Episode 421: How to Vet a Franchise Deal with Matt Stevens

Matt Stevens walked away from his first closing table controlling two duplexes, having put nothing down, holding a check for forty seven hundred dollars. That deal taught him that things he assumed were impossible were actually available to him, and it started a career built on reading structure before reading price.

Known as The Franchise Guy, Matt has more than 30 years in the franchise industry and has sat in nearly every seat at the table. He has been a franchisee, a franchise coach, a franchisor, and now a franchise consultant. He was rookie franchisee of the year, turned around struggling divisions, and served as a board member and partner inside a two billion dollar franchise group.

WHAT YOU'LL LEARN:

How to evaluate a franchise opportunity beyond the investment number, why first rights of refusal have essentially disappeared from franchise agreements, how territory math changes the economics of multi-unit ownership, the behavioral due diligence most candidates never perform on themselves, and where the real growth is happening in franchising right now.

MATT'S JOURNEY:

Matt got into franchising by reading an advertisement on a hallway wall at Wake Forest University. He joined the business that became CertaPro Painters when there were only 67 operators across Canada, New England, and the Mid-Atlantic. The deal had a zero dollar investment to get in and a 25 percent royalty on the back end, a trade both sides made deliberately. He spent about ten years in that system, moving from operator to coach to the franchisor side.

Before franchising, Matt spent nearly two decades in rental property, building to 14 units before selling his last property in 2017. Over one six year stretch in franchising, he found, recruited, signed, trained, and mentored 167 franchise owners across nine states in a single system. Today he helps candidates cut through franchise marketing using non-public research on franchisors, their development teams, and their existing owners.

KEY INSIGHTS:

Every piece of human behavior is driven by inputs and outcomes rather than rationale or common sense. Matt was frustrated by several franchisor decisions when he was an owner. Once he became a franchisor, those same decisions made complete sense. His advice to candidates is to assume every rule exists for a reason and to ask why.

First rights of refusal on territory used to be common in franchising and are now essentially gone. Matt's read is that the only reason a franchisor offers one today is that they are desperate to sign that candidate. What replaced it is a growth schedule tied to what an operator can realistically execute.

Territory secured early is what Matt calls growth insurance. One territory costs X, three cost roughly 1.6X, and five cost roughly 2.2X, and six territories can be serviced with the same phone number and van as one. In fast moving markets, what is available today will not be available later.

The hardest due diligence is the kind candidates perform on themselves. Investment and territory are confirmable. What is not confirmable is whether a person will replicate the daily behavioral patterns the system requires. One of Matt's screening questions is how long a candidate can go at zero income before hitting the panic button.

The least appreciated opportunity in franchising is the mundane service business. Matt's framing is that in a market with 400 competitors within 30 miles, you are not competing against 400 companies. You are competing against the two others the customer called. That is how he became the largest buyer at his Sherwin Williams store in Keene, New Hampshire by May of his first year in the painting business at age 20.

Perfect for anyone weighing franchise ownership, operators planning multi-unit growth, and dealmakers who want to see how structure and price get traded against each other in a real agreement.

FOR MORE ON THIS EPISODE: https://www.coreykupfer.com/blog/mattstevens

FOR MORE ON MATT STEVENS:
https://heisthefranchiseguy.com  
https://podcast.heisthefranchiseguy.com/DQ

FOR MORE ON COREY KUPFER https://www.linkedin.com/in/coreykupfer/ https://www.coreykupfer.com/

Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

Get deal-ready with the DealQuest Podcast with Corey Kupfer, where like-minded entrepreneurs and business leaders converge, share insights and challenges, and success stories. Equip yourself with the tools, resources, and support necessary to navigate the complex yet rewarding world of dealmaking. Dive into the world of deal-driven growth today!

Episode Highlights with Timestamps

[03:26] - The first deal, two duplexes controlled with nothing down and a check at closing
[14:14] - Why first rights of refusal disappeared and what it means when one is offered
[21:14] - The behavioral due diligence candidates skip and the four Ds
[31:43] - What separates successful franchisees, including the ABS framework
[47:44] - What freedom means to Matt

Guest Bio

Matt Stevens, known as The Franchise Guy, is a franchise consultant with more than 30 years in the industry. He has been a franchisee, a franchise coach, a franchisor, and a franchise consultant, and was named rookie franchisee of the year early in his career. He has turned around struggling divisions and served as a board member and partner inside a two billion dollar franchise group. Matt is a franchise gold and century club member, a Business First Columbus 40 under 40 honoree, and the author of a three hour course on thorough franchise review. He holds three business degrees from Florida Southern College and Wake Forest University and is a MENSA member. His process walks candidates from first conversation to confident decision using real world validation, insider questions, and practical coaching.

Related Episodes

Episode 329 - Cliff Nonnenmacher on master franchising and who is not a fit for the franchise model. A useful companion for understanding the layers of ownership between single unit franchisee and franchisor.

Episode 333 - Greg Mohr on franchise agreements, protected territories, and how franchisors identify their ideal franchisee. Pairs directly with Matt's discussion of what franchisors assess in candidates.

Episode 330 - Pete Mohr on owning and exiting multiple franchise businesses, including buying himself out of an agreement that was not working. Offers the operator's view of what happens when the fit turns out to be wrong.

Episode 336 - Devan Gonzalez on building an emerging fitness franchise from the franchisor side, which connects to Matt's read on growth in health and wellness.

Keywords/Tags

franchise consulting, buying a franchise, franchise due diligence, franchisee validation, franchise territory rights, first right of refusal, right of first offer, franchise royalty structure, multi-unit franchising, home services franchise, health and wellness franchise, deal structure, business ownership, entrepreneurship, DealQuest Podcast, Corey Kupfer, Matt Stevens, The Franchise Guy