Steve LeFever, CFE Profit Mastery Chairman Mark Liston, CFE Glass Doctor President Greg Esgar Massage Envy CFO Tim Purcey Comfort Keepers COO

BUILDING A CULTURE OF ACCOUNTABILITY

FOUR DISTINCT WAYS TO

IMPROVE ORGANIZATIONAL

PERFORMANCE

YOUR MODERATOR

Steve LeFever, CFE Founder and Chairman Profit Mastery Seattle, WA

PANELISTS Mark Liston, President, CFE – Glass Doctor

Greg Esgar, CFO – Massage Envy

Tim Purcey, COO – Comfort Keepers

Management is doing things right...

Leadership is doing the right things.

Considerations in Business Performance and Profitability…

BUSINESS PERFORMANCE…

• The “success road” is littered with failures

• Profile of the business owner

• 80% of businesses fail

BUSINESS PERFORMANCE…

WHY?

Measure…

What Gets Measured, Gets Managed

Monitor Financial Position

and

What Gets Managed, Gets Done!

Three Primary Considerations…

Monitor Financial Position

• Education

Accountability and Performance is a three-legged stool

– establishing the foundation • Benchmarking – creating the yardstick • Performance Groups – providing the

accountability and discipline

The three gentlemen you’ll meet today have all “done it”...

Not perfectly...

but they’re here — And they’re still standing

And their networks are significantly better because of their efforts

AND... Although their stories are very different...

Their experiences, each in their own

way, are remarkably similar

Let’s meet Mr. Mark Liston...

MARK LISTON, PRESIDENT, CFE – GLASS DOCTOR

MARK LISTON, PRESIDENT, CFE – GLASS DOCTOR

Overview of company

• Established in 1962 • Began franchising in 1977 • Became part of Dwyer Group, Inc. in 1998 • Sold to private equity in 2004 • Dwyer Group has more than 1,700 units • Glass Doctor has 190 franchisees in the US

and Canada with 300 locations

MARK LISTON, PRESIDENT, CFE – GLASS DOCTOR

• How to transfer accountability to the franchisees

• Identifying your key people and teaching them how to work together

• Performance groups make benchmarking actionable

• Franchisees can build stronger, more motivated teams!

Systems Analysis

114 Areas!

YOUR DREAM TEAM • Mark Borchin • Jon LaLanne • Gene Porter • Neil Hall • Garry Jones • Tom Ashley • Brad Roberson • Colt Easley • Bryce Stahlke • Jim Bernstein • Dave Kozlowski • George Strauch

• Matt Kelly • Larry Patterson • Ed Sieber • Jeff Bogdanski • Bob Boehm & Kelly

Larson • Cary Hooper • Justin Eimers • Mike Scorzo • Mike & Mary Ellen

Jones • Dave Hawthorne • Bryan Yarborough

RANK ITEM 1 Phone Handling 2 Know Your Numbers 3 Local Advertising/Marketing 4 Tone, Attitude, Lead by example 5 Business Plan/Goal Setting/Budget 6 Full Service Offering 7 Image/Brand Support 8 SWAT/MPG 9 Proactive Dispatching

10 Outside Sales Rep 11 Cross Trained Staff 12 Office Flow 13 Consistent/ Ongoing Training 14 Timely Closeout/Invoicing

THE DOCTORS OF THE CLINIC • 8 Franchisees who make up 19.8% of the

volume – Goal of 50% growth per year

• 2 more groups followed after hearing results

• All three groups have a Glass Doctor

Franchise Consultant working with them

• Calls each week – Voted chairperson for group

•Tim Jokl – Chair, Indianapolis •Colt Easley – Denver •Brad Roberson – Brookhaven / Jackson, MS •Vern Steiner – Millersburg, OH •Neil Hall – Amarillo •Jerry Doyal – NW Louisiana •Mike Shanahan – Austin •Gene Porter – Clovis (NM) & Lubbock (TX) •David Herrli – Elkhart (IN)

THE “A TEAM”

•Wayne Gaudette, Chair – Raleigh •Holly Nieman – Hot Springs (AR) •Ron & Jane Maxey – Northwest IN •Matt Nicklaus – Inland Empire (CA) •Ed Cape – Virginia Beach •Jeff Bogdanski – Greenville (SC)

GREG ESGAR, CFO – MASSAGE ENVY

THE MASSAGE ENVY BRAND • Founded in 2002 (Scottsdale, AZ) • First franchise awarded in 2003 (Phoenix, AZ)

• Massage Envy Spa opens in 2007 providing therapeutic facials along with massage

• Established an exclusive partnership with global skincare leader Murad®

in 2008 • Today:

• 848 Open Clinics

• 594 Massage Envy Spas

• 1,111 Total awarded franchises

• Acquired by Roark Capital Group in late 2012

THE MASSAGE ENVY MODEL

• Professional, convenient, affordable

• Membership model

• Recurring revenue

• Offerings deliver greater value to the consumer

• Competitive national pricing structure

• 43 regional developer groups nationwide

• 73% of franchisees are multi-unit owners

BRAND GROWTH

• Over 1.3M members nationwide

• 103 new clinics opened in 2012

• 16.15 million services were performed in 2012 • 50 millionth massage performed • 1 millionth facial performed • Opened in Hawaii in 2012 • Opening in Alaska next month – 47 states!

