Escaping the Drift with John Gafford - From Startup to Franchise: What Actually Works with Alex Smereczniak

Episode Date: December 23, 2025

Alex Smereczniak is a serial entrepreneur and the co founder and CEO of Franzy, a platform reshaping how entrepreneurs discover and acquire franchise businesses. Franzy was built to remove the opacity and friction that traditionally plague franchising, giving founders real clarity, tools, and support to make smarter decisions. Alex’s work centers on enabling ownership and helping people bet on themselves with better information.Before Franzy, Alex co founded and served as CEO of 2ULaundry and LaundroLab, where he helped scale a venture backed laundry delivery company and its franchise arm from the ground up. His experience spans fundraising, growth, operations, and franchising, and he remains actively involved as a board member for both companies. He has lived the realities of scaling fast, hiring teams, navigating capital, and building systems that hold under pressure.In this episode, Alex breaks down what actually works when building businesses that scale and why entrepreneurship is more accessible than most people think when the right structure is in place. He shares lessons from multiple ventures, hard earned insights from the franchise world, and a clear perspective on how to create companies that drive both profit and impact. This is a grounded conversation with a founder who understands the full lifecycle of building and backing businesses.💬 Did you enjoy this podcast episode? Tell us all about it in the comment section below! ☑️  If you liked this video, consider subscribing to Escaping The Drift with John Gafford *************💯 About John Gafford: After appearing on NBC's "The Apprentice", John relocated to the Las Vegas Valley and founded several successful companies in the real estate space.➡️ The Gafford Group at Simply Vegas, top 1% of all REALTORS nationwide in terms of production. Simply Vegas, a 500 agent brokerage with billions in annual sales Clear Title, a 7-figure full-service title and escrow company.*************✅ Follow John Gafford on social media:Instagram ▶️ / thejohngaffordFacebook ▶️ / gafford2🎧 Stream The Escaping The Drift Podcast with John Gafford Episode here:Listen On Spotify: https://open.spotify.com/show/7cWN80gtZ4m4wl3DqQoJmK?si=2d60fd72329d44a9Listen On Apple: https://podcasts.apple.com/us/podcast/escaping-the-drift-with-john-gafford/id1582927283 *************#escapingthedrift #alexsmereczniak #serialentrepreneur #franchisebusiness #businessownership #startupfounder #scalebusiness #entrepreneurship #franchising #founderstories #venturebacked #businessgrowth #ownershipmindset #buildtolastSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

It's literally one of my favorite words in the entire world, which is arbitrage. A, because it sounds fun, but B, because of what it is. Essentially, you're taking a service or you're charging a fee, and then you're turning around and hiring somebody else to do it for less, and you're making the difference between what your customer's paying you and for what you're actually paying to do the work. And finance, I love this because you can go borrow money at a certain rate, and then you can loan it at a much higher rate, which is something I do with great frequency buying notes. and you just make the spread is essentially what you're doing.

It is in my opinion, the greatest thing about America is arbitrage. I love it. So yeah. Examples of it everywhere. Everywhere. It enables you to start a business without starting a business, which is great.

And so many people that are good at a particular service or have a service, like you just said, might be terrible marketers. They might be terrible at driving sales. And you can go into those businesses and partner with them on these margins because they're like, what do we have to lose? We're just here getting business, which is great. And you can take a step further, which we do.

This is, I do, which is very good. And I've been criticized by some, for what I call it, I call it the Tony Soprano method. And now, escaping the drift, the show designed to get you from where you are to where you want to be. I'm John Gafford and I have a knack for getting extraordinary achievements. to drop their secrets to help you on a path to greatness. So stop drifting along, escape the drift, and it's time to start right now. Back again, back again for another episode of like it says in the opening, the podcast that gets you from where you are to where you want to go.

And today in studio, I got a really impressive dude, man. This is a guy that really, he went to college and rather than saying, hey, I'm going to go to college and get a degree and then maybe I'm going to look for a job. This is a guy that said, nope, I'm going to carve my own way. started a business in college that wound up being incredibly successful, leading it to having like 100 locations, open or in development through a franchise system, which developed a love of the franchising system. And through his, what he perceived as a lack of clarity or a lack of understanding of the franchise deal, he built a new platform called Franzy, which is essentially

like Zillow, but for franchises. So you can shop and understand exactly what you're getting into rather than just hearing a sales pitch and some trade show where they have like the best balloons or whatnot. So that's what we're going to do. So guys, welcome to the program. We're excited today to talk and learn from Alex Smersnack.

I'm going to take that intro and just have that for anything I do ever again. The goal is to fire you up, dude, and gets you ready to go. And also, I forgot to mention, entering in a lot of Civil World General lookalike contest right now, which is apparently something he's working.

chat in my yard. I'm just kidding. If you look at us on YouTube, if you're not watching us on YouTube, now you have to, because you want to see the look that Alex is currently rocking. He's rocking a very southern gentleman type appearance he has today, which goes with his Wake Forest education he had there on Tobacco Road, so that's what he has, which is funny. Civil War General is one of my default voices I go to a lot. I don't know why. So if you want to see what Alex looks like, please go over to YouTube. And yes, please like and subscribe us over there. We'd love to have you over on the YouTube channel. So, Alex. I get Hormosey and Thomas Rett, too. Yeah. Well, see, you're, you're too clean cut for Hermosey. You got the

blazer and you can't do it. You got sleeves too. You got sleeves on and you don't have the nose thing. I can see a young Hermosey. I can see any, yeah, you need more of a tank top look though. Yeah. Yeah. And then I wouldn't have a chance to use my Civil War General accent, which I do appreciate, which is great. So, Obviously, you said you're from Minnesota is where you grew up, which is ruining this whole look for me. I know. Terrible. How did you decide to go to Wake Forest? I wanted to get the hell out of six months a winter. So I was like, I need to go experience other parts of the country. I grew up in a small town, 15,000 people. It's called Red Wing. And the only reason you might have heard of it is Red Wing shoes or Red Wing boots. Have you heard of you? I have, of course.

So like, they employ 60% of the town. It's right on the Mississippi. And I was like, I need to go somewhere else and just experience. let's okay let's can we talk about that yeah because that to me is an interesting dichotomy that a lot of people get caught in in these smaller towns i tell a story about like when i lived in detroit in the late 90s i was a transplant from florida detroit try that talk about what that did not yeah my company moved me there it was terrible but what i found was it was a very difficult place to make friends because there was this hamster wheel of like i'm born i go to high school I graduate high school. I get a job next to my dad at the Ford plant.

I marry my high school girlfriend and I buy a house, three houses down from my parents, wash, rents, repeat. That's what it is. Yeah, but it's just wash, rinse, repeat. It just every generation just repeats what the previous generation did. And it's really hard when you're in that kind of an echo chamber to kind of see what's possible out in the world. If you're in a town where this company employed 60% of the people,

is that kind of how it was where you grew up? Yeah, I mean, a bunch of my high school friends are still there. And if they're not in Red Wing, they're in Minnesota still. So I got my parents are still. That's where my mom grew up. Were your parents working at Red Wing? My dad was a financial advisor. Okay.

But my mom grew up there, went to high school there, stayed there. I was born there, went to high school there. And so it was exactly what you just described. Most people stay. So was it, was it you or the fact that your dad was a financial advisor that you saw bigger and wanted to not just go work for me? Both for sure. Like they did a really good job with me and my two older brothers of like,

go see the world, go travel. like my mom says roots and wings she's like i help you get grounded and you know be a good person but then i want you to get wings and go fly and go do something else like don't stay here yeah love that um you know she would love to have me back and be closer we have my wife and i have a five month old um you'll get her sooner than later so how to your parents uh my dad's 74 my okay 71 and they're not and they're not doing the move to the closest grandchild thing well so i've two older brothers and they're back in minnesota so i'm the odd duck oh but yeah See, my mom did the move to the youngest grandchild thing.

