Welcome to Franchise Talk with Emery Orosz, industry specialist in buying and selling franchises presented by Morgan & Westfield, a nationwide leader in business sales and appraisals. Here's your host, Emery Orosz with today's special guest.
Emery: Phil, I want to welcome you to Franchise Talk. For those in the audience, we have with us today Phil LeBlanc from ComForCare. Phil, just before we get into the question, the questions I'd like to ask you today, tell us a little bit about yourself, how long you've been in franchising and anything else you'd like to tell us about yourself.
Phil: Thank you for your question, Emery. I've been in franchise development for 25 years. The first 15 years or so, I spent most of my time in the travel industry working for some very large travel-focused franchise companies and also helped start some franchise operations within the travel industry. Then, for the next 7 years, I serve as a VP of Development for an organization in the Detroit area focused in the commercial printing and sign making franchise arena. They had a number of brands, some 600 locations or so. About just over 3 years ago, November of 2011, we took a position with ComForCare --- at that time ComForCare Senior Services; now called ComForCare Home Care, as their Vice-President in Franchise Development. So, really those three industries - the travel industry, the printing industry and now home care - have been where my experiences have been.
Emery: It sounds like you've been in the Detroit area for quite a while.
Phil: Well, although I don't reside in Michigan, the last two companies that I've worked for have all been headquartered in the areas northeast of and northwest of Detroit. For whatever reason, two very fine companies.
Emery: Okay. Okay. So, I know the headquarters, the corporate headquarters of ComForCare, is up, like you said, little northeast of Detroit, in Bloomfield Hills.
Phil: That's correct.
Phil: We've been in that area since 1996 and just moved in to a brand-new corporate office and international training center after a number of years of wanting to get into a much larger space. It’s a really nice facility.
Emery: Okay. Well, yes, I saw some of the pictures online. It looks beautiful. Phil, are you ready for some questions? I'm going to throw some softballs at you [Laughter] to start out.
Phil: Sure! No problem.
Emery: If you could just . . . a lot in our audience, a lot of folks out there, don't know what a master franchise is. Can you tell us what a master franchise is exactly?
Phil: Sure, in its simplest form a master franchise agreement is something that a company like us would sign with a very high quality candidate in a foreign country that would do two things:
First, it would allow us to work in partnership with someone to adapt our business model for that particular country and we do that through setting up what we call our pilot office. So, we would work in tandem to have them set up that pilot office and help us adapt the business model to the specific nuance and customs and so forth for that country.
The second part of that master relationship is really where the excitement is because in essence, we are granting the exclusive rights to that person to develop a similar franchise system in their home country. And by doing so, they have an opportunity once they prove the model, so to speak, in their country or adapt the model, they get to become a franchisor.
So the master franchisee really is going to be replicating what ComForCare has done here in a foreign country and of course, in return for that, a master franchise would want that because they're going to share in the majority of the revenues that are generated through building a national network in their home country. It's a traditional methodology used by many franchisors to expand [Emery: Right] internationally.
Emery: Any countries you are focusing on in particular?
Phil: Well, particularly right now, we're actively engaged in marketing and negotiations at various levels with people in, primarily, Europe --- The Netherlands, the UK, Germany, some of the other countries there in Europe as well. We also are going to be exhibiting through a partnership with consultants in Japan in late April. We also have interests, believe it or not, in Australia as well because the economic system, the free market system are very similar to the US and so, those are countries that are very interested in home care model in particular.
Emery: Okay. The reason I asked is we have buyers, clients all over the world so I want them to know what the possibilities are. What would you say, Phil, are the responsibilities of a master franchisee? Just some of the day-to-day things.
Phil: I think, in my prior response, I alluded to a little bit of that but very specifically, they really want to become the ComForCare of Germany or whatever their home country is.
