Franchising: How to Win Big with Wall Street Journal Best Selling Author Greg Mohr

[00:00:00] Have you ever wondered how franchises make money and if franchising could be something in your future?

[00:00:05] Well today I interview Greg Moore, a Wall Street Journal best-selling author and an expert in the area.

[00:00:12] He runs franchisemaven.com and is a franchise consultant with an amazing story.

[00:00:17] And he talks about getting into franchising, the different levels of franchising from a single tenant operator to a multi

[00:00:24] master franchise

[00:00:25] and what it takes, the potential opportunity there for you. It's a fascinating conversation.

[00:00:31] So if you're interested in business, you're interested in entrepreneurship, and you're interested expanding your income and your wealth,

[00:00:36] you got to listen to this episode.

[00:00:40] Welcome to The Brick & Mortar Money Show.

[00:00:43] The podcast dedicated to helping business owners and professionals achieve wealth,

[00:00:49] autonomy and control through commercial property ownership.

[00:00:52] Join us as we unlock the power of real estate.

[00:00:55] To transform your business and investment strategies.

[00:00:59] Whether you're seeking to expand, invest or gain more freedom in your entrepreneurial journey.

[00:01:04] This is your destination for insightful stories, expert advice and actionable strategies.

[00:01:12] Welcome.

[00:01:15] Hey welcome listeners today.

[00:01:17] I have the distinct honor and privilege of having Greg Moore on the show today.

[00:01:21] He is a former corporate ladder climber, a best-selling Wall Street Journal author and a franchise consultant to the year.

[00:01:29] In his business is franchise consulting.

[00:01:31] And I know that most of you that listen to the show are already business owners or entrepreneurs and you're looking to create wealth and accelerate that process.

[00:01:39] So I'm excited to learn from Greg more about franchising and how that can relate to maybe accelerating a current business situation.

[00:01:48] So Greg, welcome to the show today.

[00:01:50] Well, thank you for having me.

[00:01:51] It's definitely an honor.

[00:01:52] I appreciate it.

[00:01:53] Yeah, yeah, you bet.

[00:01:55] I'm excited here.

[00:01:55] So just real quick background.

[00:01:58] You know, how does one become a franchise consultant?

[00:02:00] How did you get to where you are today?

[00:02:03] Well, the first step into franchising that I received was actually a long, long time ago back in high school when I got my first job.

[00:02:10] You know, back in the late 70s, most of us went to work for fast food places.

[00:02:15] You know, it's kind of an easy job to get.

[00:02:17] And I just happened to pick Taco Bell and I just happened to start working for a master franchiser.

[00:02:21] She had about 50 restaurants, Taco Bell restaurants throughout the Sacramento, California and Woodland, California area.

[00:02:27] So that was my first foray into franchising.

[00:02:29] Really loved it.

[00:02:29] Had a good time.

[00:02:30] Went on to become a restaurant manager of other restaurants, a microelectronic circuit engineer.

[00:02:35] But then I left Corporal World.

[00:02:37] And while I was in corporate, I had a couple of businesses as well.

[00:02:39] When I talked about private business versus franchises, like I started with a couple of private businesses with a friend of mine.

[00:02:46] Dry cleaners, storage units, rental properties.

[00:02:50] Then I left the corporate world and I wanted to go out there and do something else.

[00:02:54] But that private business that I got into, that was a big challenge because I didn't know too much about dry cleaning or anything about dry cleaning, except for to take my dry cleaning too on that.

[00:03:02] So I had to learn all that on my own.

[00:03:03] So I thought, you know, I want to get into my own business.

[00:03:06] I don't have the latest greatest idea and doing it with a private business on my own was a bit of a challenge.

[00:03:12] So I thought back to my franchising days and I thought, you know, that was wonderful.

[00:03:16] That was really easy to step into those because they had the playbook.

[00:03:19] So I thought, I'm going to go out there and get myself a franchise.

[00:03:22] So, you know, I went click happy all over the internet, had all these people calling me, but I finally got a hold of a franchise consultant who really simplified the process.

[00:03:31] They put me into a franchise.

[00:03:32] Really good, nice franchise that I got into.

[00:03:34] Love doing that.

[00:03:35] But while I was doing that franchise for the first couple of years, I just keep thinking back on what those franchise consultants did and not that, you know, that's really nice.

[00:03:42] I really enjoyed working from home because I lived out in the country and I still do at the time.

[00:03:46] So going into the population centers and running the telecommunications franchise that I had to do was a bit of a drive.

[00:03:52] So I wanted to do something from home.

[00:03:53] I liked helping other people and I got to work all over the United States and basically all over the world.

[00:03:58] So I went back to them said, I like what you do that franchise consulting thing.

[00:04:01] Teach me how to do that.

[00:04:02] So I sold off my franchise business.

[00:04:05] I said, show me what's going on there.

[00:04:06] And that was 12 years ago when I haven't looked back since.

[00:04:09] Wow.

[00:04:10] Okay.

[00:04:10] Fantastic.

[00:04:11] So, so you kind of stumbled into it essentially, essentially you experienced it growing up and then you sort of made a complete circle.

[00:04:18] Sounds like you went the education route, corporate route engineering.

[00:04:21] I have an extra engineering background too and I didn't work in it very long.

[00:04:25] I don't know if you were motivated.

[00:04:28] You said you want to go into business.

[00:04:29] Maybe it was the freedom motivation.

[00:04:31] That was my motivation.

[00:04:32] I couldn't go into an office and sit in.

[00:04:35] In fact, I remember when I was in school, I was co-opping and I was sitting in a room.

[00:04:40] It's probably no larger than eight by 10 and there was about six people kind of crammed in a room.

[00:04:44] And we were making these very expensive network analyzed boxes that sort of early on in the internet.

[00:04:50] Very expensive like 70,000 dollar boxes.

[00:04:52] Anyway, they argued for about two hours about the color of the little rubber booties that needed to be on the bottom of the product.

[00:04:59] And I'm like, no, I can't, I need a gun in my head if I do this or there's no way.

[00:05:04] And so anyway, anyways, it sounds like you're kind of motivated by the same thing and looking for a way to get out.

[00:05:10] But, but so franchising for you represented, you said that you didn't have a maybe necessarily creative idea or something.

