approach everything a little bit differently. As a franchise owner, I was quite frustrated with several things they did. When I became a franchisor, I realized, again like you, that makes perfect sense now. So I tell all my candidates, you're not going to be able to see everything from that side of the table. But you need to accept that everything is done for a reason and it's okay to ask why. And we do ask why. And yet you're sat at that table and you're positioned in every seat. When you are positioned in every seat at the table to understand best what that viewpoint looks like, you have an appreciation for all of it and you can move forward without questioning and frustration.

Corey Kupfer00:13:58Do you have an example or two where a franchisee might question something, but then if they get more context from the franchisor side, or certainly when you are on the franchisor side, it makes a lot more sense? In my own m&a experience, the rules that look arbitrary from the outside usually have a story behind them.

Matt Stevens00:14:14Yeah, probably the biggest one, and I don't engage with it often, but once in a while people will find something online about a first right of refusal, for territory or for growth opportunity. Back in the day, that was a thing that would allow a franchisor to bring in more people. If we actually sit at every seat at the table, if we view through the candidate's eyes, we view through the consultant's eyes, we view through the franchisor rep's eyes, and through the franchisees' eyes, who might be a neighbor or have gone through that process, you realize quickly that there are great reasons why franchisors have eliminated that idea. And the only reason a franchisor today will offer a candidate a first right of refusal is because they are desperate to sign the franchisee. That's why. Once in a while we'll still walk into a situation where there's a new candidate, they bought a franchise, they're getting funding for the two neighbors, and it takes them three to four months. The franchisor will allow that. They'll either have them put forth a chunk of change to hold it for six months, non-negotiable or something like that. But first rights of refusal are gone, and yet it still exists on the internet, enticing people into it when it's not a thing.

Corey Kupfer00:15:29Yeah, and I'm not heavy in the franchise world, but I've certainly come across it. There are specific franchise attorneys out there who do that. We don't do that. But I've had some clients who've invested in franchises, whatever, and we looked at the agreements. Back in the day that was not that unusual in the early days, or at least not that even back then they gave it to everybody, but it was something that people had more leverage to potentially negotiate, not unlike how m&a negotiation works when both sides still have room. But no longer, right?

Matt Stevens00:15:58Correct. They don't do it anymore. The franchisors learned lessons from those who did. And they've just decided, no, that's not a thing. And frankly, because of that, what you find is the people who want to grow, they secure those territories early on. They don't bite off more than they can chew. The good franchisors won't let them bite off more than they can chew, but they secure the territories early on. They then have a growth schedule to fulfill those agreements. And if they're not ready to eat that much, then they start with one. Or maybe one will satisfy them. It's a totally different mindset now that works, I think, best for everybody.

Corey Kupfer00:16:32Yeah, and I've certainly seen, even without a right of first refusal, whether it's on a new one or whatever, the franchisees who grow often do it by buying up others. They want another territory, okay, they buy out another franchisee if they want to grow. That's growth through acquisitions in its simplest form, and company acquisitions inside a system come with their own wrinkles.

Matt Stevens00:16:51They do and they can. The downside of that is you have no idea when that person will be at a time they want to sell, and you have no idea what their asking price is going to be. So we call it growth insurance. There are some models that are just exceptional. You get behind the curtain and you see that and you realize, okay, if you're in one of the major US markets where these things go like that, Dallas, Fort Worth, Charlotte, Atlanta, Nashville and Denver, for example. If you don't get what you want when you get it, you're not going to get it down the road. And the opportunity there is, you don't need to get three territories, you don't need to triple your investment. The beauty there is you can handle six territories with the same phone number and van that you can handle one. So often an investment into one territorial franchise business will be X, whereas if you control three, it's one point six X, or if you control five it's two point two X. Literally it's an opportunity to control a lot more with a smaller percentage of investment.

