← Unemployable with Jeff Dudan
Unemployable with Jeff Dudan
How Emerging Trends Are Revolutionizing Business Networks in 2026 with the CEO of BNI #235
00:25:57
Loading summary
Transcript39 lines
- [00:00]
A
Mary, many of our listeners are franchisors. They work for franchisors, they're emerging franchisors, they're founders. And I know everybody would like to hear your perspective. What characteristics and benchmarks make a good franchisor and are they different at emerging, at the intermediate size and then at the very mature size, like a neighborly was?
- [00:28]
B
Yeah. You know, I've always said there's emerging, established, mature companies, franchisors, you could call it anything. And there are good, there are good and bad things about every stage. Like an emerging stage, you're more nimble, you can try more things, you can turn the boat faster and quicker. You have a group of pioneer franchise owners that are more willing to try that when you get. But you don't have established routines and people are learning some lessons the hard way. When you're established, you have more of the system and the system of the system. And that system is growing it because you have this great process when you get to mature, but also now you're slower. And people are starting to say it's not the way it used to be. And I always tell people, and I don't know if you ever heard this, but I'm like, it's not the way it was when the family ran it. And what I would always say is, thank goodness we had the family to start this. Thank goodness we had the founder. I grateful to founders because I've never been a founder. I think about all the good that has come from the world from founders, and you have to be able to scale that. And if we were, what got us here isn't going to get us there. And so when you get to the established side, you have to really focus on do you have the right leadership in place that can then take it to really to the growth side. And the mature side is the good side and mature side is a machine and it's running. The bad side is people are comfortable and they're not looking for ways to improve the business. And so you have to almost reinvent yourself, disintermediate yourself and go back. But you know, I say there are some things that are good franchising no matter what size you are. You know, the first is that you've got a good, strong support system, meaning for the franchise owner that when you sell a franchise, there's somebody there that's going to make sure that franchise owner gets opened as quickly as possible in the most efficient and effective way that they're going to get to cash flow, break even as, as quickly as possible that you know, they've got money coming in the door because they need that money coming in the door. And they probably put, I mean their life savings. And I, I remember one of my sisters asked me when we opened our first location, what happens if you fail? I'm like, failure is not an option. Because everything we owned we put in this business. It was very personal. It's very personal. So you've got to have, you know, yes, you sell a franchise, you have to be able to do that, but you have to be able to support that franchise owner as well and get them open and operating. And then you need to take that owner that's open and operating and help them grow and be a good coach. And coaching is different than nursing. Nursing is, I know you don't feel well, why don't you sit here and put your feet up. Coaching is, I know you don't feel well, but you got to go run 10 more laps. So I always say comfort is the enemy of growth. You cannot, the minute you feel comfortable or you have franchise owners are feeling comfortable, you're starting to be in a bad place because you're not going to grow the way they're not going to grow the way they need to grow as well. And then lastly, Jeff, you've probably heard this a thousand times. It's all about the unit level economics. Are you helping your franchise owners be profitable? There's only three things that any business owner can do with profit. Pay themselves, pay down debt, put it back in the business. They have to do all three. And so it is incumbent upon good franchisors, make sure that before anything else.
- [03:59]
A
Somebody in the industry talking about how they sort opportunities. And it all came back to the fact is, is it a business that people can make money? Because at the end of the day there's, there's a lot of businesses that can create a lot of activity but they have to be able to create a good commercial return on a franchise owner's time, energy, money and their opportunity cost. Because sometimes I, and I've had this too where you, you get a, a franchise owner that left a super high paying job and they come in and they, and they, right, I mean super high paying job and they decide that they want to be a business owner and build an empire and they get into it and maybe after two years they've got a really nice business and they're performing and they're maybe above middle of the pack, maybe 70th percentile or something like that. But at the end of the day it's not the easiest dollar they can make, they're like, you know, I worked half the time and I made a little bit more doing my other. And I'm like, well, if you could make that much money playing golf, that you probably should, you probably should. But, you know, and those aren't horrible situations, but from the perspective of, Of a. Of a franchisor in terms of values, in terms of. Of, you know, how unit economics are everything until there's a problem. Okay, and now, how. Now where does the relationship come in? And, you know, we. I've never been one to go to the contract. I mean, we. I pick up. I pick up the phone. You pick up the phone with owners, you maintain. Part of leadership is accessibility and just being available to people when they need you and not saying, I'm too busy, talk to me in 13 days or something like that. I mean, it takes five minutes to pick up the phone and acknowledge somebody, to really hear what's going on and get something moving that is responsive to whatever challenge it is they're having. Like where, you know, where do shared values and kind of a way, a way of engaging, a way of being this. This kind of unwritten contract about how we treat each other. Like, how is that done? Well, in some of the best franchisors. And I know that Neighborly had their rich values from very early on. I don't know if that was from. I don't know if that was from Don.
