Intro: Broadcasting live from the Business RadioX studios in Sandy Springs, Georgia. It’s time for Sandy Springs Business Radio. Now here’s your host. For.

Lee Kantor: This episode of Sandy Springs Business Radio is brought to you by V.R. Business Sales Atlanta, guiding business owners and buyers through successful transitions with trust and expertise. Visit VBS world.com or call (678) 470-8675. Now here’s your host, Ramzi Daklouche.

Ramzi Daklouche: Hello. Hello. And with us today is Kathy Gosser. Kathy and I have known each other for a little bit. Kathy is the young associate professor of franchise management practice and the director of the center for Global Franchise Excellence in the College of the University of Louisville. Kathy can’t wait to talk to you more about what you do. How are you today?

Kathy Gosser: I’m great. Thank you for having me on. I can’t wait to talk a little bit more with you.

Ramzi Daklouche: So before we start, tell us a little bit more about you and more important, what you’ve been up to.

Kathy Gosser: Oh my gosh. Well, that’s a long story, but I’ll just I’ll shorten it. I’ll give you the the condensed version here. So I spent my entire business career at yum brands, and I was there 35 years before I retired. And I always call it the career that dreams are made of. I did a number of different things at yum, predominantly KFC, a lot of it at KFC US. I had one role where I worked internationally for about six years with all the brands as well as in the US, and certainly enjoyed it, but learned a lot about franchising, worked on operational standards, actually ran some restaurants for a while, learning and development and I always knew that when I grew up or retired from this great company, I wanted to be a professor. So here I am at the University of Louisville teaching franchise management. So I’ve been doing this. I’m on year number six, working and helping educate the next future. I mean the future franchise leaders. And it sure has been a lot of fun. And of course, we met because at the center you’ve served on my board. So that’s correct.

Ramzi Daklouche: Yes, that is correct. And it’s been exciting. Uh, journey. And we became friends from this. So I’m really first excited about the friendship, second, about the work you do and the people that you help with this. But it’s actually more than this. Tell us a little bit about what you’ve done while you’ve been, uh, you know, uh, director of the center and, uh, the, the, the instructor as well, because you built the program. Can you speak a little bit about the program that you built?

Kathy Gosser: Sure. So I actually co-created a graduate level franchise management certificate. In the beginning, we had a very innovative dean who looked at the MBA program and said, you know, we could have some stackable credentials that were germane to Louisville, Kentucky, and yum! Brands was in Louisville as well as a couple of other franchise organizations. And he said, why not a franchise management certificate? No one’s doing that. So I started at that level. So co-created that with a friend of mine, Doctor Denise Cumberland, and we rolled that out. That’s what we had when I first started. When I came over, though, I quickly realized not everyone who needs this education already has a college education, so they are not a candidate for a graduate school, so worked and made it into a professional certificate and have worked with the International Franchise Association, where now it’s the required. It’s the requirement prior to getting their credential, the Certified Franchise Executive. So then that wasn’t enough. And we realized undergraduates need it, because my whole goal in life is to teach everyone how awesome this franchise model is and what you can do with it. So we we went through the process and we now have an undergraduate certificate that the classes are always full. The students are just amazed that franchising is more than restaurants. It’s restaurants, of course, which is my love. But it’s also more than that. So we’ve done a lot of that now with the center. We’ve done a couple of things. One is we have a vibrant board. The Board of Advisors provides insights, their subject matter expertise, and they also provide a philanthropic contribution that goes 100% to scholarships. So we’re able to help students, which is really exciting to me. We’ve done a couple of different things. We had launched a couple of accelerators with yum brands, working with Howard University. We’ve had book clubs, we’ve had speakers come in. We’re always trying to do something different to demonstrate the power of franchising.

Ramzi Daklouche: That’s awesome. But let me ask you a question. So the graduates that you know, finish with the with the program, where do they end up? What is the career path for them? Are they is it the franchisee being franchisee or franchisor or entrepreneur, or working for a corporation or building their own brand. How does it look like?

