Last Updated on July 12, 2023 by nicole

Ken Lineberger is the President of Waters Edge Wineries, an innovative venture that offers a one-of-a-kind franchise model, allowing individuals to fulfill their aspirations of owning and operating their own winery. Together with his wife Angela Lineberger, Ken embarked on this extraordinary journey in 2004 when they established the first urban winery franchise, originally named “The Wine Tailor,” in the picturesque Rancho Cucamonga, California. Pioneering a concept that encompassed all the essential elements of a traditional winery sans the vineyards, their visionary approach transformed into what is now known as Waters Edge Wineries—a thriving entity that continues to expand across the United States. Under Ken’s insightful leadership, Waters Edge Wineries has flourished into a destination where wine enthusiasts can savor an extensive selection of over 50 distinct wines.

Here’s a glimpse of what you’ll learn: 

• Ken discusses the unique franchise model for Waters Edge Wineries in the wine industry. The criteria for becoming a part of the franchise system and the suitability of this model for wine businesses
• The logistics of distributing juice to each Waters Edge location, including the use of the “Flash Detente” thermovinification process
• Ken explains the process of developing Standard Operating Procedures for Waters Edge Wineries
• How the franchise model allows for intentional differences while retaining efficiency, and discussions on restaurants and wine selection
• Ken clarifies the distinction between Waters Edge Wineries’ affiliates and franchises
• Factors that determine franchise territories for Waters Edge Wineries, such as population and legal considerations
• Ken describes the ideal client or prospect for someone interested in opening a Waters Edge Winery
• Exploring the bottling process at Waters Edge Wineries
• A snapshot of general location operations, staffing, and the winery tasting experience at Waters Edge Wineries
• Ken shares insights and advice based on his almost 20 years of experience in the industry. And addressing common misconceptions and clarifying concerns related to franchisees
• The diverse sourcing and wine lineup at Waters Edge Wineries

In this episode with Ken Lineberger

Ken Lineberger of Waters Edge Wineries shares his deep-rooted passion for the wine industry and how it satisfies his insatiable curiosity. He unveils the unique franchise model developed by Waters Edge Wineries, discussing the criteria for becoming a part of this innovative system and explaining why the wine industry is particularly suitable for such a model. Ken also sheds light on the logistical process of distributing the juice to each location, highlighting the fascinating techniques used.

In today’s episode of the Legends Behind the Craft podcast, Drew Thomas Hendricks and Bianca Harmon are joined by Ken Lineberger, the President at Waters Edge Wineries. He provides insights into the development of standard operating procedures (SOPs) and the delicate balance between maintaining distinctive franchise locations while upholding consistency and efficiency. We delve into the distinction between Waters Edge Wineries affiliates and franchises, exploring the factors that determine franchise territories and addressing legal considerations. Discover the ideal clients and prospects for opening a Waters Edge Winery and gain valuable knowledge about bottling operations, staffing structures, and membership benefits. Lastly, Ken reflects on his two decades of experience and offers valuable advice to aspiring franchisees and winery entrepreneurs.

Resources Mentioned in this episode

• Drew Thomas Hendricks on LinkedIn
• Barrels Ahead
• Bianca Harmon on LinkedIn
• Ken Lineberger on LinkedIn
• Waters Edge Wineries
• Angela Zuba on LinkedIn
• Waters Edge Winery & Bistro Kalispell
• E. & J. Gallo Winery
• Bronco Wine Company
• International Franchise Association
• Sonoma Distilling Co.
• Urban Pine Winery
• Gillig Winery
• SBA Franchise Directory

Sponsor for this episode…

This episode is brought to you by Barrels Ahead.

Barrels Ahead is a wine and craft marketing agency that propels organic growth by using a powerful combination of content development, Search Engine Optimization, and paid search.

At Barrels Ahead, we know that your business is unique. That’s why we work with you to create a one-of-a-kind marketing strategy that highlights your authenticity, tells your story, and makes your business stand out from your competitors.

Our team at Barrels Ahead helps you leverage your knowledge so you can enjoy the results and revenue your business deserves.

So, what are you waiting for? Unlock your results today!

To learn more, visit barrelsahead.com or email us at hello@barrelsahead.com to schedule a strategy call.

EPISODE TRANSCRIPT

[00:00:00] Drew Thomas Hendricks: Drew Thomas Hendricks here. I’m the host of the Legends Behind the Craft podcast. On this show, I talk with leaders in the wine and craft beverage industry. Before I get on with the show, quick sponsor message. Today’s episode, it’s sponsored by Barrels Ahead. At Barrels Ahead, we help the wine and craft industry scale their business through authentic content.

Go to barrelsahead.com today to learn more. Before I introduce our guest, I wanna introduce Bianca Harmon. Bianca Harmon’s our audio channel director. Welcome to the show Bianca. How’s it going?

[00:00:29] Bianca Harmon: It’s going great, Drew. Really excited about this guest that we have on here today.

[00:00:34] Drew Thomas Hendricks: Yeah. Today’s guest is Ken Lineberger, and Ken’s doing some really unique things.

He’s the president of Waters Edge Wineries and they offer a really unique franchise model that allows people to realize their dream of running their own winery. Welcome to the show, Ken.

[00:00:47] Ken Lineberger: Thanks a lot, Drew.

[00:00:49] Drew Thomas Hendricks: Oh, Ken. So Ken, thank you so much for being on. I gotta, such a unique model. I don’t know where to begin, how he got into the industry or talk to me about the model, but let me just start with this. Why wine?

[00:01:02] Ken Lineberger: Why wine as opposed to being a water bottler or a beer, beer brewer, or any of those?

I know that wine has been a passion of mine and my wife you know, since we met which is, well over 30 years ago. And we’ve always enjoyed the wine lifestyle, wineries, the very, the fascinating amount of knowledge that you can have about this industry, and still no matter how much you know, there’s always more that you don’t know.

