Episode 63: Feeling the FUD: Dana White Fears She Isn’t Ready to Franchise

Episode 63: Feeling the FUD: Dana White Fears She Isn’t Ready to Franchise

Introduction:

This week, Dana White tells Paul Downs and Jay Goltz why she’s experiencing FUD—fear, uncertainty, and doubt—over whether she’s really ready to sell franchises in Paralee Boyd. She’s concerned because her hair salon is having some issues with customer service. On the other hand, her head of operations, Ashley, is telling her, “If you wait to expand your business until every customer is happy and until everything is perfect, you will stay at one location for the next 50 years.” Plus, Paul resolves his cybercrime, and we find out whether Paul, Jay, and Dana have done anything to prepare for a ransomware attack. It turns out one of them has.

— Loren Feldman

Guests:

Dana White is founder and CEO of Paralee Boyd hair salons.

Paul Downs is founder of Paul Downs Cabinetmakers.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Paul, Jay, and Dana. It’s been a few weeks since we’ve sat down together. Let’s catch up. Dana, what’s going on with you? What’s new in the world of franchising and Paralee Boyd?

Dana White:
The FUD, as we like to call it in the franchising world. It’s called fear, uncertainty, and doubt. The FUD is what’s going on.

Loren Feldman:
Wow. What does that refer to?

Dana White:
Fear, uncertainty, and doubt.

Loren Feldman:
About what?

Dana White:
Franchising!

Loren Feldman:
And is that a term that you came up with? Or is that what people in the franchising world say?

Dana White:
That’s what people in the franchising world say. And I have a bad case of it.

Loren Feldman:
Why?

Dana White:
It’s because I’ve never been good at separating what’s going on in my business from the vision for my business. Actually, nothing bad is going on. We just became apprised of a small group of unsatisfied customers, and we’re trying to get to the bottom of it. And they’re very nasty, so it’s leaving us kind of frozen. It’s not anything substantive. It’s not anything we can do. It’s, “I don’t like Dana.” “Well, have you met Dana?” “No, but I heard…” And it’s, “Well, I don’t like the fact that you did my hair so fast. I want to sit here and talk to you.” It’s a lot of that. It’s a lot.

So here I am hearing these things. “Oh my goodness, we’re not ready. We’re not ready. We’re not ready.” And again, my operations manager, who has operated with multi-unit franchises, has said, “Dana, This is business. This is what’s going to happen when you have five locations, when you have 20. And if you wait to expand your business until every customer is happy and until everything is perfect, you will stay at one location for the next 50 years. You let me worry about this, and you worry about growing the company. And when it’s something that I need you to be brought in on, I will come and get you.” And has she pushed back on my standard? Sure. “Dana, you don’t need to know that.” She’s absolutely right. “You need to focus on this.”

I have fears of FUD because I’m thinking, “What if we’re not ready? Why am I the first African American hair salon to do this? There’s a reason, and it’s a secret that I don’t know, and I won’t find out about it until after I open. What am I thinking? This is stupid. So what if you have the money? Why are you doing this? This is dumb.” Like, all of that is going on. But the process itself is going great. We just finished the operations portion. They’re putting together my operations manual now. We’re on version two of the pro forma. The numbers look really good. Oh my goodness. I’m like, “Wow! Wow, This looks really good.”

Loren Feldman:
Have you shared any of your FUD with your franchise consultant?

Dana White:
Oh, yeah.

Loren Feldman:
And what do they say?

Dana White:
Par for the course. They’re like, “Yep, this is what you go through.” But they do a really good job of managing the expectations. They’re saying, “Look at where you are. Here are where other franchises have been. And even if that’s not enough for you, let’s focus on what you’re doing really, really well. There’s really not much you’re not doing right, because you’re not a franchise yet. Yes, some of your processes can be fine-tuned, but you’re one person, and you’re much farther than most of the people we franchise.” These processes, a lot of the stuff, is already done. For most franchises, they don’t even know: what is an SOP? She said, “That’s most. Your numbers are a lot higher than most salons who started.” But I’ve got pressure. When you hear all the negativity, oh my goodness. I almost don’t even want to announce.

Loren Feldman:
How did you hear about it? Where’s it coming from?

Dana White:
So I brought on a new social media manager, and she sent me voicemails from people. One made me cry. A lady said, “I’ll never be desperate enough to go there again.” One lady—

Jay Goltz:
Wait. Based upon what? Why was she mad?

