#105: Why Franchise Deals Fall Apart

we're live look at that here we are talking pacer coming up next i don't like doing that when i'm not in charge i don't know if you're actually going to push play or not? I'm not like you. I'm doing the right thing. I guess so.

I'm going to make this very easy to kick this thing off just so that anybody that watches this, they can stop watching after you're done talking and then we'll keep going. What is the problem that you solve for franchise awards? You're in a room with franchise awards like, hey, tell me what you can do for me. What's answer yeah uh in like 10 seconds we um help to onboard and open your locations faster and easier um we're a project management software that allows you to uh keep control while also being able to have total visibility into all aspects of the onboarding and the opening processes okay stay stay on that uh is a franchise award do they have a solution in place when you're talking to them?

Is there no solution in place and you have to educate them on the purpose of this? How does that fall into your sales process? Either or. Usually the franchisor has done something right because they've become successful enough in order to be franchising.

So most times they have some sort of playbook, some sort of process that they're following. That being said, we do have templates that allow someone that may be a little bit more on the greener side that may need a little bit of handholding, but nine times out of 10, most of the playbook is coming from their own experience. And then it's easy to load into Pacer. And then it allows you to sort of scale and repeat that process over and over again, while continuously being able to aggregate the data and see how everything is doing very, very easily and simply.

So if I'm hearing it correctly, most franchisors are not using some sort of technology and they have a process and you're solving their process through technology. It's not like you have a direct competitor that's in there and that they're saying this is broken or this isn't working. You're solving like paper to tech. So we can solve for both.

Most times people are using Excel, Smartsheet, right? They're just check, check, check, check, check. Or they're literally sending a PDF to their franchisees saying, hey, here's the list of things that you need to do in order to get up and running. Some clients will be using like a Monday.

com where Pacer differentiates ourself from them is that it was purpose built for franchisees or franchisors to be able to repeat that process over and over. With Monday, you have to like clone the project every single time you're onboarding a new franchisee. And then there's not a lot of easy visuals to be able to, again, sort of see the process and visualize where there might be some hiccups before they actually become problems. Okay.

So now the franchisee has used Pacer to get all the way through opening. Is there value for them with Pacer beyond the opening? Absolutely. So you can also use Pacer to deploy a project across all of your franchisees at one time.

So you load in a project and you click, you know, publish, it'll copy it 25, 50, a thousand times, send it out to each one of your franchisees so that they can, you know, start working on whatever that project may be. I just heard that Dunkin' Donuts is starting to do where you're going to be able to tip through the app, right? So if they used Pacer, they could literally load in, here's all the things you need to do in order to get this up and running on the app. They can opt in, opt out.

If they opt in, here's the list of like 20 or so things that you need to do in order to get this up and running. Here's the signage that you need to put in your store. And then at the corporate level or at the franchisor level, they can see, OK, who's opted in, who's done it, who's actually live with it. And now we can actually start to analyze, okay, now let's look at our numbers.

Are things actually, you know, doing what we said they would do because we've now implemented this sort of project. So it sounds like then it crosses over into, I mean, the term that you guys would use is compliance, but I would use training. It's almost a training tool beyond that because the project management of that scenario, Duncan's going to launch tipping through the app. Here's what the franchisee has to do.

It's a training manual or project management through training or training through project management system that the franchisees can use. So then it turns into a huge value beyond the opening. Absolutely Absolutely Yeah And I would say it goes a little bit beyond training I mean I would call it sort of like deployment or I don know if but yes ultimately it you know we not only are going to let you know what you have to do but tell you how it gets done and then be able to you know measure the success around that Okay, I have a few more, then I'll let Charles speak.

I'm not letting him talk yet. You stay in your place there for a second. All right. So on the opening side, if project management is strong, there would be an argument that you can get open faster, which on the double-edged positive of that is franchisee is now driving revenue and franchisor is driving revenue because they'll get royalty out of it.

So that seems like an easy thing to solve. Beyond it, I see all the value that you can give for continuation of a franchisee. But now I go back to this fake cocktail reception or the one that you're going to be at at Frank Camp. And you're talking to someone.

Is it challenging for you to break through and get that opening? Like, I understand the value of everything that you're saying. Is it hard for the franchisee to understand it? it's it's not because it's you know they're feeling the pain now right like all you have to do is simply say like you know go talk to your uh you know like your your onboarding manager and ask them how many meetings they're having because they're chasing after you know every single department finding out where they're at during the onboarding process and the franchisee everyone's working off of different systems they're having different meetings with everybody if everything is in one place, then they're easily able to, you know, mitigate risks faster and get answers faster and reduce their meetings from three a week down to one a week.

