S2 E3: The Mathnasium Franchise: How One Couple Went All In
The Speers are natural entrepreneurs. From owning an automotive business to homeschooling, this power couple knows the value of franchising a great education product.
After watching one of their daughters struggle to understand mathematics, James and Jennifer Speer sought help with the Mathnasium teaching method. Impressed with the product, they created the first Mathnasium Learning Center franchise in 2011. And they haven’t looked back.
The Wolf gets into conversation with Jennifer and James about how they’ve expanded to 10 locations around Texas, why you should burn your ships and go all in, and why buying is easier when you get your first location right.
You’ll also hear why you should get to know your business inside and out and how that makes buying easier than building.
And if you’ve enjoyed listening to Franchise Empires, I’d be so grateful if you could drop me a 5-star review on Rate My Podcast. Thank you so much!
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LinkedIn: linkedin.com/in/james-speer-78432955
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Episode Transcription
James Speer:
We
Jennifer Speer:
Had people come and knocking on our door.
James Speer:
I literally just told a handful of people and one of ’em was my supplier that I was thinking about selling it, and I had multiple offers right away.
The Wolf of Franchises:
Amazing. Welcome to Franchise Empires, where aspiring entrepreneurs learn exactly what it takes to become a successful franchise owner. From one location to 10 and beyond, I’m the wolf of franchises.
Hey everyone, it’s The Wolf. Today in the show we have Jennifer and James Spear, the owners of and Mathnasium Learning Centers in Texas. Through our conversation, James and Jennifer speak about the benefits of burning the ships and how that helps you commit to your business venture. They also told me about why focusing so much on their first location before expanding has enabled a lot quicker growth. Now that they have the experience and knowledge of the business inside and out, and of their 10 locations, eight of them have been from acquisitions. So while building their first two locations help them learn the model, they explain why that’s now enabled them to grow faster via acquisition. I hope you enjoy the conversation.
Narrator:
The Wolf of Franchises is the CEO of Wolf Pack Franchising as well as a creator at Workweek Media. All opinions expressed by the Wolf and podcast guests are solely their own opinions and do not reflect the opinion of Pack franchising or workweek. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The Wolf Workweek and Wolf Pack franchising may maintain positions in the franchises discussed on this podcast.
The Wolf of Franchises:
So you guys own what? You just got your 10th, is that right?
Jennifer Speer:
We did, yes. June one.
The Wolf of Franchises:
And it’s all in Texas, right?
James Speer:
Yes.
The Wolf of Franchises:
Yeah. Okay.
James Speer:
Yeah, we did. For a brief moment of insanity, we did buy one in
Jennifer Speer:
I don’t count that one in la. I don’t. Don’t count that one. We own it for two weeks. Flipped it. Got out there. We went in. Ja. Well, James went insane.
James Speer:
It’s, it’s a pretty crazy story. James went insane. Insane. We won’t go into it on this.
The Wolf of Franchises:
Yes, let’s not <laugh>. Okay. I mean, I’m impressed that you were able to find a buyer within two weeks of starting owning it, but we can, that’s part of
Jennifer Speer:
The story as part of the story.
James Speer:
All
The Wolf of Franchises:
Right. Well maybe we’ll get there at the end or something. But yeah, I guess let’s start with the Texas locations. So when did you buy your first one? How long ago was that?
Jennifer Speer:
So 2011. Yeah, we started in 2011.
The Wolf of Franchises:
Okay. And what were you guys doing before then?
James Speer:
We had a automotive maintenance business. So it was a mobile auto service business.
The Wolf of Franchises:
And that was your own, or was that a franchise as well?
James Speer:
It was ours that we were looking to franchise it. We were looking to go to a multi-unit operation and then into franchising, but we ended up reeling back and then just buying into a franchise.
The Wolf of Franchises:
Okay, cool. And have either of you ever been a W2 employee or you guys kind of been doing your own thing for a while?
Jennifer Speer:
Yeah, well, yeah. We were W2 employees like a long time ago. Yeah. But we’ve been self-employed for 20,
James Speer:
Yeah, I’m 25 years. I was a W2 employee enough to save up to start my next business. I’m a serial entrepreneur. I was never going to work for I, whenever I do work for somebody, I was always the best. And I always excel excelled really quickly into management, but it was always just to save money to start my next venture.
The Wolf of Franchises:
Gotcha. And so when you moved from the automotive business that was your own, did you guys sell that or retain it when you went into Mathnasium?
James Speer:
No, no, no. Originally my intention was to retain it because it was doing so well, but we worked as a team. And to have her come out of the business and have to replace her, I was almost going to have to double the business in order to make it worth it. And so with that, and
Jennifer Speer:
Plus then growing the Mathnasium, we had split attention and so weren’t, weren’t going to be able to focus in the same place.
