E125: Foot Solutions CEO John Prothro on Acquiring and Growing a Foot Wellness Franchise

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit podcast. Today I'm here with John Prothro. He is the CEO of Foot Solutions, and we're gonna chat about his acquisition of that. And all the challenges and all the lessons learned and where he's going in the future. Thank you for being on the show, John. 

[00:00:15] John Prothro: You're welcome. I'm happy to be here. 

[00:00:17] Ronald Skelton: Awesome. I always start off with the origin story. My joke running joke is probably, listeners are eventually gonna get sick of this one, is you were born and then you ended up on a show about mergers and acquisitions. Can you kind of fill out the gap in between? How did you end up on a show like this?

[00:00:30] John Prothro: I don't think you want the whole story. It's kind of a long one. And by the way, Ron told me right before the call that this was a video call. So I probably would've cleaned up a little bit more. But, I got outta college, having studied organizational communication because it sounded professional, I guess. And I expected I would go into consulting, at some stage. Got into mergers and acquisition by doing post merger integration planning, for a large company, and then moved into, the m and a advisory world. Where we were doing sort of lower middle market transactions. Mostly brokering, putting them together, but then working on the buy side a lot with some strategic buyers.

[00:01:07] And just kind of learning along the way about how it's all done. And in the process, I started rolling some fees into some of the transactions that we really liked, that I really liked. Enjoyed that quite a bit. Wanted to be on the buy side. Was invited by or asked by a client of ours, to help them on the operations side, about five years ago. So I moved out of m and a and went, to work with, with a company that was in, industrial distribution. So while I was there, I learned a little enough to be dangerous about operations. And when I was done with that project, really just basically a three year project to get some things done for that company.

[00:01:44] I started looking at raising a fund to buy a small portfolio. I'd seen it done several times, figured I could do it myself. And I had made, some very good friends, very close colleagues, in m and a job. And I had figured, well, these guys know and trust me and I know and trust them. So why not let's put some money together and buy a portfolio of businesses. While we were raising the money for that project, a friend of mine called and said, Hey, one of our clients in Atlanta, a company called Foot Solutions. The owner is, about 80 years old and he's just, he's about ready to sell. 

[00:02:18] And, I asked him a few questions about it and originally said, told him no. I wasn't interested. It was, too small and, too many locations. I thought that's a lot of work for that many locations and that much work. But then I slept on it and, I suggested that, maybe I could meet the owner and just talk to him about it. And when I did, loved what he had to say. Foot Solutions is a franchisor. And, at that time our Foot Solutions had about 60 or so franchises in North America. And, it was only franchise businesses and the company was just collecting checks, as the franchisor on royalty side.

[00:02:54] And so it was a small business and not, a little bit of a dying brand. But it looked like a challenge to me and it was sort of making money in some ways, despite itself, to be honest. So I called my investor friends and said, look, I wanna buy this one. And I wanna run it. And let's see what we can do, putting capital, energy and professionalism behind it. And so three years later I get called by this, podcast guru and that's how I find myself. 

[00:03:23] Ronald Skelton: That's interesting. So, you've acquired at this point in the store, you've acquired Foot Solutions. You told me before the, before you turned on the mic there, that it sounded like, there was some other of your franchisees that were looking to retire. Is that one of the expansion opportunities you've seen? Okay, I can take the master franchise and then, maybe bring some of the franchisees in-house. Drive up the revenue a little bit more and put money, does that give you money to put back into the overall marketing and expansion of the whole franchise as a whole?

[00:03:52] John Prothro: Yeah. That was the idea. So, we weren't gonna be attractive in terms of shareholder value. Just collecting royalties from 60 locations in North America, that wasn't gonna work. But I knew that, cuz it was a 20 year old brand that several of the franchisees were probably looking to retire. And also we could open some corporate stores. So we've bought, five locations so far. Opened a few. And then we went to Florida and bought, a competitor of ours in Florida, company called Happy Feet Plus. Which has been a good acquisition and they were doing similar, business to us. A little bit more retail, a little bit more fashion, but, similar foot wellness sort of focus.

[00:04:29] So we now we operate 20 corporate stores. We're making money in different channels and we've got, enough scale to build up a support team. So we have about 30 people on the corporate side, now, and another 60 retail employees. And then those 30 people are really able to support franchises. And so it was only recently where we turned on, franchise sales again. We weren't really that interested in selling franchises when we weren't really ready to support 'em. But now, we figured we are. 

[00:04:56] Ronald Skelton: Awesome. So everybody knows Foot Solutions and maybe even Happy Feet. Do they make shoes or they actually make orthopedic, orthopedics to go in shoes or? 

[00:05:04] John Prothro: Yeah. I'll back up a little bit. So Foot Solutions is a foot wellness brand. Our value proposition is that your feet are the foundation of your health. Let us take care of them for you. And so we carry healthy footwear, and truly custom orthotics. So a lot of places you can go and get your feet scanned. A lot of that is just sort of, retail theater. But our technology and our service is really, based on a caring expert service. 

[00:05:28] Ronald Skelton: So it's, so many need to go to like an orthopedic specialist or what, whatever a foot doctor's called. And then have a, or orthopedics prescribed to them? Or they go to you and you hook 'em up with a doctor. And I mean, what's the process for that?

[00:05:41] John Prothro: We get a lot of medical referrals. We're allies. We have, folks that are very highly trained and independently certified, to do custom orthotic design and footwear selection. But, we're not doctors. We get a lot of referrals from that profession. So your podiatrist, if you go in there with a foot issue that could be helped by wearing better shoes or having custom orthotics made for you, they'll write a prescription and send you to Foot Solutions.