And then the final thing is that we purposely make it so that it's very intuitive for the user, right? So it's a very robust system, but it's very easy for your franchisees to log in and see what they have to do and mark it complete and move on. Because we also understand that, you know, these people are not most of the time, they're not IT people, right? Like they, they just want to know, like, how, like, how, how are you going to help me get open faster?

Or, you know, like, know what I'm doing? Because this is, you know, that I'm excited, but I don't know what I'm doing yet. And so, again, Pacer is kind of gonna, I'm kind of going all over the place. But back to your question.

Again, the, you know, these franchisors are feeling these, these sort of pain points now. And they're using something, but they could be, you know, way more efficient and way more streamlined. Now you have to break through and show them how you budget for this, which if the budgeting is coming from operations, operations usually has some budget, but it doesn't budget like franchise sales or marketing. So you still got to break through there.

But I would imagine like your close rates got to be tremendous once you get them into demo stage, but you got to get them into demo stage for them to see it. Right. Yeah. Yeah.

And yeah, that's true. I mean, with almost anything. But yes. Yeah.

And you're absolutely right. Once they kind of see where Pacer can sort of bring, kind of reduce those silos within, again, all those different people that are touching friend, devs touching a piece of it, real estate's touching a piece of it, everybody sort of is catching people. Once they see that like those sort of silos get broken down, that's usually a big like aha moment for the franchisor. Charles, now you can talk.

I think one of the biggest benefits is the network effect for the franchisor, right? Because the whole benefit of a franchise system is the data, the improvements, the analytics. So if as a franchisor, I have one centralized dashboard where we could start aggregating the data, I mean, I think that moves the needle over time, no? Absolutely.

And imagine if you're a multi-unit franchisee. I mean, you're going to be able to log into one place and toggle in between your units and kind of see what's going on. And to that point, too, I mean, there might be something you might be opening up, you know, five units over the next five years. There might be a whole lot of stuff that you're doing for that unit that's opening up next, but there might be some stuff that you have to do for the one that's opening up, you know, in six months or a year that, again, if that gets missed six months out, then you're already behind the ball.

So I'm going to throw two questions, right? Your team will be at Frank Camp next week and looking forward to that. Two scenarios now, right? Let's say we'll start off on the emerging end.

There's an emerging franchisor in the service category, home service-based business. And then there's one in the restaurant category, both really good brands, say 10 to 15 units, what are they missing out by not having a system like Pacer? Sure. I think the restaurant one is going to be a lot easier to answer, right?

That whole opening process is way more intricate, I would say than you know than doing a home service right So you got to order the spoons and the linens and you know like you got to get like bar certified and all of that kind of stuff And usually that opening process, it happens over a longer span of time. And so the ability to be able to bring visibility into that long process is really going to allow you to mitigate those risks that happen usually, you know, like a couple months out.

When it comes to the home services, there are so many different things that you're, that you have to do. That timeline shortens, right? Because I'm sure there's not going to be a lot of site selections and things like that, but there's still certifications that need to be done. And you're working on a much shorter timeline.

So I would almost argue that that's even more important because things are moving so fast that it's so easy to miss things, especially if you're scaling to the point where, you know, you've got different territories that are, that are working, you know, weeks from apart from each other onboarding them. And so it's just as important to be able to have that sort of visibility across, across the different franchisees. I mean, I, what would be a legitimate reason not to sign up with Pacer?

I mean, nothing. There is none. I'm not going to let you answer that. Let her answer it in different.

Is it a financial hiccup or is it an understanding? To be fair, I want to, I mean, Excel doesn't really cost you anything. So there is a small financial component to it. I think that there needs to be a level of growth and scalability that where you really start to feel the pain points.

Because one, onboarding every so often, sure, very manageable. When it comes to the point where we're kind of scaling on a much more exponential level and things are sort of coming in and happening at a much quicker pace, that's really where you start to see the pain points and what we're doing now is not scalable. And I guess that's how I would answer that. I think we all need to be building toward the scalability.

I think the biggest illusion is, and for every business, not just franchisors and for my own, is so many businesses focus on sales. And the ironic thing is if you focus on the capacity and the execution, the sales are going to come. And so I do think that even on the emerging level, I could think of a number of brands that in the most positive way and most confident way at FranCamp and anyone watching this of, hey, you do need a system like Pacer. And we were speaking with the team at LearningZen, and even reflecting on my own team here, where we're going through the process of training or building out systems, but we're not aggregating the data together.

