Acquisitions Anonymous - #1 for business buying, selling and operating - Buying a franchise with the Wolf of Franchises - Acquisitions Anonymous 202

Episode Date: June 13, 2023

Michael Girdley (@girdley) sits down with the Wolf of Franchises (@franchisewolf) and learns all about the world of franchising. Thanks to the wolf for joining the pod and check out his website:  https://wolfoffranchises.com/-----Thanks to our sponsor!This episode is sponsored by HoldCoConference, the conference exclusively focused on HoldCo Entrepreneurs and Executives. This conference is where Holding Companies meet, learn, scale and grow. From tech to Home Services, Holdco Entrepreneurs from around the globe will be meeting in Cleveland this September 18-20th in Cleveland Ohio.Check out holdcoconf.com for more details.Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.Do you enjoy our content? Rate our show!Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.Do you enjoy our content? Rate our show!Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Hey, Michael here. Welcome to a special episode of Acquisites Anonymous. I just spent 45 minutes talking about how to buy a business into via the world of franchising and did that with the Wolf franchises, who is a Twitter personality and somebody very knowledgeable and experienced in the space. We had a ton of fun when a lot of cool places confirmed some of my priors about franchising and also corrected some of my misconceptions. So I think you'll enjoy this one. And really, for a lot of our audience, you guys are folks that are considering buying businesses, there is this amazing opportunity around franchising, and I think it doesn't get talked about enough. So grateful to the wolf joining us today, and we have a ton of fun. Here is the episode.

This episode is sponsored by the Holdco conference. This is a conference exclusively focused on holding company entrepreneurs and their executives. It is where holding companies meet, learn, and scale, and grow. From tech to home services, Holdco entrepreneurs, around the globe will be meeting in Cleveland this September 18th to the 20th, 2020, and it will be there in Cleveland, Ohio, which has me super excited, also because I will be one of the speakers and attendees of the conference as well. So I encourage you to check out their website and consider joining us there. The website is holdcocomf.com. That's h-o-l-d-c-o-n-f.com and get more details there and sign up to join us. See you soon.

Good morning, Wolf. How are you? I'm doing good, Michael. How are you? Good. Well, you know, you're a podcast pro, so you asked me if it was going to be weird because we have your video turned off because you're the wolf. If it was going to be, if it was going to be weird. And truth for the audience, I actually have learned that I talk better when I look at my own face and not at who I'm talking to. So it's not weird at all that your videos turned off for me. It actually totally helps with wherever I am on the spectrum. Yeah, yeah. It's funny. Actually, there's a, I was talking to CEO of a franchise earlier this week. He doesn't like, he prefers in-person interaction so much more than like Zoom and camera calls.

He actually covers the whole camera thing and just talks at like a blank, you know, a blank tab effectively. And that's what he does. So whatever floats your boat, I guess. Yeah. Well, it is what it is. So everybody's got their style. Well, cool, man. Well, thanks for doing this.

I think franchising and the space that you play in is really interesting as a corner of business ownership and buying. And I'm super grateful to dig into it with you for the next kind of half hour or so and go from there. So I love to get started with just you talking about who you are and what you do. And I know we're keeping you anonymous, which is super fun because it makes me feel like a CIA agent. But anyway, you know, maybe give our audience a one minute intro on on who you are, what you do, and like me, you create a lot of content, so excited to introduce you to our audience. Yeah, definitely.

Well, first off, thanks for having me on the show, Gurdley, big fan of your Twitter account. I've been following you for multiple years now, so I'm glad we got to do this. And yeah, for folks you don't know me, I am the wolf of franchises. I've been in the franchise industry for close to seven years now. used to work for a multi-unit owner group as my first job out of college. Then from there, transitioned to a franchise investment firm. But it was kind of this hybrid company that we'd invest in franchises at an early stage. And then we became the team that would help grow them, find future franchisees for them,

and bring them through that due diligence process. And really, through all this work, I learned two things. One, there's a lack of transparency in the industry. So that was a big goal of my content was to kind of share the transparent financials behind the franchises because there is documentation out there that is public facing that you can find and use to help inform you due diligence. And then secondly, I also just met a ton of massive multi-unit franchise owners and I saw this playbook of people buying a new franchise, growing the number of locations they own,

and then either just living off the cash flow or selling those locations. And, you know, I was on Twitter during COVID. I saw a lot of entrepreneur talk. I didn't see anyone talking about franchises, but every day I'm on the phone with a new big-time franchise owner for my day job. And I'm like, you know, this is actually cooler

than most people give you credit for. And so started making content about it. And, you know, here we are. Now I'm on your podcast talking about it. So, yeah, and this is one of the things that's been so interesting to be. I think people in the United States have bemoaned kind of the decline of the corner drugstore, right, or the small business owner that was, you know, like the Main Street kind of small

business owner that you expected, right? The local cafe or whatever, the independent stuff. And to me, like, I think that's a wrong perception because now you look at all these brands that are out there, everything from McDonald's to Orange Theory. Each one of those is actually run by an independent entrepreneur. It's like entrepreneurship just shifted to this franchise model that has a lot of things that we, you know, we love as Americans, right? It's consistency of quality.