She calls me her baby boy, so maybe she'll still come on down. All you got to say is, this is so hard. We don't have enough help. We just don't have enough help. Can you help us? She'll show up. She'll show up. But your parents were good examples, wanted you to get out of the house and do things.

Yep. Well, what advice would you get to like, okay, if you could go back right now to your high school friends. And granted, if you were a high school person working at Red Wing, we're not hating on you at all, I'm just trying to say, if you could go back and talk to you, those people at their formidable ages and say like maybe there's more what message would you give them i would tell me go travel even it doesn't have to be expensive or like just go see other cities other states what the culture is like there what else is out there because our

parents being really intentional about summer trip or a spring break trip that wasn't to the cabin in northern wisconsin that looks like more of Minnesota and more yeah so like they were very good about, you know, experiences, experiencing other cultures, places, things, and that really opened my eyes to there is way more out here. And I tell those folks, like, don't take the trip to Wisconsin Dells to the indoor water park, like get in the car and drive to Austin, Texas, or Orlando, or wherever it is to go just see other parts of the country. Yeah, one of my favorite things has ever been said in this podcast room was my friend Chris Connell once said, I never met a well-traveled racist. I love that quote. I thought.

it was so apropos and we've done so we've worked to get our kids out of the out of just saying one thing over and over over again it's hard though when you have like you know we fell into the trap but we have a second house at the beach in newport the kids are like you know oh god i go you're going to newport again we're going to do port again so we try to mix up as much as we can you get them out doing stuff yeah because i agree they don't want to see the same things over and over no it's like the things that you are going through a 16 year old's head i mean mine was i like basketball I don't like the winter or like the cold. I'm going to go to college in the South that has a good basketball program.

Not to play, but just. Well, Wake, you did it. Yeah, there you go. That's a good choice. It's so crazy how kind of like valuable. Can I ask a question? We are at that age. Did you apply to Duke as well?

It did. And I got waitlisted. You got weight listed to hell of that. Okay, there was. To hell with Duke. Screw you, Mike. Justiske, whatever. Oh, yeah, screw you.

I'm not doing it about it. I had to ask. I love how you need to ask. Well, you said it. I wanted to go a place in the South with great basketball, and you went to Wake Forest. Yep. I had-Villanova, Vanderbilt. I wanted smaller, too, it's like, Duke, check that box, wait, because, I don't know,

going from a town of 15,000 people to a school of 15,000 kids felt terrifying. Well, dude, how are you going to go to Vanderbilt? It's right in the middle of Nashville. Yeah. That would have been, I mean, it would have been awesome. Don't get me wrong. My kids applying to Van, which one of the schools he's applied to right now is Vandy. So, yeah, it would have been awesome.

It was like, oh, basketball I can get over the size. I wasn't, like, terrified of big cities, but I was like, no, New York, no Chicago. I just, I couldn't. Didn't want to do it. All right. So, hey, so we get to school and we're doing well in school. Or were you doing well in school? Yeah, so I actually went to a boarding school, my junior and senior year of high school, because I went to my parents, my freshman year of high school and said, they were asking, like, why don't you have homework like, oh, they're teaching like 20 minutes and then the other 20 minutes to like do your homework. Like, well, shouldn't the other 20 minutes be teaching? I was like, yeah, I think so too.

Yeah. I feel like this isn't good. I remember going to my parents, but I don't, the rest of the world probably isn't doing this. I know other kids are doing AP classes and all this stuff. And I'm not doing that. And I don't think that's good for me if I want to have this life that I want to have. So I approached them when I was 14 and said, I need to go to another school. And Red Wing only has one options. Yeah. And they're literally training 60 to 70% of the workforce at Redmond So how much time do you need to spend on AP calculus? Right. Not a lot. So I went to a boarding school and that really changed everything because it was it was you know redwing that had predominantly just like white people farm type red wing shoe type to the school that had people from all over

the world a lot of Asian international students and so I went from being it's kind of like big fish in a small pond to I'm now the only white kid in my math classes and these again mostly Asian kids are kicking my ass killing you yeah it was it was good where was the school where was the school is in Minnesota. So it's called Shattuck St. Mary's. Okay. They've produced more D1 hockey players than any other school in the country. Wow. I know I got the hair flow. You got hockey flow too. It could be hockey flow too. I didn't even think about that. Man. In my graduating class was a hundred and four of us and I think 70 some went division one in hockey or soccer. Wow. I was not one of them. You know. I wouldn't have one of them either. Yeah. So I did well in school and I was going to let the college I got into

dictate what I did. Because I was really interested in going into the medical field, pre-med, but I also was very interested in business. My dad, you know, growing up, worked with a lot of entrepreneurs. He was entrepreneurial himself. I was like, all right, if I get into Duke, I'm going pre-med. And if I get into Wake, because those are the top two, I'd narrowed it down to. Wake has a top 10 undergrad business program.

All right, if I get into Wake, I'm going business. If I get into Duke, I'm going pre-med. So if I didn't get waitlisted, I wouldn't be sitting here. Yeah. You'd be a doctor. which would you wouldn't have as much money probably but yeah depending on what kind of doctor

you would I want to do radiology and they're getting cooked right now yeah that'd be bad reading charts yeah if you're going to be a doctor just go right to plastic surgery and just move to Beverly Hills just do that you work my buddy Dr. J. Calvert there

and there you go that's all you need to do so when you were in a way did you were in a position where you didn't have to work or what was your financial situation parents were like no tattoos, no piercings. If you do that, whatever school you get into will help financially and take care of you

guys. Good move. And a few other rules and things growing up. But so I thankfully didn't have to work, but my dad was like, I worked three jobs and walked up way to uphill both ways. And so he wanted us to have a job. He's like, you don't need to do it, but you need to have something where you're making money for your own.

You can't do nothing. Yeah, you can't do nothing. And so I worked for this student run laundry business called Wakewash. As a bag runner initially, I was running in, grabbing people's dirty clothes, putting them in my 2006 Jeep Liberty and driving them off campus to the laundromats. And the guys that ran it were graduating. I was like, this is incredible. This could work at Duke, Chapel Hill, Vanderbilt. I want to buy it.

And they're like, all right, we're going to sell it for $28,000. My jaw hit the floor. Like, this is the most money I have ever heard of. I have two grand saved up. I wasn't in the business school yet because you had to do two years of generals. So I went to the business school as an 18-year-old, sort of knocking on finance professors' doors. So I want to buy this business.

I don't know how to, I have no idea. How can I do this? And they're teaching me about discounted cash flow analysis, seller financing. As an 18-year-old, I'm getting this very hands-on, tangible learning. And that's when a light bulb went off for me. It's like, I don't need to go do this path that I feel like, partially my family, but mostly society has kind of pushed on me of like,

get good grades in high school. So you get into a college and then you get good grades there. So you get your Fortune 500 job. do that for 40 years and then die. I was like, this whole entrepreneurial, I'm learning way more. I'm enjoying it. I would have ownership. I would have say and control over what I'm doing, but I'd just be learning so much faster. So I ended up buying the business with two partners. We pulled together 11 grand and then did seller financing. Okay. So your partners. So I want to walk through this because you're an 18 year old kid, which is cool, right? Were they just equity

partners or do they bring something to the business? So there were four of us. They're going to be in three. So I learned early on about picking the right partners, not just because of they're convenient. I'd rather work with three very different people instead of three of me. And so one of the, two of those guys were, you know, another me and one of them wasn't and another one wasn't. So what did you bring in the table? See, this is, this is gold, what are you saying right now? Because so many people want to bring on a partner when they start a business, A, because they're chicken shit to do it themselves. B, because they just think it'll be fun with their friends.

but most of your friends are replications of you. And if you have three people that are all putting input into a business and they all think the same way, two of them are not necessary. Yep. So what did you bring to the table? What was your, like let's talk about the SOPs. Let's talk about what your area's responsibilities were. What did you bring to the table?

