From A to Franchisee: The Podcast for Smarter Franchise Buying

The Importance of Talking to Franchisees Before Investing

• Franchise Business Review • Season 1 • Episode 11

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Host: Michelle Rowan of Franchise Business Review
Guest: Madeleine Zook, CMO of Threshold Brands and Multi-Unit/Multi-Brand Franchisee

Summary:

In this episode, Michelle Rowan and Madeleine Zook delve into the crucial role of engaging with franchisees before committing to a franchise investment. Madeleine emphasizes that speaking with current franchisees provides invaluable insights into the realities of running a franchise, beyond what franchisors can legally disclose. This dialogue helps potential franchisees understand the financial and time commitments involved, as well as the challenges and successes experienced by others. By learning from both high-performing and struggling franchisees, prospective buyers can make more informed decisions, ensuring they align their expectations with the realities of franchise ownership. The episode underscores that thorough due diligence, including these conversations, is essential for making a sound investment.

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Michelle Rowan (00:04)
Welcome to today's episode where we are going to tackle the importance of talking to franchisees before you buy into a brand. So today I'm so excited to have Maddi Zook with us. Maddi first started in franchising back at Maid Pro where she was also an FBR client then and she was just a little young little hen that I met and also too before we get into the official bio. She's also a Mainer

like me. So there's just a good connection there that she came out of the state of Maine. So she started at Maidpro and was there for a decade of her career. During that time, Maid Pro became Threshold Brands and she has served as the Umbrella Franchisor Senior Brand Officer and Chief Marketing Officer for Threshold. Her journey took a pleasant turn when she met a Maid Pro franchisee named Jessie, who would later become her husband.

Today, they are multi-unit owners of five franchise brands and parents of three children. And if I tell you that Maddi never sleeps, believe me, she texts at all hours, she's got a hundred different projects going on, she's amazing. I don't know how she gets it all done. And for the past few years, Maddi has also become a supplier in franchising. So she's got all three sides of the wheel of franchising. We talk about supplier, franchisee, and franchisor. She's worn all those hats.

She is ⁓ optimal at really coming in and helping franchisors set up awesome structure around their marketing programs. And she works directly helping franchisees market their businesses to get customers and grow their brands. So she loves that franchising fosters a vibrant community of support and opportunities for learning and growth. And she's usually leading a lot of those initiatives.

If you don't know Maddi Zook, you can find her on all the socials. She's very active and I'm so thrilled to have her here today. Maddi, thanks for joining us.

Madeleine Zook (01:56)
Thanks for having me. Yeah, I know. feel like FBR is like the mama bear. I remember when Mark Kushinsky shout out would always be like, go to Michelle and ask for a discount. And Michelle was the one that said, no, Mark, we're not getting a discount. Come on. Exactly. Exactly.

Michelle Rowan (02:11)
That's right. That's right. We value our team here. We have to, we have to treat them well. ⁓

so, okay. So we have had a few episodes before this. So hopefully we're the audience's people thinking about buying franchises and we've talked to them about all the, all the ways to decide if franchising is right for them. But now we're talking about the importance of talking to franchisees in the brands that you're interested in before you buy into the brand. So

how, because you are a franchisee and because you've gone through this and vetted other brands, how does one approach franchisees to talk to them? And we can talk about the franchisor's answer, but also too, I wanna talk about your answer. And you can talk about both sides of that.

Madeleine Zook (02:52)
Yeah, so as

a franchisee and I want to preface this by saying we've bought brands inside of threshold, which we obviously knew we bought brands outside of threshold, which we had no idea emerging established. And we've had some, we've had one specifically fail and we lost a lot of money because we didn't validate enough. thought, hey, we've been franchisees. don't just, just give me the brand relatively the model will be fine. It'll be fine. It wasn't fine. ⁓

So, you know, the biggest thing that a lot of potential franchisees or candidates don't understand is that the franchisor has a lot of legalities around what they can say, what they can't say, and at the end of the day, there is a department that has to hit goals of selling franchisees. Now, yes, there are good franchisors. Yes, there are bad franchisors.