So there’s just, I’m a very curious person. And so wine really satisfies a lot of that curiosity cuz you could never know everything about this industry.

[00:01:32] Drew Thomas Hendricks: Oh, absolutely. Now you have one of the most unique, I don’t know of another franchise model in the wine industry. Tell me about this.

[00:01:40] Ken Lineberger: Yeah, that, that’s exactly right. We are the only one in the United States that’s doing what we do. And essentially we take our model, which actually allows us to put a micro winery, when I say micro we’re typically about a 3,500 to 5,000 square foot. Footprint at the retail level into a community anywhere in the United States.

Because we don’t do any of the viticulture side of this business, we’re not into the growing of the grapes or the farming. We outsource all of that. We just bring in the crushed varietal juice in each one of our locations, actually make the wine at the location. So we teach people how to do that.

We bring ’em in from other industries, other couriers that they were in, and they basically join our franchise system.

[00:02:25] Bianca Harmon: So what is the criteria to become a part of this franchise system? Are you picky about where they’re going, who it is?

[00:02:33] Ken Lineberger: Yes. And learning a lot, we’ve been doing the franchising side of this for 11 years.

So we pretty much have seen great people come in. Some other people that maybe we wish hadn’t come in as part of the learning process. So we’ve really refined that now. But the biggest traits that I look for are somebody that really is passionate about wine. I don’t care how much they know about wine because we can teach them that.

But I can’t teach ’em the passion side of this business and wanting to share that passion with other people. So you have to be a people person in this business as you well know. So you have to wanna be around people and essentially have some level of sales and marketing skills within you to help this business grow.

[00:03:11] Drew Thomas Hendricks: Sure. Yeah. We had Angela Zuba was on the show a month or two ago. And she’s one of your franchisees. She runs her winery out of Kalispell, Montana. And you can definitely hear the passion in her voice and just the enthusiasm and the empowerment that buying into this franchise allowed them to just leapfrog the average person that wanted to start from scratch.

[00:03:30] Ken Lineberger: Yeah.

[00:03:30] Drew Thomas Hendricks: Talk to me about the, I mean, why the wine industry’s, why it’s. I guess everybody understands the power of a franchise and how you can rapidly expand, but how is the wine industry suitable for this type of model?

[00:03:43] Ken Lineberger: That’s what we started in 2004 originally to figure out if that was a true statement, Drew.

We weren’t sure that it was at that time. So we opened up the first location, and I had two goals in mind when I opened that location. Which was here in Rancho Cucamonga, California. Which by the way, I’m sure you probably know, this is one of the oldest winemaking regions in the United States.

It actually was here in the 1830s before California even became a state. It was a well-known winemaking region. 5,000 acres of vineyards around here. So it’s got a history of making wine around here, but anyway

[00:04:12] Drew Thomas Hendricks: You still have those crazy vines as you’re driving up the, I think I know it’s the 15 or the two 15 on the right hand side.

Those like head-pruned vines that are just.

[00:04:21] Ken Lineberger: That’s right.

[00:04:21] Drew Thomas Hendricks: Humongous. Those have to be a hundred year old wines.

[00:04:24] Ken Lineberger: They are, yeah. Those are the bush vines. They all are growing this amazing old Zinfandel.

[00:04:29] Bianca Harmon: Zin. Yeah.

[00:04:29] Ken Lineberger: Someday it’ll be plowed over, but it’s still growing. Yeah. It’s just nobody really tends to them.

But they do go out. People go out and pick them and make wine for themselves. And nobody cares.

[00:04:39] Drew Thomas Hendricks: That’s cool. I didn’t know that. Every time I drive by, I always make a mental note to check in on it, and I never do. Now I know.

[00:04:44] Ken Lineberger: Yeah, there’s still a few of those patches around here. Not many. They’re going, that’s for sure.

As a development takes over all of our areas around here. So to your question, Drew is yes. We wanted to make sure that we could do two things with this model to make it a franchisable model. First of all, we had to make it where we put systems in place that could be repeated and could be taught that weren’t overly complicated.

And when I say repeated, I have to know that I’m gonna make great wine every single time. I output products. We developed those formulas. We developed the equipment, the processes, and everything documented everything. Put it into operations manuals, and built a training program around it so that we could take someone who’s able to follow a process, that’s really all you have to be able to do. It’s not rocket science to make wine as you well know, but it does take a process. So we put it into a repeatable process. The second part that we had to make sure we could do is make it scalable. I can’t have it where I’m successful here in Southern California because the logistics and the suppliers are nearby or make it work.

But I have to make this to where I can operate in Missouri or Texas or Virginia and make sure that it’s just as successful in places like that, that are far away from us.

[00:05:51] Bianca Harmon: Yeah. So how, speaking of logistics, how are you figuring out which, you know, when you’re getting the juice brought in, how is it logistically pushed out to each one of these locations?

[00:06:03] Ken Lineberger: Sure. So we use a process during the crush and actually the blending of the juice if it’s a blend called Thermovinification. It’s also called Flash Detente. I don’t, are you familiar with those terms in the industry? They’re relatively new and not widely used.

[00:06:17] Drew Thomas Hendricks: Yeah, I would. Explain it to the listeners.

[00:06:19] Bianca Harmon: Yeah.

[00:06:20] Ken Lineberger: Sure. Yeah.

[00:06:21] Drew Thomas Hendricks: I have no idea Flash Detente is.

[00:06:22] Bianca Harmon: I was just gonna say, I know the first one, but I don’t know Flash.

[00:06:25] Ken Lineberger: Yeah, it’s the same, it’s the same process, just different names. Some people know it by one name, some others. This was developed. It’s really a technology that’s been around in the winery industry for a while.

But it allows you to essentially break open the cellular structure of the varietal juice. And it actually allows you to bring out more flavors, more profiles from that. But the added benefit is it stabilizes that juice. So, we are able to store that at room temperature for long periods of time.