Corey Kupfer00:17:53Yeah, classic economies of scale. It's interesting, because on the right of first refusal, the ROFR, we get that on the corporate deal side or even in shareholder and operating agreements between owners, to say, hey, if you get an offer to sell your equity, we have a right of first refusal there. It's more common to have that because you don't want people selling out their equity and suddenly you have unwanted partners. In equity m&a we see that same clause cut different ways.

So within partners it's still common to have that. Sometimes with deals like joint ventures, or minority investor deals where they want a right of first refusal on the rest of the equity, those are more negotiated. And then certainly there are situations with people in multiple companies. There are a lot of scenarios where that question comes up and it cuts different ways in different types of deals.

One of the things I always tell my clients when they're considering agreeing to it is, if it's one of those situations where you're going to have an outside buyer, the risk always is that in that sixty or ninety day period, or thirty day or whatever you have in there, they get to decide that you're going to lose that deal. So you have to take into account whether that makes sense in your particular circumstances and what the time period should be.

Then there's also, and this is more for the audience, there's something called a right of first offer, which you hear less of, but it's different from a right of first refusal. The right of first offer means that, let's say I'm the potential seller, and let's say Matt has the right of first offer. That means I have to go to Matt and say, hey Matt, I'm going to sell this thing. I'm giving you a chance to buy it. I don't have to go out and shop it, get an offer, and then have him match it. He has the first right to buy it, and we have to have a process by which we determine valuation, things like that, whatever it is. In my m&a firm we spend a lot of time on how deal value gets set inside that window.

Corey Kupfer00:20:10But then if he doesn't exercise it, then I can go out to the market and I'm free to sell it to someone else. So I don't have this second bite of the apple issue. That's a solution that sometimes comes up in other industries. I don't think you see that in the franchise world either.

Matt Stevens00:20:27We don't see it in the franchise world, but totally understandable. There are situations where the right is offered and should be there. I'm in a private stock deal where stock can be sold, but the offer for the right of first refusal is every other stockholder has to say they don't want it first.

Corey Kupfer00:20:43Yeah, exactly. All right. So one of the things you talked about in your bio is really the way you help folks analyze and do the due diligence and the things to look at in these kinds of deals. The m&a advice I give clients is that diligence up front and managing acquisitions after the close are two different skill sets. I guess, what are the key elements to look at, and on the other side of the coin, what do people make mistakes in, let's say as a franchisee moving into buying into a franchise?

Matt Stevens00:21:14Yeah. Assuming we get past the first two real deal breakers, let's call it, those are going to be investment, likely investment, and potential return. If we can get past that and we can get past territory availability, if we get past those two things, the next biggest item is really what all the validation and due diligence is about. It is the behavior required, the behavioral patterns required, following along the people who've already done it before, to create the outcomes that that one person desires to achieve using that business model. And that's where the opportunity is.

I tell all my candidates the same thing. Your validation is, the franchisor can confirm the territory for you. That's a no-brainer. The investment is outlaid in the disclosure document and you'll confirm that with franchisees you speak with and you'll understand that thoroughly. But the question is, what behavior does it take to get from A to Z?

Matt Stevens00:22:14In the time frame that your goal is to do it in. And if you learn that and you learn it thoroughly, and you can look in the mirror and say, I'm ready, willing, and able to do that and to replicate that, then you might be a franchise owner. If you're not ready, willing and able to do that, you're probably not going to be a franchise owner. And I think that's where a lot of candidates will come to me and not realize the import of their day-to-day behavior and their habit structure to get them from A to Z.

Because one of the many beauties of franchising is, you're not creating anything new. You're following along what other people have done and the way they've done it. So there's a mundane piece to that. There can be, in the right situations, if you build it properly, you can create your own boredom. That's a real thing. Doesn't happen in the first one or two years, but it can happen sometime after that. A lot of people like that, and a lot of people are frustrated by that, but you can certainly create it. It's a matter of behavioral patterns that get you from A to Z. And if you replicate them, you can do well.