[00:06:05] Ronald Skelton: I've seen, in the show notes, it said you primarily work with, the aging population. Do you do the kids orthopedics also, like corrective shoes and stuff?

[00:06:13] John Prothro: We don't sell kids shoes. That's a game we don't really wanna play. Kids are growing out of 'em real quickly and parents don't wanna spend rightly. So they don't wanna spend more than, 30 bucks for a pair of shoes. So we focus only on adults, in terms of footwear. But we can create and do help a lot of children who need, custom orthotics, in their shoes. And people are wearing 'em earlier and earlier. When we're serving aging population, it's really kind of the 40 plus, the people who are starting to feel, starting to understand their health a little bit better. And starting to look for preventative medicine as well as, trying to solve some problems.

[00:06:45] I mean, I know after I turned 40, I stopped feeling like I was invincible and needed, I started needing some help. 

[00:06:51] Ronald Skelton: I don't think I've ever said this one on air. When I was a child it was common for kids who had any type of, let me call it, like, they weren't walking what the doctors thought were normal. They would give us corrective shoes. So I actually, I guess I walked on the insides of my feet really bad. Yeah. So they put me in corrective shoes until I was probably in second or third grade. And as an adult, I notice my shoes like if I wear cowboy boots, they last three years. I can see that they still wear toward the inside more than they do to the outside. So I still probably have. 

[00:07:17] John Prothro: Well, you don't realize that hurts your, it's not just your feet that's affecting. It's all over your biomechanics. And your knees and your hips and your back. It all sort of stems, from your feet and your foundation. So we love our niche. We love where we're at. Within the health and wellness sector. 

[00:07:31] Ronald Skelton: So people don't typically notice their feet are, hurting until they're up and active and moving around. Like, I have a bad habit. I love my Birkenstocks. But I know if I'm gonna be up and walking more than a few hundred feet for the, Between places I put tennis shoes on cuz they hurt my feet for some reason. I like walking around in 'em. I don't mind being a lounge around the house or running to the beach and doing that. But if I were going go for a walk or something, I'll switch over to tennis shoes. 

[00:07:53] The reason I brought up the activities thing is when Covid hit and everybody was told to stay inside. I promise you, those of us from the South probably didn't put on shoes for months on end. Right. I joke around and said, the only reason us from South wear shoes is you won't let us get our coffee and donuts in your fancy stores unless we have some on. But, how did that impact sales?

[00:08:11] It had to be pretty devastating when, I mean, the less active you are, I guess the less you're gonna know that you've got, pain in the feet and that type of issue. 

[00:08:19] John Prothro: Actually, the world reacted a little bit different than you did. A lot of people got tired of being inside and, started getting out and being more active. And of course they had more time on their hands. What it did do had a major impact on, on more fashion brands and, work shoes. So everybody started buying sneakers. Go back and look at all the press releases from the major sneaker brands. They're having amazing years since Covid. Bought Foot Solutions, which of course is a chain of retail stores or franchise stores.

[00:08:48] We are serving primarily folks that are 40 plus. And a lot of the elderly population buy their shoes at Foot Solutions because we help 'em pick out the right ones for them. And, we bought it one week before the first Covid death was announced. So, you can imagine my friends riving me about my investment timing. But it was a good situation. At the end of the day, it turned out to be overall fairly good for the business because we were a new ownership group. And the brand had kind of gotten off the reservation a little bit. A lot of the franchisees had started doing their own thing. And when crisis hits, it's a time to pull together.

[00:09:24] And so we did our best to, really build a culture of collaboration and teamwork during that time. And we did a lot of the heavy lifting on the brand. We did a whole rebrand with a group that, had worked with Audi and Facebook and we spent a lot of the money and time that we were gonna do over time. We had a whole year where we really weren't collecting anything, any cash, or having much to do besides trying to navigate Covid. So we spent that time getting to know the franchisees a bit better, what they needed and rebranding. And culturally, I think it was very good because, when crisis hits, you want to know who's, who's on your team and who's on your side. And I think we, we demonstrated to the franchisees that we were with them. 

[00:10:04] Ronald Skelton: Now you guys is a hundred percent brick and mortar? Or can people send in a prescription for orthopedic, insoles or whatever and get 'em online or? 

[00:10:12] John Prothro: Well, that's the difference. So we're not a, we're not a product business. We do sell product, but we're a service business. And it's a personalized, custom service. So you can't really get it on the internet. Now, if you find shoes that you like, like you like your Birkenstocks or whatever, you can buy them from Foot Solutions or buy them on Happy Feet dot com. But we sell very little online. We don't push it, very hard. Because you need to come in and you need an expert to see you and help you pick something out. And you really can't do that on the internet. 

[00:10:40] Ronald Skelton: Okay. I was curious if you had to make a shift to being more online during covid or not. But it sounds like, you just dug down, built the brand and, retooled some of your support services and stuff during that time.

[00:10:51] John Prothro: Yeah. So some of our franchises, work with Medicare, very closely. Especially, there's a thing called the diabetic Shoe Bill. I won't bore you with it, but if you're diabetic, and you have foot issues related to your diabetes, then you can get a prescription and, and Medicare will cover 80% allowable. Several of our stores were considered essential during that time because, some of the elderly population or the folks on Medicare, needed to get to a place that can get them their diabetic, insoles and footwear. Because it actually, that's preventative medicine for sure.