It’s a process used widely in real large wineries. So if you drive down the 99 during harvest anywhere near Modesto or areas north and south of that, you’ve seen those trucks carrying just truckloads of grapes coming into the big wineries, the big processor in there, and they frankly just can’t make all that.

They don’t have enough fermenters to process all of that juice at one time and make it all in a finished wine. So you see the E. & J. Gallo, the Bronco wine companies tho those size places. They will put that juice through that this, they’re really the ones that perfected the science as a Flash Detente or a thermovinification process to allow that juice to be stored in a stable environment until they’re able to put the capacity into their into their tanks to make more wine.

So, we basically scaled that down to work in our size and we have suppliers that specialize in that process. And so it allows us to have a stable product that can be shipped anywhere in the United States at room temperature and be made year-round for our needs. So it’s unique in that aspect and it makes fantastic wine.

So we’re we’re just doing a little bit outside the box in terms of the way we make, make the wine.

[00:07:55] Drew Thomas Hendricks: That’s an interesting, so for distribution, it makes it a little bit easier. And you’re also crossing, you’re not crossing state lines with alcohol. You’re just crossing state lines with juice.

So that frees up a little bit of the interstate transport.

[00:08:07] Ken Lineberger: It does.

[00:08:08] Bianca Harmon: One of the wineries get the same amount of juice, or is it all based on who’s selling more per year?

[00:08:15] Ken Lineberger: They order, they’re responsible for that. So they look at their inventory. They look at what their demands are, what their wine club size is.

There’s a whole host of factors that they input to determine when they order, but most of them order at least once or twice a month from our suppliers. And then bring it in and put more wine in the tanks. It doesn’t take because we’re making it in smaller lots. Either 60 600 liters, excuse me, or a 200 liter tank or the main sizes that we use for equipment.

So the fermentation all the way through racking and filtration is typically under 10 weeks. And then we get it into the bottle in order to start the aging process. If it’s a red, if it’s a white we’re pretty much ready to sell it, a week or so later after the bottle shock is worn off.

[00:08:54] Drew Thomas Hendricks: Yeah. I really want to get into the nitty-gritty of how each winery is separate and how they utilize the distribution. But I want to go back to the franchise model from the beginning back in 2004, cuz it is so, it is so brilliant. Everybody’s familiar with like the McDonald’s chain or any of the other franchises and they’re really built on the SOPs. And I think that the brilliant thing about Waters Edge is that you actually give these people the book that it takes like a normal winery many years to perfect their SOPs, but they get it right out of the box. How did you go about developing all that?

[00:09:27] Ken Lineberger: It took us about eight years. I was the main winemaker.

I had some people who were mentoring me here in the valley who. And I just studied a lot. I certainly, pretty much self-taught, I guess is the term out there. And I am a, I came from a corporate background. So, one of the advantages of coming from that, which I did, I had a career in sales at a large software firm is I got to see what infrastructure does to help you succeed.

And so I knew. How to build this. I just, it became down to the details of what’s the processes that I need to go through, how do we make them repeatable and what’s the right equipment to be using to do it that doesn’t cost a terrible amount of money. So that’s really what I started with in 04.

And it took us all the way until 2012 till we were confident that we could really franchise it out, and I could bring other people in here and help them be successful like we were here.

[00:10:17] Drew Thomas Hendricks: Was your goal at the outset to build a repeatable model? Or did you build a model and then say, this could be repeatable?

[00:10:23] Ken Lineberger: No, I started day one there. I had no interest in starting a small business, and just staying there or even operating a few of my own. I really, I have a big passion about helping business people be more successful. When I was in sales management at the large corporate firm, that’s what I really enjoyed about that job, was helping my salespeople, my team be successful and really do well.

And so this just takes that and now it’s my business. And it’s their businesses. And I get to be the counselor, the mentor someone who’s there to help them as well as my team. I’m not doing this by myself. I’ve got a good team here that helps me.

[00:10:57] Drew Thomas Hendricks: Yeah, I’m just very fascinated by this.

So everyone stands on shoulders. Did you model this after any other sort of franchises or model this over any other sort of business or who helped you? Is it all just done straight with your team?

[00:11:11] Ken Lineberger: Yeah, it’s really just about looking out into the market and seeing, what does a good franchise system look like.

Getting involved with the International Franchise Association. The IFA which is the premier franchising organization, as well as just having good counsel. I connected early on with a law firm here in the Los Angeles area that specializes in franchise orders and really helping them come to market and what do they need to be able to do that. And so they’re still my law firm today. And they’ve just done a great job at advising me over the last couple of decades in bringing this to market.

[00:11:43] Drew Thomas Hendricks: That’s amazing. So almost 20 years since you started, how many locations are now in your footprint?

[00:11:48] Ken Lineberger: We’re up to about 20 locations coast to coast with a lot of ’em in the Midwest. And now we’re really starting to populate the East Coast. So it’s should hit, go over 20 this year and I’m hoping to reach 30 to 35 in 2024 is my goal.

[00:12:03] Drew Thomas Hendricks: Oh, that’s fantastic.

That’s a good growth trajectory there. Now spanning the entire United States. And I think one of the unique things is, I’m going to all the individual websites is they all have a little bit of their unique spin on it. How do you draw the line between what they can do and what they should do? I mean, that sort of uniqueness guidance.

[00:12:22] Ken Lineberger: Yeah. And that’s really a part of our growth curve is where we don’t wanna be a cookie cutter, McDonald’s type, everything looks the same, feels the same, I can’t tell one from another. When wineries are a special place in our heritage and what people view them as.

So we really want there to be intentional differences between the locations, but not lose the efficiencies of what a franchise model can bring. So we’re very, carefully balancing that all the time. I’ll give you a really good example from the business side that we’re currently going through. So one of the things that we’ve done in the past is we’ve had, we have a corporate design company that we use to help design these.

