280 - John Prothro - FULL ENHANCED AUDIO
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Corey Kupfer: [00:00:00] John Prothro is an experienced executive with a background in M& A, operations, and multinational business leadership. He has lived and worked in both China and the United States. He holds degrees from Texas A& M and Vanderbilt University, where he was a baseball player. Currently the CEO of Foot Solutions, Inc.,
a foot wellness franchisor, John now lives in Milton, Georgia. With his wife and four children. John, welcome to the DealQuest podcast.
John Prothro: Very happy to be here. Thanks for inviting me.
Corey Kupfer: So, John, listen, I definitely want to get into your background at M& A and your, current role, operating a business where you have done some deals as well.
But before we do that, I want to take you back to when you were a little kid growing up, maybe 10, 12 years old. Where did you want to be? Because, I'm guessing either an M& A guy or a operator of, of a foot wellness franchise probably wasn't it at that time, but you tell it.
John Prothro: No, I think the first time I started thinking about it, I think I wanted to be either a running back in the NFL or [00:01:00] a, or a Forester just like, well, I like to be outside.
So. I'll go work with trees. I don't know what I thought, probably just ran around outside.
Corey Kupfer: I love it. I love it. When did you figure out what, that you weren't big enough for an, for a linebacker? Did that come as a result?
John Prothro: Actually, It was at an Auburn, when I was a junior in high school, Auburn invited me to come out to their camp, and I'm sure they just, you know, get as many kids as they can and make money, but they said they wanted to look at me.
Ah. And I've, I remember, I was pretty fast for like a small high school kind of thing. Yeah. And I remember going out there, and there was a guy that I was rooming with. He was, he was, I want to say he was six, six And, 30 pounds heavier than me in muscle and, you know, four or five inches taller than me.
And we were all out there running and he was keeping up with me.
Corey Kupfer: Right. Yeah.
John Prothro: And I thought, you know what, this is probably not going to be my, probably [00:02:00] not going to be my sport.
Corey Kupfer: You might need to do something else, huh?
John Prothro: That's right. Same with basketball. When you're a senior and you can't dunk, you might as well give it up.
Corey Kupfer: Yeah, exactly. I love it. One more question. Looking back, what was your first deal of any type? It could be something small when you were younger or early in your career, or anything that comes to mind that was the first deal.
John Prothro: The first deal that I can think of was, selling horses. Actually, I've always liked to do random things and, a buddy of mine, I was, I think I was probably the poorest kid at Vanderbilt or one of them.
And, a kid, I was out in my single cab F 150, which, was pink because it was a red truck, but it was so old that it had faded. So I had a pink, single cab F 150. And actually, I did this deal with the guy that, that sold me that truck, a friend of mine. But, I was out on a, it was an icy night one night and one of the wealthy kids at Vanderbilt Hit the back of my truck, slammed into the back [00:03:00] of my truck and kind of bent the bumper a little bit.
And, so his insurance company just came out and gave me a check. I mean, it wasn't a huge check, like 750 bucks, but I thought I was rich. And so I, of course I didn't take it to get it repaired. I just put a jack underneath the bumper and like just creeped it back up to make it look normal.
And then I called my friend and said, Hey, those videos that we have about how to break horses, why don't we buy a couple of horses over the summer? And, I'll watch these videos and break it. That's how stupid I, you know, I've done some pretty stupid things. So that's probably one. I will.
But we, we did, we bought, he's like, all right, I'll come in with you. So I took my 750 and he put in 750 and we bought a couple of, green horses and watch these videos about how to break them. And at the end of the summer, I just [00:04:00] went out and visited them every day and worked with the horses every day.
And then in the summer we sold both of them and, it was, we actually made good money on it. It's. It was pretty crazy, but of course, I nearly broke my neck at one point, I, I was riding one of them and the saddle I had bought was so old. That the stirrup, the leather had rotted and the stirrup broke and I fell off and got knocked out.
And my buddy drove me to the hospital, but went to the back room where he knew where there was a doctor there that he knew, cause I didn't have any insurance either. Right, right, right. And so the guy looked at me and said, yeah, you got a concussion, just, you know, I think wake up every hour or something at night.
But anyway, it was a crap, nearly broke my neck trying to make, a few grand over a summer, but I got tossed off those horses a few times, but it was, yeah, it was the first deal I ever did.
Corey Kupfer: Ah, that's great. I feel like, I feel like no interesting person I know hasn't had, some story where we did, at least one and probably many.
You know, [00:05:00] several, younger days where we did stupid stuff that could have killed us and, you know, thankfully we're still here, you know, I, I've got some,
John Prothro: that's amazing. We have two girls and two boys and the boys are definitely in life threatening situations just about every single day. You just have to think.