- [06:28]
B
It started with Don, and when he passed, they put together an operational set of values because they wanted to make sure that people could live by them. And the leaders came out and said, we put these values together. Watch us do it and see what you think. And if you catch us breaking one, you can actually beep us. And occasionally I got beeped one of speaking calmly, respectfully, without profanity or sarcasm, or responding in a timely fashion. And they had 15 values. They called it live rich, Respect, integrity, customer focus, and having fun in the process. Just like bni, we have seven values that starts with givers gain, and goes all the way to traditions and innovations. Same same that. I'm a huge fan and it's probably because my days in the Marine Corps, my days at at Neighborly, my days here at bni. I have chosen organizations that are rich in culture and a high set of values because I think diversity is very important. You need diverse people, diversity of education, diversity of experience, diversity, diversity. And the way you get a diverse group to become a team and move smartly together is they all agree to a set of values that this is how we're going to do business. So like one of Neighborly's values was speaking calmly and respectfully without profanity or sarcasm. And you know Jeff, when you talked about, you just pick up the phone, one of them was responding in a timely fashion. And so we all agreed that's how we were going to do business in at bni. One of our, one of our values is accountability and one is building relationships. And we agree, we're going to build relationships and we're going to hold one another accountable. And so I encourage. It can't just be on a piece of paper somewhere. And I remember, you know, I've asked CEOs before, I know you say your values can do they roll off your tongue because if they don't roll off your tongue, they don't roll off anybody's tongue. And if they, if everyone, if it doesn't cascade throughout your organization, then you really don't have a sense of values. And so we're, you know, franchising is a relationship business. If I have to take the contract out, we're already losing. We're, we're, we're already in a losing.
- [08:33]
A
That's right.
- [08:34]
B
Proposition. It's figuring out it's a relationship and when something's going wrong, I've, I've got to listen really, really hard and understand what really is happening. I have to listen to what they're saying and what they're not saying and understand and that then I need to live by these values that we said we were going to live by. And it's uncomfortable, you know, where one of Neighborly's was making only agreements we are intend are able, intent and able and committed to do. And so someone would say you committed to this but you're not doing it. It's like, you know what, you're right. You are right. We made this commitment. We have to live to. Or you committed to this franchise owner and you're not living by it. And we agreed to this. And so it's not a soft skill. Having a set of values for your company is not a soft skill. It is the hardest of skills. And when you see high growth organizations, they have a clear set of values that most throughout the organization not only know but they believe in and they're fighting for.
- [09:40]
A
And Simple.
- [09:42]
B
Yes. Direct and to the point.
- [09:45]
A
Direct, simple, direct into the point. And there has to be an action that is taken that would demonstrate the value.
- [09:54]
B
Yes.
- [09:57]
A
Yeah. They have to be, they have to be well, are those nouns or verbs that are actions? I think they're verbs. You know, I went to public school, Mary.
- [10:05]
B
Building relationships, that's a verb. Givers gain. That's a verb if you think about that.
- [10:11]
A
Yeah. Ours, ours are community, accountability, respect, excellence and servants heart cares.
- [10:18]
B
And I also love that it spells out something.
- [10:21]
A
Yes.