So, their first primary role is to be a partner in adapting the business model. They're going to operate a home care business and handle all of the daily functions that that would involve --- local marketing, building of relationships with the healthcare community and with referral sources. They're going to oversee the recruitment and the retention and the training of the caregivers providing care. They're going to manage their payroll and their scheduling and all of the various functions at the unit level.
At the same time, once they're open and operating at the pilot office and they're doing so successfully on around 8-9 months into the whole process, then, we'll begin to take on the process of building a team that's going to be their franchise development and franchise training and support team, just as we've done here in the US. So then, their responsibilities will shift somewhat into building a training and a support organization for the franchisees that will be joining them. So, they'll have to hire, in that time, capable management to run the day-to-day operation. They still obviously have oversight responsibilities but now they're really switching gears in to "how do I grow the business model?" which will include franchise sales and marketing, training of new franchise owners, the replication of the training materials and the support materials and on course, putting other infrastructure in place to allow them to expand and continue to grow over a period of time. They really, then, are operating as a master franchisor with the focus on training and support.
Emery: Okay. This is a question I wanted to ask a little bit earlier but it kind of dovetails into what we've been discussing. So, the masters are responsible for all of the training programs. That's part of their responsibility, right?
Phil: Yes. Eventually, they're going to [Emery: Okay.] have to train their own people but there is a very specific transition plan in place with ComForCare, so that they can ease into that at the proper time and perhaps, we can talk about that later.
Emery: Sure. What would you say, Phil, are the major skills sets needed by a master franchisee? What kind of person are you looking for, the ideal person?
Phil: A master franchise partner really needs to be a high-level executive, a business developer. Obviously, I would be remiss if I didn't mention this, they really have to have a compassion for helping people. The need for the types of care services that we provide is a global need. This is a global industry and so, to look at the home care business and master opportunity simply as a business opportunity, I think would be a little short-sighted. We want people who have a compassion to really help not just the elderly but people of all ages who need this kind of care.
Secondly, as I mentioned, people who understand the value and importance and have a high-level of proficiency with building teams of people. They need to have a coaching mindset if you will, a real team-building mindset. They have to have sales and marketing. Obviously, some savvy there in terms of building relationships not just at the local level but being able to go out and present the franchise opportunity effectively and so on. Then the organizational skills that you would expect just in business management to be able to build an organization.
So, generally what we find are two things. We find either a single individual who meets these criteria --- they've been very successful in either an executive-level position or C-level position in their careers. Some of them may or may not have owned their own businesses. And then you have the other candidate --- might be what we call a corporate candidate. A company that would be already successful either in the franchise field or in some other field in their particular country who’s recognized the home care industry as a very viable opportunity and they acquired a master rise as a corporate entity. We really have those two candidates that we deal with. Those would be the primary candidates.
A master franchise partner really needs to be a high-level executive, a business developer.
Emery: Okay. It's interesting, Phil, that you've mentioned that quality of compassion. I don't hear that very often that you need compassion, you need to be a compassionate person to be involved in a business like this. That's important for the folks to understand. [It's a] Good quality to have --- compassion. You don't see much of that nowadays.
How would I go about researching, if I wanted to do my own research, you know, researching a previous experience of other masters that have been successful, because I want to make sure I have the necessary skills, the capital to make sure this would be a good opportunity for me? Any thoughts on that?
Phil: Just from a general standpoint, I would say there's a lot of very good information online. There are a number of books related to master franchising. I've read some myself. So, just if you [are] looking at traditional online-type resources available to anyone today in regard to master franchising, there's a host of things we could find simply by doing a traditional Google or some other web search on…
What really is involved with being a master franchise . . . now, if someone who is interested in this particular industry, they certainly, again, could go to the internet and look at specific companies that have established master agreements in different countries. They could look at, obviously in this case, you'd want to look at maybe other US brands that have established masters. Then, you could to those specific websites and drill down deeper to look at what those people are offering, how many locations they have, how long have they been there . . . so, I think there's just a number of ways, quite easily frankly, to get access to information. At least, begin that process. There's no substitute though for once you do that initial research, engaging in what we call our awarding, our discovery and awarding process here at ComForCare, we do 3, 4, 5 webinars with any candidate primarily focused on educating them on our business model, not just what makes us unique but talking about the industry and how it might be different in their country. We do a lot of that research ahead of time. Really having those discovery-type conversation --- that's where you really get into the weeds.
