Gary Raphael: The Mid-Career Pivot to Franchising

“Franchising is like politics: It’s all local.”

After a 35-year career as an insurance executive, Gary Raphael found himself “on the short end of a merger” and embarked on a new entrepreneurial journey that has led him to the QSR (quick-service restaurant) franchising model with Rita’s Italian Ice and Frozen Custard. How did his high-level business experience prepare him for the pivot? And how did he ramp up a whole new skill set to establish himself as a successful and enthusiastic ‘zee?

Ab and Vini welcome Gary, who shares what he’s learned along the franchising path: Connecting with “both sides of the passion equation” when committing to a franchise. Why successful ‘zors embrace innovation from their ‘zees. Wrangling the “vapor trails” of online reviews. How young people — as employees AND customers — are influencing local social impact by ‘zees. And the personal trait that might make you want to think twice about getting into franchising.

Transcript

 Hi everyone, welcome and thanks for joining us for Stars of Franchising. Get ready for a roller coaster ride through the world of franchising as we bring you the best stories of inspiration and entrepreneurial grit and turning dreams into franchise realities. That's right Vinnie. From emerging to global brands, we'll chat with the genius minds behind the magic. All brought to you by the Tariq Farid Franchise Institute at Babson College. I'm Ab. And I'm Vinnie. Now buckle up for some serious inspiration.



 And we are really, really excited to have on our podcast Gary Raphael. Gary, welcome home, so to speak.



 You have thanks gentlemen. It's a pleasure to be here. I appreciate the opportunity to contribute to the conversation. Well we love it and we love Babson connections of course and what our alum bring to the table. And we always like to start by understanding who you are and why and your story to give our audience and listeners a chance to understand your background and what we're going to talk about.



 Yeah, sure, I'd be happy to do that. So I'm a proud Babson alum, undergraduate class of 1988.



 I didn't know we sound long ago, but it sounds a little old at this stage.



 While I was on campus, I majored in finance and investments. So I had a joint major while I was at school. So I was there, as I said, until 1988.



 When I graduated, I left campus and immediately went into the corporate world. I started my career in the casualty insurance industry and was in that industry for the better part of 30 plus years.



 And so I had an opportunity to see how large Fortune 1000 entities worked and had the good fortune of navigating my way through that environment to have some success career wise.



 I eventually found myself on the short end of a corporate merger and saw it as an opportune time to maybe flex my entrepreneurial muscles. So I went out on my own and I started my own consulting firm, which was a little more daunting than perhaps I was a little naive when I first started because really what I was selling was me. I was selling my background, my skills, my accrued knowledge and experience.



 And I had some success at it. I ended up working with a firm that then ultimately brought me in-house for a few years to work with them directly and exclusively. And then I went back out and into the consulting space. And while I was again consulting, I started to scratch a franchising and trying to get a sense for sort of what the next part of my journey professionally might look like. And I ended up looking a lot of things and was ready to go. And I had a signed letter of intent with a fitness franchise. And three days later, the world shut down due to COVID. And so my first foray into franchising was actually a bit of a false step and was really not all that pleasant because as a consequence of COVID and the impact it had on the fitness industry, I immediately had to engage in some legal activities to sort of recoup some investment that I had put out, not knowing COVID was coming. So anyway, that then ultimately led to me just being smitten with the idea of franchising and what franchising might allow me to do. And I found my way to my current venture. Thank you. So with that background, I would like to start with the first question by inviting you to explain to our audience, what do you think people misunderstand the most about franchising?



 Yeah, I think there's this tendency, at least my sense is that there's this tendency to think that franchising is basically just executing someone else's game plan or their vision.



 And it's funny, I'm in the suburbs of Washington, DC. And so I tend to sprinkle political jargon into my conversation. I can't help it.



 And I think franchising is like politics. It's all local. And it really requires an understanding of your local marketplace and consumer preferences. And as a consequence, my sense is that no two franchises are the same. Again, I'm fairly new in this. I've only been doing this for about a year and a half in terms of actual ownership. I've been scratching at this for the better part of five years, but only really full on and fully invested for the last year and a half. But it's clear, I've done a lot of research, I've met with a lot of franchisees and no two, as I said, are exactly alike. And there is opportunity, no matter where you are, no matter what you're doing, no matter what vertical you're in, in my opinion, to give your location all the personal flavor and apply your unique management style and your thought process to your enterprise, no matter what it is. So I worry that people just think it's a little cookie cutter and is not a vibrant environment to apply your vision. And then maybe if you, you know, it's interesting you say that Gary, because a few people out there think that franchising is not entrepreneurship, you know.



