Bennett Maxwell continues by explaining how, when you are starting out, it is critically important to invest time and win peoples hearts.
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
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Rick:
Told you, Brian.
Brian:
Told me what?
Rick:
This is part two of last week’s episode.
Brian:
Oh, yeah. And it was getting good.
Rick:
If you missed it, go back and listen to part one first. Take it away, fellas.
Stephen Semple:
It’s very compelling. I could put my business hat on and go 500 square feet, one oven timed single employee can do this and if the product’s really great, that’s quite compelling. But you still got to pound the pavement to find those franchisees and you still got to have a pretty good pitch. So if I’m a potential franchisee, what’s the pitch? A Dirty Dough franchise?
Bennett Maxwell:
I think I would kind of reiterate with just what you just told me as well. So it’s hitting on the team first. We have a really experienced team. Now our CEO, Jill, who I mentioned is now our president and our CEO is Gregg Majewski, who was the CEO for Jimmy John’s during all of their rapid growth and now he owns another X amount of brands. So okay, here’s the team, but that’s one thing. The other thing is cost. How much does it cost to open up us versus a competitor? And we’re going more towards the how do you lower the barrier of entry to entrepreneurship by allowing new people to become entrepreneurs? Well, what does it take to become a business owner? You need time, money, and expertise. Well, we’ve taken away the expertise out of it because you don’t need to be a baker. All you have to do is learn how to use an oven.
Stephen Semple:
Right.
Bennett Maxwell:
The time it takes to run a business is generally correlated pretty closely with the number of employees.
Stephen Semple:
Yes.
Bennett Maxwell:
If a competitor requires 50 employees before opening day and we require 15, which one is going to take more time?
Stephen Semple:
Correct.
Bennett Maxwell:
And then the money it requires, well if you only have a 500 square foot build out or even a thousand square foot build out in only one oven, you don’t have to buy all the mixers, nor do you have to have all the storage for all your raw ingredients because I’m shipping you a finished product. Now you no longer have to have all of the same amount of capital. So it’s less capital, less expertise, and less time required backed up by a really good product. Generally speaking, we get a little bit better reviews than anybody else. I mean a 4.8 star and some of the competitors are 4.6, but it’s also more by unique product.
Go try to make a three layer cookie at home or in Insomnia Cookies or Crumbl Cookies store by hand and you can’t do it. So we corner the market on having a unique product and the barrier of entry to competing with us is you go spend a few million dollars like the idiot that I was before you even have a freaking franchise open. You know what I mean? It was a high risk, but now I think it’s paying off because we’ve allowed our franchisees to sell a more unique product and nobody else has broken into that space yet, probably due to the cost.
Stephen Semple:
So what’s the typical investment that somebody would require to open up one of your franchises?
Bennett Maxwell:
250, 275 is average. If you get a good space that’s a second gen and your construction cost is low, you can open it up for less than 200.
Stephen Semple:
Right.
Bennett Maxwell:
That’s what we’re looking at.
Stephen Semple:
But in the grand scheme of things, not a massive investment?
Bennett Maxwell:
Especially if you could do an SBA loan with 40 grand down or something like that. And to my knowledge, and I haven’t checked in a little bit, but we hadn’t been denied or maybe one franchisee had been denied an SBA loan because they like the model. Because banks are also looking at risk and what’s higher risk? 50 employees out of 1800 square feet or 15 employees out of 500 square feet.
Stephen Semple:
Right.
Bennett Maxwell:
$700,000 opening investment or a $300,000 opening investment.
Stephen Semple:
And you’re also saying your cost of operating is going to be lower as well because you can run it with one person. You don’t need three people in the store at a time. I can see lots of advantages to it. So what have you guys been doing on the marketing front to get the name out there? Because it’s one thing to give people the operation and the name and the logo. What have you been doing to promote Dirty Dough to the world?
Bennett Maxwell:
The thing that’s been the most effective was definitely our response to the lawsuit.
Stephen Semple:
Right, right.
Bennett Maxwell:
I’m going to a franchise conference next week in Philadelphia, and the first time I went was two years ago and I went with my Dirty Dough shirt and I got stopped by dozens of people like, “Oh, Dirty Dough.” I’m like, “We just opened our first franchise two months ago, how do you even know who we are?” But it was for sure because of the Utah Cookie Wars, whatever. That definitely helped us out. Outside of that, what’s been mostly effective has honestly been sampling, going to businesses and just showing up because you have amazing product. I just did that a few weeks ago in San Diego with my little brother who just opened up a store. You go to seven businesses and say, “Hey, can we give you free cookies that you can hand out on your behalf of your customers after a karate class?”