Emery: Well, those are excellent ideas about how to do some research on your own. But from your experience, Phil, and knowing master franchisee partners, what would you say is their biggest challenge to being a master partner? I know I should have used that word. I'll start using that word "partner" instead of just a master franchisee. What would you think is their biggest challenge?
Phil: Ah, that's a great question. I'll speak from personal experience. The biggest challenges that we've had is that you know you're talking to sophisticated business people, people who have been successful. So, one of the challenges is simply for, and the oneous is really on me or on the person in my role as representing the franchisor, is to make sure that you help candidates understand what really makes you unique, what is that unique value offering or value proposition. And here's why. Many countries may already have independently-owned or locally-grown franchise operations in the home care field, for example, already operating in their country. So, the biggest challenge is for them is, okay, what makes this US-brand - in this case - unique and how is that going to help me differentiate myself in my country?
So, the biggest challenge for me is to help them understand that. The bigger challenge for them is to keep an open mind. I think that anyone who’s looking at a good US brand in a particular industry, really keeping them open-minded to be able to go through this process and help them understand, that is probably one of the biggest challenges. I think, obviously, there are some others that would be typical. You need to make sure that a candidate is properly capitalized, of course [Emery: Sure.] to be able to go through the building stages. That's the biggest challenge, frankly.
The biggest challenge is to help candidates understand what makes you unique, what is that unique value offering or value proposition. The bigger challenge for them is to keep an open mind.
Emery: Okay. Is there any such thing as a typical day for a master franchisee partner? I mean, he gets up in the morning and goes to the office. Is there such a thing, a typical day?
Phil: Well, I will say there's a typical range of activities that a true master partner would be involved with and they're all going to be tending to the oversight of business growth and development, training and operations and the ongoing management of the relationships with the local franchisees within their system.
All my answers now, as relates to master or assuming the person is operating a pilot office successfully he's really operating as a master, that's really all about as I said earlier, training and support, maintaining proper relationships, responding quickly and appropriately to issues that the franchisees might be having at the local level, maintaining a leadership position, being the eyes and ears in that country on behalf of your franchise owners to make sure that you're offering them programs and services that are going to allow them not just to stay competitive but to be in that small group of leading companies. That really is the role of a master --- is to lead an organization forward and to be nimble enough to wear a lot of hats or spin a lot of plates or how you want it . . . just manage a lot of the details in order to help them to do that, because the industry is growing and it's changing. When you look at the demographics of the elderly worldwide, it's amazing. Look at Japan, for example. The percentage of people over 75 as a percentage of their total population is greater than anywhere in the world.
Little things like that become very important so, it is a growing industry. It is a changing industry worldwide so, a master has to kind of, be the point of the spear and really be out there leading their organization.
Emery: Good answer. I appreciate the insight that you've given us. I mentioned most of those where relatively softball questions but here are a couple of questions that we can draw deeper on the ComForCare franchise partner opportunity. What would you say are the unique value of propositions for ComForCare in the marketplace?
Phil: I could answer that in a number of ways. I like to answer it in two parts.
What most master candidates want to know is what makes us different at the unit level so that my franchisees and myself can compete in this market and have a point of difference, a point of value, something that is unique and makes us different? That's number one.
Number two, which is often overlooked by franchisors and I think this is one of our strengths, is how does the franchisor approach me as a master? Am I just someone that is going to buy the rights to a country and then be left alone, or is there a different approach to the master franchising relationship? What is different about that and how does ComForCare handle that differently than maybe other US brands.
