Franchise Investing: Both Sides of the Table with Daniel Collins

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The Compassionate Capitalist
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capitalist movement.
Just go get it up and go in back

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and you must keep an open mind
and you try your best just to

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leave your track and do not fall
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Regret is for the Prince of
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In the end, it's all the same.
Take what the wise I've got to

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in part.
These are the principles of the

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game.
The principles of the game.

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Oh, these are the principles of
the game.

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Hey there, this is Karen Rand,
your compassionate capitalist

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and we are back with a new guest
to talk about franchising.

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Both sides of the table, right?
We're going to cover this for

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you in the listening audience,
for our potential investors that

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might be thinking about buying a
franchise or what does it take

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to buy a franchise by a region
be a master franchisor.

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But also for entrepreneurs that
are thinking that have a

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business concept that they
believe that they can have the

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ability to grow it into a
franchise, regional or national.

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And what do you need to consider
as part of that?

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If you're somebody out there
that doing neither one of those

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and you are trying to decide, so
which way do I go?

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Is franchising as a concept
right?

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Is it better to start a
traditional business or better

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to start a business that's
intended to be franchised?

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Is it as a potential investor,
so not an acquirer, but an

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investor, Is it something that I
want?

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And what's the difference of
investing in a startup that is

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doing a business that you like?
You know, we're going to be for

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the most part talking about sort
of meat and potatoes operating

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types of businesses, you know,
versus sort of an innovation

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that angels and venture
capitalists get into.

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But this is a big area of growth
in the world, you know, in the

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US, it's a huge area.
And and so it's important to

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understand because what we do
with the Compassionate

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Capitalist show is really
educate the investors and

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entrepreneurs on pathways to
reach their objectives of

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creating wealth.
And so as a potential Angel

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investor, let's say, or a
private investor, you know, what

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are the differences of investing
in a business that is a

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traditional type of operating
business?

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OK.
So it's not necessary.

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I mean, there are software that
are that franchises that are

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powered by software.
So there's innovation in there.

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There's innovation and processes
and procedures and concepts and

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new ways of delivering services
and solutions.

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And those are all unique
intellectual property that goes

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beyond just branding.
But we're, you know, so or you

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know, a company that is, you
know, some hybrid model where

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you want to be the financial
backer of somebody for somebody

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that wants to purchase a
franchise but doesn't have the

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wherewithal to purchase the
franchise at this moment in

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time.
And you don't want to be active

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in that business.
And what does that look like?

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So my guest today is Dan
Collins.

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If you're watching on YouTube or
Spotify, then you can see him

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there waiting very patiently for
me to introduce him.

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He is an award-winning franchise
investment advisor with more

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than 30 years of experience
across franchising and after

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building his career in
operations training franchise

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development for high growth
brands, some that you would

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totally recognize such as Arby's
and Johnny Rockets.

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It's right.
So he's was a part of those.

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Now he focuses exclusively,
exclusively on helping high

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performing professionals
evaluate franchise opportunities

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with clarity and discipline.
Is it the right fit for them?

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Because it is a match that needs
to happen in order for the odds

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of success, the successful
outcome that they are desiring

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to happen.
They it's not.

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I've learned now in various
different interviews and what

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I've known that you need to
really take some time trying to

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make sure that you are equipped
mentally, emotionally and

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financially to be an owner of a
franchise.

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And whether that's individually
or owning a region where you're

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going to have a multi location,
which we're going to also talk

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about those things, right?
He even he was at East Coast

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Wings and grill and after just
two years, that brand was

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recognized as one of the top
fastest growing franchises from

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the restaurant business
magazine.

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And so you know, that's I love
it when I have somebody on the

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show that, you know, not only
walks the walk, but talks talk.

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So, Dan, fill in the gaps like
how did you, did you start out

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knowing you were going to be in
franchise when you, you know,

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graduated college or, you know,
did it just evolve because you

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were lucky enough to get a job
in a franchise, then you learned

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how they operated and that, you
know, sort of gave the direction

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of the of the course of your
career.

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Well, First off, thanks for
having me on.

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Yeah, I definitely knew I was
going to be in franchising when

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I graduated college because I
worked my way through school as

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a restaurant manager in
franchises.

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So I was very familiar.
I went to, well, my first job I

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was a dishwasher in a franchised
restaurant and I just, I loved

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it.
I I had a great time when I got

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promoted to busboy and I got
away from being soaking wet all

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day, you know, it was even
better.

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But yeah, I worked my way
through school as restaurant

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manager.
I was in operations for probably

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a first third of my career and
then transitioned over to

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business development when I was
with Arby's and loved business

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development.
It's basically helping to help

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franchise investors investigate
the brand and make sure that

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it's a good fit.
My job as I saw it was make sure

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it's a good fit and the person
that I'm bringing in is going to

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be a great franchise once we get
through the process.

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So I really, really enjoyed that
and that operations experience

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really helped me be a top
performer every place I went.

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You mentioned the one place,
I'll tell you the last place

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that I was AW2 employee a while
ago, we went for.

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They had 100 locations when I
started and three years later we

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opened another 208 and had, you
know, 500 in development at that

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time, including those.
So it was, you know, it was, it

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was acquired by private equity,
but it was, it won just about

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every award in franchising at
the time for growth and

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operations and franchise
satisfaction, which is very

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important to me, franchise
satisfaction.

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So it's about a year ago now, I
split off on my own and now I

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advise people that are
interested in inquiring about

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franchising and let them know
what what it takes to be a good

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franchise and be a top
performing franchise.

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Because honestly, it's a lot
more fun to be a top performer

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than just grind it out.
Yeah.

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As an investor.
Talk about that.

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Let's talk about that.
So what is what is the biggest

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misconception people bring to
you when they say I want to buy

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a franchise?
There's a couple two different

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sides of this.
Number one is people think, Oh

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my God, it's $1,000,000 to buy a
McDonald's.

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Well, it's actually a lot more
than that to buy a McDonald's.

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But everyone thinks I can't
afford that.

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I, I don't have a million.
Point 4.

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Even when I was a kid, I thought
franchises were for rich people.

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That's why I worked for the
company instead of becoming a

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franchisee, which now I wish I
would have way back in the day

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become a franchisee from the
beginning because I spent a lot

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of my youth making other people
rich.

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So what they need to understand
is there's a lot of financing

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options out there, a lot of
places, a lot of my franchise,

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the majority of my franchisees
get SBA financing.

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Usually it's 20 or 30% down and
SBA puts the rest up.

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And the other on the other side
of it, people come in and you

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know, I had people come in and
say I want to buy the entire

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state of California.
That would be great.

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I would love to do that deal,
however you need to now show me

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a business plan that's going to
support that and show me the

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financing you're going to be
able to execute that or people

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think it's a franchise.
All I have to do is write that

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franchise fee check and then
every once in a while I write

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checks for the equipment or
whatever else, and then the

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checks start coming in and
hitting my account.

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Yeah, it's not automatic.
Conception that it's really.

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Not automatic.
Right.

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It's, it's really, you know,
owning a franchise is like

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owning any business, you know,
and you only get to be absentee

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on that and passive income when
you've created a huge

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infrastructure that you know of
people that you know, if the

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president, the CEO, that you
know, all of those positions,

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right, the director of
marketing, the director of

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business development, all those
positions are filled and they're

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doing their job.
And you know, you as the owner

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could be the chairman of the
board or something like that,

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but you're not having to, you
know, do be a part of the

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day-to-day that it becomes
passive income.

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Otherwise, you know, they're,
they're and they're even at that

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end, there's 200 million, $200
million companies where the

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actual CEO is still involved in
many of the day.

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To day.
Decisions and things like that.

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So it is buying a business.
It just has the differences is

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that has a it has systems,
processes and standardization of

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things that in theory.
And we were talking a little bit

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earlier about the guy that wrote
the atomic, the atomic habits.

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And his thing about the habits
is that it's not the habit has

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to change.
It's the system that enables you

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to do the habit or not do or
prohibit you from doing the

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habit you're trying to create.
It's the systems that make it

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easier.
You have to micro change your

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system so that you can
accomplish the thing that you're

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trying to do.
Right?

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So sure.
So what you were describing

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there, that was probably the
infrastructure for either a

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franchisor, of course, or a very
large franchise, someone that's

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got 50 locations or more.
Typically the people that I work

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with are coming in buying
anywhere from 5 to 2025

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locations.
And the way that works is they

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come in, we investigate the
brands, I'll present the brands

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to them, see what they're
interested in, see what's a fit

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for all of their goals.
And of course, then you have to

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consider what's available in the
areas that they want to go into

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as well.
Then after that, then you're

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going to, if you get all the way
down the line and you say, OK,

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this is what I'm going to do.
You're going to commit to a

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certain number of locations,
you're going to have a

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development schedule that goes
along with that.

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So and you're going to have your
determined territory.

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So over the course of that
development schedule, you're

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going to have to have a timeline
for to get each one of these up

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and open.
And as you go, the first one, of

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course, you're going to have,
you know, you're going to have

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it staffed up with your general
manager, who typically in a

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multi unit development agreement
like that, you're going to have

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somebody that's very
overqualified to be the general

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manager of that first place.
Because especially if you're

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looking to be a little hands
off, you're going to have

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someone that's going to have
some skin in the game that's

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going to really manage these
places as you get up and grow.

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So you're going to have that
person's typically going to be

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your regional manager once you
get the more than one location.

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And you're going to go through
the all the training as well,

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because I always recommend that
the owners know how the all the

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systems are supposed to operate.
But then what happens is when

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you get to start looking at that
second location, the manager at

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that first location is going to
replace himself with somebody

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inside there.
Then they're going to go launch

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off and do it all over again #2
and you're just going to cut and

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repeat every time you get up to
typically 5 or 6 locations.

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Now you have a regional manager.
They're going to run all six of

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00:12:21,160 --> 00:12:23,640
those, then you're going to have
to hire another one for the next

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00:12:23,640 --> 00:12:25,200
group.
And it depends on the complexity

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00:12:25,200 --> 00:12:28,040
of the concept, whatever you're
looking at, how many that each

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00:12:28,040 --> 00:12:29,360
person can run.
OK.

231
00:12:29,360 --> 00:12:32,800
So well then that kind of leads
into the next question.

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00:12:32,800 --> 00:12:38,600
So if there if part of the
formula for six if part if part

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00:12:38,600 --> 00:12:43,280
of the formula for success for
somebody to own a franchise is

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00:12:43,280 --> 00:12:48,600
to be involved in it, working
inside the actual functional,

235
00:12:48,840 --> 00:12:52,920
you know, operations of that
seems like they would need prior

236
00:12:52,920 --> 00:12:56,400
experience to be able to do that
and they can't just hire

237
00:12:56,400 --> 00:12:59,360
somebody and oversee them as a
manager.