Kathy Gosser: Gosh, that’s the best part, Ramsay, is that it can be whatever they want it to be. So first of all, you know, franchising is a form of entrepreneurship. Scholars finally agree that franchising is entrepreneurship. As Matt Haller, the CEO of the IFA, likes to say, it’s been in business for yourself, but not by yourself. So I when I teach, I tell my students there are three avenues. One is you can become a franchisee. Now we know that takes a lot of capital in most cases, not all cases. But many of the franchises do require a lot of capital. So people wouldn’t go straight from college into that. But you could work for a franchisee. You know, what’s happening in the franchise world is these large consolidations, and there are large companies that are hiring highly qualified people and have knowing about the franchise model puts you a step ahead. They also so those are the first two to you could work for a franchisor such as I did. As I said, the career dreams are made of, right? So there are tons of large franchisors looking for people, or you can work for a partner in the industry. My goodness, you’re a partner in the industry. So you think about anyone who’s in real estate, finance, accounting, the legal, marketing, you name it products, right? Pepsi. All of these companies need awesome employees. And if you know the franchise model, you’re a step ahead. So really, it’s a launch pad to let you go just about anywhere.

Ramzi Daklouche: Actually, I agree with you 100%. For me, for example, being in the franchising business for ten prior ten years of my life gives me an edge when I have a, you know, seller and they, you know, they’re selling a franchise, a franchise business to understand the PhD and help them with that and help the buyer understand what the PhD is all about, you know, versus others that really don’t understand the franchising model at all. At all, which is very interesting. So let me switch with you one thing, because I always in my, you know, you know, my, my new business, I always meet these, you know, investors, entrepreneurs say I don’t want to be in a franchising. I don’t want a brand that’s franchising. Right. And I kind of say, you know, I got to take him through the spiel and I wish you were with me all the time, Kathy, because I don’t think I give it, uh, the due diligence you do when you explain it. But why? Why would they want to be in franchising? Or at least listen to why franchising is an avenue that should they should be in versus non-franchise brands or Non-franchise at all.

Kathy Gosser: That is a great question. And, you know, I think there are some misconceptions around that, as you’ve said, because what folks see is the royalty payment, right? I have to share my profits ongoing. And that is true. There is a royalty payment. So to be with a franchise, you do have to pay a percent of your top line sales. However, let me tell you all that you get for that. First of all, you definitely get the trademark. You get a recognized, reputable brand. And let’s face it, not everyone has the ID of the moment that’s going to take off. So you’re going to be able to leverage someone else’s great idea. And that’s been proven in the marketplace. You’re going to get a business model that is been proven that this is how it can work. This is how you can be profitable. And most of the of the successful franchisees that I’ve talked to when I asked them, what makes you successful? They actually say, I just follow the model. I follow the model that’s given, but I add my personality in. So my culture, how I treat people, all of that, they can still add in. But the other thing that franchising provides is the ongoing developments in technology, in new product development, new process development. You know, America’s consumer, actually, any consumer is fickle. And it’s always like, what’s new? What’s the new product? What’s the new thing you’re doing? And now with the advent of AI.

Kathy Gosser: Oh my goodness. If you are an entrepreneur and having to figure that out on your own, I bet you spend a ton more money than you would on that royalty payment, and you wouldn’t have the experts figuring it out. So you have this group of experts helping you along the way. And if you’d let me give an example about Covid. So franchising did really well during Covid, during the pandemic. And the reason is because those resources were all focused on how can we help our franchisees. Example it was the government came through with PPE, PPE, loans. They were terrific, but they were hard to understand. Franchisors helped the franchisees navigate that paperwork and get those funds. They also provided signage. Folks didn’t know, what do I do for signs? What do I need to do? How do I get protective gear? The franchisors solved that supply issue. They helped them get those items that they needed. They helped them get the signage. She even had supply issues, right? You have the power of a big franchise brand. They’re going to help you. So I think the pandemic really brought to the forefront the power of franchising and having someone help you along the way while you’re still the entrepreneur, but you’re allowed to have support and help and your fellow franchisees help as well. So I think that that’s what I would tell them, that that was a long, long answer. No, no.