I think we have something very solid in both those areas but primarily, for the client, for the franchise itself, what has always made ComForCare unique in the United States and is proving to be a huge "differentiator" as I talk to people in other countries as well, is our care processes. We have what we believe is a superior care process and in summary, what that means is all of the methodologies, the tools, the technology, the critical resources, the human resources, the best practices if you will, training and support, everything that we do that allows our franchise owners to deliver an extremely high level of care on a consistent basis.
Here's why that's so important. We are 90 percent private pay as a system. That means 90 percent of the customers that come to us are coming to us because they have been referred to us by medical professionals that they trust. So, when you deliver a consistently high level of care, it's very difficult to lose that customer. And when you're not losing customers and you're going out and consistently marketing, this is where you're able to scale a business and have some success.
But more specifically, a superior care would involve what we call our start-of care program. How do we bring somebody into the ComForCare family as a client? What are all the steps that we use and do we do more than anyone else? The answer to that is "yes". The fact that we use what we call nurse assessments, we don't just have nurses’ oversee care. We have registered nurses as a best practice conduct all of the in-home assessments for any potential clients. So, we're simply doing more as a minimum standard of quality care in our system than most every other company in the US. We require things that they might do once in a while, but for ComForCare, they are a standard best practice. [Emery: Yes.] That care process and all the tools that are underneath that is what really makes ComForCare, in our opinion, a better opportunity; it's the ability to deliver superior care.
... when you're not losing customers and you're going out and consistently marketing, this is where you're able to scale a business and have some success.
Emery: Yes. And it all circles back to what you mentioned earlier, Phil, about compassion. That's such integral part of this whole model is showing that compassion, agree?
Phil: I would agree and just add that we have actually turned down candidates - not just master candidates but certainly domestically - because they were simply looking at this as a way to make money and we didn't sense the commitment to the everyday details related to care, follow-up, communication, those compassion-related items, so to speak. So, yes, it's the driver. You've got to love what you do. If you're going to be in the home care business, you really do.
Emery: Yes. And this leads into my next question. It has to do with the awarding process. Could you tell us about that awarding process that takes place?
Phil: Yes. The awarding process is pretty straightforward. It's obviously much more detailed for a master candidate but in short, here's what I do:
I first walk the candidate through 2-3 Skype calls using various webinars and other tools to present not only the difference that we make within the business model, who we are, so on and so forth. I also try to get to know them as well in terms of their business acumen and experiences, what really might be transferable into this model. Then, I focus on that second value proposition which I mentioned earlier. This is where I would answer that question.
The awarding process for us is different in that we take a much more collaborative approach. Here's a perfect example. Just going through the process now in Germany with a couple of candidates. After that third call or so, we, then, send out some homework items for the master candidate to help us create the basic business assumptions. We use a worksheet that we collaborate on. We want to make sure wage and hour law and that and all these other local taxation things are taken into account. Then, we, as a master, we will build an initial financial Performa for the master candidate that we, then, give to them as their starting point. They, now, will work with us collaboratively to adjust that based on the business assumptions that they understand and research on their end locally. Collectively, we begin to put a master business model together. We're both learning from each other at the same time.
But here's the real benefit at taking this approach as opposed to just selling them a master franchise: is we get to understand how the candidate works with us in a very practical sense in real time. And if there's collaboration and there's a real back and forth and a sharing of ideas and we're working toward the same goal and things were very positive, that's a pretty good indication that if they were our representative in a particular country, they're going to do the work, number one, and number two, they're appreciating the value that the franchisor and the franchisee both have.