 But what I hear you say here that no, the core franchising is the ability to make things happen just the way an entrepreneur would do.



 Do you have anything to say on that, please?



 Yeah, no, I think franchising is very entrepreneurial. I think in its DNA is entrepreneurship, frankly.



 You know, look, you don't, in my opinion, you don't have to invent or create a business to be able to flex your entrepreneurial muscle within its framework, right? I mean, it's just because someone else came up with an idea or a concept that's appealing to you doesn't negate your entrepreneurial thought process and instincts. And you still have to run the business. You still have to run the business every day to make it a success. Somebody's got to do it. And you're still paying bills and you're still developing the business plan. And no one's doing that for you. You're not the franchisor isn't telling you they're giving you the product and they're giving you the operational logistics typically, but they're not saying here's the day-to-day execution roadmap. You're still figuring that out. Your staff is still looking to you for answers and leadership on daily issues.



 You set the prices and calculate margins and you represent the business in the local community. You set the tone for the culture within the business. There's just lots of ways to flex your entrepreneurial perspective and mindset in a franchise scenario that I think is really, really, really healthy.



 Great, great stuff, Gary. You know, one of the things that you said that I'd love you to expand a little bit on is over the last five years, as you stated, making a foray into a new venture or chapter and franchising kind of had you smitten a little bit. Can you tell us a little bit about what you find attractive about the model and the process to get to that first fitness opportunity, you know, the steps you took? Because we have a lot of folks like you who are maybe at a stage in their life they're considering it and there's the right way to do it with due diligence and other things that I know you've done. But could you just share a little bit about that first part of the process and what drew you in and then when you had to pivot, kept you drawing in again and led you to your venture you're involved in now?



 Yeah, no, I'm happy to. You know, it was purely a passion play. When I came to the conclusion that this is, that being an entrepreneur or utilizing my entrepreneurial skill set in a way that I hadn't previously in my corporate life, I



 quickly as I alluded to, I quickly dialed into franchising as perhaps a way to accelerate that. You know, look, as I said, it was 30 plus years and I, well, I could build a business on my own ground up and I thought I and my consulting firm was in essence building an exercise from ground up.



 I saw the pros and cons of that and franchising to me seemed to be a way to accelerate the process and to maybe get there a little faster. And I saw, and as I'm sure you guys can speak to this much more effectively and eloquently than I can, clearly franchising is on the come, right? I mean there's never been more franchising opportunities than there is as the three of us are sitting here today chatting about it and the marketplace just grows and grows. The landscape gets broader and broader and there's a lot of really, really cool things happening in the franchising space. If you go to a franchising expo, which I did, and a conference or two, which I did, to sort of give myself a full measure of what was out there that might be, that Gary might find intriguing or attractive, there is no shortage of concepts to consider. I dialed into fitness because it's a particular passion of mine and I thought I could be, I thought I could be good at it from a business perspective but also immersed in it because I just really enjoy it. And so I wanted to play both sides of the passion equation.



 And unfortunately, as I said, really the only thing that inhibited me from really getting into it in depth was the advent of COVID. And so that required me to pivot a bit and maybe think about some concepts that I had that perhaps were a little less sensitive to some of the proximity dynamics that accompany fitness, right? It wasn't working. And so I ended up migrating towards a host of other opportunities. I could list them for you but we only have so much time.



 So I ended up ultimately finding my way into a Rita's Ice and Custard franchise, which was an existing franchise that a business partner and I ended up acquiring. And so the pivot to some level was forced a bit by the circumstances in the marketplace. But yeah, I'm sorry, go ahead. And then Gary, our next question talks about maybe failures, the biggest failure, even though in your case it was like a false start.



 But I would imagine you learned something from that experience, even though it was forced on you by the circumstances in the world.



 What was the biggest thing you learned from the experience?