238
00:12:59,440 --> 00:13:02,480
I think, you know, when we were
talking earlier, it's not so

239
00:13:02,480 --> 00:13:07,320
much the you, you so to describe
that because you know, if, if

240
00:13:07,320 --> 00:13:12,200
it's a restaurant, because
somebody a lot of times you that

241
00:13:12,200 --> 00:13:15,560
know how to they have, you know,
to me, restaurant is a unique

242
00:13:15,560 --> 00:13:19,520
set of, of skills that you know,
how to, you know, man, you know,

243
00:13:19,760 --> 00:13:24,360
do staffing, you know, how to,
you know, get the right cooks in

244
00:13:24,360 --> 00:13:26,840
there and the kitchen operating
the right way.

245
00:13:26,840 --> 00:13:29,320
And that usually comes from
years of experience.

246
00:13:29,720 --> 00:13:32,520
But you know, there's restaurant
franchises being sold all the

247
00:13:32,520 --> 00:13:36,480
time and they all require the
owner to go in and operate that

248
00:13:36,480 --> 00:13:41,240
franchise location before.
No, actually, most of the people

249
00:13:41,240 --> 00:13:43,360
that I work with don't operate
that.

250
00:13:43,720 --> 00:13:45,120
They're not standing behind the
counter.

251
00:13:45,120 --> 00:13:47,080
They're not handing out things
to the client.

252
00:13:47,080 --> 00:13:48,240
I thought you said they need to
be.

253
00:13:48,240 --> 00:13:50,640
An owner operator and then they
replace themselves and do the

254
00:13:50,640 --> 00:13:53,240
next location.
No, that would be that regional

255
00:13:53,240 --> 00:13:56,680
manager person that they hired
for their first location.

256
00:13:57,120 --> 00:14:00,120
So typically my franchisees are
never in the truck, you know,

257
00:14:00,120 --> 00:14:04,640
fixing air conditioning, they're
not handing trays across the

258
00:14:04,640 --> 00:14:07,120
counter in the restaurant.
They don't do that kind of

259
00:14:07,120 --> 00:14:09,400
thing.
My franchisees typically make

260
00:14:09,400 --> 00:14:12,800
sure that first of all, there is
a great culture, great people

261
00:14:12,800 --> 00:14:15,520
are hired, people are motivated,
incentivized.

262
00:14:15,520 --> 00:14:17,680
They know what the KP is, are
that they have to hit to make

263
00:14:17,680 --> 00:14:21,120
the business successful.
And then once they hit those KP

264
00:14:21,120 --> 00:14:23,960
is for the month or the quarter
or whatever it is, then they get

265
00:14:23,960 --> 00:14:27,040
paid on those KP is.
So they incentivize the people,

266
00:14:27,040 --> 00:14:28,880
keep them pumped up and get them
paid.

267
00:14:29,080 --> 00:14:32,800
Their job is to make sure their,
their culture is that everyone

268
00:14:32,800 --> 00:14:36,280
is killing the, the customers
with kindness because that's the

269
00:14:36,280 --> 00:14:39,720
biggest, that's the biggest
downfall I see in all the

270
00:14:39,720 --> 00:14:41,960
franchises that are out there.
All the businesses that are out

271
00:14:41,960 --> 00:14:45,360
there is what sets people apart
is the level of customer

272
00:14:45,360 --> 00:14:47,200
service.
You know, when I call, I've

273
00:14:47,200 --> 00:14:50,320
called a plumber, $300.00 an
hour for a plumber and the guy

274
00:14:50,320 --> 00:14:53,120
doesn't show up.
I mean, all you have to do is

275
00:14:53,280 --> 00:14:55,960
show up, do a great job with a
smile on your face.

276
00:14:56,360 --> 00:14:58,760
You're now their plumber.
That's happening.

277
00:14:58,760 --> 00:15:01,560
And at 300 bucks an hour, I want
to make sure that that person's

278
00:15:01,560 --> 00:15:04,200
only calling me and they're
going to tell all their friends

279
00:15:04,200 --> 00:15:06,480
about me as well.
So that's the one thing that I

280
00:15:06,480 --> 00:15:08,400
want you to do.
Make sure you incentivize your

281
00:15:08,400 --> 00:15:11,520
people and make sure that their
the culture is kill people with

282
00:15:11,520 --> 00:15:12,920
kindness.
Doesn't matter if it's a

283
00:15:12,920 --> 00:15:15,400
restaurant or a service or
whatever it is.

284
00:15:15,760 --> 00:15:17,000
That's one of the biggest
things.

285
00:15:17,200 --> 00:15:20,720
But then my franchisees are also
responsible for making sure that

286
00:15:20,720 --> 00:15:24,200
the the marketing is executed.
Marketing is critical to the

287
00:15:24,200 --> 00:15:28,200
success of a franchise location.
We'll make sure come.

288
00:15:28,280 --> 00:15:30,960
Back to your, you brought up
KPISI want to talk about them

289
00:15:30,960 --> 00:15:34,000
when we talk about like starting
up a franchise.

290
00:15:34,080 --> 00:15:37,840
But So what are the red flags of
what you look for that somebody

291
00:15:37,840 --> 00:15:41,320
doesn't have what it takes when
it comes to owning a franchise

292
00:15:41,320 --> 00:15:42,800
or buying a A?
Sure.

293
00:15:43,560 --> 00:15:48,040
So as a franchise, only 90% of
the people I talked to never end

294
00:15:48,040 --> 00:15:51,280
up becoming franchisees.
And, you know, a lot of them I

295
00:15:51,280 --> 00:15:54,640
only talked to for maybe 15
minutes, and that's because they

296
00:15:54,640 --> 00:15:56,720
wanted to be a franchise.
They thought it was a great

297
00:15:56,720 --> 00:16:00,040
idea, but they're not
financially qualified.

298
00:16:00,640 --> 00:16:03,520
And, you know, basically what
I'm doing is I'm just teaching

299
00:16:03,520 --> 00:16:06,120
them what it takes.
And what I'm trying to do is I'm

300
00:16:06,120 --> 00:16:08,560
trying to let them down in the
nicest way possible because I

301
00:16:08,560 --> 00:16:10,920
still want them to be
enthusiastic about it.

302
00:16:11,120 --> 00:16:13,480
You know, I'll let them know.
What you need to do is probably

303
00:16:13,480 --> 00:16:16,560
get a partner or probably, you
know, talk to your family and

304
00:16:16,560 --> 00:16:19,040
see if anyone wants to go in
together with you, that kind of

305
00:16:19,040 --> 00:16:20,520
thing.
Get it, get an investment group

306
00:16:20,520 --> 00:16:22,240
going.
But most of the people I talked

307
00:16:22,240 --> 00:16:24,880
to aren't qualified to be
franchisees financially.

308
00:16:25,200 --> 00:16:28,600
Then out of the remainder,
another factor it would be, I

309
00:16:28,600 --> 00:16:31,040
know this sounds a little wild,
but somebody that's a little too

310
00:16:31,040 --> 00:16:34,560
entrepreneurial, somebody that
is a great entrepreneur, has

311
00:16:34,560 --> 00:16:37,160
great ideas, wants to do a lot
of things like that.

312
00:16:38,040 --> 00:16:40,560
They don't typically want to
follow the systems of the

313
00:16:40,560 --> 00:16:42,560
franchise.
They like whatever it is as an

314
00:16:42,560 --> 00:16:44,120
idea.
But the reason you buy a

315
00:16:44,120 --> 00:16:46,920
franchise is to follow those
systems because those systems

316
00:16:46,920 --> 00:16:49,440
have been successful and shown
to be profitable.

317
00:16:49,640 --> 00:16:51,360
That's what you want to do.
You want to execute those

318
00:16:51,360 --> 00:16:56,360
systems, those people.
I don't turn them away from

319
00:16:56,360 --> 00:16:59,480
being a franchise.
But one of the red flags would

320
00:16:59,480 --> 00:17:01,800
be, you know how I'm going to do
it at my place.

321
00:17:02,800 --> 00:17:04,920
I would hope that you would do
it the way that it made everyone

322
00:17:04,920 --> 00:17:07,440
successful.
That's what I want you to do.

323
00:17:07,800 --> 00:17:11,079
My goal is my job as an
investment advisor is I want

324
00:17:11,079 --> 00:17:13,240
these people to be successful
with their investment.

325
00:17:13,560 --> 00:17:15,079
So I want you to follow the
systems.

326
00:17:15,400 --> 00:17:18,720
But that entrepreneurial Dr. is
fantastic because what they do

327
00:17:18,720 --> 00:17:20,560
with that, they hire great
people.

328
00:17:20,720 --> 00:17:23,560
You know, I had one guy, he had
$150.00 roofing business and he

329
00:17:23,560 --> 00:17:25,319
became a franchise of another
concept.

330
00:17:25,839 --> 00:17:28,520
And what he did is he said I'm
going to have the friendliest

331
00:17:28,520 --> 00:17:31,040
people, I'm going to have the
the cleanest places.

332
00:17:31,280 --> 00:17:33,520
In the summertime, my place is
cooler than their house.

333
00:17:33,520 --> 00:17:35,520
In the winter time, my place is
warmer than their house.

334
00:17:35,760 --> 00:17:37,720
My people are going to go out,
open the door and help the

335
00:17:37,720 --> 00:17:40,440
people get in the front.
You know, all that kind of stuff

336
00:17:40,600 --> 00:17:42,840
sets my part.
That's the entrepreneurial part

337
00:17:42,840 --> 00:17:44,840
that I want to see, you know,
the marketing part.

338
00:17:44,840 --> 00:17:47,720
I want you to be out there
shaking hands at the, at the BNI

339
00:17:47,720 --> 00:17:49,560
meetings.
I want you to be out there at

340
00:17:49,560 --> 00:17:52,400
the, you know, at the local
business market.

341
00:17:52,520 --> 00:17:55,000
I want you to go out to all
those meetings, the Chamber of

342
00:17:55,000 --> 00:17:57,160
Commerce, and make sure that
we're talking to those people.

343
00:17:57,360 --> 00:17:59,880
Wear the gear everywhere you go.
Talk it up.

344
00:17:59,880 --> 00:18:01,960
Have your 45 second elevator
speech.

345
00:18:02,360 --> 00:18:05,040
Make sure that every interaction
you have with somebody you

346
00:18:05,040 --> 00:18:06,520
mentioned, oh, this is what I
do.

347
00:18:06,520 --> 00:18:08,040
Oh, yeah.
You saw my place down on the

348
00:18:08,040 --> 00:18:09,680
corner.
Stop by anytime.

349
00:18:09,680 --> 00:18:12,480
It's fantastic.
Those are the kind of people

350
00:18:12,480 --> 00:18:15,200
that are.
Owner versus the operator.

351
00:18:16,040 --> 00:18:19,440
Well, I would ideally both would
do that, but the owner typically

352
00:18:19,440 --> 00:18:22,520
if you, if you came in as a new
franchise owner, you're just

353
00:18:22,520 --> 00:18:24,080
automatically going to be
excited about it.

