Start With A Win - Why Would Anyone Want To Buy A Franchise?

Episode Date: November 16, 2018

On this episode of the Start with a Win podcast, our guest is Ward Morrison, president of Motto Franchising, a US mortgage brokerage franchise brand. RE/MAX created Motto Mortgage in response to the increased consumer protections regulations established after the financial crash of 2008 requiring the mortgage brokers stop using marketing service agreements (MSAs) with customers. This caused a shake-up in the industry while opening the door to more forward-facing business operations between consumers and loan originators under the new compliance and legal guidelines. Motto Mortgage surpassed the 100-franchise mark within 23 months of the company’s beginning, confirming that industry professionals see the start-up resources and coaching available to them through the Motto franchise setup as a huge benefit over starting their own small business. It could be referred to as a “mortgage brokerage in a box”, which eliminates blind spots and surprises from the entrepreneurial journey and provides franchisees with a network of colleagues to whom they can reach out.Ward also spoke about the challenges Motto has encountered along the way, namely recruiting and retaining personal and professional loan originators who can stay up-to-date on changes in the industry and maintain fruitful client relationships. Motto helps set realistic expectations and benchmarks for franchisees to meet that will hopefully allow them to be productive, well-staffed, and engaged with their customers and communities. In fact, Motto is committed to corporate social responsibility, and they are very involved in feeding the hungry in every community that is home to one of their franchises.Ward’s way of starting with a win is being sure to surround himself with the right team: individuals who are customer-focused and committed to the organization. He always tries to hire people who are smarter than him in complimentary areas of business and have a social and emotional intelligence that makes everyone around them better.Connect with Adam:https://www.startwithawin.com/https://www.facebook.com/adamcontosREMAXCEO/https://twitter.com/REMAXAdamContoshttps://www.instagram.com/REMAXadamcontos/

At top of the 12th floor of the RE-MAX World Headquarters, you're listening to Start With a Win with CEO Adam Kantos. Hey everybody, Adam Kantos here, top of the 12th floor at RE-MAX World Headquarters here in Denver, Colorado. Today we got a great show at Start With a Win. Today, we have president of Motto Mortgage, Ward Morrison. Good morning, Ward. Good morning, Adam. How are you today? Doing great. Did you have a good weekend? I did. An outstanding weekend. Cool. So, Ward, you are the brand president of Motto Mortgage. That's M-O-T-T-O. That's

how we spell that, which is one of the REMAX Holdings brands, right? That is correct. Yes. Motto Mortgage, for sure. Awesome. So, hey, tell us about Motto. What is it? Yeah. Motto is the first ever U.S. national mortgage brokerage franchise. We created it a couple of years ago, and it was our first ever expansion out of just being a one brand holding company for the last 45 years. So we're excited to set up a new franchise brand. This is in mortgage instead of real estate. Very cool. So, you know, using the expertise of franchising and Remax with, you know, you've brought some expertise from the mortgage space as well as,

you know, kind of the crossover in real estate. Tell us about that. You know, you're in charge of this whole thing. Where's your background come from on this? Yeah, my background is a little bit varied. I've been in real estate of some kind or another for about 24 years, I think, is where I'm at right now. I've worked for a mortgage company where I was a loan originator for about five years up in Vail, Colorado. I used to work for Stewart Title as a controller. I used to be the CFO for the largest REMAX in the world, which is based here out of Denver. We had a mortgage company, a title company, insurance company, and obviously the brokerage was the largest.

So that's sort of my background. I also worked for a company called Lone Wolf Software, where I actually sold real estate accounting software to real estate brokers to help them and consulted with them. So sort of a varied background, but mortgage was part of that as well. And that's why I was excited when we sort of were out there looking at the concept of getting back into mortgage for our brokers. It was great to use my past experience as well. Tell the audience, why did we start Motto? Yeah, Adam, we were looking at the fact that with the financial crisis that things were changing, that mortgage, the money that people were making of it was mainly in this

thing called marketing service agreements or MSAs. So our real estate broker owners had been getting what we call passive money. And as soon as the economy changed and the CFPB, the Consumer Financial Protection Bureau stepped in, they sort of put MSAs at the back burner and forced them and said, you can't have them unless they're run a certain way. And if they're run that way, our brokers just weren't going to make money. So we were looking for an opportunity when I talked to you, when I talked to Dave, we were looking for an opportunity of how we can get people back into mortgage legally and compliantly, first and foremost, so that they could participate in the profits again with doing it the right way instead of the way that the CFPB said was no longer right. Right. And consumer protection is a big part of that, right?

