January-February 2018/ENTREPRENEUR.COM/ 149LESSON 3
Franchise Today, Paul Segreto has spent the past eight years talking to people who have launched successful franchises.
But the conversation that sticks in his mind the most these days was with Jimmy John Liautaud, founder of Jimmy John’s Gourmet Sand-
wiches, who had great insight on what to do when your business starts to wobble.
“Jimmy John’s story was that he had gotten up to 200 units; of those, 170 were franchised, and he realized the majority of those weren’t
performing the way the corporate units were,” says Segreto, who is also CEO of the franchising consulting firm Franchise Foundry. “He
put a hold on further franchising and told the then president, ‘We’re going out on the road, and we’re going to turn these locations around
before we start franchising again.’”
Liautaud knew that success didn’t come by just opening new stores. It came from customer service—and that’s what he needed to go out
there to instill in his franchisees. “You walk in the door, they greet you, and by the time you finish ordering your sandwich and walk over to
the register, the sandwich is made,” Segreto says. “Plus, they’re one of the only [fast-food restaurants] that has a true delivery system; they
aren’t delivering through a third-party system like Uber Eats.”
Segreto likes this story because it captures franchisors’ most common lesson: “The biggest learning experience they always come back to is
to spend the time on the front end building and perfecting your system before you cast that net out and decide to try to franchise everyplace.”
LESSON 1
host of The Franchise Academy Show, got lucky early. He
entered franchising in 2000 when he bought a Maui Wowi franchise in New
York City; five years later, he sold it for enough money to semi-retire at 41.
“But I learned nothing from that,” he says. Then, in 2006, he bought a Super
Suppers franchise. The company was basically a food-prep area: People
could come in to make meals in bulk, then freeze them and take them home
to feed their families for days.
That’s when Scarda’s real lessons in franchising began.
“We had small kids, and my wife was working—we thought it was the
greatest thing for moms. But in 19 months, we were out of business,” he says.
The franchisor ceased operations in 2011. The problem? Super Suppers was
offering a service far too unfamiliar to most parents. “What we learned is
that it takes a lot of time, money, and marketing to change people’s habits.”
Now Scarda often cautions prospective franchisees against jumping in too
quickly. “So many people buy franchises for the wrong reasons—they love
the food, or are infatuated with the franchise,” he says. “Some buy because of
what they perceive is a lack of competition: ‘There’s no XYZ franchise in my
town.’ It might be a great fit for the town but wrong for the person. People
ask me, ‘What’s the hottest franchise out there?’ You want to run from those,
because they’re usually a fad. Or people think having a big brand name
is important. But if you already know the brand, chances are all the good
locations are gone. In some ways it’s like trying to pick a good stock that’s a
match for your lifestyle.”
His biggest takeaway: Consider everything around a franchise, and not
just the franchise itself. Nobody wants to be the next Super Suppers.
LESSON 2
hears the same thing over and over
again: People say they want to quit their jobs and
escape their bosses, but they don’t want to buy a fran-
chise because then they’ll have to answer to corporate
headquarters. “If I buy ABC Franchise, I have to do it
the ABC way, and I don’t want to do that,” they’ll say to
him. To which he responds: “OK, that’s a problem.”
Hayes is a franchise coach, an author, and the former
CEO of HomeVestors—a.k.a. “We buy ugly houses”—
and he hosts How to Buy a Franchise Show. (Can you
guess what it’s about?) He has also taught a course on
the basics of buying a franchise at the International
Franchise Association’s expos for 27 years. And in that
time, he has offered a consistent message to people
who don’t want to do things the ABC Franchise way:
You’re missing out!
“I spend a lot of time teaching people why businesses
go out of business: They don’t know what to do to build a
successful business because they don’t have a system,” he
says. But a successful franchise brand does have a good
system, and all it asks is that franchisees follow it. “So get
on your knees and say a prayer for the franchisor who
gives you the system that leads you to profits and success.”
Bottom line, Hayes says: “If you say you don’t want
to do it someone else’s way, then keep your job. They’re
not going to change for you. The number one challenge
is giving up the control issue.”