[00:05:17] But and you didn't have a lot of experience, but you thought, hey man, maybe maybe I can learn from somebody who's already

[00:05:22] gone before me and hence you are where you are.

[00:05:25] Exactly, exactly right on that.

[00:05:26] And I was the same thing with you.

[00:05:28] I was doing that engineering thing after I got my my degree seven to five Monday through Friday.

[00:05:33] They wanted you at your desk from seven to five.

[00:05:34] If you left for too long, they got a little upset.

[00:05:36] And it's like, I got more freedom than this.

[00:05:38] This is this is nuts on that.

[00:05:40] But yeah, the franchising thing was was really good.

[00:05:42] I really like that playbook that they had that step by step playbook so you can just step right in and just take off basically take off running.

[00:05:49] And you know, private compared to a franchise business.

[00:05:53] It's more of a personal decision on that one.

[00:05:55] But I like the franchising because I wanted somebody there to help me.

[00:05:58] I wanted a whole team of people that is going to help me grow that business and be there for me when I had questions.

[00:06:04] I don't have anybody to ask questions to when I did dry cleaning.

[00:06:06] So I had to look at all up myself or figured out myself or me and my partner did we were working together.

[00:06:11] So franchising got the whole team behind me.

[00:06:14] Got that playbook.

[00:06:15] You teach me how to do that.

[00:06:16] Well, I'm taking off.

[00:06:17] I'm ready to go.

[00:06:19] Well, OK, so and you and you mentioned you dropped a term early in your experience with Taco Bell that this person you went to work for was a master franchiser.

[00:06:29] So I don't know we're getting ahead of the sort of the questions here in thought process.

[00:06:33] But I do want to get into that because I know there's different types of franchise different levels of franchises.

[00:06:39] And so so let's let's let's start at the beginning a little bit just sort of maybe you can sort of a be, you know,

[00:06:46] franchise versus doing it yourself.

[00:06:48] And then and then what's a typical franchise and then sort of the levels that are available because I don't think a lot of people understand,

[00:06:56] you know, particularly business owners were sort of nose to the grindstone out there, building their own thing to your point.

[00:07:01] Having to find the answers having to, you know, bring the people in.

[00:07:04] There's really no one to ask.

[00:07:06] So you're learning, you know, the hard way.

[00:07:07] But so you're busy.

[00:07:08] We're busy, right?

[00:07:09] We don't maybe don't know that world and what exists out there.

[00:07:13] That's correct.

[00:07:14] So when you're first starting off getting into a franchise system on that or just getting into business itself,

[00:07:20] you can go to routes.

[00:07:20] You can get your own private business or you can, you know, do a franchise route.

[00:07:24] It's basically a personal decision.

[00:07:25] You do your own private business.

[00:07:27] That's yours.

[00:07:27] You can do anything and everything you want with it, grow it anywhere you want.

[00:07:31] But you're on your own doing it on that.

[00:07:33] You're the one that's doing it, making all the decisions.

[00:07:36] You get into a franchise because they've already made the mistakes in the past.

[00:07:39] They've done all that.

[00:07:40] They've gone through that.

[00:07:41] They will make certain that you don't make those mistakes.

[00:07:44] They've got that playbook.

[00:07:45] You step right into it.

[00:07:46] You do pay for it.

[00:07:47] So most franchises on average, you pay a franchise fee of $50,000.

[00:07:52] Give or take.

[00:07:54] That's just the franchise fee.

[00:07:55] Now the rest of it is going to be the total investment on that.

[00:07:58] So when we get into franchising, we're going to be taking a look at the different types

[00:08:02] of franchises you can get into.

[00:08:04] We'll start with the unit franchise area developer and the master franchise.

[00:08:08] Most people start off with the unit franchise, which is just one

[00:08:11] territory of a franchise.

[00:08:12] And most franchisers give you a protected territory so that no other

[00:08:16] franchisees can do business in that area, which is great because now you're not

[00:08:21] competing with other franchisees.

[00:08:22] So now not only do you have that franchise or help me build up and grow

[00:08:25] that business, but as you talk to the other franchisees, as you're doing,

[00:08:28] you do diligence, making sure it's the right franchise for you.

[00:08:31] You've got a whole another whole team of people.

[00:08:32] The other franchisees are helping you grow.

[00:08:34] Okay.

[00:08:35] So you start off one unit, no competition from other franchisees.

[00:08:38] That's a single unit territory.

[00:08:39] Most people start off that way.

[00:08:42] Now, if you're very thrilled about that franchise, think they're the greatest

[00:08:45] thing since sliced bread and you want to go even further, you might take

[00:08:49] on an area development.

[00:08:50] So you may take on your entire city.

[00:08:51] So the franchise may say, well, there are five territories in your city on that.

[00:08:56] So you could have, if you'd like, you can purchase the rights to all five

[00:09:00] cities, you get a discount.

[00:09:01] So it won't be $250,000 for the franchise fee.

[00:09:04] It's usually 50,000 for the first territory and then discounted

[00:09:07] territories from there.

[00:09:08] So that gives you opportunity to expand out where you're opening up each unit.

[00:09:13] It's going to be different if you have a brick and mortar versus a service

[00:09:15] industry franchise with a brick and mortar, you've got that building

[00:09:19] that you're going to be going into.

[00:09:20] Generally, you don't buy the property.

[00:09:22] You rent lease on that and you may have a buildout plan.

[00:09:27] So if you get into something that's a brick and mortar, you may build

[00:09:29] one territory the first year to the second year and then three the third

[00:09:33] year.

[00:09:33] So you've got a little bit of a buildout plan or however many areas that

[00:09:37] you purchased on that.

[00:09:38] With the master franchiser plan, now you purchased all five of those

[00:09:41] territories that are in your city.

[00:09:44] You build one, build out one and that'll be your training unit on that.

[00:09:49] What you're going to do then is you're going to sell the rights to

[00:09:51] somebody else for those other territories you have.

[00:09:54] So there's other four on there.

[00:09:56] So you'll get a portion of that franchise feedback.

[00:09:58] You get a discount on buying the whole territory as master franchiser.

[00:10:02] So if you bought them all for $10,000 each, those other four

[00:10:07] territories, then you sell them for $20,000 each.

[00:10:10] So you get your money back and then some on that.

[00:10:12] In addition to that, what you're going to be doing with that pilot unit

[00:10:15] is that's going to be your training unit, that first unit that you bought out.

