S2 E7: Sylvan Learning: How Mike Kelley Ditched Corporate and Became a Multiple Franchise Owner
Mike’s franchise journey is a fascinating one. Find out why he left his corporate 9-5 to open multiple Sylvan Learning Center locations, via Chick-a-Fil and senior care.
When corporate life is sucking your soul away, it’s time for a change. Now a franchise owner of 10 Sylvan Learning units, Mike shares his story.
The Wolf and Mike dive right into how he left his job to work in the family jewelry business, why he turned down a Chick-a-Fil franchise, and how he ran two brands before optimizing for Sylvan Learning.
You’ll also hear why being a franchise owner plays into Mike’s ambitions of working less, earning more, and why he values a hierarchical structure.
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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Episode Transcription
Mike Kelley:
The first brand I started with actually was Chick-fil-A, and always read so many good things about ’em. I knew they were this elite brand and franchise, and it just intrigued me, their whole model. And they were the first one I went down the path with and they were very intense. Everything was really intensive. It really was. And that company doesn’t miss a beat when they go through the ride with you. Even the final interview, which I’ll get into it a bit, but she even told me, she’s like, A lot of people don’t even get to this point. So she’s like, you should pat yourself for that. And I was like, well, yeah, I had no idea. I just like Chick-fil-A because I loved the brand and I knew how solid it was, and I knew they had this amazing elite name. So it was an 18 month process for me when I started it.
The Wolf of Franchises:
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. Today on the show we have Mike Kelly. Mike started out in the franchise world by going through an 18 month process with Chick-fil-A, which he ultimately bowed out of. Then he bought a senior care franchise, which he later sold, and now he owns 10 Sylvan Learning Centers and works about 15 to 20 hours per week. This is an awesome conversation about multiple brands and franchise industries that you’re going to learn a ton from. Hope you enjoy.
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:
I mean, so you all 10 Sylvan Learning Centers today, but can you just bring us back to the beginning from where this started? What were you doing before you first even were looking at franchises? Yeah,
Mike Kelley:
So I originally came from the corporate world. I worked for Wells Fargo for a number of years, and I worked my way up through the business banking world and the corporate world just sucked the soul out of me. And I went in every day, did the nine to five thing, did the banker’s hours, and to be honest, it sucked the soul out of me. So I was looking for something more, something I could really sink my teeth into. And I got involved my wife has a family jewelry business, and I got involved with them and they said, Hey, come on over. We could use some smart heads and something different. We’re a small family business and I’m sure we could utilize you. So I came over there and it got a taste of the corporate world. And then I got a taste of the small family business dynamic, and that really kind of shaped my experiences and my skillset to be honest, and ultimately led us to the franchise side to look for something bigger and to scale. So my roots are the corporate world and then right down the small family business.
The Wolf of Franchises:
And when did you decide to go franchise versus you’re owning jewelry business? Did you ever think, oh, okay, I love this small business ownership thing, but let me go start my own versus buying to a franchise?
Mike Kelley:
Yeah. So five years ago, this is when it all started on the franchise side, and we were at the point where we were like, do we want to scale the jewelry business or do we want to look at something on the franchise side where we don’t have to reinvent the wheel? And it already has its own systems and processes and brand. And what I landed on is I loved, we’re an hour north of Minneapolis in a town called St. Cloud. I loved Minneapolis because it’s this huge market and I knew it had this ability to scale multiple centers or locations, and I’ve always wanted to do business in Minneapolis. So that’s where I started looking for franchise opportunities, an established brand and systems and processes so I didn’t have to reinvent the wheel and something that I could scale in Minneapolis. And that’s how I got involved. And I just started interviewing franchises and diving into that whole world.
The Wolf of Franchises:
And what brand did you first start with?
Mike Kelley:
The first brand I started with actually was Chick-fil-A. I’ve always read so many good things about ’em. I knew they were this elite brand and franchise, and it just intrigued me, their whole model. And they were the first one I went down the path with and they were very intense. Everything was really intensive. It really was. And that company doesn’t miss a beat when they go through the ride with you. So that was my first forte.
The Wolf of Franchises:
So your very first due diligence process with any franchise brand was Chick-fil-A?