Dana White:
I don’t know. It’s just a lot of negativity and judgment. And I’m shameful to admit, it has literally thrown me off my square.

Paul Downs:
Have there been any positive messages? Or do you get nothing but negative feedback?

Dana White:
Yes. No, that’s what Ashley—we are very vigilant on our customer service. We make dozens and dozens of calls—hundreds a week—to our customers. She takes notes, and I read the notes. But what’s being brought to me is, “Yeah, that’s what they tell you over the phone, but this is what they’re saying about you behind your back.”

Paul Downs:
Well, is there any benchmarking? Like what’s the average salon? That must be true of many businesses?

Dana White:
Most salons in the Black hair-care market don’t ask.

Paul Downs:
Right, you’ve been to a salon. Did you love every second of it?

Dana White:
No.

Paul Downs:
Right, so there you go. I will give you a comment on a slightly different context. Because I’m very worried about negative comments from clients, too, and try to never have any. And if we do, we fix it. It’s often extremely expensive. There’s a guy I know who had a manufacturing business, and he said, “If 5 percent of your customers aren’t complaining, you’re spending too much fixing problems. You need to be taking that time and attention and concentrate on growing your business. Don’t worry about that.” Which I disagree with, to a certain extent. If 5 percent of my customers were complaining, my life would be hell.

But there’s a valid point in there, which is that you’re not ever going to be able to please everybody. You just need to know whether you’re running off the road or not. And I think that focusing on any particular comment is just going to make you feel bad. You should really be thinking about, “Okay, well, what’s the overall picture of what’s happening?”

Dana White:
Right, and I’m a solutions-based person, so when it’s just negative, negative, negative, negative—and that’s what Ashley said. She’s like, “You can’t just give Dana negative. And then there’s all this judgment to question my business savvy. The people who are complaining, “Well, I own a business, and I know this is not how things are done…”

Loren Feldman:
Is there a common thread to the complaints? Is there some issue that you think you should be addressing?

Dana White:
We’re trying to find it. The common issue is, “She doesn’t know what she’s doing.”

Jay Goltz:
There’s a certain part of this—to Paul’s point—with a manufacturer or making desks or framing pictures. I agree with Paul: I don’t want 5 percent of my customers unhappy because there’s no reason for it. But when you’re doing people’s hair, it is the nature of the beast. I’m in Chicago. Give pizza to 100 people, and some people are gonna say, “This is food of the gods,” and some people are gonna go, “This is the worst crap I’ve ever eaten.” It’s the nature of the beast.

There are going to be some people who just don’t like what you’re doing by the nature of what you do. So there’s got to be some people who are happy. And this comes back to—how long have I known you? The very first time I met you, you did a speech in New York. I still remember the phrase—I’m still laughing about it. You said, “I don’t do messy.” That is the problem. You still haven’t gotten over that. Business is messy. You need to manage the messy. You still think, naively, you’re going to get every single person happy and everything is going to go perfectly, and that’s just not what business is.

Dana White:
I don’t. No, Jay, I don’t think I’m going to make everybody happy. I guess what hurts is how nasty it is. It’s personal. But what I can’t understand is, why are you so nasty? It’s like we intentionally set out to make you upset.

Jay Goltz:
I’ll tell you. It’s real easy. It’s the seven deadly sins. People are jealous. To anyone getting that nasty on you, there’s something wrong.

Paul Downs:
Yeah, there’s something wrong with them.

Jay Goltz:
There’s something wrong with that picture. This isn’t about you. I’m not saying there’s not things to look at. There probably are. I’m not ignoring it at all.

Dana White:
Exactly.

Jay Goltz:
But to get that nasty, there’s more to it. I either sat too long in the chair or I was not there long enough. I don’t know which one it is. But hair styling is very personal.

Loren Feldman:
Is there something that you should be doing to reach out to the people who are complaining and try to get more information?

Dana White:
We are doing it. We have a whole process for first-visit people. Even if we sense in the salon that you don’t like something—you may not have said anything, you’re going to get a call from us. We have a whole call process, and now I’m upgrading that process so it will include transcripts and recorded calls. We’re already doing 10 times more than any other independent stylists would do.

We can still have people operating on the floor and then have someone in the back office calling and speaking to customers, and so that’s what we do. We email, we call, and it’s not just about complaints. It’s about things going on in your personal life. If we hear your mom or dad or a loved one is sick, “Hey, we’re following up. How are you doing?” We really do our best to go above and beyond. One lady was concerned that, “Why aren’t people talking to me more? Why isn’t this a lot more hype? It’s too quiet. I need it to be more hype.”