[00:10:18] And you're going to be basically a right arm to that franchise or

[00:10:20] where you're going to be helping them do the training on those.

[00:10:23] So the franchiser doesn't necessarily have to do the training for each

[00:10:25] person.

[00:10:26] As you as a master franchiser, those four territories that now

[00:10:30] you have for sale on that, you sell them, you train those people to do that

[00:10:34] in your pilot unit.

[00:10:35] They go out and run those units themselves, build them out themselves,

[00:10:39] use their money to do that.

[00:10:41] And then you get a portion of the royalties also.

[00:10:43] So the royalties are the portion of where the franchisor makes most of the

[00:10:47] money on that is what that's coming from.

[00:10:49] Generally between five and 10% off gross sales as a master

[00:10:53] franchiser.

[00:10:53] Now you're going to get half of it.

[00:10:54] Usually about half of that is going to vary by franchise.

[00:10:56] Not always exactly the same, but you get about half of that.

[00:10:59] So it's a great way to build an annuity, long time annuity.

[00:11:02] You just built out that one pilot unit that you're training unit, training

[00:11:05] the people, sell your other units.

[00:11:07] Now you've got four other people that are, are you bringing in that those

[00:11:12] royalties from a great way to do business a little bit more of an

[00:11:16] investment upfront.

[00:11:18] A really great way to build an empire and five is not, not necessarily

[00:11:22] standard.

[00:11:23] You can do as many as you like.

[00:11:24] So if you want to build out of state, you can say I'll take the whole

[00:11:27] state, I'll take 50 territories on that.

[00:11:30] You pretty much really better believe in that franchise if you're going to

[00:11:33] do something like that.

[00:11:34] That's a big investment for a long time.

[00:11:37] Yeah, because you're, you're investing upfront for the opportunity

[00:11:40] then basically buying the licensing rights to do it over time.

[00:11:43] Right?

[00:11:44] Okay.

[00:11:44] Correct.

[00:11:45] So, so, um, and to get, you know, something at that scale, like

[00:11:49] a statewide, you're probably not going to be buying Taco Bell, right?

[00:11:53] You're going to be buying a franchise that's newer in the process.

[00:11:57] Correct Paul.

[00:11:58] Generally speaking, that's correct.

[00:12:00] If there's not a lot of those big franchise like McDonald's or

[00:12:02] Taco Bells and that sort of thing where they're going to have that

[00:12:05] much open territory remaining on that one.

[00:12:09] So you would probably go on for one that you can still get a large

[00:12:13] one that has maybe a hundred or more franchisees.

[00:12:15] They just haven't grown into your area yet.

[00:12:17] But some of the real big name brand ones probably not because as

[00:12:21] you indicated Paul, they're probably sold out through most of it.

[00:12:24] Somebody's already picked up the rights to that probably.

[00:12:26] Are you from a strategy standpoint?

[00:12:28] If, you know, so obviously franchising has been around for quite some time.

[00:12:33] You mentioned Taco Bell and, you know, you see them everywhere today

[00:12:36] and obviously it's a great model because they're everywhere.

[00:12:40] Different franchises.

[00:12:43] What I mean, if someone coming in, I mean, do you tend to lead

[00:12:47] people to the newer up and coming franchises that are kind of trendy

[00:12:52] or something that's sort of bigger and established?

[00:12:56] I'm thinking bigger and established is maybe less risky, but probably

[00:12:59] more capital intensive.

[00:13:01] And maybe maybe the revenue is not as good.

[00:13:03] I mean, what do you have kind of any insight there?

[00:13:07] Absolutely. Great question on that one.

[00:13:08] That's one of the questions that I asked my people on that one.

[00:13:11] So when they're coming in, I don't steer anybody towards anything

[00:13:13] in particular. What I do is I ask a lot of questions and find out

[00:13:17] what it is they're looking for on that.

[00:13:19] And that'll be one of the questions that I'll ask them is

[00:13:21] do you want an emerging brand or do you want one more established?

[00:13:24] We have plenty of more established brands.

[00:13:26] Keep in mind we've been talking just a lot about brick and mortar franchises,

[00:13:29] but on the other end of the spectrum, we have the service industry

[00:13:32] franchises that are a lot less around $150,000 total investment

[00:13:36] give or take. And there's a few of them out there

[00:13:39] that have 100 or more franchisees within each unit.

[00:13:43] And then there are some that have more than one franchise in their system.

[00:13:47] So if we take a neighborly brands or authority brands where they have

[00:13:51] neighbor brands, neighborly has about 20 different franchises,

[00:13:55] franchises in their portfolio, authority brands have about 10 or 15

[00:14:00] of them in there so we can still get into a very large system.

[00:14:04] The question will be for me to you, Paul, is Paul, do you

[00:14:07] and you know, where's your risk at?

[00:14:10] Did you you want to reduce that risk like you're indicating

[00:14:13] there, Paul, and get into something that's more that has more franchisees

[00:14:17] that has more established and have reproduced it many, many times before

[00:14:22] producing that risk or do you want something that you can grow with?

[00:14:26] Even more an emerging brand that doesn't have all those

[00:14:29] territories taken up out there.

[00:14:31] So you've got more of an opportunity to expand with the franchise

[00:14:35] and more of an ability to work with the franchise to grow that franchise

[00:14:39] and help them grow with that.

[00:14:41] I've got a person right now that they want to grow with that franchise.

[00:14:44] They specifically tell me we want an emerging brand, 20 franchises or less

[00:14:48] because we want to grow with that brand.

[00:14:50] And then I have still have other people out there that say, no,

[00:14:53] you know, I want find me one that's got, you know,

[00:14:55] 100 or more franchises in their system, but they just haven't

[00:14:59] expanded out into this area yet.

[00:15:00] So that's more of a personal decision of what you feel about it

[00:15:04] with an emerging brand.

[00:15:05] Again, you got to feel really good about that franchise system

[00:15:07] because, you know, they're just starting out.

[00:15:10] Now, if you got into Orange Theory, you just started out, you're golden.

[00:15:13] But then how many other fitness brands at the same time

[00:15:17] came out as Orange Theory?

[00:15:19] Orange Theory made it some of the other ones might not have.

[00:15:22] So a little bit more of a risk there for you get involved with the right one

[00:15:25] kind of doing good.

