In October 2015, Cousins Maine Lobster held its first franchisee retreat in Portland. We had booked rooms at the Residence Inn in the heart of downtown, not far from the water, and reserved the conference room. If it wasn’t as idyllic as being on a grassy lawn overlooking Penobscot Bay, with picnic tables covered in gorgeous red lobster, well, it was a start. We were thrilled just to have all ten of our franchisees in one place for the very first time.
But most of all, we were thrilled about our keynote speaker, Kat Cole, probably the most accomplished person in Portland that day. And for some reason she had agreed to speak with a collection of first-time business owners and franchisees. Slightly condensed, here’s what she said:
“It’s kind of funny that Sabin and Jim would invite a Hooters girl to speak to you today. That’s right. My second job was as a waitress at Hooters in Jacksonville, Florida, when I was still in high school. I worked because things were tight back home. My mother raised my two sisters and me by herself, and struggled to make ends meet. As the oldest, I tried to help wherever I could, first as a babysitter, then as another source of income. And that brought me into a Hooters. But I’m here today to tell you that it doesn’t matter where you start. Where you start says very little about where you end up.
“So I wore the skimpy uniform, served beer and chicken wings, and helped my mom pay the rent and take care of my siblings. But I also watched and I learned. For whatever you might think about Hooters, it is a phenomenally successful business. It has a specific brand and targets a specific customer. Hooters makes no apologies for this, nor should it. There are more than four hundred Hooters locations and franchises in the world, including forty-four states and twenty-eight other countries.
“By the time I entered college, the first of my family to do so, I still worked for Hooters but I was no longer a waitress. I was nineteen and I had learned the Hooters business model so well that the company had started sending me around the world to open new franchises. I ended up dropping out of college, because my studies interfered with my day job. My mother wasn’t too happy with that, but I think I’ve managed to convince her it was the right decision for me. By twenty-six, I was vice president of training and development. During my tenure at Hooters, I oversaw the opening of nearly three hundred locations worldwide, and watched Hooters become a billion-dollar company.
“Today, I’m the group president of Focus Brands and the COO of Cinnabon. In many ways, I still do what I’ve always done, going way back to when I was eighteen. I open franchises. Since joining Cinnabon in 2010, we’ve opened more than two hundred bakeries worldwide. But what I always tell people, particularly new franchisees like you, is that Cinnabon started as one store. Just one, at a mall in Washington State. And that first store was dedicated to doing one thing: making the best damn cinnamon roll in the world.
“Sound familiar? It should, because you’re all now part of a company that started as just one food truck that is dedicated to doing one thing: make the best damn lobster roll in the world. And what I’m going to tell you is that you couldn’t ask for better franchisors than Jim and Sabin. I’ve met dozens of franchisors and thousands of franchisees. I know the type of person it takes to build a brand that can be replicated again and again. And rarely have I seen a franchisor with the right combination of respect, hard work, and humility as you have with Jim and Sabin.
“The task before you isn’t easy, but you should expect these guys to give you exactly what you need to thrive. But … that doesn’t absolve you of being an entrepreneur in your own right. By becoming franchisees of Cousins Maine Lobster, you’ve entered into a formal agreement. The terms of this agreement are spelled out fairly clearly in a bunch of legal language we don’t need to recite here.
“But you’ve also entered into an informal agreement, one that isn’t bound by any legal requirements. This informal agreement says that you are responsible for more than just selling lobster rolls. It says you are responsible for building the great brand that is Cousins Maine Lobster with new ideas. Each of you is more than a food truck operator. You must be innovators as well. You must be visionaries. Because the genius of the franchise system is that you are able to work as independent entrepreneurs. By giving you their brand, the cousins have given you your start. But that’s all it is.
“Just like I started as a Hooters girl, you have started as food truck operators. You could stay a food truck operator, just as I could have stayed a waitress. Or you can be more than what you started with. How? By building something on your own. By using what the cousins have given you and creating something better. By turning your food trucks into incubators of new ideas.
“This is your responsibility. But I tell you now: it’s amazing where you can go when you start to build something on your own. That’s my advice to you. You’ve been given this extraordinary opportunity to join the Cousins Maine Lobster family—for it is a family. What comes next is up to you.”
