How to increase your Investment: Passion, Purpose, Pay (with Bruce Turkel)

Introduction

Patrick:— “Hey, Patrick Findaro here, Co-founder at Vetted Biz. I’m here today with Bruce Turkel. He’s a Miami-based advertising executive, and he does brand consulting across the world. Also, a keynote speaker, and he’s had six published books. The most recent one “Is That All There Is?”. So, we’re excited to have Bruce on. He has franchise experience, small business experience, advertising experience. And today’s focus is how to increase your investment, your return on investment for that small business or franchise. So, Bruce, really appreciate having you on today.”

Bruce Turkel:— “Thank you for the invitation, Patrick. I’m very happy to be here.”

P:— “And, you know, first off, I gave a very brief intro about yourself, but I’d like to just hear a bit more about your business background, and especially on the franchise inside.”

Bruce Turkel:— “Sure. When I was a kid, my dad was a builder on Miami Beach. And, well, nobody would know this, but in 1966, when I was very young, there was a moratorium on building on the beach and my father had to stop. My grandfather had moved down from New York —his father in law— and they opened a fruit stand together. Fruit juice, that sort of thing, which eventually became the Orange Bowl.

The Orange Bowl was a snack bar with hotdogs, pizza, soft-serve ice cream, and sodas. And it was —I mentioned 1966 because it’s important— when the shopping center business was just starting in the United States. My dad had the idea of putting these snack bars in shopping centers. And then, you know, all those years later, when I graduated from college, he had a couple of hundred around the country. Most of them were franchised. He owned some company stores, which I worked in through high school and college, and, I mean, I could work in restaurants.

When there’s such a clear opportunity to take what you’ve paid for, use the heck out of that, I mean, really work it, and then figure out what you can add to enhance it.

I worked in all their restaurants. But when I got out of college, I had a design degree and I worked in agencies in New York for a while, and then I came to work for my dad, and I ran a franchisee marketing. So, I spent time working with the franchisees so they could take advantage of what the franchisor —who was my family— provided. I did that for a number of years. Then, my dad started to do different things with the company. And then I went back to the agency business, worked in a number of agencies, and started my own agency. It’d be no surprise that we did lots of work in the franchise space.

We worked for Burger King, we worked for TCBY, we worked for Sbarro’s, I’ll think of more, because I knew the business. I also worked in the tourism business because I grew up on Miami Beach and I had always been a pool boy or a lifeguard when I was in school.

And eventually, I built the agency. We had offices throughout Latin America. Our main office was here in Miami. I sold it to my partner about six years ago. And set off on this new journey of rediscovery, I had written a bunch of books on branding and marketing. I wrote a new book on people who look to change their lives. And then I speak at conferences around the world on how to build profitable brands.

I speak at lots of QSRs, QSR Groups, and also lots of franchise groups across different industries on this strange phenomenon that I don’t think a lot of franchisees or franchisors understand, which is as a franchisee you invested a lot of money and getting the rights to the systems, the branding, and marketing…”

P:— “[crosstalk]— 20k franchise fee.”

Bruce Turkel:— “And then every franchisee wants to do their own thing. And it always boggles my mind. You just paid for this system, and now you’re going to go do your own thing. When there’s such a clear opportunity to take what you’ve paid for, use the heck out of that, I mean, really work it, and then figure out what you can add to enhance it.

So, as I said, I speak in a lot of those kinds of groups. I would name names, but I don’t know that that’s appropriate. But usually multi-location restaurants, hotels, any kind of flag business where the owner or the operator paid for the flag, and then how do they best market it?”

P:— “So, yeah, you have the experience on the franchisor level, sitting down with franchisees, relatively small unit systems of 50 units, 200 units to thousands of thousands locations. So, yeah, there’s a lot to discuss today. But I think we can kind of focus on, yeah, maximizing that investment.

So, you’ve paid the franchise fee. You’ve invested additional funds into the build-out if it’s a physical location, type of restaurant, or fitness business… How can you get your return on investment back and then build upon that brand?”

Bruce Turkel:— “So, I love the way you said it, get your investment back and then build upon the brand. That’s what people don’t think about. It’s a multi-step process. Number one, you paid for it, you bought it, you invest in it. As the old saying goes, you put your money where your mouth is, right?”