354
00:18:24,080 --> 00:18:25,680
So you want to talk to everybody
about it.

355
00:18:26,000 --> 00:18:27,680
What I directed to do is come up
I guess.

356
00:18:27,680 --> 00:18:31,960
I was getting confused with, you
know, an idea of a master

357
00:18:31,960 --> 00:18:33,720
concept.
I'm going to build up and I'm,

358
00:18:33,800 --> 00:18:38,080
I'm a, I'm spending $10 million
on a franchise, you know, with

359
00:18:38,080 --> 00:18:40,240
multiple locations.
I'm not going to AB and I

360
00:18:40,240 --> 00:18:41,960
meeting, you know.
Yeah, you're going to have your

361
00:18:41,960 --> 00:18:45,400
people do that at that point if
at that level of investment,

362
00:18:45,400 --> 00:18:47,720
right, your people are going out
and doing that kind of stuff.

363
00:18:47,720 --> 00:18:50,800
But then your job as the
franchise make sure that they're

364
00:18:50,800 --> 00:18:54,000
out there and doing that right.
You know, that's the stuff that

365
00:18:54,280 --> 00:18:56,880
that's all those systems in
place is what makes you

366
00:18:56,880 --> 00:18:59,960
successful.
Yeah, I have franchisees.

367
00:18:59,960 --> 00:19:02,120
When I was when I was a senior
vice president, I had

368
00:19:02,120 --> 00:19:05,880
franchisees that had 150 Arby's.
I had some that had three

369
00:19:05,880 --> 00:19:10,160
hundred, 300 plus KFC, Taco Bell
and Pizza Huts.

370
00:19:10,480 --> 00:19:13,520
You know, those are the kind of
people that have all those other

371
00:19:13,600 --> 00:19:15,440
positions that you mentioned in
place.

372
00:19:15,680 --> 00:19:18,640
So what they have to do is have
the systems in place to back up

373
00:19:18,680 --> 00:19:23,000
excellent operations.
So let's shift gears a little

374
00:19:23,000 --> 00:19:25,280
bit to this idea because we kind
of brought it up.

375
00:19:25,280 --> 00:19:29,960
If somebody doesn't have the
money, it, you know, when

376
00:19:30,160 --> 00:19:32,800
somebody doesn't have the money
to buy outright because they

377
00:19:32,800 --> 00:19:36,080
don't have, they might be able
to qualify for to acquire, but

378
00:19:36,080 --> 00:19:38,000
they don't have the capital to
develop.

379
00:19:38,000 --> 00:19:40,640
And they say it's a single
location that they're starting

380
00:19:40,640 --> 00:19:45,680
out with this idea of a of a
investor and operating partner

381
00:19:45,680 --> 00:19:49,160
model.
Somebody like that might be 1

382
00:19:49,160 --> 00:19:53,960
where they want to be involved
in running it, but they need the

383
00:19:53,960 --> 00:19:57,800
financing.
So does that work for like

384
00:19:57,800 --> 00:20:01,320
flipping the switch on that
where somebody that does want to

385
00:20:01,320 --> 00:20:04,040
sort of have passive, they know
they've got somebody that's got

386
00:20:04,320 --> 00:20:07,920
relevant experience and owns it
and then they are going to, you

387
00:20:07,920 --> 00:20:11,440
know, work there, earn their way
out of it with that passive

388
00:20:11,440 --> 00:20:16,960
investor still owning a smaller?
Percentage over time do does you

389
00:20:16,960 --> 00:20:22,320
know, I, I had seen that as a
theory of a wave for this and

390
00:20:22,320 --> 00:20:24,880
I'm not sure how much that
really ever happens.

391
00:20:24,960 --> 00:20:27,600
It's to me it's a little bit
like what you if somebody

392
00:20:27,600 --> 00:20:30,360
doesn't own they're going to go
get investors to do it.

393
00:20:30,680 --> 00:20:33,640
But then to the investors other
side of the equation when

394
00:20:33,640 --> 00:20:36,960
they're looking at this.
So if you take a take a couple

395
00:20:36,960 --> 00:20:40,080
of minutes just to sort of say
if that is the situation

396
00:20:40,080 --> 00:20:43,520
somebody doesn't have, you know,
if somebody doesn't have the

397
00:20:43,520 --> 00:20:46,360
money to do what they need to do
or they need to go raise

398
00:20:46,360 --> 00:20:49,200
capital, The investors make
whether they're friends and

399
00:20:49,200 --> 00:20:52,560
family or other business owners
in their community, they're in

400
00:20:52,560 --> 00:20:54,760
the chamber.
They know that's not necessarily

401
00:20:54,760 --> 00:20:59,440
a friend or a family, but they
see the way to you'd be able to

402
00:20:59,440 --> 00:21:02,920
participate in something that's
got a proven model.

403
00:21:02,920 --> 00:21:06,880
How does that sort of work out?
Do you see, how often do you see

404
00:21:06,880 --> 00:21:12,520
that, that then it's really
relying a big part on the true

405
00:21:12,520 --> 00:21:17,360
systems and the person hunger of
the person that is going to be

406
00:21:17,360 --> 00:21:20,680
the operator to earn out that
they're going to be really

407
00:21:20,680 --> 00:21:23,840
diligent against on the
processes.

408
00:21:23,840 --> 00:21:26,600
They're going to follow it.
Communication just like with any

409
00:21:26,600 --> 00:21:29,920
startup is important.
But but I mean, I think that is

410
00:21:29,920 --> 00:21:32,440
a great solution, but I don't
know how often it actually

411
00:21:32,440 --> 00:21:34,480
happened.
Well, I've seen that in the past

412
00:21:34,520 --> 00:21:36,360
a lot.
You know a lot of people.

413
00:21:36,560 --> 00:21:39,360
I'll tell you interest and
enthusiasm is not enough.

414
00:21:39,840 --> 00:21:42,680
You know, they need to have the
ability and the aptitude to

415
00:21:42,680 --> 00:21:44,920
execute at a high level if
you're going to be an operating

416
00:21:44,920 --> 00:21:47,760
partner.
Like I was the guy back in the

417
00:21:47,760 --> 00:21:50,680
day when I came out of college,
I was so motivated to be

418
00:21:50,680 --> 00:21:53,920
successful, but I had literally
nothing in my bank account.

419
00:21:54,280 --> 00:21:56,960
So I needed to do, you know,
sweat equity.

420
00:21:56,960 --> 00:21:58,840
That's the only way I was going
to be successful.

421
00:21:59,200 --> 00:22:01,320
So I would have been a perfect
match.

422
00:22:01,320 --> 00:22:06,200
And I got it's funny, I got
recruited by by a a bunch of

423
00:22:06,200 --> 00:22:08,840
franchisees and every concept
that I worked for, they always

424
00:22:08,840 --> 00:22:10,720
wanted to hire me away.
But I always said I'm going to

425
00:22:10,720 --> 00:22:14,000
be president of this company.
Now I'm staying, you know, but

426
00:22:14,200 --> 00:22:16,840
that that would be a great
match.

427
00:22:17,160 --> 00:22:20,480
But you want, what you want to
do is for you to have the

428
00:22:20,480 --> 00:22:23,440
ability to step back and look at
this as an investment.

429
00:22:23,600 --> 00:22:25,320
You need to have that person
that's locked in.

430
00:22:25,320 --> 00:22:27,600
I don't want to worry that so
and so is not going to show up

431
00:22:27,600 --> 00:22:30,480
today and now I have to go down
there and open the door.

432
00:22:30,720 --> 00:22:32,680
That's not the kind of
investment that you want.

433
00:22:32,880 --> 00:22:36,200
So I love the model of the
operating partner.

434
00:22:36,360 --> 00:22:38,160
I mean, Outback Steakhouse did
that.

435
00:22:38,400 --> 00:22:41,240
That's exactly how they grew.
Their operators at those

436
00:22:41,240 --> 00:22:44,600
Outbacks were an operating
partner, so they had skin in the

437
00:22:44,600 --> 00:22:46,160
game.
Same thing with Chick-fil-A.

438
00:22:46,160 --> 00:22:48,160
Everyone thinks Chick-fil-A is a
franchise.

439
00:22:48,400 --> 00:22:51,360
It's not.
The franchisees, quote UN quote,

440
00:22:51,360 --> 00:22:53,360
of Chick-fil-A are operating
partners.

441
00:22:53,560 --> 00:22:56,800
That's why it's only $10,000
become a franchise at

442
00:22:56,800 --> 00:22:59,760
Chick-fil-A because you don't
own a building, you don't own

443
00:22:59,760 --> 00:23:02,680
anything.
What you own is the operation.

444
00:23:02,880 --> 00:23:05,440
So you're responsible to work
there six days a week, at least

445
00:23:05,440 --> 00:23:08,520
40 hours a week.
You get part of the profits of

446
00:23:08,520 --> 00:23:10,560
the business and it could be
very lucrative.

447
00:23:10,560 --> 00:23:13,800
I know everybody that I know
that has that situation is very

448
00:23:13,800 --> 00:23:17,600
successful, but you can't sell
that at the end.

449
00:23:17,600 --> 00:23:19,960
You don't have no equity in that
business.

450
00:23:20,360 --> 00:23:23,400
But while you're there, that's a
fantastic paycheck and it's

451
00:23:23,400 --> 00:23:26,600
great.
So if you can have somebody tied

452
00:23:26,600 --> 00:23:28,880
in those model.
Excuse me, those owners operate

453
00:23:28,880 --> 00:23:30,480
in mind, don't have any equity
in it.

454
00:23:30,880 --> 00:23:33,320
They're not owner operators,
They're operators.

455
00:23:34,160 --> 00:23:38,480
Chick-fil-A is the owner.
Chick-fil-A, you pay $10,000 to

456
00:23:38,480 --> 00:23:40,440
be the operating partner of that
location.

457
00:23:40,840 --> 00:23:43,760
And sometimes they'll say, oh, I
have a location available, but

458
00:23:43,760 --> 00:23:46,200
it's in Ohio and I live in
Florida.

459
00:23:46,640 --> 00:23:48,200
Well, if you want that one,
you're going to have to go to,

460
00:23:48,200 --> 00:23:51,120
you're going to have to move.
It could be worth it.

461
00:23:51,240 --> 00:23:54,520
A lot of people I know would, I
mean, back in the day, I would

462
00:23:54,520 --> 00:23:57,240
have loved to have that if that
was available for me.

463
00:23:57,480 --> 00:23:59,760
But what you want to do is use
that model.

464
00:23:59,840 --> 00:24:03,000
So you have somebody that owns
say 10% equity of your company.