What did they bring to the table? Mine was like the finance strategy, putting the deal together and then like big partnership sales type of things. my other partner was also financed entrepreneurial those dad was an entrepreneur one was really good at marketing and then one was an anthropology major perfect because that because that's what you need in this business that's exactly what he's the one that didn't make it out with us really that's shocking to me yes how does this affect ancient cultures i'm not sure let's talk about it we're also the four of us are all really good friends we just realized we don't need four of us

And I can just see those meetings when you're like, here's my input. Yeah, that's really cool. Here's my input. Yeah, that's really cool. Here's my input. Yeah, that's really cool. The third person is like, should we get pizza? Lots of drinks for hats.

Yeah. I'll get us out of the round. There we go. Okay. So before you bought it, you got rid of the fourth or? Honestly, right around the time we were buying it because the issue was the people we were buying it from didn't have a formal agreement with the university. And so the fourth one couldn't get his headwrapped drawings.

Like, why don't we just do this ourselves and not have to buy it? from them and we're like they have a brand they do have a relationship with university it's goodwill and it's intangible sure and i get that you're buying this intangible thing um but the price was good we knew we were going to unlock a bunch of revenue and he just couldn't get his head wrapped around that's we're like look this is causing too much stress and friction i think for you let's give you the money back that you put into and then some are you good and he's like yeah i'm good i don't really know why i'm doing this to be so so you're learning from the professors how to value the business and you're going through it after you so after you

recast their P&Ls, which I'm sure you did. Yep. What was the multiple you bought the business at? I ended up buying it for like one and a half times revenue. Okay. Times revenue. Yep. Okay.

All right. So one and a half times revenue. Service business. Okay. It's fair. And you said you did seller financing. What were the terms on the financing? So we did 11 grand down and then we ended up paying them a percentage of revenue over the

following two years that we ran it. Okay. For a total purchase price of the 28. Geez, did you stick on that? They just were like, it's going to be $28,000. Yep. Okay? So $28,000. They wanted to uncap it, but we knew, and we did do what I'm about to say is we were going to get a really formal relationship with the university where we were getting real estate on the incoming, you know, parents' website, booth at orientation.

And we ended up aid Xing revenue. Had we uncapped it or not capped it, they would have gotten a really, really good outcome. So thankfully, we capped it. He said, hey, you're looking for 28 or so. We capped it. I think it was maybe 30, 31. Yeah, low 30s. Well, okay, lessons learned from that little transaction is you've got a distress seller.

They're graduating. The business either gets sold or it dies. Yep. Were there other suitors at all for this? There was one other one. One other suitors. Okay, so you were competing with somebody else. Yep.

And that's where our anthropology guy almost blew up the deal. And we're like, hey, we had to like go have a midnight. Yeah, yeah, we're so sorry. He didn't mean what he was saying. Yeah, like you saw where this could go. And it was very close. closely going to go to the other group. Oh, wow.

Because we had the offer, we had nailed down, they wanted to go with us. And then the anthropology guy went and said like a com, we were all in the same fraternity, too. What fraternity? Sigma Pi. Okay. So he had said something. He said, I don't think it's worth this. Why are we paying you guys all this money for this thing that's not worth that?

Of course, they, like, we'll just go to the other group. Oh, I got back. Yeah, if you don't think it's worth it. We have somebody else that does. So you said you had 11 grand. Was that all personal savings between the three of you, or did you actually raise capital. That was personal savings. I had like $2,400 or something saved up. The other one had three or four. The other one had two or three. How'd you split equity? One of them was going to be

studying abroad for a year. And so part of it was the capital we put in, but also figuring out who was willing to do the most work on it. Okay, cool. And so I was willing to do way more work. So I ended up owning a little bit more because I was effectively running it the following years. Put the deal together, structured it. Okay. So, okay, let's talk about this, because now this is interesting. Did you value your time with your partners once the deal got moving? So did you start taking a salary? It didn't take a salary. We were paying ourselves dividends and we paid it out based on the total percent of ownership

that we'd agreed to based on capital putting in and time that you were going to be working on. If you could have gone back and revised that, would you? No, this is, okay, remove yourself from your buddies and remove yourself from the situation, right? I'm just, we're trying to help somebody else is what we're doing right now. We're not trying to, I'm not trying to hammer you down what it could have should erode. I'm saying let's help the next people because I think this is something that people don't do right here and you get

into it with the best intention with people, especially partners. Everybody's, day one, everybody's best intentioned. Oh my God, I'm totally going to, yes, I can put forth effort, I'm going to do this, yes, I'm going to do this, and then life happens. Right? Maybe all of a sudden they start not doing so on school and they're like, shit, I got study. I can't do this. Maybe

they get married randomly at 20 years old and have a kid. Oh shit, I got that. Like, things happened pretty rapid with people, and you don't realize that. So was there a mechanism within your partnership agreement to adjust that or to compensate for that? No, in hindsight, I mean, we were, I think, looking on Google or like, I don't even know if the, I can't remember if the university, one of the finance professors gave us a template or something, but it was very basic. I think our math was like, all right, I'm willing to work 10 hours a week on. I'm willing to work five. And we just did like

a prorated, you know, amount of that to figure out the sweat equity piece and the cash piece and combined the two, and that was it. Was it pretty close? Did it stay pretty close to what you had estimated? Yeah, it was, it stayed pretty close. The fourth guy that we bought out, you know, we just ended up splitting his pro rata, which at the time didn't even know what that meant and what was pro rata. So we're figuring things out.

Just going to whack up this piece of the pie amongst ourselves. That's what we're going to do. Can you imagine a bunch of 18 year olds talking about, oh, you're pro rata and share and distribution of this guy's equity. It's just any, today? Yes, I can. Yes, I absolutely can. Yeah, that's fair.

That's a good point. absolutely i mean dude yeah the knowledge that's out there these kids are getting now at such a young age and the information they have access to like you had to go hawk a professor now they go to chat bro you go chat pull this out in two seconds yeah right it's a crazy the education the level you can get and again if you listen to this and you're like oh i'm a kid or oh i'm too old or whatever no you're not like technology has leveled the playing field amongst age amongst starting line amongst all that stuff like you you can get whatever information you need is really you're readily available everywhere.

Yeah. Okay, so you start going, you eight X this thing. Yep. And when do you start thinking about maybe we should put this somewhere else? Immediately, like when we bought it, we're like, we want to go to other colleges. So we first we figured it out on campus for like a year, got our bearings. How much money is this making? Our first year, they gave us that real estate, they gave us the booth.

We were like the sham wow in late night infomercial people. Like parents were coming and they loved us. We're like, step right up. We are the premier laundry service. The premier laundry service. And that was just funny. Do you want your kid to stink? Because he's not going to do his own laundry.

We would say stuff like that in front of the kid in front of their parents. He's not going to do it. He's never lived on his own. And we show pictures of the laundry rooms in the dorms. We're like, yeah, look, people take your stuff out and they put it on the ground. They get detergent all over. And they're like, oh, my God. This is like Beirut.

