Lance Hood (FranPro): 0:09

Welcome everybody. Today we have Tom Dufore of the CEO of the Big Sky Franchise Team. Tom, welcome to the call.

Tom Dufore (Big Sky Franchise Team): 0:18

Thank you for having me. I really appreciate it.

Lance Hood (FranPro): 0:21

Well, Tom, can you share a little bit about the Big Sky and how it got started?

Tom Dufore (Big Sky Franchise Team): 0:27

Sure. So Big Sky franchise team we started back in 2016 and really it came out of my background. I've been helping companies franchise their business my entire career and so I, by chance, just my first job right out of college happened to be at a management consulting company that specialized in helping businesses franchise, and so fell in love with the whole concept and the idea and really loved the vision of an entrepreneur who creates something, and I've always been a big fan of entrepreneurship. I always loved that and so knew at some point in time I'd want to start my own business, and, after going to work for a client for a little while and getting back into the franchising business, ended up starting Big Sky franchise team to help others go through the franchising process to turn their business into a franchise.

Lance Hood (FranPro): 1:28

Well, can you share for someone who's not familiar with that, what are all the services that you provide in general? Sure.

Tom Dufore (Big Sky Franchise Team): 1:37

Well, we have really what I call three core services.

Tom Dufore (Big Sky Franchise Team): 1:41

The first is for that entrepreneur or small to mid-sized business owner that wants to grow their business through franchising whether it's the main objective or main structure for growth or whether it's just complementary to what they're looking for. And that's going through our three step process that we take our clients through. Step one is our franchise blueprint and helping figure out things like franchise fees and royalties and such. Step two is the rest of the documentation, so helping prepare franchise manuals and marketing plans and brochures and getting clients connected with a great franchise attorney. And step three is helping the client go through an execution and implementing their franchise project. So that's our core overarching service, coupled along with. We do offer outsourced small division within our company that offers outsourced franchise sales support solutions. And then the third broad bucket at our company is for an existing franchisor that needs some sort of additional support, and those are generally tend to be very unique problems that these franchisors are facing and need some help and support to sort through that and figure it out.

Lance Hood (FranPro): 3:01

You know, tom, I have a really good question for you just from hearing what you just said. Two one is if I'm a business looking to franchise my business, what should, how should I be ready to be franchisable, and what is the kind of average amount of money that people should really have on hand before they decide to jump into franchising their business? Because anyone that's going to work with you, they're going to want to know these two things Sure.

Tom Dufore (Big Sky Franchise Team): 3:32

Sure. So I'll start from a broader, more general perspective and then narrow into some specifics for you. So the first is we like to look when we think of a business being ready for franchising. Sometimes it's a little bit like being ready to have a child in your home. Sometimes you're never really fully ready for what comes with being a parent, and a little bit of that happens with being a franchisor as well.

Tom Dufore (Big Sky Franchise Team): 4:01

There are some things that you can have in place to make sure that you're setting yourself up and putting yourself in the best position possible to move forward. So we like to look for when we think of the viability or what you can do to be prepared to franchise. If you look at these three things to help you assess that. Number one is do you have a profitable prototype? That's a pretty basic, simple one, but we want to replicate something that's working. So, from a core, just high-level perspective, is the business profitable? Are you making an income out of it, and those kinds of things. Number two is that you have a customer base on a national basis or international basis, meaning you have customers. If you open up franchises or self-franchises in different parts of the country or around the world, that they would have customers that would want to buy your product or service. And then we also want to take a look at the third aspect of this, and that's really just the ability to grow the business and train someone out to run and operate the business. So if your business isn't profitable, if it's unique to only your little area, wherever you're based out of, and you have no interest in training people, franchising is probably not the business for you. Now, if we break down in a little bit more detail some things in terms of profitability, if you say, well, okay, well, what does that actually mean? If I'm profitable, well, what we're looking for, what we like to look for, we start breaking that down to say, well, what kind of a return on investment would a franchisee earn if they were to buy your franchise? And so we like to be able to show somewhere at, or very close to, or above, a 20% return on a franchisee's cash investment into your business. And we like to speak for a franchisee to be able to see that in their third year of operation, we assume a certain amount of there's going to be a break, even for a couple of years of getting the business up and going Hopefully sooner if the business is operated well. So that 20% return on cash investment. And number two, the second part of that is that the owner, if they're an owner operator, that they would be able to make a manager salary running that business, so they get an income plus a return on their investment. So those are the things that we like to look at and help that out with our clients. Some clients may not have that totally broken down and we do that in our first step of our process to help run numbers and validate and really confirm that's the case. And then, in terms of dollar amount, to say, well, now I want to franchise my business.