And you could say, “Hey, free cookie, no purchase necessary on us. All you have to do is download the app and Dirty Dough is three doors down.” Seven out of seven said yes because we showed up with four cookies. So it’s like, what’s your cost for four cookies? And then we went to a handful of schools with a dozen cookies, warm cookies cut up, and you show up anywhere in the world with a box of cookies, warm cookies, and you get let in and you have great conversations with people. It’s like just get your product in front of people.
Stephen Semple:
I’m going to encourage people to go back and listen to episode 61, which is Fields’ Cookies.
Bennett Maxwell:
I listened to that episode and now I’m like, I just copied her.
Stephen Semple:
Right? Employee number one is from Mrs. Fields. And what did they do? Now they did it differently because back in the day that Mrs. Fields started, there was huge foot traffic through shopping malls. So what did they do? Gave away warm cookies in the mall. But it’s the same idea. You’re just going, we’re not in the mall, we’re not in a foot traffic location. I’m assuming you’re probably decent visibility location so people can find you. But we’re going to walk up and down the street. We’re going to go into every business. We’re going to go into every craft store and art store and karate studio and ballet studio and give away warm fresh cookies. It’s the same idea.
Bennett Maxwell:
Yes. And going back to our CEO right now, he came on at Jimmy John’s when they were like 28 stores and he left them when they had 300 open and 700 additional sold. And he is like during the whole time, you don’t really have a marketing budget. Your 3% that you’re paying doesn’t really even cover for your website and your tech and all that. So he’s like, it was just samples. And the advice that he gave everybody was, you need to give 50 samples a day, get your sandwich, cut it up to whatever pieces you want. And sampling is great. We did that, something similar with a hair cutting franchise, a kid’s hair cutting franchise. “Hey, will you give out free cookies to all of your clients on us. All they have to do is download the app and come into our store.” They gave out however many coupons, 360 people, unique visitors, kids with their parents because they’re only getting one coupon showed up to the store to redeem it.
So your product cost and everything on that is a few hundred bucks. It’s like, how else can you pay a few hundred bucks and get 360 people plus their parents to come in, download the app and try a cookie? You can’t. Now, the issue with that is bandwidth and how much can you do that and the good thing about ads is you just turn it up and down and it’s a lot more passive, and I think they both play hand in hand, but that boots on the ground, guerrilla marketing, getting out there and you’re on the high school, buy one, get one free discount card or whatever. Those are, at least initially when franchisees are opening, that’s what making a big impact.
Stephen Semple:
And here’s what I’m going to say that I think that you did brilliantly. There’s two things that I want people to take away on this. It’s probably three things actually, now that I think about it. I keep adding things because it’s so amazing. But one is when you don’t have money, you got to spend time. In other words, your guys are not sitting in their shop doing nothing. You’re like, no, here’s the model. Get out there, get out in the community, give cookies away. You can’t sit in your store, so if you don’t have money, you got to do things.
But here’s what I’m also going to say that I think was really right that you did, and I think it’s better than giving two for one coupons because when we discount things, we tend to create price sensitivity in our customers. There’s lots of studies on that, but that doesn’t apply when you give things away for free because no one expects a second one for free. But when we get a two for one, we expect two for one again in the future. So I think what you guys have done that’s brilliant is the free. I’m giving it away for free. And yeah, there’ll be some people who will never come back because they’re not cookie people and whatnot, but for each one of those, there’ll be a few people who go, “These are amazing. I’m going to go buy a box.”
Bennett Maxwell:
Yeah. And even of those 360 people that came in, it’s still accounted for. I think they did a pretty terrible job at upselling, but they still made way more money than it cost them to make those coupons.
Stephen Semple:
Sure.
Bennett Maxwell:
Because you come in for one cookie, but it’s the mom taking out two of their kids, only one of them’s getting a haircut, and you can’t just buy one kid a cookie.
Stephen Semple:
Yeah. The free thing is brilliant and great and proven, so fantastic. The other thing I think that’s been really good again, and it shows your boots on the ground, is the calling out, reaching out to people and saying, “Hey, I’m thinking about franchising. Can you give me feedback on it?” And learning all of that. I think is something again that people can learn from. You didn’t sit back and just get on the computer and research things and whatnot. You spent time in front of people. That’s what guerrilla marketing is all about.
