The 5 Toughest Aspects of Owning a Franchise (with Matt Kline the Oxi Fresh Franchise Developer)

Audio Transcription

On today’s show, Matt Klein, the franchise brand developer for oxi fresh carpet cleaning franchises, joins us to share the five toughest aspects involved in owning and managing a franchise, including how do you find the right people that can actually do the job? How do you push through that ramp up period when the cash flow is not looking? Very good. How do you organize and manage your day? How do you manage your cash flow, and how do you stay on top of your taxes? All this and more on today’s interview with Mr Matt Klein,

It’s yet another starting edition of the thrive time show on your radio and podcast download. And for some reason some reason I have a fever and the only cure could be more cowbell. So we’ve got blown my mind, Matt Klein on the phone here with oxi fresh based in beautiful, beautiful Denver, Colorado. Matt, we’re talking today about the five toughest aspects of running a franchise, so once somebody unwraps the gift wrapping, once they fill out a form, they learn more about oxi fresh. You send them a franchise disclosure document, they fly to Denver, Colorado for a discovery day and they decided to sign on the line and you decide they’re are a good fit. You will award them a franchise. Now they have one in their own local city. Matt, what is the toughest aspect of running a franchise? We’ve got the top five. If you had to say the top, the toughest business podcasts challenge, running a franchise, what is it? My friend?

Yeah, I think, and thanks for letting me be on the show today, a breath and I think every other business. I don’t think it was just specific to one industry or one business. It is absolutely finding the right people and it’s not just finding the right people that can do the job. It’s finding the right people that are going to work alongside you and what your vision is and how you can get there with a group of people that are all walking down the same path and sometimes that takes a little while to find those people, but you know, good employers can see it and they can develop people and they can, you know, make people better than when they got to that company. So finding the right people I think absolutely. Um, is, is the hardest thing and, and um, takes the most amount of scale and time and effort.

Dr Z, I have a notable quotable this, this, this, just in from the police. You want to take the room down just a little bit here. This just in from the playing bad cop. Does this show this you get to be, you get to be bad cop and then let them be the good cop about this fund. The US Chamber of Commerce did a study. They teamed up with the US does the US Chamber of Commerce team to, for CBS News. We’re putting a link to it on the show notes and what they found was it 75 percent of American employees are stealing from the workplace and that ripped my soul out from me when I had built the DJ company. And all the Djs were bros. Yeah, because they’re all guys I went to college with or were there. TheY’re all pros z. Uh, when did you first become aware that many people either steal actual tangible goods in cash or time from you as the owner?

What? My first employee. Oh, my first employee. I’m still in cash and it was just so unfortunate. You know, the problem is when you have a small business, you don’t have a lot of people can look it over shoulders because there’s not a lot of shoulders to be looking over. Right. And so, you know, when I first started it was me and one person and I inherited her with the, uh, the, the office that I just kind of bought, kind of started. It’s kind of start by, but she kInda came, she to came on board real quick. Simon sinek has this book called the power of why. Yeah. And uh, it’s uh, it’s uh, well it’s, it’s, it’s called simon sinek and we pull it up here, simon sinek, z that the power of why I just want to, I want to inspire. We’ll see. I don’t want, I don’t want to reprimand you right here on the show, but I think I’m gonna have to.

I don’t want to do it, but I just, I was looking at this as how great leaders inspire everyone to take action. Start with why you were that you were a bad leader if you took action along with cash. Yeah. She took action. She was someone come in and pay for an eye exam and cash. He just wouldn’t disappear. And I’ve kind of finally figured that out and I let her go and hired. I hired that actually the first elisia my first employee seek you out there listening to the best and but you know, but the problem is, is that now I have multiple people touching the money. Multiple people looking over shoulders, double checking, verifying, checking. Yes. The person that did the day sheet isn’t the one that confirmed, this isn’t the one that’s taken to the, to the bank, isn’t the one that’s doing the reconciliation. And so, you know, when you, when you get to a certain size, it’s a little easier to kind of have people watching other people. BuT matt, would you say that when you’re really small like that, I mean it’s, it’s, uh, it’s sometimes tough to catch him.