Corey Kupfer: So, before you, got into the business, you are now, you know, Zabra, you had an M& A intermediary. So tell us a little bit, well, first of all, how'd you get to doing that in the first place? And then, I want to get into a little bit of that experience.
John Prothro: So I was doing organizational development, organizational communication, post merger integration planning for a large company.
And I kind of didn't like the wait your turn sort of mentality in big corporates. So I started going to some ACG conferences and IBBA conferences, if you know, those sort of intermediary groups and introducing myself to, It's for the smaller M& A advisory groups, and I met a [00:06:00] fellow, who, he was kind of wanting somebody to come out and go out and do some deals for him and do all the travel.
And he was getting a little older and sort of moving towards retirement and offered to do that for him. So that's how I got involved in, intermediary work, really just deal making kind of thing.
Corey Kupfer: Right. And, and so tell us about a little bit of that experience. What did you learn in those early days?
What might've surprised you? Let's just start with that. What did you learn in the early days? What might've surprised you?
John Prothro: Well, from a business owner perspective, and now I'm sitting in that seat, but what was really interesting to me was how much of the decisions made were emotional.
Which is completely understandable, when you think about it, it is something you put your heart and soul into. And if you're selling a founder owned business, you gotta take in, you gotta take into consideration a lot of the emotional intelligence things that you wouldn't really be thinking about if it was just sort of a [00:07:00] private equity deal changing hands to another private equity group.
Corey Kupfer: Yeah, I love that point. I've given an example, on this podcast before of a situation and I actually have had this similar situation while at once, but I would take a situation where a, a deal that, should've gone through, there's no issue on the numbers, the, you know, the fit would seem right, everything was going forward and then it got snagged up.
And what I figured out was that the, the seller on the other side, we were representing the buyer. You know, just there was something going on for him emotionally, it's been his baby right for 20, whatever 30 years was, I don't think he knew what he was going to do with himself after it was over.
They saw it to get cold feet because that, and, and I said to my, I said to my client, I just sensed that and I spoke to the other attorney. So you got to feel it and ask it outright. But, I said, listen, I said to my client, listen, I think what's going to get this deal done is offer this guy a title, Sharon Emeritus.
And let him keep an office and that's exactly like that got the deal done because the guy still had someplace to go. He felt useful, he [00:08:00] wasn't totally separated from the company. I have no duties, by the way, had no even compensation, right. But had the title and had the, had an office, for as long as he needed it.
And that really got the deal done. And that's, you know, just a small example of. The point you make, I don't know if you have any other examples.
John Prothro: Yeah, yeah. I can see that. No, I've noticed even people who know they're walking away and want to walk away, if they don't trust to buyer, they won't sell it to them, you know, and some of that's about employees.
I get it. But also there's a huge legacy element, to, to these founder owned businesses. They, I had someone say, Hey, you can buy the company, but you can't change the name. And I said, well, I, we're gonna own it, so we might change it. I don't want to, like, that's not my plan, you know? But there's a big legacy element.
They built something, they wanna see it carry on for generations even after they're gone. It's something they, they take pride in. And I don't blame '
Corey Kupfer: em.
So how long did you do [00:09:00] the, M& A intermediary, stuff?
John Prothro: I want to say 10 years, a dozen years, something like that.
Corey Kupfer: Yeah. Yeah. That's a long time. Any particular fun, interesting deal story, unusual deal stories that come to mind?
John Prothro: Maybe, well, if you'd have prepped me before the call, maybe I'd have
one.
Corey Kupfer: You know, I, as my audience know, I purposely open up people not to catch anybody, but, I like the unpreparedness that come up, but it never does come up sometimes. So, and if you don't have it, it's no big deal. We can, you know, we can move on, but, anything come to mind?
John Prothro: Yeah, maybe revisit it at the end of the, at the end of the podcast and I'll, I might have thought of something about it then, but, I mean, there's some real, I've had some crazy good experiences, and some bad ones. I mean, we, we came, I came back to the U. S. from China to open an office in Atlanta in 2012.
And, we did a couple of good deals in 2012 that paid the bills and everybody got nice commissions and, you know, good, the whole thing. And in 2013, it was a real struggle to get things up and going [00:10:00] sort of the beginning of the year, but then back half of the year. I was, we were crushing it.
We were crushing it. We were doing some consulting things and we were, we had three pretty large deals that were going to close in the fourth quarter of 2013. And all three of them collapsed last minute. It was like the worst scenario you could have. And I had told the founder of the business, the owner of the business.
