Unlock Your Franchise Formula with Scott Jones and Franchise Guide Group

[00:00:00] There's two things here that we're looking at. Which is the right vehicle? And then are you the right driver? So looking in the mirror, where are my strengths? And that's part of what I'm learning about them. We're talking about what can we take that you're already good at? And it's not industry specific. In fact, the majority of the time when somebody goes into a franchise, the industry itself is new to them. That's the role and responsibility of the franchisor.

[00:00:29] But there are transferable skills. Leadership, you know, that can apply against most any industry, right? So the skill sets, the behaviors, and are we willing to stretch into something that maybe we haven't done? It'll probably be uncomfortable. So where are those limits? And it's not that there's a right or a wrong here. It's understanding. Where are you?

[00:01:01] Welcome to the En Factor, conversations with entrepreneurs who started, stumbled, and succeeded. I'm your host, Dr. Rebecca White, and I'm really glad you decided to join me today. So I want you to consider a question. What if entrepreneurship doesn't have to mean starting from scratch?

[00:01:19] Today, we're learning from Scott Jones, who spent more than three decades in the franchising world as a multi-unit franchise owner, a franchisee, and a brand CEO, and as a consultant, helping hundreds of professionals and business owners evaluate whether franchise ownership is right for them and which franchise would be a good fit.

[00:01:44] But this conversation is not just about franchising. What I loved about this franchising is that we were able to dig back into Scott's background and learn about some of the skills he developed as a student, as an athlete, and in sales that have really informed his mindset around entrepreneurship. Scott shares a lot of the skills he's been taught in Scott's background and he's been taught in Scott's background.

[00:02:09] Scott shares a lot of details about what has worked for him and some of the challenges that he's had, and he talks a lot about the importance of leadership and about the entrepreneur in successful entrepreneurship. The entrepreneurial mindset, which we talk a lot about on this podcast, always deals with identifying opportunities, taking action, executing past failure.

[00:02:31] We touched on all these topics, and in the end, Scott reminded me that a lot of it is about the do part. Entrepreneurs come up with great opportunities, but they have to figure out what is a real opportunity and what's just a distraction. And in today's world with AI and all the technology tools that we have, there are so many opportunities.

[00:02:55] And it can get challenging for any entrepreneur to figure out where real value lies and what's most important and where to put our time. Because as we all know, time is one thing that we can't get any more of. So I know you're going to love this conversation because there are so many good ideas and suggestions and tools and tips. Scott focuses on metrics, which I really loved.

[00:03:24] And I think as you listen, you're going to find something that can help you, whether you are already an entrepreneur, whether you are considering entrepreneurship, whether you're interested in franchising or not. There's a lot in this conversation about entrepreneurship and entrepreneurial mindset. So I hope you'll enjoy this conversation. Listen all the way to the end, because there are a lot of really valuable insights that I think you'll take away from the conversation.

[00:03:52] So thank you for joining me today. And let's dig into this conversation with Scott Jones. So, Scott, thank you for joining me today on The En Factor. Thank you very much, Rebecca. It's great to be here. Yeah. Well, I'm excited to talk to you. You know, if you're a franchise expert, you've been a franchisor and a franchisee, as I understand it.

[00:04:22] And you have helped a lot of other people consider franchising. So I'm looking forward to digging into that. It's a viable option for entrepreneurship, but it's not for everybody. And I hope today we can learn a little bit more about all of that. But before we do, I'd love to hear a little bit about your background. I looked back and it looked like you've had some sales jobs and you've done some other kind of work on your way to where you are today.

[00:04:49] So tell us a little bit more about Scott Jones. Where are you from? You know, did you always want to be an entrepreneur and how did you get to today? Well, I think like you, I grew up in an entrepreneurial home. So my dad, he worked for one of the large oil companies and they got acquired.

[00:05:11] And so he came to a crossroad where we could either relocate from Denver to Chicago and he could keep his job or he could set out on his own and start a business. I think I was probably like 11 or 12 years old when that took place. And so I got a front row seat to what building a business really looks like.

[00:05:37] And there was this evolution where he'd come home and he'd excited. He had got one new customer and that increased to instead of one at a time, it was 10 at a time. And then there was these national accounts. So that kind of set something in me where I had this probably early and intense interest in business.

[00:06:03] And in fact, before I forget, I wanted to mention, I think one of the impactful events in my life was in college. And by far the best class that I had opportunity to be in was an entrepreneurship class. Is that right? Yes. And this professor, it's the only class that he taught. It was a 400 level class and it was very small. My memory is there was maybe 12 or 15 students.

[00:06:31] And it was this whole process to even get accepted into this class. But I've shared over the years many times how impactful that was in how I thought about business and what I learned in listening to him. And he had owned a business that was this import-export business. But thank you for what you do.