Jay Goltz:
I was just gonna say, it seems to me like some of the people coming in, it’s hair styling and they want a new friend. And that’s not what you do. You get the hair styling, and you move on. There are some people who want to spend the whole afternoon and have a new friend to talk to, and they’re upset and they’re insulted by being moved along. It’s not the right service for them.

Dana White:
Exactly, and so that’s the conclusion.

Paul Downs:
Dana, let me ask you a question. What is your pre-written, we’re-not-a-good-fit-for-each-other, goodbye letter?

Dana White:
It’s not even a letter. It’s a conversation.

Paul Downs:
No, no, no. That’s your mistake right there.

Dana White:
No.

Paul Downs:
At a certain point, you’ve got to be able to just be like, “You know what, we’ve done everything that we can reasonably do. We’re sorry you’re not happy with our service. We suggest you go find somebody. Goodbye.” And just cut it.

Dana White:
We don’t take their address. We were doing that via email. They weren’t getting the emails. Now we have a documented conversation. That’s why we stopped doing the email, because they would give us their junk mail email, because they don’t want their email bombarded from all the places that they patronize. Now we have a conversation based on their service history with us, based on their complaints, and we say, “We do not believe we are the salon for you. But we do hope that you find a salon. We have one or two recommendations,” but salons don’t like that. Stylists are like, “Well, if you don’t want them, don’t give them to me,” so we stopped making the recommendations.

We just had that conversation earlier this week with a long-time customer who flares up every six months to a year when we don’t give her a refund for something we don’t do. So she’ll ask for service and then we’ll do it. “Well, this isn’t what I wanted. I want my money back.” We’ve always said—almost nine years—we don’t offer refunds. We’ve had that conversation with her because emails don’t work, and we don’t take addresses.

Jay Goltz:
There’s a problem there. You just said you don’t do the service, but then you did the service.

Dana White:
No, so let me be clear. She wanted a rinse. Then she said, “I want a rinse just on the bottom half of my hair.” We don’t do rinses on the bottom half of your hair, so you’re not going to do this because when we did it, “This is not what I wanted.” Even though we told you, and you said, “Go ahead.” Again, it’s back to Paul and you guys’ point. It’s not always us, sometimes it’s them. And when it’s consistently them, we’re more than ready to let that relationship go, and we have that conversation. We tried via email. It doesn’t work. “Oh, I didn’t get that email.”

Jay Goltz:
So what percentage of the people you reach out to are happy? And how many of them are mad?

Dana White:
Yes, sometimes it’s like 70 to 74 percent. Lately? It’s been over 85 percent.

Paul Downs:
Mad or happy?

Dana White:
Happy.

Paul Downs:
Well, there you go. You’re doing great. Declare victory. Stop worrying about it.

Jay Goltz:
Here’s the problem. One word. Ready? Dana: You have to grow up and realize you’re not making everyone happy with this because it’s impossible. Get over it and say, “Okay, I’ve got 85,” and I’m not saying don’t keep trying. But you can’t seriously expect that 100 percent of the people are going to be thrilled with your service. That’s just not the way life works.

Dana White:
It’s not that. I’m not expecting that. I don’t think it’s a matter of growing up. I think it’s a matter of: You have an owner that is very passionate about giving this service to this group of women. And even though I don’t expect everybody to love it, what I don’t expect—when you’re inviting a guest into your home and you’re serving them—I don’t expect them to pull their pants down and take a doop on my table.

Paul Downs:
Well, some of them do, though.

Dana White:
Some of them do, and then they get mad at you. And I don’t think I have to grow up because I wasn’t expecting them to do that.

Jay Goltz:
No, you have to grow up and realize: Stop taking this personally for God’s sakes. The difference between me and you is I worked in my father’s dime store since I was six years old. I grew up with customers. This is still new to you. You’re taking this personally. You can hear it in your voice. You’re upset that they’re attacking you.

Dana White:
Cause they’re saying, “Dana this. Dana that.”

Paul Downs:
So what?

Jay Goltz:
Right, so what?

Paul Downs:
That’s their problem.

Jay Goltz:
Yeah, whatever. That’s the nature of business. Do I excuse it? No, I think it’s terrible they’re being that vicious to you. But like, whatever.

Dana White:
I think you’re right.