My deal with him was I'll come back and open the, open this office for you, but I want a net, a high net profit, share. I want to, I want some profit sharing and you don't even need to pay me a salary. I'll just, I will, but I want a real high net income share. And of course I had an office and people we were paying.
To do the work and I was the only one relying on deals. And so I had to call him, had to call him at the end of the year and say, Hey, I'm technically a W2, you're actually going to have to pay me 17, 000. [00:11:00] So in 20, in, in 2013, I remember. I had two children, two young girls, and a mortgage and I made 17, 000.
Corey Kupfer: Wow. Well, that is a number close to my heart because in, 1992, when I launched my own law firm after being at, big and medium sized New York City Farm doing big law and then medium sized law, and I was six years out of school and I was, 30 years old and, 31 years old, whatever it was.
And, I had no clients. I went from making, I was about to get a raise to make over six figures, which back then was big money. And my first year in my own law firm, I'd edit 17, 000. That was my, that was my, income. In the first year.
John Prothro: There's, there's E, what'd you kill? And then they're starving, and sometimes you have to be willing to do that and take those risks.
But, it ends up paying off typically or a lot of times and it's worth it. But you, if you want to, you know, if you want to make something, you want to be an [00:12:00] entrepreneur, you got to be willing to. I actually do that.
Corey Kupfer: Absolutely. I mean, I will know. Yeah. Yeah. I said, I know those numbers 17 first year, 38 second year, 78 third year.
And then by the fourth year, I was making more money than I would have at the big farm and then have a back. But it, you know, it took three years. I was paying my rent on credit cards. So, you know, that was the classic entrepreneurial story. So John, let's talk a little bit about what you are doing now.
We'll get to the deal end of that, but just generally tell us what you're doing now on the, you know, running the company as the operator now.
John Prothro: Yeah. So when I was doing intermediary work, I was always looking for co investment opportunities and trying to do, you know, roll my fee and that sort of thing.
Cause I can see that's where the real money was. You could make a nice commission on selling the company, but the real win was on that sort of back end sale, especially in a good deal. Right. Right. And I was also making good friends with some of the longer term buy side clients who were working with some strategic, buyers, and also helping people on the sell side.
So I made some good, friends who [00:13:00] are still my friends and high net worth people. And several years into doing that, actually, I was moving a lot towards consulting in a lot of ways. So we were doing a lot of consulting. That was a little bit outside of the M& A realm, but still kind of within it.
And, and one of our clients actually asked me to come and run their business for them on the day to day operations. So I did that for a few years. And when I left there. I'd kind of felt like, Oh man, I'm invincible now I've got the operation side and I know deal making. All right. So I'm going to go find, something to buy.
Or we were actually, so I talked to the friends that I had that, you know, hadn't become like good and, I'd done deals with and we had a good trusting relationship and they said, sure, we'll put some money together and I'll go buy a portfolio of companies. Well, then, while we were doing that, while we were putting the whole fund together, I still have all the documentation, actually.
I met, I met the owner of Foot Solutions. I think he was 79 or 80 years old when [00:14:00] I met him. He's since passed. But, he wanted to sell his business. And it's a real niche, business. There's really, only two companies that do sort of foot care at a retail level, on a national basis. And his was one of them and it was a franchise model.
So, you know, the cash dynamics were good. But it was slowing down and he was slowing down and he had let a lot of things slip. And he would have told you that, I'm not criticizing him, he had let a lot of things slip because he sort of cashed out the business a little bit. But I really, liked and still love, the actual economic characteristics of the business.
And I love the niche part of the business because it's in a market. If you just, we sell footwear and, custom orthotics. But we do it as a service business, so we're, they're highly trained experts in the stores. Then if you come in and you've got foot, knee, hip, lower back pain or balance issues, something like that, we can recommend the right [00:15:00] footwear.
We can design custom orthotics. And there's a whole analysis piece of it. And we're really getting people healthy on their feet. That's great. And that's just something that is. It's incredibly in demand right now. So just about everybody I, when I first, even when we're looking at buying it, we would tell people what we're doing.
They go, Oh, you know what? I have this thing, you know, everybody's got a thing, you know? And what you don't, people don't realize is their knee and hip pain is oftentimes related to what they're doing under their feet and around their feet, and lower back. So in any case, I worked out a deal with him and I called, my investors and I said, Hey, look, Let's shift gears here.
Let's buy this. Let's put our money behind it. And, I'll run it. I don't want them to do a portfolio. I don't want to be a private equity group. I want to run this business because it's got some legs. And then a week after we bought it, the first COVID death was announced in the U S.
