The Chris Voss Show - The Chris Voss Show Podcast – Unleashing Franchise Success: Overcoming Fear and Finding the Right Fit with Cliff Nonnenmacher

Episode Date: January 17, 2025

Unleashing Franchise Success: Overcoming Fear and Finding the Right Fit with Cliff Nonnenmacher Franocity.com About the Guest(s): Cliff Nonnenmacher is a seasoned entrepreneur and franchise expert with over 20 years of experience in the franchising industry. He began his career as an investment banker at Morgan Stanley before transitioning into owning and operating various franchise businesses, including Cartridge World and Personal Training Institute. Cliff is the founder of Franocity, a company that offers free franchise consulting services, helping investors find the best franchise opportunities tailored to their objectives. He is also the author of the upcoming book, "Beyond the Brand," and co-host of the podcast "Pursuit of Profit," where he focuses on interviewing founders of successful franchise brands. Episode Summary: In this insightful episode of The Chris Voss Show, host Chris Voss engages with Cliff Nonnenmacher to explore the intricate world of franchising. Known for his expertise in this domain, Cliff discusses the benefits of choosing franchising over starting an independent business, highlighting the reduced risk and higher success rates of franchise ventures. He shares his journey from Wall Street to becoming a successful franchise owner and consultant, emphasizing the importance of following a proven business model. The conversation delves deep into the mechanics of franchising, touching on essential topics like the importance of conducting thorough due diligence, overcoming fear in the investment process, and the art of finding the right franchise fit for individual investors. Cliff emphasizes the significance of understanding one's own skill set and aligning it with the right business opportunity to achieve long-term success. His upcoming book, "Beyond the Brand," aims to guide readers through these processes, showcasing franchising as a viable and profitable investment vehicle. The episode wraps up with discussions on how current trends like AI are affecting the job market and creating new opportunities within franchising. Key Takeaways: Franchising offers a structured business model with proven success rates, significantly reducing the risk compared to starting a new business from scratch. A successful franchise investment requires thorough due diligence and understanding of one's strengths and business goals. Cliff Nonnenmacher's consulting firm, Franocity, provides free franchise consulting services, helping clients assess and find suitable franchise opportunities. The upcoming book "Beyond the Brand" by Cliff Nonnenmacher serves as a guide to navigating the world of franchising fearlessly. The rapidly changing job market, influenced by factors like AI, is leading many to consider franchising as an alternative to traditional employment. Notable Quotes: "Fear is paralyzing and fear has killed way more dreams than failure ever will." "Franchising is the fastest way to create wealth without inventing anything." "Execution is everything, regardless of franchising." "It's time to execute. Take what they've, it's a roadmap. They give you a blueprint on how to be successful." "Most brands are not worth buying. They have razor or thin margins." Resources: Franocity Website: franocity.com Pursuit of Profit Podcast: Available on all streaming services, co-hosted by Cliff Mucker. Beyond the Brand: Upcoming book by Cliff Nonnenmacher.

You wanted the best. You've got the best podcast, the hottest podcast in the world. The Chris Voss Show, the preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready, get ready, strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times, because you're about to go on a monster education roller coaster with your brain. Now, here's your host, Chris Voss. Hi, folks. It's Voss here from thechrisvossshow.com.

Ladies and gentlemen, ladies and gentlemen, that makes it official. Welcome to the big show. We certainly appreciate you guys being with us. As always, remember the Chris Watt Show. It's fun and it loves you, but it doesn't loan you money, so stop asking. Damn it. We sent you all cards for Christmas, didn't we? I don't know.

That's a lot of damn cards. That would have cost a fortune. Anyway, guys, welcome to the big show. As always, we're the smartest people on the show. For 16 years, 2,200 episodes, bringing you the CEOs, the billionaires, the White House presidential advisors, the Pulitzer Prize winners, all of the smartest people to share with their journeys, their stories, their lessons of life, and tools that you can use to make your life better as well. Today, we have Cliff Noddemacher on the show with us today.

Did I get that right, Cliff? You did. You nailed it. You nailed it. I've got all the energy going on from the caffeine that's pulsing through my system. He's the author of a forthcoming book we'll get into from Forbes. We'll talk about the title and what goes into that here in a second. He began his career as an investment banker at Morgan Stanley.

After leaving his Wall Street career in 2003, he acquired a master franchise for New York and Connecticut, diving headfirst into the franchising industry. Since then, he's owned and operated various franchise businesses, including Cartridge World, Personal Training Institute, PuroClean, and Made Right, as well as non-franchise companies. He's also developed well-known domestic and international brands like Four Seasons Sunrooms, Contours Express, Island, Finn, Poke, and Crack Boba. Crack Boba. K-R-A-K Boba for anyone who, I mean, some people really love their Boba, I guess. Oh, they love Boba. Absolutely.