The goal is to start to see trends. And I’ve had this happen in my business, right? one thing, you know, you can get a business podcasts cancellation, but they may do the job, right? And that should never be safe. That’s happening. You’re not really looking at your business because you can see we have gps tracks and their vehicles and things like that. But you’re absolutely right and just don’t get into a. And I’m, I’m certainly can be blamed for this to where you think your employees are so good,

but that’s not possible. And I’ve had that

laughing and then I basically had someone else had to look at my business and say, you know what? What’s going on? Well, it’s clear, you know, they’re, they’re kind of skimming off the top boom immediately, but he just took stepping away a little bit

to be fair. Some of that is there still pencils? They’re stealing stuff that, you know, accoutrements, accoutrements. I mean we, we’ve had debates. You and I have had knocked down the bag. We haven’t had a cage fight debate in a while. Let’s do it. Okay. So you had, you have your number one sales guy, your number one sales guy. Rockstar does twice as much as the next salesperson. Okay. Yep. And everyday. Everyday. Everyday. He’s late five, 10, maybe 15 at the most. And everyday he tries to slip out five, 10, 15, early. Okay, got it. Do you firing a if you can. So lab is doing. He’s doing well. Let me make two times the next one. Let me just walk you through my, my rules on this. Walk me through because he’s still on from your right. Well the patriots go, bill bellacheck has this concept of if you’re late you don’t play the next game.

So he’s famously carried that out with Randy Moss. Um, people have alleged that’s what happened to malcolm butler in the superbowl, but the point is nobody is bigger than the patriots and that’s a great thing to say, but you’ve got to be 100 percent committed to that. So an elephant in the room, we have a policy where if you do something that’s against the system, you know, we’ll, we’ll write you up document that it happened. But we’ve had one of our top stylists, I’m not even exaggerating, we’ve written this person that probably 30 times, but they’ve been with us for like four years, you know, it seems like about every three months, just a little bit of crazy hampton’s. Oh yeah. But they’re really good. So in that case, absolutely not because I can’t replace them, I can’t you. So you put up one point is you put up with a little bit of a jackass, jackass, right?

Because if they’re a rockstar, it’s like johnny depp. I mean, I think about charlie sheen, remember that charlie sheen ride their mat, climb number charlie sheen that that hot streak that he was, he was just winning. And if he was, as he was getting a million dollars an episode for his show is like, I think it was over a million per episode and he was on drugs and he was just doing some crazy stuff. He was dating adult film stars and he was just being a crazy guy. But the show had good ratings and that continued until they didn’t need to enter into the trail owens phase enter into the it. Who’s the guy on the cowboys right now who unfortunately cannot find a job. Dez bryant, dez bryant. We’re no longer on the categories, but he was our, you know, trello ends. It’s like where a guy gets to a point where they’re just not worth the headache.

So I always say she put up with them until you don’t have to go. And that’s, that’s the, that’s the threshold. And so if you pencils go missing, I don’t think you do, um, you know, you bring in the, uh, is, is you do have to draw the line somewhere when it’s nefarious and it’s a huge deal when you catch them stealing, like you said, cash is he, I mean, that’s, that’s it. Yeah. That’s over the line, right? So roughest aspect of running an oxi fresh number one or any franchise is finding the right people to do the job. Now, matt, as you’re thinking about the toughest challenges, because again, there’s turnkey marketing. you guys have a proven brand, have all these systems, are so many aspects that make it very easy to run an oxi fresh, but it’s worth thinking about the most difficult aspects. What’s the second most difficult aspect of running an oxi fresh franchise or any franchise?

It is important and I think we have a leg up on most when it comes to this boat ramp up period, right? The perfect world, whatever you’re currently doing, it’d be nice to just jump into a business that’s fully operating, right? and that’s just not really usually the case. So it’s having the realistic business podcasts expectations and understanding that, you know, the effort that I put in now, three months down the road is going to help my business exponentially grow, right? If I do nothing today, well you should expect in three months of your business, right to be a little less than it would be if you did something that day. Right? And I think as you grow your business, that ramp up period needs to be understood. You’re not going to go from zero jobs to 70, which is wonderful schedule one month for a tech, it’s going to grow, you know, 10 jobs this month, you know, 20 to 25 jobs next month and you just need to keep your foot on the pedal and just understand that it is a process. It’s not gonna happen overnight. The things you do today will help you tomorrow and vice versus really having an understanding of the growth plan and being able to budget for it and being able to do all the things necessary so you can still live comfortably. Do the things you need to doing while growing your business to a sustainable level.

Let me make sure I give matt some some some support on what he just said here. Z dot warren buffet and his book called snowball he wants wrote. He says buying stock at the price was like picking up a discarded cigar, but they had one puff remaining in it though the stub might be ugly and soggy, that puff would be free. Once that momentary pleasure was enjoy. However no more could be expected. He goes, oh, so that’s what I’m saying. When you buy an oxi fresh for all in what? Fifty 7,000 bucks. What is it? Thirty 7,000 plus about $20,000 of working capital in Mouth there.

yep.