[00:11:23] Ronald Skelton: Did you guys look at that and go, okay, I need to get some of more stores, under that certification or qualification? 

[00:11:30] John Prothro: It certainly is best practice as a foot solutions to be Medicare accredited. As a corporate, we try to have at least one in each area that's Medicare accredited. It's a bit of a pain. No offense to Medicare, but they're pretty aggressive about audits and things like that. It's not something you want to do unless you have a need for it. But it is best practice to do it as a foot solutions.

[00:11:49] Ronald Skelton: So you went from being on the, advising side and corporate side to buying your own. Is there anything that was different from theory and all the stuff you did prior to buying foot solutions? That once you got in there, you acquired this thing like, man, I wish I'd have known that before I bought it. Or, Hey, next time I'm doing this differently. What was the lessons learned in the process?

[00:12:10] John Prothro: What a great question. You could have sent me that question before we got on. 

[00:12:15] Ronald Skelton: I love it. Raw and organic. We're gonna figure it out as we go. 

[00:12:18] John Prothro: Well, I've never been a financier. Okay, let me just be clear on that. I don't like sport coats and, I don't have an MBA. So much of what I know, in fact, that almost a hundred percent of I know, of what I know is, from experience. I will say you get in each acquisition we've done, a lot of the assumptions that we've made have, turned out to be inaccurate. And so when we're building a plan a, a business plan around acquisitions and growing, much of what we do is more, as more high level goal setting.

[00:12:50] That have, a handful of initiatives that you want to get accomplished. But how you accomplish 'em and where you, where the resources come from, and who you're gonna use in that whole process, that changes pretty quickly. Because, um, as much as I think I know people, for instance, you'll get in and you think you knew that guy and you didn't. And that guy's not capable of this and this lady's better at that. And, moving those boxes around, it's really easy to look at a, at an org chart. I used to do this quite a lot and still do it. Look at an org chart and go, okay, we don't need two CFOs, so let's use this one here and let's put the boxes together like that.

[00:13:25] When you get into an organization, when you see where the power structures are, where the communication levels are, and who's talking to who and or to whom, and you get to know the people in the business, then that's the only time when you really can do that on an accurate level, I think.

[00:13:41] Ronald Skelton: Well, I agree with that. I think, one of the things I used to try to do, I was a tech manager for a long time, running tech divisions of companies. So I'd have 50, a hundred, I think the most employees I ever had under me was like 185, at a big tech startup. One of the things I always try to track is who went with who. So meaning that like if one of my key employees left, I could actually almost tell you that these three or one of my managers left. Within a year, these other three guys are going. Cuz they worked with that same guy for the last three companies. And that, that happens a lot in the tech industry.

[00:14:10] There's a web inside of communications and personal development and, relationships inside of these companies. And I can see where if you moved into a company you just acquired, if you don't know what that connection base is, who influences who really has a true power. There used to be a decision making or a action taken, I should say, process I always used to use. And it was, knowledge, influence, and power. Somebody had the power to make it happen. Somebody had the knowledge to come up with the idea in engineering. But somebody could influence the guy with power.

[00:14:37] If you ever knew all three of those players, you can get anything in a company done. You could be the guy with, if you're the guy that I had the idea and the guy that has the power to get it done won't listen to you. Who does he listen to? That's the point of influence. So you go through the point of influence, educate them, bring them up to speed, and then go through the power. If you're the guy with power you don't know happen, you start talking. So those three things work together. But you can walk into a company and not realize the person with power to really get stuff done, happens to be the administrative's assistant that sets at the front desk. The most least essential person you see on an org chart could be the person that really is just getting stuff done there and holding everything together. I could truly gather that. I've seen it occur.

[00:15:14] John Prothro: It's funny you mentioned tech because, that's one of the things I always mess up because, I have a very optimistic, outlook. And I guess you sort of have to do that to be an entrepreneur and think, oh, I'm gonna go buy this business and run it. But the technology side of it, I always underestimate how long it's gonna take to get the tech stack right. Every time. It doesn't matter, every time I get it wrong. I'm thinking we'll get this done in six months, and then, 18 months later it's still, pending. 

[00:15:39] Ronald Skelton: Yeah. That happens and the opposite happens too. As a guy who was a tech director for a long time, I could actually tell you who on my team, if they told me something was gonna take a week, it was gonna take three. And I could also tell you, the guy on the team, if he told you he would take him two weeks, he'd get it done in two or three days. He just kind of knew how people moved and how they forecasted their own abilities. But a lot of these things in that tech stack you're talking about, a lot of 'em are easy to install, but hard to truly adopt and actually get proficient at running correctly. 

[00:16:06] John Prothro: Yeah. And get people bought into using it. 

[00:16:07] Ronald Skelton: Yeah. Especially anybody that's been there for a, for years. They've got their own routines, got their own ways of doing things, and, you go put in a fancy system and tell 'em their Excel spreadsheets are no good anymore. But they just, they can't use that new system like they can in the back of a hand of an Excel spreadsheet they've been using for 10 years. They don't get it as, within two weeks to be more efficient on the other system and it opens up to you for everybody. Yeah, I've seen that. 

[00:16:31] John Prothro: Yeah, we just scrapped, we just built a software that we just scrapped the other day, because the team wasn't using it on the medical billing side. I said, well, nobody's using it. I don't wanna pay for it to be stored somewhere. Yeah, I'm with you a hundred percent on that. That's a major one every single time, and I never learned my lesson. 