James Speer:
And so it broke our heart to have to sell the baby.
Jennifer Speer:
I cried. I did, I cried. It was terrible in the day. But you know how sometimes things just happen and it’s right because it falls into place. We had that business sold within two weeks.
The Wolf of Franchises:
Damn, that is quick. Impressive. Did you use a broker or was it all off market deal? We
Jennifer Speer:
Had people come and knocking on our door.
James Speer:
I literally just told a handful of people and one of ’em was my supplier that I was thinking about selling it, and I had multiple offers right away.
The Wolf of Franchises:
Amazing. And when you moved from that business to Mathnasium, was there any hesitations given that you guys were the sole owners of the automotive business and moving into a franchise, right? I mean, you got to deal with the franchisor, you got some royalties. I mean, how was that palatable to you guys?
James Speer:
Well, when you’re buying into a franchise, you’re buying into business systems that have been proven. And after going through the startup process and building it and running it for 10 years, I mean, we understood what was involved in the process of building a business from scratch. And so buying into a business system that was already developed, that already had the product and service already in place that I didn’t have to worry about perfecting or making it my own, that was attractive. Now, was it worth 10%? I mean, that’s always the struggle when you’re looking at a business model and they want to take their piece. You are always questioning is that worth it?
Jennifer Speer:
But for us, when we started researching, and James is the one that found Mathnasium in the first place, but when we started researching it, we fell in love with the mission of, Hey, kids are struggling with math and how can we help? We want to be able to help and uplift and make these kids lives better. And that hit hard with me. And so we just pushed hard. It was nice not having to come up with all the systems and not have to having to do much thought work. I mean, there’s still a lot of work on our end because you’re still a business owner, but just not having to think of the curriculum come up with all this curriculum, it was already there. That was worth it for me.
The Wolf of Franchises:
Yeah, it’s interesting. A lot of business owners I speak to who are small, independent business owners versus franchise, they normally hesitate and have a lot of just worries about getting into the franchise, mainly because they’re used to doing things their way. They don’t have to pay a royalty. But this is kind of the first time I’ve heard, if I kind of understood both of you correctly, where because you ran your own business, you actually really appreciated and could resonate with the fact that Mathnasium has already done a lot of the hard work because you had to do that yourself with the automotive business. And it seemed like that kind of actually helped you along into at least getting into an industry probably, right, that you didn’t have prior experience in.
James Speer:
One of the other things, when you start up a business on your own, you can have a big ego and you can think that, okay, I can do this, I can do it anywhere. And a lot of people go from small business into franchising, and that’s one of the things that brings them down is that their ego gets in the way and they don’t allow the system to be able to work. And outside of this, I’ve got an advertising agency where I serve the franchise. And what that does is that puts me in conversations with hundreds of other franchisees. And so I get to see a really different perspective, kind of your perspective in conversations with hundreds of different mindsets and personalities. And the ones that I see that perform the best, I can usually spot ’em a mile away because in their mindset, it’s about letting the system work, the system that’s come before ’em, letting it work, and then just applying themselves to it. The ones that tend to struggle are the ones with the larger egos that think that I’ve been the president of this, or I’ve excelled here, I went to this university going to ace this. And
Jennifer Speer:
They don’t submit themselves to
James Speer:
The system. Two or three years later, they’ve bled out their capital and are sitting in a position where they have to submit themselves to the system in order to survive.
The Wolf of Franchises:
Yeah, yeah. No, I definitely think, especially with a franchise, Mathnasium really had incredible, at least system growth, I mean thousand plus units across the country today. And it gets to a certain point with a franchise where if there’s that many locations and the average on the average franchisees are performing well, that it behooves you to just trust the process there and follow the system. Because a lot of the times, and I’ve heard this, people will suggest ideas or try things, but at a certain point the franchisor will say no, because they’ve already done those things and they know, Hey, this actually doesn’t work. We see why you’re thinking that. So yeah, I hear you. And that’s kind of, I think probably a personality. I think the lesson there is if you’re thinking of getting into franchises, just make sure you have the personality to kind of, like you said, follow the system and not want to do things your way because you can’t get into trouble. For sure. So when you got into Mathnasium too, I heard Jennifer speak about how you guys fell in love with the mission, but was there anything else that made Mathnasium stand out? Cause I mean, there’s thousands of franchises in the country. It’s a long, if you’re not sure what you’re doing, you can get kind of lost in all the options out there. So how’d you narrow it down
Jennifer Speer:
So well, because we needed help. Why? That’s how we found we had our own business. We were self-employed, but we weren’t tied to a location. We were mobile. So we had a pretty flexible lifestyle. And at the time, we had two daughters as well, and I homeschooled them because with our lifestyle, there was no way I could actually send them to school and be able to pick them up after school in a timely manner. So we homeschooled them up. Other reasons to, but that’s what we decided to do. And I love math. I get math. I understood math. And for my first daughter, math came easy for her. I could put math in her and it stayed my second daughter, on the other hand, not so much. She and I butted heads. I could not put math in her head and make it stick. And we would fight and we would scream and we would yell and we would cry. And so
James Speer:
As a husband, that’s a fixer. I like to fix things. I did my thing. I’m hammering away on the computer trying to figure out how can I solve this problem?