So,
Corey Kupfer: Just in case the audience missed it, right. This is a [00:16:00]
John Prothro: this retail wellness retailer that serves primarily boomers and up with brick and mortar Yeah with brick and mortar and mortar franchises so we We then, our revenue, you know, went to basically
nothing.
And we had gone, we went into it believing that we were going to make all these major changes, because the business needed to be revamped.
And I remember the conversation, with one of my business partners. I just said, well, we either believe in this thing or we don't. And COVID's not going to last forever. So let's go and, let's go do this. And so we decided we're going to do it. We've, we ran into loss for a long time.
We just invested every dollar we had and, scraped by and bootstrapped it. And I've got some real supportive investors. They put a lot of money into it, as well. And we spent really from the time we bought [00:17:00] it. That we spent three years turning into something that we thought, could support, a franchise system.
And so that required us to go buy some companies. We bought a pretty large company down in Florida called Happy Feet Plus. We bought some technology things. We signed some licensing deals. We got a, we, now I feel like, well, I know, I don't feel like, we have the people and the processes and the technology.
That's the three pillars, right? Yeah. We have those three things in place. And so in January of last year, we started selling franchises again.
Corey Kupfer: And it really And you had, you had halted the franchise, or COVID had halted, what?
John Prothro: We sold one to some friends of one of the owners. Okay. And we even told them we're not really ready to do this just yet, but, and they've been doing well, and I think they're glad that he did it, but, we really just we said we're not ready.
We don't have, we don't have the scale. For one thing, you gotta support people. Right. If you don't have any scale, you can't have talent. And now we've gotten both. So we're proud of that.
Corey Kupfer: [00:18:00] That's great. All right. So there's so many deals you mentioned in that last segment, I want to break them down.
So you got it. First of all, you raised capital. That's a deal. Second of all, you bought a business. That's a deal. Third of all, you, once you own this business, you have acquired other businesses. Those are deals. You mentioned licensing. So, and then obviously even just franchising is a deal, right?
Every time you do, you know. Yes. Yeah. All right. So we're not going to cover all six of those, whatever number of those types of deals there are. But, I'm curious about a few things. I mean, one thing you said, you've had patient grade investors, right. And obviously, we've had, all kinds of people on and, you hear everything from that to horror stories, right.
In terms of investors. So, you know what, give me just one or two sort of tips or things. I mean, do you think that's because. These are folks you knew already, what are the other criteria that you've added in terms of your investors, to have such a touch, you know, good and patient understanding investors, which obviously is a big factor in, helping you.
John Prothro: Yeah. I mean, it helps that we're friends. It helps that we're friends and genuine friends and [00:19:00] people say, don't do deals with your friends. It can mess friendships up. Right. And that is true. You can mess some things up, doing that. And you go into it with your eyes open and, I'm not really spending their milk money.
Okay. I mean, they're, in one case, in one case, it's a friend who manages a, a family office that's over a billion dollars. So, buying a small franchise or was not exactly, breaking their bank. So, I'd say. Something we've learned the hard way, when you do deals you've got to really overestimate what you're going to need, in terms of integration capital.
We, you cannot be undercapitalized and in the minute you realize you're undercapitalized, you need to immediately go out and get more cash. Yeah. Cause you start trying to bootstrap it and then other things start falling apart and you're. You know, you're left holding the bag or you have to then rebuild after you did it.
So, we just raised, we had a, we had another round, and our investors came in at a really nice valuation, which reflected the growth that we've [00:20:00] gotten, but I should have done it probably a year prior. Yeah, because I let other things drop while I was bootstrapping, you know, the mistakes I was making for being undercapitalized.
So honestly, I would say, you know, take what you think you need to integrate that business. Look very closely at the software and IT, that sort of infrastructure. Yeah. Because for a while you're going to, you might be running two different systems. Well, guess what? You're going to need more accounting admin to help if you run into two different systems, or you're going to run those people on the ground and they're going to quit.
Right. Right. And you're going to need about probably three X the money you think to get the technology talking to each other. So we're really happy we're adopting that suite on the first. I am, I'm a first of February. I don't know where this is going to launch, but first of February. So, we're making good stride and making progress every day, but.
You, whatever you think you need, go ahead and triple it, and make sure your investors are clear out about that piece. You can always give it back to them, [00:21:00] right? But just doing the deal is not enough. You got to have enough to integrate to,
Corey Kupfer: so, okay. So that's a little bit on how you funded and yeah and philosophy on raising capital.
