Ramzi Daklouche, Edible Brands Chief Commercial Officer

“If you just come in as a franchisee and expect to be employed by the franchisor, and just wait for the franchisor to give you direction, that’s a sure way to fail.”

Five years as a franchisee for 4 US retail brands taught Ramzi Daklouche a lesson that informs his work today at Edible: It’s always all about the local markets. We’re thrilled to welcome Ramzi to the podcast, especially as Edible is rolling out an exciting 2024 brand refresh.

Listen in as Ramzi explains to Ab and Vini the fine line between innovating within a system as a ‘zee and trying to reinvent it. How “the journey of the chicken sandwich” reveals the sustainability of franchise brands (or lack thereof). The danger when ‘zees get in the weeds with location operations. His top-line guidance for entering international markets. His 4 nuggets of wisdom for wannabe ‘zees. And why tapping the brakes should be part of any expansion plan.

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.



 We're really, really delighted to have Ramsay Da Cluj here from Edible Brands. Super excited and look forward to our conversation with him today, bringing unique perspectives to the world of franchising and entrepreneurship. Welcome Ramsay.



 Thank you and glad to be here. I appreciate the opportunity. Thank you. Well like we always do here on this podcast, we'd love to start with understanding a little bit about our guests, why and what calls them to do what they do on their journey. Can you share a little bit of your past and experiences with our guests here today?



 Yeah, sure. Absolutely. Again, thank you for the opportunity. So I spent a large part of my life after college in the retail industry. So I've had every position retail from sales all the way to division vice president for a huge company in Big Box. And then after this, I had an opportunity to go to the Middle East and work as a head strategist for Bit Conglomerate. And that's where I really got introduced to the franchising business and fell in love with it. But I started first as a franchisee. So one of the strategies we had, us being in seven sectors, was to bring Western retail to parts of the Middle East, specifically Saudi Arabia, which is the largest GDP per kappa in that part of the world. So after research and looking to come up with a few brands that really would resonate, we found four brands that were able to bring into Saudi Arabia. So I had to negotiate, of course, and kind of work through all the franchise agreements



 for four different brands in probably about six months to eight month period, learn a lot about franchising, which is a world I didn't know much about at all. And then kind of work with the franchisor to kind of develop the Middle East and open up locations with them in the Middle East. So that really kind of made it very interesting because though you have a system behind you, which is a Bit Conglomerate company helping you, if it's a Western company, the cool thing is really locally, you have to kind of make it adapt locally. So learn a lot about that. During my journey, one of the brands we were going to bring was a US brand that we end up not bringing because, you know, other socioeconomic issues in the area. But I got to know the CEO very, very well, the owner. And at the end of my journey, which is five years in Saudi Arabia, he offered me a position to come and work with him in a brand in the US as a chief officer. So I kind of switched from being a franchisor to a franchisor and to learn other side of it and to learn, you know, all the aspects of that. So and that's how my journey started as a franchisor. And also right now, I like the franchising business so much that my wife and I also franchise completely different brand away from Head of Ball and other brands that we've been in for about two and a half years very successfully. Great. Well, before I kick it to Vinny, I'm just curious what brand that is that you and your wife are invested on as a franchisee.



 Yeah. So we had to find a brand that's sustainable during COVID because that's when really we decided to do this. It's probably not the smartest thing to do, but it was PostNet, which is kind of kind of like if you put FedEx and UPS together, you end up with PostNet. What I like about them is the ability to kind of set our own strategy for the business, grow the business, we want to grow it without, you know, forward control from the franchisee or the franchisor. Great.



 Well, in Ramsey, thanks again. I want to start off just listening to your story, listening to your why, and for someone who have seen both sides of the equation. I'm going to like a jumpstart by asking you a question that we typically ask towards the middle of our conversation and has to do with when you look back at what you've experienced from both sides of the equation, what do you think the best franchisors do well? And then flip it and tell us what you think the best franchisees do well.



 Yeah, I think for the best franchisors, the number one thing they do well is clarity of message and clarity of brand. They have to be very clear about their brand and the brand position so they can explain it. The other thing that they should do extremely well is systems.



 Really what you're selling a franchisee is your system and the brand. So you should be very clear about these two and have the message that resonates with the franchisee and clear enough to be replicated anywhere in the world, if they are global or at least locally, if they're just local company.