It's consistency of brand, like better overall service. Like McDonald's is definitely a better overall product, you know, than say your corner cafe, which could be hit or miss. Like you never, you never knew. So, you know, how do you think about like, you know, the transition of entrepreneurship like in in America that way? This is a terrible first question, but it's the thing I always think about with franchising and why I think franchising is so beautiful.

No, it's a totally fair question. And look, I get it for especially, I think when people say that, you know, when they kind of bemoan, like you said, the decline or death of the local corner store or cafe. Like, it's more from the consumer perspective, and I get it, right? The feel of a mom and pop where, you know, where it's a local owner, it's their brain. It's their feel, you know, they know you by name. That is, it's nice as a consumer to be a part of that and like kind of have your, your spot that's, that's only unique to your town and your community. Whereas a franchise, right, it's rinse and repeat.

There's an orange theory here in Austin. I'm sure there's one in San Antonio where you are. And I'm sure where every listener, you know, who's hearing this right now, there's probably an orange theory in their town as well. So maybe that uniqueness and community feel is a bit is lost from the customer standpoint. But from the entrepreneurial standpoint, I think you're dead on. I mean, to me, it's always just franchise owners or small business owners who basically just chose a different path. And everyone has the same choice. You can start your own brand from scratch, you know, where you got to build your own website,

figure out all the processes and support systems on your own. or you can look to franchises where, regardless of the industry, I can pretty much guarantee you there's a franchise doing that type of business that you're interested in. And instead of, again, having a startup from scratch, you have a bit of a head start, a playbook, and a process to follow from day one. So that that's kind of the way I view it. And I do think from the entrepreneurial perspective, it is a really fantastic option. Yeah.

So let's say I'm somebody that wants to become entrepreneur. like, and I see on Twitter, like there are a ton of people grinding their life out trying to find businesses to buy. Yep. And it, you know, occurs to me, like, like, maybe they should be looking at open a Dunkin' Donuts franchise.

You know, like, you speak to Orange Theory and, like, I have a buddy that owns three Orange Theorys here in San Antonio. Like, he takes home easily multiple seven figures a year. Like, they'd kill it. Yeah. Like, they're, you know, they're, their return on invested capital is like 75%.

And now it's getting more and more expensive to build those things out. And the franchise fees are huge because they won. But like it's still like it blows my mind. So as you think about somebody who wants to become entrepreneurial or wants to buy a business, like when should you be somebody who's looking to go buy an established business? And when should you be somebody who's like going to go get into the franchise game? How do you think about like is there a rubric to kind of self-analyze and say, I should go one path versus the other.

Yeah, I mean, I think for one, it just takes probably a very high level of self-awareness. You really got to know yourself, like, are you, and there's no shame in this, right? I would argue that the majority of individuals aren't necessarily cut out to be like the full, true entrepreneur. I mean, you know, like, girl, I can't even keep track of how many businesses you own.

But, right, I'm sure, like, you have the raw, firsthand experience. It is not easy. It's difficult to create everything from scratch and get businesses up and running. And so someone has to kind of look at themselves and understand, like, do they really want to go through all that pain, all that effort, right? I mean, just that it takes. And I mean, I see people, the average person, I don't want this to sound too negative. But, you know, a lot of people struggle even just to get like a modern functioning website up and running. And that's like step one of 5,000 when you're actually starting a business. So I think just having that awareness and realizing, you know, if maybe you think there's a

better way for you into being able to, you know, like what your ultimate goal is, whether it's just you don't want to, you know, work until you're 65, you want to ultimately get to a place where you have the freedom and control over your time because you have businesses running for you, which obviously that will take multiple years to get to at a minimum. But yeah, understanding your goals, understanding, you know, really your skill set.

