Clay Clark | The Franchise Disclosure Document With Terry Powell

Audio Transcription

Get ready to enter the Thrivetime Show! We started from the bottom, now we’re here. We started from the bottom and we’ll show you how to get here. We started from the bottom, now we’re here. We started from the bottom, now we’re here. We started from the bottom, now we’re on the top. Teaching you the systems to get what we got. Cullen Dixon’s on the hooks, I’ve written the books. He’s bringing some wisdom and the good looks. As the father of five, that’s where I’mma dive. So if you see my wife and kids, please tell them hi. It’s C and Z up on your radio. And now, three, two, one, here we go! We started from the bottom, now we’re here. Started from the bottom, and that’s what we gotta do. Terry Powell, how are you, my friend? Good morning, Clay. I’m great. How are you? Doing great. Doing great. I’m all Starbucks-upped. Thank you for the Starbucks, my friend. My pleasure. Hey, we are talking today about the franchise disclosure document. 23 items and a bunch of exhibits. How exciting. I’ll tell you what, I’ll tell you what. Now this is the thing, a lot of people say, well I want to franchise my business. And they don’t realize the legal fees and the costs and the regulation. And so we’re going to get into a lot of the brass tacks, some of the stuff that really, when you’re looking to buy a franchise, some of the terminology and the things you need to know about. So this is, we’re going to get through this. It’s going to be awesome. It could be life-changing. So here we go. But during this segment, we’re going to be unleashing this firehose of knowledge. And so before we get going, can you give the thrivers out there a little bit of a taste for how many years you’ve been in this industry and what exactly you do? Great, yes. Excuse me. Just celebrate our 30th year in business. So I’ve been at it for a while and focused entirely on franchising. Launched a company back in 1984 called the Entrepreneur Source. And since then, we’ve grown to own five franchise brands that we franchise ourself. But our key is our Entrepreneur Source brand, where we help thousands of individuals explore the opportunity of investing in a franchise business as a way of developing their income, lifestyle, wealth, and equity. And we’ve also worked with about 670 franchise companies to advise and help them grow their brand. So we’ve had a lot of FDD experience. Now you say, and I know you’re passionate about this, you’re helping people develop their income, lifestyle, wealth, and equity. Can you maybe explain what that means? Yeah, it’s really a different way of looking at a business. Many people get caught up in investing in a business, and a lot of times they’ll really buy themselves a job. And our whole mission has been for the past 30 years is to help people understand that the business is just a vehicle. And what you want to do is use a business vehicle, like a franchise, to drive your own income, lifestyle, wealth, and equity, rather than buying yourself a job and becoming the technicians associated with it. Now, before anybody can go out there and buy a franchise, they have to get this thing called the FDD. And basically, there’s consumer protection laws that make it where, before anybody buys a franchise, they have to have this franchise disclosure document. That’s what the FDD is. Correct. And on a very basic level, on a third grade level, could you explain to me what an FDD means, though? Absolutely, yes. FDD stands for Franchise Disclosure Document and it is the basis of all the information chronologically laid out the same way by every franchisor that the Federal Trade Commission believes that is the most important information for a potential investor in a franchise concept to know about that particular franchise brand before they were to decide to invest in it. And really no matter what research you do on the internet, what websites you go to, you’re going to find that really a franchise disclosure document has been created for these three, it seems like three common denominators I keep hearing. One is transparency, to give that transparency. Two is to provide that education for the franchise owner or potential franchise owner. And the third is to really offer that simplicity, where you can understand it in sort of common sense terms, at least where it’s easier to understand than one may think on a federally regulated document. Absolutely. So, Terry, let’s start with transparency, this first one here. From your experience, how does the FDD provide that transparency that a potential franchise owner really needs? Well, it literally discusses every element of that franchise company that would be important for an investor to know about. It drills down into all the personnel, the C-level executives, people that have ownership in the company. So you have all those details. Who’s going to be working with you in what areas? It also drills down into their background and history as it relates to any type of record that they might have that needs to be disclosed, such as they had a bankruptcy in their past. Those types of things are all deemed to be important in the transparency aspect. And then it also delves into their audited financial statements. It gives them a history, a couple of years worth of history back as to what the results are on an audited financial basis. If you’re watching this and you’re going, am I getting the real story here from a franchise? One thing that you should feel great about, in my mind, is when you get an FDD, I mean, we’re not messing around. This is real documented financials. This is real stuff. So when you’re getting this, sometimes when you go and try to buy another kind of business, you don’t know. Is somebody cooking the books? Is this real information? And FDD is pretty intense. Now we’re moving on to the secondary, education. So Terry, how does the FDD really provide education for the average franchise owner? How does it do that? Well, the basis of the education is to help people understand what’s the relationship. And it’s a unique relationship because in franchising, we’re licensing franchisees the rights to use our proprietary systems and processes and tools. So it’s an important relationship. It’s like Microsoft licenses the use of their software. We license that. So people want to know what’s the relationship. So actually in that FDD, it outlines all the things you’d want to know about what’s this relationship about. It’s called an interdependent relationship, so that’s important for them to understand that it’s something that we both work at and it can be a win-win type of relationship. When you say it’s an interdependent relationship, can you maybe describe what that means? Yes, we don’t work for the franchisee and the franchisee doesn’t work for us. We don’t have that type of relationship. We actually come together in an interdependent relationship where the franchisee does their part of the license and we commit to our part of the license. And equally, bringing those things together, it creates the predictable, successful outcome that we’re all looking for. Okay. Okay. Now, now we’re moving on to area number three here, the simplification. Now, Terry, I’ve actually read many FDDs and I’ve seen that there’s, I’ve seen these documents. They can be massive. Yes. But at the same time, I’m always surprised when I read them that they have some elements of simplicity where you can kind of understand what’s going on. Can you maybe explain how the FDD helps bring some simplification to the understanding of the whole picture? That’s a great point. It’s not always been that way. Actually, we went through a period a number of years ago where the Federal Trade Commission decided that they were too complicated. And that was a great thing because now they charge the franchisors and their attorneys with simplifying those documents. Now, that was a little bit of a shift for the legal field because they don’t get paid to simplify things. They get paid by the word. So they were charged and had required us to have our attorneys simplify those documents so people could read them and have an understanding. And that was a great shift in that. Now, here’s a little fun factoid for the thrivers out here. The Federal Trade Commission, as you mentioned, requires potential franchise owners to have this FDD. Basically, if you’re gonna buy a franchise, you have to have an FDD in your hands. But a little fun factoid is you have to have this FDD in your hands for 14 days. Is that right? Before you’re allowed to buy a franchise? Yes. Now, from your perspective, you’ve been doing this forever. What is the FTC and why do they want all potential franchise owners to have this FDD in their hands for 14 days? Well, the Federal Trade Commission is charged with a lot of different areas, but as it relates to franchising, they believe that by regulating this, it helps potential investors have their eyes wide open prior to going in and investing, so they understand what the upside is and also what the potential risk might be. So it’s a great tool, and it really helps people go with their eyes wide open. And the 14 days is really a good time frame so that they have the opportunity to review the document. It has a number of exhibits including the license agreement that can be a number of pages. So make sure they have enough time to have had the document, review it themselves, and if they desire to, bring in their attorney to review it. Now Terry, before people start to feel too good about the FDD and all the things in it, because it’s a great document, it really does help you get a good education and an understanding of the franchise that you’re about ready to buy or you’re looking into, but it really does not get into any detail as far as about how they actually compete, kind of. It doesn’t really get into the details of their specific competitive niches, or does it, or how detailed is it when it talks about how they compete with other franchises? It’s not detailed at all in that regards. The Federal Trade Commission is really looking to protect investors so that they have knowledge before they go in and invest. But also they understand that it’s up to each individual investor looking to invest in a franchise to do their own research and to look at the competitive analysis and interact with the franchisor to understand that as it’s based on their own needs. So just to clarify, it doesn’t explain who the competitors are. It doesn’t explain necessarily how they’re going to compete. So those are areas you have to do research on your own if you want to have a comfort level there. That’s part of what you’re going to do as part of your research and validation. But it does in the FDD mention the fact that there will be and there are competitive type businesses where it’s required to state that. Now the Federal Trade Commission does require companies to include 23 items, 23 items within every franchise disclosure document, regardless of the industry. And this is sort of a fun factoid. There’s 23 of them. And so what we’re going to do here is we’re going to make this kind of interesting. We’re going to go with the lightning round format here. So each time I read off an item, and I know you’re excited about IM2, every time I read off an item, we’re going to add all sorts of lightning thunder graphics on the screen. It’s going to be awesome. So this could be life changing for people. So here we go. All right, we’re going to get into item number one. These are