We know what they need to look like, but we allow flexibility, our owners to choose materials and finishes and flooring and things like that, that they want. But we’re moving now into, and we have been for the past year or so in having four templates that our owners choose from. And underneath each one of those templates, so for example, one of those templates is an old world European look.

So the darker woods, the darker floor. It’s got more of that classic, if I was standing in a winery in Tuscany, that’s what it, we want it to feel like. And so all of those materials that go along with that look are already pre-chosen. But you can choose from any of the four.

And even then there’s some flexibility. So we’re moving more to a standard, but still, you could have two Waters Edges in the same community, miles from each other, and look very different because they’re two different templates. The another template, for example, is our industrial template where the air conditioning units are exposed, or the venting, the ceiling is painted black.

The floor might have a little rougher finish to it. You might have a bar with a tin backing to it where it looks again, a little rougher than say the finesse of an old world winery would look. So things like that. So that’s how we balance it. The other thing I’ll share with you is that we are very strict on the wines that we make.

The wines that we put on our shelf, they’re all Waters Edge brand. And they’re all, we’ve vetted every single drop of whatever’s on their shelf. So there’s nothing on there that’s foreign or we don’t know what it is. They have no choice or flexibility in the wine side of it. But on the Bistro –

[00:14:24] Drew Thomas Hendricks: But they’re make, they’re making the wines. So do you come in and taste, make sure they didn’t mess it up?

[00:14:29] Ken Lineberger: Yeah, we do. I actually have a director of franchise support. Okay. And she travels around the country and she does exactly that. And she tries their wines, evaluates ’em make sure that they’re following the standards and the processes that we have.

And we also monitor the social media reviews out there. That’s a great way for us – nowadays to see what are the, what are people saying. What are they, is there a problem here?

[00:14:49] Drew Thomas Hendricks: Okay, well that’s great.

[00:14:50] Bianca Harmon: And do most of them have a restaurant too attached with them or are they most, cuz I see a lot of ’em when I’m looking at their food and the winery.

[00:14:59] Ken Lineberger: Yeah, every single location has a kitchen. They do vary a little bit in size depending on what we had to work with when we lease the space. Some have broader menus than other. We are also refining our food offering going into next year. We’re just one of, that’s our big project this year is to really dial the food in.

So that’s similar across the board in terms of the choices that people have right now, it’s pretty varied.

[00:15:21] Drew Thomas Hendricks: Yeah, I think. So right now, so you get a uniform bistro option across all based on the kitchen capabilities?

[00:15:28] Ken Lineberger: Correct.

[00:15:29] Drew Thomas Hendricks: And on the wines, does each one of the locations serve the same wines, or do they have some sort of freedom in what they choose and what they don’t?

[00:15:36] Ken Lineberger: Yeah, I would say their catalog of wines that they could offer to their guests is probably along the order of 75 to 90 different kinds that they could, they can choose from. Which one we tell them we know what’s gonna sell best cuz it sells every single one of our locations that we know what the top sellers are.

So those are the ones they definitely make and most of our locations will have those in. But beyond that, it’s up to them to really experiment. Offer new things. They’re one of the, one of the catchy things about wineries, of course, is when they come out with either a new vintage or a new varietal to offer to their to their guests.

So we do the same thing and that brings people back and keeps ’em interested in our model.

[00:16:13] Drew Thomas Hendricks: That’s great. Yeah. I was wondering about the quality controls. So you have a tasting team out there making sure that everybody’s doing what they need to do.

[00:16:19] Ken Lineberger: Absolutely. Yeah, we do.

[00:16:21] Drew Thomas Hendricks: And then they have some sort of freedom on that.

Cause I remember I was talking to Angela and she was in Kalispell. Some of the more semi-dry wines, or a little more resonated a little bit more with the populace there. So they have the kind of the freedom to lean into whatever the consumption patterns are.

[00:16:36] Ken Lineberger: Yeah. Exactly. So, and by the way, we had a brandy made under our label was actually made up there in Sonoma Napa Distilling Company.

[00:16:46] Drew Thomas Hendricks: Oh, yeah.

[00:16:46] Bianca Harmon: Oh yeah.

[00:16:46] Ken Lineberger: Our label, the wineries that were allowed to legally sell the spirit side of the wine. We do that as well.

[00:16:54] Drew Thomas Hendricks: Okay. That’s amazing. Talking about freedom again. I see that you also have affiliates and franchises. What’s the difference between your affiliate members?

I know we’ve got like Urban Pine and Gillig, they look like they, they standalone almost as a, you do have the Waters Edge branding at the bottom, and they’re using a template, but it looks like a standalone enterprise.

[00:17:14] Bianca Harmon: If I recall, the affiliate option isn’t available anymore, right?

[00:17:18] Ken Lineberger: That’s exactly right Bianca. We, so to your point Drew, what I

[00:17:22] Drew Thomas Hendricks: That’s an easy answer.

[00:17:23] Ken Lineberger: It is. So when we started this because I didn’t want it to feel like a franchise system, we wanted some variety and allow some flexibility where people could choose to be a Waters Edge or could choose an affiliate brand that they named, we own it still.

But they came up with it and they’re unique. But we really dropped that program or ended it in 2018. We really wanna focus on the Waters Edge brand and what we’re bringing to market and what we have to offer the public under a single brand name. So while we’re not gonna force those owners to change, and by the way, nothing else about them operates any differently.

It’s just what I call the wrapper on the outside is a different. Different color, but everything else is identical to the way they operate and what the expectations are in terms of their place. So still operate under a franchise agreement and all of that, but they just offer a different name, but we’re not doing that anymore.

[00:18:08] Drew Thomas Hendricks: Oh, okay. I seems like a decent idea, but I definitely see why you wanna consolidate everything together. Talking about ter, with franchises, talk about territories, how do you decide who gets to go where and what, how many like, how many can one town have? Is it based on populace or.

