Business Innovators Radio - Interview with Jon Ostenson, CEO of FranBridge Consulting

Episode Date: May 11, 2023

Jon is a top 1% Franchise Consultant nationally and he leads FranBridge Consulting as CEO. Jon draws on his experience as a former Inc. 500 Franchise President and Multi-Brand Franchisee in serving his clients. Jon is the author of the bestselling book, ‘Non-Food Franchising’, and is a frequent contributor to franchising for publications such as Forbes, Inc., Bloomberg, and The Franchise Journal.You can receive a copy of Jon's book 'Non-Food Franchising: The Better Path to Business Ownership' by signing up to FranBridge Consulting's monthly newsletter at franbridgeconsulting.com.Learn more: https://franbridgeconsulting.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-jon-ostenson-ceo-of-franbridge-consulting

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us John Austensen, who's the CEO of Franbridge Consulting. John, welcome to the pro program. Thanks for having me. Looking forward to our discussion.

You're welcome. I'm looking forward to it as well. Every time I talk to someone, I'm always picking up little tidbits. And I find myself with well over a thousand episodes in the podcast here. I'm always going, oh, hey, you know, I was talking to someone a few weeks ago who said, and we're always tying little learning nuggets together. So I know that we'll find some here with what you're doing. But get us started with your story.

What's your background? And how did you get into franchise consulting? Yeah, no, based here in Atlanta, Georgia with my wife and three young kids, and, you know, like so many members of your audience, they're thinking about entrepreneurship. You know, I found myself in the corporate world for many years, and, you know, but thinking about entrepreneurship. And, you know, long story short, stepped away from the public company world about seven years ago, stepped in as president of Shelfcini franchise system. Shelfcany, it's custom plow shelby for kitchens and pantries and had the opportunity to step in and support our owners across North America on a day-to-day basis. And for me, that was the light bulb moment of, hey, franchising is much more the fast food and look at all these different backgrounds of, you know, people that are stepping into business ownership that are, you know, doing really, really well. And, you know, I just saw the power of franchising. So long story short, ended up partnering with the founder. We spun off. We've invested in franchises ourselves as franchisees. So I've sat on both sides of the table. I have had other partners as well. And so I'm, I think I currently own about five different franchise brands. And, you know, but I've got good people that run them and allows me to help others do the same thing.

So, you know, very blessed to work with great clients all across the country. You know, we work with over 600 different franchise brands, all the different development groups, largest system in the country. And I get to help people understand what it looks like to step into franchise ownership and then how to select the best franchise. And so, you know, really get validated. I've been able to help them do that, either from a full-time standpoint or from a part of time standpoint.

You know, that's a big point. And I know we want to dive into all of those things. But I think back of the old days, you know, a couple decades ago, it was like, hey, I want to start my own business. I better quit my job. I better have a whole bunch of money to, you know, be able to pay the bills for many, many months. Then I better have a huge franchise fee if I'm going to do that. And nowadays, it's like, you know, you can start a little side hustle and you don't need to be all in. But one thing that I would suspect that you would recommend is you better have all your ducks in a row and know exactly the

path forward before you do that because now all of a sudden it's like that quote success leaves clues you don't want to just try it you want to go here's the path forward franchising is for me because and the right franchise is and there's a lot that goes into that so talk a little bit about the benefit of a franchise versus hey I'm going to do a startup and start my own thing and boy you're just winging it hoping things fall into place hoping you figure it out but a franchise is a proven blueprint absolutely And I'd say about a third of our clients look to step in full time and step into the ownership role of day-to-day manager. About two-thirds, we're looking at a semi-passive executive model where they put a manager in place and they kind of co-manage the manager with that franchise order.