[00:16:47] Ronald Skelton: So one of the reasons I don't wanna do tech startups anymore, cuz what you're talking about is product market fit. You have it inside of a company and outside of a company. You just built a product that didn't have a product market fit. Your market was your employees and your franchisees. They didn't need it, didn't see a need for it. Didn't fit their needs. So you couldn't get it to work. That's the problem with every tech startup out there. Is they raise a bunch of money and they're just seeing if the market wants it. They're trying to find out, is there a product market fit for this now? I use these terms, I am your guy with the mba and, probably more college degrees than the average fool should have.

[00:17:19] But, I thought I was gonna be a college professor. And then I tried that as an adjunct professor. Well, I realize I don't like snotty, no kids whose mom and daddy's paying their way through college. And the professor, they paid a full ride. And the dean wants you to pass them. That really got on my nerves. I was an adjunct professor for, I won't say the name of the college cuz of what I just said, but two different colleges. And there were times at both those schools where the dean come to me and said, you've gotta help this kid pass. I was like, he's not trying. 

[00:17:43] Yeah. But his parents have paid the, already paid for this year, next year in advance. I was like, I don't care. They didn't pay me. They paid you guys. Right? I get paid the same whether I pass this guy or not. And that one, one of the deans told me, well, if he doesn't pass, you don't come back next quarter. I was like, okay, I won't come back. See you later. Let's finish this up and I'm outta here. Anyway, I've seen him on, social media. I'm still friends with him on social media cuz he, he friend requested me way before I ever, knew his answer.

[00:18:11] John Prothro: Well, you're friends now until he listens to this podcast. Yeah.

[00:18:13] Ronald Skelton: He probably knows who I'm talking about. And, he's got that degree and I'm sure it's, in my mind it's like all he did is did a disservice. It's like you keeping a bad employee for more than a year. You're doing a disservice to that person in any future employer. Because number one, he's causing problems. He's truly a bad employee. He's causing problems being disruptive to your organization. And then what you're doing to the next organization is like, well, he kept that job for three years. He can't be that bad. And so you're doing a disservice to the next organization too. I always believe there's no such thing as a bad employee. There just happens to be, better jobs for them out there than the one I've given them. 

[00:18:48] John Prothro: Well that, I mean, that's probably mostly true. I do think that's true in a lot of sense. Some people just aren't a good fit for your culture. They're not a good fit for what you've asked them to do. And so in some cases, letting somebody go is a mercy killing in some ways. 

[00:19:02] Ronald Skelton: Yeah. And sometimes it's not even just letting them go, it's like sitting down with them like, look, it's very apparent that you don't want to be doing what you're currently doing. What is it you wanna do? Right. If you can see somebody's intelligent has potential. They're putting in the hours, they just don't have the skillset and they don't have the drive to get the skillset. If you could find what really truly motivates 'em and you have that need, then you can, give 'em a shot and move it. I'm not a big believer in just like not having the conversation before I let somebody go.

[00:19:28] But most, more often than not, the end answer is they've already kind of poisoned themselves there. They already made their mind up and they're just kind of, but they call it now quiet quitting. They're waiting to be fired. They already know it's coming. I've been in organizations where, I got hired into clean up stuff a couple times. I won't say the name of the company cause I'm gonna say something pretty bad. Through acquisition and mergers, a tech company bought another tech company and they reached out to me and said, Hey, we got a problem over here. We bought this company. They were kind of rebelling on us.

[00:19:55] Equipment's going disappearing. Think projects aren't getting done. Wanna bring in over there as the, VP of IT, or the, senior director of technology. And, I want you to track all the equipment, figure out where it's going, that type of stuff. And, I was working with the, the parent company's legal department. We were working with law enforcement. We ended up walking a few people out in handcuffs. Mainly because when we fired them, they made death threats. I didn't wanna do the job. It was one of those things I was like, okay, I'll do this if you'll pay me an extra. I gave 'em this huge hourly rate. And they're like, okay. And I was like, oh man, I wish I'd given a bigger number. 

[00:20:30] John Prothro: Yeah. Well, luckily we don't get a lot of that in the shoe business and in sold business. Not a lot of death threats.

[00:20:35] Ronald Skelton: This was one of those, a big, commercialized pump company bought something that had been open source, before. So open source software. All the people working at the open source software company seen their, seen it as their executives betrayed 'em. They sold out. But, they go back to, when you acquire companies, when you guys acquired, was it Happy Feet? How many employees or how many franchisees do they have? 

[00:21:01] John Prothro: So Happy Feet is a chain of stores. 11 stores down in, the Tampa area and down south in Naples. 

[00:21:08] Ronald Skelton: So, during integration, one of the common things in a lot of mergers and acquisitions, you have a high turnover rate. And, for all my European listeners, I'm talking about people leaving, not revenue. We have people on the show from Europe and then, a lot of listeners, probably about 25. 

[00:21:21] John Prothro: I don't think you could fire people in Europe. I thought that was the rule. 

[00:21:24] Ronald Skelton: No, they call revenue turnover. So when you say turnover over there, they're talking about the revenue. But when I just used that phrase instead of saying people leaving, and then realize I used it on this show, and I have the audiences, both sides of the pond. That said, people leave a lot during these, during these mergers and acquisitions, they lose employees. Cause they don't, the change. Does that happen when you buy, a franchise? Did you have franchisees wanting to sell out on that acquisition, or did you have any? 

