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Franchise Secrets Podcast


May 29, 2019

When researching franchise opportunities an important role for you to understand is that of a regional developer (RD). They are sometimes also referred to as area developers or master franchisors. The role is somewhat of a hidden gem—the opportunity to work in this position is hard to come by. So what role do they play in the realm of franchising? Why is it so exclusive? Listen to this episode with special guest Mark Johnson as we delve into the world of regional developers.

Mark Johnson has been in the franchise industry for well over 20 years. He developed the Area Development model for Liberty Tax Service, helping them become one of the most successful franchise models to date. Mark was one of the first people I met in franchising and I learned so much valuable information from him—and he was willing to invest his time in me. We are privileged to have him join us today to impart his wealth of knowledge.

Outline of This Episode

  • [0:35] Introduction to Mark Johnson
  • [6:57] Backstory on Area Development/regional developers
  • [10:30] What is a request for consideration
  • [12:15] Go into franchising to create value
  • [13:40] The Evolution of regional developers
  • [16:15] Is it skill-set or luck when acquiring the best quality RD’s?
  • [19:30] Advice for choosing between a franchisor or RD role
  • [22:30] regional developer programs
  • [23:25] Buy out your RD’s at a fair price
  • [26:35] Recognize there are ebbs and flows in everything

Area Development—creating uniformity where there was none

regional developer (RD) is someone who purchases an agreement with a franchisor, giving them the exclusive right to build and develop locations for this franchise within a certain geological area. Mark was one of the first people to research Area Development and create actual value in the role.

Too many franchises didn’t have the right kind of AR’s in place and didn’t develop uniformity across their platform. Their franchise systems were failing because of the lack of structure. Mark was instrumental in the implementation of a better system, and it showed as he grew his franchises. Continue listening as we dive into this concept and talk about how he cultivated such a successful system.

Your role as a regional developer should be to create value and build relationships

Obviously, your goal as an RD is to create value by means of cash flow. However, something that needs to be equally emphasized is the importance of relationships. You are helping franchisees build out locations, implement processes, and training them to be the best at what they do. It is a unique opportunity to mentor and cultivate a network of properly trained leaders.

You hold a lot of responsibility in the success or failure of the franchise locations being developed. Your desire should be to build positive relationships so that you not only have success—but build a network of people who vouch for your track record. Listen on as we discuss this topic in detail.

Franchisors want to surround themselves with a championship team

On the flip-side of the equation, if you’re a franchisor considering utilizing the area development model for your business there are some key qualities you should look for in your RD. Not only do you need to consider their net worth and value they add, but you want to be aware of their skillsets.

You want to surround yourself with a championship team of top performers in the industry.

Is your RD candidate good with people? Do they have a passion and a drive to get things done? Are they a good fit for the team you’re building? Develop criteria that you use to determine who will be the best fit. This is a great way to ensure the growth of your franchise. Keep listening as we cover advice for choosing between starting a franchise or working as a RD as well as risk versus reward.

Know when to hold ‘em and when to fold ‘em

There are ebbs and flows in every business—and similar to the stock market—you need to carefully consider when to sell your agreement. Track the valuation of your area, and don’t hold on too long. Learn to develop a sixth sense of when to let go, and then do it. Conversely, as a franchisor, be sure you are buying out your RD at a fair market value. Listen to the remainder of the podcast as we talk about the entrepreneurial spirit and the hustle required to make these roles work.

Resources & People Mentioned

Connect with Mark Johnson

Connect With Erik