And I do think also the want is important, right? Like some people think they want to own a business and they realize how hard it is. And they're like, okay, like, I actually am totally fine not dealing with any of this garbage. And like, I'll just enjoy my life. I'll work a job and it's fine. And like there's nothing wrong with other people.

half. Just really understanding what you want and what you're capable of doing. I do think a lot of times, like, I don't know, seven out of ten times, there's probably a franchise that you'd be better off and you'd probably enjoy running over starting that business from scratch. Obviously, that begs the question then, well, which franchise do I buy? And that's a whole other problem. But yeah, that's kind of how I think about it. Yeah. Okay, so that's definitely where I wanted to go next. So like, okay, so here's my perception of the franchise world. There's like 10 to 15% of the franchises you really want to own. And then the other 85% are ones that I would, you don't want to be part of, right?

I would describe them as loser franchises. But the winners are clearly like McDonald's, like some of the auto care franchises that, you know, have gotten there. Orange Theory is another great example, right? And there's those franchises you want to be in. And then there's like the subway curves. a lot of these ones that like you don't want to be in for one reason or another. Like so how does, first of all, is that perception accurate of the franchisee market? And then number two, like, how do I figure out what the top 15% are?

Yeah. So anyway, there's a premise to my question. No, it's, I would agree, honestly. There are, so just for kind of setting the table here, there's over 3,000 franchise brands in the United States. So obviously you have your big fast food brands, like you named a few McDonald's, you know, Burger King, Subway, etc. But there's, you know, brands that are plumbing businesses and lawn mowing businesses or, you know, any industry, you name it, there's a franchise for it.

But yes, I would argue that, and I know this, right, like I've been writing a newsletter for over two years now where I basically have been scouring the internet for franchise disclosure documents and for the uninitiated, those are the documents where you can find franchise financials. It is technically a regulated industry and every brand does need to file those documents once a year. So that is where I'm able to find a lot of these financials. So I've looked through thousands of them effectively is what I'm saying. And yeah, I think you're 10 to, that's called 10 to 20 percent. I'll widen the range a bit. 10 to 20% are brands that are attractive and that you would like to own,

depending on, again, your industry focus. Whereas the other 80%, yeah, I mean, it's not to say that you necessarily would do poorly with those brands. Like you mentioned Subway, I personally would never recommend Subway to anyone based on the history of the franchisor. However, two weeks ago, I was talking to someone who used to own 200 Subways. And I promise you he's a lot wealthier than I am. So it is, you know, you can find a way through scaling to multiple locations.

And I'm sure there's a lot of headaches that that person had to face to get to 200 locations. But regardless, I'd say there is just a large swath of franchises, right, that are kind of, they're just mediocre investments. Like, not horrible, not great, but they're just mediocre. You know, it's like, why would you want to buy a business that you're kind of setting yourself up for a five-year payback, six, seven-year payback? Like, you can do better. And, you know, you mentioned Orange Theory in some of these big winning brands. I mean, they have much, you know, once they're ramped up, I mean, you are taken home.

Very healthy cash flow that otherwise would be very difficult to do on your own. Yeah. So, I mean, what's the methodology for somebody to. go through and identify what the top 15% is. And maybe, you know, I know you're building a database and resources for that that you've started to talk about. Is that, is that your answer to that problem? Yeah, that's obviously very self-serving answer.

But however, that's fine. But promote the hell on yourself. We're getting your, you're, by the way, listeners, we're, I hope you're watching the YouTube video. We've already conspired. Mr. Wolf will be a talking French fry when we do this on YouTube to retain his not a video, which just has to be excited for the entire price of commission. So, anyway, continue.

Yeah, yeah. So I did, you know, we're recording this on June 2nd a little over a week ago launched a data platform for the franchise industry. So it takes all those franchise disclosure documents, which had just full of so many good data points from, you know, units open, the royalties being charged, the initial investment. You know, franchises aren't required to disclose revenue or profitability. but there are still hundreds out of the 3,000 plus brands that do show the average profitability of a franchisee.

So we curate all this data and we plug it into software and it's just very easy to sort, filter. Kind of as you'd imagine, honestly, like most industries have something like this already. Franchising, we're trying to catch up with the times here and that's my goal is to try to bring us kind of into the 21st century. But yeah, I genuinely mean this. I don't know of a better place to research franchises.

And that is why I built it because, I mean, I'm sure you get a ton of DMs on Twitter, Gurdley. But, you know, I get asked all the time, hey, like, where can I research franchises? And I never had the answer for them. So that's why I built it. So, yeah, it's called Crockett, K-R-O-K-I-T. So you can check it out on Crockett.com.