465
00:24:03,240 --> 00:24:06,640
They can either put that money
up, which is fantastic or what

466
00:24:06,640 --> 00:24:09,840
the way I like to suggest it is
most of the people, they're

467
00:24:09,840 --> 00:24:11,800
super hungry.
They might have great attributes

468
00:24:11,800 --> 00:24:15,160
and they might have the ability
to execute exactly what you they

469
00:24:15,160 --> 00:24:17,840
need, but they have no capital.
So what you want to do is give

470
00:24:17,840 --> 00:24:20,680
them ghost shares.
Ghost shares would be you own

471
00:24:20,680 --> 00:24:22,880
10% of this company in ghost
shares.

472
00:24:23,120 --> 00:24:26,200
So whatever our profit is at the
end of the first quarter, you

473
00:24:26,200 --> 00:24:29,200
get 10% of that profit.
Then you could bank that to make

474
00:24:29,200 --> 00:24:31,640
it actual equity.
So you tell me, do you want me

475
00:24:31,640 --> 00:24:34,040
to cut you a check for your
ghost shares and then you get

476
00:24:34,040 --> 00:24:37,920
your, you know, $7000 or
whatever it is, or do you want

477
00:24:37,920 --> 00:24:41,800
to put that in the bank until
you own you're 10% and then you

478
00:24:41,800 --> 00:24:43,920
would be an equity partner.
What you're doing there is

479
00:24:43,920 --> 00:24:46,360
you're locking them in so you
don't have to worry about, oh,

480
00:24:46,360 --> 00:24:48,960
he's had a fight with his wife,
he's not showing up or oh, you

481
00:24:48,960 --> 00:24:52,360
had a bad customer yesterday and
he's had it and he's out here.

482
00:24:52,680 --> 00:24:54,400
They're not going to do that.
They're going to look at it as

483
00:24:54,400 --> 00:24:56,760
an owner.
They want to make sure that the

484
00:24:56,760 --> 00:24:59,480
business is profitable.
The KPIs that you set with them

485
00:24:59,960 --> 00:25:01,920
are the ones that make the
business successful.

486
00:25:01,920 --> 00:25:04,280
So if they hit their bonus,
that's because you made a lot

487
00:25:04,280 --> 00:25:06,840
more money and now you're paying
them 10% of that.

488
00:25:06,920 --> 00:25:13,760
OK, so that see, I love it when
I'm on a show, when I'm

489
00:25:14,000 --> 00:25:16,800
interviewing somebody and I
learned something new.

490
00:25:17,120 --> 00:25:22,840
It's all that is the thing.
So Chick-fil-A and used it was

491
00:25:22,840 --> 00:25:26,680
Outback the same way they the,
the oh, they do an operating

492
00:25:26,680 --> 00:25:31,720
model where you pay to play to
be the person that runs that

493
00:25:31,720 --> 00:25:35,760
Chick-fil-A location.
But you and you can share the

494
00:25:35,760 --> 00:25:40,280
revenue, but you don't have any
equity to sell that franchise.

495
00:25:40,360 --> 00:25:44,880
The ownership of it remains with
the franchise or the the

496
00:25:44,880 --> 00:25:48,520
corporate because it's not.
Really correct, but the other

497
00:25:48,560 --> 00:25:50,720
thing is they paid for
everything to build the

498
00:25:50,720 --> 00:25:53,800
building.
The only out of pocket you have

499
00:25:53,800 --> 00:25:57,040
is that $10,000.
So it's basically a $10,000

500
00:25:57,040 --> 00:25:58,880
application fee if they approve
you.

501
00:25:59,840 --> 00:26:02,960
Now with the Outback, they were
all corporate locations, but the

502
00:26:02,960 --> 00:26:05,080
operating partner owned 10% of
the profits.

503
00:26:05,800 --> 00:26:08,000
OK.
And you and so like you had

504
00:26:08,000 --> 00:26:12,280
mentioned, I guess this is part
of the idea of mistakes that

505
00:26:12,360 --> 00:26:15,360
they might make is that the the
expectation that they don't have

506
00:26:15,360 --> 00:26:18,080
the ability to build equity in
there unless they have this

507
00:26:18,080 --> 00:26:23,480
ghost share model where they
don't take take income from it

508
00:26:23,840 --> 00:26:27,640
and instead get equity.
Yeah, I've seen, I've seen those

509
00:26:27,640 --> 00:26:29,880
as well.
Typically the the people that I

510
00:26:29,880 --> 00:26:32,240
see being the operating
partners, typically they'll take

511
00:26:32,240 --> 00:26:34,040
that check at the end of the
three months.

512
00:26:34,040 --> 00:26:37,000
So they'll take those big bonus
checks because what's going to

513
00:26:37,000 --> 00:26:39,440
happen is now you have the kid
that was very motivated, he had

514
00:26:39,440 --> 00:26:41,720
a fiance.
Now all of a sudden they have a

515
00:26:41,720 --> 00:26:43,880
baby coming.
So now they need to build a

516
00:26:43,880 --> 00:26:46,320
nursery.
So now he needs that $4000 check

517
00:26:46,320 --> 00:26:49,280
to start to do this.
So it's basically you become

518
00:26:49,280 --> 00:26:52,120
part of their life and they're
going to be there.

519
00:26:52,120 --> 00:26:54,960
Now he's got responsibilities,
he has a little family.

520
00:26:55,200 --> 00:26:58,360
Now this person is going to be
showing up, executing at a high

521
00:26:58,360 --> 00:27:00,480
level.
You know, they want to grow that

522
00:27:00,480 --> 00:27:02,960
with the company.
And if you show them that

523
00:27:02,960 --> 00:27:05,320
there's career investment
opportunities, you got the right

524
00:27:05,320 --> 00:27:08,680
guy, you know, that's that's
really a win win situation for

525
00:27:08,680 --> 00:27:10,640
the franchise and for that
operating partner.

526
00:27:11,960 --> 00:27:13,560
OK.
So let's let's look at

527
00:27:13,560 --> 00:27:17,280
franchising versus starting a
business from scratch, because I

528
00:27:17,400 --> 00:27:20,360
talk about this when I talk
about people becoming Angel

529
00:27:20,360 --> 00:27:24,680
investors or becoming crowdfund
investors and that you know, and

530
00:27:24,680 --> 00:27:28,720
mostly because I'm looking at
the cost like to start a

531
00:27:28,720 --> 00:27:31,880
business, you know, even a basic
business, right?

532
00:27:31,880 --> 00:27:34,720
But if you're not even going to
like and in comparing it to

533
00:27:35,120 --> 00:27:39,360
buying real estate that the 100
grand, 200 grand that you would

534
00:27:39,360 --> 00:27:42,000
end up putting into real estate
or starting a business that

535
00:27:42,000 --> 00:27:47,680
could be fundable by investors.
If you don't have a clear how

536
00:27:47,680 --> 00:27:49,720
you going to get to market, how
you going to generate the

537
00:27:49,720 --> 00:27:52,520
revenue, how you going to
differentiate yourself, all

538
00:27:52,520 --> 00:27:55,480
those things that you've got to
have a foundation for to be able

539
00:27:55,480 --> 00:27:59,280
to grow your business.
Then don't just become an

540
00:27:59,280 --> 00:28:03,520
investor in businesses and take
that fifty $100,000 and put it a

541
00:28:03,520 --> 00:28:06,360
wrap, put it in multiple
businesses where those

542
00:28:06,360 --> 00:28:09,160
entrepreneurs are trying to
become successful and sharing

543
00:28:09,360 --> 00:28:11,040
and grow and they're working
harder.

544
00:28:11,040 --> 00:28:15,520
They're doing that fifty, 60-70
hours a week, you know, work

545
00:28:15,520 --> 00:28:19,080
week because they have a dream
that they're fulfilling and

546
00:28:19,080 --> 00:28:21,320
they're, you know, they don't
necessarily have that, you know,

547
00:28:21,320 --> 00:28:24,520
more than 100 grand to be able
to start a business till they

548
00:28:24,520 --> 00:28:26,880
start raising capital.
So that becomes a win.

549
00:28:26,880 --> 00:28:30,000
So when you look at franchising,
buying a franchise, you

550
00:28:30,000 --> 00:28:35,000
mentioned McDonald's and you
know, you, you know, so buying a

551
00:28:35,000 --> 00:28:38,320
franchise is not just $1,000,000
for a McDonald's, it's all the

552
00:28:38,320 --> 00:28:41,520
other costs it takes to get it
going right.

553
00:28:41,520 --> 00:28:47,520
So look, you know, the hat to
me, it's you have to already be

554
00:28:47,520 --> 00:28:51,560
so established and wealthy to be
able to buy a franchise.

555
00:28:51,800 --> 00:28:55,520
If you're operating particularly
a big name brand franchise like

556
00:28:55,520 --> 00:29:00,240
that, you know, versus starting
a a business from scratch that

557
00:29:00,240 --> 00:29:03,200
maybe you're going to create a
restaurant chain or something

558
00:29:03,200 --> 00:29:04,880
else.
So spend a couple of minutes

559
00:29:04,880 --> 00:29:09,920
talking about the considerations
of somebody I had used to do

560
00:29:09,920 --> 00:29:16,480
this presentation of, you know,
start, buy or grow, right?

561
00:29:16,480 --> 00:29:20,720
Invest, start buy or invest.
And what does that look like

562
00:29:20,720 --> 00:29:23,600
based on the amount of money and
the amount of time it takes and

563
00:29:23,600 --> 00:29:27,840
the amount of effort and, you
know, before you know, So within

564
00:29:27,840 --> 00:29:32,160
that kind of a context, you know
what, what it, what have you

565
00:29:32,160 --> 00:29:35,520
seen or what do you when you're
working with clients and they're

566
00:29:35,560 --> 00:29:38,760
trying to decide the difference
of, you know, building a.

567
00:29:38,760 --> 00:29:40,280
Brand Why don't I just start it
myself?

568
00:29:40,520 --> 00:29:41,160
Right.
Yeah.

569
00:29:42,040 --> 00:29:44,040
Yep.
So First off, you know

570
00:29:44,040 --> 00:29:47,800
franchises out there, you, their
investment ranges from typically

571
00:29:47,800 --> 00:29:52,160
the ones that I, I work with
150,000 initial investment all

572
00:29:52,160 --> 00:29:54,040
the way up to multiple millions
of dollars.

573
00:29:54,040 --> 00:29:56,280
If you're going to buy a
territory and it depends on the

574
00:29:56,280 --> 00:29:58,840
concept and all that.
The big benefit that you get

575
00:29:58,840 --> 00:30:01,880
starting with a franchise is
what you want to buy is the

576
00:30:01,880 --> 00:30:04,920
systems are already in place.
Whatever the end product is, it

577
00:30:04,920 --> 00:30:07,360
could be a food product, it
could be a service, you know

578
00:30:07,360 --> 00:30:09,680
whatever you're doing, the
systems are already in place to

579
00:30:09,680 --> 00:30:11,720
execute that.
The other thing, as I said

580
00:30:11,720 --> 00:30:14,800
earlier, your marketing is so
important and when you're

581
00:30:14,800 --> 00:30:16,400
starting your own company,
you're either going to have to

582
00:30:16,400 --> 00:30:20,400
hire those experts and that
honestly, hiring expensive

583
00:30:20,400 --> 00:30:23,560
experts is the cheapest way of
starting your own business

584
00:30:23,600 --> 00:30:25,280
because otherwise you're going
to make mistakes.

