Ep. 19 | Leaping into franchising - Eric Redden

Eric Redden, a franchise development and operations expert, discusses the transformative power of franchising. Based in Charlotte, North Carolina, Eric has a wealth of experience helping people turn their entrepreneurial dreams into reality through his business, Hypergrowth Franchising. Jack and Eric explore the magic behind a well-structured franchise system, the signs that your business is ready to take the leap into franchising, and the crucial role of curiosity and adaptability in entrepreneurship.

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Hello everybody, and welcome to episode 19 of Shakin Hands. I'm your host, Jack Moran. You can find me on Instagram at Blue Collar Kid that is blue collar KEHD. Today on the episode, we have Eric Redden, the founder of hyper growth franchises. owner Hypergrowth franchising franchises. Okay. Yeah, we're close right there, 90%. so yeah, tell us a little bit about like, what you do, like what your company is. It was a little background. Sure. So I, grew up, in Kentucky, moved kind of all over South Florida, Saint Louis, Missouri, now here in Charlotte, North Carolina. But I've been in franchising for about six years now. So throughout my career, I've worked with people who wanted to buy franchises, people who were looking to get into business for themselves, coaching them through that process, teaching them what that look like. After that, I started my own company about a year ago, really working on the franchise aware side of things. So these are companies that are wanting to grow in the franchise space and figure out how to do that. So what I do is I sit down with them, walk hat through the legal documents, the sales, marketing, operations, everything they need to know that they probably don't know about their business. And I always use a key line from, the E-myth revisited. Oh, so you want to focus on growing your business? I focus on working in the business. And that's what my goal is, is working on how they're going to grow their business as they expand into the franchise market and not just be there 1 to 2 location to have locally. How do you define a franchise? What is a franchise? So a franchise model is really something that can be duplicated in the multiple markets. Now, if you look at yourself and say, you know, I'm the face of this businesses business is not going to succeed without me in it. Probably not a franchise model, but if you use the owner, you can take a step back and you've got a unique concept. You have something that people have asked to see in different markets, and you've got fans or people who are willing to take that brand and really expand it, and you have a good option for franchising. So what are what is the process like? Let's look at my business. For instance. We have a proof of concept. we have a defined sales process per unit due diligence. How do I start scaling that up through the franchise model. So I always like to sit down with people and like I said of stirs a few differentiations I want to focus on when we're getting you into that place. The first with, you know, what's your differentiator? What makes you unique in today's world is probably very few businesses where there's only one and only. So what makes you unique to the rest of the competition? Once we figure that out, I then say, okay, well, if you have that unique piece of it, do you want to scale it? Are you are you willing to sort of take your feed off of it and let somebody else drive the ship, but you be there to support them? It's almost like backseat driving. They're driving the car, but you're in the back seat giving them the direction. Double time. Can you do that or do you have to drive the car the entire road trip there? If so, you're not going to be able to do it. And then after we get to those pieces that when we start looking now, how do we take your current operations that you have systemize it. And then we could put in an operations manual. So when you give this book to a new franchisee, they can read through the book. And without even picking up the phone, they call you, they could run the business just like you were running the business. And those things are really what you look at. Okay, now we have a franchise model. Then we can get in the minutia of doing the legal documentation and get you into that space. And as we're getting the legal documentation completed, let's start focusing on how we're going to go out and find those franchisees and train them once we get them on board. So what is the outline for a good operational manual really is it's I call it the Bible, like the Bible of that business. So it's everything from their mission, their vision, how to set up the business. It's how to run the business. It's how to hire and train employees, how to go make sales, how to expand, what equipment you need. you know, some operations manuals can be 50 pages and other operation manuals can be 500 pages. So it really just depends on what you need. And the good thing about the operations manuals, it's like a living, breathing document. So you're not going to have it right the first time around. You're going to have to add to it. You're going to have to scale it. You're going to take things out. You're going to put things