💡 Get Advice, Not Opinions | The Real Franchise Ep 40

Rhiannon Hello and welcome back to another episode of The Real Franchise, a video series designed to deliver real information, real answers and real insights into franchising. The series is brought to you by James Home Services Australia. I’m the CEO and Justin is one of our owners and our head of new businesses. Together we tackle all of the big topics unscripted, unplanned, and totally unfiltered.

No sales process. We just give you information straight up. Today’s topic is about getting advice but getting the right advice. So Justin, we’re going to start in a very obvious place. What are we talking about? Get advice for what exactly?

Justin We’ll get advice on whether or not a franchise is a good thing for you. And we live in a great country where there’s a lot of great expertise available. Usually it comes at a cost. But one of the things we strongly recommend to everyone going through any, you know, business decision, looking at an acquisition, for example, you should get advice.

And that generally comes in three areas either accounting advice or business consultant advice or legal advice from us. So that’s what we’re talking about going and seeing one of those sorts of people to go, hey, this is what I’m thinking of doing. You know, this is the business. What do you think? Can I get some advice?

Rhiannon Yeah. And there is a specific part of our information process where we actually highly, highly, highly, highly recommend to everybody. Hey, this is the point where you really should go and seek third party advice on whether you proceed. Now, that point comes when you’ve been most of the way through the information process and in your self, you’ve made a decision that you would like to see the draft franchise agreement and have that issued to you.

And when we send you that agreement, that agreement comes with our written guidance that going and getting legal accounting or business advice is what we recommend. It is also what the Code of Conduct for Franchising in Australia recommends. So what we do is nothing different to what everybody should be doing. No matter what network you are working with, they should be recommending you to go and seek advice.

So we’ve talked about who you should get advice from lawyer, accountant or business advisor who shouldn’t you get advice from?

Justin Well, I think we we always go I think there’s a difference we were talking about this earlier. There’s a difference between advice and opinion. You know obviously we go look when I looked at buying my first James franchise, I went to my family for advice and I got some good advice and I got a range of opinions and, I guess the difference between the two for those watching is, you know, opinions is, is more of an emotion.

It’s not necessarily rooted. In fact, it might be something that you’ve heard on the grapevine, or you’ve saw a headline in a news article or a Current Affair ad from, you know, and all of a sudden, what happens is, whatever that story was about, then gets blacklisted, you know, franchising gets blacklisted. It’s a terrible thing. And I know you quote figures regularly, Rhiannon, about the size of the franchising industry in Australia.

It is a massive business. It’s a huge part of our economy. You know, it’s not the evil thing that some people think, you know. Yes, they have been bad operators in the past. But back to your question. Sorry. I think it’s highly important that people get good quality advice and independent advice.

Rhiannon Yeah, yeah. So what kind of. So let’s just say I’m going to go to my lawyer or my accountant or my business advisor. What kind of questions should I be asking them.

Justin Really this great question. Because, you know, I’ve had people for the last 15 years I’ve been working with and many of them going and getting 1 or 2 of the other. If you go to an accountant, if you go to a solicitor or a business consultant, the first question needs to be, do they have experience and expertise in franchising?

Yeah, right.

Rhiannon Because you there. Why is it important that they have experience. Because what you’re suggesting is that maybe not every accountant is adequately qualified to provide this advice. So why is it important that they do actually have experience in the franchising space?

Justin Because it’s unique. Franchising is a very different business model. And I guess in one sense accounting is accounting. But don’t particularly talking about business consultants and solicitors. This were often the challenges in the past. Like a good accountant, you know, if you start asking about the business model and stuff, they’re going to say to you, look, I’m going to can I’m here to advise on figures and tax what you can claim, what you can’t claim, those sorts of things.

A good account is going to give you good advice on that. But when you’re really seeking information on, you know, what are the I know what I was looking, you know, I wanted to know what are the, what are the hidden little things in the agreement that I can help me with? Or, you know, what I’m like if I want.

And what does that look like? You know, all those sorts of things. A general lawyer.

Won’t understand. And in fact, I had a case not so long ago where one of the people that is actually joining them, actually one of our star performers in our network now, but they went and saw a lawyer that didn’t have franchising experience. Right, and it costs them a couple thousand dollars to get the advice and the things that he was saying, advising them to get taken out of the agreement.