 Now from a franchisee point of view, the question again is what resonates the most as a franchisee? No, what do they do? What do the best ones do well?



 Oh, very good question. First of all, they need to understand that they're entrepreneur.



 They're not employee of the franchisor. They own their own business. They own their own market. They must understand the financials and P&L.



 So I think if you understand that you're going in and what you're buying into is a brand and the system, but the rest of it, you really have to come up with it yourself like your local marketing, managing P&L, the day to day, the hiring, the operation, what's in between the lines. You could be successful. Otherwise, if you just come in and expect them to be employed by the franchisor and just wait for the franchisor to give you direction, that's a sure way to fail. Well, Ramzi, when you said that the franchisee, the best franchisees tend to be entrepreneurs, they have to be entrepreneurs. A lot of people, folks out there, we say, "Wait a minute. As a franchisee, you get a blueprint. You have a master plan, so you don't even need to think." So that franchisees are not entrepreneurs. How would you respond to that? Such a statement. I would say, "Please let me know what system it is," and I would be more than happy to sign off for it. I've never seen a system that is just a blueprint of how to manage a business and how to hire people and how to treat people and how to pay people. It's all written up. It's really all local because if you're franchising in California, it's literally different than being in Boston or being in Atlanta or anywhere else.



 It's your business. At the end of the day, you're really only buying a marketing system or a system that supports franchisees and you're buying the technology system so the system can help you, but the rest of it really depends on you. Nobody can help you with your local marketing. It doesn't matter how much a big franchisee tries. Local marketing happens. That's the reason we call it local marketing because it's really local. It's very, very local. Thank you.



 Yes. A follow-up to that a little bit, Ramsey. He usually asks about that question, is it entrepreneurship and also what are some of the myths about franchising? Given you were "new to it" a little bit when you started, can you share a few myths or at least things you learned about franchising when you got involved in Saudi Arabia at the start and even maybe a few takeaways that really get you excited about the world of franchising?



 Yeah. The myth is exactly what you gentlemen talked about. I thought they're going to just be there for me every day at my packing hall and take care of everything for me and negotiate every deal with every vendor.



 The myth was, no, it doesn't really work that way. Once I signed, they have a system I can go to and get all the information I need, all the marketing I need. I have people I can reach out to for advice. At the end of the day, it's me and my team that had to put it together and make it work, including site selection. I mean, they approved site selection, but site selection was boots on the ground. I was just looking for places. That was the biggest myth for me as a coming into the system.



 Interesting. And then, so, Ramsey, when you look back, I'm sure that you've had challenges as a franchisee, as a franchisors. And without saying that, I'm going to assume that you learned a lot from those challenges or even some mistakes or failures.



 What failures would you want to share with us today that really stood out in your mind and what did you take away from those, both on the franchisee side and on the franchisor side?



 First, I've never made a mistake in my life.



 But, no, as a franchisee, I think the biggest mistake I made is, did not go slow to go fast.



 And I'll give you a couple examples. For example, if I'm opening a series of locations, in one system, I open too many fast without relearning my mistakes and not opening the first one to learn from it and then open more. And maybe I'll listen to my gut feeling too much without really doing research on what's going to work, what's not going to work, even though it was in the same market or same country, opening ... At that time, we opened four locations in one day. And that was a huge mistake, not understanding the customers, for example, in Riyadh are different than any other market. So that's probably the biggest mistake, I believe, that I would not repeat where if someone ... Just because the company was well-funded doesn't mean we should go out and open as many stores as we did, even with a big brand. So that would be as a franchisee. But for one location, I tell you, because we have a lot of entrepreneurs in every system that just buy one location, they want to get out of whatever they do day to day and just buy one location, is they get entrenched in working in the business. So from day one, they become operators with the business instead of being working on the business, which is administrators of the business. And that's a big mistake. They don't invest enough upfront to make sure they have the proper marketing, the proper training, the proper systems in place. So they end up in what we call in our business, making the arrangement instead of managing the arrangement, managing customers, bringing customers inside the building. And once they start with that, it's very hard to get out of that. You kind of find yourself in the world of doing the daily operation. So you end up making the arrangements or making the pizza or whatever it is and not focused on working on the business. How do I grow the business? How do I manage a big picture? How do I bring customers in? What about marketing? What about my P&L? So all this gets missed because they get in the soup instead of making somebody else make the soup. The best franchisees I've seen, they never make an arrangement. They never make an arrangement. They don't get involved in the day to day. They just manage to outlook an end.



