Michael Derrick is an entrepreneur and a multi-franchise owner with more than 20 years of experience. He’s operated some of the most successful Tim Horton locations in the United States and is now the proud owner of national franchises such as Supercuts and Smoothie King. Michael’s proven track record and passion for business allow him to create thriving business environments while managing multiple franchises and locations simultaneously.
Michael graduated from State University of New York College at Geneseo with a Bachelor of Education.
Here’s a Glimpse of What You’ll Hear:
- Michael Derrick shares what made him pursue franchising
- The key to successfully operating multiple locations
- Michael’s biggest takeaways from managing different franchise businesses
- How does culture affect business growth and profitability?
- The main differences between operating franchises and corporate businesses
In this episode…
In this episode of the Spot On Series, Chad Franzen welcomes Michael Derrick, entrepreneur and franchise owner of Supercuts and Smoothie King. They discuss what makes franchising appealing for entrepreneurs, the challenges of managing multiple business locations, and what transferable processes exist between franchises and corporate franchises. Michael shares the importance of building a culture that translates efficiency and teamwork into success and the most valuable lessons he’s learned from the industry.
Resources mentioned in this episode:
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SpotOn:
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Episode Transcript
Intro 0:04
Welcome to the Top Business Leaders show. Powered by Rise25 Media. We featured top founders, executives and business leaders from all over the world
Chad Franzen 0:20
Chad Franzen here co-host for the show where we feature top restaurant tours, investors and business leaders. This is part of our spot on series spot on has the best in class payment platform for retail and they have a flagship solution called spot on restaurant, where they combine marketing software and payments all in one. They’ve served everyone from larger chains like Dairy Queen and Subway to small mom-and-pop restaurants. To learn more, go to SpotOn.com This episode is brought to you by Rise25. We help b2b businesses to get ROI clients referrals and strategic partnerships through done-for-you podcast. If you have a b2b business and want to build great relationships with clients, referral partners and thought leaders in your space, there’s no better way to do it than through podcasts and content marketing. To learn more, go to Rise25.com or email us at support@rise25.com. Michael Derick has been franchising since 1999. He opened and operated some of the most successful Tim Horton franchises in the United States for 18 years, and is now a franchise owner of the national brands of Smoothie King and Supercuts. Hey, Michael, thanks for joining me today. How are you?
Michael Derrick 1:24
Good, Chad. How you doing?
Chad Franzen 1:25
Good, thanks. Hey, oh, what got you interested in being a franchisee?
Michael Derrick 1:31
Well, to be honest with you, I was actually in education, had a great career was in line for 20 years and out and a great retirement package. And I was bored out of my mind. So I was sitting in my basement office at one of my schools one day and said, God, there’s gotta be more than this, please. And I was actually doing a personal training business at the time on the side was one of my hobbies and things I was into. And one of my clients became a really good friend of mine. And it turned out he worked for this small in the time fledgling donut company in Buffalo, New York called Tim Hortons. And we were out hanging out one night, and we were talking about business. And I said, How I love business and wanted to probably get into that more in my life. And he’s like, Hey, why don’t we get into business together? And I was like, really? What do you think we should do? So oh, I think we should, you know, get into this brand that I’m with right? Now. He goes, it’s going to explode in the next, you know, five years here in this this area. And I said, Well, what brand is that? And he’s like Tim Hortons, like what’s that? He’s like, Well, why don’t you go check one out. So I ended up going to a Tim Hortons that just opened up around the corner was a corporate store. And I walked in, and I’m like, donuts and coffee. Are you kidding me? And I hear I’m the health nod and everything. And I’m like, How do I align that with my life. And, and so, you know, we sat down atop the numbers, and, you know, saw what it was doing in Canada and said, you know, this is going to be a great opportunity. So we sat down with a company tried to make a deal to get some corporate stores, they, unfortunately, weren’t too happy about losing him from their management team. So they sweeten the deal to keep him and then they said they would take care of me, which they did. And within a few months, I ended up getting my first location. 30 days later, they offered me an existing store. And then two years after that, I opened up another location. And then upwards of about six locations we had together, you know, very successful, you know, they, they had a lot of ups and downs at times. But you know, it was that first two, three years of just really, you know, digging the ground and plowing you know, what we ended up in that about that third year really, really taking off. And, yeah, we ended up having two of my locations, within about a mile and three quarters of each other that were, and ended up being on the list of only about eight stores in the US at the time that we’re doing over 2 million in sales. So we did pretty good. We had two out of those eight and, and had a pretty, pretty good ride for about, you know, 20 years there.
Chad Franzen 4:16
Wow, that is awesome. And you haven’t been bored out of your mind.