This is terrible. Well, and they're the mindset of like wallets open right now. They're buying books. They're buying meal plans. They're buying parking plans. No, that's not what they're selling. But no, that's not what you were selling. We were selling at a time, peace of mind, but they were ready.

What you were selling is one of the last things, the mom or whichever parent in the household has been helping take care of their kid, that last thing they could do to take care of them again. Make sure they were still taking care of them. They can't do it physically. And I know moms are like, I started making my kids near longer with 13. Yeah, but you were still taking care of your kid. And this is a way that the emotional piece of dropping your kid off. Take a load off. Genius.

No, but it's genius because it's super emotional for at least one of the parents to, dad's probably like, God, good, you know, go do something smart. But the mom is just, you know, besides herself. And you're like, we're going to take care of your baby boy or whatever it is. I mean, yeah, it's genius. Right then and there is where you need to sell it. It was just like, I couldn't believe how much revenue we did those two weeks. It was, you know, a couple hundred thousand dollars in a two week period of orientation. Wow. Um, up from 28-ish thousand in, in, sorry, it was 20-ish thousand that they were doing. Um, unbelievable. Did you ever have a conversation to the guy you bought it from that were like, holy, what?

Not really, because they had left and we were like, but this is the old thing. They left and it's our thing. But they were working in a fraternity, I thought, right? So they graduated, though. So this was our first year after. They were seniors when we bought it. Yeah, but they had to come back to school at some point and seen like this.

So they knew, but we were like, hey, guess what? Yeah, yeah. We're killing you. No. Because I'm thinking, because here's the honest truth, right? If they graduated and they went off and took jobs, there's a good chance you're probably making more. than they're making their first job.

Because the margins were unbelievable. Right, taking over their original business. So they, I kept in touch with some of them because they went on to go do finance at GE. Oh, man. Okay, that's a good job. In San Francisco. He's been at a bunch of amazing startups in the Valley.

It's like, I'll keep in touch with them here and there. And like, they've now known what's happened. They saw me do I did after college with it. Yeah. You know, they're really happy to see that it's changed hands to seven student group since.

So you're still, so you tried the business off. Yeah. We sold it when we graduated. Okay. So you guys had it and then sold it when you graduated. Yep. And it's continued to trade hands as it goes along. Six different generations of students. Wow. There's been this element of like this really emotional piece for all of us of like, it changed my life. I, I, my eyes got wide open to being an entrepreneur, running a business failing. Like where else in your life are you taught that, hey, there's a lot of learning and good in failure versus school. It's so like A, A, A, B, that's bad. You fail. Like it's punishing almost. almost, whereas this was like, oh, we now know one way not to do. Let's try this angle.

Let's try this messaging. Let's try. And it's like exciting to fail almost. You don't want to fail too much in a row, but. Yeah. Like my office, I talk about all the time. You know, people have like their awards and stuff in their office. My office is filled with like, it's like a serial killer to my own finances.

I have like trophies. The graveyard. Oh, I have trophies of miserable failures just from the lessons I learn from these things. I have a hundred thousand dollar bottle of vitamins. I have just all this stuff in my office. You're like, what is this? You're like, yeah, let me tell you what that is. You're like, oh, God, yep, we'll do that again, right?

I think it's, I think remembering your failures is far more important than celebrating your wins because people that tend to cling to their winds too much, coast. And there's only one way to coast and that's downhill. Yep. You know, when you look at those failures, you're like, man, I got to, you know, it fires me up to get away from that stuff. I love talking about that. So, I mean, so that we had that experience at a really young age and all of us felt some

responsibility like we need to give another group the same experience that we had because again it materially changed the trajectory of our lives did you learned you did you learned more from the business than you did from the classes thousand percent and i say that all the time that has nothing to do with the quality of the professors of the people they're like they're amazing professors ex-wall street guys teaching fine i mean it was amazing but nothing will replicate that hands-on down and dirty failing iterating moving quick problem solving someone calling out while you're in a class and you're like shit i need to staff this and figure this out and like i just nothing replicates being in it it's interesting because i talk about all the time you know

there's there's these people that do what i do you know i love entrepreneur stuff and have a microphone in front of them and talk about how college is a is a rip off and i'm not one of those guys i do not talk about that like my son is applying right now to all the ivies and you know uh the second tier duke is on that list which is funny i'm not like we're on that list but dandy's on that list on the second tier i'm trying to get him to go to a place for this reason right so i'm like listen if we don't if we get an ivy great let's we're doing ivy but if we don't i want you to pick a school that has is a feeder school to prop to family offices yeah let's go to smu let's go to usc let's go to one of these schools where all the family offices come out of because for me yes the

education is wonderful and the accomplishment of the degree is fine but it's the network that you build at these locations that is worth its weight and gold and for you when I look at you, like, and you're telling your story, if you didn't learn in the fraternity with these guys that had this business and you didn't have your buddies from the attorney that's business, you never would have had this business, which ended up teaching you far more than the university did. So you are a walking, talking example of exactly why I see incredible value in going to college.

100%. And I tell people, too, like you go to college to learn how to learn as well as to network, but learning how to learn. Forget what it is your learning, but it teaches you all this independence and, how to get organized and study and pick up concepts and problem solve and that was on another level for me than it was high school even that boarding school just college teaches you how to grasp kind of more foreign abstract concepts in a way that I think it's hard to do in other settings

yeah teaches that a thing so when did you start franchising to other schools with this laundry deal so we my junior year me and uh one of the guys and we were like the most gungho about this like we're laundry forever. We're going to take this to 300 universities. And we had all these models that in hindsight, model is a little nonsensical. Yeah, models are usually going to be wrong and optimistic. And these were very optimistic. We're going to get to 500 schools. We're going to get this many students at each school. There was logic behind it. But in hindsight, it's funny to think about that we're going to do like a hundred and fifty million dollar a year college laundry business. That's what we're going. But as our junior year, we started going to other colleges. And we

learned very quick and very hard that government and universities have a lot of red tape and bureaucracy and Wake loved us doing it on Wake's campus because it's a marketing thing for them. Look what our kids are doing. It's a student-run business. We have entrepreneurs here. Soon as we went to do Chapel Hill, they're like, who are you guys, fill up this request for a proposal? And you're going to have three other bids you're going to be up against and you can't have access to the dorms. And honestly, we don't even really want you here because it doesn't really add much value for us as like Dean of residence life and housing. It's a liability.

Like, what if someone gets, you know, assaulted or things get stolen? Like, they have no reason to put their neck out to let this college laundry thing. So then we're like, all right, this is a problem. It's not a no. It's a no for now.

How do we get around this? We need a JV with a student. Yes. We're like, we're going to make them, like, be entrepreneurial. So then we had all these students wanting to do that. And the university still was like, ah, we don't know.

Like, who are you guys? We want them to do it, but who are you guys involved? And what if you take advantage of our students? Like, all these nos and reasons. So we eventually thought, this is like an uphill battle. Let's, let's sell it when we graduate. You want to go do investment banking. I want to go do management consulting for a little bit and get a taste of that. We had a really good offer to sell it for basically eight, nine X

what we bought it for. And as a college kid, as a 22 year, I was like, we retired. Yeah. Yeah, I got some of those checks in my younger years. And I was like, I'll be rich forever. And like two months later. You're like, what happened to that money? Oh, I went to South Beach. That's what I did. I went to South Beach. That's what happened. Damn it. So, yeah, that's what happened. So you left the entrepreneurial award to then go be an employee. Yep. So sucked. Okay. Listen, anybody that makes, anybody that is a great entrepreneur, I find that we all have one thing in common, which is we are chronically unemployable. We're just, we're the worst and most miserable employees on the planet. Listen, I'll take this moment to say, Jeff, the AM room service manager at the Ramada in

Tallahassee, super sorry to you, dude, that I was miserable to you. I mean, probably you're the ones that stand out the most. Yeah, poor Jeff, the AM room service manager at the Ramada and in Tallahassee, Florida. Really feel bad for that guy. I put him through the ringer. It was not easy dealing with me. Brent Riddersdorf, Hooters American, dude, I'm sorry. I gave you so much grief. It was ridiculous.