all items that are required on this FDD document. Item number one, this is the franchise, its parents, predecessors, and affiliates. Let me just read you a quick summary here. This is an abbreviated summary of the actual contents found within items 1 through 23 as defined in the FTC’s guideline document. This summary will include the name, business address, business form, type of business, the years in business, years in franchising, and other businesses the franchiser, parent, or affiliate may be involved in. This portion of the document shows you how the business was started and what transfers of ownership have taken place. This document also tells you the history of the franchise organization, parent corporations, and discloses any other businesses in which the franchisor may be involved, any other businesses these people are involved in. But at the end of the day, why do I need to know item one? Why is item one in there? What’s the kind of the highlight? Kind of think of as an executive summary. Okay. It really sets the stage for what you’re going to dive into as you go through it. So it’s kind of like when I compare as an executive summary. It gives you a 10,000 foot overview of all the things they’re going to drill down into as you go through the 23. Now I’ve looked at one of these before and what I thought was interesting is one I looked at, one guy he’s involved in multiple franchises and it kind of discloses that this guy owns this business and this business and it could be helpful where you say, wow that’s great, this person’s had success here and here. This makes sense. And sometimes you go, whoa, if this guy’s been involved here, I maybe don’t want to get involved here. And so this is a really good thing there. Now we’re moving on to lightning round item number two. Here we go. The business experience. This is a listing of all the key individuals, ranging from the partners and directors to the top executives with the management responsibilities for the franchise. It will state the occupation and the employer of each person over the past five years. Terry, why is this important? Why is it in here? Well, we found over the years that people really want to identify with that relationship they’re going to be building. It’s an interdependent relationship, and these individuals and their backgrounds and experience are important. Just like when we looked at a franchisee before we awarded to them, we want to know about their background, their experience, what kind of a success track they’ve had, you know, what they’ve been doing. It’s a sharing of information around that transparency. It kind of sounds like it’s like a group resume, just like a big group resume, is that what it is? That’s a good way of describing it. Okay. It’s like a big group resume. Now we’re moving on to item number three, one of my personal favorites, lightning round item number three. Here we go, litigation. All right, here we go. Now this is a list of all the litigation the company has either been involved in in the past or is currently involved in, and if anybody who’s basically working with the company has been convicted of anything over the past 10 years. Can you walk me through some things I should be looking for in this particular section? Well that’ll be an area that you’ll look at to get a sense for the principles of the company and the individuals are going to be working with you as the part of the franchise relationship to see what their personal history was as far as bankruptcies, criminal records, those types of things. Although it’s rare, occasionally you’ll see something in someone’s background that will be explained. And from a standpoint of the actual franchise, if they’ve had some discrepancies that a franchisee has filed an arbitration or filed a lawsuit, any of those types of things in a dispute matter, which is fairly common in franchising, you have hundreds or even thousands of franchisees. You’re going to have one or two of those that will have a discrepancy, and that will allow you to understand those things and what happened, and also what the outcome of those were if they’re still in. I love this document, this portion. I really do, because years ago, my wife and I, we bought a house. And our real estate professional, that’s a licensed thing. Well, the person who had built the house had all sorts of issues. And so when we finished moving into the house, we found all sorts of issues. But there wasn’t a way or any place that disclosed this person’s background and some of the dealings they’d had in the past. Or even when you partner with someone in business, there’s no, I mean, you can Google search people, but sometimes people can hide that stuff. But because this is a federally regulated document, I think it gives people that much more confidence that they’re making a good choice. Absolutely. You really do want to know. And the Federal Trade Commission regulates franchising even more so than Securities and Exchange Commission regulates stocks and bonds. So you really get an opportunity to have your eyes wide open and have that transparency and understanding. I think this also has to do with why the failure rate in franchising is probably significantly lower than other kinds of businesses because there’s so much due diligence done. I mean, it’d be hard to be a really shitty character and to get involved as a franchise developer or franchise owner guy, right? Yeah, it’s literally impossible to do that. And even though a franchisor might have something disclosed as far as a litigation or an arbitration, that doesn’t necessarily reflect poorly on them because they are charged with responsibility of protecting that relationship. So if I’m invested in 100 other people invested in that franchise and someone’s gotten out of line with that and are causing a potential harm to the reputation, they may need to take an action around that franchisee to protect the rest of the franchisees. This makes a lot of sense. Now we’re moving into item number four, lightning round item number four. Here we go. We’re going to dedicate this one to Brett Favre, number four. Here we go. Bankruptcy. This section shows whether any of the key officers have any connection with bankruptcy over the past years. How far back does that thing go? I believe you have to disclose anything back five years. Wow, okay. So, and again, I guess if I’m looking at this, this matters so that I make sure that I’m not going to invest in a franchise that’s owned by somebody who’s basically running Ponzi schemes, right? Exactly. And the principles of that company, if they have a bankruptcy history, it’s felt that that’s important for people to understand and to know, but more importantly, if the franchise company itself has been involved in a bankruptcy of any kind. And this just in from our home office off the coast of Connecticut somewhere. Lighting round item number five here, franchise fees. This is one people have got to be excited about here. This document simply discloses all the fees that must be paid to the franchisor before opening the business. The timing of the payment and whether there is any refundable aspects of the fees. Absolutely. Again, when I read these FDDs, I thought, man, this is amazing how transparent this thing is. This is great. Can you walk me through kind of what we should, on a high level, what we should be looking for in this in this portion item number five. Really to simplify it, is anything that you’re going to be is part of your investment before you open the doors and who is going to be paid to. So for example the franchise fee. If the franchise fee for this particular license is $30,000, it’s going to describe that. It’s going to tell you when it’s paid and the fact that it’s not refundable. If there are any other fees associated such as a training fee or a marketing fee that you’re going to pay in advance. Those things will be documented and listed here. And I’m not going to mention a specific place where I might or might not take my vehicle anymore, but one of these always found is when you take your vehicle to the repair shop, you go in and you might have one issue. You know, have like a one of those rear-view mirrors that’s out or something just you know trivial that’s not working a door lock. And you’ll go in and next time then there’s a radiator issue and there’s a this and that. It just keeps happening. And I’m wondering, is the mechanic breaking things and then telling me they need to be fixed? Or you don’t really know. And it seems like the bill always grows, or sometimes you’ll rent a car and then the fee is dramatically more than you thought it would be. A lot of times people buy a house and the closing costs are more than people said they would be. But in the franchise world, it is what it is. The fee is what stayed. I love that. That’s a great thing. Absolutely. We can feel comfortable in telling them, there’s never going to be something that comes up after the fact that’ll be a surprise that wasn’t disclosed to you in advance. This right here is one great thing about buying franchises. This excites me. I will tell you, having been in business for years, this is the one thing about franchising in my mind that you just cannot beat. This transparency is unbelievable. Moving on to lightning round item number six. Here we go. Other fees. This is a disclosure of other recurring or isolated fees or payments that the franchisee must pay to the franchisor or its affiliates. They must be disclosed here. Walk me through how this is different from item number five, this other fees section. Great question. This is the ongoing things that will reoccur, such as your royalty payment. All franchises have a royalty payment that’s based typically on your revenues. It’ll describe that, whether it’s a percentage or whether it’s a fixed monthly fee. If there’s an advertising or brand building initiative associated with it, which is pretty common, it’ll describe what you can expect from that on a regular, ongoing basis. Now, on behalf of the potential franchisees or current franchisees who are not here right now, I’m gonna ask the tough question right here, okay? Because I have spoken at franchise events before where I’ve heard some of the conversations of the people who bought said franchises, and they’re kind of the rumors, the discussions, the things that they’re asking. And sometimes they’ll say, why do we have to pay ongoing fees when we already paid 50,000 or 100,000 to buy the franchise? So can you go ahead and just clarify real quick why there is a need for ongoing royalties after someone’s already paid these initial fees? Great question, and it comes up frequently. And what you want to understand about the relationship, this interdependent relationship, is that franchisors charge an up-front fee just to recover what they’ve already invested in expenses that they have to incur, such as this FDD document, registrations, attorneys. All the programs are going to be brought to your attention and value right out of the gate before you’re actually generating any revenue. So there’s no royalty payments, there’s no royalty dollars coming in. So that really, that franchise fee is just designed to bridge that gap to get the focus on getting you ramped up and successful so that royalties will come in the future. Franchise companies only succeed from ongoing royalties. They don’t succeed from awarding franchises and collecting fees up front. I just feel like if you’re watching this and you may be having that thinking where you’re saying, oh