8 episodes

Tom Spadea, of franchise law firm Spadea Lignana, moderates conversations among successful franchisors, consultants, and other franchising professionals as they share insights and strategies to franchisees, franchisors, and suppliers. Tom Spadea is one of the founders of The Philadelphia Franchise Association, which is an educational and networking group for the franchise industry. You will hear from leaders in the field as they discuss the multi-unit industry, exit strategies, franchise law, controlling costs, driving profitability, and a number of other topics. Visit spadea.wpengine.com for more information.

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    • Entrepreneurship

Tom Spadea, of franchise law firm Spadea Lignana, moderates conversations among successful franchisors, consultants, and other franchising professionals as they share insights and strategies to franchisees, franchisors, and suppliers. Tom Spadea is one of the founders of The Philadelphia Franchise Association, which is an educational and networking group for the franchise industry. You will hear from leaders in the field as they discuss the multi-unit industry, exit strategies, franchise law, controlling costs, driving profitability, and a number of other topics. Visit spadea.wpengine.com for more information.

    Life After The Crisis: The New Normal

    Life After The Crisis: The New Normal

    To catch the latest Spadea Lignana news, be sure to tune in and subscribe to our podcast on iTunes.

    Tom Spadea led a session for The Franchise Brokers Association earlier this month. In this episode, Tom talks about how franchises are currently impacted by COVID-19 and what they can be doing now to prepare for what happens after the crisis.



    Episode Highlights

    [2:30-5:30] How do you want to be viewed after the crisis is over?

    As we all are experiencing the effects of COVID-19, Tom asks everyone to think about what is actually in your control and how you want to be viewed after the crisis is over. Remember that you are living through your legacy as a business owner and the way you treat employees, vendors, franchisees, etc. during this time is going to be remembered.

    [8:00-12:00] Never waste a good recession.

    Don’t delay things that are in progress. If you put your head in the sand, you’ll be worse off. While you are in hibernation mode, think about things that you have put on the back-burner.

    [12:30-15:00]Loans & forgiveness

    If you need the funding, get it!

    [19:10-23:30] Should brokers have clients continue or pause?

    You shouldn’t be thinking purely about yourself. Remember, how will people look at you when the crisis ends?

    Be kind, be conscious & build your reputation.

    [23:30-26:30] Do you think taking one of the loans will negatively affect FDDs or a future candidate’s decision?

    If you need it to survive, take the loan because we don’t know how long this will last. Tom doesn’t think this will negatively affect a candidate’s decision. We’re all going through the same crisis.

    [26:25] Do you anticipate more bankruptcies?

    Yes, you don’t need to “outrun the bear.”

    [31:00-34:00] Recommendations for franchisees and franchisors regarding training and money

    We’re now a country of germaphobes. Use this time to think about how things will be different after the crisis.

    [34:00-36:20] This is a time where weaker systems may collapse, and it’s OK to use this time to reset.

    Recognize when it’s time to hit the brakes or quit. If you were struggling before the crisis, you may need to revaluate. Use this as an opportunity to reset.

    [36:20-37:30] Could this be a good time for franchise brokers to see what franchisors are doing?

    Yes, brokers should connect with the franchisors to see how they are working with their franchisees. Franchising is going to come back & brokers should spread that positivity to franchisors.

    [37:20-40:00] State registrations for FDDs

    Many states are making changes, but they aren’t all completely clear. Brokers need to explain to candidates that there are going to be delays.

    [43:00- 44:45] Advice to brokers: this uncertainty is a great exercise to get back to the fundamental role you play. Give coaching and guidance.

    [45:45-47:00] Are virtual Discovery Days sufficient?

    It is a reasonable replacement to an in-person Discovery Day. While it’s not the ideal situation, it’s what we have to do right now.

    Watch the full webinar below:



    Have questions? Feel free to contact us.