So, you know, that's one benefit off the bat is you've got a franchisor on the sidelines that's great technical resource. If it's a good franchise order, they're going to help keep your manager marching in the right direction. So it's also your tag team, that management. But no, you know, with a franchise system, you know, not to be cliche, but it's so true. starting on third base. You know, a lot of things have been figured out for you already. You know,

you've got a franchise to run the sidelines through the coach, you know, you're in business for yourself, but you're really not by yourself. You've got other owners across the country that are living the same thing

day in day out. That creates community. That creates shared learnings. You've got a playbook that you're executing against. You know what that path of profitability looks like from day one. You know, also,

you know, oftentimes it's overlooked, but, you have bulk buying power or you have large marketing data sets that you can leverage and make decisions. You know, you just have a lot of resources at your disposal. And, you know, also, you know, of course, you're in business to create a cash flow. You also get the benefit of, you know, tax writeoffs that you don't as a W2.

But then you also are building an asset that you're going to want to one day to have an exit on, most likely. And the beautiful thing about franchising is, you know, I'm happy to cite different studies that we want to go down this path. But it's been proven out that franchises traded a higher multiple on average versus non-reaching. franchises when you go to sell business down the road in like kind industry. So there's really a whole plethora. And I will say this, Mike, I mean, nothing's easy. It still takes work. But again, you're starting on third base rather than first base. And so, you know, that's why we're seeing more interest than we've ever seen before in franchising these days. Did I hear you correctly that there is opportunity to buy into a franchise that the location is already up and running with a management,

in place. In other words, it's not like, oh, I'm going to get a license for this franchise, and I better break ground and build this and then start from scratch. Can someone select the right franchise and go, oh, this one's already in operational? I'm going to buy it. And then I can step in and let the management team run things, the day-to-day people run things. And I can be that owner from the external perspective. Yeah, you know, those resale possibilities. I, you know, they exist. I'd say it's probably five or ten percent of what we do. So it is a smaller piece of it because frankly people hold on to these for a long time. They don't want to go sell them. You know, there is one other ownership model to that I failed to mention. That's what we

call an investor model. And there's only three or four franchise companies out there that are doing it today. But that's one where the franchise will actually run the business for you. You essentially have a management services agreement with them. I actually just pulled the trigger on another one from my portfolio that falls in that bucket, the investor model. I was down in Florida doing some site selection last week. So I'm pretty excited about that. But that was See, that's where I was going. It is like, if I were to say, John, I love the concept of a franchise because you start off the third base. It's a proven blueprint, all of that.

I don't want to start from scratch. But I also don't want another job. I don't want to go into day one when we're cutting the ribbon and myself am putting in 12, 14 hour days because I've got to do all the things. I want to see if, hey, this location is already operational or quickly will be operational. We've got employees in place. I'm going to come in and work my, let's just say, hypothetically, four hours a day to make sure things you're going, you know, as planned. That might not be the total, like, investor setup that you just mentioned, but maybe it's a hybrid. But I think that the worst thing in the world is for any business owner to just leave corporate America and be in now business for themselves.

But really, they just have another job. They're just reporting to themselves because you didn't start the bit, you didn't structure the business. as a business. You just have another job. And that's a big shift that I think people need to realize. Yeah, absolutely. I agree 100%. And that's why we have doctors, we have lawyers.

We have guys, you know, corporate executives that aren't looking to leave their day job because maybe they're really highly compensated W-2, but they say, hey, I want to get something going on the side. I want an additional cash flow. I want exposure to business ownership. You know, hey, you know, I like alternative investments outside the public markets, but there are only so many good real estate deals to be had. How do I find something else?

And that's where franchising oftentimes fills out. void in their portfolio. But yeah, exactly what you're saying. And again, it comes down to having someone that you trust that, you know, it's a good manager running that day-to-day business. You know, if you're going with that semi-passive approach. But, and we just have case study every case study of clients, buyers that have built out these portfolios over time of franchise businesses.

And oftentimes they also invest in real estate. They invest in other things. But, you know, they start to create this little organization and they can promote within. And, you know, and they're setting people up for success. And then they're taking more of a board of directors or coaching type approach on the sidelines. And the more hands off you are, the less profit margin you get, of course. But that might be the perfect scenario to preserve your time.