We're not putting someone in charge of that and owning it. And so I think there's a big opportunity for brands. I think the smaller brands emerging and growth-focused, they need to act with implementation. And so Pacer comes in in a good way.

Yeah. I mean, if you think about it, every onboarding or every opening, it is your playbook, right? So like you're learning something new almost every single time. And the ability to sort of house everything in one place and be able to make edits based on analytics from, you know, doing this repeatable process over and over again allows you to continuously make that process better so that, you know, again, like you, you truly are the expert in your field.

You're, you're being able to, that it's a sales tool for your brand dev team to go out there and say, like, we provide you, you know, a top of the class, you know, execution playbook with, you know, with technology that is going to help you rather than, then, you know, make you go crazy. Even at the legal level, it sets the tone with franchisees. If franchisees sense disorganization, it creeps into the relationship and it comes back later. And to your point, even, you know, everything comes down to unit economics, but it's a very different world if a prospective franchisee is validating and speaking to an existing franchisee and the comment is they had everything covered they made the process seamless to get open right and so there's so many intangibles there yeah could i could i potentially use this from lead to exit meaning a lead i'm talking to a candidate i can use pacer to project manage all the way through discovery day to signing then from signing to physical unit open or mobile unit open then scale and then exiting as a franchise Could I use this soup to nuts if I was sophisticated enough I think you could I think the Fran dev piece that's probably the part where I would say we would likely integrate with a true CRM.

But once, I mean, ultimately, everything else can be loaded into Pacer, tracked, analyzed. And then again, like, I mean, even your exit strategy, there's, I'm sure, a host of things that need to be done. Yeah. Yeah.

But even if you think on the, on the sales process, and I think part of the reason for franchisees buying in why, why it stalls out is let's just call it 90 days to close to set the expectation that you're going to get the FDD 14 days later after disclosure, this is what happens. Then you're going to do a call with this person and then you're going to do your validation. Like the reality is it needs, it needs pacing. I like what you did there.

All right. But I just think it's the problem that you solve is bigger than probably what you say. The second unsolicited statement is I think on your on the franchise website, your magic is at the bottom of the site where it says everything you need to run a franchise system more effectively. Like you don't get to why you why now until you get to the bottom of your site.

The second thing, unsolicited comment, is if I bought your business, I may change that URL because if you search for Pacer franchise, you just find Indiana Pacers all day long. So got to get this higher. You do need to get this higher. Yeah.

No, that's great. I'll be sure to tell Jeff, but make sure you tell him at Frank Camp because he's going to be there as well. He's our growth marketing manager. I'll pass those insights along.

Yeah. Yeah. Why does a client ever leave you? Oh, gosh.

I guess the growth is not there. I'm trying to think of our most recent turns and there's not, happy to say there's not a lot. But yeah, I think, I mean, I would say the majority of it has been a budgeting issue, but that was not a franchise client and that the growth wasn't there. So that, you know, there was not a lot of onboardings happening.

So there was a lull. Go ahead, Charles. No, go ahead, Nick. No, I'm going to say one more comment where I think Pacer could win, especially and I'm looking at franchising lens more than anything.

Of course. I think of the private equity world, like set up the pacing for how I go from I'm interested in purchasing a franchisor to close because a lot of private equity funds don't even have a strong process of due diligence that you could set up roadmaps, even if it was a free tool to break into private equity funds so that they're saying, well, we need pacer throughout all the portfolio companies as well. Yeah. Yeah.

That's a great, that's a great idea. And, and think about it too, is that, you know, that exposes the, the franchisors to, to the platform. So that, I mean, yeah, they're, they're getting a small little peek into it maybe just even on the front end, but it still allows them to see some of the dashboards. Yeah, totally.

I love that. Well, and unrelated to that and and everyone watching this, definitely reach out to Kristen and team at Pacer, which is for every franchisor watching this or thinking about Pacer, imagine that point if private equity comes in and purchases your franchise. Pacer is probably one of the systems they're going to put in play right away. And in a world of AI, for franchisors, every business, our data is critical.

So the dashboards, the consolidation of data, the insights to the brand, is what's going to make it thrive as everything gets sort of homogenized out there. So, Chris, I appreciate you spending time with us. And I appreciate you guys being such a great member of Frank Camp and really adding value to everyone in the community. And so everyone watching this, definitely reach out.

I definitely do a demo of Pacer and speak to Kristen and the team. Kristen, thank you so much. Also, for the record, she sucks at beer pong. So just let the record say that.

Let the record state that I was pregnant the last time and I am no longer pregnant. So, pre-match. Kristen, have a great day. Thank you.

You too. Bye guys. I'll see you soon.