[00:18:27] Ken Lineberger: Yeah, it definitely is based on the density of the population. So, for example, we’re we’re right now planning one in Havasu City Arizona, which is a resort town around on the border of California and Arizona. And a pretty good population there. But it’s a very isolated community, right?

It’s by itself. There’s nothing else too close to it. It’s not a big sprawling urban area. And so they’ll have that whole city to themselves because it wouldn’t make sense to bring another Waters Edge into that same town. It wouldn’t support it. But places like another place we’re going into is Doylestown, Pennsylvania, which is about an hour outside Philadelphia.

And they’re gonna have about a five-mile radius around their particular winery. That’s their territory. And we won’t put another one inside of that. But that’s usually in, in a suburban market, it’s gonna be about five miles. If it was heavily populated, dense, urban downtown, Houston or Downtown LA, places like that, it’s probably gonna be as small as one mile.

[00:19:18] Bianca Harmon: So in regards to that too, of the locations, I see that there’s several locations states that aren’t available right now too. And is that because there’s already wineries there or is that because of legality issues or?

[00:19:31] Ken Lineberger: Yeah, that’s legality issues. So there’s a handful of states, Nevada’s a great example that actually made their problem worse.

With recent legislation a couple years ago they passed and they actually require to, because all of our locations are licensed as wineries. We have federal operating permits, we have state operating permits as a winery. We don’t go in as a beer and wine license or any of that. We get a winery license. But there are a handful of states that actually require, if you’re going to have a winery license, you must grow grapes in state in order to qualify to have a winery license.

And since we simply don’t grow the grapes that rules us out, it’s actually unconstitutional. It was overturned by the Supreme Court over a decade ago that you can’t require, it’s unfair competition in state commerce to restrict somebody from another state, bringing their commerce in and being able to have be able to sell it.

So as those are challenged in court, they are being overturned. So recently, in the last three years. We’ve had them all returned in Louisiana, so now we can operate in Louisiana. And Minnesota’s another one that had a requirement for that, but which is crazy, right? When you stop and think about it, it’s like, why does Minnesota care that I grow grapes in one of the most frigid climates in,

[00:20:40] Bianca Harmon: I was just gonna say, how the hell do you even grow grapes in Minnesota very often?

[00:20:43] Ken Lineberger: In the rootstocks.

[00:20:44] Bianca Harmon: We’ve talked to some Minnesota wineries, but it’s a, it’s not an easy task.

[00:20:48] Ken Lineberger: It’s not. It’s brutal. So yeah. And so it’s really a crazy law and but you know, and Nevada’s the same thing. We would love

[00:20:56] Bianca Harmon: And so Nevada did that, huh?

[00:20:57] Ken Lineberger: Vegas. Yeah, they’ve got that on the books too.

[00:20:59] Bianca Harmon: Wow.

[00:20:59] Ken Lineberger: All that is there is a lobbying group that’s represents the ag business. There is very protective. And they’ve gotten the legislature, and the legislature doesn’t know any better. They, okay, that sounds like a good idea. Yeah. We should grow ’em in Nevada. And then they pass these crazy laws that make it difficult or impossible for us to operate there.

[00:21:15] Bianca Harmon: I’d like to know where they’re gonna grow grapes in Nevada too, but

[00:21:19] Ken Lineberger: Yeah, – that’s, that’s where they’re growing them, is up in the altitudes up in -. It’s cooler. Yeah.

[00:21:26] Drew Thomas Hendricks: By Elko. Yeah. Elko, Wells areas. There’s, I would think that would be pretty suitable actually.

[00:21:33] Ken Lineberger: Yeah.

[00:21:35] Drew Thomas Hendricks: Well, in Nevada aside, the legislation aside, let’s talk about your, let’s talk about your growth pattern and to anybody that may be listening that has the dream of owning a winery, paint a picture of what they’re getting themselves into and who’s the ideal client.

Let’s see, let’s start with who, who would be the ideal client for some, or prospect for somebody that’s would open up this Waters Edge winery?

[00:21:57] Ken Lineberger: Yeah. So we’re on the lookout for folks who have already had a successful career. Maybe in sales marketing. I’ve got my, one of my owners was a pharmacist for a large major hospital chain.

She was the head pharmacist. It wasn’t just like at CVS pharmacist-type job. She was pretty high up in that food chain. Great example is Angela in Kalispell. She was the CEO, president of a National Home Building Association in Canada. So these are people that often come in with white collar, executive type experience or senior management experience.

They’ve got a savings that they built up and they’re willing to push that into the center of the table to follow a second career. Something that they can be passionate about but also make money. Nobody wants to do this just as a hobby especially since there’s no land involved. I know there’s a lot of very wealthy people up in where you are Bianca, that they don’t really make money at the wine side of the business, but the land side of it makes it a very healthy business for them.

But we, it’s not our business model. We want people to be successful and be profitable. And be able to earn a living out of this. So we’ll take people, another good example is we’ve all seen the news recently where, up by you, Bianca, a lot of the Silicon Valley is starting layoffs, right?

And these are people that have stock options. They’ve got a portfolio of their own, they’ve saved, hopefully. And maybe they’re in their late thirties or mid-forties, they aren’t ready to retire. And this offers them a great option. I get to own my own business, follow something I’m passionate about, and be involved in my community.

So that’s who we’re looking for in a broad sense.

[00:23:24] Bianca Harmon: So they have to have the funding. Do you offer any kind of funding or do you want them coming in with all that?

[00:23:32] Ken Lineberger: So we are an SBA-approved franchise. What does that mean? That means that we work with the small business administration to secure loans for them, usually at local lending institutions in their community.

