In this leveraged episode, Jon Ostenson, CEO of FranBridge Consulting, shares how he helps clients understand all aspects of non-food franchising, from launching to scaling and everything in between.
If you’re interested in starting a franchise that you won’t have to run yourself, or if you’d like to hand off the day-to-day of your current franchise, then check out this great episode.
You will discover:
– How to build a leadership team that can lead even when you’re not around
– How to own but not run your franchise
– What ingredients do you need to do it successfully
Episode Transcript
Scott Ritzheimer
Hello, hello and welcome. Welcome once again to the secrets of the high demand coach podcast. And here with us today is the one and only Jon Ostenson. He’s the CEO of FranBridge consulting and Inc 5000 company, and he’s in the top point 1% franchise consultant. He is the Best Selling Author of his book, non food franchising and John. John draws from his experience as a former Inc 500 franchise president and multi brand franchise the in helping his clients to select their franchise investments. John is a frequent contributor to franchising for publications such as Forbes Inc and Bloomberg, and he’s here with us today. Love this phrase, hoping you could add a little bit of color to it, Jon, but to kind of open up the show here, what is non food franchising?
Jon Ostenson
Yeah, no. Appreciate you having me, Scott. And you know when I say the F word franchise, you know, everyone associates it with fast food, right? And so, yeah, I wrote a book called non food franchising. And really, what I’ve chosen to do is carve out half of the market. You know, I just my humble belief is there easier ways to make money outside of food that require less capex investment, on average, fewer employees, less operating hours, higher margins, less susceptible to consumer whims. And so it’s industries like home and property, services, health and wellness, kids, pets, seniors, understandable. Cash flow and businesses is where we focus, and that’s why term non food franchising.
Scott Ritzheimer
So as I was getting ready to to kind of approach this episode and looking at, you know, what we could, where we could kind of explore some of your expertise, something jumped out almost immediately and just ran through everything that I read from you. And it’s this idea of, when we get into franchising, there’s, there’s almost this idea that, like you being the franchisee, have to run the thing right? Is this kind of a boots on the ground mindset? Is that true? If you buy a franchise, do you have to run it yourself? Do you have to be there day to day?
Jon Ostenson
It can be true. So we work with over 600 different franchise companies that are looking to expand, and I would say about 75% of them allow for what we call an executive model. Some will term it semi absentee or semi passive. And the whole idea is you put a manager in place day one to run the business while you continue your w2 job. Or maybe you’re an existing business owner and can’t dedicate the time. I prefer to call that semi involved, because there is still involvement, right? If you got skin in the game, you were going to care about the performance. And you know, really, what it comes down to Scott is having a strong operator in place and a strong franchisor on the sideline. If you’ve got someone who you’ve aligned interest with, you know they’re on your team that it has the initiative that’s going to go out there and hustle, then that franchisor can really carry a lot of the support water for them on a day to day basis, so they don’t come to you with every little question. You know, you’re making the major decisions, you’re leaning in, you’re coaching, you’re tracking performance, holding them accountable, but you’re not having to get involved in the nitty gritty. So again, it’s a big it, but if you’ve got a strong operator and then you have a strong franchisor, it’s very doable. And we’ve got countless case studies of clients of ours, they go that bad.
Scott Ritzheimer
Yeah, so let’s unpack that a little bit. And I love this sideline phraseology, because I actually use it a lot with the founders I work with and helping them understand how their role is changing over time. Right? You take kind of it could be a franchise. It could be a traditional approach. As you grow in leadership, your role, how much time you spend carrying the proverbial ball decreases and decreases. And it doesn’t mean that you disappear completely, though, and that’s a hard place for a lot of kind of visionary types. They’re on to the next best thing out of sight, out of mind. So when you talk about a strong let’s start with the the franchisor. When you talk about a strong franchisor on the sidelines, how do you measure that strength? What does that look like?