Michael Derrick 4:19
Oh, no, no, it was exactly what I needed. Because I’m a multitasker. And it kept me on my toes. That’s for sure. So
Chad Franzen 4:28
what is it about franchising that that’s so appealing? I mean, being a franchisee or being a franchise owner, that’s so appealing to you?
Michael Derrick 4:36
You know, for me, I’m a I’m a structure guy. And, and I like operations. And when you have a really detailed structured operations that’s proven to be successful. I buy into it 100% of the time and you know, the brand and had just a amazing structure that you know, from beginning to end, you know, from the time I went into training to the time I came out, it was Just dotted their I’s cross their T’s. And I really love that. And so, you know, I got to do what I loved, which was the day to day interactions with the customers, I got to, you know, work with my staff, I didn’t have to worry about marketing advertising, like we had our meetings and things like that, but they were, the brand was in charge of all of that, you know, and they look to me just to be that hands on guy, you know, right there in the community, the local guy, building the brand and really exposing it and, and doing a great job day to day, you know, executing.
Chad Franzen 5:33
So there was no mystery when you got in as to how you how to be successful. Basically, they kind of had had the processes lined out,
Michael Derrick 5:40
they, they pretty much said, here’s our operations manual, we’re going to train in every aspect of this, do what it says and follow the guidelines, and you will be successful. And I mean, I, I was just implementing it letter of the law. Right, right. Through the time that we started, it was amazing, because when we opened the first location, they walked in the corporate guys were all excited, because you know, we had the highest US sales ever for a new store that opened in the United States, when I opened my first location. And they were like, What did you do what you do? And they’re like, they walked in, and they’re like, Wow, this store seems like it’s been here for like years. They said, You know, it operates just like an existing, you know, store that that is, is pretty much like a corporate run store. And I said, Yeah, because, I mean, one of the things that I had got to do was my store got delayed, and about six months from opening. So during that period of time, I had left my, my job in education, I had no income coming in. And I was like, Guys, what do I do? And the management team said, you know, what, we’ve got corporate stores, we’ll put you to work in a corporate store. So when I came out of training, I went into a corporate store, and I learned all their ways of doing things. And so that like really advanced my, my set my skill level, to the point where when I walked in to my own location, I knew exactly what to do. Most people’s, you know, learning curve was about a year and a half with Tim Hortons. Mine ended up being about six months,
Chad Franzen 7:01
because, yeah, well, where was your first location?
Michael Derrick 7:05
It was in Cheektowaga in New York, right near the Buffalo International Airport, in Galle, near Galleria Mall, that kind of area. So what
Chad Franzen 7:13
was the first day of being open? Like apparently, it was apparently apparently different than other people’s first days.
Michael Derrick 7:19
Yeah, you know, it was very smooth. You know, back then they had a training team that would come in work with the staff, I already had my staff hired, I actually was blessed because we ended up having two Dunkin’ Donuts around us that shut down the moment that we opened up. They were like, they knew that once Tim Hortons came, they were done. And so we ended up taking on a lot of their employees. So I got some of their really good bakers. So yeah, I mean, at the time, it was a lot of experience people there and I remember even remember our first customer coming through and, you know, so excited for that guy that came through the drive through that day. And yeah, it was a great day. I mean, just very smooth running, had the donuts up on the shelf, by the time they were supposed to be there and, you know, just serve coffee and donuts all day and had a great week.
Chad Franzen 8:06
Was there ever a mistake or a pitfall or something that you ended up? You know, that ended up being a great learning experience for you moving forward?
Michael Derrick 8:13
Yeah, and, you know, the biggest thing that I learned was not to take on too much too quick. And I think the biggest strategic mistake that I made was taking on a that that store, that they offered me 30 days after I opened up my new one. And because with that also came a mobile operations business where we were supplying donuts to like three or three or four different gas station locations. And it was a lot to take on. And the problem was, is I ended up like, you know, going and hiring one of their corporate managers who came in, and, you know, corporate managers, they just, they’re not the same as franchisees. And so they didn’t, they acted corporately, like, you know, what was in what was in it for them, as opposed what was, you know, in it for the franchise and for the company, and they were more focused on themselves and having fun, and I get that that’s fine, great to have fun in your work environment, but you got to stay focused on growing a new business. And so what happened was, is that manager allowed things to dwindle. My other business was that I took on I had to go and spend all my time there. So I left my baby. And you know, I saw that actually dropping in sales. So I had to let that Manager Go. Go back and take over that operation. And thankfully, I did that because that really caused things to turn around quickly. And we ended up growing very rapidly. But yeah, I would definitely say is, don’t take on too much too quick, especially when you start a new franchise, really focused. At least get stay there at least a year to really dig in, get your customer base, get your employees trained properly. You know, I invested in the next manager that I had, that I promoted from within I spent about two and a half years training him and and staying on top of him too. He learned every aspect of the business and cooperated successfully. And then I had him for another 13 years after that. So
Chad Franzen 10:06
what would you say then would be the key to kind of successfully operating multiple locations like you ended up doing
Michael Derrick 10:14
structure, you really got to create a structure of management team and employees. So what I always would do is, before I would move into the next location, I would rapidly hire more people. And I would grew my management team from within, I very rarely went outside of it. I did do that once and was very successful. Got a manager who’s actually still there with my former partner who I sold the business to. But yeah, I mean, you really need to groom those people and train them in your philosophy. Because a lot of times, you know, when I came out of corporate, and, you know, their training and their philosophies, and came into the franchise, so I brought all that with me, but a lot of times people don’t have that, or they’re not really, you know, as focused on that. And so all of the operations that I learned corporately, I’ve instituted those with my team. So my team was very used to doing those things, so that when we transferred them and promoted them to the next situation, the next opening new location, we would then transfer that all the skill sets, everything we’ve trained them with that would go and then that would then get groomed with the next team. So yeah, I really felt like you know, training key positions in the, you know, in the organization. So from your baker’s to your customer service reps to your management and supervisors, you basically, you build that up within your mains training, I call them my training store, and then you move them out to the next opportunities. And so that’s what really helped us.