The SBA backs that loan as a small business to get encourage more small business start-up in the United States. And so with the SBA backing, if you’ve got good credit, and especially if you have real estate assets a home or land that you own it’s not hard to get get a loan, albeit more expensive now than it was a year ago.

But it, it’s very possible to get a loan. Usually they have to come in with about 25% of their own capital. And the projects range anywhere from 600,000 to 1.1 million. So as long as they can come up with about 25% of that, either through their own funds. 401(k)s, we’ve rolled, a lot of our owners have rolled their 401(k)s over into their own corporation stock to start the winery, which is a very efficient way of doing it.

It doesn’t cost any taxes to do it. And so there’s a lot of ways we can creatively get them funding.

[00:24:32] Bianca Harmon: Cool. Fantastic.

[00:24:35] Drew Thomas Hendricks: So the ticket to entry is 600 to 1.2 to equipment up, to get the first bottling and release done.

[00:24:42] Ken Lineberger: Yep. That’s all in, that’s the all the startup fees, the build-out costs, the furniture, tanks, everything.

[00:24:50] Drew Thomas Hendricks: Yeah. That’s a, it’s actually.

[00:24:51] Bianca Harmon: Wow.

[00:24:51] Drew Thomas Hendricks: Given the amount of equipment in, that’s actually pretty reasonable. What about the, do they have, do you have a, do each Waters Edge have its own bottling line or is that done with a mobile bottling?

[00:25:02] Ken Lineberger: No, we don’t use mobile bottling at all. Because we’re bottling constantly because we’re doing this round.

No, but we do have a we have a 4 head and a 6-head filler that we use. It’s used again by small wineries. You’d see ’em in boutique wineries up in the Napa area. But no need for a big bottling line or monoblocks or anything complicated or expensive like that. It’s pretty much put the bottle on the filler, fill the bottle, put it in the corker, hit the switch on the bottle with your foot and which puts the cork in, and away you go. So nothing fancy.

[00:25:30] Drew Thomas Hendricks: Yeah, I guess I didn’t, I forgot that you do. People can actually ferment all year long.

[00:25:34] Ken Lineberger: That’s right.

[00:25:35] Drew Thomas Hendricks: So you’re not just stuck, stuck at harvest and stuck in the spring bottling.

You kind of go. So on the average the average location, how many are they bottling once a month or do they do it quarterly? What’s the average pacing?

[00:25:48] Ken Lineberger: It could be weekly. So we typically will have the stainless steel tank system, the 600 liters, we’ll have a set of four of those.

And then we usually have around 16 of the 200 liter tanks. Those are usually kept in a back room. They’re not as pretty as the big stainless steel tanks are. But all of them are kept pretty full at our winery. So there are processes every week that our owners are doing some of which is bottling, could be filtering, could be racking, could be starting the fermentation process.

Just depends. So it’s every week there’s stuff to do and it’s really a much more efficient model than the traditional winery, because I get to use all of my equipment all year round versus having the stemming machine that gets the tarp pulled off of it once a year for about 30 days, and then, I’m done.

I sit there for 11 months outta the year. That’s a tough capital project to have to really justify if I can only use it 1/12th of every year. But we use 12 months outta 12 months.

[00:26:39] Bianca Harmon: Wow.

[00:26:39] Drew Thomas Hendricks: I really like the model. I know it’s very different, but it reminds me almost of the brewery model where you can constantly be making beer.

It’s just a year-long process. That’s what you do.

[00:26:47] Ken Lineberger: That’s right.

[00:26:47] Drew Thomas Hendricks: It’s a, in that sense, it really what you’re doing, it’s a great way to spin the winemaking.

[00:26:54] Bianca Harmon: And who wouldn’t wanna own a winery franchise versus a Taco Bell, or

[00:26:58] Drew Thomas Hendricks: I don’t know, Taco Bell’s pretty tasty. Anyhow on the winery, give me an idea of the staffing of what a general location would be.

[00:27:09] Ken Lineberger: Yeah, so that’s pre formula there a formula-based system there to how we do that. So we need four sort of higher-end positions at the location. We need the general manager. We need a chef there. We need a winemaker. And then we also need somebody that’s assisting the chef. They are working in the kitchen.

And by the way, those don’t necessarily have to be the same person. So for example, if I’m open six days a week, I might have more than one chef, right? Just so I can cover all my shifts. But usually the GM and the winemaker, especially in the first year, is the owner of the business. They wanna get their hands on it.

That’s why they’re passionate about this. They wanna do it. And then after that, they start to delegate some of those positions. They might teach somebody to help them with the winemaking. They might have somebody, an assistant manager that’s there on the weekends, so they don’t have to be there Friday night, Saturday night kind of shifts.

But everybody’s different, right? So we allow our owners to decide how they wanna do that and how they wanna operate it. Then on the front of the house, we need our servers behind the bar, the servers that are out on the floor as well as the bar backs busers, people like that, that are bringing the dirty dishes back to the kitchen to have ’em put through the dishwasher.

So typically for about every $150,000 in annual revenue, the location’s going to do. I need one full-time equivalent person up front to manage that side of the business. So, a million-and-a-half-dollar location is gonna need 10 full-time equivalents operating on the front end of that business.

[00:28:33] Drew Thomas Hendricks: That’s a good rule of thumb for that, for sure.

[00:28:35] Bianca Harmon: And are the taste, are the front of the house, are they doing tastings like you would at a winery, coming in, doing a full-on tasting like you would at, you know, in Paso or Napa?

[00:28:47] Ken Lineberger: Yeah, so our, all of our wineries are designed, so there is a tasting bar area.

And  one of the benefits of being a club member in our system is that they can go and get complimentary tastings with them and a guest pretty much any time the winery’s open. And which, that’s not an unusual benefit. Most of the wine clubs up there in the Napa snow area offer that, but where do the people live?

They live far away. I’m a member of one of the wineries up there in Napa. And I love when I go there getting treated like a king. It’s great, but I only get up there every couple years at best. So here, if you join our membership in our wine club, you get to go in every day if you want to.