And all of that is subjective at the end of the day. It's a business and Everyone has different drivers good bad ugly same thing for the candidates And you can't expect

that the legalities surrounding the franchisors knowing that everyone's got goals to hit and you know the FTC and all of that is going to tell the true story to what it is going to be like for a small business owner. Now those same legalities don't apply to the current franchisees. They can tell you how much they're making. They can tell you how much it costs. That's a really really important piece of of why you need to call as

many as possible. Now you have to also understand that while

Franchisers are going to give you a list or recommend or you know, here's here's who you can call Of course, they're gonna recommend, some of the high rollers big performers top validators one because they're probably working the system. They're successful They're well spoken and I get that because not everyone is cut out to be a small business owner Not everyone wants to talk to candidates all day There is a level of like we need to make a sale but at the same time

I want a good representation of the brand who's going to talk to these future candidates. I don't want someone who maybe didn't follow the model and then telling the wrong story. But you also have to understand that I'm not going to put someone up there like that, but you need to see both sides. What happens if you decide or your partner decides not to follow the model then what?

or what happens if you suggest something that you want to do. Did they listen? Did they not? So that's why it's really important that you not only call the people that you see, that they suggest, that might be on a group validation call, but really get as much information as possible.

so that you have the data to make the best decision possible for yourself because it's very easy to see the rose colored glasses. I often say, I like to think of the glass half empty, right? This is a small business, puts food on the table for your kids. what happens if that food gets taken away?

Michelle Rowan (05:46)
Yeah.

Yeah. Well, and I think that you make a good point. So I think some franchisors do have their development team say, Hey, you should talk to people that are successful and to some of those that are not as successful. some, I think that has shifted that some franchisors will say that others will say, here's the FDD, the franchise disclosure document, call anyone that's listed in there. So those are two good approaches. But I think as a candidate, you could ask, Hey,

can you point me to some franchisees that aren't doing as well so that I can ask them questions? Because like you said, don't look and especially when you're about to buy something and buy into something, you're thinking like, what are those top performers doing? What do their financials look like? But you nailed it in that you need to understand what the lowest performing franchisees are doing. So can I still put food on the table if it's worst case scenario? Or what does the average franchisee look like?

in their business. So I think you nailed it. If that, it's not being offered to you by the team, ask those questions or use the FDD and go through and connect with everybody that will return your call.

Madeleine Zook (07:05)
Well, I think too is that for someone who's very type A and not like, I'm like, let's just get this, get this done, like task oriented. If you give me an FDD or a list, I'm like, I don't know. I'm just gonna like throw spaghetti on a wall and see who I can call. Or maybe I'm calling franchisees that might be around me, but that might not tell the right story. So asking the right questions of, know, show me some non-performers that are like, risk and recovery franchisees.

let me talk to some that aren't quite following the model. Show me some that are doing great out of the gate. know, show me some that are in my region. asking more specific questions around who to call, not just who's making the most and who's making the least, but almost also like why, why are they doing that? And getting a more context around that.

Michelle Rowan (07:52)
Yeah.

So Maddi, for you as a franchisee, how do candidates, because I know sometimes franchisers will control when the candidate can access their franchisees. As a franchisee, when a candidate reaches out to you, what is that experience like for you as a franchisee? When is that happening? Are you inundated with those calls? What is that like from a franchisee's perspective so candidates can understand what's the mindset of people that they're calling on, interrupting their business to ask these questions?

Madeleine Zook (08:23)
Yeah, it's, I will say it's a task, right? Usually it takes an hour. It's an hour of opening up about our life and our business to a complete stranger who may or may not buy a business. Now, usually we request a password. There's a password so that it's not a secret shopper of a different brand because again, we're giving out financials. don't know.

Michelle Rowan (08:43)
and you want

to know that they're at a certain point in the process that this is not early on. This is someone that's really done the work to understand the brand. Yeah.

Madeleine Zook (08:46)
Blah.

And that's when

your franchise developer will say, here's the password, da, da, da, da. I would say the franchisor tries to do a good job of not inundating. Sometimes they do group calls. They try to divvy it up so we're not inundated. But what I will say is it can be completely random, because just as we're busy, a lot of time these candidates are busy.

And if you don't get a call back right away or a pickup, please keep trying because we're busy and we're running a franchise and we're running a family. And honestly, it should be a good sign if we don't call you back. We do want to talk to you. We want to grow the brand. That's a benefit of the franchise. But ⁓ it does take a lot of time out of the day. And we don't there's no reward for it. It's the only reward is that hopefully you get to benefit, ⁓ you know, a beautiful life that we've we've gained from.

being a franchisee, you also have to understand that depending on how big the brand is or how big the franchisor its goals are to grow, these could be as many as 10 to 20 a week. mean, that's 10 to 20 hours a week. That's a lot. And granted, we don't take that many anymore, but there was a time where they would come in hot and heavy and we had to finally say, guys, like,

Michelle Rowan (09:58)
my gosh. Yeah.

Madeleine Zook (10:11)
We love you, but this is too much.

Michelle Rowan (10:13)
Yeah. Well,

in all fairness, that's what Franchise Business Review, that's why it was created to try and help alleviate the amount of time that you're spending with each of these candidates. The idea being that they get a holistic picture of what a lot of franchisees said, and then they can spend less time with the owners to really dig in. So that was one of the reasons that it was founded.