Tom Dufore (Big Sky Franchise Team): 6:49

I think your second question was how much cash or money should I plan on budgeting or spending to really make a good effort in launching or growing my business?

Tom Dufore (Big Sky Franchise Team): 7:00

And the number that I usually like to use, or a range of numbers.

Tom Dufore (Big Sky Franchise Team): 7:08

I would budget somewhere between $100,000 to $150,000 to be spent over the course of your first 12 to 24 months, maybe 36 months depending on when you start marketing for your franchising, and that would cover all of your expenses to hire consultants, lawyers, cpas, all of the professionals like us to help you through that.

Tom Dufore (Big Sky Franchise Team): 7:31

Plus have a marketing budget, a large enough marketing budget, to. I like to budget around five franchisees into your marketing budget. So that way then maybe you get lucky and you get seven, eight or 10, or maybe you underperform, but you still are able to sell two or three franchisees in the process. In today's world, the average marketing spend to acquire one franchisee is just over $10,000. And it's been around that number for a few years now a little less, a little more, but somewhere in that number. So that's a kind of a general rule of thumb. If you're trying to budget out okay, well, I'm looking for around five, ten franchisees just multiply by 10,000 and that'll give you a good sense of about what kind of a financial commitment you're going to need to make to acquire those franchisees.

Lance Hood (FranPro): 8:22

Right, because I think some people come in just thinking I have a killer business, we can knock this out of the park, but they don't realize that there's going to be expenses and also they were running a successful business, but learning how to sell a successful business and then replicate your concept with a completely new person. Those are new and those are things that you may not have necessarily done before, and so you're going to have to, like, wear a lot of hats and, you know, work a little harder for the first couple years. You know?

Tom Dufore (Big Sky Franchise Team): 8:57

Yeah, that's exactly right. We have a free download called the nine pitfalls to avoid when franchising your business and it's at ninepitfallscom and one of the items on there and this is just a collection of what really my team and I have observed over the years of doing this. Where do new franchisors or startup companies, where are those pitfalls? Where do they? We consistently see these problems and you hit one of them right on. You nailed it it's these, the new franchise or forgets the startup mindset that they forget because what you just said they've been operating a successful business, oftentimes for many years and they forget that. Oh, I'm in a startup now. This is a new business and while it's related to my main business, it's a new business. I have to learn how to market and sell and train and onboard and support. It's a learning curve and a learning process to sort through all of that. So I absolutely agree with you on that.

Lance Hood (FranPro): 10:04

What makes Big Sky different from other companies that do these types of things?

Tom Dufore (Big Sky Franchise Team): 10:10

Sure. So there are a lot of great service providers in this space. So you know, if you're hiring and working with a great, reputable company, you can't go wrong when you're engaging with someone. I'd like to describe how we work, and what makes us a little unique and different is we really are purpose-driven in terms of our focus. Our overarching purpose is to inspire and foster greatness. We have a core belief that every person and organization can and should be great, and we live that through our three values. Number one win-win relationships, and we really really take that to heart. So we want to find the win-win in all situations and obviously, franchising. You're always looking for that win-win-win along the way, and so those are some of the pieces that make us different. And then our three-step proven process that I did touch on lightly there, that we take our clients through to help them go through and franchise effectively and efficiently. And the last piece that I guess I would say is really our focus and emphasis on educating our prospective clients, or just people who never even hire us, but just producing content, much like what you're doing with your program.

Tom Dufore (Big Sky Franchise Team): 11:34

We really consider ourselves educators and we are a content-producing organization. We produce typically two, one, two, three new pieces of content every single week that's coming out. We've produced almost 300 total podcasts, webinars, you name it that we have available out in the space and it's all available for free. There's no cost for it and it's not some cheesy infomercial. Our goal is to really help educate and differentiate. So for anyone that's interested in that, our podcast is Multiply your Success, and we have a second podcast, franchise your Business, and we've got hundreds of YouTube videos and all kinds of things available for someone who's interested in just learning more or starting to gather more information on franchising or just in growing your business in general.