- [10:22]
B
You know and I think they should roll up to what your vision is. You know, Be and I were very, very clear about our vision. Change the way the world does business and those values roll up to how we do that. It's our, it's our rule book for how we're going to work with one another. And do they get weaponized and used against you? Yes, sometimes they do.
- [10:39]
A
Of course.
- [10:40]
B
Sometimes you, sometimes we earn that, you know, and we need to be reminded that it goes both ways.
- [10:47]
A
No good deed goes unpunished.
- [10:49]
B
Yes.
- [10:52]
A
What you've been a part of all kinds of brands at neighborly. Some were large legacy systems that were acquired. There was other more emerging type brands. What, what challenges do you, do you see with emerging brands that maybe some founders out there need to really pay attention to? Obviously we've talked about support. You talked about having a clear set of values. So every shared vision, shared freight, shared, shared fate. What are some other things maybe more tactical that you could, that you could share? Is there any around franchisee selection? Is there anything around? Well, how about this concept? So I've come to say right, wrong or indifferent observationally and I consider myself, I still consider myself new to franchising.
- [11:51]
B
Because you're, you're an expert.
- [11:55]
A
Well, and yeah, well I, but I, I'm. But our brand's not 50 years old or 60 years old like some of these brands that are out there. And my observation is that Franchi achieve there's this perfect balance. If you want to have an enduring legacy franchisor where franchise owners are going to stay and they're going to be incentivized to build large businesses and to acquire neighboring territories and to do that, that there's this perfect balance between who does what and what are the fees meaning there needs to be an affiliation benefit. So by the things that we do on our franchisees behalf are the things that we do collaboratively together. There needs to be a certain measurable amount of top line impact to the business because every business is a top line and a bottom line and a front line as you taught me about the front line. But there can be no outcome without income. So you got to have a robust and a growing top line. You got to keep getting market share, you got to keep same source sales that are growing every year. You need to keep continually finding ways for franchise owners to make money. Whether that's supply chain optimization, higher conversion rates, benefits in staffing, labor training, all of these different things that are gonna start to add basis points. One point here, two points there. And they continually find a way to increase their profitability as a percentage. And then so, you know, and you've gotta leave enough money as a franchisor in the locations for this to be worth their while to continue to invest their time, energy and money so they.
- [13:30]
B
Can pay themselves, pay down debt and put it back in the business.
- [13:32]
A
Yeah. So where I've seen challenges in the space where people make that equation lopsided, they, they try to over monetize a franchise system or, or maybe they even undercharge a franchise system. And I, I had a call with somebody today who undercharged their franchise system and they were not able to.
- [13:58]
B
They can't provide the right support.
- [13:59]
A
They couldn't provide anything. So now, you know, people are wandering generalities of meaningful specifics and they're floating around out there and there's no money to help them. So there's actually, you can undercharge franchisees and under, under support and under provide and, and then what happens in those situations, you know, flat. Right. Royalty structures and things like that is that there's no continuity in the system because everybody's just doing their own thing. They don't even have visibility into how much work they're doing. They don't, they can't help them on their P. Ls so they don't even have the tools.
- [14:29]
B
Well, they can't even attract top talent because they don't have enough money to attract top talent.
- [14:32]
A
Yeah. So, so these things don't really go anywhere. Franchisee doesn't realize is that what a good deal I'm getting. This is so much cheaper than everybody else. And then what happens is if you look at these systems and this particular one I looked at a few months ago was like 30 years old, there's no resale for those franchise owners. They're stuck because there's no pipeline, there's no track record, there's no support. So they've built these businesses on this flat rate royalty, but they really can't grow the businesses in a meaningful way.