Mike Kelley:
It was, yep, it was. Holy
The Wolf of Franchises:
Crap, <laugh>. Okay. Yeah, I mean, if anyone’s listening to this and doesn’t know, I mean, chick-fil-A gets today around like 60,000 applications a year. They only accept 80 to a hundred of them, which is a 0.13% acceptance rate. Statistically speaking, you have a better chance of getting into Harvard, Stanford, the Secret Service, you name it. Chick-fil-A is that hard to get into, and it’s because of this unique model where they only require a $10,000 franchise fee, and effectively they pay for everything else. So it is a far lower barrier to entry financially speaking, but they take a lot more than your average franchise. It’s like 15% of the revenue and 50% of the profits. But their average location not located in a mall was about 8 million in 2021, which is a ridiculous average unit volume. So Amble over about Chick-fil-A. But Mike, how long was the process from initial inquiry to when you, I guess, did you bow out or did you not make the cut? What happened?
Mike Kelley:
Well, and it’s funny that you mentioned all that. I guess that makes me feel better about going through the process. I was like, dang. Even the final interview, which I’ll get into it a bit, but she even told me, she’s like, A lot of people don’t even get to this point. So she’s like, you should pat yourself for that. And I was like, well, yeah, I had no idea. I just like Chick-fil-A because I loved the brand and I knew how solid it was, and I knew they had this amazing elite name. So it was an 18 month process for me. When I started it, I reached out pretty wet behind the ears with it, and it started off as basically you have to submit these. Back then it was questionnaires and letters and they wanted to really know who you were from a character side and why you wanted to do this and what you were about.
And then that wasn’t even a human interaction yet. That was just some digital writing. And then that was the first stage. And then I remember then it was a numerous interviews over the phone and it was through some of their different leadership teams that they have on the franchise size at the time. And again, they’re picking your brain about who you are, what is your experience, why do you want to do this? And after those interviews, then it went to some deeper video style interviews where they could really get a feel for who I was and person to person type thing. And it finally got down to a point where this all went back and forth, back and forth for the longest time. And there were some delays in there on my end just because things were busy. But it got to the point where I made it to the final stage that they said was They invite you down to their offices and Atlanta.
And she’s like, we would like to extend that opportunity for you. We really liked from where you were from stage one to here, and we feel like you’d be a really good potential fit. So they invited me down, but before they invited me down, they scheduled one more interview and it was with some of their leadership team, and we all got on the phone and basically they wanted to narrow down some final details of, they wanted to press me a little bit more on my setup running the Chick-fil-A, because one of the issues was is I wasn’t going to be there 60 hours a week. They want someone that is going to live, breathe, and sweat Chick-fil-A every day, every week, every month. And my philosophy was going to be a little less hands off, bringing in smart people, not working 60 hours a week.
I was going to be more of a part-time owner, if you want to put it that way. So ultimately what happened is we ended up, I didn’t go down for the interview because I was just honest with him. I said, look, I’m not going to be doing the 60 hours a week and working to the bone like that. That’s not my philosophy or what I’m I want. So I think I’m going to bow out and pass this opportunity onto someone that’s going to be full in on it. And they really respected that and we just parted ways and it ended up being the best for both of us. I know it did.
The Wolf of Franchises:
So I mean, did that come up at all before that? Because I mean, from the outside, right? All the press you see on Chick-fil-A is that that’s their biggest requirement is that they’re operators have to be in the store six days a week when they’re open, basically. So did that come up at all? And maybe did they kind of leave the window of Hope Open where, hey, yeah, we might give you that option where you don’t have to actually be in the store all the time?
Mike Kelley:
That’s exactly what they did. I thought a lot about that afterwards and I was like, well, why didn’t we approach this sooner? But they were definitely leaving that window open and they were also considering letting me doing it. So it was this really unique thing where I think they, some of the things that I was bringing to the table and this town and community, and I know it really well. I’ve grown up. I’m born here. I had a ton of connections here. And so they liked that aspect of it. So they were leaving a little bit of a window open. So to this day, it’s opened up and we’ve had an amazing family couple that owns it, and I do think it’s better off for them than us. So
The Wolf of Franchises:
That’s incredible. So you bowed out after 18 months, and do you know how many candidates that started with? Does Chick-fil-A break it out by a territory? Did they focus in, all right, we’re going to take Minneapolis candidates now?
Mike Kelley:
Yeah, so it ended up, the lady, I don’t remember her name, but she told me, she’s like, and she said something like they take the nation when they do this, but it was something like over 10,000 candidates and they were inviting three of us down to Atlanta. And at that point it started to hit me a little bit. I was like, well, damn. I’m like 10,000 to three,
The Wolf of Franchises:
Three out of 10,000.
Mike Kelley:
It hit me a little more. I was like, wow, maybe I should be really second thinking this. But ultimately I came back to square one where I was like, you know what? It’s just best. But yeah, three of us down to Atlanta. I was like, all right, that’s legit.