 Great. Well, one thing I've heard and we've heard Tariq Farid say and what drives him still and his goals and objective is to create millionaires in the stores and in his franchisees and the fact that you all are working so hard to, as you stated just now, create that culture for the customer in all the stores. And your rule today, can you talk a little bit about how you are not only monitoring but inspiring the franchisees to follow the operations or to innovate in the role you're at today and what's been successful for you to try to keep that culture of gifting and making it right with your franchisees?



 Yeah, so our number one objective in any franchising is making sure that we take care of the franchisee, the customer, but also the store itself. So make sure stores are successful because those franchisees, as you know, they sell their business, another person comes in, you want to make sure the market is successful.



 I think the number one success that any franchise or not just us, any franchisee we can have is to focus on the people piece and really not just the people in the building and how you bring in the franchisee in, right? So make sure your selection is top-notch because it doesn't matter what systems you have in place, you really have to have a good selection. And I think this is the biggest pitfall for any new franchising system is the selection. For us really is also with the amount of competition we have in our category is finding, you know, always finding other revenue streams that the franchisee can benefit from. Like we just introduced third party to our system, which about two months ago, extremely successfully with Uber and DoorDash. And that's really, it's a customer that we didn't have before or didn't really shop with these millennials and Gen Z's that really didn't know about the brand as much. And now they're finding out more and more about the brand. So again, finding revenue streams, the other thing, you know, best franchisees do is innovate.



 So whenever you can't, I mean, think of the chicken sandwich, right? I mean, if you kind of see the journey of the chicken sandwich in the past seven years, a lot of brands came up with the chicken sandwich. A lot of franchise companies started because of the sandwich as well. However, the sustainability of that brand will be based on how do you reinvent yourself at every turn, right? How do you introduce your customer to new product that they love and make them customers for life? So these are the biggest learnings I have for any franchising system looking to grow and develop and to support the franchise.



 You know, the franchisee wants from you and what ails every pain they have is revenue. Sales. So once you deliver sales, the rest of it is solvable, right? Because if, as you don't want to pee on out, everything is based on sales. So you want to make sure you solve the sales problem.



 So thanks, Ramsey. Ramsey, let's take a little bit of a move out to another interesting area which has to do with the relationship between franchisees and franchisors.



 What would you say are the factors that make for a great relationship between those two set of people or entities?



 That's a very, very good question.



 You know, the franchising and franchising need to understand that the relationship between them is a business relationship first and foremost. You buy in a system, you're signing on the dotted line to buy a franchise agreement, a system to help you be better entrepreneur. I think this is the first myth and misunderstanding of what a franchising is. It's buying a business, a system from a franchisor to help you develop your dreams of being entrepreneurship. That's the other one. The other one is really clarity between the franchising and franchisor. So going back to your first question, does the franchisor understand their value proposition and can articulate that value proposition and really keep developing that value proposition? And do they have the system in place to support that, to support the brand? So that's from a franchisee, from a franchisee's open review. From a franchisee, you bought into a system, follow it. Just follow the system. If you try to invent the system and say, "You know what? I know we're doing fruit as our gifting, but what about French fries? I'm going to sell French fries today." That's really not going to line up with a brand. And for these people that are innovators like this, they really don't need to be in the franchising business. They just need to build their own concept and move to franchising a business themselves.



 So clarity between both, clarity from a franchisee point of view, what I bought into and it's a business. So I have to drive a business and run a business as an entrepreneur. And for the franchisor, really it's the clarity of the message and making sure your system tracks with what the franchisee's system is looking for. And then so, Ramzi, if you look at, I mean, based on what you've seen so far, one thing is what the expectations are on both sides. But could you speak to what type of collaboration could also take place in, for instance, are there situations that you've seen where franchisees are actually helping the franchisors to innovate? And also vice versa. And how do they take the insights or maybe those innovations and just scale it across the entire system of franchisees?



 Yeah, I think this is your biggest lab. I mean, for franchisee, your biggest lab is the... Sorry, for franchisor, your biggest lab is the franchisee. And that's how really we learn most of our ideas.