I want to go back for a second, even let's talk about on the buy side of this, you know, buying this company. So, you're looking at a company that has, a level of success that not untypically, I'm not saying this always happens, but certainly it's far from a lone story to have a, an aging, founder where, things are, you know, are stale or, not really keep it up.
And that, you know, creates, I mean, on the buy side, obviously that creates opportunities. So when you looked at this business and you said, okay. I see the value in it. I also see the, problems in it, which makes opportunity. Like, what did you think you, I want to contrast before you actually didn't know what you discovered when you really got in there.
Like, you know.
John Prothro: Are you saying those are different? Are you saying they're different?
Corey Kupfer: Let me put it this way. If they weren't different from you, you'd be the first person in history that they weren't different from. So, maybe you're a unicorn. I don't know. [00:22:00] So, okay. Bye. Yeah. So when you were going into the buy side, you said, okay, I've identified, what's good here.
I identify where, you know, where there are challenges with the opportunities. Like, what did you think the focus was going to be to bring additional value to this, beforehand? And then what, you know, was the reality of what it took, once you got in there? And obviously you had COVID in between, which caused the whole thing, but maybe absent the COVID issue.
Yeah.
John Prothro: Yeah. Well, the big things I would say we were spot on, we were spot on. The brand itself was disjointed, and, the franchisees had more or less just sort of started running stores how they wanted to. So if you went into Affiliate Solutions over here, I remember one of the first meetings we had, I said, guys, we're a McDonald's franchise and not everybody deserves Big Macs, you know, we've got to get, we've got to get this system up and going.
And I would say the biggest learning curve I had was, on the technology side, cause I didn't understand custom orthotic [00:23:00] design and construction. Well, I understood how they were doing it. And they had a big lab and when we bought it, they had a big lab, there was a lot of casting, and hand pouring, casting and grinding, and heat molding.
And there was a big production element to the business. And I'm so thankful one of the franchisees after we bought it came to me and said, Hey, you don't have to do it that way. Matter of fact, I will introduce you to the folks, over in Europe who are 3d printing these things. And they've got CAD CAM software for design, that was built specifically for custom foot orthotics.
And so it was pretty shortly after that, that I started thinking, Oh, we don't have to have this enormous, you know, manufacturing infrastructure. Let's, let's go and look and see what they're doing. So now, about 70 percent of our orthotics are printed, 3D printed, and that, that percentage has grown.
It grows really every month as people get more and more accustomed to them. [00:24:00] Great product. As a matter of fact, you can build a spaceship with it. You just, you design it and it just happens and there's no room for human error after the design is done. There's no room for human error. It just prints.
But in, and about 30 percent of them are still milled, but we don't have to have the enormous sort of manufacturing infrastructure that they have.
Corey Kupfer: And now that the 3D printer, have you also decentralized that or do you still do that? Yeah, that was
John Prothro: the other thing.
The lab really, didn't make money. And, we're actually put 3D printers now on the floor, flagship stores. So we're doing it regionally right now, and feeding as a hub.
Corey Kupfer: Any other differences come to mind on what you thought you'd focus on or issues were and what turned up?
John Prothro: Yes, but I would be throwing people under the bus. I don't know.
Corey Kupfer: Okay. Okay. Got it. Got it Yeah, and that's a but listen, that's a real I mean without the specifics That's a real point, you know in deals [00:25:00] is that you know Not everything you're told about every person you thought was gonna perform or whatever, you know turns out and You know, listen, it's one of those things where, you know, one of my favorite expressions that I say to folks, including my team is, hey, if it were easy, everyone would do it.
So yeah.
John Prothro: Yeah. You know, it's funny, but that my wife is an incredible, charming woman and, I wasn't used to getting sued. Okay. And, we, we got sued for something, an ambulance chaser type lawyer kind of thing, suing us for, I don't know how much I can say, but, cause it was settled out, but so ticked off about it. Of course, I've been involved in lawsuits before. You can't be in business without being involved in lawsuits. I was so mad about it. And she said, look, if you want to be a big businessman and you want to make yourself out to be a tycoon, you better get ready, you know. And stop worrying about it because you're gonna get sued.
People who have problems with you. And, [00:26:00] and that's just the way the world works. And she said, you can decide you want to go do a regular nine to five and work for the man and let him worry about it. Right. And I thought, eh, that's good advice, I guess. It's a good, it's sort of a good sign if you're getting sued, right?
Corey Kupfer: Yeah, yeah, it's, you know, and, In Neuro Linguistic Programming Technology, they say that's called a reframing, you know, so the reframe is, oh my god, I'm being sued, the reframe could be, wow, somebody, like, I'm important enough, I'm successful enough for somebody to sue me, wow, that's pretty cool, you know.