Absolutely. We want to protect the consumer first and foremost. We want to be consumer friendly. We want to provide the consumer's choice. Those were some of the things when we were looking at the different models we could have done that we wanted to make sure we were going to live and breathe what the CFPB wanted us to. If they change the rules, we'll adapt to those. But we know the rules now, and we feel like our model is the most legal and compliant model out there. And it's been a great start. So Ward, why would somebody want to buy a franchise? Tell us about buying a franchise or opening a franchise versus, say, going and opening your own business. Yeah, Adam, as we were talking about, challenges of small businesses is figuring

everything out. It's trying to figure out why would I invent it from scratch when somebody's already done it. And I think franchising is probably the best way. It's sort of that you're in business for yourself, but not by yourself, that we've figured out the steps, we've figured out the value you need to be a successful business, that you don't have to go out and find the technology, you don't have to go out and find the tools, you don't have to go out and find emails or websites or all these startup things that can become very intimidating to any entrepreneur at the beginning. And in our case, mortgage is a confusing industry to some people. It's a scary industry because there's so much regulation that I think by being a part of a franchise, you get sort of handed that turnkey solution. And in our case, we call it the mortgage brokerage in a box. But in any franchise system,

I think the challenges are taken care of by the franchisor because they've seen office after office their needs and how they're going to open. And I think they try and figure out the best way to support them through that process. And they figured out all the details that you don't have to go out and reinvent the wheel as an entrepreneur, starting a small business by being in a franchise. They already sort of figured it out for you. Right. So, uh, so kind of eliminating blind spots, if you will, you know, you, you've looked around the next corner for them and said, Hey, here's what's around the next corner. Here's what we need to do next. So they're not guessing what, uh, you know, you've looked around the next corner for them and said, hey, here's what's around the next corner. Here's what we need to do next.

So they're not guessing what, you know, the wake up in the morning, what should I do to work on my business today? There's not just a system and process for it. There's somebody, your franchise development consultant that helps walk them through that, helps them benchmark against existing other companies and say, well, this person tried this. And here's some of the results they got. Now, granted, the results may be different for you, but this is what they did. So it eliminates a little of the fear of the trial and error, right?

Yeah, look on your side, Adam. You have 3,700 plus U.S. franchises out there. You guys have seen everything, right? You've seen, in your case, all the challenges that the entrepreneurs faced in setting up a real estate brokerage. And you guys have been very successful on developing the tools, technology they need to be successful. And probably any one of those 3,700 have experienced something that you got to share across the

power of the network. That's the key. Right. Yeah. And it's interesting in, uh, in franchising, one of the most powerful things in small business is peer group. You know, the, the ability to, to bounce ideas off of somebody else, or if you have a rough day to pick up the phone and call somebody and say, Hey, I'm having a rough day ward. And you go, you know what? I had one, uh, like that last

week. Here's how I got through it. And just kind of that recharge you get from each other or the information you get back in the group that can provide you that feedback. Because you can't go to one of your employees and go, hey, I'm having a bad day. And they go, oh my gosh, my boss is having a bad day. So it's an outside peer group. Somebody to hold you accountable.

Somebody to share information with, things like that. You don't want to read 10 books on opening a mortgage franchise. You can call 10 of your friends and say, hey, did you read this book? And they go, yeah, here's what it says. But ultimately, it's about the collective mindset of getting better, right? Absolutely. I mean, I think that is the power of the network of a franchise system is the power of that peer group, the ability to share information with each other.