[00:15:26] You've got to believe in the people that are running it.

[00:15:28] So OK, that's a great question.

[00:15:30] So the people that are running it and the brand and, you know,

[00:15:34] it sounds like to me that when you're buying a franchise, I mean,

[00:15:37] that's really what you're buying.

[00:15:38] You're buying name, name exposure potentially.

[00:15:41] So you have consumers that recognize the brand be the systems

[00:15:45] and the training that you were talking about.

[00:15:47] So so I don't have to start from a white clean sheet of paper

[00:15:51] and try to figure it out, right?

[00:15:53] And but but then that stuff is only as good as the people

[00:15:58] behind the whole system, right?

[00:16:00] Because if the people behind the system are flawed, we're all flawed

[00:16:04] away, but you know what I mean?

[00:16:05] The character issues or, you know, whatever.

[00:16:08] So how do I know that I'm making a good choice?

[00:16:11] How do I even investigate?

[00:16:13] Because it's a lot of money to put up front and, you know,

[00:16:15] and then and then if you're going to commit your time as well,

[00:16:18] I'm going to I'm going to leave my job or maybe

[00:16:20] I'm going to take some time away from my business and invest in another one.

[00:16:23] How do I know it's a good bet?

[00:16:26] Part of our due diligence process, we're going to go through

[00:16:28] and do that together on that one.

[00:16:30] So we'll get a lot of the background information

[00:16:31] on the people that are that are running that franchise system.

[00:16:34] And what you're looking for, you can be looking for a couple of different things.

[00:16:38] If you really want somebody that's got experience,

[00:16:40] they'll take a look at the experience of the people that have started their franchise.

[00:16:44] If they're starting a new one, did they have previous franchise experience before?

[00:16:48] That's always a good plus if they did that.

[00:16:50] They'll have their franchise disclosure documents, and then there will be a

[00:16:53] breakdown of the franchise system itself.

[00:16:56] So you'll see if there's been any litigation, any bankruptcies,

[00:16:59] that sort of thing, all of our franchise attorney for you as well

[00:17:02] to go see, to go through those documents as well and to go through the backgrounds

[00:17:06] with those people to make certain that it's good from a legal standpoint on there.

[00:17:10] But if they haven't done any franchising before and they're just getting started out,

[00:17:13] then why did they do it?

[00:17:15] The folks from a place at home

[00:17:16] what started helping them when they first started out franchising.

[00:17:20] They just had a great background.

[00:17:22] They haven't been into franchising before, but they started that business

[00:17:24] because place at home is for a senior care type franchise.

[00:17:29] And what they're looking for is that their parents,

[00:17:32] you know, they're trying to get help for their parents and they couldn't find good help.

[00:17:35] So they decided they were going to start a business on that.

[00:17:37] So they had good hearts and there are good people with a great background in business itself and working.

[00:17:43] So they started their business and I put some people in there that were actually looking

[00:17:46] for a franchise that had a hundred or more franchises

[00:17:50] who really wanted some really hands on help to get their business started.

[00:17:53] And they the person that I sent over to place at home

[00:17:57] actually liked those two guys that are running it because they felt that

[00:18:00] they would get that more personalized service.

[00:18:01] So with the emerging brands, you're going to get a little bit more personalized

[00:18:04] service with the people who did it, but you just have to believe in those.

[00:18:07] And yeah, you can do background checks on all those folks.

[00:18:09] Franchise attorney will help you check out the business

[00:18:12] so there's nothing unusual or out of the ordinary on those.

[00:18:16] But you'll be meeting those folks in person on that

[00:18:19] to get to know them and to really get a good feel for them.

[00:18:23] Got it.

[00:18:23] Got it.

[00:18:23] So so it's a process.

[00:18:25] So there's a due diligence process.

[00:18:26] And do you what is what does that look like?

[00:18:29] So somebody says, OK, Greg,

[00:18:32] I'm interested in getting into franchising potentially.

[00:18:35] I'm going to explore this or whatever.

[00:18:36] Maybe I want to leave my job or whatever the reason is.

[00:18:39] Or maybe again, I want to buy a secondary business.

[00:18:42] What can I expect?

[00:18:43] What's the process going to be like sort of just kind of high level overview?

[00:18:47] You got it.

[00:18:48] So first step in the process, we get on the phone.

[00:18:50] You ask me anything you want about myself and about franchising.

[00:18:54] So what I'm trying to do is get you familiar with me.

[00:18:56] Make sure you're OK with working with me.

[00:18:58] I'm going to ask you a couple of questions about what your expectations are

[00:19:01] about getting into a franchise, make sure that they are, you know,

[00:19:04] they're where there should be.

[00:19:05] You know, I don't want you to be thinking

[00:19:07] you're going to be a millionaire in the next year or so.

[00:19:08] OK, you're probably not on a franchise system.

[00:19:11] So I want to make sure those of your expectations are realistic.

[00:19:14] But get to know me.

[00:19:15] I just want to make sure you don't hang up on me and say,

[00:19:17] I'm never going to talk to this guy again.

[00:19:18] He's nuts.

[00:19:19] So we get over that one.

[00:19:20] And next time I'm going to send you out an email questionnaire.

[00:19:25] It'll give you our due diligence process in there as well.

[00:19:27] We'll go through a questionnaire that you'll fill out.

[00:19:30] We'll talk about you for half hour or hour, really getting down the nuts

[00:19:33] and bolts of where have you been?

[00:19:34] So what do you bring to the table?

[00:19:36] How are your skill sets?

[00:19:37] Where are you right now?

[00:19:39] How much time do you have to invest?

[00:19:40] How much time do you want to invest?

[00:19:42] How much money do you have to invest?

[00:19:43] How much money do you are you comfortable investing?

[00:19:46] And then where do you want to be five to 10 years from now?

[00:19:48] Once I get that information, gather that all through that,

[00:19:51] get to know you as much as possible.

[00:19:53] Then I already talked to the franchise or is on a regular basis.

[00:19:56] I know who they're looking for in a successful franchisee.

[00:20:00] I can do the match up, come back to you with five or 10 different opportunities.

[00:20:04] We get on the phone again, narrow that down to two or three.

[00:20:07] I let the franchise or know your interest in talking with them.

[00:20:10] And then we'll go through the process of learning about that franchise.