So that, you know, that ties into then that portfolio concept. So let's talk about your book, non-food franchising, because I think a lot of people think franchise, oh, I've got to buy the subway or whatever franchise that it is. So talk about the rise and the popularity of franchises that are not. related to food. Absolutely. No. In franchising, I would say that, you know, we encompass a lot of this in the book here, but we hit on all the key topics around the financials, funding side, different ways of funding. We talk about financials as far as what you can make, but then we also get into industries and get into how can we find broad opportunities. You know, some of the

industries just to highlight, you know, what we're seeing out there. You know, I always say that non-trendy has become a new trend. You know, so it's non-sexy, cash blowing, understandable businesses that are Amazon resistant, maybe recession resistant, that's what people are gravitating towards. It's things like gutters and insulation and dumpsters and concrete paving or oil changes or, you know, it's things that people will spend on regardless of the economy. They're always going to spend on their pets, on their kids, on their aging parents. You know, they're just going to spend on their health and wellness on their homes. And so it's businesses that cater to those pockets that we see so much interest in today.

So we give a lot of case studies. We talk about the pros and cons of different industries, the different considerations, you know, variable costs versus fixed costs, just all the different dimensions that we use when we guide clients through the process. We also talk about how to find the right franchise. I mean, there's over 4,000 franchises in the U.S. alone. You know, now you knock out those in food and real estate. And I'll say that I love people to do food.

We need them. We're grateful to them. But there's easier ways to make money. And most of my clients would agree with me. And so when you start narrowing it down, ultimately, you know, what are those opportunities that kind of fit your criteria? What are ones we see resonating out there in the market? And the beautiful thing is there's no cost to work with us. It's very much like an executive search model.

We are funded by the brands. If you go directly to a franchise or you go through us, you pay the same franchise. So it's a very clean model. So we get the privilege of coming alongside our clients and guiding them through this process. And you're really helping them see behind the scenes because if you go out there and just start. Googling different brands. You're going to start finding the you'll get overwhelmed. You don't know who that leadership team is behind a brand. You don't know what that track record is. That's so important because that's your business partner. So

we help them focus on the right things. We help give them that history behind the leadership team. You know, what's resonating out there? Why are we picking this one? Only has 20 locations today. But look at all these things that's got going for. Maybe it's got national accounts. It's got proprietary elements. So, you know, Yeah, that was a lot to digest right there. But yeah, we get and unpack all that in the book and then as we work like mine. You know, it reminds me of that book from many years or decades ago. Do you remember Tom Stanley wrote the book The Millionaire Next Door?

Yeah, absolutely. And sometimes when you're selecting the right franchise and doing some of the things you just mentioned, it's not going to be the glitzy, high, you know, gloss look. Maybe it's going to be a whatever, a junkyard or a whatever. Some dirty job kind of like the TV show, you know, it's like, who would have thought? But that person is doing really well in that industry. Sometimes those are the sleepers and you're saying that you have certain metrics and things to look for that would say, you know what, here's this one in this sector, this industry.

Here's why it's a good choice because they've got whatever, some of the things like you were mentioning there. And sometimes it's not like the ones that are the top, top, top things that you would Google or see out there. but I think that maybe you can speak to some of those factors and what some of the ahas are that someone would go, you know, I never would have thought about X, you know, industry and a franchise. But wow, that's been a great decision because. Yeah, you know, the last two I invested in it. I invested up in Minneapolis with a great operator where it's a concrete paving business. We do parking lots, fix cracks, you know, we fix potholes. You know, things that are needed. It's a B2B recurring revenue type business. We do all the line striking for parking spaces. And talk about a net. And then the last one I invested in them was down just outside of Miami. You know, it's custom orthotics and insoles. They use 3D printing. I mean, everyone has to be, everyone uses their feet a lot.

They're vitally important. And you know, we cater to diabetics and the older population, a lot of Medicare recipients. And so we've got some national accounts that they kind of benefit us and a diatrist's, you know, referrals. You know, but it's these types of niches. Again, 90% of our clients don't know what they're looking for until it's right there in front of them. And we've had a lot of clients buying you into senior care recently. Well, senior care is a crowded space, but there's one that we really, really like out there where the founder had established a 700 location senior care business across the U.S.