[00:06:59] But I came out of college and I was pretty fortunate to get a job with a large company. They did an exceptionally good job at training and they gave me a really good framework. And then through kind of a happenstance, I was at a wedding. And at the dinner, sitting across the table from me, what I learned was the president of a large carpet manufacturer.

[00:07:28] And somehow a casual conversation led to a big increase in a different type of job and both responsibility. And it was about a 5x jump in what I was earning as well. And so I had this opportunity to go from a sales rep to an executive. And frankly, looking back, I was probably way over my head in terms of responsibility and everything else.

[00:07:58] But it accelerated what I was learning. And then there was this kind of pivotal moment. I was coming back from a business trip. And back then I was flying enough that I got status. And so I got upgraded. And sitting next to me in first class was somebody at the time who I thought was really old and probably younger than I am now. But we both sat down. We didn't say a word to each other throughout the flight.

[00:08:28] And as we stood up and we were getting our things down, he was right in front of me, turned around, and he had tears coming down his face. And he looked at me and he said, be careful what ladder you lean your wall against. And that was the entirety of the conversation. So for years I've wondered what was going on in his life.

[00:08:53] But there were a lot of thoughts that were going through my mind that somehow he read. But I was trying to decide when is the right time for me to leave corporate and really do the thing that I want to do. And that is own a business. And that was a little bit of a spark. And so I left shortly after that. I started my first company, which was an athletic scouting service.

[00:09:21] I kind of leaned into some experience that I'd had. I grew up as an athlete. I played collegiate sports. But that set me off into my career of entrepreneurship, business ownership. And I've been fortunate to have probably a seat at every table. Or I guess in franchising, as you mentioned, I've been a multiple brand franchisee. I'm a franchisee today. I've been a franchisor.

[00:09:50] I've been a supplier. I was a CEO for a company that provides support services to thousands of franchise locations. So I've seen franchising from every viewpoint. And I think that has given me a real appreciation as I do consulting with individuals, helping them figure out if a franchise is the right solution for them. I consult with institutional groups, with franchisors themselves.

[00:10:19] So that's a little bit of me and my background on how we got to this conversation today. Well, first of all, thank you for sharing that. And a lot of things I'd love to dig into there. I am curious. I've got to take you back to that entrepreneurship class because you talked like it was a transformational experience. So I'm curious. Was there one or two things that you took away from that that really made a difference in your life? It was very practical.

[00:10:46] It was kind of the opposite of a lot of the other classes that I was involved in. As I mentioned, it was a small group. Where we received our grade was from the other students. So the entire grade was based on a presentation that each of us had to make. And we were able to select our own subject.

[00:11:11] And throughout the course of that semester, we worked on the topic that we had selected. And then at the end of the semester, we would give the presentation and we would grade each other. And it was interesting, the diversity of the different subjects. And by the way, one of the students had put together their thesis about Starbucks. And, you know, I'm dating myself.

[00:11:39] It was really, is Starbucks a good idea? I gave them a good grade on their presentation. But I thought Starbucks would never work. But I think that was part of really that experience where we were challenged to think in a very different way.

[00:11:57] And then the other thing that had such impact is the professor talked about the challenges that he faced in his business. And he never really talked numbers or anything else. I think he was quite successful.

[00:12:17] But he talked about the early stage challenges, the different decisions that he had made that worked and those that didn't. He talked a lot about leadership, which informed the decision I made on what topic I wanted to pursue. And it wasn't probably what you might imagine. I spent a lot of time on and my presentation was about motivation.

[00:12:46] Where does it come from? You know, how do you motivate yourself? How do you motivate others? So, you know, central to leadership. And I think that that really has served me well. I really do still to this day lean into some of the things that I learned during that period of time. So it was a great experience. You know, the interesting thing about that is that you had the opportunity to work on something that you could get passionate and excited about.

[00:13:15] And I think that makes a difference. And that's part of the reason I think people choose entrepreneurship as a career or a lifestyle or, you know, a vocation. Let me put it that way. And I find it fascinating how people find their way there, because sometimes there is a role model like you and I had. But sometimes, you know, it's out of necessity or wide variety of reasons. But there's something motivating. So I think that's really interesting.

[00:13:43] Speaking about motivation, you were an athlete, you said, and your first business was in that space. I know there's a lot of literature and research about motivation and athletes and coachability, much of which applies to entrepreneurship. And so I'm curious, was that also a factor in the way that you've built businesses and developed your own career?

[00:14:07] And if so, how did being an athlete or even being part of a team affect the way that you thought about entrepreneurship and business? I think it has had a significant impact. I very intentionally hired a lot of employees that have been athletes. I think that there's a few things there. And you mentioned a couple of them. One of them is knowing how to be part of a team and where do you fit in.