The Wolf of Franchises:
Yeah, you’re telling me holy crap. And all right, so the group that owns it in Minneapolis and store seems to be doing well and all that,
Mike Kelley:
So no, it was, but the one based in St. Cloud now, and they seem to be doing really well. They’re happy, and again, they live and breathe. So that’s how it should be.
The Wolf of Franchises:
It’s now for everyone, man. I see the numbers and they just get bigger and bigger every year. I mean eight million’s ridiculous in revenue. And even with how much Chick-fil-A’s taking, which again, 50% of the profits and 15% of the revenue, but still franchisee operative are definitely make an at least 300 grand plus probably from, which is insane. How
Mike Kelley:
Cool is it that they build out the space and hand you the keys and you pay what, 10,000 or whatever, and then you run it. It’s awesome. I mean, I totally get that. I prefer the chaos of the other stuff.
The Wolf of Franchises:
Well, I hear you, but I mean, did they give you any inclination if you gave the option to say, Hey, I’ll work Monday through Friday, but Saturday’s I’m going to have a high level manager take over cause I don’t want to work weekends. Do you know if that’s possible?
Mike Kelley:
At the time it wasn’t. I don’t know if they changed their tune on that, but at the time they were really dead set on, we want you there and your eyes on it. They didn’t put an hours behind it, but they wanted someone that was beyond
The Wolf of Franchises:
Damn. I mean what about vacation and stuff?
Mike Kelley:
No, they don’t even get into that. They basically want you living and breathing a dude. I got the vibe. Yeah. Holy
The Wolf of Franchises:
Shit.
Mike Kelley:
Yeah, I get it. I mean they’re putting all their money in it, so I get it. Totally.
The Wolf of Franchises:
I can’t say anything. I mean it’s working. The model’s clearly working. They destroy every fast food chain or franchise in average unit volume. It’s not even close. And the top location last year did 18 million in revenue, which is insane.
Mike Kelley:
I wish in an out burger would do something like that. I think they could give ’em run for their money, but I know they got their whole thing going on over there.
The Wolf of Franchises:
Yeah, yeah. I actually, I just wrote about that. It’s funny. Yeah, they’re kind of like the burger version of Chick-fil-A. They do about four and a half million average unit volume from their reports, but you can’t confirm it. Right. Cause they’re not, they’re private and they’re not a franchise. No real. You need an inside source. But that’s what’s been reported. That was cool to hear about. But I guess moving past that, so you spent 18 months just with Chick-fil-A. Yep. What happens next after you cross that off the list?
Mike Kelley:
Well, the thing is that really built up my confidence in the franchise system. Cause I got to learn really what an F T D was. I got to go through the process, the interview discovery, and I got to really understand it. So then when I started interviewing other franchisors, it was like I really was confident going into the process of what to ask and what to look for. And this time I was really upfront with them when I’d have the conversation, look, I’m not going to be your 60 hour week guide. I’m a guy that loves to build teams of smart people and I’ll make sure that we’re successful, but this is the way that I’m looking to do it. So I would have that conversation up upfront more. That’s what I learned off of it. And that really helped going forward as I was interviewing some of those other franchisors after Chick-fil-A, it was pizza.
I don’t know why I was on a food kick. I don’t know food, don’t love food, but it’s just some of the things that popped up that you could scale. I looked at a couple pizza franchises and they all wanted to be like, Hey, sign on. We want you to open up 10 of ’em. And they were all about scale. They wanted to get into the markets fast. And I ultimately got away from food is the long story short there and made a decision with the team and that we were going to stay away from food. So that’s kind of how that the food ended. Was
The Wolf of Franchises:
It like the margins that scared you or because I see that a lot, right? Food concepts are from a consumer perspective, the most popular, but oftentimes the investments are really high and the margins aren’t nearly as high as you could get. In other concepts,
Mike Kelley:
Margins are thin and you got to play the volume game and then you’re just dealing with people’s food. And ultimately it was just a simple thing that people are so picky about their food. And I was like, I just don’t want to go down that path. And I liked some of it. I loved the one I looked at, it had a pizza concept and then it also had a bar inside. So I loved that aspect of you could have a bar and liquor service and then pizza. So
The Wolf of Franchises:
Oh, was it a mellow mushroom?
Mike Kelley:
No, it was called Your Pie.
The Wolf of Franchises:
Oh, interesting. Okay. But that sounded like a mellow mushroom. We had a franchisee on the show
Mike Kelley:
From that. And there’s a lot of ’em, right? There is. There’s a lot of ’em now.
