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    Workstream | 21 min read

    How to Start and Grow a Franchise - Jimmy John's Franchisee of the Year

    The weekly Workstream Webinar brings in different business owners of various industries in to share about their experience in the industry. This week, we have Mike Knapick, franchisee of the year for Jimmy John's and Bar Louie who have a ton of experience in the industry and built a career on this. Mike shares about how adopting a people-centric mentality is key in building a successful business today.

    Read on for the full transcript:

    Table of Contents:

    1. Journey into Franchising
    2. Investing in People
    3. Hiring Talents with a People-Centric Mentality
    4. Life as a Franchisee while Consulting
    5. Advice for Aspiring Franchisees
    6. Q&A

     

    Josh: I'll start with a brief  introduction on myself and then love to pass it to you, Mike, to share your journey into the franchise world.  My name is Josh Johnson, I'm in charge of the midwest for Workstream and onboarding customers, working with folks that are really doing hiring. Workstream focuses on desk-less workers, so folks that are on their feet working a lot of different industries and it's a really fun experience to meet people like you. Mike we'd love to hear an  introduction from you and if you could also talk about how you got into this business. I think it would be really interesting for everyone. 

    Journey into Franchising

    (01:38 - 08:21)

    Mike: Absolutely. Our family was very entrepreneurial. My dad quit his job when I was 10 years old and a pretty lucrative job at the time, back in 1975, way before you were  born. I kind of grabbed  on to that because I watched that journey and I watched the success  that he had. So I've done the corporate America thing  for about 15 years and it just wasn't catching me. I  didn't feel that it was giving me what I needed. I had no idea what I wanted but it's just I wasn't feeling fulfilled. My little brother came to me and  said hey there's a failing Jimmy John's in Kalamazoo Michigan and I took the leap. I had a four-year-old and six-year-old, quit my  job and we bought the store in  Kalamazoo Michigan. My brother then opened one up in South Bend about three months later and that started our journey. Over the next 15 years, we had turned two Jimmy  Johns into 14 Jimmy John's, 11 Dunkin Donuts,  three Bar Louie. We were doing about $35M in revenue with about 800 employees. In 2018, we then sold our Jimmy John's, we got into a concept called Core Life in Columbus. In 2019, when we got into Pedal pub, my four-year-old son became 21, we moved down to Miami he became a  Pedal pub franchisee with me as a partner. In about two months ago, I became a Smash My Trash franchisee in Grand Rapids. We're about to become Window Genie franchisee down in Florida as well so I've kind of lived it. It's the lifestyle that I live. I also broker franchises. I help people become franchisees and kind of like the journey that I've had over the last 18 years has given me the ability to navigate through what is a good fit for a person and so now I help people become franchisees like I am.  I kind of broker for 40 franchises, helping people get across the finish line and being business owners themselves.

    Josh: Amazing! I think a lot of folks like you have  started in small industries and evolved and learned to learn the business that way. I'd love to hear more about when you dipped into Jimmy John's what was that feeling like and when did you know  that the franchise world was something that you were going to spend your whole career building out.

    Mike: I'm a big model person. What I mean by that is I look at a model, I don't care what the product is that I'm selling, I could have sold widgets, we could have sold paper planes. It really didn't matter. I look at three things - what's the cost to get in,  what's the average annual revenue and what's the profit margin. By looking at those three numbers, that determines what franchises we get into or what business we get into. We always looked at ourselves as a people development business that just  happened to pour coffee or happen to make a sandwich or happen to pour drink at Bar Louie or happen to take a person on an excursion to Wynwood Miami on a Pedal pub.  The product that we're selling really is not important because if there's a need for it and those three things are drivers we really didn't care and that's also when I help people become franchisees. If they look at the franchise model as a model and not I have to do Subway because I'm familiar with that or I have to do  Krispy Kreme I have to do Mcdonald's. Too many people get caught up into  the product that they're selling. What they're selling really is not important at all. Are they developing their team? Are they developing the people that they have because if they're going to grow, the only way you have the ability of growing is you have to constantly develop your people. Most of my partners today started out as delivery drivers at Jimmy John's. We didn't care where they came from, to judge a person based on a piece of paper that has a bunch of letters on it says if you have a degree or you went to this school or you were captain of the swim team or you're the homecoming king that gives absolutely no correlation between that and success. In fact, academically, I'm not gifted. Spell check and a calculator is very important to me but I looked for people that had something. I always use the  definition of luck is being prepared for an opportunity and if a person puts themselves in a position that they make themselves so available so that when that boss says hey we need to fill that spot and everybody goes well of course it's Mike.  They don't care what's on your resume, they don't care what school you went to as long as you're able to execute. My daughter is in her last semester of nursing school right  now, so she decided she was going to start at Michigan State. She realized she was not going to get into the nursing program at Michigan State because it was way too competitive. She again also is not academically gifted so she decided to go to Lansing Community College where she's going to get an RN degree from there. The people graduating from Michigan State and the people graduating from Lansing Community College, when you enter the nursing market, they don't care what school you went to and they don't care what  your GPA is. All they care about is you show up on  work and you can execute what you need to do. So that's how we always built our organization - we didn't care what you looked like, what color you were, how tall you were, who you liked as your friend boyfriend or girlfriend. Show up and execute and good things will happen to you. We collect those people and took them on our journey with us, and today those people are my partners.