585
00:30:25,480 --> 00:30:28,680
You're going to pay for it more
than once if you don't hire the

586
00:30:28,680 --> 00:30:31,200
experts.
If you have the franchise,

587
00:30:31,760 --> 00:30:34,520
hopefully they've already hired
those experts and the people in

588
00:30:34,520 --> 00:30:36,240
those positions are already
great at it.

589
00:30:36,240 --> 00:30:37,880
And that's part of the homework
that we do.

590
00:30:38,120 --> 00:30:41,240
When they come to me and we
start investing, investigating

591
00:30:41,240 --> 00:30:44,920
brands, I'll tell you there's
this year, I believe it's over

592
00:30:44,920 --> 00:30:50,240
4200 franchises available for
sale. 90% of them are not worth

593
00:30:50,320 --> 00:30:53,960
investing in.
OK, So I'm telling you that

594
00:30:53,960 --> 00:30:58,360
still leaves what, 420?
So that out of 420 different

595
00:30:58,360 --> 00:30:59,880
concepts, that's plenty to pick
from.

596
00:31:00,120 --> 00:31:02,960
But really there's only about 50
or 60 that I would ever present

597
00:31:02,960 --> 00:31:06,280
to my clients, what I look for
and what you would need starting

598
00:31:06,280 --> 00:31:08,600
your own business.
You have to have a solid concept

599
00:31:08,600 --> 00:31:10,480
to begin with.
So that's got to be something

600
00:31:10,480 --> 00:31:12,280
that has legs.
Like there's a lot of

601
00:31:12,280 --> 00:31:15,040
interesting, cool brands that
you'll see on Instagram, Tiktok

602
00:31:15,040 --> 00:31:18,840
and all that, but you're signing
a 10 year franchise agreement.

603
00:31:18,840 --> 00:31:21,600
I need to make sure that that's
going to be around for 10 years.

604
00:31:21,880 --> 00:31:24,520
If they stop posting about it on
Tiktok and people stop coming in

605
00:31:24,520 --> 00:31:29,040
the door, you still have 9 1/2
years left of lease payments.

606
00:31:29,360 --> 00:31:31,440
You need to make sure you're
busy the entire time.

607
00:31:31,640 --> 00:31:34,760
That's why I never recommend
those flash in the pan concepts.

608
00:31:35,880 --> 00:31:39,480
OK.
So, so when you're, when we're,

609
00:31:39,640 --> 00:31:44,480
so where does, where does
franchising really reduce the

610
00:31:44,480 --> 00:31:48,040
risk and where does it still
exist that people

611
00:31:48,040 --> 00:31:50,160
underestimated?
And you, you started to talk

612
00:31:50,160 --> 00:31:53,240
about KPI's earlier.
So maybe we've in what kind of

613
00:31:53,240 --> 00:31:56,520
KPI's that should be considered
or evaluated as part of?

614
00:31:56,520 --> 00:32:01,520
That OK, So the way that you
limit your kind of liability

615
00:32:01,520 --> 00:32:03,560
with whatever brand you're
buying, some of the things I

616
00:32:03,560 --> 00:32:07,480
look for, number 1 is that brand
that the concept has to be solid

617
00:32:07,480 --> 00:32:10,120
and has to have legs.
Then I'm looking for experienced

618
00:32:10,120 --> 00:32:12,520
leadership.
I want to see the CEO and the

619
00:32:12,520 --> 00:32:15,040
senior team have experience
doing this before.

620
00:32:15,280 --> 00:32:18,720
We're not going to buy a concept
where the founder is now

621
00:32:18,720 --> 00:32:22,360
deciding he's going to franchise
and now he's the salesperson and

622
00:32:22,360 --> 00:32:24,560
then he's going to help you with
real estate and then he's going

623
00:32:24,560 --> 00:32:27,280
to help you with he's going to
tell you who his marketing guy

624
00:32:27,280 --> 00:32:30,520
is, which is a third party
that's not even working for him

625
00:32:30,840 --> 00:32:32,640
and he's now going to not work
for you.

626
00:32:32,720 --> 00:32:35,720
I want to see that this senior
team is experienced and they

627
00:32:35,720 --> 00:32:37,880
have done this successfully in
the past.

628
00:32:37,880 --> 00:32:40,920
Then I want to see that they
have great operational support

629
00:32:40,920 --> 00:32:42,800
and I want to see they have
great marketing support.

630
00:32:43,120 --> 00:32:46,000
That's what I'm looking for.
Those four things before I even

631
00:32:46,000 --> 00:32:49,560
consider a concept, but really
what and then what you want to

632
00:32:49,560 --> 00:32:51,640
do after that.
I've, I've filtered that out.

633
00:32:51,640 --> 00:32:55,200
That's why I have those 50 or 60
kind of in my back pocket that

634
00:32:55,200 --> 00:32:57,680
depending upon the next
questions, that's what I would

635
00:32:57,680 --> 00:33:00,120
show you.
The next questions are going to

636
00:33:00,120 --> 00:33:02,440
be all right, What's your
financial capability?

637
00:33:02,560 --> 00:33:06,360
What's available in your area?
And then what are you interested

638
00:33:06,360 --> 00:33:07,720
in?
I always put what you're

639
00:33:07,720 --> 00:33:11,840
interested in last because I
know what the investors need.

640
00:33:12,160 --> 00:33:14,880
They might be interested in
something that caught their eye

641
00:33:15,400 --> 00:33:16,600
again.
It's only going to catch your

642
00:33:16,600 --> 00:33:19,760
eye for the next year.
Next thing, someone's on to

643
00:33:19,760 --> 00:33:22,720
something else.
And I don't want to mention any

644
00:33:22,920 --> 00:33:26,200
specific concepts because I have
a lot of friends and franchising

645
00:33:26,200 --> 00:33:27,480
and an owner hurt their
feelings.

646
00:33:28,840 --> 00:33:31,280
But there's a lot of concepts
out there that I wouldn't sell

647
00:33:31,280 --> 00:33:32,760
because I don't think they'll be
here in 10 years.

648
00:33:32,760 --> 00:33:36,480
And I know you're signing a 10
year agreement, but then we're

649
00:33:36,480 --> 00:33:39,440
looking at unit level economics.
I want to make sure that those

650
00:33:39,440 --> 00:33:43,000
top line sales have a lot of fat
bottom line after that.

651
00:33:43,400 --> 00:33:46,560
So I, I don't care if you have
$7,000,000 in top line sales and

652
00:33:46,560 --> 00:33:48,160
nothing drops to the bottom,
what are we doing?

653
00:33:48,200 --> 00:33:49,240
We're working for.
Something else?

654
00:33:49,240 --> 00:33:51,680
Yeah, yeah, yeah, yeah.
Because I'll tell you, the

655
00:33:51,680 --> 00:33:56,680
franchisors get paid from the
top line, they get 568 percent,

656
00:33:56,680 --> 00:33:59,400
whatever it is off those top
line sales.

657
00:34:00,280 --> 00:34:02,680
Franchisees, of course, get paid
from bottom line.

658
00:34:03,280 --> 00:34:05,120
They get paid the profit.
What's left?

659
00:34:05,160 --> 00:34:07,960
Right off the top.
Right, exactly.

660
00:34:08,080 --> 00:34:10,440
So no matter what, that's why
right now, and I'll talk about

661
00:34:10,440 --> 00:34:14,000
these guys, Subway right now has
a promotion, you buy 3 Subs, you

662
00:34:14,000 --> 00:34:17,679
get one for free and they have a
special where I think the Subs

663
00:34:17,679 --> 00:34:22,960
are 699 or something like that.
So that comes out to, you know

664
00:34:23,239 --> 00:34:25,560
that it's a very expensive, if
you just do it off of their

665
00:34:25,560 --> 00:34:29,520
math, you know, you're giving
away 25% of the sales.

666
00:34:30,040 --> 00:34:32,159
That's most restaurants don't
make 25%.

667
00:34:32,440 --> 00:34:35,920
So it's killing you.
The franchisor is making their

668
00:34:35,920 --> 00:34:39,679
money off of the sale.
Franchisees then have food cost,

669
00:34:39,679 --> 00:34:42,320
labor cost, rent, everything
else coming out of that.

670
00:34:42,320 --> 00:34:44,800
There's nothing left.
That's why franchisees hate

671
00:34:44,800 --> 00:34:47,159
value menus.
Value menus get people in the

672
00:34:47,159 --> 00:34:49,760
door, but then franchisees have
to upsell them to make it a

673
00:34:49,760 --> 00:34:52,600
profitable sale.
You know those $5 footlongs

674
00:34:52,600 --> 00:34:54,800
franchisees hated those
promotions.

675
00:34:55,600 --> 00:34:58,680
So I guess when does this is
there?

676
00:34:58,680 --> 00:35:02,000
That brings up an interesting
point, because when does a

677
00:35:02,040 --> 00:35:05,880
franchise get to opt out on a
promo?

678
00:35:06,400 --> 00:35:08,240
Or do they ever get to opt out
on a promo?

679
00:35:08,880 --> 00:35:12,600
You know, it does say usually on
every TV commercial it has a

680
00:35:12,600 --> 00:35:15,480
little disclaimer, you know,
that, you know, franchise

681
00:35:15,880 --> 00:35:20,640
franchisees opt into this.
But in the brands that I'm with,

682
00:35:20,640 --> 00:35:24,240
typically you have to run that
promo because what's happening

683
00:35:24,240 --> 00:35:26,240
is everyone else in the market
is running that promo.

684
00:35:26,440 --> 00:35:28,200
They're gonna come to your
location and you're gonna have a

685
00:35:28,200 --> 00:35:29,920
dissatisfied customer at that
point.

686
00:35:30,760 --> 00:35:33,800
So typically everyone buys in
because it's best for the brand.

687
00:35:34,240 --> 00:35:37,320
But hopefully that senior team
is gonna, you know, and the

688
00:35:37,360 --> 00:35:40,520
other thing is the senior team
will understand what's the

689
00:35:40,520 --> 00:35:42,240
profit going to be on this
promo.