That's awesome. Awesome. You know, it's about loving the customer, loving the consumer, you know, helping the small business owner, because really that's what a franchise is, is a small business, small business owner. You know, the LOs are out there working hard every day

to gain another client when it comes to somebody they can help with that mortgage, right? So, you know, they face a lot of challenges like other small businesses do. What are some of the challenges that you see, you know, a small business owner, a franchisee face when it comes to going and trying to gain clients? Yeah, in general, I think the biggest thing is always that client relationship. And in a mortgage, it's no different than anything else. Much like the REMAX side of the house, we have multiple customers. So we have our broker clients who are our franchisees, we have our loan originators, and then we have the end consumer. But everybody is really trying to work on supporting the end consumer getting into a home. And in order to get into a home,

most of us don't have $200,000, $300,000 laying around in our back pocket. So we have to go out and get a mortgage loan. And that's the part where I think our loan originators step in and sort of act as loan advisors for the consumer and try and help them through that process. It's scary for a lot of consumers. They're so intimidated by getting their first loan. They don't know how to do it, what it means. The terminology that maybe you and I take for granted on a daily basis is intimidating. The loan originators use acronyms about debt to income ratios and down payments and loan to value. And it really scares the consumer unless you have a loan originator who cares first and foremost about the client and the client relationship. So a lot of the fear of the unknown in that space. And you hear that, people go,

I don't know what to think about this. And they may have gotten a mortgage like even five, seven, 10 years ago. And you do it once and you're not going to remember it tomorrow, right? That's correct. I mean, and plus things have changed. When I was lending, some of the things that happen now today in lending, we used to have something called good faith estimate that no longer exists. It's now your LE or your lending estimate. The CFPB came up with different terminology. So you're right. If you had a loan even five years ago, it might be different than it is today. But I think what we see with all of our small businesses, our franchisees is just a variety of challenges, just like our brokers on the REMAX side. We see, and this would probably go in any

business, it's recruiting. Recruiting good talent is probably the biggest challenge that we have in any mortgage broker because the talent you have to get is the loan originator who's going to be that personable person who can meet with clients, be their advisor, help them along in the process. But recruiting and retaining loan originators, just like you would in any other small business that would be employees, it's difficult, right? That's probably the biggest challenge. And that's one of the things we try and help them understand and overcome and give them ways to recruit, ways to retain. You know, a lot of it's about reward and recognition as well. Because if you aren't rewarding and recognizing your employees, they're not going to stay with you anymore.

That's a great point. I want to get back to that reward and recognition part here in a minute. But, you know, you talked about some of those challenges, you know, recruiting and retaining, you you know getting a business off the ground things like that uh that you know regardless of what industry you're in uh but you know particularly in we'll say the mortgage industry or the real estate industry for that matter you got to get your doors open you got to get moving uh and and that was one of the first goals that you set was some of those metrics to overcome some of those challenges. Talk us through some of that. How do you help these people overcome some of these challenges that they have in getting their business running? Yeah, Adam. I mean, I think the biggest challenge is sort of

that initial setup and getting set up in an industry that you have to be licensed in, which is different than a lot of startup businesses out there that if you're going out there to start one up, a lot of them, you only need a general business license and mortgage. You need to be licensed as a mortgage entity in a state. So one of the things we help them with more than anything is set up guidance, getting up and running, and trying to get them in place with the right compliance, the right training, the right support. And I think that's one thing that's a benefit of a franchise model. I mean, we've been doing this for a long time, part of a franchise network, and we were able to move a lot of what we learned at Remax over to Motto very, very quickly

and say that to get people up and running quickly, you have to provide tools, services, training, support. And I think that's what a franchise system can do better than most in helping somebody get up and running that much quicker, having that quick start. Very cool. So the quick start, when we sat down and originally talked about this, you mentioned one of the key aspects to getting a business off the ground is onboarding. Talk to us a little bit about your philosophy and processes for onboarding. Yeah, like you talked about earlier, Adam, we have metrics. So we track a couple different things.

