Franchise QB

Episode 72: Dennis Schooley- Founder, Schooley Mitchell

• Mike Halpern • Season 1 • Episode 72

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In this episode of the Franchise QB Podcast, host Mike Halpern interviews Dennis Schooley, founder of Schooley Mitchell, discussing the franchise model and its benefits. 

Dennis shares his journey from accounting to founding Schooley Mitchell, a company that helps businesses reduce costs across various expense categories. 

The conversation covers the support provided to franchisees, the flexibility of ownership models, the unique aspects of the Schooley Mitchell business model, and the collaborative culture within the franchise system. 

Takeaways

-Schooley Mitchell helps businesses save on various expenses
-Franchisees do not need to be experts in cost categories
-The business model shares savings with clients for three years
-Franchisees focus on client relationships and business development
-Schooley Mitchell offers flexible ownership options for franchisees
-The franchise has no territorial restrictions, allowing broad client acquisition
-The royalty abatement program supports new franchise owners financially
-Top performers in the franchise are proactive and dedicated

https://www.schooleymitchell.com/

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Contact me and my team with any questions along the way. www.calendly.com/franchiseguy
Mike Halpern, CAFC
mike@franchiseqb.com

This is the Franchise QB Podcast, where we empower entrepreneurs to win big in franchising. We huddle up weekly to educate our audience about the most successful small business model ever created. Franchise it! Welcome to the Franchise QB podcast. I'm your host, Mike Halpern, a 20 year industry veteran and entrepreneur. My mission is for listeners to achieve their American dreams of creating wealth and independence through franchise ownership. Every week we speak with franchisees, franchisors or vendors that support the industry. Thank you for joining us and let's get started. Joining us in the huddle today is Dennis Schooley, founder of Schooley Mitchell. Welcome to the show, Dennis. Well, thanks for having me, Mike. Glad to be here. It is great to be here. So let's talk a little bit about your background, then we'll jump into the franchise model. you started your career at Price Waterhouse Coopers, and then you founded a public accounting firm, and then subsequently launched Schooley Mitchell in the early 2000s. So before we jump into the brand, Schooley Mitchell, tell us a little bit about your background and your journey in business. Yeah, sure. And hopefully my personality doesn't blight, but I am a CPA. So it is my background. And as you said, I started at Price Waterhouse, started my own firm when I was 28 years old. And that was really because I just simply wanted to be on my own, you know, much like the franchise candidates we talked about today. I wanted to make my own decisions. I wanted to hold my own role, that sort of thing. So I did that for a while. But I've always been a business development kind of guy. So we got into management consulting and computer consulting even sports consulting and as a result our own cost started going up and we knew why because we were expanding but we didn't really know why if you know what I mean so we had one of our programmers write us some fairly rudimentary script really to sort of track our at that time it was just telecom expenses and we realized we were paying 30 % more than we should have and we thought well aren't we stupid and then we went wait a minute If we're stupid, probably our 700 accounting clients are stupid too. And they were. And I don't mean that in a bad way. just mean people pay more than they should pay to these vendors that are charging what they think they can charge to make their profits. And so that's what we found. And we realized we had a service where we could really help our clients beyond accounting. And so it was in the early 2000s that really I transitioned out of accounting and kind of thankfully I don't do that anymore. But that's when the idea, which was just dust really in the late 1990s has now developed into who we are today. So that's the back. I mean, that segues perfectly into my next question, which is for listeners that are unfamiliar with the Schooley Mitchell business model, just kind of high level, what does Schooley Mitchell do? Yeah, we help. And when I say businesses, I mean, any entity like nonprofits and churches and governments too. But we help anybody that's incurring expenses in 20 different cost categories. to make sure they're not paying more than they should. And I'm not talking about the main costs that a company might have, like the cost of steel or payroll or potatoes. I'm talking about all those things that are below the gross margin line that are really difficult to track, to negotiate, to understand, and really none of them are really significant usually. They're just death by a thousand cuts when you're paying more than you should. So we're looking at all of that. We're doing that without a charge to our clients because what we're gonna do is bring them recommendations about how they can reduce their costs either by recovering errors in their bills, eliminating services they don't need, but more importantly, getting them better prices for what they're doing. And