In the competitive landscape of franchise development, understanding the nuances of the industry is essential for aspiring business owners. In a recent podcast, Kelli Schroeder, VP of Franchise Development at Threshold Brands, shared her insights on what it takes to succeed in franchising, the importance of genuine relationships, and how to navigate the complexities of franchise ownership.
Starting a business is often accompanied by fears of failure, with statistics showing that seven out of ten businesses falter within the first five years. However, Kelli emphasizes that franchising offers a better track record for success. By providing a structured business model, franchise ownership helps de-risk investments, making it an attractive option for many. Kelli likens the decision to invest in a franchise to purchasing a home, underscoring the significance of this life-changing choice.
One of the key elements Kelli highlights is the importance of understanding each potential franchisee’s personal journey. She believes that each individual comes with their own story, motivations, and aspirations, making it essential to treat them as more than just a transaction. Kelli and her team aim to be good guardians of their clients’ investments, guiding them through the sometimes daunting process of franchise ownership.
Kelli notes a growing trend of white-collar workers transitioning to blue-collar businesses, particularly in the home service sector. However, she cautions that franchisees must be committed to their businesses, especially in the early stages.
She warns against the notion of being a semi-absentee owner, emphasizing that active involvement is crucial for success. Kelli advocates for franchisees to dedicate at least 20-25 hours a week to their business, especially within the first year.
At Threshold Brands, Kelli oversees a diverse portfolio of home service franchises, including Men in Kilts, pest control, and house cleaning services. This variety enables her team to match potential franchisees with brands that align with their goals and risk tolerance. For example, while some brands are more hands-on and require lower investments, others offer opportunities for scaling and growth. Kelli’s approach is to ensure that franchisees find a brand that resonates with their personal and financial aspirations.
Effective marketing is crucial in the franchise industry. Kelli explains that Threshold Brands relies heavily on broker networks, which account for about 60% of their deals. Additionally, they utilize traditional digital marketing strategies, including pay-per-click advertising and social media engagement, to drive organic traffic to their website. However, Kelli stresses the importance of optimizing their digital presence, especially in light of AI’s impact on marketing strategies.
Kelli identifies three key factors that potential franchisees consider when evaluating opportunities: strong unit economics, authenticity in communication, and trust in the franchisor’s leadership. A solid Item 19 in the Franchise Disclosure Document (FDD) is essential, showcasing the brand’s track record and performance metrics. Furthermore, candidates appreciate transparency—being informed about both the successes and challenges faced by existing franchisees. This honesty fosters trust and helps candidates make informed decisions.