 Yeah, Vinny, great question. So one of the things that I should probably, a bit of context I should provide is so when I eventually made, it took me several years to make the decision to jump into fitness despite the fact that it was clearly some place that I had always sort of, that it always attracted me. It still took me time. And I will tell you, one of the things I struggled with despite my Bapsin background and everything else was just trusting my decision. Like I didn't feel like I initially had really anywhere to go or anyone to talk to. In fact, I think this is an entrepreneurial opportunity in and of itself. It's creating infrastructure around this burgeoning marketplace where people like me are coming out of a career. They're thinking about franchising as an opportunity.



 And it's a little daunting and a little scary. And if you don't have a network to reach out to or resources you can count on to provide you with the kind of feedback you need, when you're out there on your own trying to make this choice and you're just trusting your instinct but you're crunching the numbers and you're doing everything else, it can be hard to make that final leap. And I struggled with it and feeling, I struggled with the confidence.



 And look, the dynamic here is that every franchise or has a great story to tell and they make you feel like if you're not part of what they're doing, you are making a really terrible decision. If you're not getting the joke here, then maybe we shouldn't do this because you're not seeing the awesomeness of what we're offering.



 There's a little bit of pressure, there's time sensitivity, there's a whole bunch of other things at play in that. And if you are not confident in your analysis, that can be a little crippling. And so that's where I would say, I don't know if I'd call it a failure, but I would certainly call it a place where I didn't execute the way I probably should have because I didn't trust myself.



 And anyway, so as I reached out and started to bring other people into the discussion, it got easier because they can affirm what I was seeing. Interesting. Thank you.



 A lot of great insights, especially I think as you're right and you point to, there's a lot more of people evaluating this. And we hear hope with you sharing your story and other resources to help people on that journey. One thing that I'd love to explore with you and get your thoughts since you actually have the benefit of working with two franchisors to a certain level and then your last year and a half with Rita's is, what have you noticed that either in your evaluation or with Rita's or the fitness, good franchisors do in that relationship to provide an avenue for success or not do for that matter that you've seen in brands that maybe you chose not to align with?



 Yeah, no, I think I've realized the importance of this as I've gotten further down the path



 and not only from my own observations but from gleaning information from conversations I've had with other franchisees, just how good and bad the franchise or franchisee thing that that dynamic can get.



 There are instances obviously where it's really healthy and really constructive and it's really productive and then there's clearly examples where that's not the case at all and it's borderline I would say adversarial at some level I've heard people speak to. So to your question I would say clearly pressed, there has to be, I almost, I would say that there has to be a collaborative relationship clearly. There has to be something where you feel like they're on the same page as you are regarding your objectives and what you're trying to achieve and if you get the sense from talking to the franchisor and they're willing to let you talk to franchisees, an immediate red flag is if they're not inclined to put you in contact with the franchisees, I would maybe pump the brakes. So true. But assuming that happens, that franchisee feedback and getting their sense for how supported they feel is tremendously valuable.



 And there has to be this healthy dynamic, this push-pull, whatever you want to call it that exists between the two entities.



 You also have to find a franchisor who in my opinion is willing to invest in your success and they want to help you improve your bottom line because in essence you're helping them improve their bottom line. They're generating all the revenue on the back of your effort and if they're not willing to participate in that process, again I would maybe question whether or not that's the right relationship.



 I guess another one I might add to the list is also it became clear to me too that there were definitely franchisors who understood and embraced the idea of innovation and wanted to create a culture of innovation. In other words, they didn't build a mousetrap and just assume that the mousetrap had been perfected. They were willing to consider the possibility that the mousetrap could actually get better and that oh by the way it may get better as a byproduct of giving our franchisees the opportunity to contribute ideas about how to make it better.



 So again, that healthy sort of respect for how the franchisee can be additive and how it can help not just the bottom line financially but also help to build the brand and move the brand in a different way and move the needle in terms of the breadth of offering or the product line up or whatever it might be.



 I think that dynamic is critical as well. Whenever I spoke to people who were unhappy with their relationship, it seemed like one of those things wasn't present. It wasn't there and frankly when you're a franchisee every day there's so much to do anyway. The last thing you need to be doing is exercising a ton of energy battling it out with the franchise or nothing positive comes from that. So Gary when you told us your story I could imagine there are many millions of people out there who are in the corporate world and thinking you know what I still have that entrepreneurial fire in me. I want to go out there and do something and franchising as you said is a possibility.