[00:14:37] I'm very competitive. But being competitive doesn't mean it's always about me. When you're competitive with a team, it's how can the team win together? In college, I played football and I was a defensive lineman. A defensive lineman doesn't get a lot of accolades. We're doing kind of the grunt work. We're on the front lines.

[00:15:01] We're not the ones that are typically getting our names mentioned in the newspaper unless we did something wrong. So I think that competitive nature, I think valuing team.

[00:15:17] I think there's so much parallel to being good in a sport, good at coaching that does align with being a successful entrepreneur. I'll take just some lessons from being a defensive end. There's so much nuance in there. And let's start with just the stance that you get down into.

[00:15:46] Well, how balanced that stance is. The first step that you take. This short, you know, it's a six-inch step. It keeps you balanced. It doesn't have you leaning one way too far or another. If I'm getting hit, I'm able to absorb that. And so it's been a lot of years since I had to get in a stance and take that six-inch step. But I coached youth sports for 20-some-odd years.

[00:16:16] And I can still do it. That muscle memory. But if I don't take that first step correctly, well, then nothing else goes well. And that's just one simple example of the fundamentals necessary in business. And so from a leadership perspective, I've kind of taught in that same way, the same way that I'll take an eight-year-old and begin to teach them how to play football or basketball or baseball or whatever it is.

[00:16:43] That same approach in business, solid fundamentals, and you stack and you build upon that. I love that analogy. You know, and my mind's going in several directions, but our audience tends to be entrepreneurs, people that either are already running a company or have run companies or that's what their goal is.

[00:17:06] You know, maybe they're doing it as a side hustle, but that idea of the early steps that you take in the creation of a new venture and the imprinting, really. It's kind of if you think about imprinting and, you know, animal imprinting, for example. You know, the organizations kind of take on a culture very early on.

[00:17:28] And a lot of that depends on the leader and the culture is, I think you and I would probably both agree, is fundamental to the success or lack thereof in a business. But that idea of those first few steps, but also the stance.

[00:17:46] And I'm thinking about the entrepreneurs who are out there thinking, you know, I could do so much if I could just get this investment, if I could just get something from this banker, if I could just, you know. So they have to put on that armor, I guess you will. Yeah. And that stance, you know, of confidence and they have to be willing to take the hits, too, because, you know, there's failures along the way.

[00:18:14] But if you learn from your failures, it makes all the difference. So I love that analogy. And I think it's really valuable. You know, when you think about building companies and franchising, what is the biggest difference in your mind? You know, if I'm sitting here thinking, OK, I've had a successful business or I want, you know, I'm ready for something else or I'm ready to start my first one. What's the difference?

[00:18:40] You know, start a venture versus franchising, because I can see the path for both. Yeah. Being challenging. You know, what should I be thinking about, about who I am and what I want with regard to those two paths? You know, I come at this with the experience of owning businesses that were not franchises and those that are. And my lens at how I really make that decision, which direction am I going to take, is pretty simple.

[00:19:09] It always comes back to where's my superior return on investment and return on time. I get asked all the time, you know, what's the best franchise or, you know, the hottest franchise or business. And the approach that I take when I'm working with others is first really understanding what are the objectives, what are the outcomes that the business needs to provide?

[00:19:36] When you say outcomes, is that like what do I as an entrepreneur need? Yes. OK. Yeah. So the financial goals, quality of life goals. OK. That you may have. And from there, once you start to establish as clearly as you can how you're going to measure any potential opportunity. And I intentionally use the word opportunity rather than franchise.

[00:20:06] Most of the time when I'm working with somebody, there's more than one possible direction that they could go. It might be another job. It might be a business that's not a franchise or it could be a franchise. But the more clarity that you have as to how you're going to measure. And that's really where we begin to see a clear direction. Start there.

[00:20:34] And once we understand that, then it's an assessment. So we're talking metrics, right? How many people would you say that you've talked to actually come in with an idea of metrics and measuring metrics to figure this out? Is it? Not very many. Yeah, that was my initial impression, I think. And I love that you used the word opportunity because that's what successful entrepreneurs do.

[00:21:02] They recognize opportunity, whether it's franchising or not. But what I'm hearing you say, I think, is that you really need to get clarity around what success looks like or what the outcomes are that you want. Also, that you have to be able to put them into measurable metrics, really. Like how much money you want to make and how much time you want to work. How many people you want to manage.

[00:21:27] Because a lot of entrepreneurs are not really good at having a lot of employees, you know? And how much freedom do you want? What are some of the main metrics if you had to list them off? It is much of what you just mentioned. And there's two things here that we're looking at. Which is the right vehicle? And then are you the right driver? So looking in the mirror, where are my strengths? And that's part of what I'm learning about them.

[00:21:55] We're talking about what can we take that you're already good at? And it's not industry specific. In fact, the majority of the time when somebody goes into a franchise, the industry itself is new to them. That's the role and responsibility of the franchisor. But there are transferable skills. Leadership. You know, that can apply against most any industry, right? So the skill sets, the behaviors.

