Episode 2: The Franchise Gap

Today, April will introduce you to the Franchise Gap, first explaining what it is. Non-franchisees may discover that the same gap applies in their business and industry, but has eluded them until now. So, April will also shed light on how to know if you have stumbled into the gap and the number one way to begin closing the gap. Spoiler alert: you can start closing the gap even while you listen to today’s the Infinite Franchisee Show.

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Welcome to the Infinite Franchisee show where every franchisee meets infinite possibilities. Here, you will discover the executive level strategies needed to overcome the overwhelm, concentrate on explosive growth activities and capture the life of your dreams with me, April Porter. I am an attorney, a former award winning multi-unit franchisee, and a number one international best selling author on a mission to help franchisees achieve infinite success. 

Welcome. We're so glad to have you here. Today, we're talking about the franchise gap and how to fill it. So first, what is the franchise gap? Well, it's the space between the franchise model and the executive level strategies needed to increase profits, build a team and scale into multiple locations. So you might be asking yourself, isn't that what a franchise is supposed to do? You know, teach a franchisee how to increase profits, build a team and scale into multiple locations? Well, you would assume so. But the franchise gap was actually born out of assumptions. See, franchises attract many first time business owners. These incoming business owners choose a franchise because they believe it will give them absolutely everything they need to be successful. Maybe you've heard of the term, you know, business in a box.

And they believe that this includes the product knowledge plus all of the growth strategies that they would need to realize their dreams. And their dreams at this point are usually bigger than the salary they're currently making, or that they're leaving behind by jumping into business ownership. It also includes more free time to enjoy their family and their new experiences. That's really what's motivating these people to leave. What many consider is the safety and security of a paycheck for the riskiness and I'm saying that in air quotes of owning a business. So when a franchisee first signs their franchise agreement, they don't know what they don't know, right? Just like anytime we're going into a new experience, you just don't know what you don't know. And in this situation, the franchisee is assuming the franchisor will fill in all of the blanks about what they don't know. But that's actually not the franchisor's job and or responsibility. So you might have heard some phrases used during the discovery process, like we will teach you everything you need to know right when you might have heard this from franchise brokers or the franchisor is going to teach you everything you need to know or possibly the franchisor themselves going through the discovery process. And this isn't said to be purposefully misleading. Generally, they believe they're going to teach you everything you need to know as a franchisee to be successful. But if you take a look at the franchise agreement, there's actually nothing in there stating that the franchisor is responsible for teaching a franchisee high level business strategies. It's simply the franchisor's job to teach its franchisees about the product they're delivering to the public, why it's better than the competition and how to attract people to the business. The franchisor is assuming that the franchisee has brought general business knowledge and experience with them. So when they say we're going to teach you everything you need to know, to be successful, the franchisor is assuming that the franchisee has the business knowledge they just need to know about this particular product, why it's better than the competition and how to attract people into the business. So that's where the mistake comes in. And when this assumption is made about the franchisee bringing general business knowledge to the table. Sometimes people in business would even refer to this knowledge as common sense. They're bringing business common sense with them. But the reality is if the person hasn't been in a CEO position or role before, there's nothing common about the type of strategies that it really takes to experience true wealth and true serious growth and scaling into many revenue streams. 

So when a franchisor and franchisee relationship begins based on these assumptions, it usually plays out in one of three ways. Number one, the franchisee will quickly master the model and be ready to expand. They're at this point, they've implemented every single thing that franchisors told them to do, their location is running like clockwork, they're experiencing some really good revenue growth. And they're thinking, wow, this is going so well that I want to get another one of these and double my income, and double everything, maybe even the franchisor, or franchise broker reaches out to them and say, “hey, you're doing a great job, maybe you should get a second one”. So they're also getting this positive affirmation from the outside world who are complimenting them on their success, which then makes them believe they're ready for a second location. 

And at that time, they open a second location. And as they're getting the second location open, it suddenly strikes them that they can't really be in both places at once. And a lot of their success was based on the fact that they were in the business in the first location, they were overseeing all of the operations, they were having customer contact, they were setting the standard for the level of customer service that people were receiving. And now they're sitting here like, oh, shoot, what do I do, I can't be in two places at once. And since they don't have the strategies in place to duplicate their level of efforts in both locations, not just their operations, but their level of effort, right, because when a business owner is in the business, they're generally taking on more responsibility than the other employees. And sometimes they're, you know, type A personalities who aren't really ready to relinquish a lot of the responsibility to other employees. So their particular level of effort cannot be duplicated across both locations. And when that happens, one of the locations begins to slide backward. That's generally what happens on the revenue side. But what happens on the personal side is that the franchisee begins to, you know, feel completely overwhelmed. And their time at home is suffering and sometimes their relationships even begin to suffer as well.  So that's option number one, when a franchisor-franchisee relationship was based on the assumptions we talked about earlier. 