in. As the business grows. And it's a lot easier to modify that operation manual than it is to go in and modify the legal documents. So I always say make sure that when t once you're starting to think about franchising, start documenting everything you do. there's a you know, I really do guide Alex from OSI. I'm sure you everybody knows him these days but he always talks about writing and documenting everything you do, show and show you the process and taking that process and learning how you've done in the past. You can then implement that in the future. When you go in somebody else's business. So, you know, you come in and buy a business that's, you know, your franchisee come to buy, they're going to be able to take what you've done, make and move it into whatever market they want to. And all you have to do is now go in and support them on how we're going to find the location, how we're going to go out and do sales, and you support them from there on out, but you want to give them that guidance for what they need. Yeah. And I think it's really powerful advice, like people ask how to remove themselves from a business. As a business owner, so often people are coming to you to like make decisions based on your experience. And if you're not documenting those things, you may answer the same question 50 times, but if someone comes to you with a problem and you put that into the operational manual, you immediately remove yourself from that problem, because from that point forward, anyone runs into that problem. Exactly. It's in the manual and they don't need you to. Exactly. And that's one thing I know. Even in my days of coaching franchisees, I've been on both sides of the coin at this point. I've coached franchisees and I've coached franchise owners. And when I coach franchise owners, and one of the things I always tell them, if you read the operations manual and sort of like the teacher, when you call them up, say, hey, what's the answer to this question? Well, look, in your textbook, it's probably in a textbook. I always say read the operations manual first. If you can't find in the operations manual, then give me a call and I'll get back to it. The answer and that's what we're here to do. Or the support, but we're not there to solve every single problem when you're on the franchise base. So as a business owner that hasn't franchise yet, like what is the first steps you need to make to remove yourself from the business? And what are the limitations that keep people from removing themselves from the business? It's a good question. The first thing I would say that people do, when they're wanting to get to that space, is, like I said, start figuring out your process. I think people usually do. That last is probably helpful to do it in the beginning, it's track what you're doing, but then also begin with the end in mind. You know, know where you want to go. If you're looking to get into that franchise space, start working on that day one. You've got your model, you've got something needs unique. Start building those ideas of what you're going to do to franchise it. And it's always safe to maybe open up a second or even a third location just to really show you've got the meat on the bones. Because what you do when you open that second and that third location, you're showing yourself that I don't have to be in here managing a day to day operations. I have learned how to hire the right people and put them in the right seats on the bus to really do what we need to do in our business. And at that point, you're already taking a step back more into a leadership role. You're doing more strategic planning and supporting the location that you have open, and you're realizing that you're setting yourself up to it. This is a good franchise model. We've got 3 or 4 locations to open at this point, and we're successful and everything's profitable here. That's another big part of who you want to be in the green tunnel. Is that going to buy a franchise that's all red on the bottom? you know, but you're like, we've got something here, we've got some legs. Let's figure out how to franchise it. And you can go through companies where they're kind of piecemeal the entire operation together, or you can have them be like my organization that will come in and they do the full project for you in the full scope of the work. And so everything from the operations manual to legal documents to sales and marketing, like I said, and a full package to where, again, you're even taking that and putting it in somebody else's hand to you're not figuring out how to do it yourself. Don't reinvent the wheel. Is there like key metrics that you're looking at to see, to determine whether or not a company is a good candidate to be a franchisee? Because obviously they may be profiting for themselves, but you bring in someone else and you have to incentivize them. There has to be some margin left over. I don't know if there's like a specific margin that you guys are looking for. Those are specific metrics that now for somebody to buy the franchise and make it a franchise location, the way you're asking or say, I have a company at a profit, 10%. Okay. on the bottom line, and if I was going to franchise that out now I have a new partner. It may not be enough meat on the bone if I can only