my gosh, this is just an unreasonable franchise fee. I think when you realize the legal costs that go into making this federally regulated document, you’ll get a little nauseated and then you’ll start to empathize more so with those fees. So it’s important for you to have a… Absolutely. I mean, it’s expensive stuff. So we’re moving on to lightning round item number seven. Here we go. This one’s dedicated. We’re going to dedicate this one to John Alda. So here we go. This is the estimated initial investment. This item includes a comprehensive list of all the expenses that you can reasonably expect to incur as you open the business. Talk to me about this. Yeah, well it gives you a range. It’s addressed from a low to high range and there’ll be some variables but it will give you a description of what that low to high range will be. So the good news there is when you estimate what you’re going to need to get the business launched and the total investment, you’re going to know the high side of that and the low side of that. And typically it’s going to fall somewhere in the middle. And again, if someone’s reading this before you get sticker shock and you kind of, you know, pass out here, one thing I’ll tell you is that McKinsey is a federally regulated document. So the fees have to be, I mean, they have to get the high range in there and the low range. So you’ve got to calm down a little bit. And when you read this, you’ve got to realize this is all factual stuff that we have to share. Otherwise, if it’s not shared, that’s against the law. So it has to be in there. So yeah, you’ve got to get the high range and the low range. And the reason for the high and low variables, people ask, well, why is there a range? Well, because of certain factors where you might live in relating to traveling to the training. Those costs will vary. If you have a location and there’s rent involved or leasehold improvements involved, those expenses will vary in different parts of the country. Item number eight, lightning round item number eight, in Spanish, the OCHO. So here we go. The restrictions on sources and product services. This page really gets specific about three things as it relates to procuring the products and services needed to make a business run successfully. So first, which products or services the franchisee is required to purchase from the franchisor? Two, which products or services the franchisee is required to purchase from approved third-party suppliers? And third, which products or services the franchisee is free to purchase wherever they like. So, Terry, what’s the benefit to the potential franchise owner of knowing all this kinds of goodness? I mean, what’s the benefit here? Well, we’ve talked about the transparency is the key. So you’ll understand your eyes are wide open. But more importantly, a franchise is really a recipe that we’re licensing you the right to use. So in any recipe, the ingredients and where they’re obtained and the quality and caliber. And the managing of those ingredients have a direct impact in the result of that recipe. So for the franchisee, it’s important to understand that the franchisor knows and has documented the best way to secure those types of supplies. And they control some themselves and then they allow you to go outside. Let me give you an example of what not to do. In my office, we’re going to call it sticker gate. We had to get some stickers. And so we said we’re gonna get some stickers. And I and we order the stickers, stickers come in from weird supplier, they look terrible, you know, colors are off, things are bad. So then we said we’ll get some, we’ll go to a different supplier. So we get some more stickers. And then they’re bad. And then another, and so it’s like the third time now. And I’m going, let us document and let’s let’s carve that into a stone tablet. And henceforth we will always order our stickers from this. Because it’s like you realize how much time you wasted by ordering stickers from the wrong place three times. And in franchising, it’s documented sometimes. You say you have to buy your banners, signs, auto wraps from this person. Correct. The franchise owner might be saying, well, why? I know a dude. He can do it cheaper. Well, but you might get it wrong three times first. And so it’s all about because the franchise or makes their money off the royalties. So the faster you’re successful, the more money everyone makes. So I love that relationship. It’s important because those key elements make up the success factors of the business. And lots of times there are savings associated with how the franchisor has negotiated those vendors and those suppliers for you. And they want to make sure those savings are passed through so that the franchisee can be more profitable. Now here’s a little fun factoid for the folks at home. In franchising, it’s very common for a franchisor to require a franchisee to buy certain items from certain suppliers. And this is often called restricted. Terry, what does this term restricted really mean in layman’s terms for the average person watching this? Well, these are the areas that the franchisor feels most passionate about, that they have to restrict the franchisee to maintain a certain aspect of purchasing. And lots of times they’ll control that or require you to purchase it from the franchisor or the approved vendor. But restricted means you’re not going to have any variables there. Those are the most important parts. We’re restricting any use outside of these guidelines, and they want to make sure franchisees understand that before they come on board. So if there’s any questions as to why and what the benefits are, they get a chance to talk about it. I know of a lady I met at a conference years ago who owns a franchise and she was printing her own business cards because she knows a guy. And they looked awful. And she was so upset how corporate was telling her she couldn’t order cards from the dude that she knows. Like, why do I have to order from this supplier? And I mean, I didn’t want to say anything. I wasn’t being asked for feedback. And I just said, I think it’s because they want to have a certain standard. I just kind of looked, what’s that supposed to mean? Well, but her cards, there’s a huge difference in quality. And that’s a lot of the franchise wants to protect that brand. Absolutely. Now, in the world of franchising, franchisors often designate these approved suppliers for the franchise to use. There’s like approved suppliers. Now, a lot of conspiracy theorists watching this might be going, well yeah, because there’s some kickbacks going on. But these can include like auto-wrap companies, you know, suppliers of food products. This could be, you know, why should prospective franchise owners care about this kind of information? When I’m reading the FDD and I’m thinking about buying a franchise, why do I need to think about and know about this kind of information? Let’s talk about the conspiracy theory, because that’s what’s in most people’s mind. The fact of the matter is that if the franchisor requires you to purchase something or they restricted and require you to purchase it somewhere else and they’re making any type of a profit or associated with any kind of refunds or rebates or kickbacks, that must be disclosed in the FDD. So there’s no way that can happen. No way that can happen. So if you’re a black helicopter, if you’re pretty sure that a black helicopter is currently following you around. That may be true, but this is not true. That’s exactly right. There might be a drone in your house right now, but that’s not true. OK, so Terry, here comes another fun factoid. In the world of franchising, many franchise owners allow unrestricted purchases for common purchases like pens, paper, staples, that kind of thing. Why does this matter for potential franchise owners to know what’s unrestricted? Well, just again, it’s the transparency. I can go out to the Staples or Office Depot and acquire things. Lots of times a franchisor will have a national account that says you can take benefits from that, but you’re not required to. So you can really purchase those anywhere you want. There are things that aren’t going to be mission critical to the outcome of the recipe. If the person is writing with, you know, using a pen or pads or supplies within that business that don’t have a direct correlation to the success, then you’d have the variables. If you’re thinking about buying a franchise, the one thing I’m just going to keep hammering through this as we get through this, is that you literally have the most transparent opportunity to learn about a business because of this FDD than you would have in any other kind of business purchase. And I absolutely love this document because of that. Even though it’s laborious and it’s expensive to make it, when you’re going to sell your business, if you want to sell it, this FDD helps build the value of the brand. So this is powerful stuff here. Now we’re moving on to lightning round item number nine. I know the folks at home are excited about this one. So here we go. It’s franchisees’ obligations. This is a disclosure of all of the principal obligations of the franchisee under the franchise and other agreements after the franchisee, or after the franchise agreement has been signed. What is this item number nine about from kind of a layman’s terms perspective here? Well, think of it from a relationship standpoint. It’s an interdependent relationship. We come to, as a franchisor, we come to that part of the relationship and the franchisee has their part of the relationship. This section outlines what those commitments are from the franchisee standpoint. So it sets out those, you know, and if we had that in most relationships in life ahead of time, we had an understanding of what each other’s role would, it would be a much happier place to live. Oh, man, this should be like my new Terry Powell’s relationship tips. Next time I meet kind of like a man friend, I’m gonna have to be like, well, here’s moving forward, here are my obligations, here are yours. Okay, so we’re moving on here to lightning round item number 10. In Spanish, that’s L10. So here we go. Financing. A description of any financing terms the franchisor may make available to the franchisee, if any. Correct. Talk to me about this. I refer to as direct funding, direct financing. Some franchisors participate or have programs available that they’re involved in or they may even finance part of the investment for you. If that’s going to be the case, it needs to be disclosed there. Is this very common for a franchise or to offer financing for a franchisee? It’s not very common. It’s not typically the franchisor’s wheelhouse or expertise area. If they were going to fund that or finance it, they’d likely open company units. So there’s a lot of financing available, but if there’s anything that the franchisor is going to provide, they must disclose it. Now item number 11, lightning round item number 11. Here we go. Franchisors, assistants, advertising, computer systems, and training. This is a list of the items or a list of the systems the franchisor really brings to the table to help the franchisors become successful. Terry, can you kind of talk to me a little bit with some clarity about what kind of items I can find in item number 11. It’ll be everything that the franchisor brings to you. We talked earlier about the franchise fee. People wonder, why am I paying this franchise fee? This is a great area to understand what that franchisor brings