Does the franchisor ask you for feedback on the candidates that you're talking to? Do you get to weigh in on how you think that they would be in your system or how they are as a cultural fit or questions that they ask?

Madeleine Zook (10:44)
⁓

Honestly, that's kind of my husband's questions. He does more the like operational numbers and stuff. So he takes the calls most of the time. I would say not normally they'll ask, if it's a random call, like usually we won't even let the franchisor know because we're like, if this person's really doing their due diligence, like let's let them do it. If it's a pre-set up call or we know it's coming, we'll say, hey, we did have the call. went well. ⁓

Michelle Rowan (10:56)
Okay.

Madeleine Zook (11:13)
we will actively reach out if there was a really red flag. one time we had someone that gave us a call and said, yeah, it looks great, you know.

I don't really need the brand or the model. I just need this because I'm actually going to go do XYZ thinking that he had a friend in another small business and he was trying to kind of scam the system. And we were like, no, no, we're not going to do this. So we will alert them if we think that it's harmful to the brand. But other than that, we kind of let the department and the candidate do their own thing.

Michelle Rowan (11:45)
Okay,

cool. So Maddi, what do you think are the most important questions to ask a franchisee when you're doing your due diligence?

Madeleine Zook (11:56)
I would say a lot of times people say...

you are you making money? Or are you successful? you know, are you hitting your goals? I was actually thinking about this the other day, and I would say when I was on my walk, but let's be real, I don't go on walks unless I'm on an aggressive phone call that I just happen to walk outside, and you you find yourself in random spots when you're on the phone. And I was thinking about it of...

success and the goals of owning a franchise.

is so different, right? Some people want to make millions of dollars. Some people just want to make it home for their kids' soccer games. Some people just want to have a nest egg and be fine. So I would say the first question is, what were your ultimate goals in buying a franchise, Was it work-life balance? Was it to have something that was your own? Like what was the driving passion here for you in opening a franchise,

Specifically then you know why this brand and then I would start with do you feel like you've achieved this or you're on the path of achieving that?

And then I would dig into and in doing so whether one way or the other, how much has this cost you not only in cash, but in time? Because what I find with franchisees now speaking as a franchisor is a lot of times they're equipped to spend the upfront cash, but not the time when I say, Hey,

we're finding that the cost per leads are actually higher in your area right now because you've got some competitors driving keywords up. we can off, instead of asking you to spend more because the cost per leads are higher, we can offset that cash investment with time if you go out and do some events and grassroots marketing, et cetera, and they're like, I'm not doing that, that's why I bought a franchise. They're not aware that there's also a level of time commitment. So understanding how much time they had to put

to this, franchise in the beginning years.

and understanding what was that break even point, were the that the investment ranges about what they expected and really understanding that because again, if someone says, I feel successful and this franchisee candidate says, okay, I sign on the dotted line and they have the exact same situation and they're like, I'm not successful, but franchisee one was successful because she made

enough to be comfortable and make it home every day and felt like she had a balance and wasn't, nose-grinding at a corporate job. But franchisee number two wanted to be a gazillionaire and make an empire. Those are two drastically different expectations. So I think you got to set up the expectation of what do you expect? What did they expect? And figure out how those numbers and time meet in the middle.

Michelle Rowan (15:05)
Yeah, that's a great thing. On our survey, we do ask franchisees to report the amount of time they're spending in the business. because I always say, you know, if they're not putting a lot of time into their business and they're not seeing a lot of financial return, there's usually a correlation to that.

Madeleine Zook (15:18)
Well, and I think it's good for every franchise candidate to notice, like we always say, signing an FDD is like a marriage, right? It's usually five to 10 year long contract. I always say it's easier to get out of my marriage than my FDD. Exactly. Exactly. And depending on how the kid drop off went today, it's going to be way longer than my marriage. And so I say, look, for every

Michelle Rowan (15:31)
I was gonna say it's longer than a lot of marriages.

Madeleine Zook (15:46)
Brand they've got anywhere between 10 to hundreds of franchisees Not everyone is gonna be the perfect franchisee small business owner like everybody is different And you have to take that with a grain of salt as well Everyone's gonna have different functions work differently everyone's brain works differently so you have to understand too What is your persona and how is that gonna match with business ownership a? franchisor his job is not guaranteed success

It's a model of support, not a model of success.

Michelle Rowan (16:18)
Yeah, I love that. How about questions around, I mean, I think that you've kind of hit on how they support you, but how do you get at when you're talking to franchisees or how would you recommend people get at understanding the culture or the relationship between franchisees and franchisors within that organization?

Madeleine Zook (16:36)
Ha!