    Investing in People

    (08:22 - 17:03)

    Josh: Yeah I'd love to keep diving into that because we hear this over and over that people management is far and away. The most important thing as you're mentioning, how have you  develop that over your years of franchising how have you continued to  find new ways to get the best people and invest in those people? 

    Mike: Well I think it starts from yourself. Every single day I spend 15 minutes making myself better because you can't help people around you if you've stopped learning as well. So I'm a John Maxwell guy, every morning I listen to the Minute with Maxwell and it gives me something to work on every single day and then I transfer that so all of our teams with all of our organizations, once a week we get together the key people and we do a round table with the Minute with Maxwell from that previous week. We also do one of the laws of leadership. 21 irrefutable laws of leadership once a week, one of the team members will raise their hand and say we're talking about the law of navigation this week and they explain their version of John Maxwell's law of navigation. What's great about that is oftentimes you're now going to have your perception of how that law would be for you and then you heard from somebody else and you're like wow I never looked at it from that point. I've always said this to my team and myself is the day that I stop investing in myself is the day that I need to stop bleeding because then  they're going to recognize well if he doesn't need to study, if he doesn't need to  grow every single day, well why do I? I felt that you need to send a message to your people by the things that you do, not by the  things that you say. They know that they're not going to be able to catch me in the morning and be able to say hey did you watch the Minute with Maxwell and it's not  the Minute with Maxwell, it's making an investment every single day to do something to improve yourself. Because if you don't, you're not going to be able to help your people around you and therefore your business is not going to be able to grow. And it seems like that kind of culture you're developing there with your employees flows from the top down so whatever leadership you're driving that goes through to your managers and then that goes through to the people that are on the front lines for you. The folks that are actually pouring the coffee or making sandwiches and delivery driving - they're all extensions of you. If you don't make sure that they  understand what your values are, when they get out there, they're not  going to be able to express that to the customer. In an organization, you have two customers, the first customer and the most  important customer is the customer that works for you in exchange for a wage that you hand down. They're handing you a service back. How's that any different from a person walking in and going hey I want a number seven at Jimmy John's in exchange for a product that we're  handing them, they're handing us money. So my investment was always my most important customer which was the employee that worked for me. If I made the investment into them, when that other customer that's walking in and give money in exchange for a product, they're going to give them a fantastic  experience and that customer is going to be satisfied. When you don't take care of your number one customer your employee, the service that they're going to give that other customer is not going to be receptive to the point where they're going to want to come back. The reason the Coca-cola McDonald's, they still advertise is they want you to  come back. They want you to drink coke every single day, they want you to go to McDonald's every single day. Dunkin' wants you to have coffee every single day. If you don't give them a  great customer experience, they're going to go off the street. So we always worked on that first customer which is our employee and then the second customer - the one walking in the door and that allowed us to grow.

    Josh: Yeah and you mentioned you're able to see that potential and even in delivery drivers and see folks that maybe start off as a delivery driver that come in from a regular application or something, how do you cultivate that mindset of really looking them as your first customers?