 So when you look at those now if you want to what would you think is the best trait or maybe strength or resource they should think about if they want to be successful in franchising? What would you say they should try and nail down before they venture into franchising?



 Yeah, really another good question.



 I would say that I don't know if it's unique to franchising but so I'm not sure I can surgically dial it in that precisely but I would say and this may feel a little obvious or intuitive but I think you clearly need to be adaptive. Another word I would use is nimble I guess.



 In our business so in the business that I'm in in terms of franchising and the kind of product we offer and the way we provide it to our customers I am heavily reliant on teenagers to help make the magic happen to you know produce the sausage whatever analogy you want to use and while that can be an energizing exercise it also has its element of being a little unpredictable because we're dealing with teenagers and you know I can say this because my kids are in the business too which is a whole nother dynamic of this that you know we could probably spend an hour on which is crazy gratifying but well I'll skip that one but so there's an element of unpredictability in any business certainly in the franchising world you need to be as I said a little nimble certainly adaptable you need to have contingency plans in place and you have to make in my I've always believed this I believe this when I worked in the insurance world I believed it my entire professional life and so much of my opinion on business transaction is based on my role when I'm a customer and what I like and what I don't like and what I appreciate and what turns me off and in my opinion if you're having disruption and something is not working the way you want it to operationally you can never ever ever let the customer feel or see that and because a customer doesn't care about what your issues are nor should they and if you're not nimble and if you're not if you're not adaptable to what's going on and whatever the breakdown is that's occurring