Honestly, the FBR survey is a great understanding. I will say if they are not participating in the FBR survey, because there truly isn't anything, you guys don't have, in my opinion, a competitor. And I say that in a very respectful, good way, in that anybody can come out with a culture index, a survey, this, that, or the other thing, but you guys have been so dedicated for so long to telling the true story. And it almost goes back to how we kicked this off of like,

giving you a discount like we're telling you the truth this is the true story of your franchisees like if you you know you want to grow your brand right pay up and I'm not this is not to say he always paid up but you've been so dedicated to it that if they are going to be a part of your survey

Michelle Rowan (17:15)
Yeah.

Madeleine Zook (17:27)
they are willing to make the investment in understanding one, we're ready to hear the feedback from our franchisees. And two, we're also ready to be put alongside everybody else. And if it's good, we're gonna make those lists. And if it's not, we're gonna know about it. But we're paying to either be beat up or be put on a pedestal, right? And so that, just shows you the brand's commitment to the culture. Outside of that, I mean, those, you can ask,

Michelle Rowan (17:43)
Yeah.

Madeleine Zook (17:56)
current franchisees, but you can also see it in their marketing. What do conventions look like? Are they just one room every 12 months or is it kind of like a big family reunion where they do, you know, retreats and fun trips? it, people bringing their families along? it, do they do peer meetups that are quarterly? Is there opportunities to, join the community in other ways? you can see what that

kind of culture is like. I would also say you should look and ask about one home office turnover and two franchisee turnover. How long does an average franchisee stay? If it's not the full length of an FDD that's a red flag. Are they selling early and they're not renewing? I don't like that. Same thing if a home office employee stays for two years and they're not staying much longer.

doesn't bode really well and I say that too because I obviously know there's going to be turnover but you want to see some longevity there.

You also want to ask about the headcount in the home office. Do they have a marketing staff of two to three hundred franchisees? That's not going to create for a good culture of support, right? So and I also ask, are your goals? You know, a lot of franchisee franchisors, like is their goal to sell to private equity very quick? Is it to is it to grow to a certain number? Is it to grow quickly? Is it to grow slowly? Like have honest, transparent conversations about what

everybody's goals are because that will again what is the expectation for the culture there right if I'm going in thinking this is going to be a family-owned franchise for the rest of eternity I'm going to be greatly disappointed if I'm going into something knowing that hey you know this is not ⁓

I don't want to say family friendly environment, but it's very business driven, data driven. I'm not bringing my kids to these conventions. Like we're just getting stuff done in a boardroom. Great. Or the opposite, I can't wait to bring my kids. We have it at Disney every year. This is a family community event. I expect that I bring them. and there are ways outwardly that brands will show that. And you can, you can also ask.

Michelle Rowan (20:11)
Do you vet or talk to franchisees differently if it's a new brand versus an established brand? You talked about kind of that longevity or have you, mean, I think you've been part of very early on brands. So what are some different questions or ways that you can talk if there's only a couple of franchisees or there's not a long history of the brand being around?

Madeleine Zook (20:29)
Yeah, I would say being an early on franchisee and emerging brand, you are a different breed. I wish I could say that more professionally, but there is a much higher risk. You have to have a much higher threshold for flexibility, trial and error, ⁓ and kind of almost...

Michelle Rowan (20:40)
No, that,

Madeleine Zook (20:52)
chaos in a sense of like there's a million things to focus on a million ways to go you are truly part of building an airplane that's in the sky so i would say for for franchisees looking to join an emerging brand obviously there is a vision there of an early adopter big rewards at the end i would i would ask the early franchisees why did you take the risk

Right? was it? Did you see a big financial return? Did you see huge territory options like, you know, Denver was open and it's not going to be open for a great clips a Dunkin' you know, something like that. ⁓ Or was it that you just fell in love with the brand? You had an experience, maybe your cousin's sister opened one and you know, what was it that led you to to believe that you could make this successful and then

correlate it to why you were taking the leap as well. And then I would also say really dig into the investment financials of what are they presenting and then how much did these new franchisees actually have to spend because emerging brands are going to cost more because there is no SEO juice or brand recognition to usually fall back on. Like I said, they're still building the model while it's in flight.

you

Michelle Rowan (22:17)
Yeah, yeah,

that's good. So a big part of the discovery or the due diligence process for candidates is a discovery day. Have you participated in those? Have you gone to those? And is there an opportunity to talk to franchisees at those or is it really just focused on the corporate team?

Madeleine Zook (22:34)
There.

are so many different ways to do this and I'm so long-winded so I'll keep it succinct. Yes, I've gone to them, yes, I've done them, yes, I've been part of them. I think that they are great. I think they should happen and I do not think they should be virtual. I have heard of brands intentionally making their home office in hard to reach locations, we're talking like multiple layovers, because they want the potential candidates

it to

Michelle Rowan (23:04)
to work.