Welcome to the show, Cliff. How are you? Thanks a lot. I'm happy to be here, Chris. Thank you. Love the intro. Thank you. I should have named the the podcast crack podcast

anything works if you're gonna put on a show like this you could get away with anything yeah there so give us any dot coms where do you want people to find you on the interwebs i can be found for nocity.com f-r-a-n-o-c-i-t-y.com we also have a podcast where we only interview founders of franchise brands. That's Pursuit of Profit on all streaming services. And yes, we have a book coming out second quarter. It's Beyond the Brand. And we're excited about that. Yes, we're working with Forbes and lots to talk about. Beyond the Brand with Forbes. I mean, I've heard of Forbes. They do some interesting things over there I remember I grew up reading a lot of my father's old books and and he had these old records to these old

sales records from from the early Nightingale era Earl Nightingale you know some of those early folks Napoleon Hill who did theres of Diamonds and stuff? But I remember something, Alan, but I remember one of the things he had was, it was the original Forbes guy who established the Forbes empire back in the day, the great, great grandfather, I think it was. And he had a book that I read that just was amazing. It was a great book. I should go find that book and reread it because I probably need it at this point. So tell us about your book. Give us a

30,000 overview of what's inside this new book coming out on Forbes. Yeah, the book is about mainly how to navigate this process, how to overcome fear, how to engage properly and do a proper degree of due diligence on a brand. I mean, a lot of people lack discipline when they invest. They don't do an adequate amount of due diligence. They don't speak to the right people. They don't close the loop, if you will, on the due diligence phase. It just teaches them fear is paralyzing and fear has killed way more dreams than failure ever will. A lot of people are just paralyzed. They can't get there. They just can't seem to get to a place where they have the intestinal fortitude to move on, buy the business,

execute the model, and hopefully create wealth. And unfortunately, so many people just hold themselves back. So the book is really about fearless franchising, engaging with the right people, looking at the right brands based upon the investor's objectives, right? Not what the brand wants, not what the consultant wants, not what the broker wants, but what you want. Like what phase of life are you in? What are you willing to invest? What do you need to earn? What's your day-to-day involvement? What are your background and skill sets? Are you an engineer or a salesperson from pharma? Who are you? I just think that the matchmaking process is art and science. And I think the book is really trying to help people just get there in their mind and cope with fear. You wouldn't believe how big of a

role fear plays in this whole process that I'm in. I've been doing this 20 years, and I've watched one deal after the other die. And people will never tell you it's fear. Fear manifests itself in all these different ways, typically blaming the spouse who's never on the call or blaming an advisor instead of just saying, I don't believe in me. That's the reality. I don't believe in me to get the job done. Therefore, I'm out. That's sad. Yeah. I mean, a lot of people, being an entrepreneur is kind of a skill set. I don't think I ever really had a skill for it. I just kind of fell into it and it was sink or swim. So you're just like, well, let's make this work. I'm still trying to do that after 57 years.

So, you know, learning where you're at kind of, I suppose, you know, if you're an engineer, you're kind of very left brain, logical reasoning, you know, may want to hire some creative people to help you balance out or vice versa. You know, there's a lot that goes into it. So why do you love franchising so much? I mean, that's kind of your brand. You love finding the right businesses for franchising as well. Why is franchising something you prefer?

Maybe, I mean, I'm just putting words in your mouth, you're assuming, but why do you prefer that over maybe just doing your own startup? Great question. I don't think any brand hanging their own shingle can as one, right, as one location, whether it's an acai bowl place or it's a yoga studio. I just don't think that you can compete with the scale of economy that franchisors bring to the table. I also believe that a person that

goes out on their own independently may be more entrepreneurial and have the skill set you were just referring to, where in franchising, if you can just follow a proven system, you don't need to be entrepreneurial. And people always use the word entrepreneur. I'm an entrepreneur. If you're a franchisee, you could just be a displaced executive. You could just be someone that always wanted to be self-employed, but maybe doesn't have the business acumen to invent an idea, invent an Uber, invent a new food concept called Outback or something like that. You don't have to be an inventor. You don't have to be a visionary. You have to want to belong to something larger than one, leverage collective intelligence in a group. That's the beauty of franchising.