 it's gonna be hard for you to feel comfortable in this environment because franchising to some degree is a little bit of a lonely business right guys I mean it's not it's not a there's not always a place you have a corporate entity a franchise or but they're not they're not there to pick up the bat phone when something bad happens you got to figure this out on your own and if you're letting the the issue of the day affect how you perform to the client that will never work in my opinion and it'll always be problematic and as I said in my view the customer can never feel the pain you were feeling they have to just they have to be left with the impression that everything went smoothly and perfectly and if for some reason you're not capable of making that happen I would suggest to you that maybe you need to think about whether franchising is a good fit for you because that's a that's a trait that you've got to have Wow thank you that's great that is great stuff because I think Gary one of the things we've heard and hear often and we try to dispel here is the myth and you alluded a little bit to it earlier that I'm gonna buy a franchise and it's not hard work or I'm not don't need to be involved in the business so I think that's great advice and refreshing you have to understand what we call the service delivery model to your point and the unit economics of being in the four walls which is which is awesome I guess to that point and you know coming out of the pandemic and you referenced you know you know you're the customer experience I know labor challenges and the food side and restaurants have been out there how are you handling some of the current economic challenges you know that you're facing on the ground as the one everyone looks to you know with respect to labor challenges and other things yeah it's it has it has not been easy I think one of the advantages we have is that we are a our product is a fairly comfortable price point we're not a luxury item we are I think viewed by most people as a bit of an indulgence a bit of a treat but an affordable one right and even though we even though we've had supply chain issues and we've had which are easing a bit and we've had you know we as an ice and custard business we are affected by the vagaries of egg prices and milk prices and dairy and all sorts of other things and so look so no matter what your thing is I'm sure everybody's trying to figure out the right levers to pull in terms of how much of that gets passed on and how much of a do you eat and and and and when do you get to the tipping point where your your customers willing to accept a little bit of an increase versus your customers gonna make another buying decision and go somewhere else and so and we have plenty of things that fall under what so we're in the vertical called QSR which is quick service restaurants and so even though I don't I wouldn't categorize this as a restaurant when it comes to treats and desserts and that kind of thing there are lots of other options for people to consider and so we've been trying very carefully to mix and match and and not be do what we think we need to do to manage our costs and and to make sure that we're we're in a good spot but but not not not pass along the pain to the customer in such a way that it turns them off and gets them headed into another direction staffing wise again as I said we're not we're mostly a business that relies on young people to help us we have chat we're a seasonal business so we have challenges sort of while school is in session to get the right mix of support and help predicting we look at sales history and sales forecasts to decide how much staffing we'll need on any given week on any given day but generally we have lots of young people who are eager to come and and and support what we do and they view they view this as kind of a cool job so so we're a little insulated from from kind of the labor side of this. Gary you know a lot has been happened a lot happened during the pandemic you know and a lot of innovation technology and name it that took place if you even though you are still such your first few years in franchising did you see any technology or social trends that you think could shape the future of franchising today or in the future? Yeah I think there's I think there's a couple you know and again I don't I don't know how I don't know whether I'm qualified to speak to trends that will have kind of a widespread effect on franchising in general but but I can I can just give you a sense for what I think might help shape the future sort of generally and kind of what we've experienced. Look it's it's clear that we are at least to me that we are now in a world where your customer has lots of ways to share their thoughts and opinions about their experience with your enterprise right and so so I think this online environment that has has developed and evolved can be extremely powerful right it can be a great way to drive growth and to affect opinions of other people but it can also obviously create negative attention and drive business away and and you know you got to be look I'm I'm I'm a little older relatively speaking and so some of this is is adapting to this is again part of this whole idea of being nimble and adaptable this whole idea of managing your social media footprint and and the vapor trail that gets left behind in the wake of somebody giving you some kind of an online assessment you know you have to be on it you have to understand the implications of that and and I've been reading data recently that suggests that you know there are more and more people who are happy to document and share their displeasure online and and to their pool of to their pool of friends and and their networking and if that's left unspoken to or unaddressed I think most people assume that that's an whatever was said was accurate right and so that can be debilitating to a small business any small business but a franchise particularly and if that is allowed to to to sort of just linger out there I don't think you're doing yourself any favors and and you got to really be dialed in I think to make sure that you're addressing that stuff effectively and promptly and appropriately and understanding is this is this in essence like a gift and if somebody telling me that we're failing in a place and now I can correct it because they brought it to my attention or or is there maybe some some you know is it more nuanced than what they're portraying it is and so I think that's clearly something that is is has the the the headlight on the train is getting bigger and bigger in terms of that coming now instead of being on the edge of my desk it's coming to the center of my desk and I have to contend with that and sort of recognize that that's a trend that is going to affect potentially what my business is seen another another one that I think is kind of interesting and I it really didn't occur to me actually until I was sort of prepping for our discussion and I and I it sort of felt like it was it was a good a good match for what we were talking about and that's this whole idea of dynamic pricing I you know I don't I don't know how how dialed in you guys have been yet or whether or not some of the other guests you've spoken with have have have scratched at this but you know it's clear that in the franchising world there are some models out there they're starting to mess around with us and you know look it's always been in the hotel industry right or whatever you're always pay more for Friday than you do for a Tuesday if you stay at a hotel or depending on seasonality and whatever else but you know I see this now in the gym world right I still keep my my thumb on the pulse of what's happening in the fitness space and now you know you have more gyms who are engaging in this dynamic pricing and movie theaters and all sorts of other places and is it a stretch to think that it's some day when you open a local fast food place and you want a franchise and you want to order a burger it's going to cost you more to get it on a Friday during peak hours when the restaurants busiest versus on a Tuesday and and I just I think I think that's gonna be a really really interesting phenomenon to watch and and it seems to be gaining momentum and this idea of differentiated price depending upon as I said volumes and activity transaction is gonna really be interesting interesting especially as you mentioned the customers and consumers are getting used to it in other segments so that'll be great to keep our eye on one of the things we're hearing about and we love to ask is you know given what you said Gary and what we know about franchising that it's led by an entrepreneur in a community with local knowledge and expertise that really drives value you know is this intersection between diversity equity inclusion social impact sustainability and franchising can you talk a little bit about that as an entrepreneur in a local community with the power to create a culture they want or having local knowledge on what you think about when you hear about that intersection yeah it's it's a kind of layered sort of topic for us actually and and and I say that because as an employer of young people young people have a certain expectation around this issue now and and and and they you know that they're looking not only to consume from or buy from but also to work for places that are a little bit more sensitive kinds of topics right and so so even if I was resistant for whatever reasons which I'm not but even if I was I think my my staff would sort of force me to sort of move in this direction be a little bit more proactive be a little more thoughtful about how I how I lean into the local dynamics of the community that we operate in and so you know look again being part of a larger nationwide network of franchises there are certain things that Rita does corporate Rita's does corporately that we participate in and so so I'm proud to participate in helping advance research around children's cancer and a whole host of issues that that the parent expects us to participate in but to your to your the the the tweak to your question about localness and and participating in sort of the community dynamic of this issue you know I we are really we are really really making a concerted effort to get to get in front of schools and to understand what what these schools particularly the schools that are are are providing our workforce what matters to them what they're trying to achieve to collaborate with them to help them advance the the awareness of what whatever initiatives they're participating in and we can help to to to be involved with and and that's everything from you know fundraising to to just events they have you know sporting events or or other kind of events they're putting on and and and you know it seems like wherever we go not only do kids and teenagers enjoy working with us they also love our products shockingly right it's it's it's ice cream and and so you know we're we're very happy to make donations in terms of our product to to causes that school that are meaningful to schools we had a we this is a little bit off uh there's a little bit of a tangent but we had a school uh close to our shop last summer who had their air conditioning go out and so one way they kept the kids enrolled in the summer program was that every day we brought ice to them for for a couple days to to cool them down because they had no they had no air conditioning so you know look takes a lot of different forms uh summer camps and counselors we offer you know discounts to incentives to and other things but we're you know we are again we're still a little new with this we're trying to find our path and to try to align around some of these things that really aren't impactful but but i i think ab to your to your bigger the bigger point here is that you really really you can't in my opinion again you can't be on the sidelines with this stuff and you need you need to be actively engaged in participating and finding ways to help and give back because you are the people coming to your window every day and the people who are taking the orders and working in your shop every day are expecting this yeah wow i think you got to be part of it thank you gary gary as we uh start wrapping up now uh if you look back uh in your foreign to entrapment uh entrepreneurship and franchising uh what would you do differently and why if you had to do it again