What did you do? It was the worst thing you did. Just being me, I think was the worst thing. Because here's the deal. Because, you know, when you are an entrepreneur, I think your toxic trait is you're always looking for ways to improve on everything. It's just you can't, it's a switch you cannot turn off. And when you are not the person that has any power or authority to improve things or make things better or change. things. You can come off as condescending. You can come off as ungrateful. You can come off as always, there's a problem, always this, blah, blah, blah. But in reality, I think you're really,

you just want to see things improve. Like, hey, I don't, why don't we, but I think before you go through the process of being an updoor, you don't know how to vocalize those things. So it comes off like, why do we do it this way? This is dumb. Right. It's how it comes off. Instead of, hey, I've really looked at this. I think, I think maybe this will make us more efficient and make you look better in the process as the person this steering the show. Like the political polish was not there. Yeah, there's no political policy. It's like, this is dumb.

I don't want to do this anymore. Why do we have to do this? Why can't we just, it's like, it's terrible. Even me just now is like, yeah, it sucked. Like, I just, what's the least amount of words I can say to some of how I felt? Yeah, it's a three word description. The reality is it was awesome. I did learn a lot.

The people I worked with were amazing. Some of the best people I've ever worked with, it just wasn't the right thing for me to do. And for all the reasons you mentioned. It was always like, go, go, go. There's all this waste everywhere. and I hated the waste. I couldn't stand the waste. I remember two of the reasons I ended up leaving.

One, I just knew I needed to do something entrepreneurial, but the second one was I've always been like a systems, you know, kind of thinker of like, how do I gamify this? So I can do the least amount of work but get the most upside. Yeah. And as soon as there's diminishing returns, if I work another hour, but I don't gain anything.

Like, why would I do the other hour? Just I could go do something else. And so I, they give us the rubric. Here's how you get a one star, two star, three star, four star, star, five stars. All right, five stars, only three percent or, each class gets it. Here's the rules. They lay it out the rules of the game. I was like, I'm going to go play this game. At the end of the year, my roommates, I bought a condo with the laundry money. A lot of the guys that lived with me worked at Ernst and Young were people I knew

from college or work. And at the end of the year, my utilization and consulting, how many hours are you working? You know, client work, et cetera, et cetera. My utilization was like right at 41 hours a week. Like literally the bare minimum. My roommates was at like 80. He's working twice as many hours as I was. twice the production. So I was getting, I think twice, but just, I was doing campus recruiting. I was, you know, talking to the right partners and being involved in the right extracurricular things within Ernst & Young. And Sam, my roommate, very smart kid, also went to wake. I think he's smarter than me in a lot of ways. He worked harder than me on paper. Years up, he gets a three,

which is like where you want to be. That's three is what they expect out of you is what most people get. Two is like, you've got to work on some stuff. Four is top 10% and five is top three percent. He gets a three. Good. He's, kind of where he wants to be or needed to be. I get a five, and I'm like, I did half to work. I need to get out of here. Like, if I don't want the rest of my life to be me thinking about how I escape working because I don't, you know, like I, I wanted to, but I love the, so you skipped over

it's so quickly, so casually, and so many people don't understand the concept of diminishing returns. They don't understand, like, water boils at 212. If you heat it up to 280, you just wasted it if you're trying to boil water, right? And people don't think about it in those terms. And one of the things that I think keeps people trapped is they don't audit their time. They don't audit the effectiveness of what they're doing. They don't look at, you know, for lack of a better phrase, KPIs of everything they do.

They don't understand how much does this move the needle. And I think with me when I was, because I haphazardly just like just swung through my 20s on a hope and a dream. And I didn't have any great success until my early 30s. and because of this, which is why I wrote my book, which is a playbook to my dipshit 20-year-old self. But when you really start looking at what moves the needle here? Like what do I need to do that really moves the needle and just focusing on, if you just focus on 80% of your time on the things that give you 70% of your results, you're going to get a five while your roommate who's just trying to hit every mark with equal energy gets a three

and not understand how we got there. Right? So, yeah, I think understanding that is so important in the aspect of anything you're doing. Everything's kind of this game or this system. If you break it down and you, yeah, take even an hour and just proactively think about what your day looks like, what your week looks like, and you'll be shocked. So how old were you when you read Tim Ferriss's far hour work week? I think it was right out of college. Yeah. That book changed your life? Yeah. Yeah. When you read, if you haven't read that book, number one, buy my book available. By the time you hear this, It's available everywhere, Amazon Barnes & Nobles, all that stuff.

But yeah, another great book is Tim's book for Workweek because it talks, it literally will teach you this concept of understanding diminishing returns, which so many people do not. These are the things that I think should be taught in high school, in college of like basic budgeting and how to buy a house and taxes. You know, don't get me started there because, I mean, you figure, you know, the school system, the way it is now is really developed what, in Rockefeller days, where you were trying to really just develop a workforce,

not so much your next thinking generation. Just you're teaching to work. Go to work here and get done it this time is really the number one lesson that we're trying to teach people then. Seriously. Yeah, seriously. Yeah, and to walk on girders and build New York City or whatever

they were doing like 80 stories up. You've seen those old videos of like physical education class or like gym class and like the third. Everyone was bring it back. That I'm for that, right? People climbing the rope. And that's my honest, that's why those videos, I think, are why Robert Kennedy got made the House Secretary or whatever because, dude, he's still ripped and he's like 70 or whatever it is. God bless. Yeah, bring that back. I don't hate that. Uh-uh. I don't hate that at all. So. Regulator at the food we're eating, too. Yeah. Yeah, I got a problem. I'm going to make a video as soon as we're done here. Because my book actually, if you're hearing this now, my book actually comes out tomorrow. And I just found out this morning, there's another big drop happening tomorrow as well, which is, McDonald's is bringing the McRib back.

So as soon as we're done here, I'm going to go shoot a video where I compare for people that are on the fence, right? What you should buy my new book or the McRib. And I think I've got some really good things that, you know, are going to break. I think my book's going to win when I really lay the comparison all the way out. You know they do that strategically when pork prices are low. I know, but I got to compete with it. I got to compete with the McRib tomorrow.

Come on, man. I got enough problems. I got to deal with this. Miserable. Miserable problems. Anyway. So, that's what we're, wherever we're talking about. Oh, so you're miserable at your job.

Yeah, you're learning a lot, but deep down because you have the soul of an entrepreneur, it's not for you, right? So when do you decide to jump out on that on the next adventure? So I felt like we had left meat on the bone at the laundry thing in college. It's like, we got a couple nose, but what if we tried commercial laundry or residential, like busy families and other customer subset? And so I tried, I made the mistake almost again that I made in college. where I tried to work on this with other consultants from Ernst & Young, more of me.

This is where I really, it really stuck with me. This time was like, I don't need more of me. I need someone who aligns with me on my values and I think my beliefs in life broadly. But from a skill set has completely different, completely complementary skills. So we had tried at another school. We got a couple nose. Those nose turned them off. Like, oh, it's not going to work.

They said, like, two nose. I was like, come on, really? That's it? We're going to get like a hundred nose. Come on. A hundred nose before. Need a Mormon at this point. That's what you need.