If you're ever looking for answers to the test, like podcasting, like where does Chris Voss go for answers to the test? In many cases, podcasters are alone. They look at other people's success. They try and analyze their success. They try and look at how they position themselves on social media. But in franchising, Chris, I could go call a hundred different people across the country, Utah, California, Oregon, Washington, Texas, Florida, and say, Hey, how are you staffing your managers? Where are you finding people? How are you compensating them? What KPIs did you put in place? Oh, more importantly, what are your cost of goods? My cost of goods are 18%. Wow. Minor 30. No wonder why I'm not profitable. It is amazing how franchising can allow an average investor to collapse time, execute flawlessly, and create wealth. That's my love affair with it. I think it is the fastest way to create wealth without

inventing anything. And there's more. One of the things I was setting up for is there's that that you just said, and there's a higher success rate, right, among franchising as opposed to being an idiot and starting your own thing, like I do. No, I wouldn't say that. I mean, look, you've done very well on your own, right? I mean, there's no one saying that to become successful, you have to be a franchisee. I know you're kidding. Look, some of the most successful people in the world on the planet, obviously, are not franchisees like Elon Musk would not make a good of us. You found your spot. I think franchisees find that joining a brand and being part of a large family of people is a great way, again, to achieve your, again, investment objectives. Why are you here? What are you trying to get out

of this experience? Yeah. And I know franchisees, for a lot of the aspects you talked about, they end up taking and being more highly successful. I mean, the failure rate for starting your own company as opposed to doing a franchise business is so much higher for the make-it-up-as-you-go-along business. That's a fact. I mean, you've got that collective mind. You've got usually a proven product fit. You've got a proven customer base. It's just about replicating at a certain point original success.

And so you're not redesigning the wheel as it were. And so for a lot of businesses, especially if you're making something that's kind of unique or innovating a product, it's kind of unique. There's a high amount of risk to it because you have to make it up as you go along. You have to figure it all out. And somebody's already done that work with a franchise. That's exactly right. It's a business in a box. It's time to execute. Take what they've got. It's a roadmap. They give you a blueprint on how to be successful. I want to touch on something you said. They have proven that you have a lower failure rate being part of a franchise system. They have also proven through data analytics that you get a

premium on the exit, which is important. You had a guy on here recently. I want to say it was Scott. Was it Weevil? Yeah. Yeah. I mean, you're right. Build a plan with the end in mind. Why did I buy a franchise? I have more liquidity. Why did I buy a franchise? I get a premium on EBITDA over an independent. Solve and proven. BizBuySell has aggregated all this data and has proven that franchise concepts get a higher multiple than an independent in the same exact industry. So I agree with you. I just pulled up the stats. 80% of franchises are still operating after five years. They have higher survival rates. In contrast, reports about 20% of new businesses fail within the first two years. 50% will fail within the first five years of the 20% or 80%, I guess,

that was left over. So, I mean, that's a failure rate for non-franchise businesses. So tell us a little bit about your journey. How did you grow up? How did you get the entrepreneurial spirit and bug? And what were some of your influences that got you down this road? I grew up in Long Island, New York. I knew as early as I can remember, I wanted to be self-employed. That was never a question. I just knew that I wanted to be a business owner. Strange, but true. I speak to people all the time. They have no clue.

I'm sorry? Who are you? Yeah. No, I love it. I think it's the best life ever lived. I really do. It really is. It is.

I look at people standing on train platforms at 4 30 in the morning geeking out barely a six-figure living and man i grew up in new york so i've seen these people on the train platforms in the snow in a train that by the way is never going to come and then get on the train to be harassed by some guy that doesn't have a job like i don't know. I just think there are way easier ways. Hey, let's not talk badly about me on trains, okay? Come on now. I harass those people on purpose to make sure they appreciate what they have. That's it. It puts it all in perspective. Yeah. It's a life that I always wanted to live. I was entrepreneurial as young as I can remember. I used to rake golf balls out of ponds and sell them back to golfers, clean them up. I did all the normal things you would do as a kid, right? Whether you're pet sitting or you're raking leaves or you're shoveling snow, whatever I could do to make a buck and get my name out

there and just stay busy. And I just loved it. And then, yeah, I became an investment banker with actually it was Solomon Smith Barney that is now Morgan Stanley. You said it right at the intro. And I ended up becoming a master franchisee, or as they say, franchisor for Cartridge World and its Australian concept. As a master, I scaled about 36 units in New York and Connecticut, sold it, moved to Florida, and then continued my journey as a serial entrepreneur buying different businesses. In total, 12 franchise, non-franchise, a combination of created wealth through self-employment and franchising. I love the exit, by the way, because I think the exit is where you

make the money. Cashflow is great, but when you sell the business you built to someone that doesn't want to build it, there's a premium that gets paid in that process. So I've enjoyed the whole journey. My business partner, Justin, and I have started by buying failure, which is a true testament, by the way, of franchising. So we started buying failing franchises, blood in the street, outright abysmal failures. And it was like, why would you want to buy this? Because you're not following the model. And we're going to buy it, pay you 10 cents in the dollar, and we're going to follow the model, and we're going to sell it for a nosebleed multiple. And that is exactly what we did. And in many cases, we took these businesses from hemorrhaging cash to six-figure net incomes