But, yeah, there's lots of franchises from a variety of industries, and you can sort it right directly by the profit. Yeah, super cool. And so what's your money-making model for doing that? Do you just charge subscription fee? Yeah, it's a subscription. So we do a seven-day trial at the moment for a dollar. And then if you decide to stay on, we do charge annually up front.

It comes out to 246 a year, which on a monthly basis would be like $20 a month. Yeah, total bargain to help you not make a $100,000 mistake. That is exactly it. Yeah, it's, you know, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's shocking how the lack of due diligence that's just been, you know, been done. And there hasn't been a better way, but it is unfortunate because there are so many brands that people don't even know about exist and there are actually great, great opportunities. But there's never been a way to like kind of, again, sort the top 10, 15% from that just swath of, again, like investments

you'd rather stay away from. Yeah. And so there's these other people that play in the in this franchise sales space, biz by sale loads me up with advertisements for franchises. Generally, is it the case that when I see somebody advertising a franchise opportunity, I should take pause and assume

without proof otherwise that it's a bottom 85, 80% franchisor? Like, Orange Theory of McDonald's don't advertise in Bizby sell for me to buy a, you know, like, is that a root that I can use is I kind of, okay, I'm going to use Crockett, but I'm also going to just kind of narrow down the brokers,

bizel, like, is it that simple, like in terms of where I should start with my initial swath? Or are there top 20% franchisors that are doing that kind of advertising and stuff? No, I mean, you're right on it. And I've seen the tweets that you put out. They make me laugh and also cry a little bit inside. Because it's such a bad name for the franchise industry. You're dead right with a lot of the opportunities for franchises on biz by sell. Yeah, I mean, I don't want to, you know, make a blanket statement, but let's say 99.9% of them are probably bottom of the barrel opportunities.

And that's why they're on biz by sell. It's likely a brand that you wouldn't want to necessarily be involved with. And or that existing location probably has some massive red flag. And that's why it's gotten its way to biz by sell. The way, like you mentioned, McDonald's and Orange Theory, you're never going to see it on Bisby Sell, and that's because those top systems, they scale, they grow through a large number of franchisees, and then at a certain point, consolidation starts to happen. And this is kind of the beauty of being a franchisee, which I think is also a benefit to

someone who maybe is trying to do like a roll-up strategy for brick-and-mortar businesses. You know, once you're in a franchise system, you're part of this private network of other business owners that all own your brand. And so a lot of those, you know, when a franchisee of an older brand, maybe they're looking to cash out because they've been in the system for, you know, 10 years or maybe they're at retirement age and they just want to cash out to officially retire and enjoy their life, you get all those opportunities internally. So it's effectively this network where you can be privy to off-market deals.

And they will only go outside that network. if a franchisee within the system doesn't gobble it up, which rarely happens for the top brands because there are always people looking to add another location to their kind of portfolio. So you asked about kind of a strategy. That's actually a way to do it.

And I've had a few folks on my show to kind of dive into this, but there are people who have, rather than start their own business or do a traditional search fund, they've basically just hustled and networked their way, in to a few major big brands.

You know, there's someone named Michael Horowitz who did it with Wingstop. Brian Beers has been, you know, putting out some good content on Twitter. He's done it with Midas. They basically hustle their way into these brands with thousands of locations and hundreds and hundreds of franchisees. They network like hell with all those franchisees and basically say, hey, you know, I've got a couple locations or I've got one location, but it's performing well. I'm looking to grow.

When you're ready, like call me basically. And both of them have scaled to, you know, 20, 30 plus units within a pretty short time frame. Yeah, so there is this concept in franchising that franchisors will, you know, they'll typically either go down a single unit operator kind of model where they'll tend to have like, okay, like Subway, I think is this way. And I think our curves, right, two that we hate as franchisors, or I'm sorry, I think, I'm not going to put any words you up. You have a day job. I do know. you know, and that kind of sucks.

That means single unit operator focused franchisors mean you're kind of buying yourself a job. But then the more interesting one is the ones that focus on multi-unit operators. Like Waterburger here in San Antonio has gone hard at bringing in these, you know, multi-unit operators, MUOs, and to go into new markets, Florida, Kansas City, all this kind of stuff. And Waterburger is really smart, right? And so that's kind of a differentiator between the two. Like, how do I tell if I'm looking at a franchise system, like which one, are they bent towards?