John Prothro: Yeah, yeah, yeah. Yeah, alright, yeah, the first time you get sued for money you don't even have, you're like, okay, great. They must think I'm more successful than I am, right?
Corey Kupfer: Exactly.
All right. So I want to talk a little bit about two other aspects of, a little more of the franchising and then maybe a little bit on licensing.
So on the [00:27:00] franchising, so what is it, I mean, you know, we've had some folks on who've been in the franchise world, but, in fact, you know, one person, we had a recently who, who, you know, puts together franchise deals and things like that. And, But, as a franchisor, as operating a franchisor, that's an interesting business model, right?
I mean, if it's done right, it can be really lucrative and very successful. But at the same time, there are all kinds of, you know, all kinds of pitfalls that range from, how do you build the systems and keep franchises, in line, picking the right, people to be successful, regulatory, issues, that kind of stuff.
So, what does it take to build a successful franchise model or to, rebuild or revamp one that you've, that you've bought that had, you know, some level of success, but obviously had problems. .
John Prothro: Yeah, I don't think it's any different than basic, blocking and tackling in business.
I think you've got to think about differentiation, because the world's full of limited resources and someone's got to be what come to you rather than something else. So if there's an opportunity cost, you want to be the one, the opportunity that people want. [00:28:00] And that goes from the customer all the way to the franchisee.
I think we've done a successful job and when we opened franchising back up, I think, we did a real good job of selling franchises by being. Very transparent. And having, you have a lot of people walk when you say, look, this is an annuity investment, tell everybody this, I could do it in my sleep.
John Prothro: It's an annuity investment, you're probably going to lose money in your first year, you might break even, but you're probably going to lose money in your first year. But every single customer that walks through the door in years one, two, and part of three are probably going to be people you had to earn.
Now let me tell you when somebody comes to a foot solutions, they keep coming back, they always, they, they will come to you until the day they die. And then they'll bring their daughter or son with them too. And then that personal. So the lifetime value of a customer is huge because we do a great job all the way up from when we're selling a franchise, we're very sincere and honest with the people who are buying them and then [00:29:00] that bleeds over into the people who want to be franchisees.
They're, then their staff, they're taught to do that with the customer, right? And so it's a real high customer service, high, touch business that keeps people coming back. But it takes a little while to get there. And so we tell people like, you know, don't expect this to be a home run right off the bat.
You're gonna get, but you can, if you get to a point where the store is mature and we've been selling mostly to investor folks, multi unit investors. If you can get to a point where the store is mature, now you've got something that's just going to last you. It's just going to last you and it's just going to keep kicking off cash.
And it's, you're just going to see the same folks come back and they're going to tell people a word of mouth is going to be huge, but you got to do it right. So I don't know if I'm answering your question, but, that you are. The way to, to wait, the way I've found to be successful in the franchising space is just to be like, just differentiate [00:30:00] yourself by being honest about what's going on.
Corey Kupfer: So you said you're selling mainly to investors, so is it Are you selling territories or, geography wise, which is, generally what's done. And so that's, that's. Yeah.
John Prothro: Yeah. So we will, we'll sell a multi unit, territories. Typically somebody will say, Hey, I want to buy a city and we'll say, well, let's look and see reasonably how many spaces there are within that city that, and we sell them multi units.
Corey Kupfer: And is it a model where they're. Master franchisors, and then they have subfolks or where they're just on multiple locations and then hire people and run them.
John Prothro: No, they're just on multiple locations. Yeah. Yeah, great. We do have some master type, relationships. The fellow in Ireland, he has, eight stores in Ireland and two in the UK and he's a master.
The fellow in Canada, has, I think four or five. And he's gonna be growing that pretty aggressively.
Corey Kupfer: Right. So, international. Okay, so, is there anything else I haven't, you know, for me, I'm not a franchise lawyer, I know some folks who do [00:31:00] that or prefer that work out when I get the legal work, but I have reviewed, especially on the franchisor side, because putting together those models is illegal, you know, I have reviewed stuff from the franchisee side, and usually, the details are all around, obviously what percentage of revenue, whatever you put, you know, paying, the franchise fees, but then also like what kind of support, and this is the big thing, right, where franchises go wrong, right, is what kind of support are you getting from your franchisor, are they capitalized well enough to do that, do you have some sort of guarantee advertising spend, you know, Things like that.
Right? So I'm assuming those are some of the things that you have been working on, to get that, you mentioned getting the team in place and having the right infrastructure before you started reselling, you know, franchises again. I'm assuming that's, those are some of the things you work on, right?