Ramzi Daklouche: No, I think I can really relate to that because I could tell you for a fact, I was running a company out of California, and you and I talked about the brand prior. Um, and you’re right, before the pandemic, I took over the role of running the company, and I didn’t know anything about the, you know, the PPE and all that stuff. But we really ended up working 24 over seven, making sure every franchisee stayed open first to make sure they stay open, then to make sure they get the funds they need to help them with all the paperwork, and also to get them all the signage to get everything they need. And in about six weeks, put them online so they can actually serve customers online, which is something that they couldn’t have done. Anybody could have done by themselves. And that was probably a big, big win. And that’s why you have a brand behind you. One thing, Kathy, I talk about all the time when I’m talking to entrepreneurs, I meet them and I, you know, I spend my time just solving more issues and really talking about selling or buying businesses. Right. Uh, one of the biggest things I talk about is how they so much time is spent working in the business versus on the business, and I’m sure there are a bunch of books written on it and a bunch of people talk about that, but I think franchising helps with that. How in your point of view, and I think you kind of talked about that a little bit, but what are these, you know, you know, if you can put somebody in front of, say, here’s why franchising, here’s where you work on the business with the franchising, not in the business with franchising, because it takes really a village like they say.

Kathy Gosser: It does take a village. And I love that you said that. And actually, I just had someone on my podcast the other day talking about this same thing, talking about how now they are trying to work on the business versus in. When we say in the business, it means the day to day. How do we get product to customers? How do how are we making that exact profit margin we need to make always focusing on the minute details, if you will, and you still have to have a good team in your units wherever you’re running to do that. But working on the business allows you to strategize on what’s your growth for the future, or if you’re at a place in your life. What’s my succession planning? Right. It depends. So you’re allowed to think bigger because the franchisor is taking care of all those little issues about what our customers want. Now, how do I make digital ordering work, even curbside delivery? How do we do that? What are the different things that consumers want? How are we going to market this? You know, digital marketing has changed the world, right? So they take care of all that. So you can focus about your own growth strategy where you want to take your business. And what I like to talk about the most is your culture. What does the culture in your franchise look like? Because people work for people, not companies, and making sure you have that rich culture that makes a difference is what’s going to make your business successful.

Ramzi Daklouche: That’s awesome. Fantastic. So we talked about all the beautiful things about franchising, and I agree with you on all of them. What are some of the negatives? What are some of the cons about, uh, you know, franchising.

Kathy Gosser: I think besides the fees, because there are people who think the fees could be a little overwhelming. Again, I would argue it would cost you way more to do all that on your own. But I think one of one of the cons is even though you are an entrepreneur and you can run your business, you can hire the people you want. You can build the culture you want. You do have to follow the business plan. And actually, Ramsey, there are people who struggle with that, and there’s nothing wrong with that. But there are people who cannot follow a plan and want to do things their own way. So franchising would not be the answer for them. But if you can follow a plan, but put your own $0.02 on it. You know, if you want to have tighter standards, if you want to do your own incentive programs, who you hire, how you staff, etc., you’d be great in franchising. But if you, um, want to know how to make every single product, for example, if you’re in a restaurant and you want to put your grandmother’s recipes out. Franchising is not for you.

Ramzi Daklouche: Yeah, I think you’re right. I think there should be tests because I’ve worked with a lot of franchisees that, you know, sign up and all this stuff, and then they want to kind of change the recipe. And that really does not work. It does work that way. You signed up for our recipe, not your recipe. Uh, but they’re you know, they’re built that way. So there should be test, standardized tests for every company to kind of say, oh yeah, you probably will be a good fit for us or not a good fit because you’re, you know, your inventor. Go invent something. Don’t, don’t, don’t buy into a franchise. Right. But I believe there’s other stuff. Any anything comes up in your mind that could be negative about franchising?

Kathy Gosser: I just think it is a it is a contract. Right? And so you sign up for 20 years. And then I have seen where you sign up because you believe in the senior team. And then the senior team leaves and a new senior team comes in. And you still have to stay in that contract, even though you may not get along with that team. I think that’s tough. I’ve seen that happen a couple of times where somebody buys in because they think this leader is so fantastic, and they’d follow him anywhere and then they’d go somewhere else. And that’s tough because the franchisee is still there. So I think that would probably be another con.