    Mike: It's a lifestyle. You live it, you breathe it you eat it. It's not a matter of cultivating, there are people out there that have everything that's necessary to become a CEO of a corporation, they just need someone to believe in them, that will give them the tools. They need someone that will show them how to use the tools and then our job is to step back and they're going to be the ones that are going to pick it up and go hey I don't understand how to use this or hey can I be better at this. It's not like you have to tap them on the shoulder and say hey you're ready. They'll let you know when they're ready, not necessarily verbally but by the actions that they do so when you give them those tools and you give them a place where they can make mistakes and not be beaten down, that's why so many times there are fantastic employees that you might have but if they're so fearful that if something doesn't go right where they make a call, they won't make a call. That could be oftentimes worse than making a call and having being the worst call so that was really important, and it gives places for people to land softly and learn from that and then they received it where it's like why aren't you going to yell at me. I'm not a big church person but there's a great line that just has always resonated with me - take the log out of your own eye before you take the sliver out of your brothers, you cannot judge a person for screwing up on the line or doing something poorly with customer when I've done it myself. I've had a bad day so how can I be the one that beat them down for something that I've done. Then you create an environment where they feel safe, where they might actually feel for the first time someone believes in me because there are people out there who they don't have an environment at home, they don't have a friend network that is encouraging that says you can do it, they're like you're too stupid, you didn't graduate from high school, you don't live on the right part of town. I didn't care where they went to school, all I cared about is executing and if you can execute, I'm going to give you more responsibilities. If you take more responsibilities and if you made a mistake, we're going to sit down and figure out how not to make it next time. And then you watch these people blossom and all you had to do is just get the hell out of the way and give them the tools, and it's so rewarding to watch that happen because you've changed that person's life. It has  everything to do with pouring coffee at Dunkin' because again, now my customer who's coming in, I got great repeat business, my food costs could be less because they're not going to steal from me,  they're not going to waste hours, they are not going to work slow where I'm blowing up labor. I mean in the industry that you're talking  about, it's an industry where you're working on your food, it's cost to labor and cost of goods. If i'm managing that by an iron fist, those people aren't going to respond. If I make them a part of the solution, I don't have to worry about managing food and labor, they'll manage it themselves because they want to have that opportunity that they can grow and achieve where they never thought that they could be but they always wanted to. They always looked across the street and look at that car, look at those people playing on that golf course. Why don't I have that. Well it's because you just haven't been either given the option or you've not grabbed it. 

    Hiring Talents with a People-Centric Mentality

    (17:04 - 25:45)

    Josh: Yeah. So Mike, you've owned so many business over the years. How do you hire these folks from Jimmy John's to Bar Louie to now Pedal Pub?

    Mike: Before your time, you would open up a newspaper you go to the  classifieds you make a phone call.

    Josh: This is a different life now.

    Mike: Exactly we used to do that before there was the internet. We didn't have cell phones, it was very different. Obviously it's changed for me because that's the way that you attract your employees - Monster and Indeed and all of those things. We had them but it was not an electronic world, it was a hard copy world. I remember what Monster said, you stack a resume we don't recruit any differently than anybody else's recruits. It's what we do with regards to when we have those people. Does that mean we're great at it? Absolutely not, and we're still trying to figure it out and still trying to get better but it's a whole lot cheaper retaining employees than having to hire new people. They won't leave you for an extra quarter across the street because they realize if they're treated with respect they're going to come back. 

    Josh: Yeah.