Bennett Maxwell:
So I was living in San Diego and there’s a brand called Everbowl. They’re probably around a hundred locations. I just cold matches the owner, and I’m like, “Hey, I don’t live that far from you. I’m starting a franchise. I would love to sit down and talk with you.” I didn’t think he’d respond. He did. Jeff Fenster, great guy. And I’m like, “Hey, here’s my model. I’m going to sell franchises in packs of five. So your first location is going to be 2,500, 3000 square feet, and that’s where you’re going to house your machine. And then after you get that up and running, then you can open up 2, 3, 4, and 5. You buy a sprinter van, whatever, and then you’re delivering cookies.” And this guy looks at me and just as serious as can be, he’s like, “That’s going to fail.”
He’s like, “You cannot hope that your franchisees are now machine operators and then you’re going to tell me that you’re going to make them deal with insurance and vehicles and driving? No, no.” And I’m like, “Well, why not?” And he goes through it all. I’m like, “Okay, you need to do all that for them, and you centralize everything to one location. Then you get even better economies of scale on all your ingredients.” That was a hundred percent pivot from what I thought I was going to do, but me just messaging somebody on Instagram to meet up with lunch, and then he changed my whole business model in 30 minutes.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Empire Builders Ad]
Dave Young:
Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.
Bennett Maxwell:
That was a hundred percent pivot from what I thought I was going to do, but me just messaging somebody on Instagram to meet up with lunch, and then he changed my whole business model in 30 minutes.
Stephen Semple:
It’s interesting because founder of the Wizard of Ads group, Roy Williams, very early in his advertising career, what he did is he went out and he interviewed businesses, and it wasn’t like a podcast interview. This is back in the days where you just sat down and said, “Hey, tell me about your business. I’m wanting to learn about business. What have you done that’s really successful? What have you not done?” But again, it was collecting of all that knowledge that he then put together, the piece said, “Wow, the people who are really successful probably did it this way. So that’s what I’m going to take out into the world.”
And yeah, I think we’ve lost this art or this psychology of going out and talking to people and yes, it’s harder today because you don’t have big board of trade meetings and things along that lines, but you still can. It goes to show that you can reach out to a bunch of people and there will be people who will say, “Yeah, I’ll talk to you.” Especially if they don’t feel like you’re trying to sell them something where it’s just, “I’m thinking about starting something. Can I run some ideas past you?” Sure.
Bennett Maxwell:
Yeah. I’m going to be juicy again. Our current CEO and the Jimmy John’s CEO cold messaged him on LinkedIn a year and a half ago or two years ago. It took me six months to get him on the board and then a year to get him as CEO. People ask and they’re like, “It was a cold message?” I’m like, “Yeah, we’ve also raised 8 or 9 million pretty much all off of cold contacts or asking a warm contact for a referral.” And they’re like, “Oh, you didn’t have any connections before then?” I was like, “No, but I sold Cutco and I did door to door and I’ve knocked tens of thousands of doors and I served a mission.” I’ll just keep going until I find it.
Stephen Semple:
Right. It’s that amazing training of just learning how to do that. And I think it’s a skill that is being lost this whole how do you get out there and how do you get to know people and how do you create that community and create that interest? It’s just even the reaching out on LinkedIn, most reached outs on LinkedIn is the person’s trying to sell you something or is saying, “Hey, I would like to talk to you.” It’s like, look, I know you’re just trying to sell me something. It’s not, “I’ve got this idea and I’d like feedback on it. Could you help me?” That’s a different reach out.
Bennett Maxwell:
It has been absolutely mind-boggling to me how many people will say… Because you have two groups of people, you have more of the hustle, go earn your key, your time’s valuable. If people want to pick your brain, tell them to go to hell because you’re worth so much money and blah, blah, blah. And I bought into that flaw. And then I got into the John Richards, he was our first advisor, the founder of InfoSpace, which IPO’d for $30 billion. You talk to somebody that’s a different business world than guys running a coaching program or whoever’s giving different advice. And he’s like, “No, no, no. You give other people your time and you network for free and then other people network for you.”