Jennifer Speer:
And as homeschoolers, sometimes it’s as just as any easy a fix as switch curriculums because you’re not stuck with one curriculum that you have to, can do whatever you want. And so I was looking at other curriculums, but I’m like, Nope, this is not going to work. I don’t like this. I don’t like the way they did this. So I kept going, but it was not fun at all. And the more I tried, the more she resisted,
James Speer:
Like the old saying, you can’t be a prophet in your own land. But I realized that we had to find outside help. And I started looking and I found the business model, but there was nothing local. It was in Houston,
Jennifer Speer:
Which was an hour and a half away from us. We lived in bc, Bryan College Station at the time.
James Speer:
And so I showed it to her and she’s like, oh, okay, that’s nice. But I’m like, no, no, no, no. Look at it again. But as a way of transitioning out of our automotive business and into,
Jennifer Speer:
No, that’s not what you said originally. You like, this system works. He’s reading reviews, this system works. We need to go talk to them and see will this work for Michelle?
James Speer:
Well, that’s what was going on in my head, but that’s what
Jennifer Speer:
Came out of your mouth to
James Speer:
Transition
Jennifer Speer:
Out your mind, his mouth. Okay. So we go, I’m desperate. And so we go visit and we spent two hours with the owner in the Woodlands, a wonderful guy. And we are so grateful that he took the time to talk to us as parents first, his parents. But then James started asking the businessy questions about the franchise and what did he like about it, what did he not like about it? And so on our way home, then our conversation went to, okay, why don’t we have one here in Bryan College Station? Because we have Texas A and huge engineering school, and they need math people. We could find math people to be instructors. And so we kept poking at it and we contacted Mathnasium and got in, so the initial discovery, discovery day. And so we went and visited. And at that time, they were like in year seven, I guess.
James Speer:
Yeah. So the, yeah, the C e O, the president and the director of education, they were in the office with
Jennifer Speer:
You. It was all that personal attention because it was small. And so I fell in love with Larry. I mean, the way that we teach percents after I heard that I’m
James Speer:
Take my money here,
Jennifer Speer:
Here’s a check <laugh>, take it because it’s so pivotal. And the method is so simple and it just makes so much sense. I have had so many parents say, why don’t they teach this in school? And yeah, I don’t know.
The Wolf of Franchises:
It is and I’m not asking for it. Cause I know that’s kind of like the secret sauce of Mathnasium, but it is like a proprietary training method. Maybe I’ve heard vaguely the story, but do you mind giving some background just cause I know it’s a founding of three and they all had different expertise. One of them was a teacher, right?
Jennifer Speer:
Yes. Right. Yeah. Larry was a teacher, and more importantly, he had, his son was so gifted in math, he’s trying to upper level math concepts to a kindergartner where a lot of times a kindergartner, this would be 4, 5, 6 years away from us, away from in the learning process. But he was trying to understand those things, so he had to find ways to explain it so that it made sense, not just the technical terms, because there’s too much unpacking that needs to be done.
James Speer:
So something basic, if you were to try to explain to as an adult, if you were to try to explain the concept of half to a second grader, a seven year old,
Jennifer Speer:
Or even a kindergartner,
James Speer:
They can understand it, especially if they have siblings. But something as simple as just saying two parts the same.
The Wolf of Franchises:
Yeah, I would talk about cutting a peanut butter and jelly sandwich and a half or something like that,
Jennifer Speer:
<laugh>. Exactly. But you used the word half in your explanation, and if you didn’t know what half meant, it doesn’t make sense.
James Speer:
And so using, having to use the vocabulary of the kids at the level that they’re at, I mean, that’s one of the key aspects of why the system works as well as it does, is because we’re gauging where the students are and trying to understand how they learn and what their capacity is at that moment. And that goes to why we kind of fell in love with the mission and what we do is because we saw so much success so quickly. And the reason behind it was Larry’s method, Larry I, and if you go to the mathnasium.com website, they’ve got a video where it’s Larry talking in his own words about where he came from. That’s his story and what he’s done. I mean, I’m not going to try to rehash that here, mean he does it so well, but his son passed away and so this became his legacy.