So, we'll take them through this process. Once we get to a point where they have a solid understanding of the financials and their sufficient interest, I would typically meet with those candidates in their home country. I think when you're dealing with master franchising, it's important for international candidates to see the US company in particular on their soil, in their backyard. I think they need to see that kind of a commitment and we always do that. Of course, the next step would be a visit here at our international headquarters in Michigan. This will allow us couple more days to really get into terms of the agreement. By that time, an initial draft of the agreement may have already been presented. By that time, we're pretty much to a point where we're talking about implementation, we're talking about who is going to do what role and we've already begun, in many cases, some of the groundwork for translating manuals and software and all these things.
So, what makes us different is that our awarding process is collaborative. It's not a true selling situation. There's some salesmanship involved, obviously, on both ends. The client is trying to impress us that they would be a good master candidate. We’re trying to share with them why we believe that we're a good master partner for them. But at some point fairly early on, there's real work that has to be done and that's what makes our awarding process very different. This is what candidates have shared with us, "You, guys, are very serious and you're not just selling a franchise".
The real benefit at taking the awarding process as opposed to just selling them a master franchise is we get to understand how the candidate works with us in a very practical sense in real time.
Emery: Okay. So let's assume that the master's been awarded. The person's ready to go into the business. What kind of support does ComForCare offer that partner, there are three areas and you can address them one at a time, if you like. First of all, with the initial business launch and then with [the] franchise development and the sales plan. What kind of support can they expect from ComForCare?
Phil: I'm glad you divided that into two questions, Emery. That was astute of you because the first step really is preparing for the launch. So, even in advance of the launching and in advance of the actual signing of the franchise agreement, we'll be looking at transitioning some of the internal documents. We're looking at the costs and the work involved with converting our proprietary software, our intranet site, our internet site, marketing materials. So, discussions have already begun with the candidate as to what kind of support would be involved and some of those assignments as to who would be the key person at ComForCare to assist them with that work has already been done.
But once the agreement is signed, then we're actually translating and converting operations, personal manuals. We're converting the software now, the intranet, websites, we have an online training portal. All of those things begin to get converted and then, we'll have training here at the United States headquarters for two weeks. That two-week training program would be customized for that country with the assistance of the master well ahead of time. So, about three months, 2-3 months after the agreement is signed, the franchisor, the master franchisor partner is here in the US for two weeks.
We, then, will go through regular field visits, at least two visits, to the home country during the first year of operation of the master pilot office. And again, just continue to adapt the model, tweak it as need be, check for progress, action plan for the next period of months or so. Then, you moved into . . . and again before I move on, there's obviously a host of support that's offered through Skype and through our internet programs and what-have-you. We also have a key liaison in our operations team that would work with any master candidate to help breach the gap.
Emery: Yes. That brings . . . just as you were talking about that, say a guy from Germany comes over and his English . . . he's not that proficient. Do you folks have translators that you could use in the training and how does that work?
Phil: It's interesting that you ask that because we're working with Germany now and we are at . . . yes, we have two people on the staff that speak German. [Emery: Okay.] One of them is going to be primarily focused in the translation of documentation and materials. Again, collaborative process. We . . . our responsibility as a master is to take the first shot at translating documents. The master, then, is responsible for reviewing them and perhaps, working with their own third party - design firm or an ad agency or what have you- to see, to make sure that the translation is really proper and is saying the things that would be wanted to say. [Emery: Right. Right.] So, it's very collaborative.
Then we have another person here at the home office who is a franchise business coach, someone who is working with domestic franchisees, who is bilingual and they will be playing a role in this case of Germany as well.
So, whether it's an employee or a third party that we contract with, we will make arrangements. Sometimes, it will be in that home country because the master says, "Well, I have the perfect person here". It doesn't matter. Whatever the best case scenario is. Then, we move into trying to get the master ready for franchise development. But to answer your question, we would prefer that a master partner obviously be fluent in English and be able to deal with us and our other support team on that level, of course.
Emery: Yes, that's the ideal situation but that may not always happen so . . . [Phil: That's correct.] Yes, yes. Anything else you wanted to address, Phil, on the sales plan, the development? I think we've covered it pretty well but anything you wanted to add to that?