    • 47 min
    Why Culture Matters in Franchising

    Why Culture Matters in Franchising

    To catch the latest Spadea Lignana news, be sure to tune in and subscribe to our panel discussions through our podcast on iTunes.

    Implementing company culture and promoting it throughout your franchise is key to running a successful system. Tom Spadea sits with franchise experts, Rocco Fiorentino, Raj Bhatt and Stacey Kimmons to discuss company culture, why it matters and how to select the right people for your business.





    Meet the Panel

     

     

    Main Points

    [3:00-6:34] Vetting Franchisees

    We all struggle when it comes to finding the right people for the job. Rocco remarks, “It’s like a fine bottle of scotch.” You don’t need people that you necessarily connect with on a personal level right away, it’s about their performance. Are your people continuously improving?

    “Dining with someone can be a good metric to use to measure character,” Rocco explains. If you take a potential franchisee out to lunch or dinner, “watch their interaction with the staff; are they forgiving and polite or high maintenance and arrogant?” This can be a helpful evaluation tool during the vetting process.

    Raj and Stacey discuss why discovery day, a common industry standard that entails a day at the office for a potential franchisee, is beneficial. Raj points out, “It’s not always about the first interaction.” Spending an entire day in an office environment can help you build a relationship and understand how that individual reacts to your culture and particular day-to-day stressors.

    [6:48-12:43] So, What is Culture?

    It’s different to everyone, but to Stacey it means “a set of similar beliefs that make a system run successfully.”

    Rocco adds, “It’s your brand DNA” and Raj states, “It’s understanding the human element in relationships.”

    All three recognize that companies are spending more resources on culture in order to retain staff. Raj says, “There needs to be someone to systematically build culture.” When your employees are investing in your vision, it is important that you are maintaining a strong culture and living that every day, if not, your culture can shift quickly.

    [12:50-17:31] What Are Some Challenges That Occur When Changing a Culture?  

    Raj makes a good point: when your culture is changing, “you have to take an assessment every now and again.” Defining who you are isn’t a one and done thing; as your company grows, so does your staff. “Sometimes good employees are culture-killers.” Checking in from time to time to see your business on a larger scale can help you implement small culture changes, weed out cancerous employees, and remind your team what your franchise system is all about.

    Stacey and Rocco agree that effective communication is big part of the pie too. “Some of the greatest ideas come from our franchisees. We would be foolish not to keep those lines of communication open. All of us are so much smarter than one of us.”

    [17:32-34:49] The Importance of Strong Leadership & Culture

    Raj believes, “Culture starts at the top.” At the end of the day, if you aren’t following the culture you are implementing, then your culture is confusing, and your team won’t follow you.

    Stacey talks about the importance of culture discussions early on: “We talk about it at the beginning of training.” All three agree that having training documents where you speak about your culture is a great way to embed that message early on and deter confusion.

    Although it weighs heavily on the franchisor to promote and explain the culture, it falls on a potential franchisee to understand if they align with that system’s values. Raj explains, having strong culture helps validate employees. “When you think about your favorite job,

    • 50 min
    Local Store Marketing: Best Practices for Driving Customers to Your Franchise

    Local Store Marketing: Best Practices for Driving Customers to Your Franchise

    To catch the latest Spadea Lignana news, be sure to tune in and subscribe to our panel discussions through our podcast on iTunes.

    Our established panel of franchise industry professionals discuss best practices for emerging franchisors, marketing tactics, and how to manage your expectations. Listen as our 3 experts examine their experiences within the industry and help you make growth minded decisions for your brand.





    Meet the Panel

    Dana Kline, CFE

    Hand & Stone Massage, Multi Unit Franchisee

    Connect with Dana

     

    Jerry Flanagan

    President, CEO, Founder of JDog Franchises, LLC

    Connect with Jerry Flanagan

     

    Mitch Cove

    Rita’s Italian Ice Franchisee & President of the Rita’s Philadelphia Advertising Co-op

    Learn More About Rita’s Italian Ice

     

    Main Points

    Let’s take a look at a few key discussion points:

    [2:47-14:10] New Franchisee Best Practices & Social Media Marketing

    A good marketing strategy generates business. But how do you structure your plan to expand your base and bring in revenue? It depends.