690
00:35:42,240 --> 00:35:44,840
It's part of the it's part of
when you propose A promotion

691
00:35:44,840 --> 00:35:47,040
like that, you have to say what
would be the profit margin for

692
00:35:47,040 --> 00:35:50,160
the franchise.
But then also franchisees

693
00:35:50,360 --> 00:35:53,720
typically either have a
franchise Advisory Council or

694
00:35:53,720 --> 00:35:56,280
they're going to have, you know,
a marketing person that they

695
00:35:56,280 --> 00:35:59,360
could go to and they could say,
hey, this promotion doesn't make

696
00:35:59,360 --> 00:36:01,320
sense when they first catch wind
of it, when it's first

697
00:36:01,320 --> 00:36:04,000
announced, say, hey, this, we're
going to lose money at this.

698
00:36:04,000 --> 00:36:05,880
We can't do this.
By the way, there's always going

699
00:36:05,880 --> 00:36:08,080
to be some franchisees that say,
no, this is horrible.

700
00:36:08,080 --> 00:36:11,200
Whatever, whatever you propose,
there's always going to be that

701
00:36:11,200 --> 00:36:12,760
small group that hates
everything.

702
00:36:14,000 --> 00:36:16,320
But you know, when you run the
numbers and you have to say, all

703
00:36:16,320 --> 00:36:19,240
right, well, in order to make
this as profitable as it would

704
00:36:19,240 --> 00:36:22,120
be without the sale, that means
we had this sale has to bring in

705
00:36:22,200 --> 00:36:26,280
X plus number of people.
So at that point then I know

706
00:36:26,280 --> 00:36:28,160
that this was a great return on
my investment.

707
00:36:28,480 --> 00:36:30,520
So those are the kind of things
you have to, you have to make

708
00:36:30,520 --> 00:36:32,360
sure of.
What I always look for is

709
00:36:32,360 --> 00:36:35,400
franchisors who have a franchise
first mentality.

710
00:36:35,400 --> 00:36:38,240
That's the name of my company,
Franchise first advisors.

711
00:36:38,800 --> 00:36:40,680
That's because I want them to be
successful.

712
00:36:40,880 --> 00:36:42,640
When I was younger, I was so
naive.

713
00:36:42,640 --> 00:36:45,920
I thought all you have to do is
make franchisees successful and

714
00:36:45,920 --> 00:36:47,840
then the company is wildly
successful.

715
00:36:48,280 --> 00:36:50,440
Well, that that is the best way
to do this.

716
00:36:50,680 --> 00:36:54,160
However, not all franchisors
have that attitude because

717
00:36:54,160 --> 00:36:55,920
again, they get paid off the top
line.

718
00:36:56,560 --> 00:36:59,200
I'm worried about franchisees
making more money because then

719
00:36:59,200 --> 00:37:01,040
they'll go and buy more of these
and build more, right?

720
00:37:02,000 --> 00:37:04,000
And you get a good reputation
and more people want to buy

721
00:37:04,000 --> 00:37:05,040
them.
Of course you.

722
00:37:06,200 --> 00:37:12,360
And I this is a good moment in
time to say, if you're, you

723
00:37:12,360 --> 00:37:14,640
know, we're getting the next
thing we're going to get into is

724
00:37:14,640 --> 00:37:17,360
an entrepreneur deciding to
franchise.

725
00:37:17,840 --> 00:37:18,760
I'm a franchise.
Versus.

726
00:37:19,400 --> 00:37:21,960
Building their own business.
But I want to tell the listening

727
00:37:21,960 --> 00:37:25,800
audience, if you want to connect
up with Dan, you want to talk

728
00:37:25,800 --> 00:37:28,920
about any of the things that
we've talked about like buying a

729
00:37:28,920 --> 00:37:32,240
franchise, starting franchise,
any of that stuff, do go to

730
00:37:32,240 --> 00:37:35,840
franchisefirstadvisors.com.
That is and it's it's

731
00:37:35,840 --> 00:37:38,480
franchisee.
So it's just like the word

732
00:37:38,480 --> 00:37:40,640
franchisee.
But then it had the 1st is a

733
00:37:40,640 --> 00:37:43,840
#1ST in case you're not looking
at the show notes.

734
00:37:43,840 --> 00:37:49,960
So it's franchisee first with
A1ST advisors with an S dot com

735
00:37:50,080 --> 00:37:53,160
for Dan Collins.
All right, so that's where you

736
00:37:53,200 --> 00:37:55,640
connect.
Do you have like a an opt in box

737
00:37:55,640 --> 00:37:58,800
to schedule a meeting in there?
Do you have any free guides on

738
00:37:58,800 --> 00:38:00,840
your website?
I have all that stuff on my

739
00:38:00,840 --> 00:38:03,280
website.
I got the, you know, I have for

740
00:38:03,400 --> 00:38:06,240
entrepreneurs that are, or for
executives that are looking to

741
00:38:06,240 --> 00:38:08,840
transition out of executive
corporate work.

742
00:38:09,080 --> 00:38:11,000
There's a guide on there of how
to do that.

743
00:38:11,000 --> 00:38:13,160
And there's of course my
calendar where you can just hop

744
00:38:13,160 --> 00:38:15,120
on my calendar.
We could have a quick 15 minute

745
00:38:15,120 --> 00:38:18,320
meeting just to, you know, you
ask me your burning questions

746
00:38:18,320 --> 00:38:20,360
and we'll see if it you think
it'll be a good fit.

747
00:38:20,360 --> 00:38:22,120
And there's a bunch of other
guides on there.

748
00:38:22,120 --> 00:38:24,840
I have all kinds of stuff, but
you can follow me on at

749
00:38:24,840 --> 00:38:27,160
LinkedIn.
Just look me up Daniel Collins

750
00:38:27,160 --> 00:38:31,160
on LinkedIn and you can't miss
this head in my and.

751
00:38:32,800 --> 00:38:35,640
He's the one that says franchise
in his title.

752
00:38:36,400 --> 00:38:38,480
Yeah, and actually, right under
my name, you'll know it.

753
00:38:38,480 --> 00:38:41,640
It says I love franchise success
because that's why I do this.

754
00:38:42,160 --> 00:38:43,600
Yeah.
OK.

755
00:38:43,720 --> 00:38:46,800
So for on to.
OK, so for entrepreneurs who

756
00:38:46,800 --> 00:38:51,880
want to franchise their
business, can they get started

757
00:38:51,880 --> 00:38:56,440
and have just a great system and
strategy, like a business

758
00:38:56,440 --> 00:38:58,600
strategy?
I'd heard one time somebody says

759
00:38:58,600 --> 00:39:01,000
that's all it takes.
And it seems to me that you

760
00:39:01,000 --> 00:39:06,080
would need to have a proof of
concept as a minimum, with one

761
00:39:06,080 --> 00:39:09,040
location being able to run
without the owner, the

762
00:39:09,280 --> 00:39:12,640
originator being in there in the
day-to-day you know to.

763
00:39:12,640 --> 00:39:15,240
The.
You know, being a business owner

764
00:39:15,240 --> 00:39:19,000
in that sense that they can hire
all the people that they need to

765
00:39:19,360 --> 00:39:23,160
run that business on a a daily
day, you know, a daily basis in

766
00:39:23,160 --> 00:39:26,680
May.
So so talk about what it takes

767
00:39:26,680 --> 00:39:29,360
for a friend, an entrepreneur,
to actually franchise their

768
00:39:29,360 --> 00:39:30,680
business.
Sure.

769
00:39:30,800 --> 00:39:33,960
So I get a call probably once
every two weeks from somebody in

770
00:39:33,960 --> 00:39:37,080
that position that has a great
concept and they want to

771
00:39:37,080 --> 00:39:39,080
franchise it.
Well, I got to tell you First

772
00:39:39,080 --> 00:39:41,080
off, it's two entirely different
businesses.

773
00:39:41,080 --> 00:39:43,520
Operating a business is 1 is
what you're doing now.

774
00:39:43,880 --> 00:39:46,720
Franchising is 100% support
business.

775
00:39:46,960 --> 00:39:48,920
I told you I was with Arby's for
five years.

776
00:39:48,920 --> 00:39:52,880
We had 3500 locations.
Arby's didn't own one of those

777
00:39:52,880 --> 00:39:56,240
locations.
We had 162 people in the office

778
00:39:56,360 --> 00:39:59,840
supporting all of our
franchisees that ran those 3500

779
00:39:59,840 --> 00:40:01,960
locations.
So it's entirely separate

780
00:40:01,960 --> 00:40:04,440
business.
Again, to your point, you always

781
00:40:04,440 --> 00:40:06,800
need a proof concept.
I've had people come to me and

782
00:40:06,800 --> 00:40:10,040
say, hey, I have a great idea,
go find me a franchise.

783
00:40:10,040 --> 00:40:13,320
It's going to cost $1,000,000 to
be my first franchise and they

784
00:40:13,320 --> 00:40:17,080
had no existing location.
I would never do that.

785
00:40:17,080 --> 00:40:19,360
You have no proof that this is a
great idea.

786
00:40:19,640 --> 00:40:22,640
If you think it's so great, use
your $1,000,000 to show me.

787
00:40:23,000 --> 00:40:25,360
Once that happens, then I'll
talk to some people.

788
00:40:25,440 --> 00:40:27,360
But what you need, you need a
great concept.

789
00:40:27,360 --> 00:40:30,240
Again, I gave you those kind of
four things that I'm looking for

790
00:40:30,240 --> 00:40:32,120
when we're looking at a
franchisor.

791
00:40:32,440 --> 00:40:34,080
That's what you're going to need
to be then.

792
00:40:34,360 --> 00:40:37,600
So you need to have your systems
in place and as you said, you

793
00:40:37,600 --> 00:40:40,480
need to be able to step back out
of it and have it operate

794
00:40:40,480 --> 00:40:43,480
without you.
Once that's happening, now you

795
00:40:43,480 --> 00:40:45,840
observe it, you're and then
legally what, what you need to

796
00:40:45,840 --> 00:40:49,400
do to be a franchisor, You need
to have a franchise disclosure

797
00:40:49,400 --> 00:40:52,200
document created from a
franchise specific attorney.

798
00:40:52,640 --> 00:40:54,880
Please reach out to me.
I'll tell you who the best

799
00:40:54,880 --> 00:40:58,840
attorneys are in the industry or
who the most competent attorneys

800
00:40:58,840 --> 00:41:01,160
are because you need a franchise
specific attorney.

801
00:41:01,440 --> 00:41:03,080
Any attorney is going to say,
yes, I could do it.

802
00:41:03,080 --> 00:41:04,840
It's just a contract.
It's not.

803
00:41:05,280 --> 00:41:07,840
It's specific to franchising and
it's very important.

804
00:41:08,400 --> 00:41:10,840
Same if you're an investor
looking at franchises and you

805
00:41:10,840 --> 00:41:13,400
want to have your attorney look
at it, go to a franchise

806
00:41:13,400 --> 00:41:15,600
specific attorney because he's
not going to redline the

807
00:41:15,600 --> 00:41:17,840
document until you get them to
change this change.

808
00:41:17,920 --> 00:41:19,080
They're not going to change one
word.