[00:20:13] You will have weekly calls with them.

[00:20:15] Again, you can go as fast or slow as you want to on that one.

[00:20:17] You'll weekly calls, they'll send you information.

[00:20:19] You do your homework on those.

[00:20:21] You and I, Paul, will get together every seven to 10 days,

[00:20:23] usually once a week or so.

[00:20:25] Go over what you learn, make certain that you're getting your answers.

[00:20:28] Your questions answer to your satisfaction.

[00:20:31] I'll look into that franchise system.

[00:20:33] I'll have CPAs for you to check out their books.

[00:20:36] I'll have franchise attorneys to go with the legal stuff,

[00:20:39] funding people to take care of any funding that you need.

[00:20:42] And then you'll go through the franchise disclosure documents.

[00:20:46] Great information there, lots of good stuff.

[00:20:47] You'll talk to as many franchisees as it takes

[00:20:50] for you to get a good feel for that business.

[00:20:51] I'll have a list of questions for you for the franchisee's,

[00:20:54] for the franchisee's on that.

[00:20:56] Then eventually, at the very end, about eight weeks, two months,

[00:21:00] three months down the road is what he usually takes.

[00:21:02] You'll go over and meet those folks in person, get to know them,

[00:21:05] look them out of your eye to eye and ask all those difficult questions

[00:21:09] when you're like that.

[00:21:10] And at their offices, get to know them.

[00:21:12] They send you home.

[00:21:14] That's when you decide whether or not you want to get involved

[00:21:16] in that franchise.

[00:21:17] And they do the same thing.

[00:21:18] They'll decide whether or not they want you in their franchise.

[00:21:21] Yeah, because I guess it has to be a mutually

[00:21:23] mutually beneficial relationship, right?

[00:21:25] Because they're going to be investing time and money.

[00:21:27] And I guess, I mean, you know, the skeptical side of me says,

[00:21:31] well, I'm going to give them a lot of money to buy rights

[00:21:33] and they're going to make money right away.

[00:21:34] But the other side of me says, well, I don't think they want me

[00:21:38] to fail because that puts a blemish on their whole brand, right?

[00:21:42] Yeah, there's two things.

[00:21:43] One, one of the things in the due diligence process

[00:21:45] when you're looking through that is that you want to make certain

[00:21:48] that they're making their money off the royalties,

[00:21:50] not off the franchisee.

[00:21:52] So most of the money comes from the franchise fee.

[00:21:54] Then you're right, there are a whole motive then is just to sell.

[00:21:58] Sell franchises.

[00:21:59] Yeah, right.

[00:22:00] We don't want them selling franchises.

[00:22:01] We want them awarding franchises, making money off the royalties

[00:22:05] to do that in the franchise disclosure document.

[00:22:07] There's going to be a list of franchisees who currently

[00:22:09] running the business, a list of franchisees

[00:22:12] who started the business and are no longer running it.

[00:22:14] Pretty quick, easy math to do success rate.

[00:22:16] We're looking for 85, 90 percent or better.

[00:22:19] And yeah, as you alluded to, they don't want you

[00:22:21] to fail because two things.

[00:22:22] One, it'll show up on the franchise disclosure documents.

[00:22:25] And that says to us consultants, if they get, you know,

[00:22:29] a very low success rate that they don't know how to pick out good franchisees.

[00:22:33] So we don't want them.

[00:22:35] And also their motivation to get you

[00:22:38] successful is to make money off of those royalties.

[00:22:41] So the more successful you are, the more money they make.

[00:22:44] And that's what we want to look for is

[00:22:45] they're making their money off the royalties.

[00:22:48] Right, right. Got it.

[00:22:50] So so so with with somebody, let's say, has a successful business now

[00:22:55] and they're generating profit and whatnot and they want to expand.

[00:22:58] Are there opportunities to get in a franchising where I mean, my typical vision

[00:23:02] is, you know, you're going to go run the you're going to flip the burgers or

[00:23:05] we're going to run the run the business for a while.

[00:23:07] Like you do a typical startup right kind of bootstrap.

[00:23:10] But are there franchises where you can you can essentially be a passive owner?

[00:23:14] I mean, you can invest in other other franchises or is that something

[00:23:18] that comes downstream with like the master franchise agreement when you

[00:23:21] do you still have to kind of develop one territory?

[00:23:24] There's franchises in almost every industry out there where you can be

[00:23:28] a semi passive operator or a full time operator.

[00:23:31] So that's what a lot of folks think is that when they're, you know,

[00:23:33] they're driving down the road, they see the brick and mortar,

[00:23:35] it's real expensive. I had to do it full time.

[00:23:37] That's just not the case.

[00:23:39] There's the service industry for $150,000 give or take

[00:23:43] brick and mortar is about 400,000 total investment.

[00:23:46] You could use semi passive and either one, usually around 10 to 15 hours a week,

[00:23:50] depending on your management skill and style, maybe a little bit more

[00:23:53] when you're first getting started up on that.

[00:23:56] But definitely so you manage the manager, you manage the profit and loss statements.

[00:24:00] If you don't like managing profit and loss statements, get a CPA to do that.

[00:24:03] And then you just do the manager, manage the manager part

[00:24:06] and actually have four franchises where they actually have a management team

[00:24:09] run it themselves so that you do almost nothing to meet with them

[00:24:14] about once a month or so on that one.

[00:24:17] Right, because the ultimate goal, the Michael Gerber E-Myth, right?

[00:24:20] The goal is to build the business that generates the profit

[00:24:24] and the product is the business, right?

[00:24:25] It's not the from the owner standpoint, it's not you're not the one in there

[00:24:29] working in the business doing the day to day operational things.

[00:24:33] I mean, you could be in a lot of times you have to start there,

[00:24:35] but to me, it seems like the franchise,

[00:24:38] it's already got the model on how to all the systems are there.

[00:24:41] You now just need to put the, I would say the butts in the seats,

[00:24:45] the right butts in the right seats, right?

[00:24:46] And then you said manage them and then ultimately maybe you could get a manager

[00:24:50] and you're managing the manager or leading the manager

[00:24:53] because they're not totally passive.

[00:24:55] Somebody's got to watch the chicken house as they say.

[00:25:00] But that's an advantage, right?