And we don’t for anyone listening, we don’t change the agreement. Everyone and James signs the same thing. So we’re not going to change anything in the agreement. But this lawyer sent a list of about ten different items, and eight of those items were things that were taken out of the franchising code. It wasn’t our agreement that he was saying, oh no, you don’t want it.

This. But that’s part of the code of in Australia. Like it’s not a James thing, it’s the law.

Rhiannon And notice there. Yeah. The code is there by in large to protect, what law refers to as, you know, the smaller party or the party with less influence. And so in franchising, the code is primarily there to set a standard of behavior for franchise owners that protects the interests of franchisees. So, you know, him suggesting to take out things that are in there.

Because our code of conduct suggests we need to have them in there. Well, it doesn’t suggest, sorry, it is very black and white about what we need to have in there. It’s no suggestion. It does just simply demonstrate a lack of exposure to the franchising sector, and just the lack of experience and understanding of how it all does indeed work.

So I think that’s a really, it’s a really good example. It highlights that sometimes even advisors don’t necessarily have the experience required to advise. Well, when it comes to franchising. So what are some other questions that you might want to ask your advisor? You mentioned before, you probably want to ask them, you know, what are the little things?

Where are the hooks you mentioned also? You probably want to ask them if I need to exit or if my circumstances change and I want to exit. What are my options? Are they other high level questions that people should be asking their advisor?

Justin Yeah, them to that through our process we make all the course clear. But I would be asking your your particular legal advisor and I guess your accountant, if you’ve gone to see them, what are the costs that I’m going to incur under this agreement. Yeah. And type what they say should match up with what we’ve already said through the information process.

And what I love about when. Just to reverse to your previous question, when people go and see, you know, someone who doesn’t have experience, you’re up for a much bigger bill, right? Because when you go to someone who has experience in franchising their opening agreement, they go, yep, this is standard, this is standard. This is saying that they go through it.

And I just find like the key points for you, right. You need to understand. Do you understand this? Do you understand this? This is the cost. This is the fees. This is the get out. You know, this is you know, if you have a disagreement, this is the process by which that goes through the disagreement resolution process. He’ll highlight, they will highlight the key points for you very quickly because it’s very standard, whereas an inexperienced person is going to cost you a lot more money because they’re going to rate at all, charge an hourly rate, then regurgitate it to you instead of key, you know, going through and highlighting the key points.

Yeah.

Rhiannon I think the most important thing about going and getting advice is making sure that you’re leaving that meeting, with a much better understanding of the document that you’re about to sign. Unfortunately, it is a hefty document because it is a playbook. It sets out our, role and responsibilities and our obligations to our franchisees and it also sets out our franchisees roles and their obligations and responsibilities to us.

So it’s it’s a wonderful thing because it makes it very clear as to how both parties should behave when we are working in partnership. But because there’s so much the scope is so large, the document is large. And so it is important that before you sign any document, two pages, 200 pages doesn’t matter. You really need to be understanding what it is that you’re signing.

And if you find the role of your advisor is to set out those elements that you don’t understand in plain English for you, so that you do.

Justin Yep. Absolutely. Absolutely. And I think you had an interesting example recently of.

Rhiannon Yeah.

Justin What we’re talking about here.

Rhiannon Yeah, I think my example is a really good one. To move the conversation into, how do you know when what you’re getting is advice versus opinion? You know, and an opinion. Opinion is not rooted in fact or evidence. Opinion is a feeling. It’s, you know, I’ve read this one time or I saw that one time.

I’ve got no real first hand experience. All my information is gathered, said party, and here is my opinion accordingly. And I’ve got an example that really it really showcases, even sometimes going to an advisor, the wrong advisor can render you in a situation where you’re receiving opinion, not fact. So, what happened was one of our, potential business owners had gone to, their accountant and the accountant had had some questions and had contacted me directly to talk those questions through.

And we were talking, and it was very evident by the tone that this individual was using with me that, that they weren’t exactly pro franchising. Let’s just put it that way. It was a pretty condescending kind of a tone. I don’t think I’ve really ever been spoken to like that for a very long time. And so and I picked up on this and I thought, I’m actually going to ask some questions here to better understand where this is coming from.

And I did and I stopped the conversation and I said, hey, look, you know, you’re an accountant. You’re an advisor. You’re exactly the type of person that our potential business owners go to for advice and guidance. And I’m really picking up what you’re putting down. And what you’re putting down is that you’re not a fan of franchising. Can you just I’m just genuinely interested to understand where that’s coming from, because basically what she’d said to me was, you know, I probably shouldn’t repeat to you what I told my client.