then we share in the savings and that's how our model works. I like the death by a million cuts. It kind of puts it in perspective. And you mentioned 20 cost categories. I mean, that's a lot. So if a franchise owner comes in the system, do they have to be an expert at many of these models to be successful in the Schooley Mitchell? system. Well, actually, that's a great question. Right now we're doing 18, but there's two more in our research and development department, so that's why I'm saying 20. But no, our franchisee doesn't have to be an expert in any of them. See, we do all the analysis at head office. We're looking for people that want to run a business, build a business, build relationships, all those things that are important in building a long-term asset. That's what we want. We're the ones in the background, and I don't mean me. I don't want to do it either. but are doing the nitty gritty analysis going through bills and contracts and staying on hold for three hours with Verizon. That's us. So no, the franchisee doesn't have to know any of that. That's really cool that you guys have all that back office support. So explain how this works to the end user, like between the franchise owner and the actual customer, like explain the contingency model and what that looks like for a client. Yeah. I mean, let's say you're a business Mike. And so I'm going to talk to you about the fact, and let's say you've only got one expense. got Telecom expenses or it could be any of them could be waste or shipping or know, merchant services, whatever it is. But let's say you just said telecom. I'm going to talk to you about why I think you're paying more than you should pay for your telecom expenses. And I'm going to ask you for the right to take a look at your telecom bills. Now there's nothing private here. We're not going to look at your bank statement or your tax returns. We're just going to look at your Verizon, AT&T and those types of bills. And we're going to make sure you're not paying more than you should. And like I said, there's three things that we do. We make sure there's no errors in your bills. and you'd be shocked how often there are. And if there are, we get that money back for you. We make sure you're not paying for things you don't need or want. And most importantly, we get you better prices because we've got a lot of negotiating power because we've done 31,000 clients over time. And that gives us lot of knowledge about where vendors can go. And maybe even more important than that, the vendors know that we know where they can go. So what we end up with is you as a business owner simply paying less than you were paying before. and we're going to share in those savings, that's all. There's no fee for us to do all that work. I always get excited when I see you at our Franserve convention because when you step in the room, I know you're going to be handing out $20 bills to explain the contingency model. So when I see you enter the room, I get ready to raise my hand so I can earn. Well, we've got a few of you that have been there multiple times and you know you want to volunteer because you're going to get money. Yeah, so it obviously costs you more money to attend our convention than other Franchisors, but you get your point across. So hopefully you get a good ROI. So let's talk about the common term for engagement. Like how long does the franchise owner enjoy the benefits of the cost savings for the end client? Yeah. our reasoning for doing it this way is that because we want to be there in the initial stages to reduce those costs, as I just described, but we also want to be there when their first contract comes up and into these expense categories because We're the ones that can negotiate the best terms when those contracts are coming up and are due. what we do is we not only do what we just, I just described once, we do it every month for 36 months. So we share 50 % of the savings for a three year period with our clients, but we're reviewing their bills. month after month after month, making sure there's no price creep, no errors creep into those bills, making sure we keep track of the market change that take place every week or any vendor specials. That's really the part of the service we provide for our clients on a long-term basis. I love it. I mean, you see all these companies like Rocket Mortgage or Rocket Money that are helping people eliminate all these apps they're paying for without them knowing. You're doing the same thing in a B2B capacity for companies that don't even like pay attention to these creeps and these overages and That's a really cool service that I think a lot of people don't know exists. Yeah. And frankly, it's not in their best interest to spend as much time as they'd have to spend on these expenses. The return on investment won't be worth it, but to have us come in without an investment and just sharing the results, that's why it's so attractive to businesses and why our franchisees can do well. I love it. It makes a lot of sense. So if you guys are doing all the cost savings due diligence behind the scenes, what does your franchise owner do on a day-to-day basis? Yeah. I mean, Like any professional business, and I want you to think about an accountant or a lawyer or a financial planner, they're acquiring clients. None of those other professionals can succeed if they don't have clients. So