give them 5% like, as their specific metrics are, it doesn't. Yeah. Ten is running a little low. Yeah. just because one of the things you have to think of when you're franchising is you're going to have royalties in there. And, you know, royalties can run anywhere between 0 to 25% of gross sales of your business, depending on the franchise organization is it usually based off the top line that's based off the gross sales? Yeah, on the top. So average. You see somewhere between five to tens of royalty these days in the market. But if you're looking at that 5 to 10 mark range, that's already 5 to 10% off the top of your business. And then you usually have some sort of advertising budget in there, and then you have a national ad fund. So you could get anywhere between 10 to 15%. Sometimes of your business being taken by corporate, it helps the franchise, the franchisees in the long run, but have being taken off. So if you're only making 10% and then they're taking an additional 10% off, you're not really making any, right. I always like to do try to shoot for that 30%. Very good. You know, I know a lot of businesses will stick to that 2,020% at the bottom line, as the net. But you just want to make sure that there's healthy money on there because that's what the franchisees look for. You know, first thing they usually do when they're looking to buy the business, they flip it up. The franchise disclosure document open, they look at item 19, which is the financial documents, and they see what the averages are looking like. And if you're a new franchisee or a franchise owner, really all you have to go off of is the numbers you have in that document. And that's what people are going to go off of. Is that the popularity? And you're taking a bet on you if you're a more existing franchise owner and you have 300 locations and ten different states, and people are going to look at like, okay, this guy, they got healthy numbers, it shows in the document. So you just have to be willing to share that with them. And you know, you want to support them. Because also if the franchisee fails and ultimately you're failing, right? Because once you get into that franchise base, you make your money on how well the franchisees are doing, right? So the franchisees are making money, you're not making money, and you've got a failing system and your franchisees are your best salespeople. So the last the the worst that they do, the worse it's going to be for your business. They're not going to help you sell your locations. They're not going to be advocates of the brand. And you want people in your franchise system who love the brand just as much as you do as the owner. And when they're talking about how excited they are, they're just gonna and, you know, I say that's probably some of my favorite franchise salespeople was the one to say, this brand is the best investment I've ever made. No, I would do it again in a heartbeat because it's been nothing but support and great relationships with them since day one. You know, and it's interesting to me that, as you mentioned before, that the franchisee takes their cut off the top line them. That's kind of a big risk for the holding company or, where the corporate, you know, not not really. Because I mean, if you take at the bottom then what's left over, you know, there's that old adage as well, I love I love reading a lot of reading business books, and there's a book it's called Profit First, and it's all about paying yourself first. Yeah. And, you know, if you take it to the spiritual realm and you look at like what the Bible says, it's 10% tithing and you pay that 10% to God before you pay out the rest of your bills, it's sort of the same thing, whatever that royalty is, that gets paid out to the company because, you know, if you're looking at the franchise or side. Yeah, they might be making some profit off of that. But really, what they should be doing with that money coming in from royalties is invest in that back into the company. All right. And the good franchise owners out there, what they're doing is they're investing that back into supporting franchisees. So how can we build our sales team to bring on national count? How can we increase, new initiative, research and development, you know, what can we do to build our lead generation budget and find new franchisees to bring into the system? What tools, what resources can we back, give them to continue improving their business? Because if we're still taking this flat line percentage every single month, their sales should increase over time. So if we start by just collecting five, you know, 5% off of 500,000, that's great. But if that business in two years of doing 1.5 million and you're still collecting 5% every month, it's a long term growth. And that's why I say you're buying the business. You know, don't look at it. You're giving them the franchise fee and the franchise or just making too much of money on a franchise fee. That franchise fee goes back into the business. The franchise owner makes their money on the royalties. That's where your long term success comes in, because then you've got multiple locations all paying the same same amount, percentage, or maybe modified depending on what your model looks like. And that's all going back into the franchise