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133: Catching Up with Buddy’s Home Furnishings at PrimeTime

Written by Rob Stott

August 23, 2022

While we were together in Orlando for Nationwide’s PrimeTime show, we took the opportunity to chat with a local Member in the rent-to-own space, Buddy’s Home Furnishings. Mitchell Lee, director of franchise development for Buddy’s, spoke on the business, the team’s growth strategy and more.


 

Rob Stott: All right. We are back on the Independent Thinking Podcast. And always some of my favorite opportunities when we get out on location and get to do interviews like this with members. And what better way than doing it right from PrimeTime? You see the media sign TV booth right behind us. Nice little plug for the MediaSign TV guys. Go check out what they got. If you’re here in Orlando, obviously you’re going to be watching this or listening to this after the fact.

But nice to be here right now with Mitchell Lee, the director of franchise developments for Buddy’s. Appreciate, first of all, you coming to PrimeTime and getting the experience. I know you’ve been all over the place, RTO World. You’re going down, back home, I’m sure, for a little bit. It’s all over, man.

Mitchell Lee: Yeah. It’s been busy. I am a one-man band. Between discovery days, between meeting with prospects and franchisees and territories, conferences, trade shows amongst many other things. It’s been a grind this summer, but it’s been a good one.

Rob Stott: That’s awesome to hear. Well, before we dive into the business, I want to, tell us a little bit about yourself. Who is Mitchell Lee and what’s your background and what brought you to Buddy’s?

Mitchell Lee: Yeah. Really good question. First off as West Texan, as they come, I still live in West Texas. I love it there.

Rob Stott: Hope it’s not a problem, Philadelphia boy here.

Mitchell Lee: No, no, that’s fine. That’s fine.

Rob Stott: Cowboys. I don’t know. I don’t know.

Mitchell Lee: That’s fine. Both of us have had our disappointments in recent years.

Rob Stott: Amen.

Mitchell Lee: But no, just from a born and bred West Texan. Went to Texas Tech out in Lubbock, went to Dallas afterwards. And my background was look, I got a business management degree and I went to what I knew and that was relationships and sales. I’ve been in that role in some way, shape or form the last 12 years.

Mitchell Lee: But the last six years specifically, in franchise sales. Went from selling cars, sold a car to a guy that introduced me to the food space and food franchises. I did that for about four years. And then, I don’t know if you ever heard of something called COVID.

Rob Stott: Yeah, I think I’ve heard of that.

Mitchell Lee: But COVID was not good for restaurants. And so, just some things happened there. One thing led to another and I ended up at Buddy’s. And I love franchise sales. I love working with our franchisees every day and prospects. And really spearheading the American dream. It’s something I’m really passionate about.

Rob Stott: Well, I was hoping you were going to say, you said you sold a car to someone who was in restaurant. I thought you were going to tell me you sold a meal to someone who was in Buddy’s. And that, that made that… You know, right. And making those connections. Or who you sell to.

Mitchell Lee: I was only in training for the first couple weeks. After that, I was just told to sell the restaurant.

Rob Stott: There you go. No, that’s awesome. But no, talk to, I know the RTO space is, you mentioned it, relatively new. Talk about what it’s like getting ingrained in the retail/rent-to-own fabric and what you’ve learned along the way here.

Mitchell Lee: Yeah. First off with franchising, every time I step into any conference trade show, I’m the youngest one. It’s an older industry. And I feel like that is the same for the rent-to-own space. It was founded in the ’50s and ’60s and you see dads at that time passing off to their kids now. And it is an older space.

Mitchell Lee: I take it as look, I’m new. Just at our Buddy’s conference a couple weeks ago, I stood up, said, “Guys, I’ve done this for a year and a half in terms of rent-to-own. I’m still learning every single day. But at the end of the day, what I think the biggest thing that I’ve learned in my short time, whether it’s nationwide, RTO World, or own Buddy’s, conference, TRIB, Meeting of the Mind, all of these conferences, it’s about the relationship.

From us talking here today to my franchisees, to their general managers making a single transaction in the store. The relationships are easily the most important part of the RTO business.