Afterward, Kat stuck around to answer questions from our franchisees, as a kind of group therapy session for everyone. Not that our franchisees were in need of therapy—at least no more than we were at this stage—but when you have the master herself in front of you, you don’t waste the opportunity. We could tell that her story, her very presence, had lit a fire under everyone in the room. They just don’t get more successful or inspirational than Kat Cole. Which raises an obvious question: Just how did we get her as our keynote speaker?
That’s a great question …
THE NEW REALITY
Barbara raised the idea of franchising early in our partnership. But it was just one of several ideas we discussed in those days about how to build the brand. After Shark Tank, our immediate concern was whether we could duplicate our success with another truck. This might seem like a fairly simple matter of adding more trucks to the LA fleet, but nothing is ever that simple. We were cautious. The show had thrust us into a kind of minor-celebrity spotlight and our single truck was reaping the rewards. We were selling out wherever we went simply because people had seen us on the show.
Pretty great, right?
Except that we had become a target. A glance through our Yelp reviews in those post−Shark Tank days tells a fuller story than the lines at our truck. Previously, we had been lucky to get almost 100 percent positive online reviews. But then Shark Tank happened and suddenly those reviews began to slip. Almost without fail, each negative review started in the same way: “After seeing the cousins on Shark Tank, I wanted to see what the hype was all about…” Then BAM! A negative review. It’s not that our Yelp reviews went completely south after Shark Tank, it’s that we found ourselves under a magnifying glass that we hadn’t anticipated. Even the good reviews would offer criticisms that we had never heard before. It’s as if customers wanted to find something wrong.
A company shouldn’t ever take Internet comments too seriously. You’re never doing as great or as bad as the commenters say. Moreover, the people who do comment on those sites aren’t a fair cross section of your customer base. They make up what statisticians would call an “unscientific” sample size. But they spoke to our new reality. There had been a time when a single customer’s bad experience or opinion was just that: just one out of hundreds of otherwise satisfied customers. If the customer came to us directly or complained on a site like Yelp, we did what we could to fix the problem, within reason. Some customer complaints are just unreasonable and you do more harm trying to make them happy.
But now it was as if customers were looking for flaws in our business. A customer who isn’t 100 percent satisfied at a random food truck doesn’t think twice about it. Sure, perhaps there could have been more lobster meat or the price was a tad steep, but they either enjoyed their experience or they didn’t. The degree of their (dis)satisfaction was registered by whether they came back. And a lot would come back. But now, they weren’t just buying a meal at a random food truck: they were buying a meal at a food truck featured on Shark Tank.
The bar had been raised. The customers’ senses were heightened. Our room for error had shrunk significantly. In fact, there wasn’t any room for error. Because when you’re in the public spotlight, people judge you differently than if you’re just another food truck. Even if you try to prepare for this, you can’t ever be prepared. The sheer number of customers who are visiting your truck just so they can pick it apart is overwhelming. They’re going to find something, that’s just the way it is. It’s like knowing that the New York Times food critic is coming to your restaurant on a certain night—except there are hundreds of critics and they are coming every night.
What to do? For starters, don’t give them a reason to complain. They’re going to find something anyway, just don’t make it easy on them. We had to up our game. We had to put in place a process to rid the entire service line of human error. Because that’s where they get you—when someone screws up. Gone were the days of winging it on the fly; gone were the days of “Fuck it, just eyeball it!” when it came to the right amount of lobster meat; gone were the days of having untrained employees on the truck. Now, everyone on the truck knew their place and what to do. Everyone knew everyone else’s job, just in case something went wrong. And with a food truck, something always goes wrong.
The thing is, sometimes those commenters who came just to criticize weren’t wrong. We’ve seen it for ourselves. Heck, everyone has. You hear about a great place, maybe online or from television, and you make a point of going there to try it out. Your expectations are high, and they should be. This venue has received publicity any business would kill for. They know it and you know it. And so, when your experience there is less than what you expect, your displeasure is greater than if you had just found the place on the street. Sure, there’s a chance you’re being too harsh. But there’s also a chance you aren’t: perhaps the place didn’t live up to the hype because the food just wasn’t that good. Or maybe the place with the “million-dollar view” only has a million-dollar view, and nothing else. Maybe the burger joint made a decent patty, but for twenty dollars? For twenty dollars, the burger should have been life changing.