Ramzi Daklouche: Yeah, I think that goes on. The franchisee and the franchisee. I 100% agree with you. I think the which takes me to the next subject is the due diligence piece, which is I mean, I used to say, you know what the honeymoon period is when you when the franchisor is telling you all about how wonderful the brand is and kind of wining and dining you every day and kind of getting all this stuff done, and then comes the engagement time, and then the marriage is when you signed that agreement. It’s 20 years, ten years, whatever it is, and you signed up for that. And breaking up is expensive. So talk a little bit about due diligence. What are the steps that if I am going to sign up now? Regardless, I’m opening a new franchise, like buying new franchise or buying a business that is franchised already. There’s still the same process of you’re going to have to sign either to a new agreement or five, ten whatever years, or you’re going to, you know, assume the remainder period of a franchise agreement, right? What are these things that they have to look uh, to or check in their system to make sure that, um, they get it right? And who do they go for help? Because most people by themselves would not get it right.

Kathy Gosser: You’re exactly right. And there are a couple of things you can do. First of all, the the Federal Trade Commission requires a franchisor to provide the franchise disclosure document at least 14 days prior to someone signing, but I would suggest you get it way earlier than that so that you can read all of those articles. You know, there are 23 articles in that field, and not understanding it can be a huge issue if you don’t read exactly what the franchisors responsibility is and what your responsibility is. So I recommend that when you’re serious that you get a professional. And the professional could be obviously an attorney, but there are groups that work on selling or bringing franchisees to franchisors, and some of them are very reputable. I’d be careful, but there are some very reputable ones who do an outstanding job to help you make that match. Also, the franchise agreement could have different things in it. So really looking at that, but I’ll tell you what I think is one of the best ways to do due diligence. Besides visiting as a customer and reading all you can is in the FTD and item 20, you get a list of all the current franchisees and their phone numbers, and you can call anyone you want and they will tell you. You know, franchisees are going to tell the truth and franchisees help each other as well, which is fantastic. But if I were going to buy a franchise, I would talk to no less than ten franchisees, and people will probably cringe that I said that out loud. But this is your life investment and so doing that is so important. We live in a great world of Google and I and, you know, asking anything you want, but there’s nothing better than talking to someone who has their their life savings in that same brand to ask that question, would you do it again if you were me? Should I jump in and why or why not?

Ramzi Daklouche: I 100% agree with you. I’ve been so lucky that I’ve. I’ve told you before, I sat on both sides of the aisle. Right? And you and I have had this conversation before. I’ve been a franchisor for big brands, and I’ve been also a franchisee, and I’m still a franchisee today under this brand. Right. And anytime I do due diligence, I call as many people as possible. I visit as many. I travel with it because this is a relationship. You know what? It’s a business relationship. We’re not family. We’re not partners. This is a business relationship. I got to make sure I know what I’m getting myself into and not lucky. But because of the due diligence, due diligence that we’ve done, we’ve been very successful. We’ve done understanding what we’re getting ourselves into, what we’re going to get out of it, and what our the expectations out of us. Right. So I do agree with you. The due diligence period. You know, I know there’s 14 day, you know, cool period where, you know, you can assign take months, take whatever time you need, take the time to do your due diligence so you don’t get stuck with something for ten years. Once you sign, that’s a ten, 15, 20 year responsibility. And I’ve seen people within the first nine months, they just want to get out. Ready to get out. They ready to sell their business, whatever it takes to sell the business and others, they wait till the end. And I, you know, I deal with right now I have listings for businesses, franchise businesses, 20 years they’ve been in the business. Now they want to retire. They made their money. They worked great for them. But that that’s a franchise that’s really good. That really helped them kind of build their wealth. Now they’re ready to move it to somebody else. So incredible advice with the due diligence. Anything else? How about through IFA or other institutes that really can help them with understanding that?

Kathy Gosser: So I think there are a couple of things to the one thing I would also do is there are lists of the best franchisors out there. I would look at the list from like entrepreneur publishes in the first quarter of the year. I would I would want to make sure my franchise is on that list. I mean, seriously, the IFA is a wonderful organization that supports and protects the franchise model. They have a great website. You can read all of their articles. They’re very careful in that they don’t have a seal of approval, if you will. But I would want to be with a brand that’s a member of the IFA. That would be important to me, because that shows that they really care about the franchise system. You know, something else that’s interesting is that, remember, you are buying that brand reputation. So you may think, well, I’m going to have a great unit in my city because I’m a great operator and I’m going to do such a such a good job. I would find out about the reputation of the brand through Yelp or anything online, because if it’s a brand that is not doing well, I would just tread carefully because one franchisee in a large brand cannot. You know, you say everyone can make a difference and you can, but I would just be careful about jumping into that. So I would look at those lists. I would look at what the customers are saying, look at the senior leadership. You know, item two and FTD tells you all about the senior leaders, the the amount of experience they have. That’s very, very helpful. But, um, there’s just there’s a lot of ways to do that due diligence, but it takes time. But my gosh, Ramsey, if you’re putting all this money of your own in, it seems like you would take the time.