Rob Stott: I feel like that last point about relationships could be the answer to this next question, but what do you enjoy most about this space and what you’ve been able to learn and glean from it over the past year?

Mitchell Lee: Yeah, I think it is relationships, number one, but I will answer the question more directly. I think it’s opportunity. And when you look at the rent-to-own space, a majority of your customer is the lower to middle class. And whether they’ve had situations in their life, COVID issue, health scares or something, maybe a divorce, at the end of the day, we’re there for them.

Mitchell Lee: And I think that’s something that’s important is we don’t turn our back on our customers. At Buddy’s and we can dive into this a little bit, but we’re locally-owned, community-focused. We’re not led by numbers. We’re led by our relationships and our customers. And I think that’s something that it’s specifically with RTO, but more importantly, Buddy’s. We’re locally-owned and community-focused. And that’s what matters so much.

Rob Stott: No. That’s awesome to hear. And we’ll talk about the business in a second. We’re burying the lead a little bit. That’s what you do on a podcast. You get people to listen and then you can, you get them…

Mitchell Lee: I’m bringing it back.

Rob Stott: These metrics number a little bit longer back.

Mitchell Lee: I’m bringing it back and we’ll go forward.

Rob Stott: We’ll get there. Hang on, hang tight. Hold onto your hats. But we mentioned the travel and how you’ve been going from stop to stop. And that’s one of the… If there’s anything I’ve ever learned about being new in an industry or anything like that, it’s getting to those conferences and getting out in front of the collective. In front of the vendor partners that are involved, or the members and the retailers, the RTO dealers.

Great place to learn. I’m sure you’ve been doing a lot of that over the last little bit. Especially, like we mentioned, RTO World just literally days ago, not even a week ago. Really. And now here at Prime Time. What have those experiences been like for you? And we’ll start just with the overall, dive into the… I know you just stepped onto the Prime Time floor a little bit ago, but I’d love to get your impressions of that as well.

Mitchell Lee: Well, first off from the travel standpoint, it’s not a have to, it’s a get to. When you love what you do, no matter if you’re 29 or 59, I love coming out here and talking to some of my own vendors here.

Rob Stott: Such a great mindset, man.

Mitchell Lee: And some people from the RTO space specifically. When I walked in, I was blown away by the size, the vendors, the products here. Just from somebody that’s been here for a day, really, really good show. And I’ve sat around talked to some of their vendors too. It sounds like they’ve had some good shows as well too.

Just initial feedback up front, I think Nationwide did a great job with this event. And I think that’s something that, when you go to really any event, whether it’s home furnishings or rent-to-own, it’s always a really good showing. Because this is such an important part of the industry, of making sure, whether it’s mom-and-pop or franchise businesses that they can acquire and purchase products at a good price at the end of the day, to help their local communities.

Rob Stott: No, that’s awesome. And we appreciate the kind words.

Mitchell Lee: Absolutely.

Rob Stott: The $20 will be in the mail. Don’t worry. No, but talk about so much of being at a show is the experience. And that I think translates not just to the conference experience, but the in-store experience and everything that goes into making a customer feel welcome. And trusting the business and wanting to do business with you. What is it? I know the Buddy’s, we’ll get into the overall aspect of the company. And a lot of locations, but what’s the experience that you’re looking for at a Buddy’s store? When a customer walks in, what should they expect that Buddy’s experience to be like?

Mitchell Lee: Yes. And can I take it back one second?

Rob Stott: Oh, please do.

Mitchell Lee: Talking about these trade shows and we talked about the relationships here. And you really, when you go to these, you don’t remember buying the 100 couches. No. You remember going to get the dinners afterwards with franchisees and vendors and friends. And the after parties and all those other things. And so, I think when six months down the road, if you’re in a bind, that person on the other end’s going to pick up because you built that relationship.

These trade shows are important obviously, for product and other things. But again, we’re going to go back to that relationship and really not using somebody just to use somebody, but building a friendship and a connection, this is the time to do it at these events. Highly recommend these. Just another plug there.

Rob Stott: I appreciate you doing that.

Mitchell Lee: But yes, let’s take a step forward and backwards.