Where people really mess up in that is, as a candidate and the franchisor are considering each other for this partnership, the candidate is always thinking, I wonder if the franchisor is going to really live up to the expectations. That's easily findable. They just talk to other franchise owners about what their expectations were. What the candidate is not realizing is the franchisor is looking at them at the exact same time and saying, I wonder if these folks are going to follow through on the behavioral patterns we want them to follow.

Corey Kupfer00:23:44That's less verifiable, right?

Matt Stevens00:24:02Absolutely. So I make my candidates all aware of that as well, because you never know what life is going to turn up for you tomorrow. We call them the four D's, death, divorce, disability, and distraction. Those things happen. It's uncommon, but distraction is the one that really grabs people sometimes. Adults are who they are and each person operates differently.

Corey Kupfer00:24:09Yeah, and listen, I'm a huge proponent in every situation of the internal work it takes to become self aware. It doesn't take me that deep to know that I would be a horrible franchisee. It's the same reason I tell clients to get honest about their own m&a approach before they go chase a target. And it's just because I don't like other people's rules. I get the business model. I get and respect the business model. I think it's brilliant for a lot of people. I understand, as somebody who's built business from nothing and understands all the mistakes you make when you have to figure it out on your own, and it's the reason I'm an Entrepreneurs' Organization member and I spend a lot of time with entrepreneurs, because I try to learn from their mistakes. I understand the value of proven systems. I understand the value of access to expertise. I understand the value of having a bunch of stuff off your plate so you can focus on growing or operating a business. I can go on and on where I intellectually a hundred percent understand, agree with, and see the value in the franchise model. And it would drive me crazy, because I know who I am. I'd rather go out and figure it out on my own and make the mistakes, and maybe have slower growth for a while, but fully control and own it and be able to do whatever the heck I want with it. So I always tell people, when I help them design business models for growth, whether that's an m&a strategy, whether that's a joint venture strategy, whether that's a licensing strategy, whatever, get very, very, very clear on who your target is. Strategic deals live or die on that clarity, and that's as true in the m&a business as it is in franchising. What your value proposition to them is, and what their psychographic, demographic, whatever thing is. Because you actually want to have people ideally be able to opt themselves out of your model, because they're clear on what it is, because then you don't waste time with them or make mistakes. That's most of what strategic advisory work actually is. And then of course you also become more attractive to the people who will opt in, because they know exactly what it is. And the people who begin to be drawn to that will be drawn to that, and the other people will be repelled, and that's a great thing. It's somewhat similar with franchises, right?

Matt Stevens00:26:33Agreed, agreed. With franchisors there's a playbook and there's a culture. Every franchisor has their own. Even if they could be in the same industry, they could be sister companies, they could operate out of the same home office at the headquarters, but culture is what it is, and they really do work to protect that. The best franchisors have a culture that they're looking for. They're looking for what I call, no one else calls it this, the duck, because ducks fly so high. They're looking for the duck. And if they find the duck, they're going to be all over that person. If they don't, they're not.

Corey Kupfer00:27:11Love that. So, clear direction. Your bias is clear direction, honest feedback, and a proven path to ownership. Let's say somebody has done the work and they say, hey, the franchise model can be great for me. There are so many options out there. There's almost a franchise in every industry that exists these days. It never used to be that way. People have misconceptions around franchises. Obviously the easiest ones to think about are the food franchises, but there are so many opportunities outside of food. The deal volume out there is enormous now, in franchising and in m&a both. Obviously if somebody comes from an industry, maybe they're particularly interested in that industry. But there are also people who just come to franchising as a business opportunity, whether they're executives who are corporate middle management people, whatever it is, who are burnt out, whether it's somebody else. I see folks coming out of the military, for example. There are various situations that people have and they come into it from different places. How do they sift through and figure out, not only because there are a few things, okay, what type of franchise aligns with them, but then there's also who's good within that particular industry. This is part of what you help people do. So how do people figure that out?

