Today we’re tackling the world of franchising and today’s guest is Deborah Walliser – the founder and CEO of Got Produce Franchising Inc. She received her B.S. in Botany from North Carolina State University and her Master’s in Education, and Masters in Project Administration from Northern Arizona University.
Industry challenges led to Deborah’s development of a very unique greenhouse control system to run an entire greenhouse business from an i-pad. The second version came on the heels of successful design/build of first hydroponic lettuce ponds to withstand extreme temperatures. Deborah has increased crop rotations from 2 to 15 per year, and managed fresh product packaging, sales and distribution to wholesale and retail outlets.
She has trained employees and monitored environmental controls for optimum production and implemented proprietary irrigation and fertigation strategies for custom marketing of fresh produce. Deborah opened new markets for hydroponic lettuce including large bagged salad proprietors while developing standardized quality protocols for international sales.
She is currently selling greenhouse franchise systems in Africa, Australia and the US. Deborah has consulted with clients from around the world in putting these systems together in arid or water restricted climates. Her specialties are creating innovative water conservation methods for agriculture and food production, project planning and development, fresh produce marketing and branding, project planning and development.
In today’s podcast you’ll learn:
- What is Franchising?
- Why you should transform your business into franchise?
- How to systematize your business before you became a franchisor?
- What challenges you will face in a process?
- How much does it all cost?
Narrator: Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.
Josh: Hey, how are you today? This is Josh Patrick. You’re at The Sustainable Business.
Today, our guest is Deborah Walliser. Deborah is a visionary and founder of the Got Produce? technology and brand. 20 years ago, she began her career studying hydroponic systems with NASA. I always like to have rocket scientists on our show. Every once in a while, we actually get one. Today, we’re going to talk about franchising. Specifically, why you might want a franchisor and not a franchisee. Instead of me wandering on which I have this bad habit of doing, we’ll bring Deborah in and start the conversation.
Hey, Deborah, how are you today?
Deborah: Good. Thanks, Josh.
Josh: Deborah, tell us a little bit about you and your background. How did you end up getting into this?
Deborah: Oh, gosh. It’s a long story but it’s a simple story. I came up with an idea one day and thought, “Maybe somebody else will like it and maybe I’ll like it enough too to create a business out of it.” The story really does go back 20 years to being an undergrad student. I had a chance to work on a NASA-funded grant project. Like all good undergrad students do, we get involved in everything we can get our hands on. This is hydroponic systems for the International Space Station. I wasn’t a rocket scientist per se but our job was to maybe grow lettuce for the rocket scientists up there and the other astronauts. I came away from that thinking, “Gosh, if we can grow lettuce in space, what are we doing here on Earth? I mean, surely we can be a little bit better” and took it into a business.
Josh: You started your business, I’m assuming that you were doing the hydroponics for yourself, in your own business, before you decided to franchise it?
Deborah: That’s true. I had this idea and I thought– again, I was taking it from this very kind of science-oriented, space biology perspective and I thought, “Look, there’s got to be something commercially applicable. There’s got to be a way to do this at a price point. A way that works on Earth.” I went through a couple of revs and invented one system and another system and built a greenhouse and kept refining it, and growing lettuce and tomatoes.
The way that people said, “Gosh, these are really good. Can I buy some?” I started selling them. And then more people said, “Gosh, these are really good. Can you show me what you’re doing?” And I thought, “Sure, I can show you what I’m doing but it’s with this really special thing so you’ll need the software and you’ll need this other thing that I’ve invented.” Then, they said, “Okay, good. Give me that.” And I thought, “You know, there’s got to be a business model here.” And so, I’m telling you the story. It sounds short but this was probably a period of 10 or 12 years. In 2010, I came up with the idea to franchise the greenhouse business. I went from being a grower to a franchisor.
Josh: When you were a grower, how many units did you put out before you decided to franchise? Was it just yours only, a single location, or did you have multiple locations?
Deborah: Yeah, it was a single location. We started with six bays, about half an acre, and then quickly doubled that. Then, we were up to one acre of production and expanded our clientele. We were selling to three different States California, Nevada, and Arizona. Things were going well.
After I expanded, then, that’s when I kind of had people come and say, “Look, I want to take a look at this technology. It’s very water-wise. It’s very resource efficient. The produce comes out exceptional.” And so, people started wanting the system. Instead of expanding again and being a bigger grower, that’s when I decided to change the business model and put it to being a franchisor.