[00:21:49] John Prothro: No. That acquisition was very good for the franchisees, and I think they would say the same thing. Because it, again, it helped us get that scale that we needed to really ramp up. We did have quite a bit of turnover. With the acquisition, it was, um, owned by, a man and a woman, before we bought it. The man had passed and the woman was still running it. And a lot of the employees were very close to her and very, loved her and I love her. She's a great lady. A sweet lady.

[00:22:12] I talked to her yesterday actually. I can see why they all loved her. And I can also see why they all called her with every issue that they had. When we bought it, a new kid in town and we're different. And some of the employees didn't like the difference. And that's their, that was their prerogative. In fact, I've always taken the position if we're, if you don't wanna be here, please don't be here. Cuz there, there are lots of folks who do wanna work with us. Like our pace, like our culture. And so the employees who have stayed have, I think really enjoyed it and seen the opportunity and being part of a large organization.

[00:22:43] And we're really thankful for them staying. And likewise, we're thankful for the people who didn't feel like it was a good fit and left. 

[00:22:49] Ronald Skelton: Yeah. I was just curious because I didn't know if it was gonna be different on this when a, in a franchise model versus a brick and mortar. 

[00:22:56] John Prothro: Well, those are all brick and mortar. It was a brick and mortar chain. It still technically is. So we just, they're just corporate stores now. It's part of the Foot Solutions holdings. 

[00:23:04] Ronald Skelton: Okay, cool. I don't know why I thought it might be different, because, I mean, it's all human dynamics. The reason people leave and, don't like change and stuff has to do with human psychology more than it does with the fact it's a franchise or a non-franchise or that. Let's talk about, how fast did you realize that, COVID wasn't gonna be bad for you? It had to be startling at first. When it first started happen, lockdown started occurring. What was your gut reaction? And when did you start in, having indications like, okay, we're gonna make it through this thing. It's not gonna be that bad on us. We have some wins inside of this.

[00:23:35] John Prothro: You're really bringing back some P T S D. I really appreciate that. It was a gradual thing. If you remember, it was like two weeks to, to flatten the curve, if you remember that. Which then turned into a month. So it was a much, it was a pretty gradual thing. And like most people, I think we were thinking, okay, well we're just gonna all sit at home for two weeks and then we'd be back to normal. We just really dramatically cut down, what we didn't have to spend. Luckily we, have some high net worth behind, this business.

[00:24:03] High net worth individuals and nobody expected the business was gonna be amazing in year one. We didn't get into it cuz we needed the cash flow right away. So there wasn't any pressure from my shareholders, thank God. And, the franchisees, we're thankful to have somebody on their side and working on behalf of the team and, we really worked with a lot of 'em to keep them up, up and running and, we helped 'em apply for PPP loans. Did all that. And in a lot of cases advised them and Hey, it's probably best not to do this right now or do that right now. We had a big advantage cuz we were in a 10,000 square foot facility when we first bought Foot Solutions as part of the original acquisition where they were renting. 

[00:24:43] But the headquarters, we didn't need to be that big. We were still a small team. During Covid, we opened a store. We had a really good deal to open a store cause nobody wanted to open a store, but we knew we had to have one locally so we could know what we were doing. And so for several months we just sat in the back of that store with our laptops. I've got pictures of us. Again, it was a small team that was, on the corporate team, quote unquote. There's probably four or five people, that needed to be in an office and working together.

[00:25:10] And we do a lot of milling. We do mostly 3D printed customs now. But we do a lot of milled, custom as well. We have these mill blocks and we were just sitting 'em on our laps in our laptop on top of the milling block. And working and that's like growing up, growing up poor. You sort of, appreciate what you have. Now we have, a nice office now in several locations and a good team and support. And we don't have to wear every single hat like we used to. But we appreciate the fact that's the case. And I think if we'd have started, if it had gone gangbusters from the beginning, we would be feeling great financially, but I'm not sure spiritually, emotionally, we'd be in the same place. 

[00:25:47] Ronald Skelton: Yeah. You gotta have to have some bond and some connection of making it through. Some of the best companies on the planet started during rough times and made it through rough times. And it's a growth experience for us. Some of our best lessons in life, in multiple realms come from the hardships.

[00:26:01] John Prothro: That is absolutely true. There is joy in suffering. 

[00:26:05] Ronald Skelton: So, let's talk about the future. Like, what does it look like? Are you're back to selling some franchises? Are you looking for more acquisitions? It sounds like you had some stuff overseas already. What is the future of Foot Solutions?

[00:26:18] John Prothro: Well, we're really focused on the US market. There's room to grow for years and years. I think we, we're focused on, bringing in more franchises. At least for the next few years because we have that scale and we can support 'em. We are always acquisitive, always looking for other acquisitions. Overseas we've got, we just partner with, uh, with a company in Canada. To grow the Canadian market and sort of be us over in Canada, which we're excited about. But, we're really opportunistic when it comes to the future. If you could see the presentation that I gave to the investors on the Foot Solutions acquisition when we first did it.

[00:26:54] I mean, it's like what? I was like the, I don't like Mike Tyson personally, but, his quote, you always have a plan until you get hit in the mouth. And there's lots of quotes about war, until the first shot's fired. So I'm reluctant to say like, well, in five years we're gonna have X amount of stores and that sort of thing. I really don't know. I just know we're gonna grow as fast as we can, while still maintaining our quality. And we always say we're not gonna grow any faster than we can hire superstars. I'm just not gonna grow so fast where we have to put somebody in that seat. You know what I mean?

[00:27:25] Doesn't matter who it is. We just need somebody in that seat. We're not gonna do that if we're doing that. We're growing too fast. 

