Steve Beagelman with SMB Franchise Advisors

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Lee Kantor: [00:00:32] Lee Kantor here. Another episode of Franchise Marketing Radio, and this is going to be a good one today, have with us Steve Beagelman with SMB Franchise Advisors. Welcome, Steve.

Steve Beagelman: [00:00:43] Hi. How are you today?

Lee Kantor: [00:00:44] I am doing great. We’ve had you on the show in the past, but I’m excited to get updated about the folks that hadn’t heard. Tell us a little bit about some big franchise advisers. How are you serving folks?

Steve Beagelman: [00:00:56] So we’re a franchise consulting firm. We help people franchise their business so they have an existing business, one location to concept thinking about expanding how to expand. So we help people franchise their business and then we help existing franchise owners put better systems and processes in place to grow their business. Our company has helped over three hundred brands through franchising over the last 10 years and we’re real excited about what we do and excited about the brands that we represent.

Lee Kantor: [00:01:30] Well, let’s kind of dig in from the standpoint of there’s a kind of a mom and pop out there that maybe have thought about franchising, that maybe they’re doing gangbusters. But what are some dos and don’ts when you’re getting started going on the franchising path for folks who have not done that in the past?

Steve Beagelman: [00:01:49] Yeah, you know, we spent a lot of time talking to people about whether they’re ready to franchise their business and what are the right steps they should take and what are the right systems that they should have in place. And, you know, for us, we talk to them about several things. One is how involved they are in the day to day operations of their current business. So are they willing to work on the business and not just in the business? And some people that’s a tough transition for, you know, for for them to make that transition. Others say, OK, yes, I’ve been doing junk removal for the last five years. I’ve been dealing with the hourly crew. I’ve been dealing with the trucks breaking down. I’ve been dealing with the customer service. I really want something more. I want to see my business really grow and blossom into other markets. I see the potential and I want to work on my business, not in my business. Fitness industry concepts, restaurant concepts, child care, home services. I mean, you name it, we do it all. And when we talk to people, you know, again, working on your business, that in your business the company is increasing in revenues.

Steve Beagelman: [00:03:04] So the sales have been growing. Typically, when a company has had three straight years of decline in sales, that’s not the time to franchise your business. Right. You need to concentrate on fixing your business first. So you want to be moving with the trend. You want to be on the upswing. You want to be able to devote some time to franchising because franchising your business really is a totally separate business than the business that you’re running. Again, whether it’s junk removal, whether it’s child care, whether it’s a pizza restaurant, whatever it is, you’re now in the franchising business and supporting franchisees and helping them find the right locations and and helping them hire the right staff and helping train them and helping them service customers in their market for your great brand. So that’s really what franchising is about. And we want to make sure that people understand that, you know, again, your brand needs to have great customer service. It needs to be well received by the consumers. All of those things are really important. Before you take the leap and then jump into franchising your business

Lee Kantor: [00:04:09] Now is something to take into consideration. And I don’t know if a lot of owners look at it through this lens, but through the lens of that potential franchisee, what is kind of a reasonable expectation if you’re thinking about franchising, what should the kind of the net be for that franchisee and not like the rock star franchisee, but kind of the average franchisee? Don’t you have to kind of really build systems that help kind of the the middle of the road franchise be successful, not just the person that’s not going out of the park?

Steve Beagelman: [00:04:42] Yeah, it’s really important that any franchise or build the right systems and processes and we help a lot of our new emerging franchise owners do that. It’s one of the things that we do as a franchise consulting firm is help them with their operations manuals and their sales processes and their marketing and all of those things that they need to put in place to help the franchisees become successful. Because you’re right, you know, as a franchise owner, you’re only going to be as successful as your franchisees being successful. I’ve been doing this for well over 30 years now. I’ve been in this industry and seen companies grow to three and four hundred and five hundred locations. And I’ve seen franchise get stuck at five or ten. And what’s the difference? Well, the difference is the franchise laws that got stuck at five or. And didn’t have strong franchise validation because the franchisees weren’t making money. It all comes down to strong unit economics, good relationships with your franchisees and helping your franchisees become successful. And the successful franchise owners are the ones that focus on that. And that’s really, really important.

Lee Kantor: [00:05:53] So now how do you help that emerging franchise kind of first recognize, hey, I don’t know if you have it or not, because the only way that I’m validated validating is if the CEO kind of goes on the sales call or like you’re not you don’t have it’s not really is replicable as you think your business. Do you have to have those kind of conversations with some folks?