You’re probably less than a 10-minute drive from the winery. So go take advantage of that. And so to your point, yes, there is a tasting bar. Yes, there is a seating area. We try and distinguish the differences. So if you’re going to be doing wine tasting, please come up to the bar If you’re actually gonna be eating and enjoying and socializing.

Yeah, have a table and relax at one of the tables.

[00:29:44] Drew Thomas Hendricks: Do you have for club members, are they allowed to visit other Waters Edges? Or you just –

[00:29:48] Bianca Harmon: Yeah. Gonna ask that.

[00:29:50] Ken Lineberger: We have thought about that. We’re right now geographically far enough apart. Our closest ones, probably the ones in Ohio, up in the Toledo market that are probably a 30 or 45-minute drive from one another.

We haven’t quite figured out how we can make that work because if you’re paying one winery that’s independently owned, how do I get that other owner compensated for the cost of that, that other guest coming in? I, we’ll tackle that someday, I’m sure, but right now we have not had to tackle that or need to tackle it.

So everybody operates independently.

[00:30:22] Drew Thomas Hendricks: Yeah, it’s tough with consumables, unlike a gym network where it’s, you’re incrementally, you’re not really

[00:30:27] Ken Lineberger: Right.

[00:30:28] Drew Thomas Hendricks: It doesn’t cost you that much more to let that person in till a lot of people, you have a small location that sells a wine club, and then everybody that visits this tourist destination wants to use their tasting card.

I could definitely see the complications in that.

[00:30:42] Bianca Harmon: Especially when it’s different ownership too, at each one. So the one in Montana might be getting all the business, but then they’re going to this one in Ohio and they’re going to taste, but they’re not getting anything from it, and they’re two separate owners.

[00:30:57] Ken Lineberger: Correct. Yeah. And the benefits, some kinds can vary a little bit in terms of what each one, and we try and stick to a pretty close model, so it’s not a big variance, but yeah. And so we, yeah, it would be difficult to manage that, I think. And unless we’re charging it here in corporate and then disseminating that money out to the locations based on who’s doing what.

So that’s the only way I think I could solve that. But we’re nowhere close to that yet.

[00:31:19] Drew Thomas Hendricks: Sure, sure. So I got a so many questions here, but I, one thing I always like to ask as we’re going towards the end here is given you’re almost 20 years into this, is there anything you would’ve done differently in your growth trajectory?

[00:31:33] Ken Lineberger: Oh, tons of things. That’s a whole another hour conversation. But yeah, there, there’s definitely things that, that we we’ve learned. We modified, we try not to repeat mistakes again, and keep on going.

[00:31:46] Drew Thomas Hendricks: What advice would you give someone that either wants to, maybe they’re thinking about starting a franchise or they’re just wanting to start their own winery, their own from start.

[00:31:55] Ken Lineberger: Sure. So if you’re thinking about going into the franchise business, make sure that you have a model that, as I started out in this conversation that is repeatable. You can teach somebody how to do it effectively and it’s scalable. And you’re willing to take the time to prove it out and know what’s gonna work and what doesn’t.

Because the last thing in the world a franchisor should do, and this happens with small franchisors sometimes, is they get people involved in the business. And they haven’t figured it out themselves. They have no business trying to get somebody else to make money at it when they really haven’t figured out how that works in their own prototype, guess, for lack of a better word.

So make sure you have a good prototype. Make sure it’s,it really can be taught to somebody else. And then secondly, get a really good law firm because this business is very regulated. The franchise industry is very early and that’s a good thing because, We don’t want people buying in the franchise systems that are fraudulent, right?

That promise everything and don’t deliver anything. So it’s very regulated. You have to really dot your I’s and cross your t’s in this business. It is, unfortunately, there’s a lot of litigation around the franchise industry all the time because it’s, you know, you have two opposing forces.

You got somebody that’s put all their life savings into this. You got somebody who has put them into business and when things don’t work out it, it can get very ugly. So you have to make sure you’ve looked at that side of this business. If you’re starting a winery, it’s funny, I don’t know that I’d wanna start a traditional winery.

I don’t even know that I’d know how to do that, believe it or not. That seems funny, but I don’t know that I’d know what to do on that.

[00:33:20] Drew Thomas Hendricks: Get good consultants is kind of the solution that I would think of. If you don’t know what you’re doing and that’s basically you’re buying and when you’re buying into the franchise, you’re buying into all your knowledge base, all your thought leadership.

[00:33:32] Ken Lineberger: Yeah.

[00:33:33] Drew Thomas Hendricks: In over the last 20 years. You’ve probably had to, with franchisees, just like you said with litigation and stuff, what’s one of the biggest misconceptions that you’re trying to write that people always seem to ask? Are they assuming incorrectly?

[00:33:46] Ken Lineberger: I think the biggest misconception, which exists across a lot of small businesses is people think that small business owners, A, this is great, this is easy.

I get to make my own schedule. If I wanna go play golf four days a week, I could easily do that. And so there’s just this misconception that somehow operating your own business is an easy task. And that’s the last thing it is. It’s probably the hardest thing most people have ever done in their lives.

But it’s rewarding, right? I mean, it’s for myself. I’m not doing it for somebody else. So that’s the other side of that equation. And then secondly that they’re just, that money pours out, a lot of people, it’s funny, when we first started building these across the country, we would get bids in from contractors that we knew were just ridiculously priced.

It’s like, what? And we realized these contractors, they think because we’re building a winery, they think we open up the faucets at our place and gold pours out. That it’s just, that’s the perception of owning a winery in Napa or Sonoma is that you’re obviously very wealthy, you’re doing very well.