Now, possibility number two, is that again, the franchisee quickly masters the model and is making some good money, but then suddenly, they plateau. So at this point, the franchisee in this scenario feels that there is something they are missing, that they need in order to get over the hump, but they just don't know what it is. And they can identify that there's more to learn out there about business, there's more to know, but they can't grasp it because they just are stuck in that you don't know what you don't know void. So meanwhile, they continue to work, but they're working too many hours. And they're not really enjoying the freedom and the time with their families, the way that they thought they would when they first invested in a business. And so this franchisee in this situation may start to look for help outside the franchise, or they may go straight to their franchise business coach and say, Hey, I need some different strategies to grow, then they may become frustrated, because their franchise business coach tells them things like well just follow the model or do these things which they've already been doing, or they've already been told to do. And it's just not filling that gap. It's not the missing piece that they're trying to identify. 

Number three. The third way that a scenario can play out when this relationship was based on these assumptions is that the franchisee attempts to implement everything the franchisor taught them. But this franchisee is not capable of executing it 100%. And it could be for many, many different reasons. Either they set their schedule up from the get go to work less hours than they did in their job previously, because they thought that's what business owner life was. And so they didn't spend enough time in the business to execute at 100%. Or it could be just possibly that they're not a great multitasker. Or there are some things that the franchisor suggests they do that are not really they're not skilled at and they don't enjoy it. So they procrastinate on those things or they just avoid them altogether. But usually it's not for lack of dedication or commitment. I mean, after al,l franchisees are investing many times their life savings. Sometimes they're investing their 401 K's in order to follow their dreams of owning a business. So they're not shorting the execution because of a lack of dedication or commitment. But the franchisee is generally missing some of the skills and strategic thinking that is needed to fully juggle all of the aspects of business ownership. So the business plateaus early, it might even plateau at the break even point or even before then where the location could be struggling. And when this happens, the franchisee feels as if they are doing everything humanly possible that the franchisor is telling them to do. And they just can't see how to get it all done. So they begin to have a mindset shift. And they start to believe that the model, the model itself is faulty. So at this point, they start to supplement the model with other techniques. And they do that because they're trying to get the model to work. And it's not that the model isn't working, it's just that the model is not working for them because they don't have the right skills and strategies to execute it fully. So when the franchisor sees that they're struggling and tries to provide support to help this franchisee, the franchisor will see that this person isn't following the model. And it's easy at that point to chalk up the franchisees lack of success to their deviation from the plan. So many times in this scenario, you'll hear franchisors say, Well, you know, are struggling locations, they're struggling because they're not following the model. And the reality is that the franchisee needs some personal and professional development, to learn the skills and strategies that will empower them to follow the model to its fullest potential. It's not just as simple as they aren't following the model. It's more about what do they need to be successful. What do they need to be able to follow the model and reach their full potential. So ultimately, this is the gap, there is a giant canyon separating the basics needed to understand a product and deliver it to a customer. And the strategic thinking and leadership skills that a top executive uses to get his or her team to grow a company for him or her. It makes sense this gap exists because most franchisees decided to invest in owning a business in order to escape the corporate world. The corporate world is where they were an employee. And in that employee role, they were the doers, they knew how to execute a plan. If their bosses had invested in them to develop their leadership skills, then they may have been a manager supervising a team, who was in charge of executing a piece of a larger plan. But most people didn't have any experience in coming up with a plan. Or thinking across all departments or thinking strategically about which department needed to take action first, second, or third in order to see a strategy all the way through. Maybe they don't have experience in coming up with sales goals and incentives.

All kinds of different things that the executive level has to think about in the way that they make the company run like a well oiled machine, the employee doesn't have that responsibility and doesn't have that experience. And so when a franchisee comes out of that employee role, they go right into their habits that they formed as an employee, which is to execute the plan and be the doers. That's where the gap exists as they go into those old habits they start doing and they can't figure out how to make the transition up to be the person who's in charge of growth versus the person who's in charge of execution. So ultimately, when a franchisee realizes there is a gap, they want to make sure that they fill it because as I said, franchisees are go getters, right? They're risk takers, they want to succeed and they are hungry to do so before we can fill a gap. We have to really understand how does a franchisee identify if they are inside the gap. 