there's certainly that sales element to it, acquiring clients, but it's much more than that. They're building relationships with those clients because really where the value comes in the long run is referrals from those clients and renewals at the end of the three years because those clients want us to keep managing those expenses. But then they also present the reports when they're done. And we're generally going to always show the client three options so the client can choose what's best for them. And by the way, 80 % of our solutions are staying with the same vendor they've already got. But our franchisee is the one explaining that report with our support. Our analysts will be on that call with them, but that franchisee is building that relationship with the client at that level. And then they're continuing to build relationships as time goes on as well. So they're building an asset as well as they go along. So basically really good. business development, client acquisition kind of skills, as well as being able to present because you have to be able to get whoever the decision maker is in front of the presentation and kind of execute there. That's right. Yeah. Cool. So do you offer different ownership models? I'm assuming that someone who's full in, all-in on Schooley Mitchell is going to have more success, but do you allow people to hang on to their W2s and do this as well? About a year and a half ago, my answer would have been, no, we don't. We just have a full-time model and that that's it. But we came to realize that there are people that they do need to keep their job. Maybe they need the income flow, maybe they need the insurance, maybe their spouse won't let them, but for whatever reason, and you smile at that one because we know that's a common thing, because joining a franchise system is a family decision and both spouses do have to be on the same page. But for whatever reason, if they want to keep their job, but they've got some flexibility in their schedule. And what we require is if they've got five or 10 hours available each week during business hours, Monday to Friday, then we will allow them to do what we call a builder option, which just means they're going to do the same business. It's just going to take longer because they're not spending 35 hours a week. They're spending five or 10, but really everything else is the same. It allows them to do it while they're still working until they get to that point where they can justify the full-time commitment and they can transition anytime they want into full-time. Very cool. So let's talk about territory and franchising. Generally territories come up in item 12. How big is the territory for a Schooley Mitchell owner? Really big. And I say that tongue in cheek because we don't have territories. Now I know most franchises will give you a territory and that's a good thing because you get a hunk of land. That's your hunk of land and no other franchisee can come into that territory to take, eat your lunch sort of thing. In our world though, and that's dependent on demographics, traffic flow, the mix of competitors, all those things that are in that geography will dictate the success. of that location. None of that matters to us because we don't have territories. We allow our franchisees to get clients anywhere in the United States or Canada. So it is really wide open in terms of where their opportunities lead them. there's a lot of businesses that have multiple locations or they've got an alumni or a friend or a family member in some other state or country. And so we don't, we don't discourage building the business in that manner. Yeah, no, that's really cool. I mean, that would get a lot of candidates excited because They have this huge bandwidth to go out there and just find great clients to partner with. So let's talk about scale. Like I'm guessing a lot of people start as an owner/operator. Can you scale this business model? Well, you can. And I mean, there's two things I would like to say about that. mean, first of all, there's a leverage model built right within our model because we're the ones doing all the analysis. You know, there's no limit in terms of how much a franchisee can earn if they just simply keep adding clients to the mix. So that's one scalability comment I would make. But the other one generally relates, I grow my business to a bigger level? And the answer to that is yes as well. So we've got, I would say about 80 % of our franchisees work on their own and about 20%, they will bring on usually a subcontractor or two or three that will also acquire clients and present reports and really, I guess, mirror what the franchisee does just within their their business. So Dennis, talk about the 12 month royalty abatement program for new franchise owners. When did you launch that program and why? Yeah, you know, it was really something that just came to our mind when the pandemic started because we knew that there were going to be challenges that we'd never faced before. And it turned out that there really was. I mean, we didn't really know what they were going to be at the time, but we just thought, you know what, if we can have some new people join us and realize they're not going to have any royalties in their first 12 months, it's going to help them understand that we're really going to work with them. to help build their business. So we really