Which is another way to say that we couldn’t dismiss all those commenters. Some made valid points and we got better. It was a bit of a culture change for us, to be sure. After all, we assumed that “winging it” was part of our charm. Being a little rusty, a little rough around the edges—isn’t that what people expect when they go to a lobster shack? Perhaps, but how many lobster shacks make it on Shark Tank? How many lobster shacks can claim Barbara Corcoran as an investor? But the fair criticisms we took seriously and we tried to make good with the reviewer where we could.
The plain truth is that we had entered a new phase of our company. We had gone on Shark Tank because we had wanted to be more than a food truck. Congratulations—we were. Now we couldn’t afford to get anything wrong. We had traded our anonymity for national publicity, and the price was that we now had to be perfect, or damn near perfect, because we now attracted a different sort of customer. There are those who want to see the Shark Tank contestant and take a selfie. Then there are those who just want to bring you down.
Why? Because they can.
In any case, those early review hits didn’t hurt our sales much, but they opened our eyes to the new reality. We were doing better business than ever before, except the ground had shifted. Things were different now. We had to get better. No mistakes.
NEW TRUCKS, OLD SYSTEMS
Since the day we decided to go on Shark Tank, our plan had always been to use the money we got to buy a new truck. Our plan hadn’t changed after Shark Tank, only now, we were a bit wiser. We now saw that we had a couple problems. First, when the Cousins Maine Lobster truck rolls into the neighborhood, the cousins—at least one of us—better be on it. All over LA people were showing up because they wanted to meet us.
So, despite our busy schedules, we continued to go out with the truck whenever we could. We knew that we had to get through this post–Shark Tank patch by being on the truck as much as possible, because almost all of our new customers were there to see us in person. Again, it was the new reality and it wreaked havoc on our schedule, as well as our plans to expand. As Barbara taught us, every moment you’re doing something is a moment you’re not doing something else. It also complicated our plans to put another truck on the road. The good news is that there are two of us, so even if customers didn’t get us both, they usually got one of us.
Regardless, not long after Shark Tank we put our second truck on the road. It was an immediate success. Although we had run the numbers and figured that Los Angeles could support two trucks, you’re never sure until you try. But it wasn’t just whether there was enough demand for two trucks; it was also whether we could replicate the processes and system that had made the first truck a success.
Obviously, our long-term plan was to develop a full-scale standardization of the Cousins Maine Lobster model (whatever that was). We hadn’t yet committed to franchising, but expansion of any sort required us to codify our unique way of doing business. For instance, could we hand a new franchisee a how-to kit, complete with a brand-new food truck, and be fairly confident that just following the rules and processes in the kit would lead to success? Or what if we chose instead to pursue a corporate model, where every truck we put on the road was ours? Could we be reasonably sure of success? We weren’t sure, but putting another truck on the road forced us to find out.
We mentioned in a previous chapter that as an entrepreneur, you will have to give up the thing you love doing if you want to build a company. A baker who wants to open a lot of bakeries can’t stay in the kitchen. He’s too busy opening up bakeries and implementing a process where every bakery bearing his name operates as well as the first bakery. In a similar vein, an entrepreneur must also find the discipline for organization. Expansion requires more than customer demand, money, capital, or more employees. It requires, above all, the discipline to combine all those things into something resembling a company structure and logistical plan. You want to take everything that works here and duplicate it there. Easier said than done.
First, you should know what’s working here. Why does it only take three minutes from order to service? Have you looked at that? If it’s only because one employee on the line is faster than the others, then you need to know that. Can the other employees be as fast as him? What’s the average time without this employee?
Knowing the answer to these questions requires the dreaded word: information. Or, more accurately, data. We learned early to be fanatical about collecting data on our processes, from what happened on the truck to what happened back in Maine with our suppliers. We could trace our product; know where shipments were and why they were delayed; keep an eye on a temperature control; and find the bottlenecks and areas for improvement. We’ll admit that all of this is exceedingly dull and boring to set up—but once you have a system in place that actually allows you to capture this data, you’ll wonder how you ever did without it. It not only enables you to easily find flaws in your current processes, but it also makes it easier (it’s never “easy”) to transport those processes to another location, or another truck.
* * *
We had some of these systems in place for one truck; we improved those and added a few others once we got the second truck. But it wasn’t a seamless progression. Adding the second truck showed us a lot of the processes and metrics we had simply overlooked with the first one. Part of the problem is that we knew every job in the entire Cousins Maine Lobster hierarchy, such as it was. We could be line cooks, checkout persons, bookers, even drivers. When you can do everything—which all entrepreneurs end up doing early on—then you sometimes forget that not everyone else can. The second truck exposed to us all the jobs, systems, and processes we had taken for granted and never bothered to set down in writing.