Paul Downs:
Well, the other thing is that you could set up your company so that you don’t have to hear that.

Dana White:
I did. I have it set up. And that brings more backlash. “Who does she think she is?” Oh, she’s too good to talk to me.

Paul Downs:
Yeah, she is. Basically. When I’m dealing with troublesome clients, my first thing is, my frontline people deal with it, and I’m only there if we want to salvage the situation. Like, they pull me out, and they say, “Okay, you’ve got to talk to these people.” And I go in, and I salvage the situation. But if it’s just a goodbye? No, they don’t need to get to me. You’re not a public utility. You’re not a resource for everybody who feels like it to come in and take a few punches. So act like it. You understand it. Now start doing it.

Loren Feldman:
Dana, it sounds to me like it’s not that this problem has gotten worse. It’s that you’re more sensitive to it right now, because you’re going through the franchising process. Would that be correct?

Dana White:
Yes, and I didn’t realize that until you just said it. Well, one is because the new social media manager sent some of it to me, and then was a little baffled as to why I wouldn’t. And I said, “Oh, you send it to this person.” And she’s like, “Oh.” And it wasn’t an, “Oh, I get it.” It was, “Oh, really? You don’t want to know?” And it’s like, it’s not that I don’t want to know. Ashley said, “It’s not that she doesn’t want to know. Dana is about to launch a national franchise business. She doesn’t have time for this. This is what I do.”

You guys are absolutely right, and I think I will go along with Jay saying, “Yeah, you’ve got to grow up a little bit.” Yeah, because it’s a matter of putting myself in the perspective. It’s like me wanting a personal assistant. I’m like, “Oh, no, I don’t want to be the person who’s, ‘Here, talk to my assistant.’” But if we’re doing things based on the pro forma I’ll have 20 of these [franchised locations] in two years, yeah, you’re gonna have rapid growth, and you can’t do it all. And you can’t care what people think about what you need to do to perform. If you need to perform better by giving your customer complaints to another person, then that’s what you need to do. If you need to perform better by having a personal assistant, grow up, tighten your bra strap, and get a personal assistant. And forget what people who don’t—

Loren Feldman:
Are you looking for a personal assistant, Dana?

Dana White:
I am.

Loren Feldman:
A live one or a virtual one?

Dana White:
A live one, and then we could probably move virtual. But I need a live personal assistant.

Jay Goltz:
How old is your social media person?

Dana White:
I believe she’s in her early 30s.

Jay Goltz:
Okay, part of this process is educating her, because I can see where she is rather taken aback. “Don’t you want to know when people are unhappy?” She needs to have explained to her, “Listen, here’s the way it is. There are some people that are used to going to the salon, and they want to be best friends with the person. That’s not what we do. There are going to be some unhappy people. I know that for me to read all these, frankly, just gets into my head. And I’ve got someone who’s professional, who is going to take care of this.” So explain to them, and then they’ll say, “Oh, okay, now I get it.” But you do need to help them understand why. Otherwise, it looks like you’re just blowing them off. But in fact, there’s a method to your thinking.

Dana White:
Laura Zander, she did a great job of explaining it to me this week. She said, “You need a social media manager, not a social media secretary.” A secretary just brings you the messages, right? ”Here, this is what they’re saying about you.” She goes, “No, you need somebody who’s not going to bring that to you and just craft a social media campaign addressing the concern she’s heard.” And I said, “You’re absolutely right.” And so you’re absolutely right, too, Jay. I think we’ve had that conversation with her, and then when we meet up to do our review of how we’ve been doing so far, I will reiterate that to her. But you guys are right. There’s some growing up that needs to be done.

Jay Goltz:
No one has ever, in general, personally attacked me the way you’re getting. And I do feel bad about that. You’re getting it from some people who are, for whatever reason, they’re doing it. I am sorry that you’re subjected to that, because I don’t believe …

Loren Feldman:
I think part of it is because Dana’s disrupting the industry. You’re doing something different. And you’re attracting some clients who like it the way it’s always been and aren’t happy with the change. Is that right?

Jay Goltz:
And taking it personally.

Dana White:
Absolutely, Loren. I mean, Loren, for the win, today, right? Two things, Loren’s like, “Yeah, you’re super sensitive to it, because you’re franchising. And the other thing is that you’re doing something disruptive and people want what you have in the traditional way, and it can’t be that way.” So you’ve got to just keep moving forward and do what you do.