• In 2012, on average, the network was performing 300,000 services per week

BRAND GROWTH

• World’s largest employer of licensed/registered massage therapists

• Only nine units have closed in the brand’s ten year history

• National Finance Program: Massage Envy is one of only 30 franchises selected for this national program that provides development capital to new and existing franchises

UNIT LEVEL PROFITABILITY

• Average unit volume is $1.2 million

• Unit level profitability is an inherited culture cultivated by PROFIT COACHING from Massage Envy Corporate

• Culture of sharing relevant data

• Profit coaching occurs at three levels: – Regional developer – Franchisee – Clinic

UNIT LEVEL PROFITABILITY • Data Sources

Data Warehouse/ Report Portal

Region Franchisee Clinic

Corporate

Unit POS

Customer Service

Financial

CRM Database

OSR Feed

Marketing

Legal Membership Data

ADDRESSING UNIT PROFITABILITY

• Profit centric leadership is a core pillar to organization

• Profit coaches Forward thinking

• Provide limited data enabling franchisees to FOCUS on relevant data

• Provide multi-level comparisons; region to region, clinic to clinic

ADDRESSING UNIT PROFITABILITY

• Metrics are available 24/7 via a proprietary intranet accessible by RDs and Franchisees

• Profit forecasting and planning occurs prior to a clinic opening as well as recurring review once open

UNIT LEVEL PROFITABILITY

• Methods of Profit Coaching

– Collect clinic P & Ls via a network portal and layer results through a consistent template

– Create reports and rank through Key Performance Summary

ADDRESSING UNIT PROFITABILITY

• Methods of Profit Coaching

– Share network metrics (price points, region stats, results by vintage, etc.) through the report portal and at the Massage Envy Annual Franchise Conference

– Health Meters were created for Regional Developers to monitor clinic performance (triage system: green, yellow, red)

– Created a Profitability Committee through the National Franchise Advisory Board

RESULTS OF PROFIT COACHING

• EBITDA increases year-over-year

• Double digit same store growth

• Goal setting is aimed at increased revenue and business growth

• Provides insight into the business - catalysts and deterrents for profit growth

• Encourages franchisee to focus on what’s important

• Creates a competitive environment

• Provides a clear vision for the future

TIM PURCEY, COO – CK FRANCHISING, INC.

BUILDING A CULTURE OF ACCOUNTABILITY

• Comfort Keepers – Profile

• 2nd largest franchise in the Home Care Industry • As of Fiscal Year Ended Aug 31, 2012 644 Units • High degree of MUO’s • 1 of 60 (Last Count) competitors • High franchisee satisfaction

– History • Founded 1998 • Began Franchising in 1999 • Private Equity owned from 2003- 2009 • Strategically owned since 2009

– Structure and ownership • We are a wholly owned subsidiary of Sodexo

• Process – Peer groups – Coaching

• Personalize – Vision – Success

• Power – Measurement – Influence

BUILDING A CULTURE OF ACCOUNTABILITY

• Franchisor responsibility – Create the opportunity – Create the tools – Sell the franchisees on the value – Participate from the top

• Franchisee responsibility – Commit the time – Follow the process – Dedicate the resources – Do the work

BUILDING A CULTURE OF ACCOUNTABILITY

• Engagement • Systems • KPI’s • Accountability • Strategic Disengagement • Wealth Building

BUILDING A CULTURE OF ACCOUNTABILITY

COACHING • Characteristics

– Franchisor Managed – Coach – Individual – Tactical – Operational

• Tactics – Assessment – Training – Follow-up

• Areas Covered (Tactical) – Finance – Operations – Sales – Marketing

PEER GROUPS • Characteristics

– Franchisor Facilitated – Peer – Groups – Strategic – Fiscal

• Tactics – Education – Benchmarking – Accountability

• Areas Covered (Strategic) – Growth – Profitability – Wealth building

CONTACTS • Steve LeFever: Lefever@ProfitMastery.net

• Greg Esgar: GEsgar@MassageEnvy.com • Mark Liston: Mark.Liston@GlassDoctor.com

• Tim Purcey: TimPurcey@ComfortKeepers.com

From Profit Mystery…

To Profit Mastery

It’s a Journey

Just do it!

DRIVING UNIT PROFITABILITY