The Wolf of Franchises:
Yeah. Wow. Did not know that. Yeah. Yeah. I mean, that’s powerful. And I mean, kudos to them. We can talk about it later, but I know they had an acquisition recently, so that was probably a special moment to have just built something so incredible in the last 20 or so years. But yeah, I mean, I’ve heard from, I’ve spoken to a number of franchisees through past work, and everyone seems to really align with that mission. So I feel like that’s probably got got to be coming through and coming down from the top with Larry, which is pretty awesome to see.
James Speer:
And if you’ve spoken with the CEO and anybody in leadership at Mathnasium, the heart is really what comes through.
The Wolf of Franchises:
Yeah, it seems like just a lot of passion from everyone involved, which is great. And just looking at when you purchased that first Mathnasium and built it, a big question a lot of people have is kind of like, how do you get that first one? And I feel like that’s the hardest typically. Right? And for people who don’t know, Mathnasium is actually on the lower end of the investment spectrum compared to a lot of brick and mortar franchises. I believe it’s around a hundred to $150,000 investment range. So compared to other guests I’ve had in this show, five Guys, which can be over a million dollars. This is on the lower end. Did you guys get SBA financing? Did the sale of your business help or how did you go about it?
Jennifer Speer:
Yeah, we had some savings and then the sale of our business, and then we just worked ourselves hard.
James Speer:
When you burn a bridge, when you burned your ships, there’s no backing out, and so you’ve got to be successful. And so we just went all out. We did everything we could in order to be successful.
Jennifer Speer:
I mean, there was actually one point in there after we opened up our second center that James went back and got a job because we were just having trouble making payroll and paying our bills at the same time. So we just did what we had to do to make it work.
James Speer:
Now our staff didn’t know, we don’t brag about that, but I just wanted to make sure that everything was covered. But on top of that, if you don’t build yourself a position in the company to where you’re actively working every day, then you can either become a distraction in your company or spend money. And I couldn’t afford to do either one of those things
Jennifer Speer:
Or undermine the people that you’ve hired to, you know, don’t allow them to do their job. And that’s probably one of the more dangerous ones.
James Speer:
And so instead of sitting at home and watching Netflix and reading to the end of the internet, I decided what, lemme just go get a job. And I did that for how long?
Jennifer Speer:
Two years buddy? Year and half. Year and a half. Year and
James Speer:
A half. And not necessarily to make money, I mean I did, but it was to keep me out of the way of messing things up, but also just to make sure that things stayed financed, things stayed running.
The Wolf of Franchises:
Interesting. So when you first started with that first location, I mean, what was the role set up? Were either of you in there being the primary teacher?
Jennifer Speer:
Not necessarily the primary teacher, but I was the director. I was the one that was running the center. I would talk to the parents, assess the students, get things going, train the instructors. So we started out with the staff of three or four and grew from there. But I ran that center for three years.
James Speer:
Your primary focus, whenever you start your first unit, your first location is understanding the business systems. I mean, how to run the business effectively and efficiently and to get it right, because you can really build in some broken systems and not even really know it. And the way that our system works in education is on a consumer side, the conversation changes throughout the school year. And so what’s important to a parent right now as we’re going into summer, is not the same thing that’s important to them in October. And so going through a full year cycle, you have a better understanding of what your consumer’s needs are, and you can address it. So if you grow too quickly, you may not have a full understanding of what your product and service is and how to best service the customers. And so what we set out to do is to master number one, get number one that way. And if we went to number two, our goal was to have 10 units in 10 years.
Jennifer Speer:
Originally that was James’s initial goal.
The Wolf of Franchises:
And you hit it, right?
James Speer:
I know. 10 years, 11
Jennifer Speer:
Years, 11 years, 11.
The Wolf of Franchises:
Hey, we’ll take it. Still pretty awesome. But I mean, I can hear the experience in both your voices as you’re talking about it, the difference between SA months and October. I mean, just for me not being intimately familiar with Magnesia, and that’s not on my mind. So how long was it? How long did you operate location number one before jumping to the second one?
Jennifer Speer:
So we opened number one in August of 2011, and then we opened number two in April of 2014. So it took us about three years, but we really were trying to focus on making sure that we got the first one. And in that process in the last year, it was okay, now if we’re going to be moving to multicenter, what has to be different? Because having one center versus having two centers is hugely different. And sometimes people don’t realize that you’ve got to build in communication skills, a lot of communication processes because me telling my center director, Hey, do this. They may hear something completely different. I’ve got this picture in my head of this is what they’re going to do, but that may not be what they picture it doing then. So they do it their way thinking this is exactly what Jennifer wants. And I’m like, what are you doing that’s not right? And it’s not their fault because I didn’t communicate clearly enough and that it took a lot of trial and error to figure that out.
The Wolf of Franchises:
I think it shows patience that it was close to three years before you moved on to a second location,
James Speer:
Especially if you have a goal of 10 and 10 years. I mean, that weighs on you.
The Wolf of Franchises:
There’s like some urgency there.