When I first realized there was a gap, I was between franchisee number one and number two. I had mastered what the franchisor had given me in the first three months and made my first location profitable. And I remember standing inside of my location because I was working all the hours back then. And thinking to myself, I've already committed to opening two more of these and I cannot be in three places at once. How on earth am I going to make sure that my customers are receiving the same level of care and same standard and quality of service that I'm providing when I'm here every hour of every day. And I knew that I had to come up with some systems on my own, in order to ensure that. So that's one thing I started doing is I started creating the processes and procedures to teach my staff that would allow them to teach new staff exactly how things should be run inside my location. In addition, I remember really feeling like that business was this in my head, I imagined it as a piece of pie, or actually a whole pie. But there was a missing piece. And I didn't know what that missing piece was, I didn't know, you know, if it was a different flavor, I had no idea what the missing piece was. But I could feel that I didn't have the whole pie. It was a very gut instinctual feeling that there were some things out there that I didn't know, I didn't know. And if I could lock and fill in that piece of the pie, that it would, it would just create so many more opportunities that would create growth that I couldn't even imagine at that moment. And I just had that overwhelming feeling. And turns out, I was right. 

I eventually found out what that missing piece of the pie was. And we'll be talking about that a little later when we talk about how to fill the gap. So how can a franchisee identify if they are currently experiencing the franchise gap? Generally, they're working more hours than they anticipated. When they signed their franchise agreements, they had these big dreams of working less hours than they did in their corporate job. And they find that they're actually working at least as many if not more hours than they did in their corporate job. They also can't seem to pull themselves out of the daily operations. In order to focus on growth, they find that their to do tasks or their to do lists keep getting longer and longer. And the really needle moving, things keep getting pushed down to the bottom of the list. As they put out fires and they troubleshoot and problem solve day to day. Generally, they're also not making the money that they thought they would, they're making money, it's just not, it doesn't have that feeling of limitless money that they expected to have as a business owner. Generally, it feels like they have a cap on their income, just like having a paycheck at a job. That's another indicator. They can't shake the feeling that there are things out there that they don't know. But those things would make all the difference in the way that their business is growing. Maybe they've opened a second or third location. And they're not seeing the same success across all locations, or they opened a second or third and they thought by that point, they would be able to pull themselves out a little bit and really oversee all locations and they still find that they're in each of their locations. They may have begun blaming the franchisor for either having a broken model or a lack of support. Lack of support is actually the number one lawsuit that franchisees bring against franchisors and it all stems from the franchise gap. They can also be feeling like they're on an emotional roller coaster in their business, everything affects them emotionally. And that's not where we want to be. Obviously, that's we as CEOs, we use logic, and we balance that with our emotion to make decisions. So emotional roller coasters are not the fun kind of roller coaster. And an example of this could be like being emotionally impacted when an employee quits, right and small businesses we get really close to our employees, someone quits, maybe there's feelings of being betrayed. Maybe there's just feelings of how you know how, how could you leave me in the lurch like this, or maybe it's just feelings of sadness, and like, I don't know what I'm going to do without that person here. That person means a lot to me in the company. But it's definitely an emotional reaction to a business situation such as an employee leaving. Another indication that someone is sitting in the franchise gap is that their relationships at home are suffering, they're feeling like they're missing their kids growing up.

And ultimately, one of the biggest indicators like a big red flag is when the franchisee finds themselves thinking, things will get better when things will get better. When I hire one more person, things will get better when we hit six figures in revenue. Things will get better when I can get more leads through the door when this constant like I just need to do this and it's going to make all the difference. Well, I just need this one thing to happen, that that repetitive belief is a definite sign that they're in the franchise gap. So the question is, of course How do we close the gap? There is only one way to close the franchise gap. A franchisee like all business owners, and really like all people in the world must invest in themselves to close the gap. This is somewhere along the line, we get out of that habit of investing in ourselves, maybe because we have an education system that goes so far. And then it's just expected that you go into work. But even at most jobs, there's some kind of continuing education that is offered. As a small business owner, you have to go out and find that education yourself. And you have to invest in yourself over and over and over again to grow, your business acumen, your skills, your knowledge, your perspectives, the way you think, all of those things. And the only way that those things can grow is by making that investment in ourselves. In way too often, what business owners do is that they make an investment in someone else, they think that they have a problem. And someone comes along, saying, Hey, I solved that problem. And they grasp at the opportunity to work with that person, because they just want the solution. And also, that's how people get burned. 

Because the solution either doesn't work, it doesn't actually solve their problem, or it solves that problem. But even with that solution in place, it doesn't make a significant difference in the business. And so after doing this over and over and over again, what happens is the business starts to run out of capital. And if the business owner doesn't know what to do or where to go, have that same business owner just started off with making an investment in themselves, then they wouldn't be in that position down the road. And the reason why is because an investment in yourself does two things. One, it allows you to diagnose the actual area of business that needs your attention. When we haven't invested in ourselves, we're operating off of the habits and the knowledge that we had as employees and the perspective of an employee is completely different than the perspective of a CEO. Just think about it in terms of employees that are meant to work on a very small percentage of the company, a small piece of the company that is going to impact the overall vision and impact the overall strategic plan. Whereas the CEO is looking at all the pieces and all the different areas of the business and how they're going to make that strategic plan come to fruition, and how they're going to make that vision a reality. So just in that analysis, right there, we can see that an employee mindset is much more narrow minded than that of a CEO or an executive mindset. 