Lance Hood (FranPro): 12:31

Well, thank you, tom, and can you share some examples of some brands that you've helped like, what's happened for them, what you helped them with and all that?

Tom Dufore (Big Sky Franchise Team): 12:43

Yeah, sure. Well, I'll highlight just a few. One that I always find interesting is a brand called Lean Kitchen Company. They're a healthy meal prep organization. You go in. You basically buy pre-made healthy meals that you can take home and many of their customers like to actually take that. That becomes their lunch for the week ahead, or sometimes it's dinner, whatever it might be for them.

Tom Dufore (Big Sky Franchise Team): 13:09

And when they came to us they had a couple locations and started selling franchises and really took off. They sold a whole bunch of franchises. In the very beginning they actually had to pause because they wanted to make sure that they were onboarding the franchise. I think the electricity that they caught caught them by surprise a little bit. So they paused growth for a while and got things going back, and today they have over 70 franchises in their system and growing. So it's really exciting to see what they're doing from just a couple of locations, and I'd say another one is a house flipping franchise called New Again Houses. That one's really, really fun. It was involved with them from the very beginning, early on, and worked with their leadership team and growing and building and helping them grow, and today they're a fast approach.

Tom Dufore (Big Sky Franchise Team): 14:01

I believe it's about 80 or so franchises in their network and going, and one that's interesting is called Shoe Beauty. You probably have never heard of that. They do eyebrow threading and they've grown really, really quickly over the last few years as well, and they're up over 100 franchises from just a few when they had started working with us. So some pretty exciting growth to see organizations like that go through.

Tom Dufore (Big Sky Franchise Team): 14:29

And I always like sharing some of the fun stories where a brand goes from zero to 50 or zero to 75 in a over the course of a few years. And the reason I like it is it's a pretty sizable organization at that point that for the most part many people still have not heard of yet. It's not a household brand name, and so I always think it's exciting for someone that's maybe thinking of franchising to realize that it's not that far out of reach. It's hard to look at a company like a McDonald's or one of the other mega franchise brands and think, boy, how do I get from my one or two locations, whatever I have, to thousands or tens of thousands that it's hard to fathom that. So, anyway, just just a few examples to share there.

Lance Hood (FranPro): 15:16

No, I love that, and you know there are companies out there that are they. They've been successful with a location, but maybe their brand just isn't taking off. And you've probably seen some examples of what makes a brand catchy, what makes people drawn to it, you know, versus just seeming like everybody else. What are some ideas that you could share with people to make their business stand out? So what might catch on like that?

Tom Dufore (Big Sky Franchise Team): 15:48

Yeah, that's a great question and I used to think that I would have a great answer for you on that over the years ago. The longer I do this, the more I realize that some of the real electric growth in franchising that allows someone to go from zero to hundreds of units in a few years is—I don't know what that magic secret recipe is. If I could bottle that and figure it out, we'd be doing some things different. Obviously, there are some things that you can do to help better manage that. If you're not catching that electric growth, if you don't just catch on fire for some reason. That's part of it. To give a direct answer, certainly being able to clearly articulate your offer and to tie into what the consumer preferences are.

Tom Dufore (Big Sky Franchise Team): 16:46

I would say that for many of these brands that have taken off even some of the groups that I mentioned earlier, where some of their initial growth really happened by tapping into their own referral base, meaning their friends, family, customers, people who are connected to the brand, that already have an affection, a trust, an affinity with their group. That's one thing. I guess I would say that organizations that do grow, that is common, that they are growing from within It's—franchising is no different than any business that you might currently be in. Your best customer generally comes from a referral A referral from a satisfied customer, from a family member, a friend Somehow there was a referral connection, and franchising is no different. Your best connection is going to come from a referral.

Tom Dufore (Big Sky Franchise Team): 17:39

If you really want to tap into it to help take control of your own destiny for growing more rapidly is spending time developing that social community or your social capital that you've already established. It's sitting right there. The hard part is that the owner, the founder, oftentimes doesn't want to give up their time to tap into that. If you're willing to give up a little bit of your time, because only the founder or the people that are close in the organization that have that social capital that you're able to tap into that Again, I don't want this to—the goal is to not manipulate or take advantage of your friends and family. That is not the goal. The goal is to basically let them know what you're doing, because you'd be surprised how many people have been thinking about maybe starting their own business sometime and they already know like and trust you as a person that they know that they can use your firm business model to accomplish their goal or their dreams.