So just a hair under $60,000. Z you could not possibly by any business that I could think of for under 60 grand. Let me call him. That’s a. that’s a hot deal. That’s, that’s us. That’s a great deal. But it’s like it’s at that point, it’s the values of the all time low because there’s no customers, but you have 385 franchises that are up and operational proof of concept. Great. you’re buying back your time, you’re buying the systems, you’re saving time, saving money. It’s great, but the reasOn why it’s not 1 million to buy an oxi fresh franchise is that when you buy it, you have to breathe life into it, but if you bought one from matt, let’s say you had a franchise where you were doing 500,000 a year of gross revenue at a 20 percent profit or z at that point, you’re talking about needing to go into region bank and borrow half a million bucks or a quarter million bucks to buy a business. I mean, so I mean this, I think anybody out there is delusional. If you think you can buy a franchise and not have the struggle of the ramp up period. Zli am I at in my mind here, if you’ve got a business at all, you got to go through that ramp up period.

Yeah. That’s the thIng about it is we always celebrate the victories. We celebrate the big house or the. Hey look, he’s got a jet. We always celebrate. Yeah, it’s a big ole house. Hey, I’m retired now. I did it so we celebrate that, but you know, we don’t really celebrate the grindy and the hard work and the hours that you have to put into it that are maybe above and beyond what you thought you were going to have to do. Rhino, I mean at some point whenever you start a business podcasts you have to have the mindset of I’m going to do what ever it takes to make this successful and that ramp up timeframe, unless you’ve done it, it’s hard to explain it, but it’s an all in all hands on deck and and you know the hands are yours and anybody else you could get on your team immediately, but it’s a ramp up period is, is real and I think that’s where a lot of businesses lose it because they’re just like, I’m had a young man one time, craig, for example, listen to this story. He wanted to open up a high end clothing store, high end, high end. We don’t to be a bottom feeder was high and high and tee shirts and the crew treatments. Some of those little skinny leg jeans and rather. Yes, of course, a whole, a whole barrage of leather bracelets. of course.

Sometimes he came to me as a young man and he said, I want you to mentor me, coach, help jessica, the show of friends and family discount, other presence.

And so we helped to set up pricing, help, help some of the concepts and I wasn’t really. He didn’t hire me and so I didn’t, You know, I wasn’t really kind of all in, but he’d come by and bounce some things off of me and I would say yes, no, or giving my opinion. Well, a couple, three months later I ran into him and I said, hey, how’s it going? He goes, I’m going to shut it down, shut it down, shut it down. You gotta shut it down. I said, well, what is it? Why do you, why are you going to shut it down? He goes, man, I just keep it. Two things, two things that matt just came off the right off the bat where it goes. One, I can’t find good help. It’s not stealing from you and to the startup period is just too tough, you know? And I said, what do you mean? He goes, yeah, you know, I uh, on saturdays there, I’m not there on saturdays. I go, well, why aren’t you at their entire goes, dude, that’s the weekend. That’s my leg day. Are you kidding me?

Are you kidding me? That’s meant for anybody out there is that has been a very successful oxi fresh franchisee that you can think about it, you can think of right now. We’ve got to visualize somebody who just accepted the fact that there was a ramp up period and did very well. Can you kinda describe the make and model of that mindset and that person who embraces the fact that there is a ramp up period and who actually stoically just pushes through it and doesn’t need a whole lot of outside inspiration.

I think first and foremost is just having the optimism and the self confidence to realize that there is light at the end of the tunnel. The tunnel is very short and you can get to that point. We’re working with our team and that sort of thing. But yes, positive outlook, aggressive owner, right? Being able to leverage, you know, specifically the first few months you should be using most minutes of your day growing that business. So someone, I get a lot of people that say, you know, I want a business where I don’t have to do anything. I go, well then you need to look somewhere else because that’s a pretty tough thing, right? Um, and when I look on the other side of the fence, I have people say, you know what? I’m going to dedicate my time to making sure I’m the best carpet cleaning franchise or carpet cleaning company in my area or floor cleaning company, my area.

And those that stick to that really become very successful because they have more tools and things like that with, with occupants. But you just want to have the drive. You go into a business and you’re kind of lackluster and you’re not excited. You just want us to work for, for you and you’re not going to work on it. You know, that’s a pretty steep hill to climb. So you again, realistic expectations, you know, work your butt off now so that you can really reap the benefits down the road. And that’s not everybody. So positive outlook background doesn’t matter to us because effort is the most important thing. effort trumps all in this business because we can teach you everything else.