809
00:41:19,080 --> 00:41:22,560
I used to change not one word
what I changed in my document.

810
00:41:22,560 --> 00:41:25,560
I put your name, your area, what
the territory was, how many

811
00:41:25,560 --> 00:41:28,520
locations you wanted, and then
what's your development timeline

812
00:41:28,520 --> 00:41:31,120
and that was it.
So you're going to have to get

813
00:41:31,120 --> 00:41:33,360
that document done.
You're going to have to have an

814
00:41:33,360 --> 00:41:36,320
operations manual created.
Those are the two things you

815
00:41:36,320 --> 00:41:37,920
need.
That's the absolute minimum to

816
00:41:37,920 --> 00:41:40,040
legally franchise your
locations.

817
00:41:40,400 --> 00:41:42,800
Then there's 19 states across
the country that are

818
00:41:42,800 --> 00:41:45,880
registration states.
What you need to do is submit

819
00:41:45,880 --> 00:41:47,880
your franchise disclosure
document, including the

820
00:41:47,880 --> 00:41:51,560
franchise agreement to those
states, and then they have to

821
00:41:51,560 --> 00:41:53,400
check it out and come back to
you.

822
00:41:53,400 --> 00:41:55,480
They're always going to come
back to you with some comments.

823
00:41:55,720 --> 00:41:58,720
It's rare that they just say,
OK, this one's good, start

824
00:41:58,720 --> 00:42:00,760
selling.
You can't sell until they come

825
00:42:00,760 --> 00:42:03,160
back and they're satisfied with
your document.

826
00:42:03,400 --> 00:42:04,880
You might have to.
Most of the times you have to

827
00:42:04,880 --> 00:42:07,480
put together a little addendum.
So you need those items.

828
00:42:08,000 --> 00:42:10,560
After that, you're going to have
to have basically what you want

829
00:42:10,560 --> 00:42:13,080
to do is you want to make sure
that people are confident when

830
00:42:13,080 --> 00:42:15,120
they come in, when you start
trying to sell it to them.

831
00:42:15,400 --> 00:42:17,560
You can't just come in and say,
hey, we have the best tasting

832
00:42:17,560 --> 00:42:19,640
lemonade.
We have 17 different flavors.

833
00:42:19,800 --> 00:42:22,760
This is our concept.
All right, well now what's your

834
00:42:22,760 --> 00:42:24,720
system?
Do you have distribution to my

835
00:42:24,720 --> 00:42:26,880
state where I live because I
don't live in this state.

836
00:42:27,680 --> 00:42:30,040
We didn't think of that.
All right, Well, how am I

837
00:42:30,040 --> 00:42:32,480
supposed to get the product?
You want to make sure that they

838
00:42:32,480 --> 00:42:35,760
can execute the concept exactly
the way you have it here,

839
00:42:35,760 --> 00:42:37,280
because that's the profitable
one.

840
00:42:37,760 --> 00:42:39,840
Wherever they are.
You want to make sure it's

841
00:42:39,840 --> 00:42:42,280
duplicatable.
Yeah.

842
00:42:42,840 --> 00:42:45,200
OK.
So as we start to wrap up here,

843
00:42:45,520 --> 00:42:48,440
let's talk a little bit.
Let's talk about market trends

844
00:42:48,440 --> 00:42:50,640
and opportunities.
What are there are certain

845
00:42:50,640 --> 00:42:55,640
franchise sectors that are hot
right now or that's driving

846
00:42:55,640 --> 00:42:58,040
demand as an industry?
Sure.

847
00:42:58,440 --> 00:43:02,320
And you know, or and there are
any sectors that are over

848
00:43:02,320 --> 00:43:05,840
saturated and risky despite
their popularity.

849
00:43:06,800 --> 00:43:09,920
Yep, that's I'm laughing because
that's the number one question I

850
00:43:09,920 --> 00:43:11,520
get when people get on a Zoom
with me.

851
00:43:11,600 --> 00:43:14,760
What's the hot thing right now?
I'm not going to tell you what

852
00:43:14,760 --> 00:43:16,600
the hot thing to me is Making
money.

853
00:43:16,880 --> 00:43:18,400
That's all I'm interested in.
Yeah.

854
00:43:19,320 --> 00:43:22,080
So whatever the hot thing that
you saw was, you know, like a

855
00:43:22,080 --> 00:43:25,080
while ago, it was, oh, this
special swirly ice cream cone

856
00:43:25,080 --> 00:43:27,520
was the hot thing.
And the franchises were selling

857
00:43:28,080 --> 00:43:31,480
out like crazy.
And now I have franchisees

858
00:43:31,480 --> 00:43:33,680
calling me up saying this was
the worst business decision I

859
00:43:33,680 --> 00:43:36,080
ever made.
I never sold one of them, but

860
00:43:36,080 --> 00:43:38,760
they're telling me I just sold.
I just got rid of these.

861
00:43:39,080 --> 00:43:41,440
Now I'm looking to get into
something profitable and they

862
00:43:41,440 --> 00:43:44,400
see all my stuff on LinkedIn is
all about making sure it's a

863
00:43:44,400 --> 00:43:47,520
profitable unit level economics
and all that stuff work.

864
00:43:47,560 --> 00:43:50,240
So they they reach out to me and
say I want something like you're

865
00:43:50,240 --> 00:43:53,760
talking about.
Yeah, so I'll tell you, I don't.

866
00:43:53,840 --> 00:43:57,280
I spent a third of my life in
franchised food locations.

867
00:43:57,640 --> 00:44:00,360
I rarely recommend food
franchises.

868
00:44:00,760 --> 00:44:03,480
Reason being, as soon as I got
out of it, I got into the

869
00:44:03,480 --> 00:44:06,840
service industry and I said I've
been working way too hard.

870
00:44:07,160 --> 00:44:09,360
I mean, the profit margins are
super thin.

871
00:44:09,360 --> 00:44:11,960
I remember when I was with
Arby's, they used to have a big

872
00:44:11,960 --> 00:44:14,520
board up on the wall and it
showed, you know, here's a

873
00:44:14,520 --> 00:44:17,560
packet of sweet and low and it
cost, you know, $0.05 or

874
00:44:17,560 --> 00:44:19,240
whatever it is.
And they were trying to let the

875
00:44:19,240 --> 00:44:22,440
kids know, don't give out all
this stuff because there's not

876
00:44:22,440 --> 00:44:24,520
much profit left at the end of
the day.

877
00:44:24,880 --> 00:44:26,880
And if you do that, that eats
into everything.

878
00:44:27,120 --> 00:44:28,800
Oh yeah, they totally grab a
handful.

879
00:44:28,880 --> 00:44:32,720
I'm like throw when.
I got 18 ketchup right?

880
00:44:32,920 --> 00:44:35,800
Two mustards or two?
I don't want to have a drawer

881
00:44:35,800 --> 00:44:37,600
full of these at home.
I know.

882
00:44:37,600 --> 00:44:40,280
And then what do you do?
I got like I, you know, if you

883
00:44:40,280 --> 00:44:42,960
go camping, they're worthwhile
because you know, you got an

884
00:44:42,960 --> 00:44:46,320
easy thing to carry on camping.
But it's like sometimes, you

885
00:44:46,360 --> 00:44:49,360
know, and it'll just be like
you'll get the bag and it'll be

886
00:44:49,360 --> 00:44:53,920
like 2 napkins, but 10 ketchups,
you know, or 20 of something.

887
00:44:53,920 --> 00:44:55,760
The math doesn't work on that
exactly.

888
00:44:57,000 --> 00:44:59,680
So I want to make sure once I
got out of that and got into the

889
00:44:59,680 --> 00:45:02,040
service business, I realized,
all right, well, the profit

890
00:45:02,040 --> 00:45:04,560
margins are fatter.
The initial investment was much

891
00:45:04,560 --> 00:45:06,480
lower because you don't have to
build a restaurant.

892
00:45:06,880 --> 00:45:10,040
And then the employees,
typically when I was at Arby's,

893
00:45:10,080 --> 00:45:13,600
it used to take 13 employees to
run $1000 hour.

894
00:45:14,080 --> 00:45:18,160
And that was, I mean, now we're
talking 25 years, 26 years ago.

895
00:45:18,440 --> 00:45:21,800
So it's been a long time, but
still that number of employees

896
00:45:21,800 --> 00:45:24,040
to bust out $1000 hour to be
profitable.

897
00:45:24,040 --> 00:45:26,160
And then they can only work
there for an hour and a half.

898
00:45:26,160 --> 00:45:28,680
And then I had to cut labor.
Otherwise I'm eating into all

899
00:45:28,680 --> 00:45:30,520
the profits from that $1000
hour.

900
00:45:31,080 --> 00:45:33,440
So, you know, once I got out and
I realized, all right, we're

901
00:45:33,440 --> 00:45:37,240
dealing with say, you know, HVAC
concept now.

902
00:45:37,360 --> 00:45:39,840
All right, I have a technician,
he makes more money.

903
00:45:40,040 --> 00:45:43,280
He, he costs me more, but
there's only one of him in the

904
00:45:43,280 --> 00:45:46,120
truck.
And now the ticket that I'm

905
00:45:46,120 --> 00:45:49,400
getting from the, from the
client, you know, is he's only

906
00:45:49,480 --> 00:45:52,080
what, 10% labor to me now
because of the ticket that I'm

907
00:45:52,080 --> 00:45:55,160
getting out of this service.
So I said I'm, I'm working, I

908
00:45:55,160 --> 00:45:58,160
was working way too hard.
So I never recommend what's hot

909
00:45:58,160 --> 00:46:01,640
right now unless somebody comes
up to me with a blockbuster and

910
00:46:01,640 --> 00:46:04,000
I kind of have my finger on the
pulse of the franchising.

911
00:46:04,000 --> 00:46:06,200
So I know what's coming.
In fact, we have the franchise

912
00:46:06,200 --> 00:46:08,960
Expo S coming up next week in
Miami or in Fort Lauderdale

913
00:46:08,960 --> 00:46:10,520
here.
So I'm going down to that one to

914
00:46:10,520 --> 00:46:13,480
see if there's anything new, but
really I'm just going to see all

915
00:46:13,480 --> 00:46:16,120
my friends in the industry.
Sure, but.

916
00:46:16,520 --> 00:46:20,920
What I always recommend, I
always recommend home services,

917
00:46:21,160 --> 00:46:24,000
pet pet concepts and kids
concepts.

918
00:46:24,360 --> 00:46:26,880
Reason being they're recession
resistant.

919
00:46:27,160 --> 00:46:30,920
Doesn't matter what the economy
is, If my air conditioning goes

920
00:46:30,920 --> 00:46:34,920
out down here in South Florida
Friday night, it's triple time

921
00:46:34,920 --> 00:46:37,600
to get the guy.
I'm paying it because it's going

922
00:46:37,600 --> 00:46:39,520
to be 90° in here.
I'm not going to be able to

923
00:46:39,520 --> 00:46:41,960
sleep anyway.
So, you know, your plumbing goes

924
00:46:41,960 --> 00:46:44,040
out, you're calling, you have to
get your house painted.