[00:27:30] Ronald Skelton: Right. Do you guys do some type of, like a heat map or anything like that? You have a map of all your franchise locations and then population density, as in like marketing nerd stuff. Do you guys take a look at like, okay, here's some strategic locations. If we're gonna sell from franchises and we're gonna spend some money looking for franchisees doing advertising or whatever. This is probably regions we really need to stand up stores. 

[00:27:52] John Prothro: Yeah, it's a good question. And we are focused on, regional hubs. I don't mind saying, we don't have that many competitors anyway. So we're really focused on growing where we're planted. I think we, Food Solutions made a mistake early on, by spreading itself too thin and trying to, having one store in Tulsa on its own. Although it's a very good store, run by a very, charming lady. It's all on its own.

[00:28:16] And so you don't have buying power. You can't share people. You can't share inventory. You can't buy tv cuz doesn't make a 1500 square foot store shouldn't spend five grand a month on tv. It doesn't make any sense. So, we're really focused on building, the brand, in regional hubs. And we have a handful of hubs that we're actively looking at. 

[00:28:33] Ronald Skelton: Were you aware that I'm from Tulsa? 

[00:28:35] John Prothro: You mentioned that, before we got on the call. Yeah. 

[00:28:37] Ronald Skelton: Okay. Yeah. I was like, yeah. Did you just bring that one up? Or did you realize that, we moved here from Tulsa. So, Tulsa area. I actually think I've been in the Foot Solutions there. I like really high-end. Walking shoes and stuff like that. So I don't typically go to, and then my wife uses orthopedic inserts when she stands for very long. So, we don't typically go to like, normal box chain stores. We go to someplace, that can take a look at our feet and give her better shoes. 

[00:29:02] So you wanna branch out to where, as they can support each other and stuff like that. So you're looking for the, in regions you have established, connections and, or sorry, stores already up. If somebody out there right now has a small chain of foot stores and they're thinking they want to chat with you, what would you be looking for in a future acquisition if you were, if you were to look for one at all?

[00:29:22] John Prothro: Well, the main thing is that the center of gravity can't be the people who are running the store. Or they can't be the people who are leaving, I should say. That's a big issue with, mom and pop stores that wanna sell. And it's like, well, okay, all the customers love you. You're the one who has all the expertise, you know the market and you're wanting to run off into the sunset. That's not, that doesn't work. In terms of value, what do you have? You just have a, some inventory and a customer list. So, for anybody who's wanting to sell, and I used to work, in m and a for a long time.

[00:29:51] Anybody wanting to sell, you really need to put in place the infrastructure for the business to operate without you. Unless you're selling the business with you as part of the package. But even then, the buyers are gonna be a little bit skeptical about handing you a large check and you sticking around. Or at least being as focused as you were prior.

[00:30:09] So you have to be, you have to have people in place and the structure in place to be able to walk away eventually. Some buyers will, of course, help you with that transition. But if you're a small company, if you're, what you're talking about, a small chain of, of retail foot care stores, you can't be the main point of contact. Or you can't be the main center of gravity.

[00:30:28] Ronald Skelton: So they need to have already made the shift where there's somebody else taking that main role. Same thing what we look for if we acquiring anything. Is the key operator leaving? Right. In any business, that's a detriment. But in a business where you're a service based, I can truly, like this orthopedics and shoes. 

[00:30:46] John Prothro: And I mean, we will buy some like that. But it's just not worth as much. If you're a small business owner and you want to sell for the highest value, make sure you put somebody in there who can run it after you're gone.

[00:30:56] Ronald Skelton: Yeah. Awesome. I keep wanting to ask you if you actually, do you work with any of the chiropractors that specialize in hands and feet and that type of stuff? We have a personal family friend who, flies around, does seminars, teaching mostly chiropractors how to deal with like, plantar fasciitis and that's how I met him. My foot was killing me for a while there and I went to him and he adjusted my feet for weeks. Gave me a, prescription, or you call it inserts to go into my shoes. And that's how I started meeting us. Then we became friends. But he travels and, teaches doctors on how to adjust feet and stuff cuz a lot of chiropractors just were never taught. 

[00:31:30] John Prothro: Yeah, we get a lot of referrals from chiropractors. Most of our referrals come from podiatrists, chiropractors and physical therapists and orthopedics, don't they? We don't adjust people's backs. So we try to say, look, maybe you should send the foot people to us and we'll send the back people to you, sort of thing.

[00:31:43] So it all is all about alignment and the ones who are doing it do recognize that and it's good. But I would say we're probably better at doing customs than a chiropractor would be, in general. But yeah, we do, we work with a lot of chiropractors, a lot. A lot of people who are, especially on the sporting side. So we do work with mostly a 40 plus population, but we do have a lot of folks that are, high performance athletes, that get their custom orthotics and get their footwear from us.

[00:32:09] Ronald Skelton: I can see that a lot. Before I blew both my knees out, I had six knee reconstructions and, gained all this weight. I actually, did full contact MMA for a long time and, mostly in the gym. I've been in the ring a few times. I realized after my second loss ever, I got knocked out really bad. And, realized I didn't wanna be hit in the head. You know, I had way too much education to be hit in the head that hard on a regular basis. Trying to get to the point here on the future of it. A lot of the guys listening here are trying their acquisition entrepreneurs and they're trying to make that decision.