So you no longer look just for former nhl, professional hall of fame hockey players.

We do not.

Okay. I didn’t know if that was good. Alright. So now a tough aspect. Number three of running a franchise that I see is helping somebody organize their day, you know, focusing on things that matter. I want to start with your take on that mat, you know, because I think it’s so easy to spend your whole day on social media arguing with somebody or making political comments or networking at events that don’t matter. I mean you, you think it’s healthier to go in on going to networking events every hour of the day. but talk to me about why it’s so challenging for many people to learn how to be self disciplined now that they’re self employed.

Typically people say, I don’t want to work for anybody anymore, and you know, I get that, but you know, when you work with someone you have, you’re being told what road to walk down. It’s very easy to be successful in that model because there it is. That’s what I’m told to do. I’ll do it and I think most people when it comes to small business owneRship, it takes a little while to learn what you’re good at and what you’re not. TypicAlly. Most people like to spend thing spending time on things that are good at because it makes them feel good. It’s hard to get people to spend time on. Things are bad. You suck at marketing, right? Which most people do by the way, spend some time understanding the ins and outs of the marketing that you’re using. Don’t just use it, right? Lean on us.

Understand why it’s important to use yelp, for instance, and getting those reviews and what other things go along wIth yelp. Like, you know, for instance, you know, most people don’t realize when it comes down to like siri and alexa was a very good chance that those will be tied to some sort of form like yelp. So if you want, you know, formally, so what I’m getting to is spend the time on your whole business, don’t just spend the time on things that you’re good at and in a given day you may need to shift your efforts on just your technicians development and getting them to a better business podcasts customer satisfaction score. And that’s going to take time, right? It’s going to take next day is going to be I have a stack of work orders here and I have no idea what’s going on and if my technicians are doing good or bad because I haven’t closed out my work orders in three months, right?

So it’s just getting the system in place where every day you can knock out something small so that you can actually focus on the whole of your business and your exact rIght time. You know, management is extremely hard for most people, myself included. Um, and you just got to work on it. Maybe find someone who’s good at it and use best practices. Um, you know, you can look at, at least with oxy, fresh over 230 different franchisees out of those 3,230, there’s going to be some very good one. You’re doing the exact same thing you’re doing and the same day they have the same ties of employees, same type of marketing, same type of cleaning system obviously, and you can share best practice. I just, you know, learned from others and create a good process for yourself.

No, dr z dot tough aspect. Number four, managing any business or a new franchise is managing cash flow. Can you briefly speak dr z on managing cash flow? I think I hear so many tImes in a business failed because it was under capitalized. They didn’t realize that the cashflow situation that’s going to be. In other words, you’ve got bills to pay. You open up the business. You have also, you want to make a living. Most people are, they’ve got to make money,

was too much money going out and you don’t want to quit my job. My job on saturday sneaks 100 times, dropped. I had a job. I pay six figures fresh. I quit on monday at $7,000. Saved and liked. I liked him. I had more money in the bank. I found out she didn’t have any money in the bank. Cashflow

is. Ashland is a huge, is a huge thing. We can have a profitable company. Sometimes you have to float a deal. In other words, you’re putting money out of your pocket like a jet back when you guys were in construction, right? You guys go in and see me? Yeah. You do a deal and then you wouldn’t get paid for it for 30, 60, 90 days, 90 days, 60 or 90 days. Often it was the kind of deals with jeff preferred. So you have to. You know, it’s. It’s not only about doing the business, but it’s also about managing when you’re going to get paid for it and understanding that that’s important because you put money out, you have your time, you have resources, you have product, and if you’re not getting that money back in a in a, in a good enough time, you got to make sure you have a war chest or some money in the bank to cover said expenses because unfortunately, I don’t know why, but if you don’t pay your electric bill, they’ll shut the darn thing. Oh, come on. WhIch doesn’t make much sense. I think about it. It’s like I’ll get to you guys, you know, come on,

you know, good aspect number five, man. I want to get your take on. This is staying on top of your taxes. Now this is different from cashflows. I’m just going to tee up an example. Let’s say an oxi fresh owner, new franchise. He makes $100,000 of profit after their first year. You know, they got to pay their share to the federal government, state government, et cetera, et cetera. Probably a third of it or more is going back to the government. Uh, can you talk about the importance of staying on top of your taxes and not just abdicating that and never actually being on top of your taxes meant