 uh i do differently um



 yeah i um i don't know i mean i think uh as he said i think i probably would have been a little quicker to um to uh involve other people in the process to the degree that they were available and to the degree that that um they were uh i i guess connected to the kinds of concepts that i was considering i i uh you know i again i i just when you consider that you know you're you're it's this was the first time in my life this is this may sound a little off but it's the first time i left really that i was investing in myself because i was buying i was buying a business that i was using my money to acquire and and and and it added a dimension of i think um stress pressure whatever you want to however you want to term it that that again created a little bit of length to my decision making exercise and i think and i think that i've been a little bit quicker to sort of embrace uh some of the resources i had that process could have been truncated a little bit and i probably could have been a little um a little quicker to to to to to get going now in retrospect it actually worked out for me some of my some of my diligence and because i avoided a pandemic in a in a vertical that probably would have suffered dramatically from from the consequences of the shutdown so i you know i guess you could you could look at it maybe my situation's a little unique but as a general statement i i would say that uh you know i think i think i could have been um i would have liked i would have told gary five years ago that when you're going into this don't go in solo don't go in thinking you're just gonna identify something and move um make sure you have uh some some you know your board of directors or whatever you want to call available to help you work through it okay well great stuff gary we really appreciate you spending time it's always great to have a babson alum but most importantly the lessons you shared not only on franchising but entrepreneurship and leadership and culture i think you bring a unique skill set of what you did in the past to this venture and gave us a very transparent view into that transition which we think can benefit a lot of people would love to continue to have you involved we do have a center for family entrepreneurship so sounds like that's the topic for the next one maybe and explore you know your family dynamics and and that opportunity that sounds exciting but appreciate you being with us and wish you all the best with ritas and your your pathway to scaling



 thank you yeah thank you appreciate that i'd love to i'd love to participate any way i can and and be a resource be that resource that we just discussed for anybody uh at babson who's got got questions or is considering this as a direction they want to pursue thank you thanks gary and then please when next you come to off here uh from dc uh let us know let us know we'd like to uh have the opportunity to to meet you in person and hopefully continue this uh this relationship at this uh another aspect of your relationship with bapson thank you so much thanks gary i would love that you're welcome thanks for joining us on this episode of stars of franchising stars of franchising was produced at bapson college engineered by travis gray karen sole is our guest coordinator and music by ralph taylor if you like stars of franchising be sure to review us wherever you get your podcasts and swear the word and share these stories any way you can