[00:22:22] And are we willing to stretch into something that maybe we haven't done? It'll probably be uncomfortable. So where are those limits? And it's not that there's a right or a wrong here. It's understanding. Where are you? And from there, then it's identifying, you know, we've already said, okay, here are the outcomes that we're trying to accomplish. Here is the personal inventory that I bring.

[00:22:51] And now, all right, what are the preferred characteristics? Is it brick and mortar or not? Employees. How many? What type? And then I think ultimately, what are you really trying to build? There are some, and again, there's not a right or wrong here, but there are some that, to your point, maybe they're not interested in managing others. Or they want a small team. Or go to the complete opposite side of that.

[00:23:17] There's this desire and capability to really build a substantial enterprise, maybe dozens or hundreds of locations or diversify across different businesses. So that's where every person, every situation is individual.

[00:23:38] And I work with that spectrum of, you know, I'm trying to replace a modest income to an institutional group that has, you know, large needs and resources. So I'm curious about why you are choosing to focus on franchising. Do you see franchising as a path that more people maybe should consider, but they don't understand it? You know, I'm curious about that.

[00:24:07] Well, I think one of the reasons is franchising has been very good for our family. And so part of this is a passion where I see that opportunity and there's a solution for most circumstances, for those that could and should own a business.

[00:24:33] The challenge that I've had in opening up non-franchise businesses, and there's this whole decision matrix, but part of it is, do I have the idea? Do I see the opportunity, right? And then if I do, do I have the experience in that particular business? Can I accelerate my success by doing it through a franchise? And that goes back to where's my best return on time and money.

[00:25:03] And so that's where often that clearer path is. And I think there's a misconception that if I'm in a franchise, I'm not an entrepreneur. Untrue. I think that if we really consider what advantage a franchise can offer, again, in the right circumstances, I'm compressing how long it takes to get open.

[00:25:31] I'm accelerating what the opportunity can be. How long does it take me to get open, to hit breakeven, to hit the different mile markers of success in the business, which are usually measured by revenue, profitability, those sorts of things. The meeting that I just came off, a good example. A franchise that I'm in.

[00:25:54] We are in what is called the pre-sale stage, where it's a wellness business, membership-based. And so in this type of a business, you get a running head start. You start to sell memberships before you open. Well, the meeting that I just came off, all of the franchisees in the system that are on pre-sales right now are sharing what the results are.

[00:26:24] And so we're able to take, you know, all of these different experiences and use them. And so this repeat stage where we can look at the results, now it's not just my individual results, it's looking across the system. And what can we take from that? Where are we excelling? Where are we seeing others that are outperforming us in different areas?

[00:26:52] And that is how we accelerate our own success. And so I think that's just one example of where a franchise can quite often provide a better return. Yeah, one of the biggest challenges for entrepreneurs is scaling. And that's kind of what I'm hearing you say, really, that it can be a tool for scaling.

[00:27:18] Whether you're talking about, you know, developing a concept, proving it out, and then becoming a franchisor. Or whether you are someone that wants to be in a business that you can scale pretty quickly because somebody else has already done it before. And you can step in and take the knowledge that they've created, you know, by proving out a concept and become a part of that. And, you know, I think there is a misconception.

[00:27:48] People think, well, you know, franchising just means I'm doing a fast food restaurant or, you know, something like that. And that's probably part of the challenge, wouldn't you say? That people don't understand truly the scope of franchising and how people use it. I think people are very surprised when they start to talk about what really is out there. And, you know, I've been providing this consulting now for 21 years.

[00:28:17] And it's very common when in the early stage, they are talking about food franchises. Well, that's natural. It's what we're most familiar with. Those that actually end up in food, not very many. Once they start to see what else is out there, food can be a great solution for those usually that already have that experience.

[00:28:40] In fact, it's one of the few industries where it's actually a requisite that there is experience in that particular industry. But once there is a greater understanding of the depth of what franchising really means and it's not just food. There's north of 4,000 unique franchise brands. Dozens of industries.

[00:29:10] And so whether it's fitness and wellness and health or automotive, service-based businesses, you know, some of the boring businesses, you know, cleaning, window washing. Ones that Warren Buffett always invests in? Exactly. You know, my youngest son, I've got four adult children, all of whom, you know, own a business or have equity. And so that entrepreneurial gene seems to run strong. But two of them are in franchises.

[00:29:38] And my youngest son is building a vertically integrated business of boring businesses that do very well. They're not much impacted by economy, how well they do or don't do. And it's with a singular vision. And it's to sell it to private equity. There's so much out there.

[00:30:02] You know, franchises that we would never think of mental health franchises that are owned by executives, by people that are not in the mental health industry, but their employees are. Yeah. So there's a lot out there.