to the table right out of the gate before you’ve generated $1. And it allows you to understand what they bring to the table. It talks about all the aspects of the system, the training, all the elements they’re going to bring as far as support, ongoing support, all those are documented in there. If you buy a business or you start your own business, one of the things that we try to do at Thrive is to provide a kind of an owner’s manual where you can go onto the website and find the answers you need. But I will tell you, as a general rule, when you’re self-employed, you’re kind of on your own. And in the world of franchising, you’re really not on your own. You’re self-employed, but you’re not on your own. You’re actually getting support from the franchisor. And this part is super important for you to know what level of support you’re getting, right? Yeah, this is all the details. And from all levels that you’re going to be supported, which in a franchise is going to be soup to nuts. Everything is going to have a support element to it. It’s going to have the ability to go online and get your questions answered. It’s going to have operations manuals, procedures, all those elements are going to be important so that the success of what you can expect from the franchisor is outlined. And not that like certain parts of this document aren’t important, but this is a part you really would want to make sure you understand because this is a big thing after the purchase. What kind of support are we getting here? Moving on to item number 12, lightning round item number 12. This is the territory. By definition, the minimum area granted to the franchisee. The franchisor may use an area encompassed with a specific radius, a distance sufficient to encompass a specified population, or another specific designation. Terry, why is it so critically important for people to understand the territory that they’re getting? This is very crucial. Most people come with the expectation that they want some sort of exclusivity. They like the franchisor to put this fence around this area and protect them, so no other franchise could come into that arena. Now, when you have exclusivity, you also have a downside. It means you can’t, if a customer is outside that fence, you can’t service them. So, you know, different companies and different franchise concepts have different territory restrictions, or they’ll provide the territory in writing, so you can depend on that. I read one FDD, and again, I love FDDs. It’s just something I do, pleasure reading almost. But I was reading an FDD of one business that had no restrictions at all, where you could just open up as many as you wanted nearby. And their whole theory was with their kind of service, they provided service that everyone needs. And so their theory was, we’ll sell one right across the street almost, I guess. And I guess it’s up to them not to do it. But I was reading that. I’m thinking, there’s no restrictions. And then some are based on what, population? Sure. There’s all different. So just make sure you have a mastery of that and you understand that. Lightning round item number 13. I know people are excited about this one. We’re over halfway there. Here we go, trademarks. All registered trademarks of the franchise are specified here, including all of the registration information of those trademarks. Walk me through why it’s important for me to know about these trademarks. And this information needs to be kept up to date because trademarks are really the foundation of a franchise. It’s a replicatable duplicatable system, but you’re identifying yourself as that trademark in most cases. So you need to know that that trademark is registered and protected so that three years from now, you’re not going to get a notice that says, oops, we didn’t register that trademark. Now you need to change the name of the business. Would not be a good thing. And stranger things have happened. Yes. So that’s why, again, franchising is awesome because you know that your trademarks, your name that you’re using, isn’t going to need to change sometime. And associated trademarks that are subsets of that. You know, franchise companies have multiple trademarks because you’ll, within your franchise business, it may be called McDonald’s, but there’ll be other names that you use within that other companies can’t because those are also registered. Now we’re moving on here to lightning round item number 14, patents, copyrights, and proprietary information. If the franchisor owns rights to patents, copyrights, or proprietary information that are material to the franchise, the franchisor will describe these and the relationship to the franchisee in this section. Walk me through it this way. Again, equally important, it’s the intellectual property of a franchise that’s being licensed is critical. And if there are patents required, it’s important to know about those and know that they’re up to date. If there’s licenses and things that need to be maintained. So it really gives you the sense of understanding as to what that intellectual property entails, and that it’s copyrighted and protected in the ways it is. It also helps you understand why you’re not able to modify or adapt it or adjust it in any way, shape, or form. So there’s people that want to stretch the logo and do some weird stuff. This kind of explains it. Hey, we have a way of doing business here, and you can’t really modify it, change it. Okay. Proven formula. Now lightning round item number 15. Number 15, this one’s in honor of Tim Tebow. Perhaps one of the better college football players of all time. So we’re just going to throw in that little side note, little editor’s note here. Now item number 15, obligation to participate in the actual operation of the franchise. This describes how much direct involvement the franchisee is required to have in the actual operation of the business? What are we talking about here? In simple terms that if the business requires the owner of the business to actually participate full-time or part-time into that business you need to outline that. So we have an understanding you don’t start a franchise business thinking that you can have everybody else be responsible for it other than yourself and you are off doing a full-time job somewhere. So we want the franchisee, a prospective franchisee, to know what their commitment is to it and what the franchisor’s commitment to the success of that. An example, there is an individual I know very well who owns a franchise, and he is frustrated that he has to work it. He makes a ton of money, but he’s frustrated that he’s required to only be involved in that business. He cannot invest in other businesses or be involved. His time cannot be involved in other things because of his agreement. And this brand has a certain standard where they want the owner in the building and involved in some capacity. And they have a very great reputation. They’re known for being very successful. He makes a ton of money, but that is restrictive. So this can help determine right now whether this is the kind of franchise you want. Some people have a vision of buying a bunch of franchises and being very uninvolved in the daily operation, but kind of managing it. And some people want to work there all the time. So this is important, right, that we know this? It is important. It’s not uncommon that franchisees own multiple outlets where they wouldn’t be able to be full time in one of those, so they may own multiples or they may own multiple brands. So this is not always the case where you’ll be restricted that you must work in it. In certain industries that’ll be more important, such as the food industry sometimes. It really requires someone to be there. But yet, in the food industry, there’s also lots of owners that have multiple units. So it would be unusual that you’d be restricted that much. Now, we’re moving in here to lightning round item number 16. This one I’m going to dedicate to Joe Montana, a man who was a keynote speaker at an event that I was not a keynote speaker at. I was like on page 17 of that itinerary. Now, item number 16, the restrictions on what the franchisee may sell. This is a description of the conditions imposed by the franchisor on the goods or services that the franchisee may sell. What are we talking about here? Well, it’s really, again, back to the guardrails of the system. You can’t get that creative that you can start to go out and do some creative things. For example, you can only imagine the number of items that McDonald’s franchisees have suggested that they should be offering or selling. There’s actually a story of that they, franchisees, lobbied to have pantyhose vending machines in the lobby. Oh, that’s a beautiful idea. Yeah. That would be something I would want. I’m like, let’s get a burger. Hey, do we need some pantyhose we can get out of a vending machine? We haven’t seen that show up, and I don’t think we will. There is one example I want to hammer home on this. When you don’t have this kind of thing. There’s a cell phone store that I’m familiar with that sells cell phones. And they sell like jewelry. Like the really, the kind of jewelry that’s like definitely fake, but people wear it as though it is real. Just massive jewelry. And they sell hats that you can custom embroider. And they sell like all these different services. And that is obviously not a franchise. And it’s obviously, there’s no rhyme or reason as to why they sell stuff there. And services are important also. It may not be a product. But you’d be amazed a franchisee may decide to go out and start doing some things outside the system, doing speaking engagements, giving seminars, and generating revenue that’s being taken away from the franchise business and believe that’s OK. So I couldn’t, let’s say, buy a franchise that states I have to focus strictly on like automotive repair and then I’m starting to offer perms in the lobby. Well while you’re here if you want a perm you know we do that you just can’t do that kind of thing right? Right. Okay now item number 17 item number 17 lightning round item number one seven here we go the renewal termination transfer and dispute resolution this section summarizes the provisions of the franchise and other agreements dealing with termination, renewal, transfer, dispute resolution, and other important aspects of the franchise relationship. Terry, what are we talking about here? Well, it gives you again an insight as to the types of things that could happen that could cause your license to be terminated. Now, the good news in a franchise is termination without the ability to cure is very unusual. There are some very small number of things that you could do that wouldn’t give a right to cure. Most of those things would never happen, but they’re addressed here. So it tells you what you would need to do to be terminated, but also lets you know about how long the license relationship is for. Okay. Typically there are 10 years. What happens when you get to the renewal? Is there another fee involved? Do I have to pay that franchise fee again, or I just pay a renewal fee? I have to renew? Yes, you have to renew. Really? Yeah. Wow, so 10 years is kind of average? There’s some that are 5, some that are 10, there’s a few that are 15, but 10 years is pretty standard. Item number 18, lightning round item number 18, the arrangements with public figures. Example, there’s one franchise that I can think of that had a really strong involvement with the Dallas Cowboy at the onset there. And this