So to try it a little bit at EY, but then I kept seeing all these Uber for X businesses pop up. This was when Instacart ship for grocery delivery, Wag Rover for dog walking, postmaids, DoorDash for food delivery, drizzly for alcohol. Like someone is, like we're in the era of the convenience economy. Someone is going to do this for laundry and dry cleaning. And I'm going to hate myself if it's not me. I'm, I did this in college. I got the drive to do it.

I'm young. I don't have any major responsibilities. Like, I need to get after this. And so what I did instead was, I called someone who I knew had my beliefs, you know, deep trust with them. One of my childhood best friends. But the difference was he's very good at marketing sales. I'm better at like operations finance.

I can sell if I have to, but I'm better at like putting models together. You're CEO or not CMO. Yeah. And so I was like, you want to do this? And we started tinker on the website. We started getting customers unintentionally in Charlotte. Like, all right, we're starting to work here a little bit. So he moved down, quit his job, broke up with his girlfriend at the time,

broke the lease on his apartment. he's now married and has a kid with her and everything's great. But at the time... Did you get invited to the wedding after you almost ruined her entire life? Did you get invited to wedding? She hates when I bring this up. I can imagine she would. Sorry, Alyssa.

Yeah. I can imagine she would. So he moved down and we got after, we had five guys living in a three-bedroom. My place, three-bedroom condo. It was my mattress, Dan's next to ours. And then we have this other friend that we kind of, we say we saved a little bit. I mean, he grew up in good family, but comes from a family of alcoholics. and like kind of wasn't going anywhere in small town.

He was one of those guys that was going to stay in Red Wing forever. And we're like, we're going to start this thing, come down. He's one of the hardest workers I know is very good with hourly employees and like frontline operations. He came down as our first driver. He eventually managed five laundromat locations for us and an 80 person team. So that's something that always personally. So you had the app on the front end.

Did you start acquiring brick and mortar laundromats to do the actual stuff? Eventually. So we were early days doing the laundry in our apartment at first, doing the delivery in our own vehicles of some of the stories and things we saw. And yeah, we did out of our apartment at first. I grew that quickly. Started going to laundromats and say, hey, we're going to, you know, John, we're going to bring you thousands of pounds a week. They all laughed that we were keeping in mind, we're 23, 24 years old at the time. We're like, we're bringing thousands of pounds a week. We did this in college. We went a discount, right? And they were like, yeah, sure, I'll give you this discount. If you can hit this tier, we blew through the tier in like two

and a half weeks. And they were, how are you doing? I've been running this laundromat for 10 years. I have no delivery business, no walk-in. How are you doing this? We eventually all grew them. They couldn't handle the scale that we were bringing them because laundromats are typically semi-absentee, not that many employees. They now needed 5, 10, 15, 20 employees to handle the volume we were bringing. And they're not operators. They're more landlords, I'd say, than. So were they doing the washments fold for you? Yes. You were arbitraising this deal. Yes. Okay. Let's Let's talk about that. And that's what we did in college, too.

Okay, so it was arbitrage. So we didn't talk about that. So if you're listening to this, you don't know what this is. It's literally one of my favorite words in the entire world, which is arbitrage. A, because it sounds fun, but B, because of what it is. Essentially, you're taking a service or you're charging a fee, and then you're turning around and hiring somebody else to do it for less, and you're making the difference between what your customer's paying you and for what you're actually paying to do the work.

And finance, I love this because you can go borrow money at a certain rate, and then you can loan it at a much higher rate, which is something I do with great frequency buying notes. And you just make the spread is essentially what you're doing. It is in my opinion, the greatest thing about America is arbitrage. I love it. So, yeah. Examples of it everywhere. Everywhere. It enables you to start a business without starting a business, which is great.

And so many people that are good at a particular service. or have a service, like you just said, might be terrible marketers. They might be terrible at driving sales. And you can go into those businesses and partner with them on these margins because they're like, what do we have to lose? We're just here getting business, which is great. And you can take a step further, which we do. This is, I do, which is very good.

And I've been criticized by some, for what I call it, I call it the Tony Soprano method, because I call it that, even though it is good for everyone. It's not that bad. But what I'll do is, if I think I can drive our customer base to an auxiliary or a vertical or something we don't currently do, I'll go find somebody that's really good at it who might not be the best sales. And I'm like, okay, cool. We want to start sending all of our clients to you.

If you can handle it and you do a good job. And they do it. We start testing it. And if it goes well, we start sending more and more clients at them, more and more clients at that, more and more clients at them. And I have these conversations every so often. We're like, how much of our business is your, how much of our business is your business? oh it's like 20% of my business is your business how much service oh it's like 35% of our business

and as soon as that number tips over 50% well now we're going to be partners yeah so I'm like okay here's the deal um we're going to get in now I know that this is a viable business we've tested the market market response is great we can make this profitable we're going to be your new partner or we're just going to go open our own and take our clients somewhere else at which point they're like okay cool because and here's again this is where yes it is a it is a lever technique to get business done. I understand that, but it is also good for them because once we are now officially their partners, we wind up driving much, much more business. So every single person that I have ever done this with is in a much better place today than they were. Bigger pie, small piece,

bigger pie. Much bigger pie than they were the day we found them. So, but we've been able to do that with just about any vertical that you can imagine that has to do with real estate, which is great. And I love that you did this as well. So at some point that you're out growing the laundry people. Yep. Do you just buy them out? Do you become partners in their existing business? What do you do? So we had this weird, I mean, we're at this point probably 24, 25. Business is starting to hum in Charlotte. We're probably not bankable yet because none of us, we have some assets, but like the

businesses venture back. We'd raise some venture capital for it. A lot of the money that we were making was going right back into technology, scaling new products, new markets. And so you jumped over that. I want to come back to it. They'll keep talking. So we had this, it's kind of in between tweener moment where you couldn't go build a

half a million million dollar laundromat. We just didn't want to use venture capital that way for a non-scale asset, like a laundromat. Yeah. And so you're raising money at this point, though. Yeah. What were the terms you were giving on your money? So we raised 400 grand in our first round at a two and a half million dollar valuation.

Okay. And we were doing, I don't know, 20K a month, 30K a month in revenue. Okay. Okay. In hindsight, probably would have gone for a high valuation. Yeah, yeah. There was a lot of learning that happened in that whole phase, too, of just venturing I was going to say, that seems a little light with the margins you were running.

Yeah. So, yeah, definitely I've learned a lot. I've now raised collectively $40, $43 million. I know a lot more about venture deals and how to structure things. And I had really good mentors early on that give us advice on what to look out for, liquidation preferences and participating non-preferred equity and all this stuff that goes into it. So we had this tweener stage where we couldn't buy a laundromat yet, but we needed something because we were outgrowing the quality.

of which the laundromat partners could provide. So we started moonlighting, hiring our own staff to go into other people's laundromats when they weren't busy. So you were just running them off hours. Yeah, and they loved it. They're like, yeah, now I don't have to do anything and I'm generating revenue

that I would have never had otherwise because you're bringing a customer base that would never step foot into a laundromat. It's mostly affluent dual-income households. And now you're running, so you're running, you're not competing with them because like they said, they're never stepped foot in. You're running the graveyard shift,

I'm assuming is when you're in. Graveyard shift, but then also, Monday through Friday, people who are using a laundromat, they're working jobs, you know, so they're not doing laundry at 11 a.m. on a Tuesday morning for the most part. And so we had some off hours in the day, but mostly at night after 9, 10 p.m., so graveyard. And were those all in leases you were doing at this point? Yeah, so we'd pay, you know, basically rent. You know, we'd rent out space. It was an asset utilization play, though. Yeah. They've got assets that aren't being used. We can produce, you can produce goods and services out of them. We did that for

eight months, and it allowed us to really perfect our process of how do we hire people, train them, build technology around tracking. We were tracking everyone's garments and scanning machines and measuring everything and getting everyone very efficient. We actually, you know, we realized turnover is a huge issue for a lot of retail businesses. We're like, all right, what is this group of people, you know, what excites and what motivates them? People, oh, pizza party, this. I was like, they don't care about that. Everyone does this. They try these things at something like, oh, pizza. The pizza party. Everyone tries that. And we, so we, We just, I just asked me, like, what do you want?