Jennifer Speer:
We just knew that if we duplicated broken processes, it was going to be harder to fix it on the back end. Either that or we wouldn’t even get there because it would all fall apart. Yeah,
The Wolf of Franchises:
No, definitely. And so
James Speer:
In order to get to 10, you have to realize pretty quickly that you can’t be the show. You can’t do everything. And so we had to document everything that we did so that we knew what we were doing correctly and we knew where we needed. And the other thing is just knowing your numbers, charting everything out, understanding, benchmarking, baselining so that you could see if you made a decision, if it took you the wrong way, you knew quickly and you could back it out and you can go the other way. And so understanding early on in the business, I mean, it’s a math business. If you’re not watching the numbers, you’re pretty crazy.
The Wolf of Franchises:
A good point. Yeah.
Jennifer Speer:
Numbers, my mantra is trash in, trash out. So if Essent, oh yeah, just split that up evenly between if I’m trying to allocate something split up evenly, no, it didn’t go. I need to know because I know it didn’t go evenly. Kobe knows he’s a victim of my trash in trash out speech.
The Wolf of Franchises:
Gotcha. So when you get the second one in April of 2014, did you have the systems in place to operate two or did you get the second and then it was like, oh God, what? This is way harder.
James Speer:
We had
Jennifer Speer:
The most of them in, but
James Speer:
We had what we thought we needed.
Jennifer Speer:
We made adjustments
James Speer:
And we realized pretty quickly that going from one to two in a business this is a lot. Getting punched in the face and not seeing it coming. There was so much that we didn’t know that. We didn’t know that we just had to be ready to pivot and move quickly and to understand that failure was part of the process. We’re a big proponents of failure’s, not fatal. Just keep moving and understand that it’s part of the learning process. I mean, that’s what we teach our kids here at Mathnasium is that failure’s, okay, this is a place where it’s safe to fail because that’s part of the learning process. And you have to fall down a few times before you can walk normally
Jennifer Speer:
To build your confidence. And I think for us, okay, we know we’re going to fail, we accept that. And then the next question is, how fast do we get back up and pivot?
James Speer:
How fast can we learn our lesson? How fast can we get back on top?
The Wolf of Franchises:
Yeah, and I mean, what kind of challenges, just from a higher level, did you fall into with that second location? Were you understaffed? Was, I don’t know, maybe you felt like you were stretched thin on marketing for the second location? What was going on?
Jennifer Speer:
The biggest thing was the fact that Brian College Station is a twin cities. And so our first location was in Bryan. The second one was in College Station. Well, the
James Speer:
Reason the first one was in Bryan is because there was no commercial locations in College Station unless you needed a grocery store.
Jennifer Speer:
So that needed to grow. But when we opened our college station location, we ended up gutting the Bryan Center. It had a hundred students. When we opened College Station, we took half of those students to College Station because they were actually coming from college station.
The Wolf of Franchises:
Wow. So
Jennifer Speer:
Instead of having a center that’s running great, and then one that’s growing, then we had two that were like, oh. So that was challenging, but we were able to grow the college station center fast enough to overcome that.
James Speer:
Well, this is also about the same time that I decided I need to get a job. Yes.
Jennifer Speer:
We needed help with our own personal bills.
The Wolf of Franchises:
You effectively doubled your fixed costs with a second location, and then you just cut the performance of the first one in half. Wow.
Jennifer Speer:
Exactly. We did, and we knew that we were going to end up cutting into the first one, but we didn’t think it was going to be that bad.
The Wolf of Franchises:
It was more severe than you anticipate. So what was the remedy? You just really dialed in the marketing efforts on each location, and eventually it rose up over time,
James Speer:
Dialed in the marketing efforts, but also understanding how to segment the business enough to know where our weaknesses were. I mean, we were doing SWOT analysis all the time. Were you doing looking at strengths, weaknesses, opportunities, and threats? So where we knew exactly where we needed to be working based on the highest priority, we didn’t try to boil the ocean. We didn’t try to do everything at the same time. We just, okay, what is the highest priority? Let’s focus there and fix that. And then we move to the next highest priority
Jennifer Speer:
Because it’s a long process from parent needs help with math homework, to, we’re sitting in a chair in front of a center director doing an assessment, a pretty good time gap there. And there’s a lot of pieces that go into it. And so we had to break down from parent getting onto our website to actually contacting us, what’s that right there? Or how many people are we losing? And then once they contact us, what’s our booking rate? Are we getting them for an assessment so we could work on that number if that number was off? So we had to set so many benchmarks along the way. We can take a look and know exactly if something’s broken, okay, we need to fix this little bit here. And not trying to fix the whole thing.