The Wolf of Franchises:
Yeah. Well it’s funny that you’re right. I mean especially when I write something on Twitter about say a big franchise concept, it’s food related. I did a Twitter thread on crumble and recently even in and Out and regardless of how successful the brand is, how many locations they have, whatever, there’s always people in the comments saying, oh, their food is disgusted <laugh>. Like who would ever go there? And I’m like, dude, they have hundreds or if not thousands of locations and they’re like a beloved brand. Clearly a lot of people like ’em, but you’re right, man, some people are just so picky. So that’s just something I guess food operators got to deal with is the haters. There’s always going to be haters
Mike Kelley:
And it’s probably the decision I feel the best about is staying away from food. I know there’s people that are really good at it and I’m going to let them have it. It’s a tough one. Those guys are Saints man, people that dive into that.
The Wolf of Franchises:
Yeah, it’s noticed. Food franchisees in particular, they stick to food. I’ve had other people on the show where they own fitness concepts, they own wellness concepts and maybe educate. It’ll be a mix, but food operators rarely go out of food.
Mike Kelley:
I believe
The Wolf of Franchises:
It. So you gave up on food and what’s the franchise you ended up with and why’d you kind of go with that
Mike Kelley:
Direction? Well, and I actually ended up with two after that. I got really aggressive and I ended up in the senior care space for a while. And that was the franchise senior helpers I was with for a little while. I ultimately did sell that one off just because it was a time constraint, but I owned that one for a couple years. But I actually bought Senior Helpers and Sylvan the franchise at the same time. So it was a wild chaotic ride. I just like both brands and I love the diversification of it. And so that’s why I ended up with both. But I ultimately ended up with Sylvan because for me, my goal was I’m looking for something, a mission and profit. What can I generate a good profit with and scale? And then what can I get behind with the mission side? And it was the kids aspect, to be honest, I didn’t have kids at the time, but I had kids around the same time that I looked at Sylvan and I understood what these parents were coming from that you would do anything for your kids because I started interviewing some of the parents for Sylvan before I bought Sylvan.
And I was like, what do you love about Sylvan here? Why are you a customer? And their stories were unbelievable. These parents are distraught, they’re crying. My child was behind in math or reading and they needed help. And I was like, I get it. They would do anything for their kids and SIL was providing it for ’em. And I had a chance to acquire five locations at the time and it kind of all meshed together. It was this beautiful thing and I totally understood where these parents were coming from.
The Wolf of Franchises:
So you bought a senior care franchise and then also acquired five at once for Sylvan?
Mike Kelley:
I bought the senior care franchise. I bought the Minnesota market. It was three big territories that included all basically Minneapolis.
The Wolf of Franchises:
And that’s a non brick and mortar franchise. That’s like placing senior care helpers basically. I’m sure there’s a industry term for that job
Mike Kelley:
In-home senior care is really what it’s referred to. So you’re providing assistance in people’s homes. And so yeah, it’s basically a non brick and mortar. So
The Wolf of Franchises:
What would you, because I’m curious, I find the non brick and mortar type businesses, whether it’s like dog training or there’s even in-home exercise workouts, you send a trainer to our house, there’s a bunch of different forms of the home services, whatever the case is, it’s easier in a way to generate cash flow and the investments seem to be lower, but I find they’re less scalable. So I’m curious for your feedback, do you see that where it’s like increasing revenue was always just you had to increase staff and other aspects
Mike Kelley:
And I think you hit that right on the head and it was the scaling factor that I ultimately didn’t love about it. And the Sylvan side, I can scale brick and mortar locations, but the senior business can’t scaling through services and people, which is a lot more difficult and especially in ed industry, which is really right now at its peak in terms of chaos, staffing and it’s growing and everyone’s aging in place so that it was really chaotic and there’s a ton of competition in that market. So the reality is it’s a lot more difficult to scale, takes more time, more money and more effort. And I just made the decision to not put all that into it.
The Wolf of Franchises:
It’s tough.
Mike Kelley:
It was really tough. It one of it was a really big learning for me and it’s something that I look back on and learned a lot from. But yeah, it’s a different space man.
The Wolf of Franchises:
Absolutely. You always see the brick and mortar operators, those are the ones who got to the biggest scale. So I think he made the right decision there. The biggest branches he have had on the show is Jamie Weeks who owned 140 orange theories, but I’ve never met anyone who owns even close to a hundred territories of a non brick and mortar bran. So there’s a reason for that.
Mike Kelley:
That was a great episode. I encourage everyone to listen to. That was good. I enjoyed it.