[00:30:19] And that becomes part of really trying to find that ideal fit, which goes back to what we were talking about earlier, which business helps me best achieve the goals and objectives that I have. You know, I had someone on my podcast a number of years ago, and she started out licensing her concept and actually got in trouble. Yeah. Because it was actually more a franchise.

[00:30:48] So she got visited and had to make some changes. And I don't know, do you run into that sometimes? Do you want to talk a little bit maybe so our audience understands the difference between licensing and franchising? Sure. And it's a good question. And it's one that more than one person has accidentally stumbled into. Yes. And so franchising is regulated by the Federal Trade Commission. And so there's two categories.

[00:31:16] You've got franchises and then you have business opportunities. And really the biggest distinction between the two. A vending is probably a good example. A vending is a business opportunity. You go to them. They sell you the equipment. And they might give you a manual of here is how you go and build a vending business.

[00:31:44] But there's not this enduring relationship after you buy the equipment. You might come back and buy more equipment later. But you're not really investing in systems and processes and training that continues. There's typically not an ongoing royalty in a business opportunity.

[00:32:11] And that's where it starts to get murky. And they are trying to set it up as a business opportunity because it's a much lower threshold in terms of compliance and the regulations that need to be met. When you really are operating as a franchise is when there is that continuing relationship. You're going for training. That training really continues.

[00:32:40] There's some sort of an ongoing royalty where, you know, either a fixed amount or it can be a percentage of revenue, which is what it typically is. But what the FTC will do is, you know, if it walks like a duck, quacks like a duck, it's a duck. Same thing between business opportunity and franchise. And I will get a company that comes to me that is operating like a franchise.

[00:33:09] And they haven't done the work that is required to register as a franchise. And it can get expensive if it's not fully complied with, you know, the states are not terribly forgiving. Right. On not understanding, you know, the rules. But that's the cleanest distinction is that ongoing relationship. Yeah. Yeah.

[00:33:33] You know, the ongoing relationship is where you can get real value in terms of being able to scale and build right quickly. Yeah. Yeah, that's what I found. And the good franchises, I think this is maybe another misconception. I'll hear it two ways. I will hear people quote the, you know, 95 percent of franchises are successful after two years and, you know, only 5 percent fail.

[00:34:02] Or I'll get the other extreme. All franchises are terrible. Neither one of those are true. You know, there's an article that goes way back that misquoted or made up some statistics and somehow that that got adopted and was carried forward for 30, 40 years. Here's what I think the reality is. And this is my personal belief. But having been around this for a long time in many different ways, those 4,000 franchises that I mentioned, I think at least half of them are terrible.

[00:34:31] You know, and a lot of those are small franchises you will never hear of. You know, they were really good at whatever they did. And so their friends and family encouraged them, you know, hey, you should franchise this. And they don't understand it's a completely different business. But not all of those are small franchises. Some are large. I think anybody that does their homework, they'll figure out pretty quickly. This is not a good franchise.

[00:35:00] Yet there are some franchises that really are bad. They, you know, high failure rates and very smart, accomplished people go into that franchise because they didn't do the appropriate due diligence. And seriously, it would have taken two or three hours to figure out this is not the right thing. So anybody that does any basic level of work, they'll understand those. I think what's more challenging is that middle category.

[00:35:30] And I think it's maybe the next 40 percent. They're OK. Some are even good. But that leaves about 10 percent at the top end that really are exceptional. And it's the same investment. It's the same effort. And so where it shows up, that difference from good to great, it shows up in the numbers. And the only way, the only way that you get to that understanding of the numbers, it cannot be done behind a keyboard.

[00:35:58] You've got to talk with the existing franchisees. And hear from them what their experience has been. And if you approach them correctly, they'll be really helpful. They'll be transparent. They'll share their numbers. They'll share their experience. They'll share what the day to day, you know, a day in the life looks like. But that's the mistake that's too often made is not doing that work.

[00:36:25] So that, yeah, so it shrinks down in a hurry. We can use AI now. And can I do all this on AI? I did something really interesting just on a lark. And I don't know why it didn't occur to me until just, I don't know, a few months ago that the first thing people would do when we talk about a franchise is go right to AI. I use AI all the time. And I don't know why it didn't connect to the dots, but one day I finally did. And so just out of curiosity, I took a franchise that I know very well.

[00:36:54] It's a large national franchise. A lot of people would be familiar with it. And I typed in to, you know, just the AI said, how much does a franchise X franchisee make in profit a year? And I hit enter five times in a row. I got five wildly different answers, none of which were correct. So why? You know, why isn't that correct?

[00:37:17] Well, going back to the oversight, every franchise is required to have a disclosure document. And one of the sections in the disclosure document, maybe the most important one, the item 19, the earnings performance representation. And so this is the opportunity for the franchise to disclose their numbers.