Loren Feldman:
You have to find the right clients and make sure people understand exactly what it is you’re offering.

Dana White:
Exactly.

Jay Goltz:
So back to my formula of success. One, it is what it is. Two, deal with it. You are dealing with it. Three, you’re not doing anything wrong. You’re trying to take care of customers. And the last piece is, I have different versions of the last piece. We’ll keep this one clean.

Dana White:
No, no, say it, say it!

Jay Goltz:
Fuck ‘em. Really, they want to get that vicious on you? You know what, that’s their issue. And I’m sorry, I know you don’t say it out loud, but you cannot take this personally. And like I said, you are getting it 20 times worse than I’ve ever gotten it, and I’m sorry for that. You’re pioneering a new way.

Dana White:
That’s awesome. Thank you, you guys.

Loren Feldman:
You’re welcome. Paul, what’s your FUD level like?

Paul Downs:
About business? Pretty low. But the lady who had the issue with the cybercrime, she actually paid me in full last week.

Loren Feldman:
Wow.

Dana White:
Whoa.

Paul Downs:
She sent me the other 63 grand.

Jay Goltz:
Wow.

Loren Feldman:
What happened? How did that happen?

Paul Downs:
I don’t know. [Laughter]

Jay Goltz:
We think you know.

Loren Feldman:
Let’s review. You had this cyber attack. You had a vendor who tried to pay you. The payments were diverted to someone in Texas, and you went back to the vendor and tried to get them to pay you again properly.

Paul Downs:
Right.

Loren Feldman:
And you’re telling us that it finally worked, and you got the money.

Paul Downs:
She did not want to take responsibility for, basically, a theft from her company, and didn’t really want to believe and acknowledge that it had been her accounting team that had done this, and tried—on several occasions—to get me to file an insurance claim for it, which would have been fraud. I had my lawyer send her a nasty letter. We have some potential ongoing business, so I didn’t really want to go all the way to the end of the process with her. I just decided to wait, and I guess maybe she made an insurance claim or whatever. She had the money, and she sent it to me in three payments over two and a half months. But we got the last payment last week, and now I’m like, “Great. I’ll never trust her again.” And I will be very careful with her organization, but we’re paid in full.

Loren Feldman:
Did you learn anything through this that you should do differently? Or was this just a weird one-off event that is what it is?

Paul Downs:
Well, you could certainly call it a weird one-off event, because I’ve been in business for 36 years, and I’ve done business with thousands and thousands of people, and we’ve never had anything like this happen before. But given that there seems to be such a rise in cybercrime, and a total inability on the part of law enforcement to do anything about it, I would say that the lesson is: You need to be careful. You need to be careful about confirming bank information and making sure that your own house is in order so that if something like this happens…

I’ve engaged, since the beginning of the year, a net security firm that was able to audit our emails and make sure we hadn’t been spoofed and sent any directions or somebody hadn’t used our email addresses to direct this client to send these payments anywhere else. Like we were able to, as far as possible, prove that it wasn’t our fault. And so to the extent that the people you do business with are vulnerable to being hacked, you can’t control that. But you can certainly get your own house in order, so I’m spending significant money this year on security in general that I’ve never spent before.

Loren Feldman:
Is some of that prompted by all of the stories about the ransomware issues?

Paul Downs:
It was really prompted by a set of Defense Department directives that we got in the fall that said, “Hey, if you want to do business with the Defense Department, you need to be able to conform to these protocols,” which are very strict. We do a lot of business with the Defense Department, so I got going to try to do the protocols. So it just happened that I spent all this money and did all this stuff, and then we had an incident almost immediately where I was glad I did it. And of course it rarely works out that way. Usually you spend all the money and do all this stuff, and nothing happens. But yeah, it wasn’t because of the stories. It was because I kind of had to. But I’m glad I did.

Loren Feldman:
Do you feel as though you have set up procedures that will protect you from the kind of ransomware issues that we’re reading so much about?

Paul Downs:
Everybody in my company is more aware of it, and I doubt that we would be invulnerable to a really sophisticated attack, because it seems that really sophisticated attackers can do pretty much anything they feel like. But for ordinary things, like someone getting into our server and encrypting it, I believe we are protected by that piece. That’s what my vendor assures me. So yeah, we’ve upgraded, and I hope I’m in decent shape.

Loren Feldman:
What’s the nature of the insurance that you have? Would that cover you for a ransomware attack?