Chad Franzen 11:41
Great, what, what made you decide to move on and from Tim Hortons?
Michael Derrick 11:45
Well, Tim Hortons through the years, I mean, when I first came in, they had merged with Wendy’s. And that was a great, you know, family kind of environment. They were very, very similar. You know, it’s like, you know, everybody knew everybody, you know, you got together for meetings. I mean, we, and it just was this great camaraderie that we had. And then something happened. And then they decided to break away from Wendy’s because Wendy’s wasn’t growing. It was Tim Hortons growing. So they broke away, we became a private company, again, it was great. It was amazing. We went back to, you know, just family structure, everybody knew everybody, you know, they really cared about the franchisees, the franchise, you know, or was really focused, they said, if we take care of the franchisees the franchisees will take care of us. Well, they did say, you know, that there was the possibility that a, an equity firm had been buying up some of our shares and stuff, and that there could be a hostile takeover, but they were doing everything they could to prevent that, well, about 2016, I believe a company out of South America came in and, and basically did a takeover of Tim Hortons. And it was not good. Well, I mean, initially, it was okay. You know, they met with us, they said, Oh, you know, what is we’re going to keep everything the same as it was, you know, success is great, you know, we’re going to, you know, we’re not going to make any changes and all this kind of stuff. Well, what they did was they came in they, they didn’t make any changes to the franchise for like a year, but they wreaked havoc at at corporate, and they took away all of our, you know, consultants, all the people that we relied on, before, he knew that it just seemed like there was chaos there, while they were basically cutting away and trying to increase the bottom line, so that they can make their shareholders happy, and their upper level management so they could line their pockets. Well, then from there, about a year to a year and a half later, they started doing things behind the scenes that started affecting us now. I had profitability that was very, like off the charts, compared to a lot of the other franchisees, we averaged, you know, for Tim Hortons 17 to 20% in profitability. Well, we saw our profitability quickly dropped to seven and a half percent, because of things that they were doing behind the scenes. And this is where I really found out where the franchise or makes its money. And a lot of it is the backdoor goods, you know, they have, they changed a lot of that they upped the prices of things. So like, for example, if I get a box of cream locally, I could get a box of 18% cream for $17 A box, they were charging us $27. So things like that were very dirty and underhanded that they did. They at the time had control over our pricing. So we couldn’t you know up our prices and our labor was going up. And so it was like this just horrible tsunami that took place. And at that point, it got to December 2017. And I’m looking at my bank account and I’m like, oh my god, we’re gonna have to put some money into this thing to keep it afloat, as and my partner I had taken at the time said to me look if you know, it’s like we have to do something to keep this thing going. And I said well, and the other thing that can attributed to that was we had done two remodels that cost me $350,000 apiece, which were very expensive. And so we were paying a note that we weren’t paying before. Well, then it got to that place where I had to make a decision, like, you know, am I gonna go back to work as a manager in my own company, you know, running day to day operations? Or am I going to do something else and cash out. So, you know, at that point, she didn’t want to, she didn’t want to sell out. And I kind of felt like it was maybe time to do something new. And so, you know, we made deals, and I decided to step out of the company at that time. And, you know, she hung in there and it was pretty much a one partner business and it took a couple years and it took a lot of problems that corporate and franchise a lot of friction. They established a Franchise Association and kind of went to war with each other and thankfully, I wasn’t there for that, but from what I understand things have gotten better. But yeah, it was it was quite a trying time. Let me tell you, yeah, Wow, sounds