system to grow and scale the franchise system. More training, more support, more growth, more brand recognition, better purchasing power, all of those things. How'd you get into this business? So kind of a unique story. I went to college for, campus recreation to Recreation Administration and just realized I wasn't a big fan of the higher education sector. I didn't want to do that anymore. So got a job at a country club as a director of marketing done in South Florida while working at the country club. A friend of mine who work there as well, him and I talked business all the time. We're usually talking podcast books, need investment ideas or whatever, which is interesting. That day and his brother actually worked for one of the largest privately owned franchise organizations in the world. And he said, have you ever thought about going into franchising, working with small business owners, coaching them? And my experience on franchising at the time was McDonald's, like most people also, I know McDonald's and I know KFC and Taco Bell, but no. And he said you should just check them out and see what you think. So I went in, I talked to the team, fell in love with not only the company I was working for, but the concept of franchising. It gave basically people who want to own a business, but they they want that support as well and gave them their footing to do so. And usually people buy a business for three different reasons. It's going to be the legacy play. It's the person that they build a business up. They give it to their kid, and then their kids can run a business and sell it off. They want to. It's the guy who's retiring. He's 65 years old, but he's just not ready to be done yet and play golf every day of the week for a year. And then there's the last one is the Empire Builders, and they're looking to scale something huge. And you hear about these groups like Flynn Restaurant Group, where they have thousands of restaurants. They want to be somewhere like that. or try to be somewhere like that. So you start looking at these people who's in this industry and you're like, this is how you help them figure that out. And you do that by being the introduction. So my role and my time with the company was I was working with franchise owners that wanted to buy businesses, coaching them through that process and helping them get on board because you're the first person they meet, they build the relationship with you, and then you're there to support them as they grow with your team. So what have you learned about relationships through this process? How important they are, and what is the key to having good, long lasting relationships? And I'm liking these questions. I'm appreciated that. Yeah. So food the I think the biggest thing when it comes to it is if they're going to sound tacky, but communication, you know, it's that communication, in relationships is really how you drive relationships forward. And that's personal. It's business. It's whatever, whatever industry you and whatever thing you're looking at. If you don't have a two way conversation going on and you're never going to be successful, it's all about having opening dialog and hearing each other, and it's really figuring out how to support the other person. You know, what we can control at the end of the day is what we do for others. We can't control what others do for us. So what can I do to others to make them successful? And if I can be all in on that, pour that into them. That's what I want to do. and then, you know, I feel just the way life works is ultimately that comes back to support you in the right way as well. I agree with that. Yeah. What would you now tell yourself just starting out to do differently? Read more. Yeah, I would definitely say read more, but read more on books that make sense to what you want to know. You know, growing up, my my experimental reading was you read in school, you read because you had to, not because you want it to. Now, looking back at it, if I could have put another 5 to 10 years of reading into the system, you know where I'd be at now. Because once I really got into reading, I started doing about 20 to 25 books a year is what I try to lock in. I would probably have another 30 or 40 years of experience on my belt if I started reading more, because those books that I'm reading now, I would read back then and been adding new books on what are the most profound books that you've read thus far that you would recommend to anyone? Probably the top of my list is, if you're familiar with Ed Mylett. He is, business coach very healthy guy, but he's a business coach. He's owned a lot of businesses, but the name sounds familiar. Yeah, he's all over the internet, all over social media, a great guy. just from listening to his podcast, his books, everything. But he has a book called The Power of One More that he put out a few years ago. And the main principle of it is just do one more and one more of thing. If you're in the gym, one more rep, if you're in sales, you're making calls more and more call.

You know, you're clocking out of 5: 18:16

00. I can guarantee you the good sales rep and the great sales rep. They're going to be leaving at a different time. The guy is a good sales rep.

5: 18:25

00 or 458 he's hanging up a headset. He's done for the day.