Is it as simple as clicking something in your site? Or how do I know? So we don't actually want to crock it. There's not like a sorting or filtering functionality based off that. However, I would just broadly say most franchisors welcome multi-unit opportunities. You know, I feel like that's actually shifted quite a bit in the last two years, let's say, where there was maybe this mantra of, you know, we want our, owners to be fully bought in and, you know, they have to be operating. So we limit ownership to

one location, which kind of that ties back into what we said in the beginning of this conversation about like small business ownership in America. Again, from a customer angle, like maybe that's more attractive to walk in. You see the owner every day and they're kind of, you know, blood, sweat, and tears is present with you. Whereas there's sort of this stigma against, oh, the person who they own, 10 or 15 businesses and locations, but they're not in there. Like that, that's not, you know, that business is never going to be as customer friendly because the owner's not there, which I don't agree with. But also, you know, back to the entrepreneur side, right?

I mean, the reason I'm happy with the change that multi-unit opportunities are becoming far more the norm and are the norm for the large majority of franchises, I would say just assume every franchise is going to give you the opportunity for a multi-unitism. a unit deal, especially an emerging brand where they're looking to grow. And they kind of need to have this narrative of growth so that every time they're on the phone with a new prospect, they can say, hey, yeah, like last month, we just brought in X number of franchisees into the system. As soon as that slows down, it basically, it's almost like self-fulfilling prophecy where you might scare off all your new prospects because they're going to say, whoa, hold up,

you haven't sold a deal in, you know, nine months. Like, there must be a reason for that is kind of the thought process. So it's a weird game. of growth. You know, everyone jumps into franchising and, or a lot of people do and say, oh, you know, you're a new brand. You only have 20 locations. You know, why would I buy this? There's no brand recognition. So there's just kind of, you're kind of always fighting that as a new brand. And the reality is, right, every single location, even McDonald's started at one. So the brand recognition comes in time. But, you know, before then, right, for the entrepreneur, it's, it is critical, I think. They, you know, you're never going to get rich with just one

location of any franchise outside of maybe a Chick-fil-A, but of course, Chick-fil-A has their own kind of unique model that they work with their operators on, so we won't get into that. But it is a benefit for the entrepreneur to be able to own multiple locations, because for me, that's really the only way within franchising to truly, like, earn life-changing income is through multi-unit ownership, never just a single location. Chick-fil-A is super interesting. I mean, if you look underneath how their franchise deal works, it can be very lucrative,

but it's basically indentured servitude, right? Like, you can't become able to you in an operator. Like, you're going to have to work hard and you make a lot of money for it. And, like, that's a great model. Like, if that's what you want to do, like, no more power to him. But calling it like a real franchise to me is like, I see why they're billionaires. I just put it that way. Yeah, no, it's, it's, you don't have equity.

You don't have, you don't have skin in the game. You can't sell anything. So I think especially with, you know, the Twitter bubble that you and I operate in, that is very like anti what everyone talks about, you know, building wealth for yourself and building equity. So I get it. I personally wouldn't want that, obviously, but I do, I try to zoom out on that because, you know, anytime I've ever tweeted about chick forlite, oh, you know, you can't, you don't own

the equity. It's actually a horrible deal for the operators. When you zoom out and you look at most of America and how much the average household makes, it is an incredible financial opportunity for many people to have the privilege to own a chick-fil-a and earn well into six figures per year from it. And oftentimes, you know, the resumes that you'd see from the operators are probably people who are like, you know, they couldn't command a 350K salary from some corporate job. So yeah, so I think as a whole, it's a net positive for the entrepreneurs who are operating

chick foys. And they actually have opened it up to if you're in the system for a certain amount of time, you can expand to two and sometimes even three locations, which at that point, you're pulling in seven figures a year for sure. But yeah, anyway, I totally hear you. It's not a, let's just say, it's definitely not a traditional franchise. Look, I'm not knocking it at all. I think that's great. And it's easy exactly what you say. It's easy to live in your bubble. And look, I'm in a bubble for sure with all my friends and people I talk to.

Like, it's easy to forget. Like in the city I live, like, the median income is under $50,000 a year. Like, it's, it's a different world out there. And I think it's easy to forget that, you know, it's easier to stay in your bubble. For sure, for sure. 100% of privilege. So, and not going to knock it. It's life changing for people, for sure.

So I want to talk about this idea of timing. when you're picking a franchise chain. It seems like there's windows in which you want to get in and windows in which you have leverage as a franchisee and then windows where you have no leverage whatsoever. So, you know, an example is my buddy who opened up three orange theories over five years. And he told me the process he went through

because he came in relatively late. Like he had to beg to get those orange theories. Now, he's got a great life now. He makes a million and a half dollars a year. It doesn't really work. but like he got in a little late. And then I heard about another guy who is a friend of a friend who Orange Theory was just trying to get started.