So when a business owner is still operating in that employee mindset, and they have not invested in themselves to grow up into a CEO mindset, they're looking at their business in pieces. And they're narrowly focused as to what the solution could possibly be, to help them grow. And their attention always goes to the things that they know they need to focus on. So generally, it's something like marketing - I know I need more leads through the door equals higher revenue, because the more people that come through the door, the higher my revenue will grow. And yes, of course, that's true. But perhaps that's not really where the problem is, maybe they have plenty of leads coming through the door. But their conversion rate, their sales, and closing sales is so poor, that they're not making enough revenue. And if they simply focused on not only increasing their personal sales conversion rate, but also that of their teams, then that would make their revenue across the board increase, even with less leads coming through the door. And if they invest in themselves to become better salespeople, they invest in themselves to gain the skills, then they can teach it to their team, or better yet, they can invest so that they know enough that they can identify excellent sales people and they can hire those salespeople that are better at sales even than the owner is. 

And that's really where the value and the infinite value comes from this investment that we would make it ourselves is that you learn enough to be able to identify who you should be working with, whether it's an employee, or if you're outsourcing tasks, you have the knowledge to really identify who is going to be an expert in their field, who is going to be able to take your business to the next level. So by investing in yourself, not only are you able to apply that to your current business, but that knowledge edge that goes with you for life that allows you to scale into other businesses to take on more responsibilities to continue to grow, and to continue to elevate into a true entrepreneur, who has many, many irons in the fire, that are bringing them in the income of their dreams, all while allowing these people who are smarter than themselves in the in the specific areas to do the work. That's ultimately what being an entrepreneur means. And that's how we close the franchise gap by beginning that investment in ourselves to become better business owners, rather than making investments outside ourselves into these individual little tasks that need done. Now, that doesn't mean you're not going to have to invest to get these tasks done, you still do need to invest, you need to have marketing, you need to have leads through the door. But the question is, how do I make sure I'm not throwing money away on someone who's not going to give me the ROI, on getting leads in the door and how to identify what strategies in marketing we need to be using to get not only people through the door, but the right people through the door that are ready to buy from us. So that goes back to the strategy side, really understanding strategy. And in order to understand and to create strategy, you have to elevate your thinking, again, going back to investment in yourself. So that is the entire circle of the franchise gap. 

So this is what I did. When I realized that I was in the franchise gap. I knew I had to increase my own knowledge. As I said, I was sitting there, I felt like there was a piece of the pie missing. And it was simply a piece that was labeled, I don't know what I don't know, the only way to solve that is to know. So I started to invest in myself. And once I did, that's when I took the success that I'd already had, which at the time we were mega successful. But I wasn't quite happy, because I was still working too many hours and still putting out those little fires. And I wanted to be the CEO who could oversee and be confident that everything was running as it should and make decisions that weren't emotionally impacting me at every turn. But those were measured decisions that I knew competently, were going to help the business. And I wanted to spend more time with my family. And so, I invested in myself. And that's what happened, I was able to make that shift. Quite quickly. Within 60 days, I was no longer working nights or weekends. We were taking four vacations a year, our revenue was skyrocketing, all from that shift. And what I learned is that by me being in the franchise gap for that period of time, that was actually inhibiting the growth of my business, so it was all in my hands to make that change and to pull myself out of that gap. 

So in today's episode we have learned what is the franchise gap. It is the space between the franchise model and the executive level strategies needed to increase profits, build a team and scale into multiple locations. We've also learned how to identify if you're experiencing it right now by asking yourself if you feel like you're on an emotional roller coaster in business. If the answer is yes, then you are likely inside the franchise gap. But don't worry. We also learn the secret to closing the gap is to invest in yourself just like you are doing now by listening to this podcast, the infinite franchisee and we hope that you'll be tuning in to more each and every

Do you love the Infinite Franchisee show? I'd love to hear from you. Take 60 seconds and leave a review of the podcast on iTunes or wherever you listen. It is such a small thing that can help so many other franchisees and entrepreneurs find us and then they can discover infinite possibilities. Thanks for tuning in today. Until next time, remember, there are infinite opportunities to grow your business and reach the sanity, wealth and gratitude you deserve. So don't ever settle for anything less than infinite success.