section is really where it basically introduces the celebrities that may be involved with the franchise or I believe George Foreman, like as an example, he is in relationship with I think Meineke, like a lifetime relationship there. Correct me if I’m wrong, but I think Peyton Manning’s now involved in some sort of franchise relationship. Walk me through what this is all about, this particular item and how that works? In some really small amounts of areas, franchising wise, public figures are very important to people investing. A lot of times that the idea that that public figure is involved and how long they could be involved can be important to your decision to invest. For example, if it’s a short-term relationship, it’s just for one year, you at least need to know that. It’s just a campaign that we’re involved with this public figure to build the business to a certain level, but beyond that there’s no predictability that them being there. So a franchisee can’t come back three years later and say, I bought this because Payton was going to be involved for the lifetime of my license. OK, and now he’s gone. So therefore. So, again, this is a great thing to read. I want to encourage this because I know that Henry Ford has that quote. He says that thinking is the hardest thing to do. I’m paraphrasing. So we’ll get the actual quote up on the screen. He says basically thinking is the hardest thing to do, therefore very few people think. I think a lot of times we get these FDDs we might just kind of skim and I’m sure you’ve dealt with people because you’ve worked with tens of thousands of franchise buyers and people tend to skim stuff. This is important we don’t skim this stuff right? We need to read it and really understand it? It depends on the individual. Everybody kind of learns and takes information a different way. I’m not as detailed as others, so I would be able to skim it and pick up what I need to know. Others would really deep dive into it and take it to bed. Yeah, I’ve been walking around with FDDs for weeks. I’ve been known for that. Okay, here we go. Lightning round item number 19, financial performance representations. This section says information given to a perspective, this is information given to a prospective franchisee on behalf or at the direction of the franchise or its agents from which a specific level or range of actual or potential sales, costs, income or profit from franchised or non-franchised units may be easily ascertained. What are we talking about here? In the fifth grade level we’re talking about that some franchisors provide information that would give a potential franchisee indicators as to what they can expect the outcome to be. Okay. Now sometimes those are really watered down from an average standpoint. Yeah. Which can be dangerous. Some franchisors do not use item 19s because they’ve learned that it really lowers the bar from a standpoint of the type of people they want that will go beyond those norms or averages. I’ve noticed that in the world of franchising, one thing that you, it’s not frustrating when you understand the regulation, but sometimes you’ll ask somebody and you’ll say, hey, how much can I make? Yes. be very hesitant to answer that. They’ll say, well, here is what we disclose in our item 19. And the reason why is because this is a federally regulated thing. And if I were to say, well, you know, you can make a hundred thousand a year, you can make that can be dangerous because there might be some guy and, you know, she boy can make it $5,000 a year and some other guy making two million a year. And if I say something that’s misleading, I get in trouble, right? Absolutely. It’s regulated and franchisors can be penalized severely, even in jail time, for misrepresenting this area of how much can I make. Jail time? It’s unusual, but it has happened. There’s been some cases where that’s happened. Wow. Well, stay out of jail and don’t mess up your item 19. That’s something we can take from this. Now lightning round, item number 20, outlets and franchise content. There are several tables that are located within this portion here. And table number one is usually a summary of the system-wide outlets. What is a system-wide outlet? Well, this would be what’s referred to as the entire system and how the outlets are described. Typically by state, and the outlets would be described how many there are currently. And it typically gives you a range of the year before or two years before and what the most current year. So if I’m in 2014 with an FDD, all I’m going to show there is the latest 2013 year end numbers. Now, so table number two is basically a transfer of outlets from franchisees to new owners. What is that talking about? Well, in franchising, you know, you have an opportunity if you get into a franchise system and you use it as a stepping stone to grow to a certain point and then you decide you’re going to step into something entirely different. You’re able to sell or transfer that license to someone else and benefit from that. And the FTC wants us to disclose how many franchisees actually sold or transferred their license to a new owner. And that might help us know of the health of the organization or who’s doing really well or just kind of let you know a little more for the lay of the land here. It also gives you a good indication that the franchise has a resale value and that there is equity associated with being able to transfer and sell that. Now table number three provides information on the status of franchised outlets. We say the status, does that mean if they’re still in business? Or what does that mean? It does. It means those that are still in business, but also means those that we’ve awarded that haven’t opened yet. Oh. So you want to know that if a franchise has awarded licenses to develop 200 units, that sounds great. But if only five of them are open, you want to know that. Now, table number four provides information on the status of company-owned outlets. Talk to me about that. Many franchise concepts also run company units. Some have large amounts and many have mostly small amounts of company units. Typically they do that for the reason of being able to test and check items before they become the next practices and put them into the franchise units. And others, companies, large companies like McDonald’s run company units to also augment their profitability. How much, how many, is it percentage? I mean, how many company-owned stores is kind of average, or is there any sort of average there? There really is no basis to average them. It really depends on the industry, and it depends on the size and scope of the franchisor. Okay, so table number five is talking about the projected new franchised outlets. What does that mean? Now, in franchising, as a franchisor, we refer to that as a crystal ball. For some yet-to-be-known reason, the FTC believes that we can project the number of units that we’re going to award in the next year. Never been able to quite figure out how we do that, but they ask us to do it. They believe that a prospective franchisee needs to have some sense for what that franchisor expects to award in licenses for the following year. One thing about federal documents and things that are involve regulation is it’s nice in some areas because it’s kind of like having a referee but the other thing is like in I know in small business sometimes you have to take a salary that’s considered fair and reasonable and you know like Steve Jobs took a salary of a dollar a year and then he just took dividends that kind of thing so and some people take a huge salary and in the world of franchising you’re trying to make a guess here, but you don’t really know. You might think you have a bunch of people that said, I’m going to buy one, but until the check clears, they might not buy one. I wouldn’t put too much stock in that, would you? I don’t really put too much stock in that, but more importantly, it really is difficult to predict where franchisees will come from because they want to predict it by state, actually where they’re going to come from. It’s also hard to predict because we really don’t know which franchisees are going to qualify that we will award them a license. I predict strong growth in South Dakota. That’s my prediction. Now we’re moving on to item number 21. Lightning round item number 21. We’re going to dedicate this one to Deion Sanders. All right, so here we go. Financial statements. This section includes balance sheets covering the past two years and income statements for the past three years. These financial statements must be in accordance with generally accepted accounting principles. What are we talking about? Well, here’s where we get to the fact that you can depend on those information to be audited financial statements. We’re required to provide our audited financial statements for the past three years, and we’re also required in some states to provide the current balance sheet for the interim. Really? That’s rare, but it happens. Now, let’s talk about this for a second. Audited financial statements. Are those free? Yeah. I mean, doesn’t that cost some money to do that, to audit your financials? Yeah. It’s a very expensive proposition. It’s the highest level of validation to your financials that you can provide in any way, shape, or form in the world of accounting. And I just want to make sure, if you’re watching this, again, if you’re kind of that conspiracy theorist, you’re a little bit of a skeptic, and you’re going, what am I really paying for here? Well, let me tell you something. I’ve seen some of the legal bills associated with franchising, and they are nasty. I mean, nasty, unless you’re an attorney who’s getting paid that. Maybe you’re excited. But I mean, it’s expensive. And the auditing is expensive. Those accounting bills are huge. I mean, this is part of the expense of opening a franchise. Absolutely, and maintaining it. Let me ask you this. It’s a broad question, but maybe you can just bring a little clarity. Let’s say that I have a snow cone stand, and it is selling the heck out of some snow cones. And I’m going, I want to franchise this. I mean, I have one that’s on fire. How much would it cost me to franchise it, so to speak, or to make it so that it’s ready to where I could franchise it? That’s a great question. There’s a lot of variables that depend on how thoroughly you’d want to do that before you started to launch and test franchising. But anywhere is a minimal amount for a non-retail environment. It could be as little as $150,000 just to be able to start to offer or as high as $300,000. As little as $150,000. For the low, low price of $150,000, you could franchise your snow cone stand or for as much as $300,000. And then on the annual basis, every state that I want to sell a franchise in, I’ve got to have audited financials and got to have my… right? I mean all this… I have to be per state, right? Under certain compliance? There are registration states, which there are about 13 or 14 of, and then the rest of the states just accept the uniform aspect of the FDD. But the no states where there’s registration, they also require you to pay them a fee every year to do that. A little fun factoid. The great state of California, I believe, is unbelievably expensive to sell franchises in, right? You might tack on a few more thousand dollars to be open in California. It’s called a uniform fee, so we don’t charge more in California than we do anywhere else. Okay, so you wouldn’t charge more there, but maybe there’s more