Josh: What were the challenges that you had when you were becoming a franchisor?
Deborah: Everything. I should make it sound easy but when I first approached a franchise attorney, they said, “Look, we’ve never franchised a greenhouse before. We’ve never franchised a farming operation“ basically. Of course, all these franchise attorneys and franchise experts and things like that, they’ve been in the industry. They’ve done this a time or two. Here I am bringing them something totally new. I’m coming from a grower background. It fit the business model. In layman’s terms, it’s really easy to determine whether you want to be a franchisor. I’ll just kind of input that, if you have something – a special way of doing business – a system, and you have a trademark, and you’re really involved in the daily operations. In layman’s terms, you fit the definition of being able to be franchisor. I thought, “Gee, that’s really simple. That applies to me.” That’s the time I went to the attorneys.
In answer to your question, there was no rules written for what I wanted to do, really. And so, the easy part was we got to write our own rules, to some extent. On the flip side, the hard part was we had to write our own rules.
Josh: Before you became a franchisor, how systematized was your business? What did you have to do to get your systems up to snuff so you could become a franchisor?
Deborah: Well, on day one, there was probably zero organization but I was a grower under the brand for about nine years. In that timeframe, got well organized. I had a lot of international students, and interns. A lot of people who worked in the greenhouse didn’t speak English, couldn’t speak English. It wasn’t an easy language for them. Here’s this kind of really advanced technology and I thought, “How do I explain how to run this sophisticated technology to somebody who can’t even understand what I’m saying?” And so, I was sitting down one day thinking, “Okay, I’ve got to make this simple enough that you don’t even have to know English to be able to run it.” And so, I got the whole system basically down into a series of little steps and commands that I could put in Google translate, hit button, and somebody would know how to run it. If you can Google translate this whole thing in one sentence then I thought, “Okay. Now, we’ve got a systematized operation.” That was kind of the basis for the operations manual and everything.
Josh: What was the process you actually went through to become a franchisor? How did you get your first franchisees?
Deborah: The process itself is a legal process. You have to create the franchise disclosure doc and go through the regulatory things and make sure the patent is there and trademark things and the operations manual. You have to do a lot of writing. A lot of people work in legal stuff. Paperwork and legal stuff, I think, is the minimum definition for running a business but the same applies to franchising. That takes a number of months.
I wasn’t really rushing. I was still growing. This was kind of something I was pivoting to. That took about eight months but you can do it probably much quicker if you are really engaged with it.
After eight months, then voila I have all the stack of paper on my desk. Now, I’m officially legally able to sell franchises in the US. And so, I thought, “Well, this is fantastic. I’m going to advertise and overnight everybody’s going to email me and want this fantastic thing.” It didn’t quite happen that way, contrary to what I believed. The phone did start ringing. It was all international numbers. And so, people in really hot, arid climates or people who live in places who don’t have access to fresh food thought, well, for the first time ever, it’s a way for them to be able to grow because they get the training. They get the know-how. They get the system. I was the first one to do that.
Our first franchisee was an international franchisee. We jumped. After finishing all the domestic docs, we immediately had to do it all over again for new countries overseas. In the beginning, it was a lot of paperwork.
Josh: I’m going to assume that for every country, you have to do documents for that country, that’s specific. Am I correct with that?
Deborah: Pretty much, yeah. Some countries require a whole lot. Some require little to nothing, and so.
Josh: Okay. Well, that would make sense. I assume the European Union is a lot and the developing countries are not a whole lot but that’s just an assumption.
Deborah: To some extent, sure.
Josh: In the United States, do you have to do a document for every State or can you do one that covers the entire country?
Deborah: Both. There is one that you have to do. And then each State basically gets to determine whether they want to follow the Federal guidelines or make their own. They have what they call franchise registration States and what they call biz op States which she say, “Just check the box and say you’re going to follow all the rules and we’ll be good with it.” But some States – New York, California and some of these other ones, really have a lot of their own State stipulations. And so, then you have to draft the doc that meets those specific States. We’re registered in 42 States, some of them just kind of follow the Federal procedures and some we had to re-draft docs specifically for.
Josh: When someone becomes a franchisee of yours, do they get a geographic area or do you just say “go and do what whatever you want”?