Like, I want to make more money. And like, honestly, this is a hard job. You stand, you fold close for six, eight hours. I would love to be able to get in and out of here. If I can produce quality work, just get paid more and get out of here faster. It's like, we should do that. Why don't we pay you a variable base? All this technology tracks everything so we can see John's producing 28 pounds an hour folding.

Then there's a QA check that they're incentivized on something else. And so if you went too fast, you'd get reworked, slow you down, you make less money. We'd show it real time on a leaderboard. Here's Alex. Here's John. Here's Susie. here is it was unbelievable. Gameification. Everyone was making more money

and we were way more efficient as a business or a cost of goods sold went way way down. What would you say the impact was on that model of the leaderboard? Everything. Gameification. Was everything. Everything. Getting to see it and it was, we'd put TVs up.

Yeah. We'd install TVs in these places with the raspberry pie. I have I have all that. It is game changing. Game changing. It doesn't matter if you're a white collar, blue collar, like, if you can see everyone likes performance and competition. And a friend, they like friendly competition. They don't necessarily like, like brutal like first place, you know, Autorino steak knives. Third place is you're fired. They don't like that. But yeah, same thing. So that, that tweener stage really allow us to perfect the operation,

training, hiring, technology we'd built. And then it was, all right, it's go time. We need to go get into our own space. And we had two early investors that really believed in us. And, you know, But they were like, look, we'll PG, we'll personally guarantee us going to go get our own spot. And then Electrolux came in, huge appliance, you know, manufacturer. They own brands like Frigdair. Yeah. They loved what we were doing. Like, look, we'll be the bank.

We'll back you guys. We don't typically do this, but you have two and a half million of pickup and delivery volume that you're going to bring to this location day one. There is almost zero risk of you not paying us. Wow. So let's go do one. So they banked and financed all your machines. Yep. And some of the buildout, which they would never.

do is because of how much volume we had. And they looked at this as if we do right by them now, and this works, they're going to grow. They're going to go open hundreds of these. And we want Electrolux equipment into these locations, not anyone else. So we ended up buying, you'll appreciate this as a real estate guy. I know you do more than that, but we, my heart, that's where I'm at. It's fine. I'm not offended by that.

We are first real estate deal for that laundromat was with McDonald's corporate. So I'm 25, negotiations. negotiating with McTaddle's Chicago office on, and I got fleeced, of course. Oh, my gosh. Can't put a restaurant into our spot for 20 years. Yeah. Oof. Yeah.

Okay. But again, we had good, good mentors and support along the way. One of the guys that was personally guaranteeing the, you know, some of the debt was started fast med urgent care, well the largest standalone urgent care businesses in the country. So he had done 400 different commercial businesses. Yeah, he's got it. So he's like, all right. And so they didn't know that he was doing this.

So they were like, who is this kid? Fucking, sorry, asking some of these terms and these things. It was an awesome experience. They were, they literally just moved across the street because the light rail got put in. It was blocking their visibility. They didn't want to sell to another restaurant, even though it's perfectly designed and laid out and built for a restaurant.

So at the ampage we needed, the water lines we needed because it was a restaurant. Oh, right. Yeah. And we built a 6,500 square foot. Most laundromats are 2,500 or 3,500. Giant facility. A huge facility that we had opened seven days a week to the public, but same thing with that kind of arbitrage or asset utilization.

Monday through Friday, the store's not as busy. We'd shut down these roll-up doors, and we'd reserve that almost for like a production-style manufacturing line. On the weekends, when laundromats are busy, we'd open the roll-up doors and let the public use the whole thing. Wow. And how many of these? So, okay, here we are fast-forward.

How many these did you build? So we are up to 43 of them. 43 of these. Yep. And so this is going well. You still own this, right? So I'm on the board. I hired a CEO about a year and a half ago.

Corporate stores are doing really well. Some of our franchise, early franchise stores. There's a lot of learnings, and those aren't doing as well. And then the next wave of franchise locations are doing a lot better. Well, I want to get it just because our time's going to run short. This has been fascinating talk. Let's talk about Franzy, because I know that's the new love. So let's talk about it.

So I, about a year and a half ago, or honestly, as soon as we started franchising. I'll give you the quick fill in. When we started opening these laundromats, like this is working. We need hundreds of them, but they're not cheap. All this equipment, build out, et cetera. Plus the operation was complex. There's a lot of people, even with the gamification and the tools, it's a lot of people and we're going to do this in Seattle and Austin. And so we've been approached to franchise a number of times. We always had said no. And when COVID happened to give us this once in a lifetime opportunity to really, hey, if we could stop everything and start over, what would we do differently? Because COVID gave a lot

people that was that reset yeah um and so we said well we need a ton of laundromats we'd like to have that the labor risk on someone else's played or some of it on someone else's plate well why don't we franchise it solves both of these issues other people come in with their capital we give them a playbook revenue delivery volume um equipment discounts you name all the stuff that franchising brings they bring capital to open stores they handle some of the labor we handle the delivery piece win win win win win win um so we started franchising in 2021 we sold 118 locations in 14 months Got a crash course on franchising and all the things that go into a franchise disclosure document, FDD, and then also selling them, I learned a lot. A lot of brands work with what are called FSOs, franchise sales organizations, and they work with business brokers or franchise brokers.

We did about half of our deals organically because we were good on social and content. The other half, though, we were using brokers of some sort, and we were paying them 60% commissions on the franchise fee. Wow. And I was like, okay, maybe they have some access. to a network of people and whatever. The more we got into it, it was like, they're doing, they're doing work and some of them are really good, but I don't know about 60% worth and why is this happening. I start talking to more and more brands.

They're all upset about it. We don't know what else to do because if you think about it, most franchisors, they started John and Alex's gym or coffee shop, and they're not like venture-backed, like tech entrepreneur. They're not, they're thinking about, how do I get more coffee beans cheaper and training manuals? And, like, that's what they're focused on. They're not the thing about selling to sophisticated franchisees and putting all this stuff together. So they work with brokers as like a means to an end out of necessity, but they hate

it. Everyone hates this. It's a huge pain point, hugely expensive. My thought is could we do what Zillow did the residential real estate buying process where there's education, they democratize access to date? I don't need to have an MLS or real estate license to go access home information anymore. Can we do the same thing for franchising where we get every franchise you can possibly imagine in one spot, what it's going to cost to get into, what the royalties are, what the potential revenue is, what the consumer sentiment is in each region of the country, what competition looks like down the road from you, all the stuff that you need to make a sound good decision that a broker should be doing. A good broker would be doing. And send these leads to the brands

for half the cost. So that's what we're doing. That's what Franzy is. Think of it as Zillow for buying and selling. When did it launch? February of this year. So you just got it up. So what's your adoption rate? How's it going? Is your model performing? Yes. Okay. Yes. We've, So it's gotten better than we did, but we were sitting in the dorm room. Yes, a lot better. I got a phenomenal team. Like, people have the same values, but completely different skillsets. I learned from that lesson.