[00:32:36] Do I go to the franchise model and buy somebody's else's system process and just own one or more franchises and do it that way? Or do I just buy a company that's up and running? Maybe franchise at one of these days. So there is this line in the sand for acquisition entrepreneurs to figure out to buy a proven model and or to just buy a company.

[00:32:54] What is your franchisee requirements? What would you look for? If somebody's listening to this show and they're thinking about making that, that line, drawing that line and figuring out whether they wanna own a manufacturing company or a set of shoe stores. What would you look for and what would you tell those guys that they needed? What skill sets would they need to have to be a franchisee of you guys? 

[00:33:15] John Prothro: Well, there's a few questions in there, I guess. If I was making a decision about whether to open something on my own or buy a franchise model, that to me seems like a pretty simple calculation in your head. Well, do I need to buy into a dog grooming, franchise? I don't know. I mean, how many customers do they send you? Maybe if they're sending you enough customers to make it worth paying the royalty, maybe. But it's not like somebody needs to teach you how to, outfit a van to shampoo a dog off, right? I'm sure I'm making that sound more simple than it is.

[00:33:43] But that would be the question like. Well, can I do this easy on my own or do I need help doing it? And that's one of the reasons Foot Solutions was interesting to us, cuz there is a very high bar to entry. You don't really wanna be a shoe store unless you have a big brand behind you cause you're not getting the discounts and you're not gonna be successful usually. But on the custom orthotic side, you really have to have the expertise foundation and we've got that. Or are able to train it. In terms of what we're looking for in a franchisee, not to be, flipping about it, but we need somebody to be very cashed up. I think, one of the problems with the brand prior to us getting here was, if you had enough money for the franchise fee in a heartbeat, okay, here you go, you're a franchisee.

[00:34:25] Without discussions, and I don't wanna disparage the previous regime. Maybe there were discussions about working capital, but it didn't seem like it. And a lot of the franchisees of course, failed because retail goes up and down, as does the economy. So we need somebody to be comfortable, with the cash requirements. Plus from a Foot Solutions perspective, this is an annuity investment. It is not a replace my income investment. You are putting time and money into building a customer base for the really the first few years of owning the franchise. Of course, if you sell somebody a burger, they might come back the next day and buy a burger.

[00:34:58] But if you sell somebody a franchise or if you sell somebody a custom orthotic, and then probably not seen him for a couple years. Unless they come in and buy a pair of shoes. And if it's a dude, he's probably buying it 12, every 12 months or 18 months when it falls apart. If it's a female, of course you can sell, more than one pair a year to a female consumer. So you really have to be cashed up and you have to have the patience to get to that kind of three, four year mark, where you start to see the same customers in year two. And then you saw those same customers in year three that also came in year two. And it really starts to build on itself and you, and we can see a real clear path after that sort of three year mark. What happens, it just starts to really start to ramp, which is nice. Our repeat customer numbers are really spectacular.

[00:35:39] But if you have the cash and you're willing to be patient, the other thing is just attitude. We spend more time at work than we spend at home, unfortunately. So the people who are, who we invite into this franchise are people that we like. I mean, simply put, and the people that we like are not just competent, but they're, genuine. And we, we want people who are gonna be genuine, trustworthy, and competent. The kind of people that you want to be your friends are the kind of people that you want to be your franchisees. I mean, it's really that simple. 

[00:36:07] Ronald Skelton: And I imagine you have to have a really good service mindset to, to want to be in this space. Cuz everybody walking through your door, maybe I'm making this up in my own head, but in my mind everybody walks into your doors in a little bit of pain and not in a great mood, right? Because they're coming to an orthopedist cuz they're dealing with something, their feet. At least the guys, most guys are like me and I assume they are cuz we don't go to the doctor until it's like, it's getting distracting. I've got other stuff to do.

[00:36:30] So if I come to you or when I show up to a shoe store for, or orthopedics or something. It's because I've got enough pain in my feet. It's distracting me from doing my normal day-to-day stuff. So, everybody that walks into your door is grumpy. In my mind. So if you had somebody in that just didn't deal with difficult people, then I could see where that would be a.

[00:36:48] John Prothro: Well, I don't really want a franchisees necessarily working in the store. It's the people that they hire that, that need to be cheerful and pull people back from the pain. Although it's fine if you wanna own a franchise and work in the store, that's good too. In fact, that can be more successful because you know the market, you know the customers, and you're really controlling your own destiny. But, you're exactly right. People come to Foot Solutions a lot of times for a reason.

[00:37:11] Our conversion rate are very high because typically you walked in there because you knew you needed something and you needed a solution. Although we do have quite a bit of walk-in customers that just want to buy a pair of Brooks. Or buy a pair of parking stock and that's fine too. But the people who really need foot solutions come in there. They know what they're, what they're there for. They're, wanting to spend the cash on getting their feet healthy and feeling good. And then they thank you for it. It's not a cheap service.

[00:37:36] Well, the service is for EBIT and the product is not cheap. But they walk out feeling better and they get, they're able to get back on their feet and they're happy for it. So we're really providing a service in helping people and getting paid for it. Which is a real benefit. 

[00:37:48] Ronald Skelton: Does your franchisees, or you ever think about advertising near places where the majority of the work is orthopedics? So I'm thinking about my wife works at, well, I told you a little bit before we live in the Redwood Forest. What I didn't tell you is we're kind of digital nomads. Meaning that we own a tiny home. This studio you're looking at is a portable studio. It's a small cargo container. We cut down and turn into a recording studio. 