It’s vitally important to know your business from A to Z. Your early days as a business owner should provide that education, as long as you’re doing it right. After all, how can you teach someone else to do something if you haven’t done it yourself? We’re reminded of that reality show Undercover Boss, where CEOs spend a day working at the low-level jobs of their business. The point of the show is that the CEO is supposed to come away with a newfound appreciation and respect for the people who do those jobs. Which is why we’d be terrible on the show. We’ve already done those jobs in our business; we know exactly what our employees go through. But we agree with the show’s purpose: we are better business owners because we know these things.
The best way to tackle this phase of your organization overhaul is to deconstruct every process to its barest essentials. What do we mean by that? Look at it like a recipe, which has two elements: ingredients and steps. Every process in your business, from the manufacturing of the product to payroll, must be reduced to ingredients and steps. We found that this is an exercise where it pays to be painfully literal. When we say every ingredient and every step must be listed, we mean every single one.
But replication of our system wasn’t limited to processes. We also had to deal with our first problem: Who can be the cousins when the cousins aren’t there? Put another way, how do we build a company where our presence on the trucks wasn’t required for success? Our solution was to give each employee the ability to be able to converse with customers about the company, lobster, and Maine. In short, not only did every new truck need to operate like the first truck, but each employee had to be an extension of us. That was our goal. Which should be the goal of all entrepreneurs: your job during the early expansion period is to replicate yourself. If you’re still micromanaging after you’ve opened a few more locations, then something is wrong with your process. Fix it and stop wasting your time.
This is what we mean by discipline. It’s hard to let go when you’ve been involved in the business’s operations from day one. But for the same reason you can’t keep baking if you want to own a chain of bakeries, you can’t do everything if you want to build a company. Hiring the right people is the first step; but the second, equally important step is to have the discipline to set down your process and practices into a system that can be replicated.
It’s the old adage: work smarter, not harder. Just by opening your own company, you must work hard. Both of us benefit from an incredibly strong work ethic. But discipline is different than hard work. Hard work is running around to each of your locations, double- and sometimes triple-checking your employees and your processes, and correcting mistakes. Discipline is setting up a data-capture system that collects information from all of your locations and delivers actionable insight right to your computer screen. A system like that isn’t easy to set up, but it’s a heck of a lot smarter than the alternative method: you running around like a madman. Don’t ever mistake hard work for smart work.
In short, expansion of any sort requires a level of discipline your little company probably never needed. You need to find this discipline if you want to keep the whole shaky edifice from crumbling. Because a lot of the time, failure has nothing to do with your product, customer demand, or money flow. Sometimes it is just a matter of total disorganization. This doesn’t necessarily mean that you must do all the organization yourself. Sometimes discipline requires finding the right person or team to organize the company for you. Have the courage to give up a little bit of control to achieve organizational simplicity.
Which brings us to our third truck.
For us, adding a second truck was always part of the plan, but a third? We assumed we’d get there, too, but we weren’t in a rush. And that’s when we learned something else about expansion: sometimes a business’s growth isn’t a choice; it’s a necessity. We were taught this lesson when going over finances with—who else?—Steve. By this point in our company, we had standardized most of our financial processes, at least to the point that they resembled a real-life business. And while reviewing some numbers one day with Steve, we were looking at some forecasts and noticed they weren’t great. We were running a bit short and putting too much on credit, but that’s how it goes sometimes.
Or so we thought, until Steve said, “Looks like it’s time to get another truck.” We sort of looked at him, as if to say, “Are you nuts? We just added a second!” Why did Steve want us to expand at a time when money was tight? That didn’t make sense. But Steve’s point was that if our two trucks were completely booked, then that meant the market could bear a third. The lesson we got from this is that you shouldn’t go slow and steady just because you think that’s the smart thing to do. Go slow and steady if that’s the best thing for your business. But if circumstances point in the opposite direction, have the courage to go fast, too.
And so, only a couple months after putting our second truck on the road, we had a fleet of three. It wasn’t long before our trucks were pulling in around $180,000 a month in sales. We stood to make roughly $2 million in sales our second year. We could have left it at that and been considered successful by most definitions of the word. Certainly, any attempt to go beyond that would be a risk.