And they came to him and said, hey, we're desperate to like open up in the state of Texas. Will you work with us? And he said, no, because it was an unproven franchise model. And then he said, okay, well, here's how it's going to work. I want to own the whole territory for these two main cities in Texas. and I want this special deal, and I'll go hard and I'll build out your, I'll build out the business here. And he ended up like eight years later selling the entire rights for these two cities for like $100 million or something stupid.

I mean, these are all kind of like apocryphal numbers. Yeah, yeah, yeah, yeah. It is just like the idea of timing and getting involved in a franchise business. So like how do you think about that? Like what is my mental model to kind of look at timing relative to choosing franchise ownership? Yeah, absolutely. It's a great question. And it kind of goes back to, I think, understanding what I talked about before, right? This game that once you start franchising your business, you're kind of forced to play, which is that game of growth. And I don't want to say faking it until you make it, but a little bit of that, right? Because again, like, if you've been quote unquote franchising for a year, but you've only sold a new location of one franchisee, right? It just naturally, it looks, now, your offering looks less compelling to the next prospect, the next person you get on the phone with. So how that translates to someone doing due diligence is the less locations and the newer

franchise is, generally speaking, the more leverage you have in your negotiations. So, you know, you talked about Orange Theory and your buddy who was late to the game there. Through my past work, I used to work with this pet franchise. And it's franchise ownership is funny. you know, people buy one brand and once they hit it big, they start looking at other brands. And so we actually had a lot of luck with this pet franchise

with Orange Theory franchisees. And through that, I spoke to some, I spoke to franchisee number three, five, nine, and sixteen. They're all absolutely crushing it. But they were all able to, because they were so early to the system, they negotiated the large territories where they said,

yeah, I want this county and this county, which gave them the opportunity to over time build, you know, 15, 16 plus locations. And typically, if you were to say, buy into a franchise and negotiate for those large, that amount of a territory, you'd have to pay the franchise fee for every location up front. However, so that's, you know, $40,000, $50,000 times, you know, 10, 15, 20 locations. A lot of money. Most people can't write a check that big. But if you're new to a system, you know, a lot of times, it's basically just a, just, negotiating game with you and the franchisor and they'll say, hey, sure, we'll give you that

territory. You have to stick to this development schedule and build them to a specific timeline, but you pay effectively a franchise fee at a time. So you do get a much better deal. And assuming you pick a winning brand, that is a massive kind of win for you as a buyer. So Orange Theory, I mean, it is tough. I don't want to paint the picture that everyone should just be looking for like the next orange theory, because that's a bit like, you know, picking the stock market and trying to, you know, figure out the next one that's about to go gangbusters. But overall, I'd say number of locations, number of years franchising,

and generally speaking, this 100 location mark seems to be a good benchmark. You know, once a brand is getting close to there or past there, you can expect that things are going to get tougher. And that's not 100 locations sold. That's 100 locations open and operating, which is a pretty, you know, that's a big difference as far as the proof of concept that a franchisor can leverage. Okay. All right.

So we're out of time, but I'd like to give you a challenge. And here's, let's role play a little bit. I am, imagine I am a 29-year-old guy, which basically looked the same as what you see here, except I had hair back then. and I didn't need to wear glasses yet. In other words, the wheels were not falling off. But, okay, so imagine I'm a 29-year-old person and male or female, and I have, you know, let's say $100,000 in net worth that I've saved from a couple jobs.

And my goal is, by the time I'm 45, is to retire a cent-a-millionaire, like $100 million net worth in 15 to 18 years. how can like I hear stories of people doing this as franchisees like how do I do that like so what would be the steps and maybe it's unrealistic but like how do I make that happen? Yeah wow loaded question there Gurdley but uh let's let's let's go through the playbook to become you know a hundred millionaire but um no look I would say one self plug again go to crockett.com and start researching franchises

However, more seriously, you do want, you got to pick a brand. If you have the financials to self-funded or maybe through your network, if you have that ability, through friends and family, to get going and buy your first franchise. But from there, right, things get easier where you can parlay profits of one into investing in another, once you have two locations, if it's a brand regionally, or even if you just have two locations and you develop a relationship with a regional banker, you can start acquiring or, sorry, funding new locations via loans. There are brands that work with, say, like, a Live Oak Bank, and for folks you don't know, Live Oak Bank, biggest SBA lender in the country.