I said, I told my client not to go in, you guys with a ten foot barge pole. And so I asked her a few questions, and I said to her, have you ever had any previous experience directly with our network? She said, no, she hadn’t. I said, have you, you know, have you actually sort of worked really closely with any business owners that are in our network?

No, she hadn’t. Where where is your feeling coming from that franchising is a really negative thing. And word for word, her response was, every time I, you know, open the newspaper or look at the media, there’s, and I won’t say the brand because that’s not fair to them, but there’s a there was a particular franchise brand that she mentioned, and her comment was every time I, you know, every time I look at the media, this brand is in trouble for something else.

And it was in that moment that I realized that, unfortunately, that business owner had not gotten advice from his accountant. He had gotten opinion, and the opinion was not rooted in fact or evidence of our network. In fact, the accountant even disclosed to me that she hadn’t reviewed the agreement, and she hadn’t even looked at any of the figures of the business.

And it just it’s a really stark example of where sometimes, people’s personal opinion and she is entirely, totally entitled to her own personal feeling and opinion. And I have I had no grudges, you know, people feel what they feel and that’s completely fine. But what I found really disappointing was that this potential business owner had paid good money, had gone to this advisor for advice, and and what he had really gotten was just a personal opinion being regurgitated back to him.

So make sure that when you’re engaging with your advisor that they have actually reviewed our agreement, make sure that they have reviewed our fee structure, make sure that they’ve done research and due diligence on our network because there are so many things that we do differently. You know, one of the things that these advisors said to me was, oh, I see it going wrong all of the time.

I franchises. Right? And I said, oh, what what do you mean by that? Oh, you know, franchise owners are always messing around with lease agreements on property. Now, if you’ve been hanging around the traps for a little while and you’ve been listening to the real franchise for a little while, or even, frankly, if you’ve only been listening to this episode, you probably know that we work with people starting cleaning and lawn mowing businesses that are operated, out of basically their home and their vehicles.

So there is no premise, and yet, one of the fundamental reasons why she had expressed to this person that they shouldn’t do this was because franchise owners mess around with lease agreements and often, yeah, she used to use some quite direct language, which I really don’t feel like agitating, frankly. But, you know, it just demonstrated she hadn’t done any research on us.

And that was the problem.

Justin Yeah, yeah. And it’s a hard thing, you know, in any professional industry, when you’re giving advice, you’ve always got to I think you have a duty of care to separate opinion from advice. And and there’s obviously most out there. Fantastic. Like, you know, over the years we’ve had so many people, you know, when they go to someone experienced in the field.

They get good, clear, concise advice. And it just it should, you know, if you’ve gone through our information process, you’re going in there very well educated in all the costs in the systems, in how to get out if you need to get out. All of that is part of our process. So you go in there, if you see someone that knows what they’re talking about, they’re going to go bang, bang, bang.

These are the key points. And you’re going to go, great, that’s what I thought. And and most people like come back out and go, great, Justin. Yep. They confirm what I thought what you said. Happy to sign, send us the agreement. And that’s sort of a normal process. Yeah. When I get people come back with real squirrely questions and then I just naturally start to ask a few questions about the advisor and what’s there, and you find out, yeah, they they’ve gone and seen a uncle who’s an expert in a state law or, you know, and that sort of thing.

So, yeah, you tend to find then you get a bit of a lack of knowledge or opinion or things like that. Training.

Rhiannon So it’s. Yeah. Yeah. Go one last little area to chat about before we wrap up this episode. Lots of people really rely on friends and family opinion when they’re making a decision like this, and that makes total sense. It is a really big decision. You know, you shouldn’t be expecting yourself to shoulder this whole decision on your own.

It’s exceptionally natural and we encourage that. You talk openly with friends and family about what you’re doing or what you’re thinking about doing, so that you can gather intelligence where how do you then manage the intelligence that you gather?

Justin Yeah, I think the same principle that we’re talking about here applies to anything that you ask friends or family about. You know, like, I’ve got a guy in south east Queensland now, he and his wife are joining us in their own business. Right. And he rang, his dad said, hi, dad, I need some advice. And his dad said, great.