Steve Beagelman: [00:06:17] Yeah, it’s interesting, there is a difference in the 30 plus years I’ve been doing this and building brands, there is a difference between a franchise that becomes the first franchisee or the second or third in an emerging brand versus somebody who’s buying a five guys or a McDonald’s today. Right. So those are much more established brands been around for, you know, for a long time, very successful. Lots of locations. Now you’re going to pay more in a franchise fee. You’re going to pay more in an investment. A lot of times they’re going to tell you your territory sold out and you have to go to Iowa or Texas or somewhere where there may be a territory open. And you say, well, I live in the Northeast, that doesn’t work. So, you know, with an emerging brand, you typically get the choice of territory. You’re the first one in you have a little more say in the brand is the brand evolves and grows with helping put systems and processes in place because an emerging franchise or with one location or two, it’s not going to have it all figured out. They’ll have a lot of systems down, but they’re not going to have everything figured out. So so there is a big difference with being an early in franchisee. And you’re right, the only validation that they typically have is with the corporate territory, the corporate location, the founding location, whatever it may be. So you want to look at, obviously, the social media to see how the brand is well received. You obviously want to know a lot of times it’s a customer, a lot of our brands that go into franchising the first franchisees or customers of that brand and, you know, brand ambassadors, they were loyalists. They love the brand. They want to be part of the brand. They’re super excited about it. They want to see it expand and they want to be a part of that. So that typically happens a lot with emerging brands as they expand into franchising.

Lee Kantor: [00:08:10] So now when you’re working with folks, let’s talk a little bit about the they’ve gotten past emerging, but maybe they’ve plateaued at, say, fifty to one hundred units. What are the conversations you’re having with those folks that it seemed like they got that escape velocity they needed, but they’ve kind of hit a hurdle or maybe the pandemic kind of threw them for a loop. How do you help those folks kind of get their bearings and get to a new level?

Steve Beagelman: [00:08:37] Yeah, again, every brand’s a little bit different, clearly. So some brands. It’s OK. You’ve plateaued. How do you reenergize the brand? Do you do potentially an acquisition of a competing company in your industry? Do you double down and focus and reinvest in the development side of the business, relook at the team you have in place, your website, the marketing that you’re putting out there, and maybe you need to change that up because what work three and five years ago clearly doesn’t work today. I mean, again, I’ve been in this business 30 years. You know, when I started this industry, there was no Internet. So it a very, very different business. And the businesses evolve. And today we have franchises that award franchises through Facebook. So because of their marketing and it’s just that kind of brand that people get super excited about through through one of the channels, through social media. So it’s again, it really depends on the concept. Sometimes we have to really get to know the franchisees and understand, you know, what the system signifies and what they need to be continue to be successful again, because down to the franchisees, if they’re making money and they’re validating, franchise typically can grow their business and continue to grow from that 50 to 100 location to one hundred fifty to two hundred to three hundred, et cetera, et cetera. And then a lot of franchisors. We helped through a private equity exit. Several of our clients that we’ve launched seven, eight, nine years ago have had a private equity exit, either fully or partially as they continue to grow their brand, which is super exciting for us and super exciting for our clients. I mean, that’s a lot of people get into franchising and franchising their business because they want to see it grow beyond their location or multiple locations, from regional to eventually a bigger presence regionally to eventually nationally and then some internationally. And then a lot of times they’re excited about that private equity exit. Our endgame is a lot of them like to refer to it as that’s out there. And private equity is is very, very big in the franchise space today.

Lee Kantor: [00:10:52] Now, you mentioned you’ve been doing this for a minute. What trends do you see moving forward as we come out of this pandemic? Are you seeing kind of more home based franchises as we come out of the pandemic? A lot more folks are working from home. Are you seeing more of these? What I like to call clusters, where one franchisor has a several brands around like. KB Home Services, more things like that. What is your crystal ball tell you as we move into the end of twenty twenty one?

Steve Beagelman: [00:11:28] So two parts to that question. I guess so. Franchisees are definitely buying homes, service brands. There’s no doubt about it. They can acquire a concept, be trained a month later and opened a month after that. So, you know, the whole the whole process is 90 days, 120 days. They’re in business. They’re operating, you know, person in a van or a couple of vans, a couple of cars, that sort of thing. And home services, hot industry. Right. We all spent during during the pandemic, you know, doing stuff to our houses, painting our porches, redoing our kitchens, expanding things, doing stuff outside our homes with outdoor living. So everybody was doing stuff. So those businesses are continuing to grow and I would even say explode over the last year and a half to two years. On top of that, we are seeing, you know, concepts in retail that are smaller footprints that are still doing well. Some of the fast casual concepts are doing very well. Some of the the retail concepts that are fifteen hundred square feet in personal care services still doing very well. So all of those things doing real well in the franchise. Space Fitness continues to obviously everybody wants to to be healthy and fit.

