FranDev Players: Joe Mathews, CEO of Franchise Performance Group

After graduating with a degree in fine arts, Joe Mathews got his first job in franchise recruitment right out of college — with Subway no less. When he started, the 20-year-old chain had just under 400 restaurants. Over the next few years, Mathews helped the chain grow to more than 3,000 stores. 

Since his introduction to the industry, Mathews has helped recruit more than 1,000 franchisees for many top brands in the country. Now, as the founder and CEO of industry-leading franchise development and consulting firm, Franchise Performance Group*, he works with brands throughout the industry helping them to properly tell their stories in the marketplace and recruit the right franchisees.

1851 Franchise caught up with Mathews to discuss the key components of growing a franchise and how FPG has positioned itself to be an industry leader in consulting.

1851 Franchise: Are there any keys to consistent franchise growth?

Joe Mathews: All growth, profitably and sustainably have two things in common: profitable franchisees that will predictably stay profitable, now and for the long haul, and trusting and workable franchisee/franchisor relationships.

Profitable to me means a franchise’s product and service is unique, defensive in the marketplace, difficult to copy, sustainable and has profitable margins. As for the franchisee/franchisor relationship, the franchisee’s issues should be heard and they should believe they are being resourced properly and seeing some of their big ideas implemented. Franchisors should see the franchisees as internal consultants in the idea farm, and that will help them prioritize what is and what isn’t working. 

1851: What are the biggest hurdles to successful franchise growth right now?

Mathews: There are a couple of things: one would be franchise models. Most are emerging growth franchisors, so the franchisees’ results are inconsistent and unpredictable. There are breakdowns in the relationships. There are fractions. 

The franchisor will look at the model and breakdown the franchisee performance in thirds: top, middle of the road and underperformers. The bottom third of franchisees fail or find their way out. The middle third is following the system, but not as well as the top, and the bottom third simply isn’t. The franchisor doesn't own the whole bell curve, they only own the top third, when in reality the system runs on the whole curve. The entire organization needs to focus to move the whole bell curve to the right. Every system has big performers, and the bottom performers are just people who screw things up because that’s what they do. How you move it forward is to shadow the top performers, see what they’re doing differently and institutionalize that to help move the curve forward. 

1851: How did the COVID-19 crisis affect franchise growth opportunities?

Mathews: It’s destroyed the opportunity for some, like full-service restaurants, and it's provided opportunities for others, like pizza and wing delivery. Convenience foods are doing extremely well. 

There's going to be permanent behavior change, but I can’t predict all of what that will look like. There’s sure to be a psychological hangover. Are people going to always wear masks? Will they be afraid to sit down in the dining room? Are movie theaters ever going to come back? Who knows. People are going to be tuned in to cleaner home and work environments, which bodes well for home and commercial cleaning franchises. 

We can predict that less office spaces will be occupied and we’ll grow accustomed to more decentralized work environments. Services that relate to that kind of environment will continue on an upward trend, but there are going to be psychological problems. 

1851: Are there any common mistakes you see franchisors making when trying to grow?

Mathews: What I’ve seen franchisors do is pull the wrong budget and rely on broker networks to draw growth. Brokers have 10% market share and they’re the most expensive deals to do. A lot of franchisors delegate their own deal flow to outside brokers at their own risk. Brokers should be a part of lead generation and deal flow, but shouldn’t be the primary source of deals. Brokers are impacted just like everyone else during this time. 

A lot of franchisors aren’t skilled in telling their own story to the marketplace, and they don’t know how to position it online to have it heard by people who are looking for a business like theirs. They rely on the consumer marketing team to market their franchise opportunities, assuming that is relevant and similar when it’s not. You’re not going to sell a million-dollar hamburger restaurant with the same tactics and strategy that you’re selling a $6 hamburger with. Franchise lead generation and storytelling is its own specialty. 

1851: What are your biggest goals and plans for 2021?

Mathews: FPG wants to onboard at least five more long term clients. We want to distinguish ourselves in the marketplace further as experts in franchisee recruitment and lead generation, and we want to get more involved in franchisor executive and manager education with developing franchise brands. So specifically franchise sales, franchisee recruitment and private equity.