regulation in California? There definitely is more regulations. So these are just fun factoids. So again, if you’re thinking about, what am I paying for when I buy a franchise? This is the stuff you’re paying for. So here we go. Moving on to lightning round item number 22. I’m going to dedicate this to Will the Thrill Clark, former San Francisco giant from 1989. He hit 333 in 1989. I know that because I was obsessed with him for a long time. So here we go. Item number 22, contracts. The franchisor will attach a copy of agreements proposed for use or in use in your state regarding the offering of a franchise including the franchise agreement, sample leases, and options and purchase agreements. Contracts, what are we talking about? Well basically you’re going to enter into this license agreement. The FDD to this point is just outlining all the things that you’d want to know but it’s not really the license agreement. So you’re going to have an exhibit that shows the actual license agreement with the blank still blank, meaning your name’s not in it, the state that you’re going to operate in it, so that you know exactly what that license agreement says from beginning to end. Plus any associated agreements. If you are required to sign a lease of some type with the franchisor, they’ll have an example of that. I want to give an example of this. Like if you go into a subway, they all pretty much look the same. And they all have pretty similar lease agreements and they have pretty similar build-outs in every area, every nuance, similar menus, similar almost as in like the same. And these are the kinds of things you’re gonna find here, right? I mean it’s gonna lay out the kind of agreements you should expect. So there’s no surprises, there’s nothing that you’re gonna not be aware of. You know, I wish, and so you can say later, I wish I didn’t know that I had to sign this, you know, this document or I needed to be prepared to accept this kind of a lease term. Now lightning round item number 23. Now we’re going to dedicate this last item in honor of the NBA Hall of Fame basketball player and marketing machine Michael Jordan. So we’re going to give the producers a moment to go ahead and pull up some drum roll here, kind of get the energy flowing. Here we go, number 23. You’re excited. I am. I’m excited. They’re excited. So here we go. This is a one-page document that the prospective franchisee signs to acknowledge that the franchise disclosure document was received. Again, item number 23, it’s the receipt. The receipt, what are we talking about? In simple terms, is that we need to have the prospective franchisee sign a receipt and date it when they receive our FDD. And we’re required to keep those on record. A lot of times it makes a prospective franchisee a bit nervous, but it’s really nothing to be concerned about other than you’re stating that you did receive it because we’re obligated to provide it to you. If you don’t sign that receipt and you come to us 15 days later and you want to join, you cannot do that. I have a funny story. There’s a guy I know who did not buy a franchise, but I remember that he had the funniest commentary ever. He was like, I requested information and they want me to sign this receipt. I’m not signing it. I’m not signing anything until I decide if I want to buy. And I was like, well the thing is you have to sign it 14 days before you buy because you can’t buy legally if you don’t sign it. He’s like, well I’m not signing it. And it was just so funny how livid he was. But this is something you have to sign this before you buy it. So if I’ve been talking to you for five months, I still can’t buy a franchise for 14 days until I’ve signed this, right? Absolutely. Okay. And it’s important that you know to make that kind of decision to invest in a franchise. You’re going to want to have that information. It’s more valuable to that prospective franchisee than anyone else. All right, Terry, we’re moving on to exhibits. An area that I know you’re excited about, I’m excited about, they’re excited about. This is the additional little clarifications that are attached to this FDD. Now they can vary from franchise to franchise a little bit here? They will. Okay, and so some of the things we can find in here might be one is a a template version of any legal contract that you may be designed. Why could that kind of item be included in an exhibit? Well the exhibits are really designed to give you insight as to the things that’ll happen after you’re awarded the license or as part of awarding licenses, such as the franchise license agreement is going to be templated there, meaning the blanks will be there, they won’t be filled in, so it’ll be the template that will be used to actually construct your license agreement with your pertinent information filled in. Now this next one here gets me excited because I mean I really, it’s kind of scary if you’re a franchise or and you’re selling franchises, but as a general rule, correct me if I’m wrong I’m gonna find a document in there that’s going to have the names the numbers in the addresses of actual franchise owners current franchisees is this right yes is it required to be in there yes it’s exhibit of current and then there will go on to give you an exhibit of past franchisees. Imagine that you today were going to go to Target and buy something and they had to give you a list of all the customers who bought something, who bought that item from Target yesterday. I mean, that’s the kind of transparency you’re getting. But literally, they have to supply you with the names and numbers and contact information for people that have bought a franchise. And I don’t know what more clarity and transparency you can ask for. That’s great. It is. Now, Terry, the next thing is this table of contents. Now, the table of contents, the way I understand it, is it’s basically a table of contents for the operations manual for the franchise. And for this, this is kind of like it’s the manual they use to run the business on a day-to-day basis. Why is the table of contents included in this exhibit? What’s the point? Well, it’s an important element for the franchisee to understand the depth and breadth of the types of things that are addressed in it. It’s the playbook, so to speak. And it helps you really get a good understanding of all the things that are addressed. Because people have concerns that they’re going to have to think up or make up or create things on their own. In a franchise system, we want you to understand all that’s going to be laid out in the best order and the best way for you. Now, I understand franchisors I’ve met who’ve said, if we change our operations manual and I change the table of contents, I have to change my FDD, refile a bunch of stuff. It’s expensive, right? So people, I mean, this is like the documented truth. This is the system. I mean, this is as real as it gets right here, right? And many times, a prospective franchisee will say, well, let me see the operations manual. But that’s proprietary information that we’re not going to share with someone who’s not under a license agreement. But the best you’re going to get is to have a sense of what is addressed in there. Okay. Now, Terry, my brain is about ready to explode just from this fire hose of knowledge. So I’m going to go get some duct tape to try to keep my brain from exploding. And if it does, it’ll just keep it all inside here. But I appreciate you coming in and just giving us this unbelievable knowledge that you just don’t get at college for helping us learn this stuff and for giving us almost 30 years of FDD knowledge today. So thank you so much. My pleasure, Clay. I appreciate it. Take care. Alright, JT, so hypothetically, in your mind, what is the purpose of having a business? To get you to your goals. So it’s a vehicle to get you to your destination. And would you need profits to get there? I mean, when you have a business that’s successful, in your expert opinion, would you need profits to get you to your goals? Yeah, because if you have a $15 million business, but you have $15 million of expenses, it’s kind of pointless. Holy crap. All right, so the question I would have here for you, if you could take like, I don’t know, 10 minutes or less and see if you could save 3000 bucks a year by reducing your credit card fees, would you do it? Yes, absolutely. Holy crap. Why would somebody out there who’s listening right now, who has a sane mind, why would they not go to Thrivetimeshow.com forward slash credit dash card Thrivetimeshow.com forward slash credit dash card to schedule a 10 minute consultation to see if they can reduce their credit card fees by at least 3,000 bucks a year. Why would they not do it? Yeah, why would they not do it? Um, maybe because they didn’t understand how you said the website. This tree is a symbol of the spirit of the Griswold family Christmas. That’s clear. Okay, so that can be true. So I encourage everybody to check out Thrivetimeshow.com forward slash credit dash card Thrivetimeshow.com forward slash credit dash card What would be another reason why someone would not be willing to take 10 minutes to compare rates to see if they could save $3,000 or more on credit card fees. Maybe they think it is a waste of time and that it won’t. It’s not possible. There’s somebody out there that’s making more than $3,000 every 10 minutes and they’re like, Nah! That’s not worth my time. Hello! We getting there, everybody! We getting there, everybody! There’s probably some, someone out there. Okay. They would think that. Well, I’ll just tell you folks, if you’re out there today and you’re making less than $3,000 per 10 minutes, I would highly recommend that you go to throttletimeshow.com forward slash credit dash hard. Because you can compare rates, you can save money, and the big goal, in my opinion, of building a business is to create time, freedom, and financial freedom. And in order to do that, you have to maximize your profits. Holy crap. Now one way to maximize your profits is to increase your revenue. Another way to do it is to decrease your expenses. It’s a profit deal. It takes the pressure off. JT, is there any other reason why somebody would not be willing to take 10 minutes to compare rates to see if they could save a total of $3,000 a year on average I am at a loss I cannot think of any other Shampoo is better I go on first and clean the hair Conditioner is better I leave the hair silky and smooth oh really fool really Stop looking at me, Swan! Well, let me tell you a good story here real quick. I actually, years ago, compared rates with this company here called IPS. It’s Integrated Payment Services. And I scheduled a consultation. I don’t know if I was skeptical. I just thought, whatever. I’ll take 10 minutes. I’ll compare rates. I can’t tell. You can tell me I’m a doctor. No, I mean, I’m just not sure. Why can’t you take a guess? Well, not for another two hours. You can’t take a guess for another two hours. And in my case, in my case, my particular case, I save over $20,000 a year. Holy crap! Wow. Which is, you know, like groceries when my wife goes to the organic stores. Yeah. Great. OK. Yeah. Oh, God. No. Everything OK, ma’am? Oh, it’s just that you’ve only scanned a few items, and it’s already $60. I’m so scared. OK, I’m a trained professional, ma’am. I’ve scanned a lot of groceries. I need you to stay with me. It’s just that my in-laws are in town, and they want a charcuterie board. This isn’t going to be easy, so I need you to be brave, all right? What’s your