[00:37:43] You know, it's the only section in the entire disclosure document where format is not mandated, nor is inclusion. So there's a lot of franchises that don't have any information. And that's defensible in some regards. There are some franchises that are flat fee. They don't, you know, harvest any revenue information.

[00:38:10] There are others that that's all they require that the franchise report is revenue. And so they don't have expenses. And so there's all kinds of reasons why. But what matters to us when we're looking at investing in a franchise? We have to understand the numbers.

[00:38:28] Well, because these disclosure documents are uneven and what is required, and they're usually only available directly from the franchise or they're behind a paywall somewhere. And that's why a lot of the AI just doesn't have it right. Can't get to it. No. Can't get to it. And even when you can, it doesn't help understand, well, timing.

[00:38:55] Well, how long did it take to get to this point? You know, is that profitability number 10 years in or a year in? So that's where we've got to do the work. So talk us through what I could expect. If I was going to come in and see you, could I come in as somebody with a concept that wants to franchise that you could help me? Or are you mostly working with people who want to find a franchise? Do you do both sides of it?

[00:39:23] I work with those that are looking to buy a franchise. I do get often those that have a business that they would be interested in franchising. And I'll have a conversation with them and help them understand if it's a franchisable concept. And if it is, I try to help. But yeah, where my day-to-day is, is working with people that are looking at their alternatives.

[00:39:52] And some are in a transition or they see one coming. Others, they're really looking at this as more of a diversification strategy. They're in a career that they want or need to stay in. They already own businesses. They're looking to diversify. And it's about 50-50 between those that are looking to go into a business for whatever reasons,

[00:40:20] and that's going to be their full-time effort, and those that are looking at it as some sort of a diversification. So, you know, I'm curious about that because when you have somebody that comes in and they're not all in, you know, they want to diversify, do you see a higher failure rate because people are not all in and they're distracted maybe? How does somebody make that work? Because I know a lot of people that have tried to do a side hustle, I'll call it,

[00:40:49] whether it's franchise or not. And I've even had that experience myself. And if you're not all in, sometimes it can be really challenging. So, you know, how does that work? I think one of life's great lessons is being able to differentiate, is it an opportunity or a distraction? I've had to learn that myself inside some of our businesses and the choices that we've made.

[00:41:15] There are certain franchises that lend themselves well to a semi-passive operator. That doesn't mean absentee. And that's where people will get in trouble, is when they, you know, build it and they will come and they think things just happen magically. And that's not true. Where it works versus where it doesn't.

[00:41:40] If it's a business where you can bring in a manager that can run the day-to-day and then the role and responsibility of the franchisee, manage the manager, manage culture. We talked about the importance of that earlier. And they quite often are involved in marketing strategy and that sort of thing. But there are some very large successful franchises

[00:42:06] where the majority of the franchisees are semi-passive. But to have a manager able to run the day-to-day, what it really comes down to is what is the skill set required of that manager and what does that skill set cost? And that's the conflict that too often really results in it not working. And so what I'm looking at very carefully is that very thing.

[00:42:35] And can the business afford the manager that that business needs? And in those situations, it can. Now, the franchisee, they need to be a good leader. They need to hold their team accountable. And when those things don't happen, then that's where it begins to break down. I see franchises that claim it can be operated in a semi-passive way,

[00:43:03] but they can't demonstrate that anybody's been able to successfully do it. And usually it's that manager cost conflict. So they're very much out there. I have run all of our franchises semi-passively by necessity. We own more than one business. So the next question that I get is, well, how much time does it take? And that is influenced by two things, the franchise itself and the strength of how good a leader you are.

[00:43:32] I had something very interesting happen a few years ago. I put two people into the same franchise, both in Nashville, at the same time. They were in the same training class. So same franchise, same market. One became the top franchisee in the system, and the other was slightly below average. The difference was that franchisee and the strength of their leadership. So, yeah, can it be done? You can't get away from that, right? No, you can't.

[00:44:01] Even with the strength of a strong franchise behind you, leadership still matters. I think that's a really, really, really important lesson, I think, to think about. I'm curious. I want to switch gears just a little to talk about your business, which is a, you've had these franchises, but you've got this consulting business. I was just on a call with someone who's brilliant, and she's developed an assessment and a model,

[00:44:29] and she's got a consulting business, but she's really struggling with business development and finding clients. So what have you learned that you might share with those people who are listening that have consulting businesses about how to scale a consulting business? Because that's a tough road sometimes. Yeah, it's a great question, and it's one that I see frequently. And let's break this into two pieces.