[00:25:03] That you don't have to go through the development process

[00:25:06] and the trial and error of going through like Michael Gerber's E-Myth

[00:25:09] and developing these processes and the vision and all that.

[00:25:12] That's already done.

[00:25:13] You're basically buying into that, you're buying a team and support.

[00:25:16] And so it seems to me if you want to scale

[00:25:21] to have the skill set of already building a business or successful in management

[00:25:25] or leadership somewhere would allow you to scale more effectively

[00:25:29] maybe than someone who's just been a what I would say a technician

[00:25:32] in just doing deliverables day to day to day

[00:25:35] and whatever role they were in.

[00:25:38] Would you agree with that?

[00:25:39] Yeah, absolutely. Correct.

[00:25:40] Paul, there I would say the most of the franchises as you alluded to

[00:25:44] would rather you be working on the business rather than in the business

[00:25:48] because if you're working in the business,

[00:25:49] you can't grow it as effectively as if you're working on the business.

[00:25:52] And from your standpoint, Paul, as a business owner,

[00:25:55] you really don't want that business to revolve around you.

[00:25:59] You want that business to run by itself for many, many different reasons,

[00:26:04] mostly because so you have your goal,

[00:26:06] your vision was to have more time for your friends and family

[00:26:08] and make money at the same time.

[00:26:10] So you don't want that business that involves around you.

[00:26:14] And then when you go to sell it, much if you decide to sell it,

[00:26:17] much easier to when it's not revolving around you

[00:26:21] to just sell that business off if you want to.

[00:26:23] Right. It's worth a lot more.

[00:26:25] Is there a market within the franchising system?

[00:26:28] And I know that each franchising brand or concept is their own thing.

[00:26:33] But is there typically a market to sell?

[00:26:35] So if I say, OK, Greg, you set me up with a franchise

[00:26:38] and I build a territory or whatnot,

[00:26:40] but I want to exit in five, six years.

[00:26:42] I mean, that's my goal here.

[00:26:43] I don't want to do this is not a lifetime job,

[00:26:45] but you know, Taco Bell or whatever, you know,

[00:26:48] whatever we build, right?

[00:26:49] Whatever whatever franchise group.

[00:26:52] Is there a market generally within that that concept or brand?

[00:26:56] Or do you have to look outside of that?

[00:26:57] I mean, is I know how does that work typically?

[00:27:00] Yeah, Paul, that's a great question.

[00:27:03] There is a huge market for franchise resales.

[00:27:05] I have people come to me, you know, a couple of times a month,

[00:27:09] if not more asking me for resales.

[00:27:11] And unfortunately, my inventory isn't just isn't that great

[00:27:14] for franchise resales because of the fact that when you go to sell your

[00:27:17] franchise, especially if you build it up and it's doing fine,

[00:27:20] is that you're going to tell the franchisor that you want to sell.

[00:27:23] The first thing they're going to do is they're going to tell

[00:27:25] any franchisees that are close by you that that franchise is for sale.

[00:27:29] So if it's doing fine,

[00:27:30] generally speaking, another franchisee is going to pick it up.

[00:27:34] Because it's an easy they're already doing it.

[00:27:36] Right.

[00:27:36] Step right in, grab that.

[00:27:38] So I don't get a whole lot of resales that come to me on now.

[00:27:43] And because of that fact, occasionally I do because no other franchisee

[00:27:46] wanted that are doing fine, but great market for really easy to sell.

[00:27:50] I'll franchise it strong good.

[00:27:51] So if you so if you've developed it, you follow the system and you're profitable,

[00:27:55] then there's there's already sort of a ready made market within

[00:27:58] within that brand or that concept typically to pick it up.

[00:28:03] I another question to along those lines.

[00:28:05] Well, if it's well run and it's successful and you have people in place,

[00:28:11] if I'm in Virginia and you're in Texas and it comes available,

[00:28:14] I mean, do I have can I still maybe buy it?

[00:28:17] I mean, if if I'm managing the manager,

[00:28:19] can I manage the manager there potentially?

[00:28:21] I mean, is there an open market, not just local?

[00:28:26] It depends on the franchise really.

[00:28:27] OK. And if the friend, if you're already a franchisee,

[00:28:30] that franchise and you're in Texas and somebody selling in Virginia,

[00:28:35] they'll have a talk with you about that if you want to pick it up

[00:28:37] and how you plan on operating that remotely from that standpoint.

[00:28:41] So the possibility is there. Absolutely.

[00:28:43] They usually generally like to have you close by it

[00:28:47] because now you're the local owner operator.

[00:28:48] That's the idea behind it.

[00:28:50] But they will make exceptions for really good

[00:28:53] franchisees that want to expand out and then they do it quite often.

[00:28:57] But if I want to justify buying my airplane

[00:28:59] and I to my wife, you know, we need to get the airplane

[00:29:03] because now we have a business in Texas.

[00:29:06] We need to go visit it periodically.

[00:29:09] That's a different question.

[00:29:10] It's a different conversation for a different day. Right. OK.

[00:29:13] Last thing, what's the what's the outlook?

[00:29:15] And what are the trends and outlook in franchising?

[00:29:17] Again, it's been around for a while.

[00:29:18] There's a lot of businesses out there.

[00:29:20] A lot of them are mature.

[00:29:21] What do you see for the future?

[00:29:23] Do you see a lot of new concepts?

[00:29:25] I mean, is it bright?

[00:29:26] Just your your 30,000 foot view.

[00:29:29] There's always going to be a great business for franchising.

[00:29:34] You know, amazingly enough during COVID,

[00:29:36] I we kept very busy during that because so many people realize,

[00:29:40] you know, they were all set in our ways, generally speaking,

[00:29:42] we'll get our jobs or go on there on a regular basis.

[00:29:45] And we love the routine in general on that one.

[00:29:49] Most people do.

[00:29:50] Routine was kind of interrupted doing that

[00:29:52] through a little bit on that.

[00:29:54] So what happened was people will start to realize that.

[00:29:58] All right, I can do something different

[00:29:59] and it is possible to do something different.

[00:30:01] Well, let's look at the different things I can do.

[00:30:03] So we got really busy during the COVID area

[00:30:05] where people were working from home

[00:30:08] and their usual daily lives were interrupted on that.