Rob Stott: Because it’s a very important point. Yeah. Absolutely. That Buddy’s in-store experience, what is it that you’re trying to accomplish for the customer that walks in? What do you want them to experience?

Mitchell Lee: Yeah. The RTO space has really changed the last 10 years. And I think that might be leaders like Amazon pushing the technological side. People will buy things online now. 10 years ago, 15 years ago in the rent-to-own space, you’d have 100 people in the store on a Saturday. You would have 50 to 60 flow through during the week.

Now, sometimes you might not even have three to five people show up in your store in a day, but you’ll get three to five transactions. Well, how is that? It’s because I think the normalcy of buying products online now has really changed the way we think. We don’t have to touch, feel anymore. And so, we have to keep up to date with that. I think we at Buddy’s are very good at evolving. And we’ve really evolved our marketing platform. Now, we’re 95% digital with all of our marketing efforts, SEO, social, all of those things.

And here’s a fun stat. Don’t know if I should share this with you or not, but I’m going to. It’s 72 to 75, don’t quote me, but it’s more than 70% of our products that we push on our digital efforts are rented out, are purchased within 15 days of being on our showroom floor.

Rob Stott: Wow.

Mitchell Lee: It goes to show that that is the way we’re moving. And so, we try to ever evolve. We try to stay in front of our franchisees. And to the second part of that question, we are franchisee-led. We’re one of the only in the industry. We have 330 plus locations now, 290 plus franchise led. Our franchisees own those. But we still have 37 corporate stores in Florida, which I think is important. We’re one of the largest operators still. This is where you train in our stores. Any R&D, anything we’re pushing to our franchisees that have value, we’re doing in these stores.

When you ask the customer experience and customer facing, we’re leading from the front with that. That’s where we found out these things that are digital. But yeah, you don’t have as many people coming in the store, but once you do get somebody online, you have to give them a call. You have to get them in the store. You have to do those things to make sure that they’re still getting that relationship because in the RTO space, it’s about payments. Monthly by monthly and weekly payments. Are you more inclined to make a monthly payment if there wasn’t a relationship in place?

Rob Stott: Probably not. Yeah.

Mitchell Lee: Yeah. And so, I think that’s the biggest thing about rent-to-own. Is although we have gone more digital, the basis and the foundation is still that relationship. And so we have training. We have tack. We have everything from an operations manual and franchise consultants, but there’s systems and processes in place to build a relationship with that transaction.

Rob Stott: And we had a great conversation, just a couple episodes ago with our rent director, Mr. Kevin Dalke, who he’s not standing right off camera, I promise you, but watching us. No.

Mitchell Lee: I listened to him today, by the way. It was good.

Rob Stott: It’s a great episode, but him and I were talking about that relationship. And how that, that’s probably one of the biggest differences between you look at all the members that are here with us today and appliance furniture, consumer electronics, mattress dealers. They might see their customers once every couple years when they’re replacing something.

RTO very different. Probably the biggest difference in that you have that more frequent touch with the consumer and with those payments. And that means more opportunities to make a great impression. Things can go the other way as well. It puts a lot of pressure on having a great in-store experience in building that trust with the customer. Definitely something that I think that I’ve learned just recently about how different it can be from RTO to traditional retail.

Mitchell Lee: Yeah. And I’ve only got one and a half years in this. He’s done it for 30, so you definitely need to listen to him on that one.

Rob Stott: You didn’t just age him on this podcast, did you? No.

Mitchell Lee: He said in the podcast, he’s been doing it for 30 years, not me. I’m just saying.

Rob Stott: You’re just quoting. You’re quoting the man. You’re quoting the man.

Mitchell Lee: Yep.

Rob Stott: But talk about all those locations you mentioned, I know 37. 37, right? Corporate.

Mitchell Lee: 37 corporate stores.

Rob Stott: From store to store or even from corporate to franchise, is the experience different at all? Or what do you guys… Do you try to keep it, when a store gets franchised, that experience looks and feels the same?

Mitchell Lee: 100%. I think when you are franchisee-led, although you have franchisees throughout different states and regions, at the end of the day, there’s still that one voice, that one brand coming from corporate. 100%, yes. And I think that’s something that’s important.