Matt Stevens00:28:42It is. And I've worked with people literally who've told me, I've been looking for 10 years. I was a candidate I worked with yesterday. I've been looking for 10 years for the right thing. I haven't found it. So my first question is, what are you looking for that you can't find? And that'll all come up. And AI won't help you. It'll give you great questions to ask, great things to ponder, but it won't help you get where you want, because frankly a lot of the information we use is non-public. It's from our research of the franchisor, their developers, and their franchise owners.

So the interesting thing in franchising, and I have a candidate right now who is having a difficult time putting any of the businesses I've introduced to him down. He's really struggling putting them down, which you don't think is going to be a problem, but it is. If you do it right, it is. So in the background, there's a spouse saying, well, out of thousands of options, why these three? And that's a relevant, pertinent question.

Matt Stevens00:29:40What it comes down to is this. Every company has their own culture, they have their own growth structure. There are franchise systems out there that won't even let you on the phone with them unless you're going to buy seven locations for $11 million. So what are the discriminators? It's money, it's territory, it's timeline to get that money back or to make an income. It's your ability to sell or your ability to manage salespeople, your ability to manage others or not on the labor force. Do you want to work with white collar workers or blue-collar workers? How much money do you have to invest? How long can you go before you get some of that back?

One of my questions to every candidate is, how long can you go at zero income? Let's assume we found you the right thing. How long can you go at zero income before you bang your head against the wall or you hit the panic button? So there are roughly two and a half dozen ownership criteria that I go through with every single candidate. And each one of them sifts more and more options out.

Some options are fantastic, Corey, but they're three years old. And some folks just don't want that. Other options are known because they're 30 years old, but they have no territory left. And those businesses won't offer a resale to a greenie. They won't offer a resale to someone outside their system. You have to first become a franchise owner with a new location before they'll even show you their resale.

Matt Stevens00:31:01So that's not publicly known information. And we deal with all that. So for this one candidate I'm thinking of, and I do it with every candidate, but for this one who's down in Texas, we sifted 4,000 options down to four. He got it down to three, and now he's struggling putting one down. And I think that's a good thing. But it's for reason. Each of those three has a different superpower that he is overwhelmingly attracted to. And he's just trying to find out which one really is going to work best for him in his situation. And I'm trying to facilitate him doing that.

Corey Kupfer00:31:32Love that. I know every franchise is different, but what are some of the characteristics of a successful franchisee? It's the same question I ask in m&a work about management teams.

Matt Stevens00:31:43Yeah, successful franchisee. One, they follow the playbook. That's step one. And anyone who's looked at franchises has heard that term from a consultant or a franchise developer. It sounds cliche and plastic. It's also absolutely true. For a six-year period, I found, recruited, signed, trained, and mentored 167 different franchise owners in nine states in the same franchise system. And it was indelibly linked into me that that is absolutely the fact. You follow the system, or you waste a bunch of time, money, and you have a nervous breakdown, possibly. So that's one.

The second piece is you have to engage in the business. You need to reach out to other franchisees. You need to form friend groups. You need to reach out to the franchisor. And you have to exercise your ABS. ABS is attitude, ambition, behavior, and skill. You have to exercise those things in that business. And I think if you do all those things, you're likely going to be quite, quite good.

The things you want to avoid are, don't compare yourself to average. Average is a C student. No one I've ever recruited wants to be a C student, yet they always compare themselves to the C student and say, that might not be good enough for me. Okay, well, let's compare you to the B or the A students then. Let's do that and see what happens and figure out if you want to behave like them to get there. And sometimes they do and sometimes they don't.

You also have to vet your employees. You can't just sign warm bodies. Those who do, especially when they come from the professional world, they're mentally out within a year, year and a half.