One, we track how many days it takes to get somebody licensed. Then it takes them how many days it takes them to get opened. Because what we're really trying to make sure is they get up and running legally and compliantly as quickly as possible. And another thing that we watch is, you know, in that process is we have about 84 steps we've got to walk them through. We try not to intimidate them on day one with all 84 steps. Obviously, it's a process, but we do help them through that. And we believe in guiding them, assisting them and sort of advising them through that process, because we can't do the work for them. They're still their own entrepreneurial business,

but we have to give them the steps and the guidance to get through there. And we never would tell them 84 on day one, but we definitely walk them through that and try and get them up and running as quick as possible. 84 steps. So that's like you walk in the room and you look at the whiteboard and you write this giant eight and a giant four on it. You don't start it that way, I'm guessing. You've been in sales long enough. And any sales process, you'd never leave with 84 steps that need to be up and running because you would never sell anything. But we definitely break it down into bits and pieces.

Kind of the how to eat an elephant one bite at a time thing. Yeah, exactly. Excellent. Well, you guys have been incredibly impactful and you've got this onboarding process down because I know you mentioned you measure metrics. So in order to create successes, in order to create these wins, it's not about just setting a goal of 84. It's about creating systems and these little points throughout the process that you go, okay, we've, we've, we get this, this one and then the next one and the next one is, you know, it's

creating, you know, starting with one win at a time, right? Yeah, absolutely. I think with us, what we do is our, we have what we call franchise development consultants and they work hand in hand with our people. Most of them set up a weekly call, sort of an accountability call, almost like a coaching call. And in that they go through the steps of that week. So it might only be 10 steps this week that they had to get through and they try and make sure, you know, five or six of them are pretty easy. And then maybe the other four, they have to do some paperwork because nobody likes to do the paperwork part of it. But they definitely work hand in hand with them to try and we call it, hold them accountable to the process because we know if we can get them up and running and get them on the right track as quick as humanly possible, they'll start making money.

And that's what they want to do. Right. That's awesome. So it's that end goal, get the doors open, get some customers going. And a lot of these people start with an existing book of business, don't they? Yeah. A lot of the loan originators definitely bring in an existing book of business, don't they? Yeah. A lot of the loan originators definitely bring in existing book of business. I think with our franchisees, a lion's share of them have been real estate companies that we've sold to. And they don't have a set book of business, but they have the

access to a potential book that is unheard of in the industry. I call it sort of diamonds in their backyard. They have these diamonds of purchase money referrals, which everybody in the mortgage industry is dying for. And if we sell to a real estate company, that's sort of right there in their backyard. They just have to mine it and monetize it. That's the key. So you're not expecting them to open doors with a existing client base. You help them learn also how to go get that client base, right? Absolutely. I think most loan originators are bringing a book of business of prior clients, prior referrals, prior agents they were working with. But at the end, they still want to be connected to that real estate company and

start to get those purchase money for referrals. So what we talk a lot about is integration, integrating that new business. Particularly, think about somebody who's trying to start with a win. They might already have a business or this might be their second business. So we're teaching them how to integrate two businesses and have them sort of be synergistic off of each other, right? Feeding one feeds the other. You give leads over here, give leads over here.

So if you look at good entrepreneurs, a lot of times they're just adding business after business that's sort of complimentary to each other. And I think that's where we're seeing the most success. That's great. That's great. So, you know, I love it. You guys, you definitely try and get them going, get them to start with a win, get them to, you know, each day, each week, it's get some of these things done in order to start, not just get their doors open, you know, accomplish the compliance pieces and ensure that they're well-educated and functioning in a manner that they maintain compliance, they follow the rules, they provide

consumer protection as much as they possibly can as well. So, Ward, how do you start with a win? This is what the podcast is about. So, let's talk about you as a business leader. You've done a lot in your life, in your professional career. You're very active. You know, you've always got some things going on, family, friends, you know, poker game, whatever it might be. You know, how do you start with a win, Ward?

What tips do you have for our audience? Well, I think the first thing is really surrounding yourself by the right team. I think team is all that matters. Even when you're an entrepreneur or one or starting as one, the next thing to do is get a great team in place. And I don't know about you, Adam, but I'm always looking to hire people smarter than me, who work harder than me,

who understand business better than me. I'm not the smartest person in the room. I'll never pretend to be that, but I'm going to go get those people. So I think surrounding yourself with a great team is the most important thing. And I think they have to be, to start with when you have to be customer focused, you have to worry about that customer experience, what they're going to do, how they're going to touch your customer, how they're going to be dealing with your customer.