Right now the decisions that I’m making, we have a deal on the table, an investment I was like, okay, should I take it or not? I sat down with the owner of a company called Savory Fund out of Utah. They own several hundred restaurants, and he just sat down with me so I could lay out the deal, and he gave me his unbiased feedback on it. I’m like, why did you do that? You know what I mean? But he is like, “Oh, well it’s because this person this or that, and I know that you’ve talked with this other person that works for one of my stores.” And it’s just like everything is very well-connected, and as soon as I got rid of your time’s valuable, charge other people if they want to pick your brain, said, no, I’m not going to charge people, I’m just going to give it back. And other people seem to give it to me. It’s been so powerful for networking, even if nothing comes from it, at least I know that person and I maybe could have added some value to them, hopefully.
Stephen Semple:
Yeah, well, that’s not much different than my philosophy because I structure as kind of a 90-minute meeting that I’ll do if people want to talk about marketing and there’s a little bit of prep work I ask them to do just so that I can show up actually with a bit of an intelligent thing to say, yeah, I’ll meet with anybody because my attitude is why not? And if you can help somebody out, it just seems like it comes back in some weird way to help you in the future. I think there is that, and yes, people can be a little bit too much, and you do have to balance it. There is only so many hours in the day, but at the same time, yeah, there is a little bit of that give back that I think is a good mentality to have.
Bennett Maxwell:
And it is important. Yeah, don’t get lost in giving free phone calls. That’s not what I’m saying. But it’s like if you’re like, oh, I got three hours a week to go meet three new people. And I’m going to pick who those three people are this week, or whether it’s me outreaching to somebody else or other people outreaching to me. Kona Ice is a brand that has over a thousand locations. Somebody that owns a franchise called me for some advice, and then after they’re like, “Hey, can I share your information with Tony?” And then I got to meet Tony and they have a thousand locations. And it was just because I’d helped somebody and he was asking of something else about cookies and desserts and it was like, oh, it’s cool how quickly sometimes you see it and sometimes you don’t see it quickly, but it doesn’t matter. I do believe that if you have a problem, either it’s because you lack knowledge to solve it or you lack somebody with knowledge to solve it. And the bigger you build your network, the greater capacity you have to solve your business issues.
Stephen Semple:
And the other thing I think that you’ve done, and I can just hear it in the way that you’re talking, even when you got bad news, that won’t work, and here’s the reason why. There’s two things that you did. One is you didn’t let that defeat you. So you went, okay, I got to rethink this model. But the other thing is you listened to the advice of this person who was highly knowledgeable. I’m amazed at the number of times that we’ll sit down and talk to people and they’ll be like they want the way that they’re doing it to be true, even though there’s no way it’s going to work out, that’s fine. It’s their life. They can drive that way. But there’s a certain point where it’s like, no, if this person really and truly is an expert and often experts will point out that thing that’s like, yeah, this won’t work for this sets of reasons. And again, it’s not to say don’t do it. It’s don’t do it that way.
Bennett Maxwell:
Yeah. When I go on the phone with our current CEO now, the first time it was probably the second person outside of the Jeff Fenster guy from that first story I told that was just as blunt as can be. And I’m getting on the phone all excited. I’m like, “We’re doing this. We’ve sold X amount, a hundred of franchises and we’ve opened up four stores already.” And he’s like, “You’re an idiot. You’re doing this, this, and that.” I’m like, okay. And it was a potential investment call, but it wasn’t a good fit. And then I’m like, but he was so blunt, and that’s what I like. I want somebody to call it and be like, that’s bullshit. And I know why. And here’s the reason.
So it wasn’t going to go down the investment side, but I’m like, well, what does it take to get you on as a board of advisors? And then we build on that relationship because of him just telling me how all the mistakes. And I know all the mistakes that I make, and it’s kind of like, okay, well, you can have short-sighted selfishness or long-sighted selfishness. The short sight is like, no, I need to be right because I need to feed my pride. And it’s like, no, I want to be right in the long term and to be right in the long term, it’s because I’m listening to people who are smarter than me.
Stephen Semple:
Yes, yes. Now, here’s one of the things I’m going to say that I admire about what you did is you very quickly got above that 50 franchise space because what a lot of people don’t realize is 50 and under is Death Valley. It’s an awful brutal place to be because you’ve got to support all these franchisees and it’s not enough franchisees to make money.
Bennett Maxwell:
But the franchisees don’t know that.
Stephen Semple:
No, no.
Bennett Maxwell:
They have no idea.
Stephen Semple:
And it’s also not their problem. I bought a franchise, you’ve got to support me. But at the same time, you’ve got to build a business and you’ve got to recognize, you’ve got to get above that. And I think I’m right on the number. I don’t know, am I pretty close on the number?