Paul Downs:
I don’t have specific ransomware insurance. I looked into it a couple of years ago, and they gave me a checklist of, “Here are the things you need to do before we’ll even think about selling you a policy,” and it was a pretty extensive checklist. I looked at it, and I was like, “Oh my God, I’m not doing that.” Because I would have had to do it personally. Nobody was screaming at me to get that stuff done at that point.

But then when the Defense Department came out with their new protocols… like, if we were fully compliant with all of those things, it would have easily cleared the bar where I could have bought the insurance. But also if I am fully compliant, you’re in pretty good shape, in terms of being able to resist these attacks, because they’re designed for a Lockheed Martin to be able to not get hacked. They’re very extensive, and they include all kinds of things that are quite complicated to implement.

Loren Feldman:
Jay, I think the last time this came up, we talked about cyber insurance, you said you were going to first find out what cyber insurance is and then see if you have it. Did you do that?

Jay Goltz:
I’ve been busy. [Laughter] Seriously, I’m gonna redouble and find out what the story is, because I’m not blowing this off. I do know someone with a similar-sized business to mine that did get hit, and I am going to… You know, it’s been hard because nobody’s in the office. All the people involved are at home, so it’s not like I’m having my regular meeting. No, it’s concerning, and I will get people together and figure out what we’re doing and should we be doing more?

Paul Downs:
When your team is at home, that’s actually kind of a bad thing. We got a hack incident about a year ago—I don’t know, I’m not sure I mentioned it—where I was away one day, and somebody spoofed an email to one of my employees—

Loren Feldman:
What does that mean, “spoof”?

Paul Downs:
They sent an email to one of my employees that appeared to come from me. Very convincing. And it said, “Hey, I’m going to give a surprise bonus to all the employees, so go buy five grand worth of gift cards from Walmart, and then send me the numbers on the back.” And this guy thought that that’s something that I might possibly do, which, maybe not. But it’s not out of the realm of possibility, since I’m a communist at heart, as Jay tells me.

Loren Feldman:
Socialist.

Paul Downs:
And so, yeah, he did it. And then I walked in the next morning, and he handed me all the gift cards. And he said, “Here’s the gift cards you got, boss.” And I was like, “Oh, no.” I knew what had happened immediately. But when your employees are isolated from each other, I think they’re more vulnerable to those kinds of human hacks, because there’s not somebody right next to them that they can turn to and say, “Does this seem real?” Or they can’t come and ask us quite so easily.

Jay Goltz:
Did he send the numbers?

Paul Downs:
Oh, yeah, we were out five grand. It sucked.

Jay Goltz:
I just have to ask the question, in looking at this employee: that’s kind of frightening to me that somebody would do that. Have they done other things that is not too smart? Because that doesn’t sound too smart, given what’s going on in the world.

Paul Downs:
Well, this was a year and a half ago, and so it wasn’t headline news. It’s one of those things where he’s a good employee. And he’s the kind of person who, if I said to him, “Go do this,” he jumps up and does it. It wasn’t entirely out of character for me to give people bonuses. So I would say that I chalk this up to the story of—I can’t remember who it was, Warren Buffett or somebody—one of his managers had made a mistake that cost him 2 million bucks. And someone asked him, “Did you fire that guy over that?” And he says, “No, I just spent $2 million to educate them.” So that’s sort of how I took that one.

Jay Goltz:
I don’t disagree. I have had people get emails, similar, from me, and they always call me.

Loren Feldman:
But you know, it doesn’t have to be that way. It can be more sophisticated. It can look like it’s coming from an HR department or from the Social Security Administration. And it’s, “We need this and we need that,” and people do get fooled by it, which is why a lot of companies educate their employees by putting them through training.

Paul Downs:
That’s what we did.

Loren Feldman:
You did do that?

Paul Downs:
Well, when we engaged this firm at the beginning of this year, they did a whole series of seminars and they send us a little email every week. It’s just to keep it top of mind.

Loren Feldman:
Jay, have you thought about ransomware? Do you know what it is?

Jay Goltz:
Uhh, I’ve got to talk to my attorney. I know my CFO is on it, but I’m going to verify. I will go through with it, but it’s not like… he’s on it.

Loren Feldman:
If you Google “What should a small business do to prepare for a ransomware attack?” one of the things they tell you is, the way it works is they get into your computer system and they lock it up and you’re paralyzed. You can’t do anything unless you pay the ransom. The one protection that everybody advises against that is, you need to back up everything and have it backed up somewhere else—not on your system, so that if your system gets locked up, you’ve got all your data and everything available, and you can kind of reboot and get restarted.