James Speer:
A lot of times people in a sales process, they’ll say, I’m getting in leads, but my closing rate is 20%, 30%. And they think that they got to fix their closing and they don’t have any clue. And that’s a conversation I have a lot with other franchisees, and when I work with them on segmenting out their business, they find out that, well, maybe they just need to work on their phone skills on getting more people in or refine their process on the assessment. And maybe they need to be more articulate in the assessment process. So
The Wolf of Franchises:
Yeah, definitely. I have a sales background myself, and I think mean there’s so many variables in a deal process, maybe you’re getting a lot lot of leads in, but if they’re not the right leads, they’re not high quality, maybe you need to focus on your targeting of leads. And the issue could be at the top of the funnel, middle of the funnel, bottom of the funnel, you really got to think critically to figure out what’s going on well. So when you get the two locations, you know kind of work through it, they’re performing better. I’m curious, geographically, how far was the third location from the other two? Did you just say, let’s get far away so we don’t have that issue again, or
Jennifer Speer:
No, actually, we had our franchise business consultants, and so that’s our liaison from between us and our headquarters. He said, have you guys ever thought about buying one? And we’re like, I don’t know. Tell me what you got. And there was a owner that was an hour and a half away from us, he’s wanting to sell, and I thought about you guys first and we’re like, okay, well, so we thought about it. And pros, cons, all that stuff. We always analyze everything before we jump in. Don’t, I know sometimes for our staff it looks like we’re going crazy and just doing all kinds of stuff, but we do think about things on the back end a lot. And so we decided, you know what? Let’s do this. I mean, this will be our next step because we’ve built two of them from the ground up, and it’s a long, hard process. It’s not easy, especially where we were, nobody knew who Mathnasium was. They had never heard that before. And so when we would go out to marketing events, it would, they’d be like, we we’re and Jennifer with Mathnasium, and they’re like, math, what do you guys do? Yeah. So we were having to build that brand, and that takes a long time.
James Speer:
And so the location that popped up is an hour and a half away center that was underperforming. And we realized pretty quickly what the weaknesses were. And we saw that everything that we’ve done to this point, we knew that we could bring a lot of value to that location. And so we acquired it and we found out that buying a resale really compressed everything into a shorter amount of time, and we were able to make money so much faster. And so we ended up moving that to a different location and that accelerated its growth. And we realized, okay, we have a system, we have a process,
Jennifer Speer:
And we know what we’re looking for. We were starting to learn that if a center is having trouble here, here and here, we know how to fix that. We just put this in place and we can fix that. I think we decided from now on, we’re not going to build any, any from scratch. We’re just going to buy resales.
The Wolf of Franchises:
Interesting. And so, so first two locations, were new builds. The third you acquired, and has every single one been an acquisition since
James Speer:
Everyone has been in an acquisition since now? We have given some consideration to building again, but it’s not going to be our primary focus. We’ve been able to specialize in centers that have been struggling, and really, it’s kind of our comfort zone now. We know the value that we can bring and we know how to identify areas of the business that are broken. And so when we go in and we’re analyzing what’s going on, it’s gotten to be pretty routine for us. I mean, we’ve acquired three locations in the last six months, and every single, well, I mean one we just bought a few days ago, but the two previous, they’ve already seen significant growth. And so we know that our systems are working. And more importantly is the people that we’ve built up as a supporting organization that support each one of the centers are such high quality that nothing can fall through the cracks. And we’re watching all the numbers all the time
Jennifer Speer:
Now. Once after we got that third one, our next step, we bought two at the same time. Yeah, yeah. We were crazy. Yeah, we were like, why not? Why
James Speer:
Not three hours away,
Jennifer Speer:
Three, yeah, three hours away.
James Speer:
Great idea.
The Wolf of Franchises:
Oh boy.
Jennifer Speer:
Yeah. So we try to step things up as we go. We like to keep things the same. Yeah,
James Speer:
There’s, there’s this thing, don’t go where you’ve already grown out of or where you’ve already outgrown. I mean, that’s been our thing is let’s continue to stretch
Jennifer Speer:
Ourselves, keep growing. But at that point, we had to rethink our structure and how we were doing things, because when we got there, it’s like, okay, we can’t do everything on our own. So we had to start segmenting things and put specialists in place. And our first one was our lead specialist. Amanda, she’s amazing on the phone. She is the poster child for <laugh> for what a parent should hear when they call Mathnasium. She’s amazing. Yeah.
The Wolf of Franchises:
That’s awesome. Given the mix of buying versus building, if you could go back w, would you start acquiring locations from the start? Or do you think that the learnings from having to build things from scratch were just too invaluable and that’s why you’re able to acquire and turn these locations around?
