[SHOWNOTES]

TITLE: New Franchise Broker Laws - With Sarah Davies

DESCRIPTION:

Sarah Davies, General Counsel of the International Franchise Association (IFA), discusses the proposed Model Franchise Broker Registration Act by the North American Securities Administrators Association (NASAA) and the California Senate Bill 919. Both pieces of legislation cover the same territory, focusing on registration and disclosure requirements for third-party franchise sellers. The IFA worked with the California legislator to introduce Senate Bill 919 in January, proposing registration and disclosure requirements for third-party franchise sellers. Meanwhile, NASAA has been working on its Model Broker Registration Act for several years.

Davies explains that the term "third-party franchise sellers" encompasses franchise brokers, franchise sales organizations, and franchise consultants. Currently, there are no educational or registration requirements for franchise brokers. The IFA supports education for franchisors and has resources and tools available for this purpose.

The IFA is supportive of increased transparency in the franchise sales process as part of its overall initiative around responsible franchising. Senate Bill 919, which requires franchise brokers to provide disclosure information, has passed the Senate and is currently before the California Assembly. If passed, it will require the governor's signature to become law, with a proposed effective date of January 1, 2026. The disclosure required for franchise brokers is straightforward and basic, including contact information, professional experience for the last five years, litigation history, services performed for clients, a general description of the compensation structure, and franchises sold in the last year.

NASAA, while not a rulemaking body, has issued statements of policy or commentary to clarify disclosure obligations under the franchise rule. These guidelines are then adopted by states, either formally or informally. Franchisors, for the sake of having a single Franchise Disclosure Document (FDD), generally comply with NASAA's commentary. - With Sarah Davies.

TIMESTAMPS:

00:00 Introduction: "Sarah Davies is the General Counsel of the International Franchise Association..."

01:05 Discussion on Senate Bill 919 and NASAA Model Franchise Broker Registration Act.

03:08 Overview of Senate Bill 919 and NASAA's initiatives.

05:18 Definition and role clarification of franchise brokers.

07:10 Requirements to become a franchise broker.

09:00 Lack of current regulations for franchise brokers.

10:20 Support for increased transparency in franchise sales.

12:15 Status of Senate Bill 919 in California.

14:30 Effective date and preparation time for Senate Bill 919.

15:55 Extensiveness of disclosure requirements for franchise brokers.

17:40 Submission process and potential fees for registration.

19:05 Responsibilities of franchisors under Senate Bill 919.

20:20 Role and function of NASAA in franchise regulation.

22:00 Relationship between NASAA and the FTC.

LINKS:

WEBSITE: http://franchisehotseats.com/

LinkedIn: https://www.linkedin.com/in/drjohnhayes/

Twitter: https://twitter.com/drjohnhayes

YouTube: https://www.youtube.com/c/Howtobuyafranchise

Instagram: https://www.instagram.com/hayesjph/

TikTok: https://www.tiktok.com/@johnphayesfranchise

Pinterest: https://www.pinterest.com/DrJohnHayes/

Facebook: https://www.facebook.com/franchisehotseatpodcast

Where to find Sarah Davies:

DESCRIPTION:

Alicia Miller, founder and managing director of Emergent Growth Advisors, discusses her book, Big Money in Franchising, and the role of private equity in the franchising industry. She highlights the success story of Tropical Smoothie, which grew from 315 to 1400 units through private equity partnerships. She also discusses the Dwyer Group, a home services giant, which transitioned from being publicly traded to partnering with private equity.

Miller points out that 700 franchise brands have partnered with private equity companies, with at least 2 trillion dollars available for investment in franchising. She explains that private equity in franchising began in the 1990s, with significant growth after the 2009 financial crisis. She emphasizes that successful private equity partnerships in franchising focus on franchisee satisfaction and investment.

There are 5,000 registered private equity firms in the United States, with 1,400 having invested in franchising. These firms often specialize in certain sectors or stages of brand development. Miller advises emerging brands to be prepared before engaging with private equity firms and to consider the implications of losing decision-making authority. She reassures franchisees that initial private equity transactions usually align with their growth goals.

-With Alicia Miller

TIMESTAMPS:

00:00 - Introduction of Alicia Miller and her background in franchising and private equity.