[00:38:08] That said, my wife always works wherever the best benefits are, cuz that way we have medical for the kids and stuff. Within a week or two of being at the casino, we realized, really realized that standing up that much for her was really hurting her feet. So she ended up going to the doctor and she wears special shoes probably from a store just like yours. I don't know which one she went to here in the Santa Rosa area. But, she got, tennis shoes that were not your normal. She got orthopedics, tennis shoes that were prescribed. 

[00:38:35] John Prothro: Is it helping or is she feeling better? 

[00:38:36] Ronald Skelton: Oh yeah, yeah, absolutely. They're not your normal tennis shoes either. They're, I think they were like two or 300 bucks.

[00:38:41] John Prothro: If you go to Vegas, you're more than likely the people who are serving you and at the tables are wearing Foot Solutions. Something they bought at Foot Solutions. There's two in the Vegas area and they serve those casino workers. Like crazy. 

[00:38:53] Ronald Skelton: Any place where the employee's standing up for more than eight hours or six hours at a time, it would be high traffic. I'd say, if I was in your shoes and I own, open a franchise, I'd like, okay, where there's a lot of casinos. Where there are a lot of restaurants where the waitresses are up on their feet all the time. Because those are the typical workers. Even I guess some factory workers where there's long shifts where they work, four tens and stuff like that. If they're up on their feet for more than six or eight hours, it's gonna be typical within a few years. 

[00:39:18] John Prothro: There's an absolute need. There's an absolute need. And I, I wanna shout it, from the rooftops. You don't have to live with foot pain. You don't. I know you're on your feet all day, but we can fix that. 

[00:39:29] Ronald Skelton: Yep. I know it's a big difference for me and my wife, so, I appreciate that. We're running towards the top of the hour. If somebody could remember two or three things about your experience in the acquisition and mergers space, what would you wanna leave 'em with? As far as, takeaway for today.

[00:39:42] John Prothro: People thinking about making acquisitions and growing through acquisitions. Well, for an individual business owner, I would say it's not as hard as it looks. I think it's really not rocket science. It just takes a lot of nerve and it's a little, it's a lot of extra work. But, buying companies and building, as long as you got the right people in place, it can be done. If you're an owner and you're, and you wanna make strategic acquisitions, you very much can do that.

[00:40:08] You might need some help, you might need some support, but, it really isn't rocket science. There's a lot of terminology in the finance world and in mergers and acquisitions in general. I can explain to you what each one of those terms mean in, in 15 seconds, and you'll get it, right? You understand it. Just naturally you're gonna understand it. Same way with economics. Economics is not that complicated as long as it's explained on terms that are applicable, to your life. So that's, I would say that to someone. If you're a strategic buyer and you want to do that. If you're an entrepreneur and you're thinking, I wanna buy a company and run it, same thing.

[00:40:42] Same thing. Approach it with humility though, cuz I, I can tell you it's been a real, challenge on my end to sort of step back and say maybe I don't know how to do it better than that person does. I think a lot of times, I can have one meeting and be like, oh, well, I know what needs to happen there. It's not true. I don't know what needs to happen there. I need to spend a little more time with the people who've been doing it for several years and learn and learn before I start making, assumptions about what I can do better than what the other person can.

[00:41:07] But taking the leap and buying a company and being an entrepreneur and growing a company. I really think as long as you've got capital behind you and some competency, and the industry, or you at least have a good grasp of the basics of business, you can do it. I think everybody who wants to be, should go out and do it. Should go out and be an entrepreneur. Whether you buy a franchise or buy an existing business. And by the way, it's not that hard to structure a deal either. That makes sense. I've got some friends who, I had a call last week with a friend who wants to buy a business. And he said, well, I don't know where I'm gonna come up with, half a million dollars to buy this small business.

[00:41:46] So, well, that's what banks are for. You do have a hundred thousand, let's go get you an SBA loan and see what the bank will give you. Because you want your cash, from cash return to be, to be high. You might as well go out and borrow the money to do it. So it just takes a little nerve and a little bit of competency. And it's really not all that hard. It's not like we're doing something that complicated. In fact, most of what you do will be basic blocking and tackling. 

[00:42:08] Ronald Skelton: Awesome. Well, I appreciate you having you here today and, I like learning from people that have been out there and done it. Is there anybody out there big enough, in your competitive space? I guess the word I'm getting to is this a long term hold for you guys, in your investors? Or is this, five to 10 years from now we're probably gonna find a strategic acquisition to acquire us? Or is that something you're not ready to talk about? I don't wanna put you totally in this spot here.

[00:42:29] John Prothro: No. I get asked a lot. And a lot by the franchisees too. Well, what are you gonna do with this? Are you gonna get it to a certain point and sell it? I'd say probably the most likely scenario is a recap. Private equity recap in which I'm selling, not just the company, but our executive team as well. If I can't ride off into the sunset and a private equity transaction. We're having fun. It sort of goes back and forth in my head. As long as we're having fun and growing, I'm not in any hurry to sell. I don't need a big house on the beach or anything like that. I just, I enjoy what I'm doing. 

[00:42:57] Ronald Skelton: Awesome. Well, I appreciate having you here today. Any final parting words you wanna say before you take off? 

[00:43:02] John Prothro: No. I appreciate the interest in Foot Solutions. Anybody wants to learn more, go to foot solutions.com. The franchising link is all the way at the bottom. So if you're looking forward, it's all the way at the bottom. But we'd love to hear from you and, uh, I hope to stay in touch. 

[00:43:16] Ronald Skelton: Awesome. Well, I appreciate you being here, and we'll call that a show.