But we had discovered within ourselves that we weren’t content with good enough. If three trucks made that much money in LA, what would a single truck make somewhere else? Say, in Raleigh? Or Dallas? Or Sacramento?
We weren’t sure, but it was time to find out.
“WHAT IS FRANCHISING?”
Do just a little bit of online research about franchising and you’re likely to come across some variation of this statistic: “Studies show that franchises have a success rate of 90 percent as compared to just 15 percent for businesses that start from the ground up.” You’ll even find some sites using a number as high as 95 percent. The funny thing is no one knows where this stat came from, yet franchising brokers and consultants continue to toss it around, luring the naïve into franchising because it’s supposed to be easy money.
The idea behind the statistic is that a franchisee doesn’t need to do all that much work to be successful; that merely buying into an already successful brand somehow guarantees success, like osmosis or something. This is laughable. We’ve spent years fine-tuning and improving our franchise kit so that our franchisees have all that they need from us to be successful, but we’ve learned one undeniable fact about franchising: it all comes down to the franchisee.
Just ask one. Better yet, ask them about the 90 percent success stat, only be prepared to duck. Franchisees have a mean left hook. Or just keep reading. An article in Entrepreneur Magazine dug into this pesky little marketing gimmick and found what any franchisee already knows: “The Stat” is crap.
Bad information is the bread and butter of the Internet, but this particular nugget is especially troubling. Franchising is one of the most heavily regulated industries in the U.S. for a reason—it has suffered from high-profile cases of misrepresentation and fraud. Critics point to The Stat as a willful misrepresentation and an attempt to sucker people into buying franchises. In many ways it really does lure people into franchising, even if a franchisor has never made the claim. The ubiquity of The Stat means that many candidates come into their businesses thinking franchise ownership is practically guaranteed success.21
The reporter searches in vain for a more reliable success rate for franchisees only to conclude that success depends on two independent variables: the franchisor and the franchisee. In other words, we’re back to where we started. Finding franchise success is no quicker or easier than anything else. We certainly didn’t choose a franchising model for our expansion because we thought it would be easy. We chose it because it was the option that made the most sense for the type of business we were at the time, and the type of business we wanted to become.
But let’s back up a bit. Our first discussions with Barbara over franchising began soon after Shark Tank. They didn’t go well. When Barbara asked us about it, Sabin’s exact words were, “What is franchising?” Once we got a dictionary, we thought that the franchising model was a good one for us, but that we weren’t ready for it. At the time, late 2012, we were just getting ready to launch our second truck. But the thought had been planted and we started to view our new trucks as our first forays into the franchising world. By developing a system that is replicable we were taking our first steps.
There was only one real alternative to the franchising we discussed at the time. We could have chosen to pursue a corporate model, which would mean we owned everything with our name on it. The good part? We owned all the profits. The bad part? It required a lot of capital to get started. It would also require us to employ and manage people from afar. We saw this firsthand with the three trucks we had put on the road in Los Angeles. We had reached that point relatively quickly, but not without a lot of luck along the way. Beyond LA, the corporate model might have made more sense to us after a few years of running three or maybe four trucks ourselves. As it was, we were years away from establishing a corporate presence beyond our LA office.
Besides, pursuing a corporate model would require us to know every market we entered, and for food trucks, that’s not an easy analysis. It’s one thing to set up a brick-and-mortar in a specific neighborhood—you can readily investigate your competitors, the demographics, etc. But a food truck requires a sense of the community beyond a simple neighborhood. You need to know about food-truck-friendly events, make the right relationships, and find the right people on the ground. It’s a different beast altogether.
Franchising offered a faster way to expand without requiring as much upfront capital. Moreover, the franchising model—individual truck owners operating in cities they know far better than we did—seemed like a better fit for a food truck business in general. Sure, we would lose out on most of the profits, but we would also be able to expand smartly, choosing other entrepreneurs like us to promote and protect the brand.
Because, in the end, that was our chief concern. How could we expand the reach of Cousins Maine Lobster without sacrificing any of its meaning? Or, how could we keep the “Cousins” in Cousins Maine Lobster, even though we lived in LA? Our answer was that we needed to find people who cared about it as much as we did. Sure, you can hope to find employees like that, but it’s far better to encourage ownership in a brand if you in fact provide some level of ownership to them. Franchising does that. It allows each franchisee to know that he or she is working for themselves. They have as much of an interest in promoting and protecting the Cousins Maine Lobster brand as we do.