Deborah: Yeah, it’s dangerous to say “go and do whatever you want”. They do get a territory. One of the definition of being a franchisee is you get something special and you get your own territory in which to do that special thing. In our case, it’s growing produce. And so, your territory is comprised of a minimum population area and a number of outlets. You’re going to be selling these to people. You’re going to be selling the produce to restaurants and grocery stores. And so, we give you a territory that gives you enough people and outlets to be a viable business.
Josh: Aha, so how many franchisees do you have right now?
Deborah: Well, we’ve got about a dozen in seven countries.
Josh: This is over what period of time?
Deborah: This is over about seven years. We started the process in 2010, finished it in 2011, so really since 2011.
Josh: How much did it cost you to get all the paperwork and the legal work done so you could become a franchisor?
Deborah: Yeah. Gosh, that’s always a tricky question. There’s minimum filing fees that are probably close to nothing but the time and effort into drafting and re-drafting, especially if you want to go into these registration States, you need to be prepared for. All total, we’ve probably spent more on legal fees than would need be. I would tell somebody who really wants to get into this, that they should have a kitty of probably a $100,000 or $150,000 to get all this done.
Josh: That seems to be about what I’ve heard in the past. One of the things I’ve been told, which seems to make sense to me, that if you’re going to be a franchisor you quasi become responsible for your franchisees being financially successful. Is that true?
Deborah: You can’t be a successful franchisor if you don’t have successful franchisees. That’s the bottom line. And so, the whole business model, the whole reason you would be a franchisee is because you want to purchase a proven model, something that you can just roll out and duplicate and do and be a successful business person without trying to reinvent the wheel. As a franchisor, my job is to make sure the business model works and that people are successful. Otherwise, the money doesn’t trickle up back to us.
Josh: Right. That certainly makes sense. If you’re going to give some advice to somebody who wants to franchise a business– McDonald’s is very, very strict on what they let their franchisees do. It seems to me, most franchisors say, “Here’s the system. Run with it. Don’t change it.” Is that your MO or do you let people sort of do what they want once they get started?
Deborah: I think that’s really the trick that every franchisor has to go through. Even McDonald’s goes through that a little bit. Especially if you’re going to be in different States. Certainly, if you’re going to be in different countries, there’s going to be things that you’ve got to do differently. That’s why there’s a little bit of different menus when you go to McDonald’s overseas versus McDonald’s here. You’ve got to change things for the local market.
In the beginning, we were very flexible. If you’ve got an idea, shoot, run with it. That’s not always the best option. Now, this many years into it, we know a little bit better where we can be flexible and where we can’t. And so, I would say that we’ve become more stringent over time and we know exactly what needs to kind of be fine-tuned when we go into different countries. You can customize within certain limits.
Josh: I’m not saying this to be mean or anything but it seemed to me that after eight or nine years that you would want to have more franchisees than you have. Has that been a challenge getting people?
Deborah: It’s not been a challenge running more. You’re absolutely right. We would run more than we have. But I think this is a radically new thing. And so, in the beginning, everything that we were doing was overseas. That was a little bit of a challenge because all our support base was in the US. So then, how do you support a franchisee who’s overseas if your support base and technicians and stuff are in the US?
Then it took us several years and we saw a lot of things are going and people are now going from single units into area developers and master franchises which are bigger development contracts. The people that started in single units are now saying, “Okay. Now, I want I want a larger territory and we’re going to roll out so many units over a period of years.”
We built on what we started with, bringing in some bigger development schedules. We also decided that, “Look, we’re going to have to build some international support into this.” If we had just started in the US and only focused on the US and we had this opportunity, it probably would’ve been the easier way to go or the shallower end of the pool to get into but we jumped right into the deep end. It took a little bit of a time for our back wheel to catch up with the front as they say.
Josh: Well, that makes perfectly good sense to me. If I’m going to start a franchise, what are the three, or four things, or five things I need to be really clear about before I start down that road?
Deborah: If there’s any intellectual property, if there’s any patents or trademarks, those really need to be registered and secured, searches and things need to be done. We run into trademark infringement issues off and on. If you kind of don’t have your ducks in a row before you begin, it’s really hard to enforce later on. I would say that’s the first thing to look at.