Lance Hood (FranPro): 18:49

When I work with different companies. So as a broker, I'll work with clients. Those clients are looking to find a franchise. The thing that I have to tell them if you're working with a younger brand, they're going to have less organization or structure. When you work with, the bigger the brand, the more structure and sometimes it seems like quite a bit of structure, almost like it's a job. You might have a six-step process. With more of a developed brand, it'll be broken down specifically by training and marketing and economics and all this. When you work with a very young brand, especially if the owner himself is trying to sell it himself, they're just like they want to talk it out for 20 minutes and then say I'll see you in two weeks and we'll get this baby signed. That's not a sales process. People don't make $250,000 decisions on a simple conversation. Can you give me your thoughts on advising people on that whole thing of having that structure, what it should be and why it's important?

Tom Dufore (Big Sky Franchise Team): 20:08

Yeah, that's a great question. That problem that you described is one we've seen over and over and over and over again. It's one of the reasons we actually created our franchise sales training workshop to actually take our clients through it, and we created specifically a workshop. And it's not a class, it's not a course, it is a workshop because it is a seven-hour workshop with a 160-plus page workbook that when they go through they're actually doing work during that, because I've worked with enough founders and owners that if they're not doing it while they're sitting still, it's not going to get done at that exact moment. They're not going to come back to it later. This is helping them build out and map out a sales process to achieve, ultimately, the goal of helping them sell a franchise.

Tom Dufore (Big Sky Franchise Team): 21:00

A franchise is just a series. Selling a franchise, in my experience, is it's a series of just many steps along the way. But new, emerging franchisors struggle with and you, you, you encapsulated it so well is the these new franchise or stinker? I just have my one little what a minute call or an hour call, or maybe two. And why haven't they bought? Why aren't they buying this? Don't they see all the amazing things that are possible with it. The reality is they don't, because the founder sees it, because they created the business and they got Years and years of experience of working day to day in that business. So of course the founder sees that, but that prospect doesn't. And so there's a lot more that questions Scheduling, things like discovery days and having meetings and meeting with training staff. It's something that it's not just a sales pit, that that that maybe that happens very early on where you're trying to get someone excited about your brand. But the sale, franchise sale cycle is long. This, this, it's not uncommon for franchisee to enter your sales pipeline and take twelve months to close. That's not uncommon Because life happens.

Tom Dufore (Big Sky Franchise Team): 22:17

For for these buyers in the franchise, buyers and plants you know this with your experience in the franchise brokerage world they they have their own mental hurdles to overcome and get through about buying a franchise. A lot of times it's not not necessarily Can I make money doing this or can I make a return that I'm looking for. A lot of times they see the value in that. It's the mental hurdle Can I convince my husband or my wife? Are they convinced? Or maybe I'm caring for an alien parent and mom and dad? Mom or dad took a spill and what that really set me back for three months or I've seen this happen.

Tom Dufore (Big Sky Franchise Team): 22:58

This has been one of the things for these buyers that that the founders or the franchise or new franchise or stone maybe recognizes that there that candidate is one promotion away from leaving the franchise candidacy pool. You know they get that promotion or that bonus at work that they've been waiting for their, their spouse does, and now all of a sudden they say you know what? I'm not as motivated anymore to do this. So it's a really fragile thing for that butting entrepreneur and I always describe franchising is the confidence elixir to a butting entrepreneur. It helps them realize that they can do this if they follow someone else's system and as that new franchise or your job.

Tom Dufore (Big Sky Franchise Team): 23:50

When you're selling them, it's not really sales education, it's educating them on how you, you and your system, will be able to help them accomplish their goals and what they're looking to achieve. So understanding, do they want to? If? Are they motivated by? Are they really interested for earning potential?

Tom Dufore (Big Sky Franchise Team): 24:11

My experience for a lot of franchisees they're really looking for, oftentimes a lifestyle. How does this fit in with my life and how do I want to be able to coach my kids baseball team or participate in whatever it might be, whatever stage of life there in, and Franchise or is new franchise or is especially that have a hard time taking off, miss the boat on that because they're focused on. I'm so great as this franchise offering. Everyone wants to buy my, my business and and you're very often the business is great. But we need to communicate that in a different way to that candidate so that they understand the value that you're, you're actually providing and how what you offer franchising. They're just there borrowing the rent in your name and business system. So your it's your name and business system is for rent. So when you're renting it to them, how does what you're renting help that franchise candidate accomplish their goals for what they're doing? So I don't know if that's helpful, but I who, I guess, leave it at that.