I think that's finding the right people who have a customer mindset, who think more about the external customer than they do even themselves or the internal. Because if you make the external customer happy, everybody here is going to be happy. Everybody in your business is going to be happy. So I think the first win is always starting with the right team. That's the key is getting the smart people on the team who can help you grow the business. That's awesome. Yeah, you're absolutely right. You and I are on the same team, my friend. So, you know, I completely agree with you. It's, it's about, about talent, about execution, about, you know, utilizing that, not just that individual, but that been instrumental in this, is you're giving back to the community, the corporate social responsibility that Motto is involved with.

And, you know, Remax has always been about giving back. And that was something that was really important to you in the creation of Motto. Why don't you tell us a little bit about, you know, the program that Motto has come up with? Yeah. And when we sat down, we had about eight value props that we were looking at that we were providing to our customers, but I felt like we were missing one. And one was in this day and age

and in every past experience with all businesses, you have to be one who wants to give back. You have to want to be giving back to your community, giving back to your clients, whatever it might be. And we looked around and said, we're part of the home buying process. And what's going on in home ownership? What's going on around homes? And we studied it. And we also found out whether it's homelessness, but we really found

out that more people in this world are hungry more than you ever thought before. And we said, hey, we have people who are moving constantly, doing deals constantly. The last thing they want to do is actually move food products, foodstuffs out of their house when they're moving. And we said, how can we make that advantage to feeding hunger and getting rid of hunger? You know, the motto mission against hunger is what we came up with. And what we do is try and incentivize and tell our loan originators in our offices, connect yourself with a local food bank, a local food pantry, maybe a church, whoever's giving back in your community and start to make a process with your motto

to say at every closing, we're going to give you this bag and we want you to fill it up with foodstuffs, bring it back and we'll donate it on your behalf because you're not going to want to move it. And we also thought it was a great way to continue a connection with our customer to say, hey, when we close together, we're going to give you the next bag. And in six months, we're going it was a great way to continue a connection with our customer to say,

hey, when we close together, we're going to give you the next bag. And in six months, we're going to do a loan checkup. But we want you to fill that bag and we're going to donate again on your behalf. And what we've seen is sort of a groundswell of support, sort of almost a step-by-step process in each of our franchises of getting up and running, giving back. Cool. All right. So, Ward, any big successes you want to share with us here? Yeah, absolutely. We've sold over 100 franchises in our first 23 months. 100!

Yeah, we're excited about that. That's a huge milestone. We hit it in, like I said, under two years, which is very exciting. It puts us in the top 1% fastest growing emerging franchises according to franchise grade. We're excited about that. And to put us in the top 1% of franchises in their first two years is an accomplishment that not only I'm proud of, our whole team is proud of, and even our network is proud of now. So we're sharing that out there, and we're pumped to celebrate 100.

I mean, that's huge. That's testament to your team, to the team of Motto franchisees and their efforts and growth and the LOs out there and the consumer who trust Motto with their lending needs. I'm super proud of you as the CEO of Remax and Remax Holdings. I mean, it's amazing to look at. That is a big success. Top 1% of emerging franchises. And I read the article as well. It's really cool. I encourage everybody to go out and take a look at that.

Yeah, I feel like we've started with a win, obviously. We've started with a great win, and we feel like all that we can do is continue to provide this great value prop to everybody. And if we continue to provide this great value proposition of training, support, compliance, marketing, everything to them, just like any other franchise model, but we want to do it even better in mortgage than it's been done before, the sky's the limit. So we feel like we started with a win, but we want to keep winning. Hey, Ward, thanks for being with us today on Start With A Win. We've learned a lot about the Motto Mortgage franchise. If anybody wants to get ahold of you, what do they call? They typically would go to mottomortgage.com and start there is probably the best spot. Thank you so much for joining us today. Make sure to head over to startwithawin.com to get

more great content. Please subscribe and rate the show on iTunes or wherever you get your podcasts. Follow Adam on Twitter, Facebook, and Instagram. And remember, start with a win. you