 Actually, a lot of them should come from the field and what the field sees, right? I mean, other examples of what happens in our industry, really, besides based on the customer, is also based on what the franchisee sees. The franchisee's relationship at that point is to kind of prove that lab, right? To prove that whatever new concept they want to come up with or new arrangement for us or new platter, whatever it is, really works and kind of be able to justify it from financial and operation and cost, of course, to make sure it works. But these lines should always be open. And also, we have focus groups for innovation, especially. We have focus group with a bunch of franchisees and they change on a regular basis to make sure that there's collaboration between both. Up to and including, for example, we have one franchisee in West Virginia, an incredible amount of business with the government.



 Next week is our convention and she's going to be featured in our convention to be able to talk about what she's doing, how she's doing it, and how she's getting all these sales and a completely different product than we saw today. It's not a different product. It's a different way of showing the product for school kids, for example. So we learn and we kind of, you have to scale it in a way where if it's scalable without the interference of the franchisee, you do that in this case. The franchise doesn't really play a big role in it. We just make sure the other franchisees learn about it and we help them scale it. Other times, we have to kind of take it to our labs and test it and see if it's feasible, operational, and something we can roll out to the system. Interesting.



 Ramzi, since we have you here and your great experience on the international side, I'd love to ask you the following because our audience not only is our students and potential franchisees but globally, new franchisors, growth concepts, anyone interested in scaling. So love your perspective. You can share maybe some advice or guidance for brands either seeking to go internationally or develop international markets. Since you are a franchisee in the Middle East, it'd be great if you could offer some perspective or guidance for those that are choosing as franchisors to go international from, say, the United States.



 Well, that's a great question that I'm not sure how much time you have for that, but we can go like three, four hours. Yeah. You can tell everything you should do and everything you shouldn't do about international.



 So I think part one is to make sure you read a budget for that.



 You've got to have a really solid budgeting process to understand what is it going to take for you to hand over your brand. That's the number one thing before you even talk to anybody. Number two is the selection of legal assistance you need for that. And I'm going to get to the selection of people, but that's a little bit selection of a master franchisee or partner.



 But legal, because what I've seen even with big companies, the misunderstanding of different nations' laws can really hurt them. So you need to have groups that have international presence in the country, not in the region of the country, because country to country, the laws change completely. For example, if you are in the Mina market, you really cannot say, "Well, I'm working out of Dubai, and I'm going to define what happens in Qatar," or sort of, "It doesn't work that way." If you are in Asia, you can't go to China and say, "Here's what's going to happen in Japan." It just never works that way. Every country has its own laws and franchising laws and what you should follow and all that stuff. So you have to have a team that has boots on the ground, or they have a relationship where it could be reviewed locally as well. And you've got to understand that sometimes you have to kind of translate that to the language otherwise not acceptable by law.



 So I think I had to train a lot of big companies I worked with in the US how to do that, including some huge name like, literally, LVMH, and the certain day to name a couple of them that really I had to kind of help them understand what does it mean to come to markets outside of their comfort zones, even though they're huge markets and huge companies all over the world. So that would be the first two. Second one would be the people selection. That's where you need to spend, listen, money with the international, especially when you look at Western retail, there's a lot of people that want to get to the Western retail. And a lot of companies will say, "Oh, we're going to support it. We're going to open a couple of hundred locations for you." 84% of all these development plans never happen. So be conservative, first of all. Make sure you have the patience to kind of test it first, see if it works before you open too many. But the people selection is very important. You got to make sure when you pick that franchisee that they have a similar business and they manage a business in common, right? Like if you need warehousing and e-commerce platform, they really should have it. It's very hard to kind of build one from zero. They should have an e-commerce and a good delivery platform as well. So make sure it's a relationship in kind. Wow. What great advice. We talk a little bit about it here, which is doing your due diligence and partners and understanding the landscape. But I love the advice on local country legal expertise, as well as, sounds like what you're saying is your partner should be smart money, existing operator or have an infrastructure to support. That's great advice.



 Yeah, definitely.



 Well, Ramsey, let's bring it a bit local here. If you have maybe, if you have before you, like a group of people who are thinking whether to get into a franchising or not, and they're seeking maybe words of wisdom or advice from you, what would you tell them? What would be your top three advice to a group that would like to follow that route?