Yeah. Capital raise was amazing, really good terms, really good partner, didn't give up too much of the company to do it. Let me ask you this, because you're talking about that, and I always say this, which is the hardest thing for most entrepreneurs to do is give up control of certain tasks. And the way that I have reconciled with it is this, is I go, okay. If what they do is 80% as good as what I would do, I'm okay with it. I do this exact same thing. Hey, but here's the reality. You ready?

So people listen to that, they hear that, they go, man, that's really egotistical. This dude thinks he's better, everybody. No, because if it's 80%, if it's 80%, in my opinion, as good as I would have done, in reality, it's probably 120% what I would have done. It's probably that much better than what I would have done. because I just, the 20% margin is my ego. Yep. And so that's where I'm like, okay, so if I can just get that.

So did you struggle with that? At first, now I can delegate. Yeah, let's go. I don't care. A mother. Yeah, let's go. Take it all. I don't care.

Please take more. Yeah, I think I probably say any more, I don't care more than anything else. Because I just, I've just decided that I don't need to have an opinion on every little thing. Yeah. I don't care. Like, you're smart. I pay you to be smart. I hired you because you're smart.

Just go do it. Hopefully incentives are aligned. Yeah, yeah, yeah, just go do it. If you're the right people, it's easy to do. So what's the long term, like you're on, you're on target with your model right now? What's the long term vision? How much money did you raise for, for frenzy? To raise three and a half million.

Three and a half million. And where was your tech? So your tech team obviously is pretty heavy. Where was your tech was the main investment and then go to market shortly after. So like getting Fransy out there. It's a marketplace. Marketplaces are notoriously hard because. You got to get that flywheel going.

You got to become de-place. You don't want to spend your time on franzi if we don't have any good businesses or good data. So we have to go get that first, build all that out. And same thing, the brands don't want to be listed or participating in the marketplace. We don't have good leads. So are you, and I'm curious because it's the buzzword and everybody talks about it when they come through. But what are you doing or what is the plan or have you thought about how you're going to implement AI into this business to make it better? It is like all AI.

So we have 4,000 brands on the platform, 4,000 franchise brands. We scraped 26,000, what we're called FDDs, franchise disclosure documents. It's like a SIM, like a... Yeah, I know in this. So you've got audited financials, all this stuff. So we indexed every word, every number. It's the most expensive part of becoming a franchise is what it is. There's useful information.

So we pulled 26,000 of those. We have trend data across the 4,000 brands over multiple years. You can see stores open and closing, which is a good indicator of the health of the system. Sure. They were also pulling in census data, Bureau of Labor Statistics data, all these data points. of this massive data set now. So when John comes through, we're asking you, what's your risk tolerance?

What's your financial readiness? What's your operative? What are you good at? What are you good at? But don't enjoy doing and don't want to do more of. What is your goals? This is a family legacy. Is this an intellectual stimulating challenge for you?

Is it to make money? Because everyone's got, honestly, a slightly different reason. People ask me like, well, what's the one that just makes the most money? Isn't it the one everyone wants to buy? I'm like, no, honestly, no, it's not. No. And so we take all that. And then that's where the AI.

Depends on what you like plunge a toilets. Yeah. Yeah, exactly. Yeah. But that's where the AI comes in as a human being couldn't look you in the face and say, I know all 4,000 of these brands. It'll help you find the right one for you. Yeah, there's no way.

Navigate the C of that. AI pairs it down to John's top five. So when you say you've got 4,000 brands on there, have they all agreed to it? Or are you just kind of pulling their information? And then as you get leads, you're like, hey, knock, knock, I have a client for you, or I can send it over here. The latter. So we, 4,000 unverified.

We got about 300 verified that have signed legal agreements, platform agreements with us. And to your point, whenever we get leads and like, I want to talk to this brand. We go to brand, hey, we have this amazing person, $2 million net worth, they're one of buying in markets. We know you have availability. You should sign the platform. It's free for you to do.

We reduce so much friction. Well, you're going to, okay, so if you haven't already, you're going to piss somebody off. Yeah, probably. Okay. So, because you're going to have somebody's data on your site that is not complimentary to what they are, what they're pitching. We did have one guy say, hey, take all that stuff down and we'll do it,

but it's also public information. We want people to be able to look at their brand still. Does that hurt the integrity of the site? though if you're not like if it's right and you believe if this year like this is right shouldn't you be almost as a warning not not a public okay they're like hey how did you get this this shouldn't this isn't anywhere this isn't out there in the world and it shouldn't be we'll respect some of those requests but then we still leave the logo and here's the here's this is how many stores closed last year because I think that's the metric that would probably bother or yeah or ruffle the feathers of

enough people yeah our response is like this is how capitalism should work is you should run really good business. And if you do that, people want to buy into a response. You shouldn't try to hide. You shouldn't tell us to take it out. Like the whole point of this is to make transparency in this otherwise very opaque market. That's a problem. People are making huge life decisions or investing. Some people are doing Rob's roll. You know Rob's rollover is you can borrow, you can take retirement assets, tax free, no penalty to buy franchise businesses. I think independent businesses. Oh, self-directed, self-directed, self-directed, self-directed or like a company 401K, you can pull money out penalty free to buy a franchise business.

It's called a Rob's Rollover. I had no idea. It's a, I didn't know until franchising. It's, I kind of like it. The government's like, if you can invest your hard-earned retirement money into a corporation that might tank and why can't you invest in yourself. That's America, buddy. That's America.

They let you do it. I love that. So people are doing that. They're taking half of their retirement savings and they're buying a business, but with incomplete information or with brokers, they don't realize are being paid 60% on the back end. Because there's no, unlike real estate, you don't have to get a state license. You don't have to take coursework. You don't have to do continuing education.

you and I are business brokers right now in this moment. Yeah, yeah. Right now, you're, you're not so much me on the licensee, so I can't. No, the franchise broker, yeah, I don't, we'll leave that along. We don't do, we don't do business brokers here at all. And for the very reason of they always end up in lawsuits when you, I mean, so many, so many businesses get traded and existed in the lawsuits because the books are always cooked and everybody's always puffing and then it's always a mess.

So, like the adbacks and. I don't need this trouble. the problems. All right. Well, dude, if they want to find you, how do they find you? Yep. Go to franzi.com, F-R-A-N-Z-Y. This is all free for you as someone exploring business ownership. We do get paid by brands, by lenders, et cetera, but it's a flat success fee across all brands. We have no incentive to promote one over the other. So more of a fiduciary. So it's free for you. You get all these resources. You get all this AI tooling, get access to lending and coaching there. And you get free one-on-one coaching if you want.

We have folks on our team that are franchisees that will walk you through how they did it themselves, what to look out for, what things to look out for in brands, how to negotiate with brands, how to finance the deal, et cetera. That's amazing. All this free to you. And then follow me on LinkedIn, Instagram, all the other stuff. It's Alex from Franzy. I love that, dude.

That's awesome. Well, thanks for coming. Listen, man, that was a pot. If you didn't get anything out of that, there's something wrong with you today. I got to tell you, I mean, doesn't matter how old you are. Doesn't matter what your education level is. It doesn't matter where you are. Build a good network that provides opportunity.

and then seize those opportunities, go out and chase your dreams because something is simple and stupid as doing students' laundry can turn into a massive, massive business. We'll see you next week. What's up, everybody? Thanks for joining us for another episode

of Escaping the Drift. Hope you got a bunch out of it or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escapingthrift.com. you can join our mailing list but do me a favor if you wouldn't mind throw up that five star review give us a share do something man we're here for you hopefully you'll be here for us but anyway in the meantime we will see you at the next episode