name? Patricia. Patricia, all right. I need you to take a deep breath. We’re about to do the cheese. You know, that’s the difference between eating organic and not organic. So because my wife eats organic, I had to take the 10 minutes needed to compare rates to save the $20,000 a year on credit card fees just for one of my companies. One question. What’s the brand name of the clock? The brand name of the clock, Rod. The brand name of the clock. It’s an elegant from Ridgway. It’s from Ridgway. Let’s buy the clock and sell the fireplace. I encourage everybody out there, go to thrive time show.com forward slash credit dash card. You schedule a free consultation, request information, a member of our team will call you, they’ll schedule a free consultation. It should take you 10 minutes or less, and they’re going to compare rates and see if they can’t save you more than $3,000 a year off of your credit card processing. You were hoping what? I wouldn’t owe you money at the end of the day. No, you don’t owe us money. Because at the end of the day, the goal of the business is to create time, freedom, and financial freedom. And in order to do that, you need to create additional profits. The number of new customers that we’ve had is up 411% over last year. We are Jared and Jennifer Johnson. We own Platinum Pest and Lawn and are located in Owasso, Oklahoma. And we have been working with Thrive for business coaching for almost a year now. Yeah. So, what we want to do is we want to share some wins with you guys that we’ve had by working with Thrive. First of all, we’re on the top page of Google now. Okay. First of all, we’re on the top page of Google now, okay? I just want to let you know what type of accomplishment this is. Our competition, Orkin, Terminex, they’re both 1.3 billion dollar companies. They both have two to three thousand pages of content attached to their website. So to basically go from virtually non-existent on Google to up on the top page is really saying something. But it’s come by being diligent to the systems that Thrive has. By being consistent and diligent on doing podcasts and staying on top of those podcasts to really help with getting up on what they’re listing and ranking there with Google. And also we’ve been trying to get Google reviews, you know, asking our customers for reviews and now we’re the highest rated and most reviewed Pest and Lawn company in the Tulsa area and that’s really helped with our conversion rate. And the number of new customers that we’ve had is up 411% over last year. Wait, say that again. How much are we up? 411%. So 411% we’re up with with our new customers. Amazing. Right. So not only do we have more customers calling in, we’re able to close those deals at a much higher rate than we were before. Right now our closing rate is about 85%. And that’s largely due to, first of all, like our Google reviews that we’ve gotten. People really see that our customers are happy, but also we have a script that we follow. And so when customers call in, they get all the information that they need. That script has been refined time and time again. It wasn’t a one and done deal. It was a system that we followed with Thrive in the refining process. And that has obviously, the 411% shows that that system works. Yeah so here’s a big one for you so last week alone our booking percentage was 91% we actually booked more deals and more new customers last year than we did the first five months or I’m sorry the first we booked more deals last week than we did the first five months of last year from before we worked with Thrive. So again we booked more deals last week than the first five months of last year. It’s incredible, but the reason why we have that success is by implementing the systems that Thrive has taught us and helped us out with. Some of those systems that we’ve implemented are group interviews. That way we’ve really been able to come up with a really great team. We’ve created and implemented checklists. Everything gets done and it gets done right. It creates accountability. We’re able to make sure that everything gets done properly, both out in the field and also in our office. And also doing the podcast like Jared had mentioned, that has really, really contributed to our success. But that, like I said, the diligence and consistency in doing those in that system has really, really been a big blessing in our lives. And also, it’s really shown that we’ve gotten the success from following those systems. So before working with Thrive, we were basically stuck. Really no new growth with our business. And we were in a rut. And we didn’t know. The last three years, our customer base had pretty much stayed the same. We weren’t shrinking, but we weren’t really growing either. Yeah, and so we didn’t really know where to go, what to do, how to get out of this rut that we’re in. But Thrive helped us with that. They implemented those systems, they taught us those systems, they taught us the knowledge that we needed in order to succeed. Now it’s been a grind, absolutely it’s been a grind this last year, but we’re getting those fruits from that hard work and the diligent effort that we’re able to put into it. So again, we were in a rut, Thrive helped us get out of that rut, and if you’re thinking about working with Thrive, quit thinking about it and just do it. Do the action and you’ll get the results. It will take hard work and discipline, but that’s what it’s gonna take in order to really succeed. So, I just wanna give a big shout out to Thrive, a big thank you out there to Thrive. We wouldn’t be where we’re at now without their help. Hi, I’m Dr. Mark Moore, I’m a pediatric dentist. Through our new digital marketing plan, we have seen a marked increase in the number of new patients that we’re seeing every month, year over year. One month, for example, we went from 110 new patients the previous year to over 180 new patients in the same month. And overall, our average is running about 40 to 42 percent increase, month over month, year over year. The group of people required to implement our new digital marketing plan is immense, starting with a business coach, videographers, photographers, web designers. Back when I graduated dental school in 1985, nobody advertised. The only marketing that was ethically allowed in everybody’s eyes was mouth-to-mouth marketing. By choosing to use the services, you’re choosing to use a proven turnkey marketing and coaching system that will grow your practice and get you the results that you are looking for. I went to the University of Oklahoma College of Dentistry, graduated in 1983 and then I did my pediatric dental residency at Baylor College of Dentistry from 1983 to 1985. Hello my name is Charles Colaw with Colaw Fitness. Today I want to tell you a little bit about Clay Clark and how I know Clay Clark. Clay Clark has been my business coach since 2017. He’s helped us grow from two locations to now six locations. We’re planning to do seven locations in seven years and then franchise. Clay has done a great job of helping us navigate anything that has to do with running the business, building the systems, the checklists, the workflows, the audits, how to navigate lease agreements, how to buy property, how to work with brokers and builders. This guy is just amazing. This kind of guy has worked in every single industry. He’s written books with Lee Crockrell, head of Disney, with the 40,000 cast members. He’s friends with Mike Lindell. He does Reawaken America tours where he does these tours all across the country where 10,000 or more people show up to some of these tours. On the day-to-day, he does anywhere from about 160 companies. He’s at the top. He has a team of business coaches, videographers, and graphic designers, and web developers, and they run 160 companies every single week. So think of this guy with a team of business coaches running 160 companies. So in the weekly, he’s running 160 companies. Every six to eight weeks, he’s doing Reawaken America tours. Every six to eight weeks he’s also doing business conferences where 200 people show up and he teaches people a 13 step proven system that he’s done and worked with billionaires helping them grow their companies. So I’ve seen guys from startups go from startup to being multi-millionaires, teaching people how to get time freedom and financial freedom through the system. Critical thinking, document creation, making it, putting it into, organizing everything in their head to building into a franchise little scalable business Like one of his business has like 500 franchises That’s just one of the companies or brands that he works with so amazing guy Elon Musk kinds kind of like smart guy He kind of comes off sometimes as socially awkward but he’s so brilliant and he’s taught me so much when I say that like Clay is like he doesn’t care what people think when you’re talking to him. He cares about where you’re going in your life and where he can get you to go. That’s what I like him most about him. He’s like a good coach. A coach isn’t just making you feel good all the time. A coach is actually helping you get to the best of you. Clay has been an amazing business coach. Through the course of that, we became friends. My most impressive thing was when I was shadowing him one time. We went into a business deal and listened to it. I got to shadow and listen to it. When we walked out, I knew that he could make millions on the deal and they were super excited about working with him. He told me, he’s like, I’m not going to touch it. I’m going to turn it down because he knew it was going to harm the common good of people in the long run. The guy’s integrity just really wowed me. It brought tears to my eyes to see that this guy, his highest desire was to do what’s right and anyways just just just an amazing man so anyways impacted me a lot he’s helped navigate anytime I’ve got nervous or worried about how to run the company or you know navigating competition and an economy that’s like I remember we got closed down for three months he helped us navigate on how to stay open how to how to get back open how to just survive through all the COVID shutdowns lockdowns. I’m Rachel with Tip Top K9, and we just want to give a huge thank you to Clay and Vanessa Clark. Hey guys, I’m Ryan with Tip Top K9. Just want to say a big thank you to Thrive 15. Thank you to Make Your Life Epic. We love you guys, we appreciate you, and really just appreciate how far you’ve taken us. This is our old house, right? This is where we used to live years ago. This is our old neighborhood. See? It’s nice, right? So this is my old van and our old school marketing. And this is our old team. And by team, I mean it’s me and another guy. This is our new house with our new neighborhood. This is our new van with our new marketing and this is our new team. We went from 4 to 14 and I took this beautiful photo. We worked with several different business coaches in the past and they were all about helping Ryan sell better and just teaching sales, which is awesome, but Ryan is a really great salesman. So we didn’t need that. We needed somebody to help us get everything that was in his head out into systems, into manuals and scripts and actually build a team. So now that we have systems in place, we’ve gone from one to ten locations in only a year. In October 2016, we grossed 13 grand for the whole month. Right now it’s 2018, the month of October. It’s only the 22nd, we’ve already grossed a little over 50 grand for the whole month and we still have time to go. We’re just thankful