Matt Stevens00:33:37You can't do that. You have to build your own culture and you have to build people who are going to work within your system. I've seen people buy existing businesses who also assumed all the employees from that. And the culture wasn't what they wanted it to be. The seller, let's say, let employees get away with things that the buyer would never have let them get away with. And I've had phone calls driving toward a golf event nine hours away where I spent two of those hours on the phone with a person I placed, talking him through that. So you've got to use common sense, you've got to engage, you've got to exercise your ABS, you've got to follow the playbook.

Corey Kupfer00:34:14Yeah, and I'll tell you, I just got my oil changed yesterday at Valvoline. And only in this playbook conversation, because again, I see the value in it. You go in there and they have three bays, so I can hear the conversations all going at once. And I'm sitting there because I love studying business models. A lot of times I'm amazed, and I'm talking about outside the franchise world, how there are some basic things that somebody, just in terms of follow-up, in terms of the way you greet somebody, there are these basic things that so many businesses don't do. And in the meantime, I'm sitting at this bay at Valvoline, and all three bays are saying the same exact thing in the same exact order, in the same exact way. They pull out the filter, they show me that it's good. They don't just tell me it's good. They literally bring the air filter over and say this looks good, I'm just going to put it back in, you don't need anything else on that. Obviously they're trained to do that. They could just say your filter's good, but there's something about that and I'm like, okay, that's cool. And I could tell where they're trained to upsell. Okay, we recommend this additive to your whatever. I'm like, no thank you. But the point is, I can respect it, because you haven't had your tires rotated, no, you're right, I'll do that. So it's a simple example, but it's like, just driving into this bay where there are three of them and just seeing the way that every single person is doing the same exact thing, and also their attitude. They're very positive. I'm like, these are well trained people. And you go into a lot of places, I'm not saying every franchise, there are bad franchises as well. But I think the odds of that happening are higher in a franchise model than in some random business. And I'm often shocked at how poorly employees are trained in non-franchise businesses. Even the way they barely look up when you walk in, the way they greet you. Some of it's their attitude, but some of it is also, you can tell somebody's maybe very positive and great, but they just, who trained this person? They don't know the answers to fundamental questions. A lot of that can be alleviated. Even frankly a mediocre and upright franchise system probably has that better than a lot of non-franchise businesses.

Matt Stevens00:36:51It can, it can. I mean, I walk into my bank and anyone who's not working with a customer at that time and who can give attention to the person walking in that door, within two steps I hear good morning or good afternoon. We're glad to have you here. It's a completely different environment.

And I was 20 years old when I learned not to just have my people show up at a job site. I was 20 years old when I learned to instruct my foreman on every job site to get a piece of paper detailing what they're going to do that day, knock on the door, talk with the customer, and share that information with them so they knew what was going to happen.

Matt Stevens00:37:19And at the end of the day, do the exact same thing about what they did and what they planned tomorrow. The next morning comes, here's what we're going to do today. So it's the second time they've heard it. And it just becomes this wonderful circle, because fear and anxiety come of not knowing what to expect. If you can reduce that bubble to nothing, or you can alleviate it entirely, boy, are you going to have a much better relationship with your customer and they're going to tell their friends about you. And you're absolutely right. I agree a hundred percent. The training is important and you can't just hire a warm body.

Corey Kupfer00:38:02Yeah, and listen, this comes from somebody who, as you know, I'm not a franchise guy, but I get it. The good franchise systems have training programs. Individual companies, it's harder for them to build out a training program. Every individual franchisee may only hire, depending upon the type of franchise, it may be many people, but maybe a couple of few people. In a small business that's only hiring a couple of few people, they're not going to build out a training system. But if you're part of a franchise model where every franchisee only has a couple of few people, they could still have a robust training program because they're doing it across the franchise. So that's one of the examples of where it really is an advantage.