started it then, but then we found it was really so helpful and so effective for our franchisees. We've just kept renewing it. And we examine it, I guess, every six or eight months and determine whether we're going to go back to normal or whether they're to keep extending it. But we've just continued to extend it. In fact, as I think it was just this week, we extended it again for another six months. We got the email. That's really cool. I mean, what a nice concession for new owners because that's usually the rub when you think about joining a franchise system. There's this royalty, what's the value proposition? You guys say, hey, join as you're ramping up the first year. It's an abatement, which is a really, really cool thing. So you obviously have some really high earners that are in your franchise system, some even eclipsing the million mark in net earnings, which is net, not gross. I know that's the exception, not the rule, but it's very impressive. So what are the characteristics of some of these top performers? So a new owner can kind of figure out how they can aspire to achieve similar results. You know, there's no real magic to it. There's no special skill or luck or anything. The difference between the person and I'll tell you, we've got people that do, like you just said, make that kind of money, but we've also got people that don't make anything. And the reason for that is they don't get out of bed. So that's really the only difference. The people that make that money have not done anything special. They just kept doing what we do and continue to march up the scale. You know, And this is maybe not something you really asked, but what this boils down to, and there's a lot of businesses like this that maybe don't acknowledge it's like that, but the model is 2060-20. And it's the Pareto rule where he said, and know, Pareto is a long dead guy that made up this theorem that says that in any organization based on client acquisition or any sales force, anything like that, 20% of the people, so let's say the top quartile, make 80% of the money. And you know what? I agree with that and I get that. But what he didn't address is the bottom 20%. They don't make anything. They don't do anything. Now in a sales force, they get fired. In a franchise, it's a puzzle because they made an investment. They went through training and got the same opportunity and yet they don't make any. So what happens here is that top quartile, they kill it. The middle 60% are lifestyle driven. That means they want to make 75 or 100 grand. That's what they make and they stay there. And then the bottom 20% are dogs. And I wish we could change it, but it's been the same way for 25 years. We try to help everyone, but any business like ours, including yours, Mike, it's a lot very similar. Very similar. Yeah, I get it. I look, you know, I'm a trainer at France serve. I meet a lot of the new consultants and I can usually tell within 15 minutes who's going to crush it and who's not. You know, sometimes I'm wrong, but it's a very similar phenomenon in our business too. And usually the reason in our world that someone doesn't do it is because they get discouraged because someone says no to them that they think should have said yes. Well, we tried, we warned people 15 times before they ever joined us. We know what our close ratio is. It's 30%. So, okay, if you perform an average, you're to get three yeses and seven nos. That's just the way it is. And really the question we want to ask people, are you a top quartile person? Because if you are, wow. Yeah, you're a big earner. So let's talk a little bit about the exit. In a business like this, it's a transactional model. Obviously, there's contracts involved, so that adds to some residual revenues. But does the business have real value when they go to sell? Well, it really does. And unlike most consulting businesses, the consulting business can be a good business. You can earn good money. You can get good renewals with your clients. But really, at the end of the day, there's nothing to sell because it's based on you, the person. In our world though, every client is a minimum of a three year annuity. And we've got a very high renewal rate as well when we treat our clients well. So that means every client is actually a long-term asset. So yes, it is saleable and we've had some pretty big ticket franchise sales. Yeah, that's exciting. So you guys are operating in the B2B space. You're helping businesses, small, medium, large. What are some of the advantages that you see of avoiding the consumer side of the business? Well, it's a more stable marketplace for one thing. mean, the consumer business is very fickle. know, they change based on the whims of the day, the pricing of the day, the trends of the day, that kind of thing. We don't have to deal with any of that. So we're dealing with a much more stable marketplace, but there's not enough transaction volume in any one of our expense categories with an individual household for it to be worthwhile. So we're going to deal with businesses that have multiple transactions in multiple cost categories. And that's why we stay to the B2B model. I hope that answered your question. totally does. you know, if someone is thinking about this, they're listening and they're like, this looks pretty interesting. How do you get in? What's the cost of entry to launch a Schooley Mitchell