Ramzi Daklouche: That is exactly right. Um, also. So what’s the advice for people? You know, they say, because, you know, okay, I’m going to pay royalty. I understand the royalty piece, and then I have to pay to the ad fund. I don’t understand this. Is it really going to make an impact to my business? What’s your advice to them? Because you know, that’s not that’s not where it all stops, right? You cannot stop as an entrepreneur running your business. This is not where all stops. But what is the advice on what is the ad fund and how does it work? And what else do they need to do?

Kathy Gosser: You know, it’s interesting. I’m teaching a group of leaders who are they’re already above restaurant leaders, and they’re going to become senior leaders. And I had them unpack all the fees and an FTD, and we had a roundtable discussion about it. And they work for a franchise. They work for franchisees now. And they’re like, these costs are just ridiculous. Can you believe they’re charging this, this and this? And I just let them talk. They talked about technology fees. They talked about advertising fees. Um, sometimes there are training fees. So they talked about all these fees. Right. So I let them talk. Let them talk. And then this one guy goes, wait a minute. What if we were to do that ourselves? We never could. So they brought it back around. But you know, the ad fund, especially if you’re a national brand, national advertising, if you have a fund where you put all your money together, it has been proven to almost always be more effective than anything regional. So having that national ad fund is so important, and many great organizations will provide the accounting of it. Here’s where it all goes. Here’s what we’ve done. They’re very diligent about letting you know this is exactly how we spent it. And this is the return that we’re getting. So you can ask those questions. Now technology fees are interesting because old established legacy brands didn’t have that. Well, now technology has come into play. So when they want to introduce a technology fee, it’s not popular because they didn’t have it before. So it’s important that you show the value that you’re providing there. And franchisees are smart business people. They’ll get it. They’ll understand. Okay. You provided a whole new digital ordering platform for us that increased our business by 20%. So that’s how. So it’s important that franchisors show that. But franchisees need to understand we’re getting things we’re getting value for those fees.

Ramzi Daklouche: Yeah. There’s one more. In the past five years kind of popped up actually Covid kind of made it pop up more third party fees. Right. So the delivery fees. Third party delivery fees. If you’re sitting alone in a restaurant and you have a restaurant, you have by your name, you’re paying 25, 30%, right? And national brands are now paying way less than that. So you take advantage of that. That by itself is a huge saving. Now, knowing that most most restaurants are 20, 30% delivery, you know, businesses. So that’s incredible savings when you think about it and.

Kathy Gosser: Leveraging that, you know leveraging. Absolutely. So yeah you know supply I didn’t even mention obviously your raw supplies.

Ramzi Daklouche: And all this.

Kathy Gosser: Stuff because of because of the size that you have. And, you know, it’s interesting, like you talk about digital ordering, it has been proven. People order more if they do it themselves. So either they’re a kiosk or through their phone. They order them. And I find that so interesting. And they that they would just order so much more than if they stood in front of a menu so that there’s a people.

Ramzi Daklouche: Buy more from Amazon versus going, for example, to a target because they don’t see the credit card, they just kind of order, oh, I don’t know where it goes. Somebody is for it. Yeah, exactly. Uh, okay. So question for you. A lot of people, I think if you ask nine people, ten people would say, you know, franchising is restaurants, right? So tell me about what franchising is now. Where is it going? Because now it’s everywhere, right? I mean, a lot of brands and a lot of different concepts, business concepts become franchisable. And where should I be kind of looking at now and where should I be careful? And, you know, let’s kind of talk clearly Because there’s a lot of Franchisable brands right now.