Lance Hood (FranPro): 25:17

Yeah, no, that's awesome and you know there's so, like you said, there's so many variables that hold things up. You said the job thing. You know getting fired could be a positive or a negative. You know getting a promotion positive or negative, that the other spouse could be the talking them into it or talking them out of it and and funding it, depending on their credit and their ability to get a loan. I've seen loans take forever. It's just. I've seen car accidents. I've seen people get get cancer, just every single thing. Life is happening while they're going through this and you're not always their number one priority. So it's it's. It's a Something to just be ready for, have your mindset ready, you know, and and be focused on it.

Tom Dufore (Big Sky Franchise Team): 26:05

Yeah, yeah. It is one of those things where the Oftentimes the new emerging franchise or that the founder is used to Working hard and basically if they put a little sweat, equity and and and elbow grease Into the business, that just magically stuff starts happening, sales start happening, because that's how they started their company. Then franchise sales the founder can get discouraged quickly if they're expecting immediate results, and so patience really is a virtue when it comes to in most things in life, but especially in franchise sales.

Lance Hood (FranPro): 26:42

Mm-hmm, and I got one last question for you that I think would be really good and that is People who want to buy a franchise as a franchise, or there's this balance, because some of them are looking for somebody who Exactly follows the system and kind of does stays within the the rails really tight, but as a With a franchise, people really look at these are, these are entrepreneurs. They're entrepreneurs that don't want to just go out and figure it out on their own, but they still they're not looking for the boss they just had where they were working. They're still looking to have some sort of autonomy and and Run this business, even though it is your brand and your structure. So what's your advice with the franchise? Or is on Understanding that balance of they are looking for people who will follow the system, but they are entrepreneurs and they do not want to boss.

Tom Dufore (Big Sky Franchise Team): 27:40

Yes, that that's exactly right. So it is my. My take on the first ten franchisees that come into a system sometimes is a little different than other Other folks advice in in our industry and in our space of franchising, but I'm a big believer that when you're a franchise, or bringing on your first ten franchisees, it's essential to get those folks into your system, and naturally these people oftentimes will be more entrepreneurial versus a franchisee that buys in at number 100 or number 500 as your system grows and develop, even different from franchisee number 20. Oftentimes, these first ten they like being into the new business, in a new franchise opportunity, and because they have that, they're a little bit more willing to take risks or accept risk. They're also going to operate your business that way. They're probably going to be deviate from your system a little more often. You're going to have some correcting to do with them. Those franchisees are also, though, going to provide to you new ideas and ways to reinvent what you're doing or make what you're doing better for the next franchisee, because those first ten franchisees help teach you how to be a franchise, or they teach you how to effectively build your training. So training we can only give our one. We want to get spilt out initially, before you have any franchise, it's your best as you educated guess on how to do it. It's usually fairly close. But you're going to learn a lot from these first ten as you sell, train and support them so that the beyond those ten you really are able to start identifying now what kind of background or Profile, franchisee profile, is successful in your system and you can learn a lot from there, from that. So you have to be willing to.

Tom Dufore (Big Sky Franchise Team): 29:41

That just my opinion. You need to be willing to recognize that every franchisee is not going to be you the founder. In fact most won't. Most founders I described there they're going to be in the. They would be in the top 10% out of a hundred or a thousand franchises in their network. They'd be a top 10%. Most franchisees, you know. You look at a bell curve, it's they're going to be around that 50th percentile and so you have to accept that reality that comes in and there will be some those that come in. Out of those 10 You'll probably have one or two that are absolute superstars that run the business way better than you do, and one or two that are Probably going to drive you nuts and that just really Are difficult to manage and work with and support. So Anyway, that that that's, I guess how I'd, how I'd answer that question there, absolutely well.

Lance Hood (FranPro): 30:37

I learned a lot today. Thank you, tom, for joining us. Anybody who's interested in Speaking with Tom and learning more about Big Sky go here https://Franpro. vip/GoBigSky. Tom, thanks again for joining us.

Tom Dufore (Big Sky Franchise Team): 30:56

Thank you, lance, for the opportunity really appreciate you and all the work you're doing.