- [15:03]
B
You do get what you pay for. I believe that. And you know, on the whole, you know, as we were talking about good health, it's not one thing I do that keeps me healthy. It's how I eat, it's the vitamins I take, it's exercise I do. So as a franchisor, it's, you know, I especially emerging franchisors sometimes what happens is they're, they're selling a lot of franchises. You know, like, look, the money's coming in, but so much of the money is going out as it's coming in. They're not royalty sufficient. So you have to get to royalty sufficiency as, as quickly as possible because that's going to pay for the support of your franchise owners and you. And that is what's going to grow your franchise more than anything. And yes, you have to have R and D. And you need to be thinking about the, you know, like, as we've been doing, where do we deploy AI, where do we deploy new, new things? But, you know, what's going to grow our franchise owners the best and fast is executing brilliantly at their location. And so first and foremost, I've, you know, I've got to make sure I have, I've got enough royalties coming in that they're not going to somebody else, that I'm not paying a percentage of my royalties to somebody else. Because I need that money to attract top talent. I need that money to simplify processes. Because, you know, how we help franchise owners make money is we help them figure out the best way to market, figure out the best way to deliver the service or product in the least expensive way so they can hold on to the most amount of their profit. That's what a franchisor does. And so it's, it's all of that combined. And so, and it's even to the point of what do you charge for a resale? Because sooner or later your system will get to the age where you need a robust resale department to help those franchise owners. Because not, not all of them are going to will that to their children, nor should they, nor do you want them to. And so it's understanding that it's the, the combination of all that. And I see sometimes they'll start with really good, really good support, but they're not selling enough franchises to start growing that to the size that they can do some innovation or they're really good at selling franchises, but they haven't even thought about the support they need to put in because everyone's new. And what they're learning is the basics. And that's easier than teaching someone who's, who's doing 15 million in revenue and now needs to take it to 20 million and making sure you have. You're able to attract that top talent. And then, you know, lastly, you have to. If you're doing those things right, then you have the right team that you're able to disintermediate yourself every now and then and say, where is the world changing and what should we do about it? And there are plenty of companies that have good history of disintermediating themselves so that they're always relevant within their space.
- [17:53]
A
That is a underappreciated aspect of a franchisor. When they bring things to the franchise network and say, this is what's happening with not SEO but AEO agentic engine optimization. What do you need to be doing to be found on chat or Claude or Grok or these places? It's a whole different ballgame out there. The franchisor, it's incumbent upon them to stay ahead of these things. That's not what the franchisees thinking about every day. There might be a few enlightened franchisees that are. Put them on a committee and utilize. Utilize them to figure it out. Yeah, yeah. To create best practices. We talked a lot about providing resources for franchisees. If I'm a franchisor in today's world, I'm. I'm three, four, five years into my brand. Where do I go to get help? Where do I go to get education? Where are the best places that I can go to become a better franchisor?
- [18:51]
B
Every year, I'll tell you where I've gone year after year after year. The year I sold my franchise, I went to the very first convention. And that's the International Franchise Association. And Jeff, you know this, I'm quite biased. I'm the chair of the IFA this year. And so obviously I have bias there, and I want to share that, but I have bias there for a reason. Because when I was building a field program in Cookies by Design, I sat across the table from Melanie Bergeron, who had two men in a truck who said, you know what, let me connect you with Quincy, who runs our field program, and he helped me build my field program. And then I sat across from Fred DeLuca, who said, I can show you in writing some ways that you can put this out to your field to help them. And then when I became a chief operating officer and I needed to know better ways to build relationships with my franchise owners or with my leaders, how to do that. And so what I like about the IFA is you have founders, you have CEOs, you have CEOs, you have franchisees that are all part of this organization that are all about protecting, enhancing and promoting franchising. And part of enhancing franchising is making sure that our founders, our emerging brands are emerging in the right way so that they can do good franchising, so they can build something that's going to last for a long time. You know, it's very personal to me. If I had failed at that first franchise, I wouldn't be sitting here talking to you today. I wouldn't have the resources that I'm able to give for my family and, and make sure that my kids went to college and the things that were important to me is very, very personal. And so I, I think the IFA is a great, you know, the conventions that you can send your legal people to the legal symposium. We have the multi unit franchise conference that you can go to. There's an emerging franchise conference, there's springboard, there are a lot of great places that you can go and you can sit with people who are doing what you're doing or maybe three years ahead of you that can really share. And it's a very sharing environment.