John Prothro: Yeah. So if you're considering investing in the franchise, those are all important questions to ask and, try to get a feel for what really is behind, the salesperson. And a lot of them are using, FSOs, Franchise Sales Organizations, to sell their franchises. We don't do that. There's nothing wrong with doing [00:32:00] that, but we don't do that.
But you really need to make sure you talk to the business and see the org chart really. I mean, that's what I'd be asking for. Give me the org chart. Is that person a contractor part time or is that person a full time employee? And then get a sense for what you got, because I think you got, you have a lot of early franchises.
Yes. And I don't blame them, but they, you got sort of one head and then a three or four people that are on the website, you know, that are, they're just contractors that, maybe hadn't some, a little bit of value here and there, but is there a real group of people there behind?
The franchise able to support you and if there's not, maybe it's still worth it, maybe, but at least you're going into it with your eyes open.
Corey Kupfer: Sure. Yeah, I mean, listen, it's like anything else. It's a more early stage, more speculative investment, right? You know, what will the franchise system work out?
It's like, buying into early stage companies or buying that first house in that development. Be, I was actually just on the phone this morning with [00:33:00] a. Hospitalization. A, attorney, a colleague of mine who I, reached out to. He goes, well, we may do something in Mexico.
Corey Kupfer: And, one of the things we're talking about is, the fact that, well, it's great. You get precurricular prices when you get in early in these development communities, but. If the developer runs out of money and they never build the common, areas and, you know, the pool and the tennis court and the, the big rec center and the, whatever that they promised.
Problems. So it's the same conversation everywhere. The last kind of deal I want to touch on, because you've done so many before we go to my final two questions, you mentioned licensing and some people even confuse licensing and franchising. They're totally different things.
Not only from a legal point of view, a regulatory point of view. But what do you, where do you get involved in licensing deals?
John Prothro: On the product side, typically, on the product side. So we, we carry a product, we license a product from Italy that's, a high frequency shock absorption technology, which is pretty cool.
It was actually on a shark tank. Okay. And, if you hit your, you know, everybody, we always say, if you hit a [00:34:00] metal pole. With a bat the sting that's going through your hands. That's high frequency shock And when you walk and run and jump and all that stuff you play in sports a lot of tennis players buy this product from us It's called no e no e any But it create it prevents a lot of aches.
Let's just put it that way it reduces that shock that goes a back 30 But we license that product We have an exclusive license on a pro a massaging sandal it's a Japanese invented, product now, now owned by a company in Dubai or at least partially owned by a company in Dubai, but really helpful for circulation.
And so it's, but it's super unique. And of course we're a distribution, a way to distribute kind of super unique foot health. Products, right? So it's a win win. We have a license with, the technology provider that we use the CAD CAM software and 3d printing, company. So yeah, it's a good, those kinds of deals [00:35:00] are always win wins or at least the ones we put together.
You know, you, I don't, it's harder to do it with a bigger, more established company. They're going to want more out of you, of course. But if you can find, if you can keep your ear to the ground and find things that are unique and good, you can get in early with them and everybody wins.
Corey Kupfer: Yeah. Love that.
You know, one of the things before I come to my final two questions that I want to point out to the listeners is, one of the things I talk about all the time on this podcast is the mindset of a deal maker. And I also. And even the fundamental premise of the podcast, like one of the reasons I really launched this is because I believe that deal driven growth is an underutilized tool.
It's not for everybody, but it's an underutilized tool. So many entrepreneurs are banging their heads against the wall to, or even if they're somewhat successful in growing their business organically. Getting more customers, getting more clients, getting new sales and marketing, providing great products and services.
Obviously that's got to be the core of any business. And if you don't do that, well, you're not going to, you know, most of the time you're not going to do deals to get your way out of it, but there is this additional way to grow through deal driven [00:36:00] growth. And so many companies don't take advantage of any of it.
And some folks only think when they think of deals, they only think about capital raising and M& A, which are two of the types of deals you have done. But then on top of it, we talked about franchising, we talked about licensing, right? There are other types of deals that, that people could do. So, you are just such a great example for the listeners for the whole reason I do this podcast to try to get.
Entrepreneurs thinking like, wait, if I've got a, in fact, there's a talk I'm going to be doing, and, and, Singapore at the, entrepreneurs organization global leadership conference. On, and it's basically, I'm going to do a talk, but then I'm going to basically do hot seats with entrepreneurs and I'm going to say, all right, what is your biggest problem, frustration, issue, okay.