So there is a chance that depending on a franchise, depending on how many locations they have open, you could already acquire. I have heard, again, this isn't the norm, so I don't want to kind of paint this rosy picture because this is not how it always works. But there are stories of people, you know, you can just like acquiring a small business, you can get up to 90% funded for a de novo build of a franchise. But yeah, personally, find a brick and mortar franchise, start scaling your locations and either go deep into that one. You know, I've interviewed folks who own hundreds, you know, we've been talking about Orange Theory a lot, so we'll stick with that. I interviewed a guy who owns 150 locations of those, and he is worth well over nine figures

because of that. At a certain point, you get private equity involved. He did a lot of what's called a dividend recap where he's effective. taking a loan from the bank and using that cash to fund new locations. And as long as net EBITA is rising across the whole portfolio, he's more than able to cover his debt servicing. And then he effectively rinse and repeated that to 150 locations. But yeah, sorry, that was a lot.

I kind of just word vomited there. But ultimately, find a brick and mortar franchise, scale the locations. I think picking that brand is massive and making sure you can pick good locations in your market is massive and there's a lot of nuance to both those two things, right? The brand and the real estate.

But if you do those two things very well, you know, you have a great shot. And there are some fantastic brands out there that are looking to build and looking to find quality operators. So, you know, I would definitely, if you are serious about being an entrepreneur and a business owner,

head to crockett.com and at least just skim, skim some of the franchises and see what you think for yourself. Yeah, 100%. Okay. And as a general rule, like, if I see, if I'm not in the network of one of these franchises and I see a franchise entity or rights for sale for a territory, as a general rule, I should be running the other way.

Like, I never see McDonald's for sale on biz by sell. Yeah. So is that the general rule? Are there exceptions to that ever? There's probably been an exception to it here and there, right? But the general of thumb, yeah. I mean, as we talked about earlier, the top brands, they have very, you know, sophisticated and, you know, people with deep pockets in the franchise network who anytime a new location

is up for sale from an owner, all that acquisition happens internally within the brand. Nobody even knows about it, you know, outside of that world. So yeah, if you're seeing something on a website, it's either a bad deal or, you know, I've heard of a lot of bait and switches from the brokers on like sites like Biz by Sol right, where they advertise a good opportunity. And then you get on the phone with them and they're like, oh, sorry, that opportunity's gone. But I do have five others for you. And then naturally those five other ones aren't even as close to as attractive as the one advertised.

So, yeah, general rule of thumb, you're likely not going to have any luck if you're seeing a deal posted on. some business buying website. Yeah, and I think it's the same thing for buying businesses too. The best deals never, like, they never make it to the listing sites. And the key thing is how do you figure out how to arrange yourself to be in those places? Like, I'm working on a deal now to do an acquisition. There's no way that that deal is not going to show up on like a listing site. Because the seller knows, like, he knows the six people who are going to pay him and value the most for the deal.

and he called all of us. And that was it. That was the whole deal. And we had just had to figure out how to be one of those six. Beautiful. Yeah. Yeah.

No, it's, that's the game. Yeah, we'll see if it actually closes. So, that's what it is. So, you know,

we're running short on time here. How can our listeners follow along? I mean, you're, you're a full-time creator, man. So, like, kudos to you. How can we follow along

on your journey and be supportive of that? Yeah. No, I appreciate it. I mean, I'm most active on Twitter for sure at Franchise Wolf. I do have a website, Wolfofranchises.com, and obviously now diverting a good amount of my time to helping build and kind of lead the development of crockett.com, KR-O-K-I-T-com. It's a play on Ray Kroc, by the way. Some folks have asked me, like, what is going on with that name?

and not as obvious as I thought it would be, but here we are. So, yeah, if anyone wants to follow along, shoot me a DM, you know, you want to talk franchises, always happy to do so. So, yeah. Super cool. Yeah. And if it's any consolation, like, I was like, oh, I bet it's, I need to make a Ray Kroc McDonald's franchise joke here.

And you're like, no, it's serious. I'm like, okay, God, God, I didn't do that. I would have. At least I got it, but maybe not the way you were hoping. No, no. It's all good, man. That's funny. Yeah.