    For Jerry’s junk removal business, it began as a grass roots movement. “A lot of door hangers and lawn signs.” He jokes, “I don’t think I own a piece of clothing that doesn’t say JDOG on it.” Believing in your brand and being your brand become crucial entities for a startup looking to target local business.

    Commitment and persistence are important for a successful marketing campaign. Dana explains, “Social media is key; you can’t just do a Facebook post once.” In order to generate brand awareness, being on as many platforms as possible on a consistent basis can create results. But it doesn’t happen right away. Dana suggests, “find an eager marketing student at a local college looking to boost their resume and manage a media campaign. A common misconception is that managing a social media account is free. But it’s not! It takes time.”

    Mitch, a long-time franchisee owner in the well-established Italian ice franchise, Rita’s Italian Ice, brings a different perspective. “Advertising revenue was scarce in the 80’s, and these platforms weren’t available.” Be creative. Find new ways to boost your marketing. Direct mail, tv, print ads, and radio are still viable players. Understand your companies target audience; this will help you decide where your marketing dollars matter most.”

    [14:11-19:04] The Importance of Earned Media

    All the panelists agree that understanding your clientele and their needs are important. Jerry points out, “Customer referrals are critical.” If you are an emerging franchise, reviews can make or break your system. Remain relevant and provide quality customer care.  

    How do you get franchisees to emulate your system? 

    Establish a mentor system for new franchisee support. The first 6 months of a new franchise system is critical. Make it a point to be checking in on new franchisees to keep them on track.

    [19:05-20:59] Open Communication is Key 

    Mitch makes a smart observation, “Early success is not always continuous, which is a struggle.” Maintaining open lines of communication between a franchisee and franchisor becomes imperative. There will be times when you don’t agree, but vocalizing your concerns is a good idea.

    [21:13-25:18] Flops in the Franchise Industry 

    With every opportunity, comes the chance to “flop.” Without these learning moments, franchisees and their companies would become stagnant.

    • 51 min
    Franchising & The New Tax Law: What Business Owners Need to Know

    Franchising & The New Tax Law: What Business Owners Need to Know

    To catch the latest Spadea Lignana news, be sure to tune in and subscribe to our panel discussions through our podcast on iTunes.

    Our panel of experts discuss the 2018 tax law and how it affects franchise professionals in the upcoming years. Follow along as tax accounts, Andy Tarquinio and Tom Fleming, overview reforms that will take place on an individual and business level, helping you assess your business and maximize your returns.



     

    Meet the Panel

    Main Points

    Let’s highlight a few key discussions during this event:

    [1:34-7:06] The New Tax Law: Individual Changes

    Last winter, the Tax Cuts and Jobs Act was signed cutting individual income tax, doubling standard deduction, and eliminating several itemized deductions. Tom Fleming goes into depth about the changes that will take place on an individual level with the hope that a drop in tax rates will stimulate business and generate economy until the bill expires in 2026.

    [7:07-21:24] The New Tax Law: Business Changes

    Andy highlights important tax saving opportunities for the franchise industry such as the rate reduction in C-corporations, the standard deduction increase to 20% for pass-through businesses, and the limit on deductible interest expenses. What does this mean for your business? These deductions offer pro-growth and slack in expensing and administrative burdens; however, will increase the deficit over the next decade and require remodeling changes to your business plan.

    Both Andy and Tom agree that although the changes don’t necessarily show us a clear picture of the future, a significant drop in C-corporations and pass-through entities will deem us more competitive collectively in the global marketplace.

    [21:37-46:24] Limitations

    Like any law that is passed, legislature includes its limitations, with heavier burdens on higher income brackets. Andy and Tom discuss what these tax brackets look like according to your income structure and provide examples for pass-through deductions.