for you, thankful for Thrive and your mentorship, and we’re really thankful that you guys have helped us to grow a business that we run now instead of the business running us. Just thank you, thank you, thank you, times a thousand. The Thrive Time Show, two-day interactive business workshops are the highest and most reviewed business workshops on the planet. You can learn the proven 13-point business systems that Dr. Zellner and I have used over and over to start and grow successful companies. When we get into the specifics, the specific steps on what you need to do to optimize your website. We’re going to teach you how to fix your conversion rate. We’re going to teach you how to do a social media marketing campaign that works. How do you raise capital? How do you get a small business loan? We teach you everything you need to know here during a two day, 15 hour workshop. It’s all here for you. You work every day in your business, but for two days you can escape and work on your business and build these proven systems so now you can have a successful company that will produce both the time freedom and the financial freedom that you deserve. You’re going to leave energized, motivated, but you’re also going to leave empowered. The reason why I built these workshops is because as an entrepreneur I always wish that I had this, and because there wasn’t anything like this, I would go to these motivational seminars with no money down, real estate, Ponzi scheme, get motivated seminars, and they would never teach me anything. It was like you went there and you paid for the big chocolate Easter bunny, but inside of it, it was a hollow nothingness. And I wanted the knowledge, and they’re like, oh, but we’ll teach you the knowledge after our next workshop. And the great thing is we have nothing to upsell. At every workshop, we teach you what you need to know. There’s no one in the back of the room trying to sell you some next big get-rich-quick, walk-on-hot-coals product. It’s literally, we teach you the brass tacks, the specific stuff that you need to know to learn how to start and grow a business. I encourage you to not believe what I’m saying, and I want you to Google the Z66 auto auction. I want you to Google elephant in the room. Look at Robert Zellner and Associates. Look them up and say, are they successful because they’re geniuses or are they successful because they have a proven system? When you do that research, you will discover that the same systems that we use in our own business can be used in your business. Come to Tulsa, book a ticket, and I guarantee you it’s gonna be the best business workshop ever and we’ll even give you your money back if you don’t love it. We built this facility for you and we’re excited to see it. If we go back eight years ago, think about the number of clients you had back then versus the number of clients you have now. As a percentage, what has been the growth over the past eight years, do you think? We’ve got to inspire somebody out there who just doesn’t have the time to listen to their phone. Okay, so Clay, it’s like I would go up and down from about $10,000 a month up to about $40,000, but it’s up and down roller coaster. And so now we’ve got it to where we’re in excess of 100 clients. That’s awesome. And so I would have anywhere from five clients to 20 clients on my own with networking, but I had no control over it. I didn’t, without the systems, you’re gonna be at the, you’re gonna be victimized by your own business. For somebody out there who struggles with math, let’s say that your average number of clients was 30 and you go to 100, as a percentage, what is that? I have doubled every year since working with you. So I’ve doubled in clients. I’ve doubled in revenue every year. That’s 100% growth every year I’ve worked now, so so I’m looking we’ve been good friends seven eight years and I’ve got Doubled five times which is just incredible. I mean the first time you do it, that’s one thing, but when you do it repeatedly Yeah, I mean that’s Unbelievable we’re working our bless assurance off this year to double we’re planning on doubling again We’re incorporating new some some some new things in there to really help us do it, but we are going to double again this year. I started coaching, but it would go up and down, Clay. That’s when I came to you, as I was going up and down, and I wanted to go up and up instead of up and down. And so that’s when it needed a system. So creating a system is you have nailed down specific steps that you’re going to take no matter how you feel, no matter the results, you lean into them and you do them regardless of what’s happening. You lean into them and it will give you X number of leads. You follow up with those leads, it turns into sales. Well I tell you, if you don’t have a script and you don’t have a system, then every day is a whole new creation. You’re creating a lot of energy just to figure out what are you going to do. Right. And the best executives, Peter Drucker is a father of modern management, he said, the most effective executives make one decision a year. What you do is you make a decision, what is your system, and then you work like the Dickens to make sure you follow that system. And so that’s really what it’s all about. So with a script here, we have a brand new gal that just came in working for us. She nailed down the script, and she’s been nailing down appointments. Usually we try to get one appointment for every 100 calls. We make 200 to 300 calls a day per rep, and she’s been nailing down five and eight appointments a day on that script. Somebody out there’s having a hard time. So she’s making how many calls a day? She’s making between 200 and 300 calls a day. And our relationship is weird in that we do, if someone were to buy an Apple computer today, and or let’s say you buy a personal computer, a PC, the computer is made by, let’s say, Dell. But then the software in the computer would be Microsoft, let’s say, or Adobe or whatever that is. So I basically make the systems, and you’re like the computer and I’m like the software. It’s kind of how I would describe our relationship. Tim, I want to ask you this. You and I reconnected, I think it was in the year 2000 and, what was it, maybe 2010? Is that right? 2011 maybe? Or maybe even further down the road, maybe 2013? 2012. Okay, so 2012, and at that time I was five years removed from the DJ business. And you were how many years removed from tax and accounting software? It was about 10, 11 years. We met, how did we meet? What was the first interaction? There was some interaction where you and I first connected. I just remember that somehow you and I went to Hideaway Pizza. But do you remember when we first reconnected? Yeah, well we had that speaking thing. Oh there it was! It was Victory Christian Center. I was speaking there. My name is Robert Redman. I actually first met Clay almost three years ago to the day. I don’t know if he remembers it or not, but I wasn’t working with him at the time. I asked to see him and just ask him some questions to help direct my life, to get some mentorship, but I’ve been working with Clay for now just over a year. The role I play here is a business coach, a business consultant. I work with different people. I work with different people. I work with different people. over a year. The role I play here is a business coach, business consultant. I work with different businesses implementing best practice processes and systems that I have learned here by working with Clay. And the experience working here has, to put it real plainly, has been just life-changing. I have not only learned new things and have gained new knowledge, but I have gained a whole new mindset that I believe, wherever I end up, will serve me well throughout the rest of my life. Since working with Clay, I have learned so much. I mean, I would like to say it was everything about business in terms of the different categories. I haven’t learned it all, but I’ve learned all about marketing. I’ve learned about advertising. I’ve learned about branding, I’ve learned how to create a sales process for organizations in any industry, I’ve learned how to sell, I’ve learned how to create repeatable systems and processes and hold people accountable, you know, how to hire people. It’s almost like every aspect of a business you can learn, I have learned a a lot in those different categories. And then, again, the mindset that I’ve gained here has been huge. You know, working here, you can’t be a mediocre person. You are a call to a higher standard of excellence, and then as you’re called to that standard here, you begin to see those outcomes in every area of your life, that standard of excellence that you wanna implement no matter what you’re involved in. I would like to describe the other people that work with Clay are people that are going somewhere with their life. Marshall in the group interview talks about how the best fits for this organization are the people that are goal-oriented. So they’re on their own trajectory, and we’re on our own trajectory. And the best fits are those people where there can be a mutually beneficial relationship, that as we pursue our goals, and we help the business pursue those goals, the business helps us pursue our goals as well. And so I’d say people that are driven, people that want to make something of their lives, people that are goal-oriented, they’re focused, and they’re committed to overcoming any adversity that may come their way. Clay’s passion for helping business owners grow their businesses is, it’s unique in that I don’t know if there’s anyone else that can be as passionate. You know, whenever a business starts working with Clay, it’s almost as like Clay is running that business in the sense that he has something at stake. You know, he’s just serving them. They’re one of his clients, but it’s as if he is actively involved in the business. Whenever they have a win, he’s posting it all over his social media. He’s shouting it across the room here at Thrive. He’s sending people encouraging messages. He can kind of be that life coach and business coach in terms of being that motivator and that champion for people’s businesses. It’s, again, unique because there’s no one else I’ve seen get so excited about and passionate about other people’s businesses. The kind of people that wouldn’t like working with Clay are people that are satisfied with with mediocrity, people that want to get through life by just doing enough, by just getting by, people who are not looking to develop themselves, people who are not coachable, people who think that they know it all and they’re unwilling to change. I would say those are the type of people and in short anyone that’s content with mediocrity would not like working with Clay. So if you’re meeting Clay for the first time the advice I’d give you is definitely come ready to take tons of notes. Every time Clay speaks he gives you a wealth of knowledge that you don’t want to miss. I remember the first time that I met Clay. I literally carried a notebook with me all around. I was looking at this notebook the other day actually. I carried a notebook with me all around and I just took tons of notes. I filled the entire notebook in about about three or four months just from being around Clay, following him, and learning from Become coachable. Be open to learning something new. Be open to challenging yourself. Be open to learning and adjusting parts about you Be open to learning and adjusting parts about you that need to be adjusted.