Jennifer Speer:
Absolutely. We had to learn what we didn’t know, and we had to figure ourselves out buying into a franchise, into Mathnasium. They had systems and they had processes, but we had to figure out what worked for us too. Because sometimes some of the things that they had in place, we were like I think we could do better here. So we were always trying to improve and make things better, and we had to go through that struggle to figure that out. If we would’ve acquired one, we would’ve fallen into this is what they’re doing type of scenario. And I don’t think we would’ve been nearly, we would not be at the place we are right now because of that.
The Wolf of Franchises:
Yeah, no, that’s fascinating. And it’s such a classic debate in small business, but franchises are a little different, right? C and I’m talking about the buy verse build. I have a book right here, it’s called Buy Verse Build. It’s part of the bible for small business owners. But franchises, even though if you’re buying a franchise, you still have to, as you guys did, build it from scratch. But it is a little different in that it’s a replica model and you already have proof of concept out there via however other many locations there are. So to me, it’s a little bit of a different argument than just, should I start my own coffee shop or should I try to find one in an independent one in my market that’s up for sale and already as cash flow? But it’s always interesting to hear for you guys, it sounds like you’re very much now on the path of, hey, acquiring is easier versus building. And I’m curious, did you ever, at a certain point, at a certain number of locations, kind of just say, okay, we’re rolling, we know what we’re doing now let’s just like we know the playbook and we’re still going, was it four locations, five, six? At what point, if ever say, all right, we got this.
Jennifer Speer:
I think once we had five locations and we adjusted our structure to have the support staff that we needed in each of our places,
James Speer:
It kind of goes a little deeper than that. You have to make a decision, are we going to stay at five or are we going to grow beyond? Because if you are going to continue growing, then you got to make sure that you have a supporting structure in order to continue to scale. And then you’ve also got to build that supporting structure so that it can scale and it doesn’t get it. It doesn’t become the bottleneck. And so instead of building the typical corporate structure, we decided let’s just rethink this whole thing. And so what we’ve done is we’ve built a group of specialists, so it’s not a hierarchy. Corporate structure you would normally see is a collection of specialists that’s interdependent on each other. So Colby here is, he’s our marketing specialist, but he is interdependent on other members of our team in order to be successful at what he does. He doesn’t answer to ’em, they don’t answer to him, but they need each other and they
Jennifer Speer:
Work successful. A synergy there when they work together.
The Wolf of Franchises:
That’s interesting. Yeah. Cause I mean, a lot of these multi owners that I talk to that the typical just general structure is a manager per store and then an area director that basically oversees maybe three to six stores regardless of the brand of the industry. That seems to be just how the corporate hierarchy goes for these multi-unit operators. But sounds like you guys aren’t doing that. It’s a little different.
Jennifer Speer:
No, we know we aren’t. And one thing that we realize is the director that’s sitting in the chair, we ask ourselves, what’s their responsibility? What do we want them to be excellent at? And it’s creating that culture that’s in our center. It’s speaking with parents, it’s enrolling students, it’s making sure students are happy. It’s student retention. That’s what we want them to focus on. We don’t want them necessarily to focus on getting, going out and doing marketing events. Now they do go out after Colby has set them up, but they just show up. They don’t have to do a lot of the legwork. We don’t want them to have to worry about training the instructors. They’re a part of it, but that’s not their main role. It allows them, again, to specialize and be awesome at a couple of things. Being nines at three things versus being sixes at 10 things.
The Wolf of Franchises:
Yeah, no, definitely. It’s really important. And sometimes being a generalist is better, sometimes being a specialist is better. So that’s a creative way though, to structure the organization that that’s pretty interesting. I know you guys just acquired your 10th location within a few days, so you’re, not to put you on the spot, but any plans for the future to more Mathnasium, other franchise brands? Or your goal was 10 locations? Is that you think you’re happy with this?
James Speer:
No, I mean, in the beginning it was 10 and 10 years. That was the target, and we’ve achieved that. But you really, if you have something that works and you want to attract the best talent possible, you’ve got to be a growing, thriving organization. And in order to keep that going, I had to set a vision for our group that was much bigger and for a couple of different reasons. One, I wanted people that came into our organization, whether they were at the bottom level instructors or whether they were in management. They needed to know that there was a place to grow too, and that there was always going to be a place to challenge them. The other thing is that I knew I needed to challenge our thought process and mindset. And if I set a number out there that what I thought could break our systems, that’s what I needed to do.
And so I put a number out there, I said, all right, let’s do 40 within the next 10 years. I think that probably is too small, but it was big enough to where I thought it would break our current systems and processes to the point where we had to rethink everything. And once our team got over the shock of that and realized that I was serious, and on top of that, what would it take us for us to acquire five centers simultaneously? Again, it’s scared the fool of out of our team, but if we go through the mental process of that acquisition and of that growth, then there are no tires on a football field during a game. But during practice, they’re flipping and dragging tires. But if you practice hard, then you can play fun. And so that’s where we’re at now, is we’re going through the mindset of building that, going through the thinking lifting process. Then we know that whenever it’s playtime, then we’re going to be playing fun because we’ve already built it in our minds.