The guy who's good at 5: 18:30

00, he's hitting the call one more times. One more person picks up because that person probably just got off work and they're going to make it. And then, you know, it's one more out and you know, you've got friends, family members, you don't know the last time you'll see them. so if you get that chance, they'll grab dinner with them one more time. If we know that you get a chance to go home and visit family because you're not from that area, go go go go go see family one more time. So it's that power of one more. It really hit me because I try to do that wherever I can. I usually say yes to things because it might not be happening again. Now they get super deep, but at the power of one more is a big one. And then another one that I really liked was the go giver, which I don't know if you read the go give or not, but it's all you know and like everybody's about what we can get, what we can get and they go giver. It's a fable. It's like a story. But it's there's a good business lessons in there and it's what can you give, you know, what kind of giving can you give back to other people? you know, like we talked about earlier is going to give back to you in the long run. So give as much as you can and just always do the one more because you don't know what it's going to lead to you. Just one more decision and one more action away from doing something that's going to. Or one more. Yeah, one more interaction. It's going to change your life. So it's fantastic advice. Yeah. Do you read anything else out of business I try, I get bored. I've tried science fiction, I've tried history, I've tried, yeah, I've tried two different books. I usually can't do it, I can't focus, it's usually business. It's, management, sales, those sort of things. It's just. That's what I'm passionate about. Yeah, I'm kind of the same. Like, I've always read nonfiction, and I didn't understand a practical application to reading, like, nonfiction. But I've realized now, just like the power of words and language and like reading some of these, like, literary masterpieces like expand your vocabulary in your language. And that's very powerful in business. So that's like kind of been my excuse now to reading more like poetry and like hearing more metaphors and the power of metaphor and language and how it can drive imagination, which can be very seductive and influential. So that's kind of been my like recent discovery is reading more, you know, balancing it out with some nonfiction, too. And there's definitely things in there about that too. I think you just have to. It's like any kind of writing style, if you find somebody that you're a big fan of, you know, even with TV shows, usually you watch a TV show or movie because it's written by and by a certain director or creator and you want to follow them. Books all are the same to, you know, I read The Alchemist a few years ago, and The Alchemist is one of those books that, you know, it's not a business book, but you always hear about in the leadership development space. It's just a story. It's an adventure story, but there's a lot of things you can take away from it. And there's like I said, there's a lot of poetic language in there. And one of the things I wanting to do is I've got it on my list. I want to read more of his books because I like I can't remember his last name now, Pablo something. But books like that. You're right. You need to branch out more and do that. Something else should probably work on. So yeah, yeah, I know it's like it's been difficult for me as well, but I'm like, I need that pragmatic excuse or like justification to read it. What would you say? And I always ask, you know, people this what are you chasing after. Like what is your definition of success? Why are you barreling down this journey? Really? It's to, leave a legacy. and one of the things I read years ago was as you grow and you're part of companies and you're part of organizations, every company and every business, you're a part of, they have a mission statement. You know, I've always read mission statements are key to an organization. So I've created a personal mission statement for myself. And, you know, my personal mission statement is to leave a legacy and to make an impact. And that's really what I want to do is when I look at my life in general, I'm trying to leave a legacy, for the future family that I'll have one day. I want to leave a legacy for them, and I want to make an impact. And that making an impact. It could be a quick conversation like this. It could be connection with family and friends, people in my church group. It doesn't matter where I'm at. I just want to impact somebody's life for the better and help them get along. And if I can do that and I feel like I'm hitting my personal mission statement. Have you found any overlaps in your life between spirituality and business? Yeah, absolutely. really, everything I do goes down to my background and my my Christian faith and me being a believer in Jesus that I want to do well to others that they do, and to me, I want to treat people right. I don't want to get a sale or do business just to make a sale and do business. I want to, you know, do it the right way. If someone is looking at buying a franchise and they might be light on cash, or I might not be a good situation for them in their family, I want to tell them that I'd much, rather than be mad at me for a little bit, and then in the long run, they'll call me and thank me for not letting them invest a few hundred thousand dollars. Then I'm investing a few hundred thousand dollars. And then for the next two years of their life, they're just miserable and tight on cash. And that goes into, you know, when I'm interacting with people, I just want to, you know, make people feel welcome and included. You always look at these things like the strength finder and different the different personality assessments. They're always about inclusion and bringing people along with you. I always want people to feel like a good part of the group. that's one of the reasons I know we've connected through networking events now, and that's one of the reasons why I love networking events to is you're making people feel included. So basically everything I do is about inclusion, working