925
00:46:44,160 --> 00:46:47,440
Doesn't matter what the economy
is, you know, And then with pets

926
00:46:47,440 --> 00:46:49,840
and kids, people spend more
money on that than they do on

927
00:46:49,840 --> 00:46:51,480
themselves.
It doesn't matter.

928
00:46:51,680 --> 00:46:55,200
So you have a good solid concept
with good unit level economics.

929
00:46:55,480 --> 00:46:57,800
That's what we look at.
So those are the ones that I

930
00:46:57,840 --> 00:47:02,320
usually recommend to people.
And, and I think, you know, sort

931
00:47:02,320 --> 00:47:06,200
of the, it's sort of a, an adage
that's used if, when it comes

932
00:47:06,200 --> 00:47:09,600
somebody's setting up a
traditional hair business or

933
00:47:09,600 --> 00:47:12,200
something like that location,
location, location, right?

934
00:47:12,200 --> 00:47:17,400
So I would think that deciding
if I, this is what I know and I

935
00:47:17,400 --> 00:47:21,960
want to do and I want to go
build this business that as like

936
00:47:21,960 --> 00:47:24,360
just what we would say a
startup, you would go and see

937
00:47:24,360 --> 00:47:27,200
what your competition is.
When you're dealing with a

938
00:47:27,200 --> 00:47:30,920
community type of a service or a
business like that, it's like,

939
00:47:31,360 --> 00:47:34,800
what is the, you know, how many
potential customers are in this

940
00:47:34,800 --> 00:47:39,440
geographic service area that you
can, you can actually service do

941
00:47:39,440 --> 00:47:43,000
the franchisors look at that so
that you don't get too many

942
00:47:43,000 --> 00:47:46,520
froyo shops in the same one or
two mile radius.

943
00:47:46,520 --> 00:47:50,560
I mean, I know down here where I
am in Peachtree City, outside of

944
00:47:50,560 --> 00:47:55,320
Atlanta, we're like, do we
really need another pizza place?

945
00:47:55,480 --> 00:48:00,680
Why do we in our 40,000
population have 8 pizza places?

946
00:48:00,680 --> 00:48:03,440
You know, it's like.
Maybe.

947
00:48:03,440 --> 00:48:06,280
One that's an individual,
they're all franchises.

948
00:48:06,280 --> 00:48:11,280
And so like like it did to me,
it seems like there's does

949
00:48:11,320 --> 00:48:15,320
anybody the owner or whatever
doesn't figure that out?

950
00:48:15,600 --> 00:48:18,600
Is the franchise orb?
Do they limit like I know they

951
00:48:18,600 --> 00:48:21,320
do for their own stuff?
You can only have one and so

952
00:48:21,320 --> 00:48:24,560
much, but do they look at their
competition or do they say, oh,

953
00:48:24,560 --> 00:48:29,680
now that there's 4 fast food
restaurants or a mini maid

954
00:48:29,680 --> 00:48:32,520
there, then we'll open up other
one there because we know

955
00:48:32,520 --> 00:48:36,400
there's people that want to buy
it or a massage thing or a

956
00:48:36,400 --> 00:48:37,960
chiropractor.
One of the franchise

957
00:48:37,960 --> 00:48:40,480
chiropractors will open up a
second one there.

958
00:48:40,560 --> 00:48:44,880
Like, does that mathematics go
into the idea like it would for

959
00:48:44,880 --> 00:48:48,720
somebody starting a business?
I'll tell you, anybody that I

960
00:48:48,720 --> 00:48:52,040
would refer you to would
absolutely have all the software

961
00:48:52,040 --> 00:48:54,920
it takes to know exactly how
many households, what's the

962
00:48:54,920 --> 00:48:56,600
average household income.
We do all the all the

963
00:48:56,600 --> 00:48:58,840
demographics, all the
psychographics, all the

964
00:48:58,840 --> 00:49:01,920
competitive analysis.
And then what I like to do is a

965
00:49:01,920 --> 00:49:04,920
market optimization map.
So it shows me exactly who the

966
00:49:04,920 --> 00:49:08,360
competition is.
Where are my customers for this

967
00:49:08,360 --> 00:49:10,360
concept?
Because a good concept knows who

968
00:49:10,360 --> 00:49:12,760
their customers are.
And now with cell phone

969
00:49:12,760 --> 00:49:16,280
information, you know you're
going to get everything you need

970
00:49:16,480 --> 00:49:19,440
to be able to slice and dice
that information and know

971
00:49:19,440 --> 00:49:21,880
exactly where my location should
go.

972
00:49:21,880 --> 00:49:25,680
So if you say I want a 55 unit
territory, they're going to show

973
00:49:25,680 --> 00:49:29,880
you a map with usually six or
seven areas that say, OK, these

974
00:49:29,880 --> 00:49:32,120
locations would go here.
If you pull one of those off,

975
00:49:32,120 --> 00:49:35,560
the map will adjust and say, all
right, if this is only a 5 or 6

976
00:49:35,600 --> 00:49:39,680
unit territory, then this is
where we say it would be optimal

977
00:49:39,680 --> 00:49:42,640
to have those locations.
So they're they definitely have

978
00:49:42,640 --> 00:49:44,120
that.
Competitors.

979
00:49:44,480 --> 00:49:47,760
Yeah, absolutely.
Now when I was, when I was the

980
00:49:47,760 --> 00:49:50,560
development person, I was senior
vice president of development,

981
00:49:50,760 --> 00:49:54,840
in charge of, you know,
locations, real estate, sales,

982
00:49:55,000 --> 00:49:57,840
legal, all that stuff.
I was, I would always say I'm

983
00:49:57,840 --> 00:50:01,040
very generous with territory
because I want you to go out and

984
00:50:01,040 --> 00:50:04,240
hit a home run with every
location, but I'm going to hold

985
00:50:04,240 --> 00:50:06,920
tight on that timeline.
That's what you get for having

986
00:50:06,920 --> 00:50:09,640
all of that territory.
You don't get to just gobble up

987
00:50:09,640 --> 00:50:11,800
a bunch of territory and then
not develop.

988
00:50:12,000 --> 00:50:14,960
I'm going to be knocking on your
door saying, hey, you got 1

989
00:50:14,960 --> 00:50:18,040
coming up in three months.
It's time to sign that lease.

990
00:50:18,640 --> 00:50:21,280
You know, so those are the the
kind of give and take that you

991
00:50:21,280 --> 00:50:23,520
have.
And I can help share that with

992
00:50:23,520 --> 00:50:27,520
anybody that wants to talk to me
of you know what, what can I

993
00:50:27,520 --> 00:50:30,640
negotiate with this person?
You know, typically you have

994
00:50:30,640 --> 00:50:32,600
some wiggle room in a couple
different things.

995
00:50:33,640 --> 00:50:37,120
OK, great.
So any final comments that your

996
00:50:37,120 --> 00:50:39,440
thoughts that you wanted to
share and of course, everybody,

997
00:50:39,440 --> 00:50:45,360
it's franchise first advisors to
go to, you know, get more

998
00:50:45,360 --> 00:50:49,400
information Little golden nugget
to leave the audience with Dan.

999
00:50:50,120 --> 00:50:52,640
One thing I would say is, number
one, it doesn't cost anything to

1000
00:50:52,640 --> 00:50:56,200
work with me or any franchise
consultants that does this.

1001
00:50:56,200 --> 00:50:59,480
What I would say is definitely
don't go and buy a franchise

1002
00:50:59,480 --> 00:51:01,680
without talking to me or someone
like me.

1003
00:51:01,680 --> 00:51:03,600
You know, franchise consultants,
I'll tell you, are a dime a

1004
00:51:03,600 --> 00:51:06,560
dozen on LinkedIn.
Make sure you Scroll down to see

1005
00:51:06,560 --> 00:51:09,640
what their experience is, that
they know what they're doing and

1006
00:51:09,640 --> 00:51:12,720
they've done this before.
Just because it's in the title

1007
00:51:12,840 --> 00:51:14,440
doesn't mean they know what
they're doing.

1008
00:51:14,680 --> 00:51:17,800
So you want to be with somebody
who knows what they're talking

1009
00:51:17,800 --> 00:51:22,800
about, but definitely use my 40
plus years of experience to help

1010
00:51:22,800 --> 00:51:24,480
you make a smart, informed
decision.

1011
00:51:24,480 --> 00:51:26,280
That sounds like a good closing
line.

1012
00:51:26,280 --> 00:51:29,600
I thank everybody for tuning in.
Please.

1013
00:51:29,600 --> 00:51:33,320
You know, it's really important
to the growth of this podcast,

1014
00:51:33,320 --> 00:51:35,920
if you like it, the
compassionate capitalist show,

1015
00:51:35,920 --> 00:51:39,680
if you tune in on a regular
basis, give us some five stars,

1016
00:51:39,680 --> 00:51:43,560
give us some love because the
podcast players all and the

1017
00:51:43,560 --> 00:51:46,720
review would be terrific.
They all all care about that

1018
00:51:46,720 --> 00:51:48,880
stuff.
And that's how this show gets

1019
00:51:48,920 --> 00:51:50,920
amplified.
You know, we want to continue

1020
00:51:50,920 --> 00:51:55,080
growing up the line on Apple.
So good conversations like this

1021
00:51:55,080 --> 00:51:58,880
with Dan can be found and you
know, the entrepreneurs that are

1022
00:51:58,880 --> 00:52:01,400
listening and other
entrepreneurs and investors can

1023
00:52:01,400 --> 00:52:04,440
be smarter about how they create
wealth as a compassionate

1024
00:52:04,520 --> 00:52:07,280
capitalist.
And with that I will say onwards

1025
00:52:07,280 --> 00:52:12,000
and upwards, have a great day.
Thank you for listening to this

1026
00:52:12,000 --> 00:52:14,840
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1027
00:52:14,840 --> 00:52:19,680
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1028
00:52:22,400 --> 00:52:26,400
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1029
00:52:26,400 --> 00:52:30,840
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1030
00:52:30,840 --> 00:52:34,800
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1031
00:52:35,160 --> 00:52:38,600
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1032
00:52:38,920 --> 00:52:42,440
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1033
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1034
00:52:44,800 --> 00:52:49,200
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1035
00:52:49,680 --> 00:52:53,640
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1036
00:52:53,640 --> 00:52:56,760
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1038
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1039
00:53:02,600 --> 00:53:06,600
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1040
00:53:06,600 --> 00:53:10,960
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1041
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1042
00:53:14,040 --> 00:53:17,280
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1044
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1045
00:53:25,880 --> 00:53:28,000
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1047
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1048
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1049
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1053
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