Madeleine Zook (23:05)
Yeah, get here. Get here if you really

Michelle Rowan (23:07)
That's interesting.

Madeleine Zook (23:08)
want to get here. Prove it, right? I don't love group discovery days, but I also understand, let's say for an unleashed brand, you've got a bunch of brands. It makes sense. You don't want to have these people wait. ⁓ But it is such a large financial decision. It's a life-changing decision for these people that if you can do singular discovery days, I think it's important.

I think Paul Pickett and I have had a great discussion about this where, I think he said his dev team doesn't work on commission or if they, they don't, right. And he's even said that if your dev team is on commission, taking them out of the final decision process, because it is a decision, because most of the time they've worked with these candidates, maybe they have a relationship, but at the end of the day, that's, if yet, if it's a yes, both ways,

Michelle Rowan (23:41)
They don't. They don't.

Madeleine Zook (24:00)
are going to make a significant amount of money.

And then there's always a scorecard and at the end of the day and usually on a discovery day, ops meets with them, marketing meets with them, leadership meets with them, sales meets them, whatever it may be. And I think that everyone rates them on a scale of one to ten and anything lower than a five is an automatic no. like average, anything that's five to seven has to be talked about and leadership makes the executive decision and anything seven and above is pretty much an automatic yes.

I really like that. It has to be a discussion. Normally they don't see other franchisees on that day unless there happens to be one in the office or maybe there's a local one that can go out to lunch with them. during COVID they had to be virtual and then I think people got really comfortable with how easy and how quick it could be and then they started doing virtual group discovery days.

And it just became so quick, a lot less personable. And then we sit there and we wonder why franchisees don't want to go out and be the mayor of their community and local market and shake hands and do this and do that. I'm like, well, did we do any of that in the sales process?

Michelle Rowan (25:11)
That's a great point. Yeah.

Madeleine Zook (25:13)
You know,

so I think the more personal person personable, the more in person, the better. I think it makes a big difference shaking someone's hand and looking in their eye and saying, are you ready to do this?

And this dog, well, he's over here behind me. he was, he was behind me. At some point, Rudy was a puppy, used to come into the office for the Maid Pro Discovery days and you got to see people's walls come down and he'd sit with them and you start to realize that people are starting to think about their homes and their kids and this decision. And we've seen some people sit in the office and say, this is a great culture. We would cook them breakfast, but.

this might be too much for me. You seeing how the operations work and how they're going to have to be day to day in their business. And it makes me feel good knowing that they realized this was too much for my family. I'm not ready to take the leap where I can confidently say if it was just a Zoom meeting and they hadn't seen the inner workings of how a franchisor could support them and what they would have to do as an owner, they probably would have signed and it might have not been best for their family. And I've also seen people who said no and then

came in and saw the home office and the franchisor staff and said, wow, I know that I can be successful with this much support and, and really turned it around. So my opinion for what it matters is it should be in person. They should make the commitment to come out, meet the team, and it should be as unique as possible.

Michelle Rowan (26:46)
Yeah, I love that. And I think that you bring up a good point in that candidates should know that this should be them making a decision on you and you making a decision on them. And so if you don't get a sense of that, if you get a sense that they are just trying to get you to yes, that should slow you down or give you pause to ask other questions because they should be vetting you. They shouldn't just be looking for a body to hit that number count that they have as a goal. So that was good. ⁓ I want to talk about the failed brand.

and we don't have to name names, but.

Madeleine Zook (27:17)
I will not name names.

Michelle Rowan (27:20)
I want to talk about why you feel like or what you learned or how you would do your due diligence differently to uncover that that was not the right opportunity before you signed.

Madeleine Zook (27:35)
So I will say with all five of my brands.

Mind you, Maid Pro, I'm basically married into, but including Maid Pro. All of the performers were...

Michelle Rowan (27:44)
Yes. Yeah.

Madeleine Zook (27:51)
inflated and not intentionally, but it always ended up being more and there was a lot of rose colored glasses there. And like I said, not intentionally, everything was done legally and by the book, but in our market for what we needed to do as a family, always ended up costing, there's the dog, ended up costing a lot more. And it took us till brand five to realize, hey, anything

Michelle Rowan (28:19)
Plan for

that.

Madeleine Zook (28:20)
anything we see like maybe 1.5 x it or two x it ⁓ Yeah, I would say for the more failed brand, it was the first brand that we signed outside of threshold brands, it was more of an emerging brand. I brought that to the table was someone that I had met through.

Michelle Rowan (28:26)
Wow, that's big difference.