The Wolf of Franchises:
I appreciate it man. Thank you. So you dive into Sylvan five at once was, I mean, I know you had had experience operating that jewelry store and I think you guys still have it, but what was it like to just all of a sudden have five sylvans under your belt
Mike Kelley:
And I knew it was going to be chaos and I thrive on the chaos and so we acquired five at once and if for while I was just myself, but I brought a friend in, his name is Emmanuel and he’s a good friend of mine and he was working for Verizon Corporate. And I said, Emmanuel, I’m going to buy these five. Let’s do this together. I want you to be the area manager, the area director of ’em. I’ll train you, we’ll do it together. And so I brought him on simultaneously. So we buy the five. I do bring him on as the manager, and I remember day one like it was yesterday, we go out and we’re visiting all five locations and it was wild man to be honest, because I don’t have any education experience. I’ve run a jewelry store and I’ve gone through some franchises and some other, but this is a different ball of extra.
You got five different locations, you got five different managers, each location as 20 teachers. So you got a bunch of staff you got to get to know now and you got to learn all the systems and processes. You had the old owner who had their way and then you got new ownership. So you’re basically just spending the first six months learning every nook and cranny that you can and hanging on for the ride. It was a roller coaster, but part of how we got through it was just enjoying it and working together to enjoy it and just diving in day by day and understanding it all the little minutiae of running those centers. So day by day in the hard work.
The Wolf of Franchises:
And how’d you I mean, I kind of glossed over this financing, did you leverage some seller financing to acquire these locations? Because five at a clip that’s, it’s probably not a small amount of money.
Mike Kelley:
No. And the other thing that they have with it too is the sylvans come with some receivables on the books because your people basically pay for the tutoring upfront and then they use it over a six to nine month period. So there was some complexities there with the financing, to be honest. So it was a mix of traditional financing, SBA financing, and then working with the owners. So there were some complexities there and there was a lot to it.
The Wolf of Franchises:
It’s always good for people to hear that you could minimize the cash upfront where before you discover financing, everything seems impossible to attain because it’s you just of it in pure dollar terms. But the reality is you don’t need to pile of cash to get these deals
Mike Kelley:
Done. That’s actually a great point. And I remember when I was first looking, I was like, well my God, I’m going to have to save up all this money and how am I going to be able to, but the reality is, yes, you have the SBA first off is amazing in general, if people don’t know about that, you really got to dive into the SBA side and there’s just so many resources that are actually free. But beyond that, don’t be afraid to ask the sellers to get creative sellers. There’s a lot of ways to get creative, whether it’s seller owner financing or helping out with the down payment and spreading that out or there is a lot of options. You just can’t be afraid to ask them for it and work with them on it. A lot of people are willing to do it. You’d be really surprised. So
The Wolf of Franchises:
Definitely, yeah, I’ve heard they’re looking to get it into the hands of someone who’s going to do a good job with it. So that all makes sense. When was that five unit acquisition? How many years ago was that? So
Mike Kelley:
That was May of 2018.
The Wolf of Franchises:
And so you went from acquiring five to getting another five since May, 2018. Were those also acquired or did you build them?
Mike Kelley:
Yeah, so we basically acquired another three and then built two of our own. So over that time and yeah, I guess time does fly. It’s been four years now. Well yeah, so acquired five and then over the next four years and even throw Covid in there, which is crazy to think about two. But yeah, another three more. And then we did two of our own. So I remember the last guest talking a little bit about acquisition versus starting new and I’m totally on the board of acquiring versus starting new. That’s totally been a lot easier I’ve learned. So it’s allows you to just scale up.
The Wolf of Franchises:
Yeah. Is it just ramping up for a new location? Is it just the time and the cash flow that you got to shell out operationally as you’re ramping up?
Mike Kelley:
Well, it’s that too. We just actually, we just opened tuna locations this past spring and yeah, that’s exactly it. The ramp up period is, you know, plan for that. But the other part is the actual opening you got, it’s just a cluster of time and money as well. Now I got to pull my team in to help open up two new locations. So now their time is spent on that versus managing the other items. Plus you got the money and sometimes you don’t even think about some of it. You got to still stock it. Maybe you’re moving a location or moving items. Now you got to pay movers and you got to put signage up and you got to build it out and you got to do all these things just to open up a new location and then you got to support it until cash flows for three, six or nine months. So it is, there’s a ton to it, but if you don’t have the ability to acquire one or if it’s a new market that’s really good, you got to go into it. And that’s why we did it. We went into two markets that I know have the families and have the income. So it was something we just had to do.