Steve Beagelman: [00:12:50] As far as franchisors go, what am I seeing? I’m definitely seeing some consolidation, like you said. So whereas a lot of brands are under one umbrella by the franchisor. So the neighborly model where they may have, you know, five brands, 10 brands they’re doing, whether it’s painting or it’s, you know, you know, restoration or it’s, you know, air dryer, vent cleaning all under one umbrella. So you’re seeing a lot of that in the franchisor space. And again, you know, franchisors get into the business, private equity gets into the business, but you’re seeing more and more big private equity that acquires a franchise or if they have the right management team in place and they feel real confident about that team and it continues to grow the first investment, then they’re looking to diversify and acquire other brands under that umbrella and run them with a lot of the same team, whether it’s the marketing team, whether it’s the franchise development team, the accounting team, you know, they can leverage some of that support. And I’m seeing that more and more in the in the franchise space these days.

Lee Kantor: [00:14:02] So now you think it’s a good time to be a franchise owner franchisee? Is this are we getting into kind of a golden age?

Steve Beagelman: [00:14:10] Yeah, I think I think that obviously with the pandemic, more and more people became franchisees. They didn’t either want to go back to corporate America. They decided that this was a a life changing time for so many people that went through really, really tough times and a horrible, horrible time in our in our country. But a lot of people made decisions personally that I’m not going to go back into corporate America. I want to own my own business and I’m going to do something or I’m going to do something, a business with my family, my kids, my spouse. So you saw a lot of that. And franchising really, although probably took a little bit of a hit in in March and April of last year, really rebounded by the summer and started to really pick up steam. And franchisors just had a great second half, especially last quarter of the year. And the first half of this year has been the same. It’s been it’s been terrific. Our businesses is exploding. You know, very, very happy to see how many people want to franchise their business and existing franchise owners that want to continue to grow. So our business grows in leaps and bounds, double digits every year, including last year. So we’re very, very happy with our clients. We’re happy to see our clients continue to grow. And the franchise industry is is alive and well, which is which is great.

Lee Kantor: [00:15:39] So what do you need more of? How can we help you?

Steve Beagelman: [00:15:42] Well, we always want great clients and we always want our clients to be successful with with the right franchise partners to grow their brands. So for us, it’s always getting our name out there and letting people know that we’re here as an option for them to help them. And, you know, listen, one of the things that I do is I spend as much time telling people that they shouldn’t franchise their business, yet they’re not ready versus that they are. You know, one of the brands that we launched into franchising is in personal fitness in people’s. Holmes and I remember the first time that I talked to the founder of the business, I told him he wasn’t ready to franchise his business and he said, What are you talking about? I’m ready to pay you. I have your fee. And I said, it’s not just about paying us our fee. It’s about being ready to support franchisees. You’re just not ready to do that yet. He said, well, what do I have to do? I gave him a list of things to work on.

Steve Beagelman: [00:16:36] Called me up. A year and a half later. He said, Steve, I did everything you told me. I said, OK, let’s go through the list we did. An hour and a half later. I said, You know what? You are ready to franchise. And today he’s in two hundred markets across the country, so and he started his parents dining room table. So stories like that are what makes me excited to get up and go to work every single day and and do what I love, which is help people franchise their business and help existing franchise owners continue to grow with the right partners. But know franchising has been a love of mine for 30 plus years, started a family business 30 plus years ago and packaging and shipping then got into the food delivery industry before GrubHub and Door Dash and all those businesses even existed in the early 90s while I was in college and then franchised that business. So I’ve been a franchise guy for for my whole life. I love franchising. It’s really a great industry for so many people.

Lee Kantor: [00:17:30] So if somebody wants to learn more, have a more substantive conversation with you or somebody on the team, what’s the website?

Steve Beagelman: [00:17:36] The website is is SMB my initials or you could say small medium business, SMB franchising dotcom or SMB franchise advisors dot com. Either one will get you to talk to us and then either myself or somebody else from the team will be happy to have a conversation with you about your business and how we may be able to help you either franchise it or grow your franchise system to the next level.

Lee Kantor: [00:18:04] Good for you, Steve. Thank you so much for sharing your story today.

Steve Beagelman: [00:18:08] Lee, my pleasure. Hope you have a great day. And I wish everybody the best of luck out there.

Lee Kantor: [00:18:13] All right. This is Lee Kantor Rousselle. Next time on Franchise Marketing Radio.