with people, making them feel like they're part of the group, and then also just doing right by them and helping them out how you can. So well, it's apparent that you have really good values, and I'm sure that yields endlessly for you. So many people out there, so transactional, and they don't realize that that's counterproductive. when you do have good values, it's contagious. And it it comes back, I think tenfold the comeback, you know, and it comes back in different ways that you wouldn't expect. When I left my my previous company, I left on guitar and we're still really close with each other. But I left the, you know, quite a few franchisees where I put in the business where I did work with over the years, and I still hear from some of them occasionally, which is really cool. You know, they'll call me. And there's one time I actually had a guy call me, and he talked just to say it was on a Saturday morning. He said, hey, I just wanted to give you a heads up. I sold my business. I thought it was great. I was like, just retirement. He goes, yeah, we had a good, you know, good few years. We did ten years in the business. We thought, everybody off. We're going to go into our time on the boat and retire for a little bit and probably do something else afterwards. But I always liked working with you, and I wanted to call and tell you you didn't have to call and tell me that, but it was really cool just to hear that he did that for him and his family. And that's something that I really enjoyed about the process, is because I didn't ask for that, never expected it. But these people, you've come back in your life because you treat them right while you're working with them. And in the moment. Yeah, I think that I can really appreciate and, relate to a lot of your motivations. And I think that, more people are motivated by those things. There's more depth and reward to the world, than the money it is. And and money is great. You know, money is what we all want to make. At the end of the day, we all like money, but for me, I never plan on being the highest earner. I never plan on making the most money. But I want to make sure that the people who I interact with are having a great time, and they enjoy it. And, they know they call me and said they want to go grab a drink or go grab a drink if they want to go grab whatever, or just sit down, talk. That's what it's about is putting, putting those emotional the, you know, the, putting a deposit like an emotional bank account, and then makes you feel good, makes them feel good. And, you know, it's a win win for everybody. And that's the stuff you remember at the end of your career. It's not the, you know, transactions. It's those relationships that you've built. I think that's a powerful message that anyone can adopt. The, word something one time and again, this is all back to reading and books and just leadership. I forget who said it, but they said, you know, one of these days you're going to die. And I know I like it more, but as a sounds, imagine your funeral and you're sitting there in your casket. Now, there can be a number of scenarios in your casket. Are you at a one room funeral home? Is there a pretty decent crowd, or do you have the entire gymnasium of a college or in like this Tiger Stadium of college rented out because that many people in the stadiums lie to you? Are they're happy that you were there, and they're there to remember you just as much as you made an impact on their life. Are they there in the long run after you're gone? And that's sort of something that always stuck with me. You know, when that time comes and they're going to be five people in the room, or they're going to be a thousand people in a room just being able to sit there for hours talking about nice things that I did and ways that I've helped them out through the years. That's what it's about doing, because once you're gone, you're gone. but what you've done and the memories that you leave with people that's going to go on to the next generation, the legacy and talk about, you know, back to that Ed Mylett book. You know, he even talks about now he's he goes, there's going to be one person in your family that does the change. We're going to be the one person that changes the path of a family. Are you going to be that person or are you just going to kind of go with the status quo? And either one's fine, but if you want to be the one, you've got every opportunity in the world to be that one person that does something different and make a change. What's a great message? Is there any, last advice that you would give to someone watching this podcast, maybe you wish you had, or one last piece of advice? I'd say all of the mike said, just do good. Do good by people. Always be willing to help out. Always be willing to see where your services can work into somebody's situation because you really don't know where it's going to lead to. it might lead to a conversation on a podcast, might lead to, business meeting a new long friend spouse who who knows? But, you know, just just hoping it's going to in the long run, the more people help each other, you're going to get a lot farther and the world is going to work together. So great advice. Where can people find you if they want to reach out or they might be interested in your services? Yeah, really. The, the biggest one is if you go on my personal Instagram, you know, it's Eric Redding at Eric Red. And it's pretty simple. It's just a few pictures of me that never post on there. So just message me and I respond, but if you want more professional things, it's LinkedIn. And there's Eric M Redding on LinkedIn and it's under Hypergrowth franchising is what you'll find me up. Title is Franchise Operations and Development Executive. So always on LinkedIn, very rarely on Instagram. Gotcha. And well I appreciate you coming up I appreciate it. super insightful. Thank you. All right guys. Well that concludes this episode of Shaken Hands. I'm your host, Jack Moran. You can find me on Instagram at Blue Collar Kid. That is blue collar k e HD. If you have any suggestions for guests or questions you want to ask, do not hesitate to reach out. But other than that, continue tuning in for some more interesting guests and conversations. And thank you. For.