[00:44:57] Once you're established and then you're trying to break in, I think one of the most important elements, the vast majority of my work now is referral. Referral from past people that I've worked with, continuing to work with them. Many of the people that I work with, it's this continuation. It's not one business, but it's that continued diversification. The attorneys and the accountants and all of those people that begin to know who you are,

[00:45:26] and there's this element of trust. So referral is really important, but that doesn't help much at the beginning. So at the beginning, it's network. It's really networking, getting out into not just your network, but who do you know that also has a network of their own? And leveraging that. I'll get people that'll come to me that have,

[00:45:54] you know, whatever type of consulting business. And the reason they're talking to me, they left corporate, they started a consulting company of, you know, whatever it is they were expert in, and they can't get enough clients. And so now I need to pivot. And a lot of times what I'm doing is I'm actually pushing them back to, all right, build this up because you're going to need some cash flow. But it's networking. It's getting outside of your own network into others' network.

[00:46:22] The answer isn't spend more on, you know, Google ads and SEO. You're not going to build it that way in most cases. Who has a relationship with your clients? And you develop relationships with them. So I have wealth managers that send me their clients. I have attorneys, accountants, CPAs,

[00:46:50] different professional organizations that will have me speak. And you can begin to do that at the very beginning and developing those relationships. But you also have to have enough runway to be able to get to the point where you're established and you have enough to meet whatever your own needs are. And so I think sometimes that runway

[00:47:18] isn't closely enough considered. You said you have multiple franchises that you run. So you've been able to fund this consulting business and provide that runway when you needed it? Is that a fair thing to say? I was maybe a little bit in a unique, I was in a fortunate position. When I started doing this consulting, I didn't need it. I had other sources of income. So I didn't have that pressure. But going back to my competitive nature,

[00:47:48] I still wanted to perform at a high level. And I do some training on this. And one of the core elements, in fact, I was just talking about this the other day, and I didn't necessarily intend to say it. And I almost wish I would have said it more elegantly because it's become this thing inside our company. But I talked about butt in seat. You know, what does that mean? Well... We talk about that in education too. Okay.

[00:48:17] So, you know, if you're a small business, there's a lot of distraction, especially if you're working from home. And so you have to shut out that distraction, that self-discipline, in order to be able to do that. And butt is in seat, meaning I am working on revenue-producing activity. And that's where I think, particularly in the consulting, it's easy to be busy,

[00:48:46] but not focused on what will do what really matters most at the beginning, and that's produce revenue. Yeah, yeah. I'll offer one other lesson. That's a great insight, by the way, I think, for every entrepreneur out there because it's so easy to be busy. Yeah. But are you working on what's really going to move your goals forward and your company? And are you protecting that time? The golden hours when I make the gold.

[00:49:14] Am I doing gold-producing activity or am I just being busy? So, yeah, you know, absolutely. And I think the other thing, and one of the questions that I get, and doing what I do, it's a little bit different because those that I work with, it's at no cost to them. The way I get paid is much like an executive recruiter. So, but many that I get approached by, that's not. They're billing their client.

[00:49:42] And I have that relationship with institutional groups. I got to a point where I wanted to kind of back away from the consulting with the institutional groups. You know, I enjoy it, but not as much as I do working with individuals. And there are some that I had these long-term relationships with, and I didn't want to go to them and say, I don't want to do it anymore. So I thought, okay, I'll just raise my fees. It had the opposite impact. What I learned in that,

[00:50:12] after continuing to raise fees, is somehow a higher fee somehow made me smarter. But the lesson learned that I would share, don't undervalue your time. And so there's this conflict, this internal conflict of, I'm trying to get customers, you know, clients, and I'm not exactly sure what I should be billing. And there's this pattern that I see

[00:50:40] that they actually give it away at the beginning, just so that they can say they have a client or, you know, maybe not giving it away, but, you know, almost. So value your time and don't undervalue how you will be viewed. That's, I think that's such great advice. Pricing is so hard when you're pricing, when you're pricing your time and your services, especially in a consulting company. And so I think that that's really good

[00:51:08] and a really interesting outcome for you as you raised your prices. And I've heard that from others. I've heard that from others. I want to ask you, most of the entrepreneurs that I know and have worked with and talked to, myself included, have had some epic failures along the way, I guess, you know, some things that didn't work out the way that we wanted. And a lot of it is about continuing to execute past failure. And so I wonder,

[00:51:36] as we get close to the end of our conversation, have you had a failure and a story that you might share and what you learned from it that might help our audience? Sure. We could have done a whole show just on this, but... Yeah. Yeah. Here's one that I was just talking about a couple days ago. In my largest company, we thought we saw an opportunity to create basically a point-of-sale system. And this goes back many, many years.

[00:52:06] You know, we had a base of thousands of automobile repair facilities. And back then, they were largely manual. Remember back when they would write out handwritten work orders and all of that? Well, you know, through some of our businesses, we saw that there was this opportunity to create a point-of-sale system. And we formed a new company to do that. We put a lot of money into it. And probably the easiest way that I can sum this up, our first national account,

[00:52:35] they had brought us on and they wanted some specific changes made for just for them. And they gave us a large upfront retainer to do this. And we had, I can't remember now, three or four months to complete that. But it culminated with us presenting in front of the board. And so the night before, we're there, I've got the whole team. I'm the one doing the presentation and I'm not technical, by the way, but I'm the one that's doing the presentation.