Madeleine Zook (28:47)
⁓ the community and I did not do enough due diligence. I was just like, hey, this person's in the community, they seem trustworthy. ⁓ Like I said, my husband and I, we need very minimal support. He's an outstanding operations and finance guy. We stay in our own lanes. I'll do the marketing. I need very minimal support on the marketing side. Just let me run with it.

And they cut us a great deal, great territories, we were ready to rock, we do owner operator for the first year, and then we hire manager, like we were ready to go, right? Home services. And what ended up happening was that...

one we didn't call enough franchisees. We called a couple that were doing okay and they had some marketing issues and I said, yeah, yeah, yeah, I know better, it's fine, it's fine, don't worry about it. A couple franchisees had their own website. I'm like, you're not allowed to do that. Don't do that, but whatever. And so we sign and we get going.

and we start to realize that the cost per lead was about $800 per lead. Not even per sale, per lead.

Michelle Rowan (30:00)
Wow.

Madeleine Zook (30:03)
Now, we also partnered with someone else that ended up not being the best decision and partnership is very difficult, very, very difficult no matter what. So, that was not working in our favor. And then what I realized from the franchisor standpoint, and this is where the validations and I should have listened as a marketer better instead of being a know-it-all was that their marketing was actually detrimental to the brand. It was not...

set up for any sort of success. They were recommending franchisees go make their own websites. They were recommending that every franchisee go get a different agency. They were recommending this, they were recommending that, and then there was a lot of skeletons that were coming out. And at the end of the day, we ended up shutting it down because we just couldn't get the cost per lead down and the territories were too big. overbought because we thought

Michelle Rowan (30:53)
Yeah.

Madeleine Zook (30:57)
hey, we're going to be the Mosquito Joe of Pennsylvania because we got in so early and bought the whole state and da da da da. And, it was really hard on our family. We had to cancel vacations. When I say it literally took food off the table for our kids. It was a tough Christmas. We were trying to keep the other brands alive. We were holding on to the mortgage. was it was tough, you know, and ⁓

Michelle Rowan (31:12)
Yeah.

Yeah, yeah.

Madeleine Zook (31:26)
So that's when I'm thankful for the experience because it showed me what it was like to be a franchisee that.

Michelle Rowan (31:36)
isn't supported.

Madeleine Zook (31:37)
isn't supported but also is in dire straits. I couldn't spend any more money. There wasn't anything left to do. so we shut that. I couldn't sell it. There's nothing to sell. So we did end up shutting it down. it's hard to shut something down that you put so much time and money into. But it was a lesson learned. And it was an emerging brand. And it was...

Michelle Rowan (31:49)
Yeah, that's so hard.

Madeleine Zook (32:02)
It was something that we should have done more due diligence on.

Michelle Rowan (32:07)
Would you still invest in other brands or has that kind of put a pause on your expansion?

Madeleine Zook (32:13)
So I keep saying no more kids, no more brands. And somehow one pops up again and it's not gonna be me anymore. But yeah, we have recently become franchisees of a roof concept called The Roof Resource So we're very excited about that. We did do a lot more due diligence. We actually partnered with another local franchisee. He's a franchisee of Fast Signs. Our other partners before that were never franchisees before. So we did do a lot of due diligence.

Michelle Rowan (32:19)
Yeah.

I that.

Madeleine Zook (32:42)
and having someone that understands franchising in the model has been super, super helpful. So we didn't let it kind of harm our entrepreneurship or home service empire spirit, but it was a very eye-opening experience and something that I think helps me relate to franchisees that are in similar situations or just scared about being in that situation.

Michelle Rowan (32:53)
love that.

Yeah.

Yeah, yeah.

I have a couple more questions. The franchise disclosure document, the FDD also lists franchisees that have exited the system. Do you ever reach out to those that are not in the brand anymore, or do you think that's an important part?

Madeleine Zook (33:16)
You know...

I don't. I think that you could ask the franchisor, because at this point, you can't go into it not trusting this franchise development representative.

You know, gotta trust them if this is truly a brand that you're thinking you wanna go with. So if you ask them, hey, I've seen, I see there's a few that have exited the system. Can you tell me a little background there? You know, maybe someone was like, I wanna retire. Maybe someone sold for a crazy multiple. And get some background there. If you do wanna talk to them, you can get your number. Most of the times, they're not gonna wanna talk to someone. They've left the system for a reason. And so take that with a grain of salt.

But I would say it's important to look at the number of how many left the system.

Michelle Rowan (34:05)
I agree

with both of those. don't think it's important to reach out to franchisees that have left the brand. And I think you're looking at what's the turnover look like. It makes sense sometimes for a brand. How a brand grows, those first franchisees that they brought on are not always the right type of operator as they continue to grow. So sometimes it makes sense, but use that to ask your questions and understand if the numbers are high or

just asking those questions and you mentioned a good one too. Are they fulfilling their full term? Are they exiting at a normal time? Are they selling or are they shutting their doors? All of that is in the FDD. So I think that gives you enough information that talking to people that have left doesn't give you an accurate look at what the brand is now.