    Mike: So it's just recruiting, it's always the problem but with us it wasn't the problem. We worked all of our time on what do we do to retain that person and it didn't have to be all based on money. People think of this. I'm going to give you an analogy and work right with this. People will pay more money in some cases for a lower quality product  if they get great customer service. People will work longer hours for less wages in an environment where they feel valued. Now, that doesn't mean that money doesn't matter and that doesn't mean that you can just take advantage of that person, but you don't have to worry about them going across the street because of more money. If they feel that they're part of a team and they feel that they're  part of a family, they'll never leave you regardless. But yes, you have to pay market rate, and trust me, I get a lot of pushback from what I'm going to say next. But, I truly believe it and people prove this.  If you're worth minimum wage you get paid minimum wage. If you make yourself so valuable to your employer that they have to pay you twice what minimum wage is, they're going to pay it because they know if they don't, you're going to go across the street. When employees come to work making themselves the most valuable person that day, if they can't walk home at the end of the day and the team would vote and say who's the best person that day, and if they couldn't raise their hand and say that was me, then they didn't bring their game. The people that do that will make whatever they make. If you're worth $150 000, you will get paid $150 000. If you're worth minimum wage you will get paid minimum wage. You make your worth. I don't believe  there are obstacles. Yes there are some industries where you cannot become an electrical engineer without having those degrees  because those are analytical type things I'm talking about. Most jobs don't require a degree. They are not saying anything about not going to school. I'm just saying that you don't have to have those skills to rise through an organization. You rise to an organization making your boss look good and then your boss embracing that and then there are four ways a person  rises to an organization. One, you do something so significant for  the organization. You invent the aids vaccine, you invent the ability to cure cancer, they would make you the Vice President of the organization. Two, you've been there for 30 years and finally everybody says well hey of course it's Mike's turn. Congratulations you are janitor  second class you get a quarter extra. The other two ways people rise to an  organization is they ride some of these coattails and they're in the right place at the right time. I've never met a CEO  that hasn't become the CEO any other way other than being in the right place at the right time or riding someone's coattails. Being in the right place in the right time doesn't mean you're physically standing someplace, it means that you put yourself in a  position, you've made yourself so valuable to that organization that when they say hey we need someone to fill that spot they go of course it's this person and all of a sudden that person's at the highest level. My mentor Roger Smith never got a high school diploma. He became the CEO of a $300M dollar organization. A CEO and naturally his email address is a GED to CEO and this guy is a multi-millionaire and he never graduated from high school because he made himself so valuable or he latched onto a rising star and he said I'm  going to make that person's life so good so when that person gets promoted, that gives you the opportunity to step into that spot or when that person gets promoted they say hey you can take some people, they're like hey I got my guy, this guy made me look  good. Next thing you know, they rise to an organization together. 

    Josh: Yeah I love your people-centric mentality. I like how you talk about your  employees as your customers and what kind of experience you deliver to your employees is super important to you. I have an interesting experience when I graduated college and was looking for jobs, so I was applying to multiple jobs and was getting interviews from some and then no response from others. After I got hired at this company, I had three or four other of my applications come through from other companies trying to reach out to schedule interviews with me. Well at this point, it'd been nearly 10 weeks since I had applied to their company and not heard anything back from that and so I have the plug for Workstream here. Workstream delivers your brand experience from the second that an applicant applies. So when an applicant applies through Indeed, they're getting a text message from you confirming to them that their application matters. They're straight into your process, they're getting instantly engaged. I know we talked about Workstream a little bit but how important is delivering your culture beyond just the hiring process but all the way into your interview process  for you.

    Mike: I'm not active in Workstream (my partner is the one using Workstream more) but  this morning I kind of pulled her aside and said give me some highlights and she goes, I love it. I love it because it allows me, with a couple clicks on my phone, to be able to interact "hey we're short staffed today can you come in'' and boom it shows up as an interaction where before it would be grab the phone, go grab the phone list, let's go down and see who we can call to find out how to do it. Those efficiencies have allowed especially in our industry that's a little more transient with regards to the employees that we have, it allows us to stay tight to them. You're not  going to find that at Amazon in the corporate office. Workstream might not be as efficient there, but within our industry it is. She loves it. She said it eliminates a lot of the minutia that she had with regards to scheduling. It's there to make her life easy.

    Life as a Franchisee while Consulting

    (28:54 - 30:24)

    Josh: Given your busy lifestyle as a franchisee in consulting with other people helping broker those transactions as well, what's your favorite part of the entire process? 

    Mike: Just being a part of people's journey. I'm dealing with people who just like me, were stuck in jobs and they were running a business for somebody else. And to be able to hand them a gift and have them open it up and have them get excited about it and be able to apply it. Not everybody can, not everybody's ready just like an employee or the person looking to become a  franchisee, they might not be ready but I'm just hoping that every single day, I helped somebody's life take a step forward that's what gets me excited and that's what wakes me up in the morning. This is kind of a weird thing but I can't wait to go to bed because the sooner I go to bed, the sooner I get to wake up in the morning to go to work. People's like why do you get excited about going to work is because well I might have the ability of changing a person's life because there were people in my life who tapped me on the shoulder and gave me those things for free. It's my responsibility to pass those on.