Phil: Yes, I mean I think when you're looking at why someone would have want to master . . . be a master partner with a good US firm, there's two things.
It's yes, how do you run the business? Is it a good model? Is there a true value differentiation in the market? And then, secondly, can they help you grow a network?
Then you have to look at franchise development and sales planning. We have a reasonable development schedules. Yes, we want to grow. We want to be aggressive. But again, the development schedule, the plan for growing the franchise system in the home country is something that's developed jointly. We have tremendous sales process. We call it an awarding process here. There's training, all kinds of tools that we use here. We will work very closely with the master franchisor to develop the franchise sales and marketing and training plan that's best for them. Then, we'll launch that plan approximately 12 months after the pilot office has opened. In doing so, we'll offer them ongoing franchise development support through people like myself and we will train their first 2-4 franchises for them because they would've not yet have been prepared to do that on their own. Our training them to be the trainer will take place as we jointly train those first few franchise units. So, there's a tremendous amount of support that goes into launching a master franchise partner successfully and it really is two-fold as you pointed out. It's the pilot office first and then, how do you build a franchise system? That's second.
The development schedule, the plan for growing the franchise system in the home country is something that's developed jointly.
Emery: Yes. So, the training is just ongoing as long as it's needed?
Phil: Well, training is . . . it's funny that you say that because if you ask our CEO and our founder, Mark Armstrong, you ask him what his primary role is as a franchisor, he will tell you that "we are primarily a training and a coaching organization".
Our job every single day is to train and coach our franchisees on how to properly implement the programs and services and the tools that they've paid us for. It's not always easy to do that and so, that is a constant focus for us. It is absolutely important. And when you look at our system as a whole, you'll always see those who are the most successful are the ones who are taking the time and investing in the use of those tools and programs and even they need sure reminders and refreshers.
So, training and coaching and education is really what we do most every single day. And it would be the same for a master partner.
Emery: This has been really informative and I think it's going to give the folks out there a good view of what's involved in becoming a master partner with ComForCare and I don't have any questions to add, Phil. Anything you'd like to summarize or add anything to our conversation?
Phil: I appreciate it. Not to add too much, I would just say that one of things that's exciting about home care in general is that really is a global need. One of the things that ComForCare, I think, does very well is we never position ourselves as a direct competitor to the social systems that are in place in so many countries who are heavily subsidized by the socially-administered systems. I think one of the things I enjoy about representing ComForCare internationally is that we really are looking to complement what the initial home country systems are providing because most of them fall well short of what could be provided.
And so, I think, the approach is cooperative. As I said, it is an awarding process and when we have the right master candidate who sees the need and really is focused on excellence and providing a high level of care, that's where the magic happens. That's where people understand the importance of what we're doing and as you pointed out and we talked earlier, if the compassion quotient is there, then those become very, very exciting opportunities for us to grow the network. We're working on that now.
The opportunity to chat with you today, Emery, has been enjoyable, very much appreciated. And I hope that it helps your listeners understand that much more about how to do this the right way.
I think one of the things I enjoy about representing ComForCare internationally is that we really are looking to complement what the initial home country systems are providing because most of them fall well short of what could be provided.
Emery: I think it will. I think we covered all the basics and then some. So, for the folks listening, good thoughts on the kind of person is going to take for becoming a master partner with ComForCare so, I appreciate your time today, Phil, and maybe we can do this again, maybe cover some different aspects of becoming a master franchisee partner, would that be okay?
Phil: That would be wonderful. I appreciate it, Emery, [Emery: Okay.] thank you.
Emery: Alright. You take care, Phil.
You've been listening to Franchise Talk with Emery Orosz, Morgan & Westfield's expert in buying and selling franchises. If you'd like more information about selling or buying a business franchise, call Emery at Morgan & Westfield at 928-793-3000. Or send him an email to email@example.com.