Jon Ostenson
Yeah, you know what I like to see, and oftentimes in markets like Atlanta, where we were both based, you know, we work all over the country, but you know, good opportunities are moving fast in these markets. If it’s a household name, it’s probably sold out. So oftentimes we are working with emerging brands. I like to see on that leadership team of the company, a strong leadership team. And what I mean by that is, they’ve got the industry experience, but they also have franchise experience from their backgrounds. Maybe they’ve imported that onto the team if need be, but someone that has been there done that supported successful franchisees. Obviously, the business has to have competitive advantages and the unique why behind it, strong financials and then really other franchisees in the system that we’re going to help support as well. You kind of build this community or mastermind group, you know, with good franchises. So for me, so much of it, and you would agree with this, I believe it comes down to the leadership team and having the right and having the right people in place that are there supporting you and support your operator.
Scott Ritzheimer
Yeah, so let’s talk about, let’s talk about that operator, and we’ll come back to the leadership team, because I think it’s really important. But what are we looking for in a strong operator? And I want to couch this a little bit with often. Times folks, when I see them looking for an operator, there’s kind of two equal but opposite extremes, right? There’s just the one that has been here the whole time, and I’m comfortable with them. They’re not super competent. They don’t actually want that level of responsibility, but I can’t imagine anyone else doing it. And on the other side, there’s like the golden goose, right? It’s like they have to be perfect in every way possible. How do you how do you find, how do you define a strong operator, and maybe even, where do you find one?
Jon Ostenson
Yeah, I think self motivated, and you can find them in the least likely places. One time we hired an operator, there’s a former accountant. He was a CPA for the past five years, but he was a sales guy in a CBA spot. He wanted to get out there. He wanted that to go build, you know, an empire. He wasn’t quite financially ready to just yet. So he needed capital partners like ourselves to come behind him. But, you know, we gave him a piece of equity. Were sort of clawback provisions, all that, you know, the nitty gritty. But one thing that I think will be helpful, so we gave him a title, we made him president of, in this case, was the driveway business and driveway company. And titles are free, and oftentimes people rise to the level of the title. You know, they’re looking for that advancement in their career, on their resume. They’re looking to build something. They’ve got skin in the game. And so I’m a big fan of aligning interest around compensation that may or may not include putting them on the cap table and giving them stock equity, but it may be, you know, bonus plans that simulate the you know that, and then when you have exit one day, you know, you get the benefit there. So one other little hack I’ve learned is, you know, giving someone three pay package options, one that’s heavier on the base, and then others that are lighter on the base, more heavy on the incentive compensation, where the grand total that they can make is higher. Obviously, you hope people will choose those, but it gives them skin in the game in that ownership decision of which package they choose. So one quick case study at Khadir is Nathan over in South Carolina. He’s the largest franchisee of two men in a truck moving service operates like 12 or 13 marks. I think they just are number 13, 40 million plus a year in revenue. He’s been able to find, you know, great people in his community through his church, just, you know, in other environments that come work for him. But because every year he buys another franchise with us, they’ve he’s created just this growth path for people within his organization to go take on additional responsibilities so you attract better people, you retain them. When you have paths for growth within the organization.
Scott Ritzheimer
Yeah, how does that change and when does it change? So if you go from, let’s say, you know, one market with two minute truck to two markets, is that a massive shift? Do you have to change the way that you run that, or does it not change until maybe 3-4-5, where does that start to shift into a different game?
Jon Ostenson
Yeah, I’d say if it was an adjacent market, then probably not as much as just your natural growth trajectory. You’re covering more ground, if you will. But if it is remote, then you’ve got to have a really strong personality in place that’s kind of overseeing the business on a day to day basis. So I’d say it depends. I mean, most people are growing continuously. In his case, he has had to expand, you know, through other states. But when it’s contiguous, then it’s just, you know, you always need a fractional person, right? You need four and a half people, not quite five people. Yes, you have to kind of splurge and, you know, expand that way. But now, if it’s contiguous, it’s not as big of a challenge.
Scott Ritzheimer
Right, right? It’s super smart. Now, when it comes to when it comes to leadership, there’s kind of two worlds that leadership shows up. There’s the kind of corporate side, right? Do you have a leadership team that’s helping support you? And then, depending on how much you grow, how many locations you have, there’s also kind of a leadership structure that begins to develop inside of the franchisees operations, shifting focus to the kind of corporate leadership structure. What should somebody be looking for from them, particularly before they jump into doing business with them or partnering up?