The Wolf of Franchises:
Buying versus building is just always an interesting discussion, but I’m starting to, especially with these more established brands like a Sylvan where if they’ve been around for a while, I’m starting to lean toward towards the acquisition route. Just seems to be the way to go
Mike Kelley:
On some of these franchises too. They have really aggressive growth plans. So for us, for instance, Sylvan, they’re still requiring us to open up new locations. So part of me taking on Minnesota was that they said, Hey, we still want, these are some of the cities that we want you to look at. And there’s no centers in there. So a lot of times owners don’t even have the option to just say, I want to acquire. I still have to look at both for my tenure with Sylvan, which is fine, I agreed to that. But
The Wolf of Franchises:
Assuming they’re ramp up, I mean you’ll be sitting on a very nice portfolio of businesses, <laugh> at the end of the day there. How do you think about it competitively versus we Mathnasium franchisees on a few episodes ago? There are obviously that’s a concept that’s saying, Hey, we’re going to help you get better at math, but we’re not doing anything else. Sylvan does kind of everything, reading, writing, college prep, so how does it fit in versus those other educational concepts.
Mike Kelley:
One of the pioneers in it, and they just celebrated their 40 year a few years ago, 40 years in the industry is unbelievable. But their heyday were the eighties and nineties and even the early two thousands. And Sylvan was one of the only premier ones on the scene that was doing custom individualized tutoring like that. And part of where they got their brand bill too is that’s when TV advertising was huge and Sylvan pounded the TV advertising and commercials and that really put them on the map. That was their heyday. That’s when the centers were doing buku revenue and customers were just streaming through every single week in month. And then the competitors started to catch on, okay, obviously there’s an industry here, stillman’s making it. So that’s when you started to see some of ’em pop up and some of the individual ones, and they’re smart because they’ve taken, they say, okay, Sylvan does offer everything math, reading, writing, and stem.
They offered some paper and then some digitally on the iPad. So some of the competitors started to poke through and say, okay, we’re going to try just math Mathnasium or Kumon, which uses a lot of paper based. So they started to kind of poke holes. So the industry has matured since then and that’s where it’s gotten to. So no longer are you going to be looking at a 10% growth in this industry, if you’re looking at 3% to 5%, you’re really happy with that because of the competition that you mentioned. And for us, we are always one of the higher priced tutoring services, but we also have the 40 year experience and some of the guarantees behind it to allow for that. To be honest,
The Wolf of Franchises:
It’s definitely probably, I’m trying to think of a, I don’t know if there’s a concept that has kind of a history that Sylvan does even it was only founded in 2003, so Sylvan was running commercials well prior decades before that. But yeah, it’s interesting, just like Sylvan could be, I’m not making assumptions or anything, but I just mean, let’s just say Sylvans better at even the math tutoring within their other curriculums, but just the sheer fact that a Mathnasium pops up and other competitors, it just naturally eats into market share. So I’ve been watching that in a few other spaces, specifically crumble cookies has absolutely crushed it. But now I’m starting to see these cookie franchises pop up and even if they’re not as good as crumble, I just think naturally crumbles, it’s their growth and success will come back down probably to Earth a little bit just because it’s brick and mortar. If it’s another cookie concept exists, you’re going to walk into it.
Mike Kelley:
Well, and that’s why I keep a close eye on those battles that you talk about, whether it doesn’t have to be tu, but I keep a close eye on those battles. Cause what does the franchisor and the franchisee do? How do they pivot their costs? How do they pivot their brand and what they say and what they do? And because Sylvans in the same boat, so it’s really interesting how are you going to take on that battle? So I love that you bring that up.
The Wolf of Franchises:
How do you think about the support the franchisor provides? Because I mean between a lengthy process with Chick-fil-A, a senior care franchise brand and Sylvan, I mean you’ve got kind of three franchisors that you have been intimately familiar with at one point. I mean, what does Selvan do that you really love and that you think like a differentiator From a service aspect,
Mike Kelley:
I’m always careful to butter them up because we have a really good relationship and I’m hard on them and I don’t love buttering them up. But the reality is, is they are probably some of the best support that I’ve ever have been involved with. The amount of resources that they give you is unbelievable. And then beyond the resources, it’s actually the human touch. And it’s not just your franchise business consultant that’s helped you, it’s people in their corporate office, their marketing teams that are operation teams and they’re all just available to you and they all get the mission of what you’re trying to do and operate and grow a center. So again, I don’t love to butter ’em up, but I definitely give them an a plus in support.
The Wolf of Franchises:
How often do you talk to them? And I’m more just trying to give people a picture, and it obviously varies from brand to brand, but are you on weekly calls with them? Do you only speak to them when you need them? How does that a whole thing work?
Mike Kelley:
And in the beginning because of the chaos, it was probably every other day and then it got to a weekly and then it got to monthly and then it got to the point where I was like, let’s just set up something quarterly. And recently I’ve gotten back to just a monthly touchpoint. That’s what works for me and my team, but anyone else that is in it, I would a hundred percent recommend a weekly touchpoint until you get really comfortable with what you’re doing.