Matt Stevens00:38:56I agree. And even if someone just has, even if you're someone out there who owns 10 properties and you have two handy people who are running the properties, there are some practices in there that will make your life ten times easier than it is. If you just think through that and you have them either approach a tenant or the owner every day, first thing, or they get a phone call or a text or something. Just keep people informed on what's going on.

I once had my interior painted and there was this wacky thing they left on a wall. And I assumed it was because they ran out of paint, because I've been in that industry. I wasn't going to paint it myself this time. So I reached out to them and said, hey, no one left me a message, what's up with that? And they said they ran out of paint. Well, most customers don't understand that that's why that would have happened. It would have helped a lot of other customers get their head wrapped around it, sleep better at night, if they knew that that wall was half done because they ran out of paint, not because they were missing something.

Corey Kupfer00:39:55Yeah, it's amazing how bad some folks are with communication, or just forgetting it, because they don't have something as simple as a checklist of something that they should be doing on every call, right?

Matt Stevens00:40:07Yeah, literally. Just have a checklist. You don't have to memorize it even. Just follow that. One of the books I read said, goals are for losers, systems are for winners. And I agree with it a hundred percent. Follow a system.

Corey Kupfer00:40:20Yeah, it's funny, because even in my business I become, in a lot of the entrepreneurial operating systems they have this concept of a visionary and an operator, a visionary and an executor, a visionary and an implementer, whatever they call it. But it's always a visionary and there's always somebody that makes it happen. And us visionaries are notoriously not natural at systems, because we have a million ideas.

And when we're smart, we surround ourselves with people who are great at systems and building systems. I often say this, that I have a couple of people in my company, especially Dawn, who runs the whole operations of the firm, and she'll say to me, Corey, okay, we can do that, but do you understand you only understand four of the twenty seven steps it takes to get that done?

Corey Kupfer00:41:13So we're not going to have it next week, and where do you want it in the priority stack? Because it's going to take a while to make sure that we do this right. And I'm like, okay, okay. It's the same thing I see on an m&a team, where the visionary needs the person who actually knows the twenty seven steps. So listen, there's a lot else we can talk about and we're coming towards time. You talked about some of the evolutions, like around the right of first refusal, things like that. Whether it's on a business level, whether it's what's happening in certain industries or whatever. What are some of the interesting trends or directions that the franchise industry is moving towards, or interesting new things that people might want to know about? In the m&a business we watch for the same kinds of shifts.

Matt Stevens00:41:57Yeah, there are a couple areas where there's a lot of gravitation. A lot of companies moving toward health and wellness is becoming absolutely enormous. It was before COVID. It bounced up significantly during COVID. And here we are now six years almost past that, and it hasn't slowed down at all. You know, the whole saying that 50 is the new 35, 70 is the new 50, that kind of thing. That has grabbed a hold. And it's true.

I'm 58. And I think of my father at my age, and he looked older than 58. And I think of my grandfather at that age, which is about when I was born. I've seen pictures of him, and he looked like he was 70. And that's okay. But times have changed. So health and wellness is big.

Property services. A little secret in franchising that I'm trying to make it not a secret, and it's growing quickly, is a first year person in this business knows this. The fastest way to turn five figures into six or seven, or a low six figures into high six figures or seven, is to get involved in a mundane service business where there are 400 competitors within 30 miles of you. Because you're not competing against those 400 people, you're competing against the two other people that the customer called.

Matt Stevens00:43:25And so that's how I did very well as a 20-year-old starting in a painting industry of all things. I was 20 years old, all pimply faced, and literally my Sherwin Williams store in Keene, New Hampshire, I was the biggest buyer they ever had by May of my first year. And it's just because we did things differently. We had more ambition and we employed ourselves a little differently. So in home services, there's a lot of opportunity and there's a lot of growth. And I don't see it stopping. I've been around 38 years in the industry and it hasn't slowed down. It's only gotten richer and more lucrative and more opportunity, especially when you do things right.