The Wolf of Franchises:
I love that. I think that’s a great quote. If you practice hard, you can play fun. And yeah, there’s, I’ve been getting into Navy Seals and there’s this guy, David Goggins. Oh
James Speer:
Yeah, extreme ownership, right? Yeah.
The Wolf of Franchises:
Jocko Jocko. Big fan of him. But yeah, there’s some quote, I don’t know if it’s from one of those guys, but it’s like, it says you don’t default to your potential, you default to the levels of your training, which I think that kind of speaks to the philosophy you guys have, which is pretty cool. Well, alright. Hey, we’re coming towards the end here. So last question I want to ask is, I know Mathnasium had, it just got acquired at the end of 2021. And again, for those not familiar a thousand plus locations across the country, the acquisition amount was not disclosed, but you can imagine it was a very large amount. We’re talking high eight figures, probably possibly low nine figures. And it was RO Capital who bought ’em, who owns brands like Dunking Donuts Baskin Robbins, Carvell, Cinnabon. They’re very involved in tons of different franchises. So I want to ask, have you noticed a difference, because it’s a big fear of franchise owners is that if they’re going to buy a brand and then there’s an acquisition, the ownership changes, I’ve just known that’s a fear. Has it been smooth as far as you guys can say, given that you’ve been on both sides of the different owners
Jennifer Speer:
So far? Honestly, we haven’t seen too many changes coming down the pike at us.
James Speer:
There was basically the things that we noticed that stuck out ahead of time were there was a brand refresh and some billing changes
Jennifer Speer:
Like minor bookkeeping adjustments that had to be made that they wanted made but nothing major yet. And we have a pretty really good relationship with members of Home office and with our franchise business consultant, and they have not expressed any concern yet. So we don’t really think there’s a need to be concerned.
James Speer:
I think members of the organization that did Fear have left, and I think that we’re in the process of rebuilding those parts. But really just looking at the brands that Rourke has and the growth that they’ve seen, and some of our new stepbrothers and sisters other business owners, I’m kind of excited about the future because seeing how Rourke has combined different brands like Duncan and Baskin Robbins, and there’s Cinnabon and Slosky combined and teamed up brands, and one of the aspects that I’ve always been troubled with on this brand is that we’re open five hours a day. We pay rent on a location in a retail location 24 hours a day, but we’re only able to use it five hours a day. So it’s not like I can open a deli here or a yoga studio. Yeah. So it’s a learning center, and so that has to be done after school. But seeing how Primroses is one, the brands that’s brand, what are ways where they have a vision of teaming up with that brand. So those are questions that go through my mind as I’m looking down the road and trying to think creatively as to how this can impact us. I’m really excited about the direction.
The Wolf of Franchises:
Yeah, no, for sure. And well, one of the first guests I had on the podcast was he owned six Mellow Mushroom Pizza franchises, but he talked a lot about this concept of unused capacity and just trying to find those in his business so that he could maximize his capacity. And for him, he noticed that as a pizza shop, they were opening at 11:00 AM but they weren’t really making money unless it was peak lunch hours or peak dinner hours, and he ended up building a massive catering revenue stream. So then as soon as they came in the morning, they were just prepping orders that were going to go out at lunch because he was paying rent at that time anyway. He had staff members in rather than sitting on their hands. Now they’re making pizzas to go out at lunchtime. So yeah, that’s interesting. I wonder there’s probably, there’s got to be something you can do there.
I mean, off the top of my head, I’m like, with the whole work remote movement, you guys probably have a lot of open desks. Maybe there’s a co-working play there. I don’t know. It’s not necessarily collaborating with another brand, but that’s just something that popped into my head. But yeah. Well, hey, look guys this was super cool to talk to you and learn your story. Really appreciate you coming on. If folks want to follow you along, is there anywhere online, maybe it’s Twitter or LinkedIn or somewhere where they can kind of reach out and just watch you grow?
James Speer:
I mean, I’m on LinkedIn, it’s James Spear on LinkedIn. Jennifer stays pretty incognito, so good luck finding her. I might find a picture
The Wolf of Franchises:
Smart website. Very smart.
James Speer:
Yeah, I’ve got progress of our growth on there and if they want to reach out I’m available.
The Wolf of Franchises:
Love it. All right. Awesome. Well we’ll link to that profile on the show notes. And yeah, thanks for again, for coming on guys. We’ll talk soon.
James Speer:
Awesome. Thank you for having us. We had fun.
The Wolf of Franchises:
Thanks for listening to Franchise Empires. We’re coming to you soon with actionable insights to take the next step on your franchise journey. So make sure to subscribe on Apple, Spotify, Google, or wherever you listen.