Paul Downs:
Can I add something to that, Loren?

Loren Feldman:
Yeah, please. Tell me: what have you done?

Paul Downs:
When I engaged these guys, we had an off-site backup every day. And what they said is that the way we had it set it up, it was okay—you’re backing up the data. But what we weren’t backing up was an actual image of our server so that we wouldn’t have been able to just take the infected server and throw it away and get a new one and reinstall everything. We would only have a copy of the data. I’m not technically adept enough to be sure this is true, but apparently there are a couple of different levels of what a backup could consist of. We now have a complete offsite backup that, at the end of the day, we could throw away all our computers, get new ones, and start over again, and we’d be okay.

Loren Feldman:
Did you hear that, Jay?

Jay Goltz:
Okay, there’s a difference here between Paul and I. I have a CFO who’s been here for 20-some years, who I believe is on this. Paul doesn’t have that. So Paul’s the guy doing this stuff, as he should be doing it. I’m not the guy that does this. But I certainly am going to follow up after this conversation and find out where we’re at on it. But I believe he’s doing all this stuff right. We have had consultants come in. My guess is we should be doing more.

Loren Feldman:
Jay, if your CFO were doing all of this, I think you would know about it.

Jay Goltz:
No, you don’t know how it works. No, that’s not true. My CFO would—

Paul Downs:
Well, the other thing would be, it shouldn’t be him doing it. Like, he’s a CFO. He’s not a cybersecurity expert.

Jay Goltz:
I’ve got 130 employees, four businesses. I don’t know every single thing that’s going on in this company, guilty as charged. I’m just telling you—I’m not staking my life that everything has been done right. I will follow up on this conversation. But there’s a good chance that everything’s being done as it should be. I will follow up, and the next time you ask me—

Loren Feldman:
I hear a little FUD in your voice, Jay.

Jay Goltz:
I’m FUD-less. I’m FUD-less.

Loren Feldman:
Dana, you’re gonna have to worry about this too, especially when you’re a national franchise operation.

Dana White:
Yeah, I’m listening.

Jay Goltz:
You are the fudder. Loren’s the fudder. Loren always tries to get you feeling FUD about something.

Loren Feldman:
FUD you!

Jay Goltz:
You’re a FUD-enabler.

Dana White:
No, he’s not. He actually, I mean, all of you—you did the Magic Eraser on the FUD today. It was good. Loren came with the powerhouse two questions, and I said, “Well, I’ll be. That’s it.”

Jay Goltz:
I’ll tell you what’s a little disappointing to me. Obviously, they’ve got this phrase in the industry, FUD, right? And your consultants—what we just told you—I think they should have told you. They do this for a living. I think they should be a little more hands-on with the owner to understand where their head’s at and say, “Listen, people go through this. Here’s the issue.”

Dana White:
They did.

Jay Gotz
They did? Okay. Fair enough.

Dana White:
Yes, they did. But here’s the thing: you guys did it a little bit more in detail, because you know me better. Right? I mean, you’ve known me for years.

Loren Feldman:
That’s fair.

Paul Downs:
I want to comment on one thing Jay said, which is that the consultant should have warned you. Yeah, they should have warned you, but you should never only believe the consultant. You always have to look at multiple sources of advice. Because those guys need you to pay the bill and need you to move forward, and they’re gonna do whatever it takes to get over your FUD, but there may be a moment when your instincts to not do something that they’re telling you to do are actually correct. You don’t want to just have one source of information. You want to bring it to your friends and people who know you and other business sources and then make a decision.

Dana White:
Well, obviously, they also understand because they coined the phrase FUD. They’re dealing with tons of entrepreneurs who are franchising their business and know that this is something that they go through. But whether it’s the FUD, whether it’s the viability, whether it’s culture and training, whether it’s the prospect of potential franchisees, I never go to one source. I have a board of advisers, if you will—of which I’m proud to say, Jay is one of them, Laura is another one of them—where I go, “Hey, does this look right to you? Does this smell right?”

And that’s why I’m so thankful for the time on this show today. We spent a lot of time sorting through the FUD, because you’re right: people come to you with their own agenda. And I find that this show is very agenda-less. The agenda is peace of mind and business success and however you define that.