Bennett Maxwell:
Yeah, yeah. And obviously if you’re a full store restaurant, the number’s a little bit lower. If you’re a snack brand, the number would be a little bit higher.
Stephen Semple:
Sure.
Bennett Maxwell:
What I was speaking to in that though was it makes it even harder because you have 40 locations and all your franchisees think you’re just loaded with money and they’re like, “What are you doing with all my marketing dollars?” You’re like, “What marketing dollars?” 40 stores, that’s nothing. What do we do with that? How do you put up billboards if you’re getting 3% from 40 stores? You know what I mean?
Stephen Semple:
When do you think you’ll hit 250 stores open?
Bennett Maxwell:
Man, I’d have to go look at it again because I feel like it always changes.
Stephen Semple:
Give me your guess.
Bennett Maxwell:
We’ll end this year with about 90, next year I think it was 170. So in year and a half to two years.
Stephen Semple:
Okay. What revenue does somebody need to do out of one of the little stores to become profitable?
Bennett Maxwell:
It’s going to depend on a few things. Mainly just the lease space, if you’re in San Diego or if you’re in Oklahoma. But I’ve seen break even’s 20 grand a month. Some are a little bit more than that, but when you compare it to a Crumbl, they disclose their financials and their lowest store, I think was doing like 50,000 a month and lost almost 20,000 a month on that.
Stephen Semple:
Yes.
Bennett Maxwell:
It is drastically different.
Stephen Semple:
But it’s not a big number.
Bennett Maxwell:
A quarter million to 350 is where we were hoping our break even is going to be.
Stephen Semple:
It’s not a big number, which I understand. So I get why you guys are successful. You’ve got an easy business to run. It’s a low cost to entry and not a big hurdle to get to that profitable space. So for me, it’s going to be fun watching growth that you guys go for. So if somebody listening just us and says, wow, this sounds like an opportunity I want to get in on, what do they do? How do they get started? Who do they reach out to?
Bennett Maxwell:
With probably some cookies. Make sure you like them. And then, if and when you do, dirtydough.com you can get information on franchising, videos, and all of that apply there and go through the process or reaching out to me. Bennettmaxwell.com is my website that just has links to all my social medias, LinkedIn, any of that, if you have any other questions outside of the do I want to buy a store? Because usually that’s not why people are coming to me.
Stephen Semple:
That’s awesome. And again, it’s going to be exciting to watch what you guys are doing. Now, last question. If you are going to give somebody advice who’s an entrepreneur and is looking to grow their business, and of course this is kind of a bit of a tough one because all sorts of industries listen to this podcast. What should they take away from this conversation and what would you tell them?
Bennett Maxwell:
Don’t get caught up in the fancy Nancy glamour of entrepreneurs. Some people want to be an entrepreneur, just to be an entrepreneur. I own a business, but what are you after? So I’ve been focusing a lot in the last few years on you always set material goals. My goal is to have a $10 million business. My goal is to have 50 franchisees open, but then you hit those marks and it feels good for a little bit and then it doesn’t. And it was because my real goal wasn’t to have 50 franchises. My real goal is how I thought I would feel when I had 50 franchises open or when we had 10 million in revenue.
So it’s whatever you’re going into, whatever your goals are, if your goals don’t include, I want to grow this business to do XYZ because I want to feel this way more often or this often. And a lot of times you’ll see that you don’t need a $10 million business to have more time with your family because guess what? You could just be with your family every day. You know what I mean? But set the right goal. And if it’s not emotional based, you’re not to the end point, because there’s nothing that humans do that we do without the intention of feeling a certain way. That’s what I think.
Stephen Semple:
That is so awesome. Thank you for sharing that. And I know, just given the fact that you said that you and I are going to become friends long term because I love that philosophy. I love that philosophy. Hey, thank you so much for your time. This has been awesome. And folks, check out Dirty Dough. It’s pretty cool. And you know what we’re all looking forward to? We’re all looking forward to when we see Dirty Dough as a billion-dollar business.
Bennett Maxwell:
Here we go. Me too.
Stephen Semple:
Thanks, man.
Bennett Maxwell:
We just need to survive clubbing.
Stephen Semple:
You will, it’ll be great.
Dave Young:
Yes, please share us, subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire building session, you can do it at empirebuildingprogram.com.