[00:30:13] Anytime there's a downturn in the economy,

[00:30:17] somewhat of I don't know if you call it recession,

[00:30:18] we've had too many recessions,

[00:30:19] but a few of those we've had in there

[00:30:21] or we get a lot of layoffs.

[00:30:23] That's when people really start thinking that

[00:30:25] there's got to be something better out there

[00:30:27] than what I'm doing on that.

[00:30:30] So we get a lot of business for franchising.

[00:30:32] I think that the, you know,

[00:30:33] it was a long time ago when corporations

[00:30:36] just started coming up and everybody

[00:30:37] was working out in the fields

[00:30:38] and the corporations were treating people just outstanding.

[00:30:40] You know, if you've got great benefits

[00:30:41] so they came in from the fields,

[00:30:43] they went to work for the corporations,

[00:30:44] everything was great.

[00:30:46] Now we've been working for the corporations

[00:30:47] for a long time.

[00:30:48] Now we're kind of realizing that they're okay,

[00:30:51] but you know, maybe there's something

[00:30:53] a little bit better out there

[00:30:54] because we're just not getting the same kind of benefits

[00:30:57] that we used to get from the corporation,

[00:30:59] you know, the retirement plans and that sort of thing.

[00:31:01] We've got to do all that ourselves.

[00:31:03] So quite a few people are looking down the line on that

[00:31:06] and thinking that working for another company

[00:31:09] and making somebody else rich

[00:31:11] is not necessarily going to get me to what I want to be,

[00:31:14] you know, at the end of the day.

[00:31:15] So it's always, always going to be

[00:31:19] a lot of people out there that want options,

[00:31:22] that want the opportunity to at least look at

[00:31:25] what could be if they got into business.

[00:31:27] It's gonna be some work, it's not easy, not for everybody.

[00:31:30] I won't try and convince you that franchising is for everybody.

[00:31:33] The greatest thing is the slice bread

[00:31:34] because for some people it's not.

[00:31:36] But it's good to have those options,

[00:31:37] good to take a look at what you have to do

[00:31:40] to get to where you want to be quicker

[00:31:43] than if you were to do it through a corporation.

[00:31:45] Right, right, now that's a good answer.

[00:31:46] So last question comes up on, so what is the tip?

[00:31:49] And I know this is a loaded question

[00:31:51] because there's no typical, right?

[00:31:53] But I'm gonna ask you anyway,

[00:31:55] what is the typical expectation you should have

[00:31:58] as a new franchisee to start seeing

[00:32:01] your business operate in the black?

[00:32:03] I mean, this is a two-year process before you're like,

[00:32:05] okay, you know, I gotta have enough money in the bank

[00:32:08] to cover me for a year or two years or whatnot.

[00:32:12] And then we can expect if we follow the plan

[00:32:14] that we're gonna be starting to get profitable,

[00:32:16] is it three years?

[00:32:17] What do you see or what do you advise people on for that?

[00:32:21] Great question, so brick and mortar, building.

[00:32:25] It's gonna be a while on that one.

[00:32:27] So do three years down the road,

[00:32:29] depending on what it is that you're investing in on that one.

[00:32:33] You'll start bringing in money.

[00:32:36] Most franchises fairly quickly,

[00:32:37] but to actually get the black

[00:32:38] and pay back everything that you did

[00:32:40] because you're looking at a $400,000, $500,000 investment

[00:32:42] on something like that.

[00:32:43] You gotta find the real estate,

[00:32:45] takes about nine months, six months, nine months

[00:32:47] to get it built out, to get it going.

[00:32:49] It's a little while longer on those.

[00:32:50] So you'll expect a little while longer to get it back.

[00:32:54] If you're looking for some of those in the brick and mortar,

[00:32:56] look for ones that have membership models

[00:32:58] and where the franchise really helps you grow

[00:33:00] that membership so that you can have

[00:33:02] a big membership right away, even before it opens up.

[00:33:06] So you've got people coming into your business,

[00:33:08] whatever it is very quickly on that.

[00:33:11] So that'll get you out there a lot quicker.

[00:33:13] Franchise, service franchise.

[00:33:16] You are working from home

[00:33:18] or you have a small office, $150,000 investment.

[00:33:21] It's not unheard of in the first year or two

[00:33:23] to be right there in the black,

[00:33:26] really depending on which franchise you get into.

[00:33:28] I mean, there's one that where you do leather vinyl,

[00:33:32] plastic repair, very simple business work from home.

[00:33:36] If you do it yourself,

[00:33:37] you're probably pulling in 75, 80% ROI

[00:33:41] on something like that

[00:33:42] because you're not a lot of overhead on it.

[00:33:43] So easily within the first year

[00:33:45] you could be bringing in some money

[00:33:46] and so a little under $100,000

[00:33:47] to get started on that one.

[00:33:49] But in general, have enough money for a couple of years

[00:33:53] to keep yourself going for a service industry franchise,

[00:33:56] probably a little bit more than that

[00:33:57] for a work and order franchise on that.

[00:34:00] Right, okay, yeah, that makes sense.

[00:34:02] And that's legit.

[00:34:04] I mean, business generally doesn't,

[00:34:07] takes a while to become profitable if you ever do, right?

[00:34:10] In business, most businesses startups don't make it

[00:34:14] very far and again, I know that's an advantage

[00:34:16] of franchising, you're all in from the beginning, right?

[00:34:20] And so you know what you're up against.

[00:34:21] You got people and most people,

[00:34:24] most entrepreneurs kind of bootstrap things along the way

[00:34:26] and don't know what they're up against

[00:34:28] and don't know what's around the next corner and so.

[00:34:30] So it's a harder decision to make.

[00:34:32] And I see, I know you see this just winding down.

[00:34:35] I see it as you get older and older,

[00:34:39] people realize that hey,

[00:34:42] this to your point retirement's not that,

[00:34:45] all that is cracked up to be and maybe,

[00:34:47] maybe it's not gonna be,

[00:34:48] I'm not gonna have as much money

[00:34:49] as I thought I was gonna have kind of thing.

[00:34:50] I hear this a lot from people and so they're looking

[00:34:53] and of course from an employer standpoint,

[00:34:56] the older employee gets the more expensive they are, right?

[00:34:59] And so you can hire two or three out of college

[00:35:01] for maybe the same price.

[00:35:03] I saw that in the future when I was young.

[00:35:05] I was like, that is a bode well for the future.