P:— “Yes.”

Bruce Turkel’s Advice

Bruce Turkel:— “So, use it, work it. I don’t understand why so many franchisees, I speak to say No, I have a better idea». I’m sure you do. But the folks you bought from, and there are good ones and bad ones, let’s face it, but, you know, most of them that have survived the test of time have kind of figured it out, and what you bought was the ability not to make mistakes. The ability to step into a system that works. So, use it.

The old story, it’s probably apocryphal, but the old story about Colonel Sanders is that when Harland Sanders started Kentucky Fried Chicken, he said, I’m going to open one store and make it perfect before I open my second store.» Because if you have a mistake, when you open two stores, you have two mistakes, and then you have four stores, you have four mistakes, and then eight mistakes, and then 16 mistakes, and it grows by geometric progression. My dad always said, Your second restaurant ruins your first because you’re so busy now dealing with the second one that you’ve forgotten all the fundamentals from the first one.» ”

P:— “I’ve seen that a lot too with, even some local Miami chains where their first location is doing incredibly well, $200k, $300k that the owner is taking out of the business. And then they start opening up multiple locations and they kind of don’t… They lose focus and they kind of get into leases or spaces that maybe they shouldn’t be in.”

Bruce Turkel:— “Well, because of…there’s a number of sins you just brought up, Patrick. Number one is the sin of overhead. No business does better when you have more overhead. And we never think of this as we start a business, right? Because we all have some degree of insecurity, or some need to prove ourselves, or whatever. So, When I have the fancy office…», When I have the multiple locations…», When I have…»— then we’re gonna really look impressive, right? But the customer doesn’t care.

The customer only cares about the momentary purchase they’re making. And so, all of this investment and expanded overhead really just adds more pressure to you to have to perform and increases your need for volume without giving you according to increase of quality, you just I need more, I need more, I need more» because I keep buying more, I have got to pay for more.

So, number two, you have a loss of focus. You can have one store that’s a jewel, a gem, and you’re there and you’re an owner-operator, and you’re managing. You open a second store, now your attention is divided. Now you might find the right people, but your attention is divided. And then you open three, and then you open four, and so on and so forth. And then if you go back to the original sin that I mentioned, then you are not following the systems because, Hey, I can do this better».

Then number one, you’re not taking advantage of what’s there to help you win, and number two, you’re not maximizing your investment. You paid for it. Listen, I’m not suggesting you should do that. If you know how to do what you’re doing, don’t open a franchise. Use that money.”

P:— “Yeah, don’t sign up for that franchise.”

Bruce Turkel:— “Right, exactly. But once you’ve made that decision, whether it was a good decision or not, you never want to then throw that away and start from scratch. So, those multiple locations can be very successful, very profitable, and very lucrative. But they also can chip away at what you worked so hard to build.”

P:— “For the Orange Bowl franchise that your father founded and you helped grow, did the franchisees typically start with one location —grow it and then open up a second one—? Or how did that take place?”

Bruce Turkel:— “Yeah, yeah. Exactly right. And they were some, especially in small markets that were single owner-operators who had a lifestyle business, a husband and wife. Maybe they retired from civil service or something, they had some money, they paid a fee, they open the…we found them the location, we open the store, we built it out. My dad was a developer, after all, so he built out the stores.

And then they operated them for years and years, and they did really well. Then there were other people who either had much bigger investment, or much bigger ambitions, or had access to lots of money and they would come and buy a region, you know, so they would buy the Atlanta Area or they would buy the Washington D.C. Area. And there were franchisees who had died and then as new shopping centers popped up, they had first rights of refusal of those locations within that geographic area.

If you love to bake but you open a chain of bakeries, guess what? You are not baking.

And there were even a couple who took on multiple geographic exclusivities. However, keep in mind, that means you’re doing something very different than running a business, right? I mean, you’re still running a business, but running a location. Now you’re running the business. If you read “The E-Myth Revisited” by Michael…Just forgot his name. I think Gerber, Michael Gerber. He says, Work on your business, not in your business». And his whole point is that you cannot be behind the counter serving pizzas, or handing people their dry cleaning, or installing the gutter.” (…)