We offer 100 hours of training, basically two weeks of training. And we have our franchise consultants out there before the store’s opened. We are making sure that messaging and that brand is set from the beginning, even before the store opens. To answer your question simply, yes. And I think that’s why somebody lives in Florida, where our corporate stores are basically throughout central Florida. Between Tampa and Orlando and about 100 miles north and south, but everywhere else is franchisees. We have seven franchise consultants that oversee about 290 locations.

Rob Stott: Coast to coast, right? Yeah.

Mitchell Lee: We’re basically, if you go from Arizona, New Mexico, Texas, over to Florida, that’s where we’re at. If you go up to the Carolinas in Virginia, that’s where we’re at. Some stores in Kentucky, but we’re not in Indiana, Ohio, the Northeast, the Midwest.

Rob Stott: Gotcha.

Mitchell Lee: Some of those states and going out to the greater west. We do have 20 stores in Washington. But here’s what I love is, if you go into a store in Washington, if you go into a store in Florida, you’re going to get the same experience.

Rob Stott: Which that’s, I mean, important to mention.

Mitchell Lee: That’s what you want.

Rob Stott: Yeah, exactly. I mean, whether a customer, no matter where they are, to know that when they see a Buddy’s, they know what to expect. And you mentioned that expansion, which is awesome. Is there, and I know a year plus into the role, anything specifically you’re looking at when you look to potentially franchise a location?

Mitchell Lee: I get this question 80 times a day. I do a lot of cold calling. But I think the most important thing is finding the right franchisee. Because people ask me, “Where do I want to go?” At the end of the day, I don’t sell real estate territories.

I sell the prospect and the prospect turning into a franchisee. That’s what I own. From first call to close, that is my main job is making sure they’re comfortable going through the franchise sales process, meeting with our executive team, meeting with our franchisees. And making sure that they are a good fit for Buddy’s. Because remember, Rob, we only have 25 franchisees. And we have 290 franchise locations. If you do the hard math, that’s what? 10-ish to 12-ish franchise locations per franchisee. We’re 90% multi-unit franchise. We are in a very exclusive group. When I’m say you’re joining the Buddy’s family, you truly are joining the Buddy’s family.

Rob Stott: Wow.

Mitchell Lee: But yeah, just it comes down to that individual. What is their liquidity? What’s their net worth? What’s their background, what’s their experience? We take all that in. We interview them just like they interview us.

Rob Stott: Sure.

Mitchell Lee: Because they’re making a big commitment to us. They’re making around a half million or more investment into our brand.

Rob Stott: Wow.

Mitchell Lee: We take that very seriously. And yeah, it’s something that it comes down to really the prospect rather than a territory. But to answer the question on the territory. We have stores that are in 10 to 20,000 population and we have stores that are in 50 to 100,000. At the end of the day, it’s about the general manager. We talked about that relationship piece. The most important piece is that general manager, that general manager in your store is going to lead your staff, is going to check in with your customers.

Rob Stott: Heartbeat of the operations.

Mitchell Lee: The heartbeat of the operation, 100%. Because this model’s a little different. We only need 5,000 square feet and we only need five fulltime employees. That’s important for franchise people because if you go into food, you need 20 to 30 employees and 12,000 square foot. We have an advantage there, but it comes down to that GM. And we can train that GM or they can have RTO experience. But if you ask me, the most important aspects, it’s that prospect and it’s that GM. What is that leadership and investment going to look like?

Rob Stott: A question following up on that I think franchisee or not, someone in the RTO space might be able to hear and learn from. What are the qualities of that GM that make them successful that you’ve noticed? As you look to expand that someone they, like I said, might not be a franchisee, but find those qualities in themselves or things that they can focus on to be a better manager of an RTO business in their own market.

Mitchell Lee: Yeah. You haven’t had the chance to meet really any of our executive team, but some people know Michael Bennett, some people know Mike Zagar, Roy Griffaw, Nina Shively. If you look at our executive team, they’ve been in this space for 24 years on average. Our executive team would have that, but I only have one and a half years, so I’d bring that down. Minus me.