Well, we didn't talk about Chili's, which I'm disappointed about, but maybe I'll come back on it a few years. Well, you know, Brinker's franchising. Exactly. As we were talking, it just, it made me kind of sad that, you know, I'm almost 50 now. It made me kind of sad that Twitter and this type of niche creating that you're doing wasn't around 25 years ago. like when I was coming up, like literally if when I was coming up in business, like if I wanted to learn about more corners of business, like I had to go to Barnes & Noble and like buy books. Holy crap.

And like the problem with that is, you know, those bookstores, you can't really make a business out of publishing super niche content like you do. But like the things have shifted and you can make, you know, I'm, I'm doing Holdco's stuff, right? And you're doing franchise stuff. And like, there's things like this that are so amazing now. And nobody slows down to think about how amazing they are. Right. Like, and this is one of those things that I'm like, I used to have to go buy books.

Like, I lived in an apartment, like, just full of books in my 20s. And because that was all I could do. And I had to read the newspaper like on paper. Like, it was the worst. But like, like, people don't understand like how much of a treat and how much of a blessing it is. that people like you are doing what they're doing for niche audiences. And like, I don't know,

everything's amazing and nobody's happy. That's all I think. That's what I think. That's, no, it's a great point. Yeah, wow. I certainly am guilty of it, not necessarily slowing down to realize all the benefits. Because, yeah, I can't imagine having to just go to Barnes & Noble.

I mean, that sounds crazy. But obviously, like, what else would you have been able to do at the time? So, yeah. I'm looking for it. Look, the thing that still frustrates me the most is, like, how slow, like, I have no patience for how slow I can consume information, right? Like, like, you, I don't know if you ever watch Star Trek, but, like, data, you know, data and next generation also data yourself. Like, he could, like, look at a book and, like, ingest it. Yeah, yeah.

I'm like, oh, that would be so amazing. Like, how much money would I pay for that? Oh, that would be incredible. Yeah, no, I completely agree. I think, I mean, who knows, but Elon Musk is probably working on something where I remember reading about this. There is some, it sounds scary as hell, but some brain chip where it's basically a computer chip, right? And then, yeah, you can do what effectively you just said if that ever becomes a reality. But who knows, they might also control your mind at some point.

So nothing to do with franchises, but like some of the stuff, this guy Ray Kurzweil wrote like 25, 30 years ago, like talks about. eventually we'll, you know, offload our consciousness onto computers and like suddenly time won't matter anymore because nobody will die. Yeah. Well, there's, I mean, it's interesting. We're totally not talking about a franchise anymore,

but it's interesting if you think about how much life is the way it is because humans die. Like, like, imagine, imagine, like, here's the opposite of it. Imagine if somebody could just, like, freeze themselves and wake up 200 years from now. Yeah. Well, that has some weird second and third order impacts.

Like there needs to be a whole first order. It needs to be a whole industry to deal with that. But like second interesting one is imagine what happens to the time value of money. Like time value of money happens because we die, right? It's because money is worth different things to us and is much worth more now. Well, if time doesn't matter to you anymore, like then the time value of money gets all screwed up as well. Right? Because you'd see people just like, oh, I'm just going to invest my money, go to sleep and wake up rich.

Well, if everybody does that, it's not going to work anymore. Yeah. Holy crap. Oh, that is so scary to think about, though. But, yeah, wow. I mean, I don't know. I would need, like, I don't know if I'd want to do that. Like, just wake up and, I mean, I guess if you're the same exact age, if that was a possibility. I mean, yeah, we really are going off on a tangent.

Yeah, yeah. It's fascinating. So anyway, we'll tie this back to McDonald's. Do you want a quarter of butter with cheese? Yes, yes, I do. And yes, everyone, please check out cross. rocket. Yeah, let's, oh, God, wow, that would be. Well, thanks for being here.

Listeners, thanks for doing this. We'll get this out. And, you know, I don't know if you're doing this wolf with your stuff, but, man, because we now post natively on Twitter, like, we'll get four to one views on Twitter on what we do on normal downloads. Like, in the first couple days, we'll get four or five thousand downloads of our pod, but on Twitter we'll get 15 to 18,000 views of the pod. Holy crap. It's crazy. So if you're not doing it, I encourage you. No, yeah.

Appreciate the suggestion. I'll definitely get my team and I will start posting. That's a great idea. I saw a car dealership guy who is also similar anonymous. And he did it. And then he texted me and he's like, yeah, dude, you got to do this. And I was like, then I took that. I copied pasted it and sent it to Ty who runs our business.

And I was like, yeah, dude, you got to do this. So we do it. Yeah. Cool, man. All right. I appreciate you. bunch. Thanks for doing this. Thanks, Gardley. Appreciate you.