The Wolf of Franchises:
That seems to be the route most franchises take where especially a new franchisee, they’ll a franchisor will do some type of intentional support for the first quarter at least on a weekly basis to make sure everything’s going smoothly.
Mike Kelley:
I require my team to touch base with them weekly. Again, I’m more passive in it. So I’ve have a couple that I’ve hired in and that have run it and I require them to do it weekly. So
The Wolf of Franchises:
In speaking of a staff, I mean with 10 locations, what’s like a general hierarchy you have? And I’ve noticed most multi-unit operators across any industry, it’s basically one manager per location. And once you have a cluster of store, so you bought five right away. So that would’ve qualified to me as a cluster where you have a area director who oversees a group of managers and then you’re the one at the top.
Mike Kelley:
I remember listening last week and I remember him talking a little bit about specialists and kind of having it to me that it was a little too convoluted, a fan of the structure, the military type structure, the hierarchies and business has been done that way very successfully. So that’s the way we keep it in. Yeah, each of our stores has a manager and then underneath them it could be an assistant and then their lead teachers. And then above that we operate with two area managers, one that does operations, one that does sales, and they work together to support the team. And that works really well for us and it’s been successful.
The Wolf of Franchises:
So the sales manager and the ops manager or the area managers, they’re overseeing all 10 locations?
Mike Kelley:
Correct. And they’ll have some people underneath them that support them maybe with certain parts of operations, a certain part of sales. But yeah, that’s what we found has worked best and supported the team and our sales.
The Wolf of Franchises:
How have you thought about when you do make those hires? Those are pretty strategic hires. I found that at times, and I, you’re a little unique, most people don’t buy five at once, but the cash flow has to be able to support the ability to hire that manager, which then frees up more of your time. So did you have a number in mind where it’s like, okay, once my stores are doing this much, I can fight me, hire that person and free up a lot of my time?
Mike Kelley:
Yeah, I can tell you’ve been doing this a while. Cause that’s really intuitive right there. So that’s smart man. Cause to be honest, in the beginning we didn’t have the cash flow or the money to be making some of these hires. So it had to come from two areas. We were not profitable for a while and I had to take it from some of my other companies. It was aback basically like, okay, we’re going to hire on some smart people and set up some smart bonus plans and comps and this will pay off in the future. And so for the first few years it was, hey, we’re not making money. But I had to really be patient in saying, we’re trying to build up a team here. And that’s kind of where my strength comes in is in building teams. And I can say to this day that we’ve gotten an awesome team, so it’s paid off.
The Wolf of Franchises:
And were you basing sort of that when you made that bet of saying, Hey, these locations are going to improve, we’re going to be able to support this in the future. Were you basing that off of say what you learned in validation during the process from other franchisees and what they’re earning or whatever was in the F D D? Did you have some target revenue goal that you had to get to?
Mike Kelley:
I will always ask for mentorship and help. I’m never one that thinks I know it all. So one of the first things I did in the first two years is I started going out to the other owners around the US and I would pick their brains on the really successful ones, the ones that owned multiple locations and that were doing a lot of revenue. And I deep dived each single one of them, what they did. And I just pulled out some commonalities. And that’s what I’ve worked to build the last few years and done mimicking those because why reinvent the wheel? There’s no need to do that. And they all had some commonalities and it was how they set up their centers, what they did with their teams, how they paid ’em. And that’s what I’m looking at to mimic a little bit and replicate. So yeah,
The Wolf of Franchises:
I said this on a recent podcast and I think that’s the number one thing that if I’m a new franchisee, what I would do is find the top performers and try to become their friend, figure out what they’re doing, how they’re doing it, get their advice. You can learn a lot that way is a new franchisee. But I think even better, assuming you put it into practice and you become one, also one of the top franchisees, I’ve seen that franchisees then get a reputation within their brand system and the ones who are focused on acquiring more and building more and owning more, I mean then they become the de facto go-to person where it’s like, Hey, I’m looking to get out. Do you want to acquire my store? I know you do a killer job.
Mike Kelley:
Well said, man. And look, when I remember there was four or five groups that I started reaching out to and I was like, oh, they’re not going to want to take the time they don’t care about. And they couldn’t have been more accommodating. They’re like, let’s jump on a call, you want to fly out? It was awesome. And they’re just so gracious with their time and it’s been a really good culture, to be honest.
The Wolf of Franchises:
That’s fantastic in a way, right? It’s like you have a free business consultant for your brand.