[00:53:04] And at about nine o'clock, the whole thing turns into an absolute brick. Nothing works. And it works for the night and I'm there and I can't help. I'm probably just bothering them. But we get to about five o'clock in the morning and our meeting was at 10. And I finally come to this recognition, it's not going to work. And so we made up a few static slides and I got up there and in a two hour meeting, somehow they never recognized that we never actually showed them anything.

[00:53:33] I just talked about it. But did we make it work? Yes. It wasn't necessarily a brick, but was it an opportunity or a distraction? This turned out to be a distraction. Yes, we saw the opportunity. We were not the right ones to be able to do that. All we did really is we proved the market. And then other more capable groups came in

[00:54:02] and provided a much better solution based off of what we had worked at. And yet I was so reluctant to let that go. And probably another $2 million because I could not let that go. It was a sunk cost. So that is a lesson learned that I have tried mightily not to repeat. And it ties into much of what we talked about.

[00:54:32] But where are our core capabilities? Where is opportunity? And we did find many other opportunities, but they were within our core capabilities. We were the right driver for that. And so opportunity or distraction is always going through my mind when I'm looking at something like that. You know, that is so powerful. So powerful because I've lived that as well. A lot of distractions.

[00:55:01] I get excited about ideas. And you know, an idea is not an opportunity. And even if you can prove out the market, you're so right. I tell students this all the time. And if I'm critiquing pitches of entrepreneurs, they want to spend all the time talking about the market and how the market is there. And just a minute or two on how they're going to solve the problem and why they're the right team to do it. That is so powerful. I love that you shared that.

[00:55:30] And that distinction in particular, and I think there can be other reasons that something is a distraction, but that's probably a primary one for a lot of us. And I look around all the time. I see so many opportunities and it's hard not to chase them. But eventually you always look back and it's like it has taken you away from where the real opportunity lies for you. So that's fantastic.

[00:55:58] You know, I have loved this conversation, Scott. I've learned so much. And I think there is so much wisdom in the stories that you've shared and the examples. So much to learn, not just about franchising, but business. And I just want to end with the question I always ask. If you had one piece of advice for our listeners, you've given a lot already, but if you had one piece of advice that you'd like to leave them with, what would that be?

[00:56:25] I think it would follow along with your guidance and that's do. People come to me all the time. I've been thinking about this. I've been researching this. And sometimes they've been doing it not for weeks or months, but years. Don't be stuck. If you've got this aspiration to be more, well, do more. Don't just get lost in the analysis and the research. Really get to the source,

[00:56:55] do the work, and then make the decision based on information rather than, well, what if? So that's the best advice I can give anybody is do an act. I love it. I love it. That's the difference between people that are entrepreneurs and those that aren't, right? That is the great separator. Yeah, you can sit around and think about it all day, but it takes action. And if you get out there and do things, you're going to make mistakes

[00:57:24] and you might lose money along the way. But if you keep moving forward and stay focused on a real opportunity, then get there to the finish line. So, Scott, where can our audience find out more about you, your business, the work that you do? I know you have a lot to offer, especially to anybody that's out there listening and they're interested in franchising. Yeah. Probably the easiest way to reach me is go to my website,

[00:57:52] FranchiseGuideGroup.com. And we've actually created a special link just for your audience, if you can put that in the show notes. Sure. And if you'll go to that, I will personally talk with anybody that would like to have a conversation about anything that we've talked about today or you're curious about franchising, whether it's for yourself, for your business, if you're at this point where you're not even quite sure

[00:58:22] what the next best move for you might be. I've had hundreds of these conversations and would be happy to offer whatever insight that I can. But typically, with a short conversation, we're able to determine if a longer, later conversation is warranted. That's fantastic. Scott, thank you so much for joining me today. It's been delightful. Thank you very much, Rebecca.

[00:58:57] I hope you enjoyed this conversation with Scott Jones as much as I did. I really enjoyed hearing about his take on franchising and on franchise ownership as well as his ideas and thoughts and experiences about business and leadership and motivation. I think there was a lot in this conversation to help entrepreneurs of every sort, regardless of whether you're thinking about franchising or not. But if franchising is something

[00:59:26] you're interested in, I hope you'll take Scott up on his offer to reach out and learn more about what franchising might mean to you and your business goals. So again, I hope you enjoyed this conversation. Please share it with someone else that you think might be able to benefit and always visit us back here at The N Factor. Check out my website, drrebeccawhite.com and also

[00:59:56] the Entrepreneurial Intelligence Lab where you're going to find a lot about my latest research. Thank you again for joining me. I look forward to seeing you next time.