Kathy Gosser: You know? Totally. And you think about hotels and restaurants are what you typically think. Most hotels are franchised, most restaurants are. So those are large segments. However, the segments that are really growing are things like personal services. So you think about all those boutique exercise places. All of those are franchised. So that’s growing. You think about even cosmetics, massage salons, all of those kinds of things. That’s that’s really growing. But the other area that’s been growing are home services. Everything in your house and these brands. What’s evolved is they’ve had these large platform companies that have 16 to 20 brands under them, say, home services, and say they have an electrician and they have light, they have windows and yards and floors and you name it, everything in your house. You can be a franchisee of multiple brands in the same region underneath that umbrella. That’s big time. Even my favorite one is picking up dog waste. That is huge. And as a franchisor of one of those companies told me, nobody ever gives that up. You pay that $25, $35 a week. Once you start, you don’t want to stop. So that’s really, really grown. And I think that folks don’t understand just that almost everything is franchised. Now. The newest component of franchising that is fascinating to me is things like physical therapy, chiropractic, chiropractic, that type of chiropractor, excuse me, that type of service, um, dental offices. So now the medical field is also starting on the franchise path. So I have my eye out on that. That’s pretty interesting.

Ramzi Daklouche: That’s amazing. You’re right. I think I’ve seen everything and a lot of customers I receive either, you know, buyers mainly buyers are looking for, you know, products that’s not franchised and all this stuff. But when I talk to them, they’re really not prepared to kind of take over a business and they probably need the guidance that a franchise business would give them with a with the systems. And they don’t understand the cost of starting a business, just even service business. Right. You need a CRM. You need, uh, you know, website. You need technology, you need, you know, a payment method, all the stuff. But above that number one thing you need, a lot of people don’t know how to networking. How do I network? How do I get my business? How where do I spend my, you know, marketing dollar? How do I spend my marketing dollar? Local marketing by itself, which is you and I, I’m sure you and I can talk about local marketing for another three episodes, right? But a local marketing, how do I get to do it? And you need a system for that. So franchising can give them that as well.

Kathy Gosser: You do. But I do think going back to those home services brands that have number I mean tons of different brands, what a way to grow. I mean, if you want to say if I want to stay in Louisville, Kentucky, I could have 16 to 20 brands under one umbrella. And think about this. The same technology back a house, Everything’s the same. So that platform. I don’t have to rethink. How simple is that?

Ramzi Daklouche: It’s. It’s interesting. So short story. I’m working with a, with a person right now who has a, you know, service company looking for different service company and leveraging the services that person already offers now, she said, well, I can actually offer that same service to this, uh, this group, completely different segment, right? One is the commercial, one residential. But she said I could do both now to the same group. So very, very smart way of doing business. So you start with one, build it, build your customer base, add another one, give them extra services, let them, you know, build trust with the customer. This is fantastic and I love that model.

Kathy Gosser: You know I even I even talked to a Christmas lighting franchise that they do landscaping during the summer and Christmas lights in the in the Christmas season. And they figured that out so that they would make sure they could keep their workforce. And I was like, that’s brilliant. Well, the franchise did that for their franchisees. How genius it is, isn’t it.

Ramzi Daklouche: Kathy? So this is fantastic. And you and I have talked about I think we’ve had a few subjects you and I talked about, and we have a new program together we’re going to do at the end of March, I believe, with some very excited about. And this is what happens after a long term, what do you do with your business? And I can’t wait to talk more about you with you, about this. But so tell me, um, what’s new? You know, what else is going on in your life? And, uh, you know the last thoughts? How do people reach, you know, like the University of Louisville program, if somebody is interested in learning more about it, what do they do?

Kathy Gosser: Oh, thank you for asking that. You know, actually, what’s most important to me is just educating people on this vibrant model that can make folks wealthier than their wildest imagination. And our center is all about empowering communities to build and sustain generational wealth through franchising. So you could reach us at w w w louisville.edu/business or just look up the yum center for Global Franchise Excellence and you’ll and you’ll find us. I’m on LinkedIn. I always invite anyone to link in under Kathleen Gossart happy to meet anyone that way. And I’ll be at the IFA and I’m hoping you’ll be there as well.

Ramzi Daklouche: I hope so right now, February is very difficult. It’s February right? Yeah.

Kathy Gosser: February. Yes. In Vegas.

Ramzi Daklouche: Yeah. Very good. Wonderful. Well, Kathleen, thank you very much for being on the show. I appreciate it. By the way, this is my first show on Century Business Radio. I’m very excited that you are my first person to interview because it can’t have any better. Anybody else that I would wish to interview? Thank you again, Kathy.

Kathy Gosser: Thank you. Ramsey.