01:15 - Example of Tropical Smoothie's success with private equity, including recent transactions.

02:00 - Discussion on the Dwyer Group and its transition due to private equity involvement.

03:00 - Acceleration of private equity interest in franchising post-financial crisis starting around 2009.

04:30 - Challenges faced by publicly owned franchise companies with shareholder interests.

06:00 - Overview of the number of private equity firms and family offices in the United States.

08:00 - Potential conflicts between franchise operations and private equity decisions.

09:15 - Specialization of private equity firms in franchising and specific investment criteria.

10:30 - Exploration of how private equity firms actively seek out emerging franchise brands.

12:00 - Dynamics between franchisors and private equity firms in brand acquisition and growth strategies.

LINKS:

WEBSITE: http://franchisehotseats.com/

LinkedIn: https://www.linkedin.com/in/drjohnhayes/

Twitter: https://twitter.com/drjohnhayes

YouTube: https://www.youtube.com/c/Howtobuyafranchise

Instagram: https://www.instagram.com/hayesjph/

TikTok: https://www.tiktok.com/@johnphayesfranchise

Pinterest: https://www.pinterest.com/DrJohnHayes/

Facebook: https://www.facebook.com/franchisehotseatpodcast

DESCRIPTION:

John Hayes, host of the Franchise Hot Seat, interviews James Butler, a serial entrepreneur, author, and franchise sales coach. Butler shares his experience of owning three bridal shop franchises and five different businesses, and his decision against franchising his concept after consulting with a franchise attorney. He discusses his consulting work for franchise owners and his belief that not all businesses are suitable for franchising, emphasizing the need for differentiation in a saturated market. He also mentions the trend of consolidation in the industry, with companies like Authority Brands and Five Star Franchising acquiring different brands under a parent brand.

Butler and Hayes discuss the challenges of franchising a small gym, with Butler suggesting that success in this area requires effective marketing and community building. He warns against franchising businesses that cannot provide adequate support to franchisees or have not developed a solid business model. He cites statistics from the International Franchise Association showing that two-thirds of franchise brands in America never reach 100 outlets, questioning the financial viability of franchising for these businesses.

Butler and Hayes discuss the reasons why people are drawn to franchising, despite the challenges. Butler suggests that many franchisors do not fully understand the industry or their business, and make mistakes as a result. They also discuss the importance of marketing in franchising, and the difficulties faced by small start-ups in competing with larger, more established brands.

Butler's book, Franchise Growth Strategies, is mentioned, specifically his concept of an "idea day" for making big breakthroughs in business. He explains that this involves scheduling time to reflect on the business and its trajectory, and to develop a list of activities to work on going forward. He emphasizes the importance of regular reflection and strategic planning for growing franchisors.

Butler warns against the "activity versus accomplishment trap", stressing the importance of focusing on activities that contribute to long-term goals. He suggests having three to six priorities per day, and maintaining a master list of tasks from the last "idea day". He also discusses strategies for avoiding distractions and staying focused on priorities.

- With James Butler

TIMESTAMPS (Use ChatGPT on Transcript):

00:00 - Introduction by John Hayes

00:11 - James Butler's introduction

00:39 - Discussion about owning bridal shop franchises.

01:06 - Decision against franchising their own concept.

01:27 - James Butler discusses his experience with multiple businesses and consulting.

02:08 - Question about the saturation of franchising.

03:06 - Discussion on industry consolidation.

03:42 - Mention of meeting a former franchisee over lunch.

04:09 - Conversation about small gym franchises.

05:11 - Further discussion on small fitness franchises and marketing challenges.

06:03 - Reflection on the struggles of emerging franchise brands.

06:44 - Question about the appeal of franchising.

07:23 - John Hayes reflects on the caution needed in franchising decisions.

08:01 - Discussion on "idea days" and strategies for business breakthroughs.

08:57 - Importance of planning and reflection in business.

09:29 - Reflection on daily routines and accomplishing goals.

10:06 - Conversation on prioritization and avoiding the activity vs. accomplishment trap.

10:52 - Managing distractions to stay focused.

LINKS:

WEBSITE: http://franchisehotseats.com/

LinkedIn: https://www.linkedin.com/in/drjohnhayes/

Twitter: https://twitter.com/drjohnhayes

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