This mutually beneficial relationship, once we fully understood it, appealed to us greatly because it required people who were just like us to work. In fact, it was during these conversations about franchising that Barbara said to us, “You’ll want to find franchisees who are the best average of yourselves.” In other words, we’re not going to find our clones. But we can find potential franchisees who exhibit most of the qualities we like to think contributed to our success. The best average of ourselves. We’ve been following Barbara’s advice ever since.
FINDING THE FRANCHISEES
Once committed, we set out finding a franchise development group to help us get started. There’s this sense that once you’ve signed a shark from Shark Tank, you never need another advisor again. But Barbara has dozens of other investments and interests that keep her busy. She isn’t our employee, nor our president. She gives us her time when she’s able, and we’re thankful for each minute. Still, just because Barbara convinced us franchising was the way to go doesn’t mean we knew any more about how to do it.
Fortunately, Barbara gave us the names of a few franchising groups that handle a lot of these details. It’s one of the great benefits of having Barbara as a partner. She can tap her network and give us reputable, successful names, but then it’s up to us to find out if we want to go further. In the end we decided to go with one of Barbara’s suggestions, a Buffalo-based group named—what else?—the Franchise Development Group.
While FDG helped us put together a document known as a franchise disclosure document, we worked on writing employee manuals, a handbook, and training courses, as well as measuring out recipes to a precision we could never have anticipated in April 2012. On top of this, we were also managing our three corporate trucks and our e-commerce business. Those were some crazy days, to say the least. But the discipline we had shown when putting two more trucks on the road in LA paid off. We had already replicated our system; we had the recipes down, ready to refine slightly for a franchisee.
Indeed, we’ve discovered that the hardest part of franchising is finding the right people. With a few exceptions, we’ve been extremely lucky in our franchisees. It took us a while to develop the right vetting process, but eventually we developed three criteria for what we look for:
1. Hands-on. We got a lot of requests from investors and investment groups that had deep pockets and wanted to buy their way into a truck. We steered clear from these applicants right away. The last thing our brand needed was another layer of interests between us and the guys in the truck. One of our early franchisees had been invited to set up the truck inside a major theme park. Wow! Things don’t get much better than that. There was one catch, though. The truck had to be there at the gate at 7:00 a.m. on the nose. So, what happened? The truck showed up at 7:30 and the theme park refused them. The franchisee tells us that it wasn’t his fault, it was his manager’s, whose alarm didn’t go off. Sorry, pal. You should’ve been there, not your manager. You should’ve set two alarms, made a pot of coffee, and shown up outside the gate at 6:00 a.m., just in case. We would’ve. A hands-on owner would’ve, too. We want the guys (and gals) in the truck to be the interests. The people who put up the money were the ones we wanted running the truck.
2. Work ethic. We also stayed away from fast-talking food people. We knew nothing about the food industry or food trucks when we first started. We weren’t quite looking for that level of ignorance, but we wanted hard workers over experts. A hard worker is more willing to take direction, particularly early on. They know they don’t know anything, which is why they’ll approach the business the way you want them to. An expert thinks they know everything already and will fight you tooth and nail every step of the way. No thanks. Take our Nashville franchisee. In July and August, most of the other Nashville food trucks slow down, and some stop service altogether, because the heat is brutal. The conventional, expert wisdom is that no one would stand outside a food truck on a blistering day. Our Nashville guys said, “Well, why not?” Instead of listening to what everyone told them, they went out every day during that scorching July, setting a Cousins Maine Lobster single-truck monthly sales record of $143,000 in sales. Simply said, they outworked everyone.
3. Fixers. Finally, we want people who just get things done. This has very little to do with intelligence or experience. It has everything to do with determination; a will to succeed no matter what. A brief story should explain what we mean. One of our early franchisees was a lawyer, an incredibly smart guy. The problem was that every time the truck broke down, it would take him two to three days to get it fixed. He ended up selling the truck to another franchisee, who would be able to get a broken truck back on the road the next day. The only difference between these two franchisees is that one was determined to succeed no matter what, while the other one wasn’t.