You could afford whatever. And the vast majority of winery owners and in places even like Napa and Sonoma, that’s just not the case, right? They’re struggling to make ends meet every year and and while they may enjoy some of the benefits of having that winery, it’s not easy and it certainly is not, you know, they’re not pouring, not taking wheelbarrows of money into a back shed and hiding it away. It’s a tough business.

[00:35:02] Drew Thomas Hendricks: No, it definitely is. And I guess one of, one of the biggest, I see, I’m thinking what’s one of the biggest mistakes like the new franchiser makes maybe at Waters Edge?

Cuz I’m sure everyone’s listening. That’s a owner of one of these wineries to you today.

[00:35:16] Ken Lineberger: I think that the biggest thing I’d probably phrase a little differently, Drew, what do I wish everybody would come in and do in our, that’s way more positive because it, yeah. Mistakes are many and everybody’s gonna make ’em.

So I don’t wanna pick out any particular ones. But the bottom line is we have a system that’s proven that works. Follow the system, trust the system. And it’s people who don’t wanna follow it or don’t trust it and try and figure it out on their own eventually come back and I, I’ll usually get a call once or twice a year saying, “Ken, you were right about this.”

One of my people, they’ll say, “Gosh, I wish I’d listened to you. In fact, when you told me that’s why I shouldn’t do this or whatever.” It, it’s followed. Trust the process, trust the system.

[00:35:55] Drew Thomas Hendricks: Figure out why these SOPs are in place before you try to overthink them, which is, that’s, I’m the worst offender of that.

So that, that would be my biggest problem. And I’m always trying to overthink things and often though, I’m like, “Oh yeah, they did that for a reason.”

[00:36:11] Ken Lineberger: Absolutely. But I will tell you, this business Drew, it’s a fun business. You as an owner get to intermingle with a community and be in a unique business.

I’ll tell you, when you’re at a social event, as an owner of a winery and a community like in Broken Arrow, Oklahoma, right? There’s not a lot of wineries around in Oklahoma, let alone in Broken Arrow. You’re a rockstar, right? I mean, people are like, you own a what? You own a winery here in Oklahoma that’s local.

And so it’s a fun business that you really get to build something in your community that gives back to your community, provides jobs, provides a great place for people to go and hang out and just enjoy the atmosphere, enjoy the vibe, if you will, of what’s going on. And it’s very rewarding.

This is probably, For most of my owners, if not all of them, the probably the most rewarding thing they would say they’ve ever done in their lives from a professional standpoint.

[00:36:55] Drew Thomas Hendricks: Yeah. That’s incredible. I mean, it’s very inspiring. So how do how does a perspective person start the process of reaching out to you and get the ball rolling?

[00:37:06] Ken Lineberger: Sure. So the best thing to do is go to our website, watersedgewineries.com, plural, watersedgewineries.comand really investigate from the website level. See what you’re seeing there. You like read our news articles. We are constantly we’ve got a great PR firm that works with our ownership to really publicize a lot about our wineries across the country. So that’s a great place to read what’s going on. And then watch the video that’s on the homepage too. That video will kind of show what our winery looks like, how they operate to some degree, and give you a feel if this is really something of interest.

If it is then just fill out the more franchise info contact form on there. There’s a request more franchise information. And we’ll, my team will get in touch with you. We’ll have conversations. Describe whatever you know you need to know and start walking down the process of investigating if this is a good fit for you and if it’s a good fit for us.

Right? It’s gotta be a both ways where we’ve gotta really see that you’re a good fit in our system because we don’t need people in the system that just are not a good fit in a franchise model or in our model.

[00:38:05] Drew Thomas Hendricks: Oh sure. Just with any multi-location you wanna make sure people have some sort of expectation when they come in.

You gotta maintain that. that’s awesome. So Ken, thank you so much for joining me. Is there anything we haven’t talked about that you’d like to bring up?

[00:38:18] Ken Lineberger: The only other thing I’ll touch on is we talked a lot about making the wine from scratch. Which we bring in the varietal juice and we make from there.

But that’s actually not the only way that we bring finished product to our guests. We also have relationships with wineries up and down California, even a couple up in Oregon. That actually produce the wine for us under our recipe, under what we request, and what our profiles are.

And then we’ll bring that in bulk format here in our place in Rancho Cucamonga. And then we’ll put it into smaller bulk containers and ship that out to our individual locations where then they will do a final filtration process on it and then actually bottle it there locally. So it’s under our brand.

It’s under our label. But it wasn’t produced and bottled by it was usually you’ll see it cellared and bottled by on the back label. Oh yeah. a lot of people don’t know that if you look at the back label of a bottle of wine on your grocery store shelf there’s a lot of them that don’t say produced in bottle body.

Which means that the maker of that product did not start with the scratch, from grapes. They bought the product at some other point down the process and then actually packaged it into their marketing and brand. So we’re no different. Some of our product because we have such rich stories in California to tell about Paso and Sonoma and the Santa Barbara, Santa, and Naz Valleys, they just go on and on.

And so we really want to emphasize our roots here in California and push that out across the country with special. Wines that we have here. And then we also have a sparkling wine lineup. We have a co-packer in the Central Valley. Oh, wow. Who does all that under our brand? So we have a brewed sparkling, we have an almond sparkling, we have a rosé sparkling.

We have several under that lineup that are ever popular too. So I just wanna bring that in, that we’re not just our own wines that we’re making each location, we actually spread that out as well.

[00:39:57] Drew Thomas Hendricks: Enable, yeah. Enable, enable ’em to have a good variety. No, that’s a great, that’s a great point.

Thank you for bringing that up. Well, Ken, thank you. Thank you so much for joining us today. This is fascinating. I can’t wait to see your growth trajectory just continue.

[00:40:11] Ken Lineberger: Thank you. Thank you very much.

[00:40:12] Bianca Harmon: Yeah. Awesome.

[00:40:14] Drew Thomas Hendricks: You have a great day.

[00:40:16] Ken Lineberger: All right.