Jon Ostenson
Yeah, you know, franchises are like any industry, there’s good players, and there are ones that aren’t as strong, but you wouldn’t want to be affiliated with necessarily. And so that’s where we help our clients identify the strong ones out there across a number of different dimensions. But really, you’re looking for not only that leadership team, because that’s going to be your business partner, right? But also, what kind of franchisees are they attracting to the system? What are their backgrounds? How is that culture being built internally? Because, again, you’re going to be a part of that. You’ll still put your thumbprints all over your own local business. But you know that that national business should be one you can really draft off of, and maybe they’ve got national accounts or other little benefits. You know, you’re paying a royalty stream back to the franchise. Or it’s important to understand, what are you getting for that? Are these expenses that you would be paying anyway if you were just doing a traditional startup? Or, you know, are there true value adds, you know, on top of that? So, you know, we start at 30,000 feet with our clients. We’ll look at the top 10 opportunities in their market that are available, and then we’ll start to get really granular around some of these other details.
Scott Ritzheimer
Right. And so shifting our focus, then to the leadership structure that begins to emerge inside. Your operations, what would you say? Are there any kind of general rules? Are there any kind of patterns for when you should start developing a leadership team beyond you and the operator who boots on the ground?
Jon Ostenson
Yeah, I’d say there’s a rule of thumb. I don’t know that there’s a rule of thumb. I think oftentimes it happens more organically, and you quickly realize, I mean, business ownership takes work, right? It’s not easy, or also, whatever, what would be a business owner. So I think over time, just going through that day to day grind, and as you start to expand, and, you know, we always know the person that got you to this level may not be the one to get you to the next level, right? So, you know, I’d say that’s where, if you’re running the business semi passive, and you’ve got a manager in place, that’s where you can, if you stay close with them and you’re getting feedback from the franchise or from those interactions, it gives you a better informed decision on how to start evolving that organization over time. Is there. So oftentimes, I’m just seeing someone that you can promote within that ends up being the right person that knows it all that you know is willing to share that their learnings with others and make makes those around them better. So, you know, titles are one thing. Oftentimes it is that, you know, day to day servant leadership that causes people to rise in the ranks, and all of a sudden they’re a better fit than the one with the title.
Scott Ritzheimer
Yeah, yeah. One of the challenges in the world is it kind of feels like you’re getting pulled from both ends. There’s the expense of operations and trying to run a profitable enterprise. Then there’s the, you know, the outflow to corporate. And I’ve seen founders who felt like they’re kind of stuck in the middle, especially as they’re growing really quickly and they need additional leadership support, but don’t always feel like they can afford it. How do you approach that? You talked about it brilliantly, like you always have a fractional piece, right? It’s like, I need four and two thirds of a person. How do you judge, like, when to bring somebody into that team, when to maybe pull them out of some of their daily responsibilities to provide more leadership?
Jon Ostenson
Yeah, you know Jack Dailey was a business coach of mine in the past. He’s a sales guru. Well, no, read a lot of books, and I’ll never forget, you know, Jack a couple of jack lines, you know, if, if you don’t have an assistant, you are one. And so I think you know, making sure that you’re focused on what he would call your high payoff activities. And one thing that he always hammered home was your best salesperson may not be your best sales manager. So I think you know, again, even if you’re running the business semi passive, you’ve got to be involved enough to understand what’s going on and have an ear on the ground. And what are people saying, what are customers saying, and what’s franchisor saying to know, how do you promote within and really elevate someone’s responsibility, or keep them in a current place and let someone else elevate past them? And you risk losing people right whenever someone leapfrogs someone else. But oftentimes, there are creative ways to, you know, get them playing in the right seat. And oftentimes they appreciate that. I mean, I’ve seen it over and over sales people that get promoted, they say, wait a minute, my day to day responsibilities have changed. I don’t enjoy this HR and management piece. I’d much rather be out there on the front lines working with the clients. So I’d say that’s where the value add. That’s where your high payoff activity as a owner, leaning in, sensing that makes the most sense.