And said, you know, there's really a better mousetrap. Now that I know everything that I know, I'm going to go out and start a new model. And it checks all the boxes. And so that's where we have our clients lined up these days. You know, we have clients that are getting involved in dumpsters. started getting involved in, you know, just all different types of businesses that you would never think about. Insulation. Inolation is $53 billion a year. Wow. I bet most of your listeners couldn't name one brand. It's a highly fragmented market.

Yeah. Yet there's a lot of money to be made, especially with energy costs growing up. And, you know, that's a B to C and B2B model. So, you know, it's fun exposing people to these. So you said something interesting. I want to just kind of dive into to make sure it's really understood. If you were talking about the benefits of a franchise because all the reasons we just talked about and someone is like, this is what I need. But wow, I got to pay John and Franbridge consulting multiple tens of thousands of dollars just to put me in touch with the right one so that I then can pay the franchise fee. But your services are no cost to the franchisee because the franchisor is paying your fee. So it's no cost to work with you from the entrepreneurs aspect. And I think that's huge because they're just tying, they're just tying into your knowledge base, your expertise, and you are guiding them through the process to say, you ought to consider this.

And I think that's a big piece that people need to realize. Yeah. No, it's a beautiful model. Very much like real estate or like executive search. And we've been very blessed. We do more placements than anybody else in the country. And so I say that for the reason of it, it allows us visibility into what's resonating with different backgrounds all around the country. why is it resonating? So we bring those insights in when we're working with our clients to

understand their situation, what may be the best pick. So I know that we could probably spend four and a half hours on this last piece, but, you know, it really does kind of boil down to, okay, I'm all in. Now, how do I pick the right one? So what are some of the low hanging fruit, the top points that people need to think about when choosing the best franchise for them? Yeah, you know, we certainly look at the financial model. You know, we want to make sure There's a lot of meat on the bone from a return standpoint. We look at competitive advantages of a business within their industry.

You know, are those true differentiators and are they meaningful? You know, we look at the franchise or leadership team. Can't put enough emphasis on that. I mean, having been a franchisor or myself, that's your business partner. There's that's such an important relationship. You have shared values that they're going to have your back, you know, through the whole process. Yeah, and then, again, we look at what's resonating with everyone else out there, and why is it resonating?

we bring, you know, wouldn't you rather join a franchise system that brought on 50 franchises last year or would you rather join one to bottom on two franchises? You know, who's got the momentum? Why do they have the momentum? So, you know, we bring those insights together combined with what's available in your market, which frankly, some of our biggest challenges these days because things do move so fast. I had a client in Philadelphia that signed a deal two weeks ago where he was one of six candidates looking at the opportunity at the same stage and everybody he wanted it. And unfortunately, he's a great guy. We worked our relationships to kind of position. And it's the number one. He got the first dibs on territory. Yeah, but it's competitive

out there. And so we're always, what's coming down the pipe, what's at the tip of the spear and bring those. 100%. So, John, it's been eye-opening to hear what you do, how you do it, and what sets you apart in serving your client? So I just really appreciate you coming on. What's the best way that someone interested in exploring their options potentially could learn more and pick up a copy of your book and connect with you. Yeah, come out to FranBridge Consulting.com. That's FRAN, FranBridge Consulting.com. Sign up for our free monthly newsletter.

We put out some great content. When you do, my assistant will also reach out to you with free digital copies of non-food franchising. You need to it be an audio or PDF. And if you'd rather get the hard copy, you know, go out to Amazon. It's Amazon, Barnes & Noble, all of the different retailers. But all profits go to a great charity that we support, Hope International. So know that your funding is going to a good cause if you do choose to get that path.

Excellent. Well, John, thank you so much for coming on. It's been a real pleasure talking with you. Enjoyed it, Mike. Thank you. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www. www.influentialentrepreneurs Radio.com.