    Advice for Aspiring Franchisees

    (30:25 - 36:20)

    Josh: Yeah I love that and this whole discussion has been framed around people. A lot of people that watch these webinars are people who either own franchises or people that are trying to or that are working in franchises. Given your years of experience Mike, what's your greatest advice to someone who's pursuing this business and is trying to become successful like you.

    Mike: You're not that good, you can always be better. So many people, they pass out awards and I was franchisee the year for Jimmy John's and Bar Louie and none of those words mean anything to me. It's a plaque, it's a piece of paper, you're not as good as the plaque says. You just happen to get lucky on a day. If you take yourself too seriously and you think you're better than that, you read your press clippings that's when people start deteriorating because they stop driving for that excellence. It's successful people enjoy being uncomfortable. So getting comfortable and thinking that you got it, I can now say what I don't have to wake up this morning  somebody else is going to take care. I can take the day off today, I'm going to go jump on my boat, someone else can take care. The day that starts happening when I start thinking about  that I need to stop being in leadership because my people are going to say well then I can tap out one time and next thing you know, your organization it's like a cancer and it just spread. So don't take yourself too seriously, you're not that good you're not that important. We are people, just rich people and poor people put their pants on the same way and maybe there's little holes in their underwear but they still wear underwear. So you're not as impressive as you really think you are sometimes so just be grounded and do unto others as you would want others to do unto you and it doesn't matter how big your checking account is. 

    Josh: Yeah great I love that. I've personally loved working with different franchise owners and really enjoyed your perspective on the most important parts of running the business which I think from our conversation, seems to just be people. You seem to be a very  people-centric guy. You have a really strong business going with Bar Louie and it was fun to learn a little bit more about Bar Louie and the space he found there. And if I'm correct you're now no longer really dealing with Jimmy John's and just more on Dunkin'?

    Mike: Yeah we sold our Jimmy John's in 2018. My son and his best friend are, this is really exciting because it's not daddy setting up a business for his kid, it's you're doing it and I'll be there and so we started with Pedal Pub with them. They learned a lot and now I really sit back and I allow them to kind of step forward. 

    Josh: Yeah amazing! And then slowly transferring your expertise and I guess your son's going to start to understand your life a little bit more too.

    Mike: Yeah he's a little intimidated by it but he's really grabbing onto it. It's exciting because you kind of hope as a parent to be able to and that's why I like franchising and that's why I also like helping other people because it could be generational. When you start a business, franchise or not, it's a generational thing that you're able to pass on. You can't pass on your job Johnny Lunch Bucket who works for 30 years and even if they move themselves all the way to a Vice President of the decision when they retire they can't sell their job. They can't pass that job on to their family. When you own your own business, when you're a franchisee or you just open up a business, you have something that potentially can be passed on for generations. It's a legacy or if you get to the point where you're not ready to retire, you can sell it. We sold 14 Jimmy John's for $9.6M. That's a  legacy that we're able to pass on for the next several generations  and hopefully they can pick that up. That's why I'm a big fan of helping  people become. So if any of you folks out there want to become, talk to me. I would love to help you do that because the reward that I get from watching that happen for other people is far greater than anything that we get off of it financially.

    Q&A

    1. What's the importance of getting diversity into your restaurants and getting diverse employees into your workplaces?

    • We don't care who walks in the door, people are going to come and if they're going to execute like I said  earlier, I don't care what color you are, I don't care how tall you are, I don't care if you have hair and I'm not going to discriminate it's a dude that has fantastic hair. None of that's ever been important to us because again, we don't know what the package is going to come into our organization to make us better. So we don't have quotas, we don't look for something. We look for a person that can add and make us better and if that person happens to be of a certain race or something, fantastic. We're not going to have those issues in our place because it's an inclusive place not because we choose to, meaning like it's actual thoughtful, it's just it is. And because people then feel comfortable in that environment and we don't look at a person because of that. That welcomes their friends and peers, so I don't think you have to create quotas or look for certain things to become diversified. I might get blow back from that, but we don't care yeah it's  not important to us. I think that just speaks to the people-centric mentality you have or just investing in people. It doesn't matter who it is you're just investing in people who want to get the job done and want to develop  themselves and deliver something really  great. People will figure out. If they know that you are a welcoming organization, they will come to you. Whoever they are, they will come to you. 

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