Madeleine Zook (34:52)
It

should not be extremely high. Obviously, it'll be more high if it's a very established brand, but it should not be very high. also another thing to look at, please, please, please always look at the legal section of the C-suite. If your CEO has been sued and it's like a Bible in there, that's a problem. ⁓

Michelle Rowan (34:55)
Yeah.

Yes. Yeah.

A red flag, ⁓ a

real red flag, I like that.

Madeleine Zook (35:17)
Because

also the C-suite will do everything they can to not be sued because they know it has to go in the FDD. It's like a big no-no. So if it gets to a point where they have a lot of lawsuits to their name, that is something you're going to want your legal team and have a discussion around.

Michelle Rowan (35:34)
Yeah. So I'm going to ask you another question, not necessarily about talking to franchisees, but I think it's an important part of understanding this is that the franchise or franchisee relationship is extremely complex and it goes up and it goes down and there's sometimes a rub when the alignment of the goals of the franchise or franchisee don't align and it happens. It doesn't mean that it's a bad brand. It doesn't mean that the franchisee is wrong or the franchise or is wrong. But I just go back to this. ⁓

conversation that we had, and we talked about just basically that idea of resolving conflict or having constructive conversations. What do you think, or how is your experience of being a franchisee and being ⁓ on the corporate team, how has that shaped the way that you manage that relationship? Or how would you recommend people coming into franchising? Think about when there is a conflict or when there is not alignment, how would you recommend people work through that?

because I think everybody can work through it in most cases. It doesn't have to blow everything up.

Madeleine Zook (36:34)
Yeah, and from someone who literally goes into blow things up. Yeah, it's probably. So there's a couple of stories here and I'll try to keep it short. The first story is when I was ⁓ engaged to Jesse. everyone and he's.

Michelle Rowan (36:37)
blow things up.

Madeleine Zook (36:49)
Yeah, I'll blow it to his credit. He is one of the top franchisees in Maid pro. I'm very proud of him. So everyone knows I'm engaged him basically a franchisee was at the corporate side for five years at this point and we had rolled something out at corporate and they knew that I would talk to Jesse but it was kind of like a you know, we'll keep it relatively separate. So we rolled something out and I go home that night and Jesse is like, can you believe they rolled this out? And this is why and I was like,

like, whoa, whoa, whoa, that is not the intent, that was not their intentions. This is what they were thinking. And he was like, that's not how it came across. So then the next day I went in and I was like, this is how it was received. And they're like, that's not what we were trying to do. So I had to play the mediator of like, this is what franchisees heard. so, there is a lot of that I'm sure goes on in every brand that...

And this happens in my marriage a lot of that everyone assumes the worst and it's nobody's out.

Michelle Rowan (37:47)
Yes. Yep.

Madeleine Zook (37:50)
to get anyone. Everyone wants everyone to make the most amount of money, right? So coming from a place of that, Richard Sparaccio who was also the co-founder of Maid Pro, would always open every meeting with like, this is my intention. So I always try to, when I'm talking to franchisees or my franchisor I always like to say like, my intention of this meeting is to come to solution of this or to voice my concerns about this. When it comes to threshold brands now, I like to keep a separation of church and state because while I...

I'm very active in the franchise sector. I think it is non-productive for me to go in as a franchisee and try to be like, I know better, because I don't. I'm not in the system on the corporate side anymore, but I will say there was a story. One of the brands, one of our brands is one of the smaller ones, and there was a situation going on and...

they just were not hearing us because the communication kept getting skewed from different levels of management and just you know the normal things that go on. So finally we requested a meeting with Ted who is the CEO and I kind of get on the call and I'm like this arms crossed and he immediately said Maddi you look real angry and frustrated and like that's let's not do that our goal here is to solve this for both of us and I just thought that was a great way to approach it because

because it was like, look, he's not happy, I'm not happy, and we're gonna find a way to work this out. And so what I usually tell franchisees and zors is like, this is collaboration. And the collaboration comes from what I call the ACE method, which is accountability. Who is accountable for what piece of this, let's say, issue? Communication, how are we communicating what got lost here? And the expectation. Was my expectation that Threshold was gonna solve this last week? Was Ted's expectation?

Michelle Rowan (39:20)
Yes.

Madeleine Zook (39:39)
that

we were gonna get back to him in two weeks. So if we can break that down via ACE, accountability, communication, expectation, then we can have a really collaborative relationship and also both have to understand from both sides, we both came into this marriage knowing that we're both gonna do our best to make either side successful.