- [20:50]
A
It is. The IFA is critical in protecting the business model we call franchising. Not only through the education, the collaboration, but also through the political action. There is continuous assaults on the business model from various states and federal agencies. And it's important that we keep our, the nature of our business model safe and secure and doing what it does. One of the things we care about at home front brands is creating economic freedom and financial security for families on Main Street USA. You know, the middle market creates 90% of new jobs. And if you look, if you drew your four squares and you said I'm a family, what do I want it to do to secure my future? It's probably got stocks and bonds in one quadrant, it's got real estate in another one and then it's got business ownership in one of the quadrants and then the fourth is a kicker. What do you like to do? Do you like to do ip? Do you like to write books? Do whatever you know, but, but at the end of the day, business own businesses are high class assets and every family should take advantage of the tax code through business ownership. And it's just, it's such a passion for me. And, and it really. And the IFA is just like there's 829,000 franchise establishments, one out of every eight people in this country work that are employed, work for a franchise system. And your leadership of our flagship organization has never gone underappreciated and we thank you so much for your leadership.
- [22:17]
B
It's my honor to serve, and I. I felt compelled to serve in the industry that has done so much for me and my family. You know, I'm living proof that you can take a girl out of the Marine Corps who no one in her family ever owned their own business, and actually control your own destiny and build wealth through business ownership because you're a part of something that was bigger than you. And, you know, you've heard this a thousand times. You know, in franchising, we say you're in business for yourself, but not by yourself. I think IFA takes that out as well. If you're on the franchisor side, you don't have to be in business by yourself. You can be with another group of people that believe what you believe, that. Believe that you can create this great place that you can. You can be operationally excellent. You don't have to reinvent the wheel, and you can create wealth for your family. And that is why I'm still doing this, because I don't think there's anything better.
- [23:09]
A
Yeah, me too. I sold my business when I was 50 years old. It was 2019, and I stayed on the sidelines as an investor advisor and played around in a few things for a few years. But then I was like, you know, what am I going to do? I'm going to take all of this hard work away to some golf course or some fishing boat somewhere and do nothing with it. Or you can impact families and take what you've learned and step out into the game. Dan Sullivan, with Strategic Coach, is one of my mentors, and I think a lot of them. He's 80 years old, and he spoke for 10 minutes at the last Genius Network I was at. He said, you know, I'm twice as ambitious at 80 as I was at 55. And at 79. He filed for 75 patents on his work. And he says, I'm going to be more ambitious at 90 than I am at 80. And it's our job to constantly be more ambitious every year and year on, because when you're more. When you're more ambitious, what it does is it exposes capabilities that you have to be able to serve that ambition. And then in developing those capabilities that you have, it forces you to uncover capabilities that you don't have and you didn't know you needed. So that's where all the growth comes from. It comes from your ambition. And people say, well, I can't have a family and be ambitious or I've got a sacrifice. I don't believe that's true. I just don't think you're doing it right. Like, you should be able to be as ambitious as you want to be in your business and be ambitious in your personal life and accomplish all of your goals. And I think the more ambitious you are, the easier it is to accomplish the things that you set out to in life.
- [24:54]
B
You know, I get asked. I think sometimes women leaders get asked this more than others. But I bet you've been asked this as well as how do you find balance? And I always say I don't. I don't have any balance because balance assumes that everything is exactly even. What's even over here is even over here. I don't seek balance. I seek out harmony. Harmony is like, you know, my favorite. One of my favorite songs is Bohemian Rhapsody. I love that song by Queen. And that song has big, loud, crashing parts. And it has quiet, beautiful melodies. And it has absolute silences in it. And what I want is this beautiful song. Sometimes my life is crashing and loud. Sometimes it's got a beautiful melody. Sometimes it's just got this just quiet moment that punctuates everything. And in the end, it's this amazing song. And part of that amazing song and is being ambitious is understanding that you're here to do something. You're here to get something done and serve others. And that's why I'm still doing what I'm doing. Because there's. For me, there's nothing more thrilling than serving others.
- [25:51]
A
It's a beautiful analogy.
- [25:54]
B
So here's to a great song.
- [25:56]
A
It is a great song.