Jay Goltz:
The fact is, some of the people with FUD have legitimate problems that, to Paul’s point, maybe they shouldn’t be franchising, and these people are probably not going to go, “You know what? We didn’t realize that when we first met you. We should rethink this.” There are probably some people that do discover some things along the way, who realize this isn’t right for them. How could that not happen?

Loren Feldman:
We’re running short of time. Jay, I want to catch up on your business. About a month ago when you were here, you were excited, kind of crowing, that after 18 months, you’d finally gotten a bank to agree to give you the loan you were looking for. What did you decide to do with all of your loot?

Jay Goltz:
Well, it was a mortgage. And I do have this bank that’s ready to go.

Loren Feldman:
Whoa, whoa, whoa. But you had it all done?

Jay Goltz:
Well, it was done except they kept putting more strings on. “Oh, we want you to move your regular account to us.” No, I’m not doing that. So in the meanwhile—

Loren Feldman:
So wait a second. That loan fell through?

Jay Goltz:
No, it didn’t fall through. It’s right in the middle of—let me finish, I’m gonna tell you the whole story. So this bank keeps telling me, “Oh, we want this, and we want that.” And finally, I go, “Enough. It’s only a 45 percent loan-to-value on the building. I’m not giving you all my inventory. There’s no reason for me to do that.” So in the meanwhile, I call the new banker. I go: “I got a silly question. Have things changed at the bank? Do you think they’d be interested in doing this loan?” She called me back, and she says, “Oh, they’re excited about doing this loan.” “Really? Because they weren’t up until now.” So she’s led me to believe that, today, they’re going to want to do the loan.

Paul Downs:
The bottom line is, you actually have not closed a loan.

Jay Goltz:
I didn’t close it. The guy just left me a message right before we came on this [show]. He’s ready to close. I told him I’ve gotta wait to see if the other bank wants to do it. Because it’ll be easier to do with my existing bank.

Paul Downs:
Oh, God.

Jay Goltz:
You never know what to believe. I’m getting a complete opposite story now from this existing bank. It used to be, they didn’t want to do the loan. Now, they’re surprised that they didn’t do the loan. And I’m thinking, I don’t know what’s going on there. All I know is, today I should find out. But I’m going to get the loan from one of them. For sure.

Paul Downs:
All right, tune in in 2023. We’re gonna see.

Jay Goltz:
Well, here’s the joke. I don’t really need the money anymore, because frankly, things are going nicely. But I’m still gonna take the loan out because I want extra cash. If I’ve learned anything from this pandemic, always have extra cash lying around.

Dana White:
Take the money.

Loren Feldman:
Jay, does this say anything about the general ability of small businesses to access credit through banks? Or is this another weird one-off situation?

Jay Goltz:
Absolutely. I believe behind the scenes, these bankers—one of them actually said this to me. The guy used to be a banker, he went to another bank. He actually said to me on the phone, out loud, “We’re no longer giving loans to retailers or anyone in hospitality.” He actually said that.

Loren Feldman:
When was that?

Jay Goltz:
Three months ago. So I think the difference between him and the other banks? He told me the truth. The rest of them don’t want to say it out loud. They are under the impression that every retailer is going to go out of business.

Loren Feldman:
Would this have been easier for you or harder for you, if you were going for a loan to expand your business?

Jay Goltz:
That’s not even an option. There’s no way I would have gotten a loan for that. That’s what’s so sick about this. I’m only looking for 45 percent loan-to-value on very hot real estate. This is an extremely conservative loan. And I’m telling you, I don’t think the banks ever recovered from 2008, in their heads. I don’t believe this would have been the case 20 years ago if I were doing it. But I’ve literally talked to six banks, many of which, they’ve known me for 30 years. We’ve done the lunches. Here’s the key word. This is the key word: relationship: “We’re looking for a relationship.” Punch him in the face, that’s what you should do.

When I hear that word, I cringe. I go, “Please, stop with your relationship stuff because I know the second there’s any kind of blip, there is no relationship.” And I have to tell you, 43 years, I’ve never been asked to leave a bank, never missed a bank payment. Got an over 800 credit score. It’s really remarkable. They’re afraid of their shadows now. So I don’t know what the story is, but I will absolutely have a loan signed by next week.

Paul Downs:
I’ll bet you 10 bucks. I’ll bet you $10 you do not.

Loren Feldman:
We’re gonna get a follow up on that one. My thanks to Paul Downs, Jay Goltz, and Dana White. As always, guys, thanks so much for sharing.

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