    [21:39-23:52] Andy overviews 3 limitations: 

    1. 50% of wages

    2. 25% of wages or 2.5% of gross value depreciable property (Used for real estate businesses)

    3. 20% of taxable income (To the extent that you are within certain income thresholds, this limitation would not apply. Nor would the specified service limitation.)

    [25:31-26:33] The easiest way to explain the 20% qualified business income pass-through deduction: 

    If your qualified domestic business income is 100 dollars, you start out with a 20 dollar deduction (20% of qualified business income). Then you will take a look at your wages; if 50% of your wages is equal or greater to your deduction, in this case 20 dollars, then you have no limitation.

    In keeping with this 100 dollar example, let’s say your wages are 40 dollars. 50% of your wages is equal to 20 dollars. Because your wages are equal to your qualified business income deduction, you can conclude that you have no limitations.

    [31:00-35:19] Andy provides an example of 3 individuals with 100,000 dollars in wages, however differing allocable pass-through wages.

    Follow along with the illustration below as Andy walks us through 3 examples that explore the options a business may face depending on an owners decisions and the new limitations in place.

    [46:25-51:14] Takeaways

    Tom Spadea wraps up the discussion by asking Tom and Andy what our listeners should take away from this discussion: 

    Tom states, make a game plan. “Sit down with your accountant, attorney, and financial planner. Understand your future plans.” Ask yourself, “Where do I see myself 5-10 years from now?”

    Andy emphasizes how important it has become to define your business. “Make a list of critical questions: Am I a specified ser...

    • 51 min
    Helping Franchisees Move from Owning a Job to Owning a Business

    Helping Franchisees Move from Owning a Job to Owning a Business

    To catch the latest Spadea Lignana news, be sure to tune in and subscribe to our panel discussions through our podcast on iTunes.

    “Helping Franchisees Move from Owning a Job to Owning a Business” explores the idea of owning a business, rather than a job. Join us as our three panelists led a Q&A session that discusses the fundamentals necessary to own a successful business.



     

    Meet the Panel



    Main Points

    Let’s take a look at a few key discussions during this event:

    [2:33-11:01] Advice for New Franchisees   

    We open up our luncheon by discussing how a franchisee approaches the franchising world. Todd points out, “stability can be hard to find in the job market today.” Individuals are seeking long-term solutions and the franchise industry can offer that if the franchisee is capable of running a business.

    Mark and Don both agree that a newly integrated franchisee can’t solely rely on the franchise model to take care of everything. In order to succeed, a franchisee needs to have business skills, principles, and ideas (and a franchisor that understands this as well).

    A lack of business skills breeds poor decisions. If you are having a hard time achieving your goals, a business consultant may be able to step in for support.

    [11:02-24:28] Emerging Franchisors & Franchisees: Training, Skill & Support

    Franchisors do a disservice to the business by selling a franchise to an individual that doesn’t have the appropriate skill set to handle a particular business. Mark emphasizes the importance of the vetting process. There are plenty of “assessments that ascertain business skills.” A behavior interview can be helpful too; this kind of evaluation can make it easier for you to understand if your candidate is qualified.

    Although it is important to measure your potential franchisee’s skills, team culture matters too. Todd explains, “One single person will not have all the skills necessary. It becomes just as critical to focus on structured training suitable for a variety of personalities.”

    Although a business plan can be a methodical process, this kind of structure can address a franchisee’s plan for growth and can be used as a coaching tool along the way.

    [24:29-28:58] How to Motivate Complacency

    It’s human nature that individuals become complacent. How do you deal with that? Don exclaims, “Grow or die!” It can be hard to enforce development agreements and even the “top dogs” in the industry can get too comfortable. If this is the case, use them as a model of success. This kind of franchisee can be a beacon that can build up franchisees that are new or struggling.

    [28:59-38:09] Audience Questions

    The panel answers questions about unit economics, margins, and marketing efforts.

