Video Transcript Brian Schnell: Shelly, one of the concepts that you talk about in the book is building to last, and a term that you use is franchisee unit economics. Can you describe for us what franchisee unit economics means to you? Shelly Sun: At the highest level, it's about helping franchisees be profitable. But I think there's four key areas to look at in doing that, helping franchisees grow their revenues; helping to make sure they are always increasing their mergence; looking at ways to reduce their cost, particularly with scale; and looking for ways to help their organization be more efficient. Those are the four ways to help them, over time, make the most amount of money possible, and make more money. Brian: With that franchisee unit economic focus, what are some ways that a franchisor can help their franchisees get off to a great start in their business? Shelly: I think it's important to look at every role within the franchise, or organization, and how each individual role could have an impact on one or multiple of those areas. And so how do we help them grow revenue? We make sure we've got great sales programs so they know how to go out and find clients to start building revenue. How do we help make sure they have strong margins? Well, we do things to look at national contracts with suppliers for workers comp, or for screening cost, to keep those things down. We look for ways to help make sure they understand pricing tools, and how to sell the differentiation of what they're offering to a consumer so they keep margins high. You look at ways to reduce their administration costs, if you will, and how can we look at national contracts for office supplies, or any of the things that they're buying-- printing services-- looking at ways to look at efficiency gains. How do you help a model? What's the right infrastructure and job description in the very early stages of their business, and how does that need to evolve as they grow and scale their business? And how do we invest in technology to help them to continue deriving that benefit of scalability that's gonna help their organization be more profitable? Brian: You talk about the concept of an intentional culture in Grow Smart, Risk Less. What role does that focus play in building a sustainable organization? Shelly: It can't just me talking about how do we help our franchisees be successful? How do we help our franchisees have strong economics? Now, I might be the most vocal, and maybe the most passionate about the topic, but every one in my organization needs to have their mission be how do we enable better success, better satisfaction of our franchisees? And if they can look at what am I gonna be able to do today to help my franchisees be more successful, then we've built that intentional culture where everyone is aligned, that if our franchisees win, we win. And the opposite can't be true. We have to succeed together. and that's a part of the culture that we've been very intentional about. Brian: It's clear that you share a lot of information with your franchisees, and you talk about that in the book. Are you worried about giving all your secrets away? And why are you so open with communication? Shelly: I've seen what a positive impact it has had on our franchisees to share information. We started early just sharing revenue information. But our franchisees began looking at that and finding ways to help one another find ways that if someone was able to succeed in two counties over, I should be able to succeed. And they would get together. I find that our franchisees are probably spending an hour or two a week with another franchisee, either asking of or giving back to. And soon as I saw the positive benefits of that sharing of information, now we've extended to everything we possibly could share. So our franchisees know each other's margins, and how many customers they're servicing. And we find that it's doing the right thing to show what's possible to keep spirits high-- everybody has down days-- to see what's possible out of the model, but also to allow them to be able to share best practices. Just like I do with other franchise owners, and what I'm trying to do with the audience and the readers of the book and share best practices, I find that our franchisees have built that same culture into their culture of the franchisees. Brian: We've talked about the importance of franchisee unit level economics. Let's now talk about the franchisor. Where should most of the focus be for a franchisor in how they make money? Shelly: I think the biggest area that a franchisor needs to understand is if they're doing the right things, and investing in the franchisee to help them get out the gate quickly, and have good training, and good pre-opening support, and good support out in the field with them to help them grow, you don't make money on that initial franchise fee. And so the way that a franchisor makes money in a sustainable way is on those recurring royalties. For us, it takes 22 months before we get to the point where we make money on bringing on a new franchisee, on average. And so we know that we have to be investing in a franchisee in a sustainable way so that royalties eventually come back. I think for franchisors, it's important to understand that the best thing that they can do for franchisees is make sure they protect their balance sheet and grow a profitable organization so the brand is around for a long time. I'm all about thinking about my franchisees and their unit economics, and I do that wholeheartedly, and I'm passionate about it, but it has to be balanced. For franchisees who are succeeding, we have to be able to succeed as well, 'cause to do everything we possibly could for franchisees and have a weak balance sheet doesn't allow me to protect and preserve the brand. And ultimately, I am the brand protector. That's what I've made available to my franchisees, an ability to participate in my brand. Brian: This goes back to the strategic planning and financial forecasting that you talk about in the book, and how rigorous you and your team goes through that process. Yeah, and we benchmark for how our franchisees should perform compared to other franchisees of other systems. But we also benchmark ourselves on how we should be performing against other franchisors. So we continue to challenge ourselves to always get better at both the franchisor level, but also at the franchisee level. 'Cause if we're continuing to focus on both sides, and both areas are improving, we win and succeed together. And we mutually protect the brand.