Scott Ritzheimer
Yeah. And I want to re emphasize, for folks that are listening, it’s, it’s why, and correct me if I’m wrong, but it’s why you emphasized in the beginning that it is, you know, it’s not absentee ownership. It’s not, you’re not doing it from the press box or from like, corporate headquarters, right? You’re doing it from the sideline. It’s such a such an important reminder, because if you don’t have that both kind of relational, intuitive knowledge, and you don’t know the numbers of your business, right, the kind of quantitative knowledge, you’re gonna miss these types of distinctions. Do you agree?
Jon Ostenson
I would absolutely agree. And I will say there are two or three franchises out there that truly run an absentee model. I’m a franchisee of one of them down in Delray, Florida, and they run the business. For me, the franchisor does. It’s totally hands off. But everyone else, I don’t like the term absentee. I like it semi involved, right? And so because you do need to have a pulse on what’s going on, because no one’s going to cure like the guy with the skin in the game, right?
Scott Ritzheimer
Yeah, yeah. So true. So John, there’s a question I ask all my guests, and I want to, I want to hear what you have to say. What would you say is the biggest secret that you wish wasn’t a secret at all? What’s that one thing you wish everybody watching or listening today knew?
Jon Ostenson
Yeah, I don’t know if it’s a secret, but I don’t think enough people do it, and that’s I that’s the idea that activity breeds activity. It’s getting off the couch, it’s starting to move in a direction. I’ll see this oftentimes with clients or just friends in the past, where they’re analyzing an option A versus option B, and they can’t figure it out, and yet, they’re not taking steps in the direction of one of those two options. And in my career, I’ve seen it over and over again, when you start moving to Option A or Option B, Option C comes out of left field. It’s that whole idea that when you’re in motion, good things happen.
Scott Ritzheimer
Yeah, I love that. I’ve always used the analogy that you can’t turn a ship that’s still in Harbor, right? It’s if you want to be able to move, you got to have some water moving past. So I love that activity breeds activity. Okay, it’s fantastic. Now, you’ve got a book out on non food franchising. Tell us a little bit about the book and where we can find a copy for ourselves.
Jon Ostenson
Yeah, it’s been great. I mean, we’ve sold 1000s of copies. All the proceeds go to a great nonprofit that we support, hope, international, great organization, but happy to share free copies as well. You know, free digital downloads in different formats. If you come out to our website, frandbridgeconsulting.com, just share your email address, and we’ll reach out with links so you can download the book for free. But yeah, non food franchising, it’s been great. Most of our clients have read it by the time we get on the phone. And the goal is just to educate and open up people’s eyes to this world of franchising and all these other industries outside of fast food.
Scott Ritzheimer
Yeah, it’s fantastic. It’s fantastic. Well, John, thank you so much for being on the show today. Really appreciate it again. Want to just reiterate head on over to friend bridge consulting this website, we’ll put it in the show notes below. Get a copy of the book. You will not regret it. John, thanks for being here. It’s an honor and privilege having you on the show today. And for those of you watching and listening, you know your time and attention mean the world to us, I hope you got as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care.
Contact Jon Ostenson
Jon Ostenson is the CEO of FranBridge Consulting, an Inc. 5000 company, and he is a top .1% franchise consultant. He is also the bestselling author of the book, ‘Non-Food Franchising.’ Jon draws on his experience as a former Inc. 500 Franchise President and Multi-Brand Franchisee in helping his clients select their franchise investments. Jon is a frequent contributor to franchising for publications such as Forbes, Inc., and Bloomberg.
Want to learn more about Jon Ostenson’s work at FranBridge Consulting? Check out his website at https://franbridgeconsulting.com/
Podcast Booking Status: Open
We are looking for podcast guests, and we want to share your story.
Are you a coach, consultant, or advisor for entrepreneurial organizations? If so, let’s do a great show together – and we can promote you to our audience on all our social media channels, website, and email list.