franchise? Well, you that's the other thing about this franchise. It's a fairly low cost. mean, the franchise fee is $73,000. And I don't mean that that's nothing, but you know, the system we've developed, you know, we spent millions and millions of dollars developing our software and our tools and our systems and our support and all those things. That's what the fee sort of covers and allows to get trained and get started. But there's no inventory, there's no vehicles, there's no facilities. So it's not a million five like a McDonald's, it's 73,000, that's it. And most people work from home, so there's really no ongoing expenses either. So they couldn't grow into an office if they decide to build a team or if they just want to get out of the house, but they can launch this thing from their house. I'd say about 98 % of our people work from home, but there are some that they just want to be outside home. But even some people that have employees or subcontractors, they still work from home and so do their subs. So it's really a choice. you mentioned earlier about the economy and do you find that your B2B model is recession resistant or recession proof? Well, I love this question because I can't tell you how many times somebody will say, we're recession proof. And they're really not, you know, unless you're selling essential goods or services, it's not recession proof because disposable dollars disappear. There's just no money. And that's not anybody's fault. It doesn't mean it's a bad business. It's just not recession proof, but we truly are because what do companies have to do in a bad economic time? They got to cut costs and we don't charge money to help them do that. So we're a hundred percent flexible or inelastic, so to speak, to economic conditions. So we've actually done better in bad economic times than, than others, you know, during the 2008, '09 recession, during the pandemic, during inflation, any other type of economic threat. we do actually very well. Now we do well in good touch too because we help companies expand efficiently. So yeah, there's a commonality there because in our business we find that when people are getting laid off like the big U S government layoffs, are like, okay, well let's turn to franchise ownership as an alternative to kind of control my future. sometimes when the economy kind of dips a little bit, the franchise consulting community's risen because we can help place these people in businesses instead of getting another W-2. Yeah, mean the reality is there's been studies that showed as many as 70 % of people would like to be in business for themselves. Only a small percentage pull the trigger, but sometimes that economic downturn, that's the thing that pulls the trigger for them. That's the push, So let's talk about the culture within your model. Do your owners collaborate? Do they compete? Do they do both? I mean, what's it feel like to be an owner in the system? Well, the market for what we do is so big that nobody feels any competitive pressure from each other. They really don't. We've got a very collaborative system. We have an annual conference every year where everybody gets together. And after that conference every year, we've got more and more teams of franchisees that collaborate to go after certain types of clients and work together. So it's a it. No, it's a very. happy environment. It's one of the things that we're most proud of here is how it feels to either work here or be a franchisee here. So I'm assuming that kind of translates through to owner validation. So if people are kicking tires on Schooley to see if it's a fit and they talk to owners, that validation process goes pretty well. It really does. now I do just a general caution for franchising and as a whole, you've got to be careful because if something bad or untoward happened in the last week. That's what you're to hear from the validator, no matter who it is. Especially on their mind, Yeah, exactly. So you've to be careful that you do enough or at least, I guess, judge it according to the system and not just what might happen to them in the last week. But yes, we have very good validation. We've got great people and very successful people. Yeah, that's great. So I've heard you say that you can't make a nickel until you give someone else a dime. I love that. It kind of really succinctly summarizes what you do for businesses. Why does that matter to you? Well, you know, we are all in this business to make money, that's for sure. But there's nothing better than having a great altruistic result as well. And that's what we're talking about here. And you know, we've got some great stories about clients that, you know, been able to keep their doors open, or they were able to keep an employee, or they were able to have a Christmas party, or help if it's a nonprofit help their constituents more. That's very rewarding too. And that's why we say, look, if I'm going to make a nickel, I'm giving you a dime. And that's really a powerful way. to tell people that they're gonna benefit way more than we are. Yeah, no, I love it. So tell me about the space. I mean, what's the competitive landscape like? Well, I'm not gonna say to you that there's nobody that does something similar, but most of those types of entities, they will go after those $50 to $100 million companies and up, which we do as well. We've done very big companies, but