The other thing is really be specific on the person that you’re looking for. It’s very easy for a new franchisor to say, “Look, we’ll take anybody who’s interested. Fill out an application and we’ll approve you.” It’s going to be excited in the beginning. It’s good to get applications in but I would say, as a precautionary statement, be kind of very specific and choosy on who your franchisees are. Even in the beginning, kind of set the tone for who you want representing the brand. I think most people kind of— it’s really easy to let that slide, especially if you’re trying to get the numbers in.
Josh: What kind of screening did you do with your franchisees to make sure they were— have you had fire any franchisees?
Deborah: You don’t really fire a franchisee. We have taken over some contracts. There were some that, in the beginning, wanted huge development contracts and huge territories. We would call that an area developer or a master franchisee. If you lock up a huge area and you don’t develop it, then it kind of costs us business because then nobody else can build on that area.
In the beginning, we had people buy huge territories and then some areas were not developed. And so, then, we had to take those areas back up and open them back up again. Again, that’s kind of the eager beaver new franchisor tendency. You want big? Sure, I’ll give you big. If you want to join, sure. We did have to do a little bit of vetting after that. “Are you really capable of taking a big territory? Are you really capable of doing a multi-unit? Do you have the financial wherewithal to do this? Do you have the business acumen to do this? Do you have a shared vision?
That’s the other thing too. What is your franchisee trying to accomplish? They’re independent business owners. They’re getting into this business for a very specific reason. You should make sure that it matches the vision of the company and it matches what you want the brand to stand for.
Josh: Cool. What does it cost for someone to become a franchisee of you, if I could ask?
Deborah: Well, you can ask. We’re legally obliged to tell you. It’s on our website. We’ve kind of kept it simple. We have three size models that you can buy – small, medium and large. I actually thought that was really simple and then come to find out most people only offer one size. You can get into this for about $300,000 to $350,000 all the way up to 2 million bucks or a million plus, depending on how many bells and whistles you want on top.
Josh: Right. Now, are you still operating your own grow operation?
Deborah: Not in the US, no. We’re operating a R&D facility now overseas. That’s where we do testing of new software, new technology and new seed trials. Now, we can kind of test them in our facility. We used to have some of the franchisees try and test this and see what happens but you can’t really ask your franchisee to be a R&D center. Now, we’ve built an international R&D center and do a lot of that. That’s the basis of our corporate operations.
Josh: That’s overseas?
Josh: You must spend a lot of time on the road?
Deborah: Or in the air, yeah [laughs].
Josh: In my world, that’s kind of on the road but [laughs]—
Deborah: Yeah. Yeah, too.
Josh: –[laughs] you have my sympathies unless you’re flying private. I doubt that you are but that’s [laughs]—
Deborah: Well, yeah, you know, maybe a couple of years down the road.
Josh: That would always be nice.
Deborah, we’re almost out of time here on the podcast. There might be somebody who listens who wants to become a franchisee. If they wanted to, how would they find you and where would they go?
Deborah: The easiest place to find us is the website which is www.gotproduce.us like the Got milk? but gotproduce.us. It’ll give you all the contact stuff and a pre-application form and pictures and all the good stuff.
Josh: Are you looking for franchisees in the US or just overseas right now?
Deborah: No, the US territory is wide open, 41 States. We have a little map. I think it has 38 States indicated. We just added California and a couple more on there. We’re wide open in the US.
Josh: Cool. Thank you so much for your time today. I really appreciate it.
I also have an offer for you. I just wrote my first book. Actually, I wrote it about six months ago or published it about six months. I wrote it last year. There it is. It’s called Sustainable: A Fable About Creating a Personally and Economically Sustainable Business It’s really easy to get. You can get it at Amazon. You can get a Kindle version or the paperback version. Or you can go to my website, sustainablethebook.com. That’s www.sustainablethebook.com. If you get it there, you get to have a free 20-minute conversation with me about a problem you’re having or an opportunity you’re not taking advantage of. I also have a 37-page cheat sheet that tells you how to implement the stuff that’s in the book.
This is Josh Patrick. We’ve been with Deborah Walliser today talking about franchising. You’re at the Sustainable Business. Thanks so much for stopping by. I hope to see you back here again really soon.
Narrator: You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around a hundred years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an email at firstname.lastname@example.org.
Thanks for listening. We hope to see you at The Sustainable Business in the near future.