And then what let's brainstorm about deals that can help you, do that, right. And there's so many examples, whether it's, getting into a new market, whether it's. You know, our industry, geography, whatever. Yes, I'm not, there are times when it makes sense to try to do that organically, to try to hire people in that new geography or put your salespeople into that new market.[00:37:00]
But there are times when a joint venture is to do the go, it's might be a better way to do it. You could theoretically have tried to develop. Those things that you licensed, right, and, but in your case obviously was, the better decision you decided to license it from somebody else.
So, you know, I just want to sort of bring it home here, cause you've done so many kinds of deals that it's clear that you have this mentality that, Hey, yes, we are going to grow organically and all that kind of stuff, but we also are going to look at deal opportunities.
And obviously you've got to the point despite COVID and all the, challenges to have this thing be very successful, I think, in part because deals have been part of the strategy.
John Prothro: Yeah. And you can break a lot of things doing deals too. I mean, you can drop the ball and you can, cause all sorts of disruption and complexity.
And we had our, we had a dinner last night with our, corporate team. And, you know, I had basically just told these guys, look, I'm sorry, you're working so hard. I just can't help it. I can't help it. Every time they turn it around, I'm asking them to help me put another deal together, you know, to make [00:38:00] it work.
But you're totally right. You're totally right. I think, the mentality really has to be open palm. Because You have to be willing to give up some things, you know, if you're going to do deals, you got to be willing to let other people win while you win. You got to be able to open your books up to folks to, like most deals are going to come with some minimum purchase requirements.
You know, you got to be able to tell them I had a bad quarter. I didn't sell enough of your product. Let's work this out like that kind of, but it's a much more collaborative type of approach. And I really do like it. I really do like it. I don't, I'm not against putting my business.
I mean, I don't want to say too much, but I don't care about being a big thing all by myself, you know? I'd rather be a real small part of a huge thing, you know, because I'm, it's just not my mentality. I just want to see, it's just fun to see the thing grow, it's just fun to watch.
It's fun to [00:39:00] watch it and be a part of something that gets bigger and changes and adapts and I'm probably the most boring person in the world when it comes to adaptability and, changing and technology. I like to bird watch. Like I, I'm not a, but in business, I just I like the technology side and I love seeing what other people are doing and collaborating with them.
It's just a, it's just
Corey Kupfer: fun. It's fun.
Love it.
Love it. So John, if people want to find out more about your company and everything that's going on, what's the best place for them to go?
John Prothro: Footsolutions. com. You can find me on LinkedIn too if you want. But if you're a software salesperson, I always say this, don't reach out to me.
I'm not interested. Speaking of which, if there's an entrepreneur out there that you're into coding, please create a LinkedIn where you are, you're kicked out if you try to sell somebody something.
Corey Kupfer: Ah, there we go. I will, I will do it. I love that moment. I love that. Yeah. I get all of us. I get.
John Prothro: FootSolutions. com. And if you go, if [00:40:00] you're. If you're interested in franchising, you always go down to the very bottom. We sort of bury it cause we only want serious people reaching out to us to click on the franchising link at the bottom. But, you know, reach out to me on LinkedIn and hopefully I'll see it in between all the software sales messages.
Corey Kupfer: I love it. Great. John, my final question on the podcast though is about my highest value in life, which is freedom. And to me, that means everything from, freedom for promote people from oppression around the world to why I've been an entrepreneur for decades and I haven't had a boss. What does freedom mean to you and what is, how does it impact your life and business?
John Prothro: Well, I tell you, if you're into freedom, you support the International Justice Mission. It's about a hundred million dollar organization, I think even more, based out of DC that, saves people from sex trafficking and, slavery around the world. And they have offices, they go to, you know, really dangerous places and set up offices and partner with local law enforcement to save people and then rehabilitate them.
So look into [00:41:00] IJM. org, I would say, if you're into freedom. I don't even remember what the question was, like, how do I, how do I value freedom?
Corey Kupfer: Or. Yeah. I mean, what does freedom mean to you? And you know, do you like the business?
John Prothro: Man I tell you it's, as long as you're working with people that you really enjoy working with, I don't mind managing up, I like it when my board comes to town and they challenge me on something, I like it, because I like them, and I trust and admire them.
But I would say freedom to me is having, being able to work with people you enjoy, and, and having time to spend with your family. We gotta really, God's blessed us with such a tremendous good family. I just, I love being home, and the more time I can be home. I don't want to do it. So, at some point, if I ever get slowed down a little bit, it's going to be nice to spend more time with them.
Corey Kupfer: Love it. Love it. John Prothro, thank you for being such a great guest on the DealQuest podcast.
John Prothro: Thank you for having me. I had a
great [00:42:00] time.