 Yeah, that's a very good question. And this is a group or a single person is understand what you want to do for the next 10 years, at least. Most of the time, it's 10 years. So understand if your passion is to make pizza for the next 10 years, you sign up with pizza company to do that.



 So you got to understand the business you're getting into first of all. The second thing will be understand your market. What does your market need? So just because you want to get into the chicken sandwich business, and you're in middle of Tennessee and you understand that nobody's going to buy you chicken sandwich because you just can't compete with what's local in Tennessee, for example, probably bad business decision, right? So understand your market.



 So first I would say understand what you want to do for the next 10 years, understand your market. Third, understand the franchise or you're going to marry for 10 years, right? It's really a marriage. It's a relationship for 10 years. It's bound by law, by franchise agreement.



 So by understanding franchise or that means understand the franchise agreement, what's expected of you, how much is going to cost you, what are the royalty fees on it, what are the marketing fees, and make sure you build yourself a good business plan that can support that. And you can see it on paper that it's sustainable and doable. And the last advice is when you get into one, talk to other franchisees. It's just very important to kind of do your homework. I see a lot of people, and I did this probably same thing, where we didn't do the homework hard enough to kind of understand what are the pain points. You don't want to do it enough to talk yourself out of it, but do it enough to say, "Well, there's a little smoke. I don't want to be in that fire."



 Or it sounds like it's a great thing to do and let's go and jump in and do it, right? So you can alleviate 10 years of pain if you just do a little bit of homework.



 Sorry, before I pass it over to Ab, if you look at trains, name it, any trains in the world today, which train would you say will likely shape the future of franchising the most?



 Well, edible, definitely. I mean, just doing gifting.



 Really, the trains right now are companies that understand Omni channels and have delivery systems that can really reach customers where the customers want to be. Our customers changed from 20 years ago when I was in Big Box until now, drastically, where they have so many ways that they want to receive the information and so many ways they want to buy that product from you. So I love brands that are really dedicated to technology and Omni channel delivery, that understand the customer is not the same with loyalty as it used to be before and you've got to really be able to meet them. So convenience is very important when you talk about Omni channel.



 Interesting. Well, Ramsey, thank you so much. I want to ask you this one question and we know there's this intersection and franchising and community and impact in social aspects because of the nature of it. We like to ask the question of this intersection and what role your brand and franchising can have on diversity, equity, inclusion, and things that are important to customers today. I know that your franchisee base is diverse. Can you talk a little bit about that topic and how franchising can play a role in it at the community level? Absolutely.



 Especially with the brand as developed as Edible is, when you look at diversity, we



 try extremely hard to make sure that we bring in franchisees from that market itself. We are for largely single union franchisees. So we want to make sure that people that are asking for franchising out from the market, we want them to be part of the community, understand their chamber, understand their churches, understand their mosque or synagogues, know people and know markets. So they have influence on them, right? And they're hiring from the market as well. Really, to bring in somebody from the outside that just want to buy like a state in our business is just not sustainable, not workable at all because it's really very personal relationship between you and the customer.



 I think that's number one, number two and three, by the way, answer to your question. Is it the piece? It's just hire from the market.



 Well, Ramsey, you're in your 30s now. You look super young.



 So if you look at what the world of franchising has taught you or what you've learned navigating this world of franchising, what is one thing that franchisees taught you that you think everybody at some point in their life should know?



 Very difficult one answer to answer, but I'll try. I'll give it my best shot, right? Thank you. Franchising is a business system that you buy into like any other business system that you want to get into.



 If you're an entrepreneur and you want to get into this, you own the business. You got to make sure you do your due diligence and your homework to make you successful.



 Wow.



 Well, that's a great way to end it, Ramsey, and we really appreciate your time today. It's so wonderful here at the Tareq Farid Franchise Institute to continue our collaboration and have you as a guest on behalf of Edible and bringing your operational experience and experiences of franchisee and a franchisor to us.



 We couldn't be more proud of our relationship with Edible and we wish you all the best and look forward to continued collaboration and we appreciate you guys have been involved in the classroom on several experiential learning projects. So we love it and our students love it and we wish you all the best.



 Absolutely. Thank you very much. Thank you, Victor. Thank you, Ramsey. Thank you.



 Thanks for joining us on this episode of Stars of Franchising.



 Stars of Franchising was produced at Babson College, engineered by Travis Gray. Karen Sowell 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.