Can you send me through what they’ve sent you? And you got the franchise agreement. Can you send me that and I’ll get back to you, and I just thought “That’s fantastic”. Exactly. So dad’s smart, and I figured, hey, I don’t know these guys. I need some knowledge. Send it to me. So he’s then giving, you know, he’s giving, advice from a basis of knowledge.

Yeah. Like this. When you ask friends and family, just be aware and ask you often, you’ll know what experience have they had in business in franchising, that sort of thing, and take it with a grain of salt, like my family got very mixed advice when I was looking at James. All were very encouraging to us to do our own thing and get into business, for not one wasn’t sorry.

I had one family member that was didn’t want me to leave my great career. And what are you doing? And don’t be crazy. How can you put your family through that? But you know, you’ve got to take it with a grain of salt. But none of them had any experience in franchising, so it was up to us to do a bit more homework and get legal advice and accounting advice, which we did.

Yeah. So yeah, but.

Rhiannon It.

Justin Just take it with a grain of salt and advice is always very different in time to pass someone to what’s it worth to opinion. Sorry.

Rhiannon Yes, yes. I think ultimately there is no substitute for doing your own research. You know, and going and getting advice from a third party advisor, legal, accounting, business. You know, if you’ve done enough research, then their advice really should just confirm what you found out along your, you know, your research journey anyway. And certainly our information process is designed to highlight all of the main questions that people ask us, all of what traditionally have been called, you know, the the curly things or where are the gotchas?

Well, there’s not a gotcha like we don’t do gotchas. We tell you that, hey, here are your options if you need to exit. And here are the franchise fails. Plain and simple. That’s what it is, is no surprises. Our information process is very much designed so that when the by the time you get to an advisor, there are no surprises.

There’s nothing that they are telling you that’s new news. And that will be strengthened by the quality of and depth of your own research. And there is no substitute for doing your own research. And you know, when you do your own research and you do enough of it, you can build your own confidence about what your opinion is on this opportunity.

And you may decide that it’s right for you. You may decide it’s not right for you. Your opinion matters, but that opinion that you’ve built has been based on our information process. That advice and guidance that you’ve got from a third party, you know, when you do go to friends and family, their opinion is it isn’t it isn’t coming from that same knowledge base that your opinion is.

So yours is so much more important. And I mean friends and family. I hope everybody has friends and family that just absolutely support and get behind you. No matter what you want to do in this life. I know I’m fortunate enough to have friends and family who believe that everything I do is incredible, and I am so fortunate, but it can be really difficult just to navigate through opinion, advice, professional advisors, family and friends, media.

I mean, like this is the real franchise. We talk about everything. The elephant in the room is that if I’m really going to be honest about it, pretty much everybody’s opinion on franchising is just based on what the media tell us. And the media have a job and their job is to spotlight things that the general public should know about.

But also their job is to make money by doing that. And so if there’s a headline in something, they’ll run it. And, you know, the one, the franchises that end up in the media, well, obviously they’ve put a foot wrong. And then maybe, maybe they should be in the media. That’s certainly not our goal. But so I bet a lot of people’s opinions really are formed by only how the media represents our industry.

And again, that’s not our system. That’s not us. That’s not our leadership, that’s not our philosophy, that’s, you know, whatever brand they’re reporting on, you know, it’s not us.

Justin Yeah. Yep. And you see it in everything, but it almost makes you cynical. I must be getting older, but, you know, like you read the press about some policemen did something, and then all of a sudden, you know, everyone’s a policeman, whereas, you know, 99% of people in the force are they’re doing an incredible job. Right. And it’s the same in our industry, right?

This. Yes. There’s ones that have put yes that, that alone. But the vast majority and particularly in that case we’re here to help people. We are a model only. We only do well if they do well, business owners. So, you know, it’s not. Yeah. People just need to. You don’t hear the great stories. You don’t hear the good stories.

You hear the the people that put if the one percenters is what you’re going to hear about in the press.

Rhiannon Yeah, exactly. And those one percenters are in everything in life. There is always that small piece. And no matter what you’re looking at, there is always that small potential, that small percentage that make poor decisions and draw attention to themselves. Always in everything. Our industry is no different. So I guess that’s just that’s just another perspective to layer your information search with.

Justin Yes.

Rhiannon Yes, yes. Perfect. I think that is a great place to leave this episode of The Real Franchise. Thank you so much for joining us and listening to this point, and we hope that you join us very soon for the next episode of The Real Franchise.

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