But we won’t lie. The downside of franchising is that it all depends on the people you choose to protect and promote the brand: the franchisees. Even after you’ve vetted dozens of applicants, picked the ones you thought were the best, trained them, got them a truck, set up their supply chain—even after all that, they can still be the wrong ones for the job. You just don’t know until they get out there. And even after you’ve decided they aren’t the right fit, it’s not like you can easily fire them. At the same time, that’s the only way to discover what type of person does work for your brand. It can be a long, sometimes painful journey, but the rewards of having a team of franchisees who get it—who love what you’ve built because they’re building it for themselves—there’s no better feeling.
THE OTHER BARBARA
Now, we could lie and say everything we know about franchising we learned ourselves. But you should know by now that we approach nearly every new thing with a breathtaking level of ignorance. And yet we’ve rarely failed. The secret isn’t that we’re business geniuses. The secret is that we surround ourselves with business geniuses—and annoy the shit out of them with millions of questions. Barbara Corcoran is one of those geniuses. Kat Cole is another.
Sabin first met Kat while they were filming a pilot for the Food Network in 2014. We had already started the process of franchising but were still very much in the early days. We were a bit overwhelmed, so of course Sabin decided to do a television show. The show wasn’t picked up, but introductions were made and pleasantries exchanged. Kat would tell us later that when she told Sabin to call her if he had questions about franchising, she didn’t expect he would.
He did. When one of the world’s foremost experts on franchising invites you to call anytime, you don’t worry about being too forward. You call! Which serves as a good lesson for all budding entrepreneurs out there. There are a lot of opportunities to meet successful businesspeople: seminars, conferences, and talks, for example. It might cost you an arm and a leg to attend these events, but if it gives you a chance to brush shoulders with some of your business idols, then do it. And if you get a chance to talk with these people, don’t hesitate to be forward. You might never get another opportunity. The worst that could happen is that they think you’re a weirdo stalker and call security.… No, the worst that could happen is that they just ignore you, which means nothing happens. Or they give you a card and take your call.
Our next meeting with Kat took place a couple months later in LA, when she came through town on business. Sabin met her for a drink and talked shop. It was during this conversation where Kat, in her words, “laid a bunch of truth on us.” That’s not an exaggeration. We were very early in the franchising game, just testing the waters, but essentially Kat’s message was: “You’re going to need a bigger boat.”
Put another way, the very characteristics and qualities which had allowed us to get where we were wouldn’t be enough to make us successful franchisors. She told us that some of the best business minds she’s ever met made lousy franchisors. The problem, in her view, was one of ego. The drive and determination that make one successful in business are not conducive to the franchise world. Can you imagine Steve Jobs being a successful franchisor? Or Meg Whitman? Or Jeff Bezos? These businesspeople are successful because they can mold a business in their likeness by sheer force of will. Nothing escapes their notice; everything is done by their say-so. The results of such an approach speak for themselves.
But that’s why franchising is different. Instead of enforcing your will, you must give it up. Instead of leaving nothing to chance, you hand over an appendage of your business to someone else. These sacrifices of a successful franchisor are anathema to most corporate businesspeople. It just goes against everything that they know. In short, Kat told us that franchising requires a level of humility and trust that you just don’t see a lot in the business world.
Kat also emphasized the franchisee role as an idea incubator. One of the characteristics of franchising that makes it such a great business model is that the franchisee has enough independence to experiment. While remaining true to the brand, a franchisee can try new marketing ideas, they can invent new recipes, and they can improve the overall functioning of the truck. We encourage all of this. But thanks to Kat, we have in place a process where these great ideas have a way of making it up the chain to us. That way, we can implement the idea across the business, throughout the franchisee network, and improve everyone’s bottom line. Kat’s emphasis on putting down processes and best practices has proven itself time and again.
But if we could identify the best lesson we learned from Kat, it’s this: be open and honest with your franchisees. Just because they have your franchisee kit and a truck doesn’t mean they’ll never need your guidance ever again. Your franchisees look to you as a mentor, a guide, a guru, and a therapist. It’s our job to be available to our franchisees always, ready to answer their questions or even talk them off the ledge. More importantly, we need to be proactive in our communication. We can’t just wait for them to call us with questions; if we know that the price of lobster is about to go up, we need to call them and explain why and what they should do about it.
This is what makes the franchisor-franchisee relationship so different from the manager-employee one. In the latter, the manager adheres to a hierarchy, a chain of command, where it’s best to keep relationships simple and efficient. A manager expects the employee to do her job and the employee expects the manager to tell them important information. The power structure is very apparent in such a relationship, as it should be.