we have a very easy model. There’s not many moving parts when it comes to a, you know, a spreadsheet for us in our chart of accounts. My biggest issue when I first started, I didn’t really have an accountant on my team for like seven months, so I just had like all these transactions going on in the very beginning is actually when you have most of the unique transactions that have things up and things you would never really buy as you’re an established franchise company. So by the time I was seven months down the road, I had to basically spend, you know, days with my account and getting my chart of accounts when, if I just start at the beginning, did that normally that’s one thing. So just don’t go down the path that I did. If you have an accounting background, super easy to do your chart of accounts, we can actually help you with that, but that one was important, but people in small business don’t realize the implications of, of not understanding your taxes. So,

okay,

you feel like you just made $200,000, but you don’t account for taxes, you don’t have anything in the bank to pay your taxes, if you will, you know, if you need to pay, right? That can be very detrimental to your next year’s growth. It’s the opposite of having, you know, um, what you think you have in the bank. So I would just, you know, understand it, just like I talked about investment time and understanding where you stand if you’re a c corp, escorp, um, and just, it’s very easy to learn, right? Just, just use the resources at your disposal to understand where you stand. And that way there’s nothing that’s going to surprise you when you do your taxes. And if there’s nothing that’s surprised you, then you can budget for the next year and you can do the things you need to. And you may just see at the end of the deer, yeah, it makes sense to buy a boat, right? But if you do that without knowing the implications and buying that boat when he gets taxed and then it becomes a detriment to your business.

If you’re out there today and you say, you know what, I a proven turnkey marketing system. I want a company with a history of success. I want to be self employed for my sale and I want to take a selfie of myself in my own vehicle that I own myself and I want low startup costs and I want cutting edge carpet cleaning, super green carpet cleaning technology. You my friend, need to go to thrive time show.com forward slash oxi fresh nosy. We don’t want to apply pressure for the listeners out there know, no pressure. We would never say, oh, come on now. Come on. I’m a couple of really who would never say we would never do the real call in the next 10 seconds or we knew we would. We wouldn’t do those kinds of things. We’re above that. We’re. We are above that size. It’s hard to make a phone call in 10 seconds, but anyway, we just strongly encourage you to go to thrive time show.com forward slash oxi. Fresh out the form. Matt will give you a call. He’ll tell you about the brand and matt has one more final question for you. I know you’re in denver and so I know you’re. You’re well connected. You’re kind of a big deal. I juSt had a quick question for you. How’s john elway doing and are you guys doing dinner this week? Again?

You were on the outs right now because I’m a pretty big broncoS fan. I’m pretty tired of losing, so I told him before we do dinner again. You better get this train back on the track. Well that’s fair. I think they can’t argue with that. That’s fair. Standard of excellence. They just caught our backup quarterback. I’m breaking and entering someone’s home, so I think he’s got a little bit on it for god is key. Yeah. Maybe. Maybe pushed the next week. Okay. Well sorry about the broncos. Sorry about those guys. You guys are. You guys are on the upswing. I can feel the worst team in the nfl. So you know, things are looking at who’s the worst team in nfl? Arizona cardinals. the cardinals. Cardinals. Yeah. Well we do play the Kansas city chiefs in, in arrowhead this week. So that one should be fun.

May the may you not lose by more than 40 points.

Yeah, that would be good.

You’re going to get well next time you see him, tell him I said hi and you know, and now without any further ado, hello.

He the game of life and in the game of business there all, both cowboys and that’s where I’ll tell you what, I don’t know who you’re talking about, but let’s go ahead and nip listen to. But right now we’re the first apple example now provided bY you via sample was the phrase snippet in the. But when you just sAid you wanted to nip it in the bud, it made me question many, many things. One of which was why would you want to nip something in the blood? Why I tell you this brother, you just killed me. two stones with one bird man, your toenail and i. Hey, don’t know what you’re talking about. I unfortunately now rest my case to be a successful entrepreneur. We all know you have to be a cowboy, but you don’t want to be an idiot brother. You need to make a 360 degree change.

You sound so angry and according to forbes, between 36 and 50, three percent of all small business owners are going to be involved in at least one piece of litigation in any given year. Will brother, I’ll tell you this, I look at that as positivity because that ain’t every business podcasts. It’s being sued. That’s just 36 percent, so I rebuke your negativity and so despite his jack ass, my challenge that I pose for you is to take the 32nd test, go to cowboys and idiots.com. Again, it’s cowboys and idiots.com to make sure that you, your family and your business is properly insured in this. The pitches society that we’re in, 45 percent of small business owners will be soon this year. The good news is that includes everybody bought you. Rather. I already knew that. That’s why I’m not going to cowboys and idiots.com. Take the challenge and takes the 32nd [email protected].