there's really nobody out there helping those local businesses, you know, the car dealer, the dental clinic, the accounting firm, the small wholesaler. There's really nobody and that's what we say to our franchisees, know, absolutely you can go after those big clients and you should, but you're going to have a free sort of approach to anybody that's in your community, millions of companies in that space throughout the US and Canada. And that's really no competition. That's a very big total addressable market. So let's talk about kind of where you guys are now. How many franchise owners do you have in the system and how many people do you have at head office to support them? We have about 320 franchises right now across both countries, US and Canada. We have 150 people on our support team here at Head Office. So we over support and we know we do. Payroll is awful big, I'll tell you that. But we really do provide a lot of special tools, special programs, special support. We provide every franchisee with a one-on-one coach. All those things are part of the formula. And then all the analyst teams that do all the work in all those 18 cost categories. that's all part of our support team so that franchisee really can just run that turnkey business. Yeah, I mean, a two to one ratio of owners to support is really pretty unique. You don't see that a lot in franchising. Usually it's one to 20 or something like that. So that's a really, it kind of shows that you're investing in the future of the business and supporting the owners. And that's probably why the culture is so great. talk about training. When someone enters the system, like what's the new owner go through to get up to speed on the model? Well, we do have a commitment to lifelong learning actually, Mike. to answer your question directly, once they decide they would like to be a part of the School of Management, we decide that it's a good match, they can train right away because we have training classes every month. The initial training is really one week, Monday through Friday and one day the next week. They're ready to go into business right away after that Monday through Friday. And I actually asked them all to get a client their very first week. But then we do have lot of ongoing training as well through webinars, through seminars. through distance learning, through our annual conference. There's a lot of training that continues to develop their ability to make more money. But to get into business, it's money through Friday and away you go. Yeah, I love it. Yeah, I mean, there's a lot of models that require a lease in real estate and lead times on getting vans and equipment. And you skip all that and get ready to your training and launch, which is pretty exciting for someone that's ready to get going. You know, just in my consulting network, Franserve, and I know you participate more than just us, you're awarding eight to 10 new franchise owners per month. You know, why are candidates flocking towards your model? That's a tremendous amount of growth. Well, I think it's because of all these things that we've been talking about. You know, it took a long time, a lot of work, a lot of money to develop where we are now. And, you know, that sort of volume you just talked about, that's recent. We grew fairly slowly and methodically for years. decade and a half actually. But this last year or two, have started to realize, people like you too, Mike, have started to realize what a great opportunity it is for people that have some business background. And I think that's the reason why. And we spend a lot of time building good relationships with you as well, right? Of course. Yeah. You're handing out $20 bills. mean, that's a good thing. That's not a bribery thing. Let's not get that out This has been a lot of fun, Dennis. Anything else you want to add to the mix before we wrap up today? I don't really, I guess I'm just always pleased to talk to you about our business. I'm proud of our business. I'm passionate about our business, but so are a lot of our people, including our staff, as well as our franchisees. And that again, is what we're so proud of here, what we've created. And it really was from an idea, dust, you know, 25 years ago. So that's great. Well, I appreciate your time, Dennis. And if anyone listening to the podcast would like to connect with Dennis and his team to learn more about becoming a franchise owner with Schooley Mitchell. contact me at FranchiseQB.com or on X @QBFranchiseQB. I'll get you connected. Thank you so much, Dennis, for taking the time to get in the huddle and discuss Schooley Mitchell with us today. Very welcome, Mike, and I'll do it anytime you want. Awesome. Thank you. Thank you for listening to the Franchise QB podcast where you're at the helm of your future as a franchise owner. If you enjoyed the content, please rate the show and recommend it to anyone that might be interested in franchising. Make sure to visit FranchiseQB.com to subscribe to my newsletter and for an actionable playbook to go from walk-on to legend in your new business. Follow us on Twitter @QBFranchiseQB and join us every week for a new episode. See you next time. franchiseqb.com. take the next step of your journey towards wealth, independence, and franchise ownership. And remember, when working for the man gets old, you must do something bold. Thank you for listening.