Corey Kupfer00:43:57And I feel like, from what I know, that one's been going on for longer than the health one. The health one is newer, but it's still so robust. And on the health one, I see these places with cold plunges, these little, they're popping up all over the place. Recovery spas. For a while it was the SoulCycle, the fitness studios. Now there's a lot of this longevity, health recovery, biohacking. That whole thing has become huge.

Matt Stevens00:44:41Right, right. I'm fifty-eight. I said earlier, when I hit forty I was told things would happen, and to my body it did. And then I was told when I hit fifty it would happen more so, and I'm thinking, I don't think that's possible. And I was hit by a truck. I mean figuratively, and it does. And you have to keep, you know, today this morning I made the comment, you need to wake up each morning and do some kind of exercise and stretching, or else I'm going to have a bad day. And so there's life. That's how we go. My grandfather always used to say, don't grow old, and I realized I don't like the alternative. So I'm happy to grow old, but you've got to prepare for it.

Corey Kupfer00:45:18Exactly. In fact, it's funny, super quick. I was in an Uber once, and I got talking to a driver and the driver mentioned it was his birthday, he was turning fifty. And he was very sad about it, like, I'm getting old, whatever. And it's funny, I thought this was sort of common, but I said to him, did you ever consider there's only two things on the menu and this is the better one? And he said, oh my God. I felt like I changed his life in that moment. I didn't think it was that profound of a concept, but he hadn't really thought of it that way. It was funny. No, listen, you're absolutely right. I've become one of these pickleball addicts, and I'm going to be playing this evening. And I'm going to get there an hour in advance to get on the bike for fifteen minutes, to just warm up and to stretch. Because the times when I thought I could just go on the court and play two hours of pretty high level competitive, I mean recreational high level competitive pickleball, I'd pull a calf muscle or hamstring or whatever. So you've got to warm up.

Matt Stevens00:46:35Right. No, it's true. The last time I ran full speed on a softball field, I pulled my hamstring, and all of a sudden the best athlete on the team became the pitcher. It just wasn't a good idea.

Corey Kupfer00:46:46Love it. All right, good stuff. Matt, if people want to find out more about you, where should they go?

Matt Stevens00:46:57Yeah, go to heisthefranchiseguy.com. He is the franchise guy dot com. And if we want to get even more technical than that, we can go to podcast.heisthefranchiseguy.com slash DQ, and you'll find three different tools there to help you navigate the field, and you can even reach out and contact me that way.

Corey Kupfer00:47:20Perfect. So a direct link for this audience. That's awesome. Matt, my final question on the podcast is always about my highest value in life, which is freedom. For me that means everything from freedom around the world for people from oppression, to why I've been an entrepreneur for decades and haven't had a boss. What does freedom mean to you and how does it impact your life and business?

Matt Stevens00:47:44Yeah. I've gone through multiple iterations of this, but this one's stuck with me now for probably a couple of decades. Freedom to me is, I get to engage with the people I want to be with, doing something that fulfills me. And that's freedom. The impact is it provides me with a wonderful social base, a support structure. It provides me with the opportunity to travel, because I'm not doing this with all my neighbors. I love my neighbors, but they all have their lives too. Most of the people I know now, most of my circle are in franchising. They're scattered all over the country. And boy, does that make it fun to travel and enjoy things around them, and we have a great time.

Corey Kupfer00:48:29Love that. I love to travel as well. And certainly when you have local folks in different places, it's great to have hosts. So the franchise world gives you that as well.

Matt Stevens00:48:40It does. You want freedom of people, time, money and purpose. Absolutely.

Corey Kupfer00:48:48There we go. Matt Stevens, thanks for being such a great guest on the DealQuest Podcast. And for everyone listening, if you've been sitting on a deal story you think our audience should hear, you can put yourself forward over at beaguestondealquest.com. We read every one of them.

Matt Stevens00:48:53Corey, thanks so much. This has been a lot of fun. I appreciate it. Thanks.