Rob Stott: The outlier.

Mitchell Lee: Yeah, it’s 24 years, but they started on backs of trucks. They worked their way to where they are. And I’m just blessed to be around them because I have a really, really good executive team. But I think when you start on the back of the truck, you go through those trials and tribulations of some of those experiences that you remember that you can learn from. Whether you were in the right or you’re in the wrong, you still have to take the high road.

And in those moments of years of experience and climbing the corporate ladder or what you will, you find that honesty, integrity, hard work. Really easy answers, cliche answers. But really, if you want a good GM, and just like how we talked about that relationship. If I can sit down and have a 20, 30 minute conversation with you, and I know your background, your experience and you’re hard working and all those things I mentioned, we’re going to find a good GM and we’re going to be successful.

Rob Stott: No, that’s awesome. And I appreciate that. And I think our listeners would appreciate that as well. Something they can look at and just think about it. You say, a cliche of sorts, but to hear it hammered home and reiterate it, I think just shows how important that is. No, I do appreciate that.

Close it out here. What excites you? It could be Buddy’s. It could be the RTO space in general and trends that you’re seeing happen. What are you excited about or what things are going well and offering success to you guys that you’d hit on or tell people about today?

Mitchell Lee: Yeah. For me, it’s a two part. First, I’ll talk about the industry. We’re a growing industry. We’ve grown through the ’08 recession, recently with COVID. We’ve grown our sales, the industry’s grown, our stores have grown. From the industry standpoint, we’re not slowing down and we’re not going anywhere. We’re in a very niche market. It’s hard for Amazon to duplicate. We actually, I don’t know if you know this, but ever since we were founded in 1961, we have offered 24 hour delivery. We’ve offered service and support. We were doing things before Amazon. The industry’s not going anywhere.

The lower to middle class will need products and they’ll need it in a way of weekly, bimonthly and monthly payment. I’m very confident in the growth in the industry and how we’re able to take care of our customers. Now, from a Buddy’s standpoint, man, that gets me fired up. Because we have to be at 1,000 stores or we have made a commitment to be at 1,000 stores in 10 years.

Rob Stott: Wow.

Mitchell Lee: Yeah, a lot, a lot.

Rob Stott: You got some work ahead of you, man.

Mitchell Lee: Michael, I know I got a lot of work to do. I know, I know. But that excites me because if you’ve seen our competitors, they’ve built very good business models, but they’ve been around for a long time.

Rob Stott: Sure.

Mitchell Lee: And if you see just the numbers, the numbers speak for themselves, we are growing. And I think we are really going to make a name for ourselves, in both unit count, as well as just purchasing power and all those things. I have a really, really good team at Buddy’s. They make my job really easy. I have great franchisees.

I know all 25, they’re in my phone. I can call them up if I need a “validation call”. Or if I’m in a local trade area and I want to meet with a prospect, I know they’re there for me. But I also have a great backing at the franchise group. And the franchise group is a bigger portfolio that owns us, American Freight, Pet Supplies Plus, Vitamin Shoppe, Badcock Furniture and Sylvan Learning. And they want to grow as well too. It’s not just Buddy’s. It’s the franchise group. Their job is to own franchises. I’m very excited for where we’re going. We’ve had a lot of leads coming in, a lot of internal growth as well too. Only positive things on Buddy’s and that’s what gets me excited.

Rob Stott: No, that’s awesome. Well, I’ve taken up a few minutes of your time. Sounds like I maybe shouldn’t have, because you got a lot of work to do to get to that number. That’s exciting stuff. And we look forward to seeing it grow and you guys continue to succeed. Appreciate you A, coming to Prime Time and walking around and taking in the sight and sounds of this show. And B, sitting down for a podcast with us while you’re here. Mitchell, I appreciate it. It’s great connecting with you. Great seeing you and we appreciate it.

Mitchell Lee: Yeah, absolutely. I really enjoyed it. Really enjoyed the show today. Y’all did a great show. And in true franchise salesperson, I’m actually going to go to the airport and start making some cold calls.

Rob Stott: There you go. That’s awesome man. Have at it.

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