But you can’t treat your franchisees like employees. Kat taught us that we need to treat them like investors and partners, because they’ve done what employees haven’t: given us hundreds of thousands of dollars (sometimes their life savings) on the expectation that our brand sells. We need to honor their commitment, their sacrifice, with complete transparency and respect. Because when a franchisee feels cut off or isolated, they’re liable to do something rash that might hurt more than their operations: it might hurt your brand. Bring them into the fold, keep them there, and they’ll repay your respect with a dedication and loyalty that you simply cannot buy.
Which isn’t to say we never made a mistake with our franchisees. We’ve made plenty. And we would often call up Kat in the middle of making one and use her shoulder to cry on (metaphorically speaking). Like any good advisor, she didn’t coddle or patronize. She gave us the type of tough love we needed to realize our mistake and work to make it right.
In fact, the idea to hold an annual franchisee retreat was a result of Kat’s guidance for transparency and respect. After the meeting, we even asked her to take on a more formal role within the company. She agreed. And that’s how we got the world’s foremost franchise expert (and one of the most successful businesspeople in the world) to be a consultant for Cousins Maine Lobster.
Sometimes we can’t believe our own luck. Which is another way of saying: thank you, Kat.
LESSON
SURROUND YOURSELF WITH GREATNESS
Barbara likes to say that we have a halo around our heads. What she means is that we’ve had more than our fair share of good luck with our business. We don’t disagree. Besides, when Barbara Corcoran, someone who deals with people like us all day every day, says you’re lucky, well, you’re lucky. That said, Barbara is being a little tongue-in-cheek, too. She understands as much as we do that our luck is the product of many factors, most of them within our control. Hard work is one of those factors. No one works harder than we do and we aren’t too proud to say it. Humility is another factor: we never pretend we know what we’re doing when we don’t, and that allows us to find the right answers, and learn a lot along the way. We also don’t take no for an answer—a lesson Barbara herself taught us. If we want something to happen, we find a way to make it happen. You can call it luck when it happens; we prefer to call it determination.
But if we had to attribute our good luck to anything, it would be the people who surround us. Part of it is an outgrowth of our humility, but we learned early in this game that there are people out there far smarter and better at business than us. Now, we’re not too shabby, and we’re far better than when we started. We look back on those first few months, before we even launched our first truck, and we’re kind of amazed we ever got this thing off the ground. We had almost no help and it showed. Annie, Jim’s sister, was the first one to open our eyes to the world beyond our limited vision and experience. We wouldn’t have found our suppliers without her. Steve, Jim’s father, was the next to come along, and he forced us to confront our own financial management, or lack thereof.
And so, on it went, until we pulled Barbara into our orbit, then Kat. But it doesn’t end with family, partners, or advisors. You should also surround yourself with greatness in the people you hire. In this chapter, we’ve focused on our franchising efforts and you’ve read the stories of some of our franchisees themselves. We should be very blunt about this: we are only as great as our franchisees. And these guys are pretty freaking great.
When we made the decision to franchise, we understood that a lot would depend on the quality of the franchisees. We just never realized how much. Perhaps we assumed that we would have more control over them than is possible. We simply don’t have the bandwidth to micromanage at that level, nor do we want to. But by seeking out potential franchisees who exhibited the qualities we believe contributed most to our success, we discovered magic. Our franchisees impress us nearly every day. Their dedication to their work and to the brand is inspiring. We honestly didn’t think we could find a level of dedication equal to our own. We were wrong—and we’ve never been happier to be so wrong.
That’s the lesson we’ve taken away from franchising; our awareness that we are only as good as the people we surround ourselves with. People like Barbara and Kat, employees like Shaun and Sandy, and franchisees like the owners of our Sacramento, Raleigh, and Nashville operations.
Expansion is part of being an entrepreneur. It’s what separates the entrepreneur from the owner of a store or the operator of a single food truck. It’s a rite of passage all entrepreneurs must pass through if they want to build a company and a brand. We chose franchising as our principal mode of expansion, but there are a variety of methods available. We’re exploring others, as well. But whether you choose to franchise, license, or stay corporate, your success suddenly moves beyond your direct control. You can’t be everywhere, doing everything. You can’t know everything you need to know. What you can do is find those who can be where you can’t and know what you don’t. And if you’re lucky enough to find those who are great, it will lead to greatness in your company, and in yourself.