    [38:09-52:56] Managing Validation

    A good indication that your business model works is if the franchisee has the ability to “step out” and the business continues to succeed. Todd speaks from a potential buyer’s perspective, “If your girl or guy is still handling day to day operations after five years, this is not a good validator.”

    Don holds a different view. He explains, the only real difference between two McDonalds is the real estate and the owner—the rest is identical. As long as the business has solid fundamentals, the only aspect a potential franchisee should be validating is their own ability.

    Todd remarks, a business model is a great accountability component if you find your ability lacks. Some franchisors require a business plan before a deal is signed. It can take up to a year for that business model to be approved; if you have worked that long on your plan “hold yourself accountable.”

    [52:57-53:58] Takeaways

    • 53 min
    Franchise Exit Strategies: Best Practices for Buying or Selling an Existing Franchise 

    Franchise Exit Strategies: Best Practices for Buying or Selling an Existing Franchise 

    Be sure to subscribe and tune into our quarterly luncheon discussions through our podcast on iTunes.

    During this luncheon, we cover “Franchise Exit Strategies: Best Practices for Buying or Selling an Existing Franchise.” We welcome panelists, Eric Lavinder, Jena Henderson, Jim Provo, and moderator, Tom Spadea, to cover the unique challenges associated with exiting or inbounding into the franchise system.



    Meet the Panel

    Eric Lavinder

    Executive Vice President of T‍‍‍he Simple Greek (a Marcus Lemonis Company). Connect with Eric.

     

     

     



    Jena Henderson

    Vice-President, B‍‍‍rand Services Saladworks‍‍‍. Connect with Jena.

     

     

     



    Jim Provo 

    Franchisee, My Salon Suites, SBA Economic‍‍‍ Development Specialist‍‍‍. Connect with Jim.

     





    Main Points

    Let’s highlight a few key discussions throughout this event:

    [2:39-4:54] Why do people sell and transition in the first place?

    Jena points out, “Our lives are constantly changing.” The franchise arena may have been suitable at one point, but eventually, life gets in the way. Eric and Jim agree—each emphasize the importance of maintaining a clear plan of action when your exit time is near.

    It may be that your operations aren’t successful, or you are ready to retire. Regardless, set clear expectations and understand how to execute your plan. If your vision and communication are clear, your exit will be graceful.

    [4:55-8:52] Let’s talk evaluations.

    There are many methods of evaluations out there. Jim mentions a common financial method which can be determined by establishing the proper multiple of a seller’s discretionary earnings.

    However you chose to understand the value, an evaluation is necessary. Establishing this number will help a seller assess the worth of a business and a buyer to determine if the business is a worthy investment.

    There are a lot of factors that drive a business owner to sell — sometimes the challenge for a seller can be, “Why should I sell?” Do the research! There are plenty of digital resources that can help you.

    [8:53-12:10] How do franchisors deal with franchisee’s unrealistic expectations?

    One word: honesty. Eric points out how simple a conversation based upon revenue can be if a franchisee isn’t producing sales. If your business is failing, “You have two options: get back in your store and fix your sales! If your business isn’t making money, get out and sell.”

    Jena adds, as a franchisor, it’s your responsibility to keep a close eye on a business where an exit may be in the works. Oftentimes a franchisee will sit on a business that is bleeding because they are not ready to sell their location for less than what they put into it. The reality is, a franchisee should not expect to receive a profit when selling. The franchisor should monitor these situations and step in to have that difficult conversation if necessary.

    [12:11-29:59] What do you think surprises buyers or sellers about the sales process?

    All panelists agree that the amount of due diligence that is necessary between a buyer and seller is overwhelming for some to imagine. Each party should know the franchise requirements, be educated and understand the FDD. Eric reminds us, the franchise system shouldn’t be considered an entrepreneur venture. “You are buying into a system” that enforces spending to be al...

    • 49 min

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