Mike Kelley:
You’re exactly right. Owning a non-franchise business. I wish I had that in the jewelry business. We don’t really have. That’d be awesome to lean on. You got to figure it out for yourself. So yeah man, it’s good.
The Wolf of Franchises:
That’s awesome. And looking kind of ahead, mean, do you have an end goal in terms of is it capital, you know, want a certain unit account for a certain revenue or IT lifestyle? You have a lifestyle goal that you’re looking to get to as far as how much you have to work while still maintaining a certain quality of living? What’s your thoughts?
Mike Kelley:
Probably a bit of an odd answer, but it is the truth and I really enjoy seeing my team prosper. And I wouldn’t have even done 10 had it upend for my team because I was happy with what we had going on. But they have expressed interest in wanting more out of their career, more out of scale, more pay and some ownership potential. So the future for the next three to five years, we’re going to scale up. It’ll probably be somewhere around 15 or 16 centers and I’ll invite some of that executive team into some ownership in some facet way so that they can share in the pie and then we’ll grow this up to 15 or 16, could potentially be a couple more than that. So I would say the cap would be 18 from what I can tell right now. But that’s kind of what the futures hold, that’s what we’re steaming towards. If I can build that up plus then bring them into some ownership, that’s really satisfying to me. So that’s my goal.
The Wolf of Franchises:
Yeah, I have noticed that as well where, I mean, it’s just a good way to incentivize people to stick around, helps you grow, right? It seems to be a win-win for everyone.
Mike Kelley:
Well, especially in this staffing market right now. I mean everyone’s hopping ship and the grass is greener and it’s just, it’s unbelievable right now what’s going on. It’s crazy. So yeah, things like that make a big difference.
The Wolf of Franchises:
And Mike, so how many hours would you say on average are you putting in a week? You know, own 10 locations, you’ve built up this staff to run these businesses for you. So how many hours a week would you say you’re putting in?
Mike Kelley:
Yeah, I mean it’s of that type of hours, 15 to 20 hours is what’s needed to really make sure that we’re staying on track and I have my hands on the wheel and eyes on what’s going on. So 15 to 20 hours gets the job done and puts it in the people that need to be doing it.
The Wolf of Franchises:
So you bought the locations, you know, first entered into the Sylvan system in 2018. I’m sure in the beginning you were working way more hours. When would you say you got to this lifestyle schedule?
Mike Kelley:
To be honest, it was probably shortly around Covid time, to be honest. Kind of right in that mix, right before Covid and then soon after, it’s when we finally got people in the right lanes and the right seats. That’s the best way I can put it because once you do that, that’s the goal. That was always my goal and philosophy. Put smart people in the right lanes and the right seats and ’em do their thing.
The Wolf of Franchises:
You got some free time on your hands. Do you have a hobby? I know we were talking before, we’re recording about potentially ice fishing, but I love to hear what people do once they have that free time. So a lot of people dream about getting it, but you know
Mike Kelley:
Haven’t. Yeah, I do. I’ve been sinking my teeth and real estate business. We just bought our first rental property. That’s been really fun for me. My wife and I do that together. And then spending time with my wife is a big part of it and I have two young girls. So spending family time between those three things. I mean, what more could you want out of life that’s like, I’m never going to take that for granted. That’s perfect.
The Wolf of Franchises:
That’s the dream man. That’s awesome. Yeah,
Mike Kelley:
That’s great.
The Wolf of Franchises:
Look, this was great Mike. I’ve learned a lot about a few different brands, so that was fun. A lot of
Mike Kelley:
Balls.
The Wolf of Franchises:
Yeah, exactly. If there’s anywhere online that people can follow you or maybe want to reach out and learn more about, do you have a Twitter profile or LinkedIn that you’d recommend? Yeah,
Mike Kelley:
I have a lot of good conversations with people on LinkedIn. Mike Kelly can search me out on there and it’ll pull up JF Cruz, our jewelry business, and then Sovan Learning and Twitter. It’s all day mk. And I love having conversations with people I never understand when people shut down their profiles to not have combos. I don’t understand that. So my is always open. I love exchanging information and that’s how it should be to me. So
The Wolf of Franchises:
I completely agree. There’s a lot you can get out of those platforms. So that’s
Mike Kelley:
How I met you.
The Wolf of Franchises:
Yeah, exactly. That’s how we’re having this conversation. So prime example. But all right man, so we’ll plug those links in the show notes, so if anyone wants to request or follow in, you can do that. Yeah, a hundred percent. Yeah. Thanks again, man. This was a great conversation. We’ll talk soon.
Mike Kelley:
Thanks for all you do, man. Thanks for having me. Really appreciate it.
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.