How to find your next franchise CEO
Michael Ruiz, Global Talent Solutions, starts by asking clients “investigative questions.”
Umbrella companies, many backed by private equity firms and with multiple concepts under each roof, are the rage in franchising. Buzz Brands has three concepts. Self Esteem Brands now has four after two acquisitions last year. Xponential Fitness has eight and counting. So how to find leaders to drive all those concepts? The Human Element went to find out.
Michael Ruiz’s recruiting firm Global Talent Solutions focuses solely on franchising. “There’s no one-size-fits-all scenario,” he said. “You need to deep dive with each of the brands to identify exactly what stage of their life cycle they’re in, what their current challenges are, what is needed to overcome them and then from there you put together a strategy.”
He recommends a series of “investigative questions,” and he always pushes back on most companies’ initial instinct. “I try to take it back away from: ‘Hey, tell me what you’re looking for.’ Because when you ask a question like that you get a regurgitation of an internal job description.”
Clients will say they’re looking for six to 10 years of experience, say, or a bachelor’s degree in this or that, “which isn’t very helpful,” he said. He instead likes to ask: What is it they want to accomplish, and he has a specific exercise to help them find the answer.
“Imagine this is 12 months from now, you’ve already made your hire and it was a phenomenal hire. You’re about to walk into their office and give them their 12-month review and you couldn’t be happier.” Describe the milestones the person has achieved. “It makes them identify what they need this individual to accomplish.”
Global Talent Solutions has worked closely with Xponential Fitness, the Los Angeles-based umbrella company with eight concepts ranging from Pure Barre to Club Pilates to AKT to Stride.
“Every brand is different,” he said.
For example, Pure Barre was acquired with a substantial number of open and operating locations and its own developed management team in its own headquarters location. “You’ve got an entire system you have to keep afloat, and build a team in a short period of time.” For that task, “we need people who can come in and hit the ground running.”
On the other end of the spectrum were brands like AKT and Stride, acquired when they were much smaller. They needed leaders “who not only were strategic, but had the right personality and the communication style to roll up their sleeves and be tactical and hands on,” he said.
Scott Hatter is the new president and COO of Legends Boxing.
‘They’re in the shoes of you’
Of course, not all franchises use recruiting firms, which typically charge the employer between 25 and 30 percent of the candidate’s compensation once placed, with guarantees the person will stay ranging from three months to in one case five years.
Michael Blair grew and sold two companies in the financial and technology space. But he and his wife, Jennifer, were new to franchising when they co-founded Deka Lash, the eyelash extension franchise with 83 studios open. Last year they formed an umbrella company called Look Good Brands and then acquired Legends Boxing.
Somewhat by chance but also because they needed advice, the Blairs brought in consultants at first who were experienced franchisees of multiple brands. “It really was the springboard on how we built the company. We were able to promote this franchisee-centric business model,” Blair said.
“They were in the shoes of you,” meaning ‘zees. “They’ve operated and owned multiple franchises, and they get where you’re coming from.”
Scott Hatter, now president and COO of Legends Boxing, grew up in the Burger King system that his father operated, and at one point he took over their stores. He and his wife, Teresa, have operated Baja Fresh Grill, Lunchbox Waxing, and now own two Legends Boxing gyms.
Jerel Tomasello is president and COO of Deka Lash. “He was one of the largest franchisee owners of Liberty Tax and came to us from there,” Blair said, and owned one of the salon suites concepts and still does, plus was a Haagen Dazs franchisee. He “never played on the franchisor side,” before Deka.
In the early days, Blair was trying to understand the dynamics of franchising. “I’ve never had a franchise system; it was always growing corporate and everybody under you were employees. This was unique; you’re building all these business owners within your business.”
Having franchisees of your brand as executives, too, is an excellent validation for prospects, Blair said. “They could speak that they have skin in the game. Their money’s at risk as well.”
40 years of placing franchise execs
Douglas Kushell, founder of Franchise Search, has been at the franchise recruiting game for 40 years. One big change has been the entry of private equity firms into franchising. “They’re acquiring franchise systems and then putting together a plan for very aggressive growth, and then to ultimately be able to sell the system,” he said. When he started, “it was more initial mom-and-pop expansion as opposed to multi-units,” often working directly with the founders.
One recent assignment illustrates the trend. A publicly held private equity company with a “couple thousand” locations worldwide over five brands retained Franchise Search to find a senior vice president who will be managing all the brands, holding the VPs underneath accountable for individual brand goals, and reporting directly to the board. Both strategic chops and a fast-growth track record will be needed strengths.
The most important thing is recruiting franchise leaders, he believes: “Ideally somebody who has been there before” and has “successfully grown something.” And when his firm identifies that person, the employer needs to offer “bonus or equity on the back end” in order to snag these widely sought-after candidates.
From the candidate’s point of view
Everyone knows the phenomenon in franchising, that top leadership positions tend to recycle. Paul Macaluso went from Krystal to Another Broken Egg Café last year. Christina Russell went from Camp Bow Wow to Pure Barre to Sola Salon Studios in the past several. Mike Rotondo was CEO of Tropical Smoothie Café, then Edible Arrangements, briefly, and now Altitude Trampoline Park.
“They’re not job hoppers,” says Michael Ruiz, founder of Global Talent Solutions, but rather the moves are a function of franchising’s unique business model. “Understanding the dynamic of the franchise business model, and most importantly understanding the balance between the franchisor/franchisee relationships, you just don’t get in other industries.
So inevitably, there’s a lot of career movement within franchising.”
Rotondo’s journey is a case in point, and he said he’s learned a lot from the moves he’s made. Tropical Smoothie, for example, was purchased from the founders by a private equity firm and he drove a highly successful growth run there. Then he was recruited by a franchising icon he admired and vice versa, Tariq Farid, the founder of Edible Arrangements. In July 2018, Farid called Rotondo, the brand’s first outside CEO, “perfect for the role.” By last November, Rotondo was out and Farid had reclaimed the CEO’s job.
Rotondo said there’s no hard feelings toward Farid. “I cannot believe what he has done” to build Edible.
In his latest move, he was recruited by Susan Beth, COO of NRD Capital, the private equity firm founded by Aziz Hashim, a long-time multi-unit restaurant franchisee. NRD Capital had just purchased Altitude Trampoline Park, the family entertainment franchise based in Dallas, and Rotondo decided to jump in large part because of good feelings about the team. “It’s 100 percent relationships with me,” he said.
For other executives considering a move, he ticks off several important considerations. “As a leader, having good self-awareness of what is important to you as to how YOU drive brands,” he said. If you are good at taking the outline and executing it for someone else, “going into a founder-led organization, it might be OK,” he said. “If you’re a person who leads the charge, private equity firms are more open to that,” because they’re not typically operators. “In terms of how to move it forward, they’re depending on me for that.”
Ruiz said landing an accomplished leader in franchising takes knowing what is important to that person and what the new position could offer to his or her career. “There is no secret message,” he said, about how to attract candidates. “It boils down to being able to convey…not what the brand needs, but really showing them what they get out of it.”
Naturally for the founder of an executive recruitment firm, Ruiz believes “it’s very difficult to identify the right people on your own. “ The same goes for getting their attention.
“What do you say to them in the first 15 seconds of the conversation that’s going to get them to stop what they’re doing, pick their head up and listen? Because right now, there’s so much noise. The really accomplished executive, they’re getting this all the time.”