[00:35:09] And so you can grab ahold of something

[00:35:11] and take it as big as you wanna take it, right?

[00:35:13] Or as little as you wanna take it

[00:35:15] with franchising if you find the right thing.

[00:35:17] And so your whole thing, Greg, is you help people,

[00:35:21] you help somebody like me that says,

[00:35:24] hey, this is what I wanna do,

[00:35:25] but I have nowhere to, I don't know where to start

[00:35:29] because some businesses are gonna be,

[00:35:31] I'm gonna do better at than others

[00:35:32] based upon my experience, my personality,

[00:35:34] what I like to do, what I don't like to do,

[00:35:36] my financial commitment, yada, yada, yada, right?

[00:35:40] Versus me trying to go out there

[00:35:41] and figure it all out on my own.

[00:35:42] Again, trying to DIY.

[00:35:44] And so do I pay you?

[00:35:46] How does that work?

[00:35:47] How do you get paid for all this?

[00:35:49] Placement agency basically is what I do.

[00:35:51] So I work with about 500 different franchises.

[00:35:53] If you decide to invest in one of the franchises

[00:35:55] I introduce you to, they pay me a referral fee.

[00:35:58] You don't pay me anything, I'm free to you.

[00:36:01] There you go.

[00:36:01] So why wouldn't we work with you, right?

[00:36:03] In that scenario, right?

[00:36:05] Because it is, as you indicated,

[00:36:06] it is a real challenge to go out there

[00:36:08] and look for a franchise for yourself.

[00:36:10] You can do it yourself.

[00:36:10] I tried doing it for myself when I first started.

[00:36:12] So I clicked on about 20 different franchises,

[00:36:14] had about 20 different franchise development people calling me.

[00:36:17] I was like, wow, confuses all heck.

[00:36:19] And then I got a whole franchise consultant

[00:36:21] and they're like, whoa, stop, take a step back.

[00:36:24] Yeah.

[00:36:25] Where have you been?

[00:36:25] Where are you at?

[00:36:26] What do you want to be?

[00:36:27] Let's narrow that field down a little bit.

[00:36:29] Yeah, yeah, no.

[00:36:31] I'm a huge advocate of having an advocate

[00:36:34] in no matter what you're doing

[00:36:35] to be sort of dispassionate

[00:36:36] and can be like the person that says,

[00:36:39] okay, really what are you trying to do?

[00:36:41] Okay, here are legitimate options out there

[00:36:43] because there's a lot of smoke and mirrors

[00:36:45] and all that as we both know and a lot of confusion.

[00:36:48] So, well this has been great.

[00:36:49] Well, how can people get up with you

[00:36:51] if they're interested in learning more about franchising

[00:36:54] and maybe they just want to dip their toe in there

[00:36:55] and kind of learn or maybe they're thinking

[00:36:57] they've been, you know, every day they,

[00:37:00] you know like, how do I get out of this job?

[00:37:01] Kind of thing.

[00:37:02] How do they reach you?

[00:37:04] Go to my website, franchisemaven.com.

[00:37:07] That's franchise, M-A-V, as in Victor, E-N dot com.

[00:37:12] Email me at Greg at franchisemaven.com

[00:37:15] or just pick up the phone and give me a call at

[00:37:17] 361-772-6401.

[00:37:22] Oh, that's awesome.

[00:37:23] Yeah, and we'll get that in the show notes

[00:37:25] and I know you wrote a couple of books on the subject too.

[00:37:28] So are they on your website

[00:37:29] or how do they get access to that?

[00:37:31] Sure, so a couple of things there.

[00:37:33] If you go to my website,

[00:37:34] if you don't mind the PDF version,

[00:37:37] I'll send you a PDF version.

[00:37:38] It's on the front page.

[00:37:39] You just click on that download PDF version

[00:37:41] from the bookshores.

[00:37:42] If you want a soft copy or hard copy

[00:37:45] of something like that, send me your address

[00:37:47] and I'll send that over to you.

[00:37:48] If you wanna get my newsletter,

[00:37:50] there's on that front page of my website again

[00:37:52] if you click on that, subscribe to newsletter

[00:37:54] and you just get my newsletter once a week.

[00:37:56] There's many different things on the website

[00:37:58] you can get due diligence process,

[00:38:00] matrix of business types,

[00:38:02] seven mistakes to avoid when you're looking at franchises.

[00:38:04] So for the do-it-yourselfers,

[00:38:06] a lot of good information there.

[00:38:07] If you don't want me, wanna do it yourself, just go there.

[00:38:09] Start clicking on those things and download those.

[00:38:11] I'll give you all the information, especially the book.

[00:38:13] Step by step process of what you and I will go through

[00:38:16] and how to investigate a franchise

[00:38:17] with real old examples of people that I work with.

[00:38:19] So again, if you're a DIYer,

[00:38:22] let's go on there, check it out.

[00:38:24] Awesome, all right, Greg,

[00:38:26] thanks for being on the show today.

[00:38:27] This was great.

[00:38:28] I appreciate you having me, Paul.

[00:38:29] This is an honor, great questions.

[00:38:31] Hey gang, just winding down here today.

[00:38:32] Thanks for listening to the show

[00:38:34] and as always, if you need capital to grow your business,

[00:38:38] you're looking to purchase commercial real estate

[00:38:42] or build a building or invest in commercial real estate,

[00:38:45] you're looking to acquire a business or a competitor

[00:38:48] or just need growth capital.

[00:38:50] We'd love to talk to you.

[00:38:51] We fund businesses all day long.

[00:38:52] Our mission is to help entrepreneurs win

[00:38:55] and to fund their businesses and fund their dreams

[00:38:58] so that they can make an impact in their community.

[00:39:01] Reach out to me today.

[00:39:01] Go to our website, click the button,

[00:39:03] schedule a 20 minute conversation, discovery call.

[00:39:06] We'll have a quick conversation,

[00:39:08] see if there's a need, see if there's a fit

[00:39:09] and we can take it from there.

[00:39:11] The website is vpcviktorpaulcharly.capital,

[00:39:18] that's vpc.capital.

[00:39:21] All right, there's no dot com on that.

[00:39:23] It's vpc.capital.

[00:39:25] As always, keep crushing it

[00:39:27] and hope to see you soon around here.

[00:39:29] Take care.