And I think that's why conventions and meetups are great, because you are reminded in person that is what we are all here for. But you can't expect it to always be roses. And it shouldn't always be fire either, right? It's going to be a back and forth. And that's why it's really important, one, to be transparent and honest, but that we're also following the rules and guidelines of the system, because that's what makes a franchise a franchise.

Michelle Rowan (40:13)
Yes.

I wrote down everything that you said, but I love the collaboration idea and just that raise your hand, talk to corporate. If you have an issue, the scuttlebutt, the franchise community can just like fire each other up rather than bringing the other side into the conversation to get at what was that real intention of the change and change is hard for everybody. So I think that that's important. Okay. One last question. What advice? go ahead. Yeah.

Madeleine Zook (40:54)
I'll say one more thing you have

to understand because there's always the Facebook groups. So WhatsApp, chat thread, everybody has a different situation. They are in a different stage of their business. They've got different personal pressures. Like remember that because I was in a brand once and they are very like business of hard knocks where they were trying to go at corporate. I'm their step in CMO and

Michelle Rowan (40:59)
Yes.

Madeleine Zook (41:20)
I said, listen, they're lighting up corporate and a lot of it's not true. And they said, Maddi light them up, which for me, I'm like, hold my drink. And so we posted everything they're spending, what they're doing, if they're following the model. And it was like, guys, here you go. you're saying corporate's the problem, but you're not fully funding the accounts needed to be successful. And it was like, you shouldn't, will say, depending on the brand, it's not necessarily something you should

do

but or not do but it goes to show you that there's always different stories going around so it's best to go direct to source and understand that if someone says well corporate's not giving me this well what did you ask for did you ask for a sweetheart deal that legally they can't do you know something like that so understanding there's legalities in a franchise system but with Ted

we were able to say, hey, we just need a little bit of leeway on we're doing a rebranding XYZ. And he was like, no problem, right? There's no legality issues. There's no fairness issues. Makes sense. Done. And it was perfect.

Michelle Rowan (42:22)
so the last question is what advice, and it doesn't have to be specific to talking to franchisees, but it can be just what advice would you give to somebody that is thinking about purchasing a franchise?

Madeleine Zook (42:35)
One, be overcapitalized in both money and time. There's no such thing as semi-absentee. ⁓ Yes, you can hire a manager, but even then, it's very difficult to find someone who cares about your business as much as you do from someone who has done it for 10 years. ⁓ Two, follow the model.

You might know better, you might be better at design, but you might be better at finance. But follow the model, it is a successful model for a reason. Don't try to reinvent the wheel, don't make things harder than they need to be on yourself. Three, do as much due diligence as possible. Drag your feet, see how the franchisor reacts. Show up when you need to show up.

Four, communicate it with your friends and family. Make sure that they're gonna be supportive. You're going to need them. Small business is difficult, but rewarding. Was that three? Four? Five? Five? ⁓

Michelle Rowan (43:33)
You're on five if you have another one.

Madeleine Zook (43:41)
with all those other things said, take the risk. You gotta, at some point, if you are ready and you have the means.

this is the least risky way to bet on yourself and build a life of your dreams. And I get emotional when I say it, but this franchising has given me a career that I absolutely love with my best friends. It's giving me a husband, it's giving me three kids that eventually could inherit businesses if they want it. I ⁓ almost died with my third child giving birth and the franchise

franchise community were the first ones to send flowers and diapers to the the NICU and having that sense of support across brands. You know, I can't say it enough that the franchisees, regardless of if you're a competitor or not, they will always show up for one another.

And franchising isn't going anywhere and it is the most wonderful community I have ever been a part of. So if you have the opportunity to do it, you should do it.

Michelle Rowan (44:50)
I love that. That's a beautiful

way to wrap. I remember when your baby was born.

Madeleine Zook (44:54)
And now she is two and a half and terrorizing her preschool. I picked her up yesterday. Yeah, I said, how was her second day? And they were like, she's very direct. And I was like, boy. That's one way to put it.

Michelle Rowan (44:57)
Yeah, that's called, that's called Karma Maddi.

Yeah.

I just really appreciate you sharing. You're just a wonderful part of the franchise community and also very passionate about franchisors and franchisees doing this together and doing it right. So reminding our audience, you can go to franchisebusinessreview.com. We do have reports there that franchisors share to let you know kind of what's happening across the system, but there is no way that you can replace the value of talking to franchisees that are in it every day. So

Call as many people as you can, call them multiple times as Maddi recommended, and we're here to help you on your journey. So thank you, Maddi, again, for sharing your stories with us today.

Madeleine Zook (45:46)
Thank you for having me.