annualized and sold them at a premium and then kept doing it over and over and over again, which led us, Chris, to creating Fernosity, which is a franchise consulting company that advises the investor on what they should be looking at based upon their investment objectives, their risk proclivity, their time horizon, their day-to-day involvement. Many people today want to keep their jobs and get a business on the side. So that's what we do now. And we do it for free. Nobody believes free, but it's free. We're paid by the seller. Yeah. Our services are 100% free. So for anyone listening that's saying, you know what? I always wanted to explore this. Didn't know where to get started. Get started right here because there is zero obligation. And quite frankly, I tell every investor, you are not buying a franchise.

Zero expectation of buying. Just engage and see, is franchising an investment vehicle for you? It's just another asset class, Chris, right? There's art, there's stocks, there's bonds, there's mutual funds, there's real estate, there's franchising, there's crypto. We're another asset class that should be investigated. And I've met people over the years, like with our mortgage company, we had, I remember one guy came in and he was very left brain. He was a math teacher. And so, you know, everything had to

follow rules and formulas. And I remember he came in and he wanted to take out a huge equity line to start his own business after being a teacher in math for for 40 50 years he's pretty he was about my age probably and i retired i guess and i remember telling him i go i'm really concerned about what you're doing here because i don't know that you have the creative mind to be your own entrepreneur and just do your own thing you know i i've there's a lot of times I've met people and I'm just like, I don't, I mean, I think it's great. You want to own your own company, but this is a learned skill and you can burn a lot of money learning this skill. It's kind of like, I don't know, trying

to master the roulette wheel in Vegas. Right. Right. Yeah. You thought student loans were bad. Take an SBA loan. Yeah. House always wins. And so franchising is so much more easier because it's almost turnkey, right? I mean, pretty much. I mean, think about every area of starting the business, right? Let's start with site selection. Done. They already know what a sustainable market looks like. Let's call it a three mile radius, 40,000 houses making 75 grand a year household income. Check that box, right? So it's like, well, what size? Well, we don't want to exceed 1200 square feet. Keep going. What else? It's all laid out. What about the architect? Done. Have one. Site selection, real estate negotiation, already in-house.

How about the grand opening support? We're going to start the grand opening once you sign your lease and the place. So yes, everything is designed and everything is laid out in that blueprint, that roadmap for the buyer. Again, execution is everything. I think execution is everything regardless of franchising. And I am amazed at how many people really can't follow a proven system. They can't follow basic instructions. Just look at society. I mean, it's like, really? You know, I always scratch my head and I'm like, man, like that's pretty basic. You didn't even get that fundamental down.

So in franchising, yeah, it's all about execution. Definitely. I can see on your website, you offer several consulting services, finding a franchise opportunity that's right for you, a franchise agreement make sure that i like that you review it before you sign you know there can be some pitfalls in franchising where you know i i don't know what they all you probably have a better feel than i do but let me well i'm just going to toss it to you what are some pitfalls in franchising i mean sometimes they you know they want you to redesign the whole building every year or something you know like hey we got a new lookout and you're like we have to buy a new signage and new logos and everything and we're

like we just did that like two years ago didn't we i don't know there's some there's some places i see you know like fast food places that you're like jesus how do you keep up right yeah right those those comments are brick and mortar, right? So those are going to be your retail, physical location brands that are going to put language in there. Not every year. I understand what you were saying. Not every year. Yeah.

Yeah. Maybe within the decade, because most franchise agreements are 10 years with an option to renew. And maybe on that renewal, the brand says, hey, your sign still says Kentucky Fried Chicken. Like we haven't used that that name in many, many years. You know, we're KFC now after fried became a very bad word many, many years ago. So brands true up. Right. Look, look at TWA and Transworld Air and look at Pan Am and all these brands. They were very geographic specific. Look at Southwest Airline. It's like, do you do more

than the Southwest? Yeah. Sometimes there's an unintended consequence to the name of a business. So the brands want the ability at some point in the future to true up the system, to make sure they're not using legacy technology. But you asked specifically about pitfalls. I think some of the pitfalls that people choose brands that really are not developed enough and don't have proof of concept. Be very careful looking at brands with a handful of locations, especially if it's in a specific geography. A brand that's successful in Manhattan, that doesn't say anything to me that it's going to work in Naples, Florida or Houston. These are certain outlier markets that have a massive humanity, a ton of discretionary spending. Will that model work in these other

middle America areas? So I think that's one issue. Poorly written franchise agreements need to be reviewed by attorneys. We don't let anyone purchase a franchise without a full legal review. Another issue I see with people is they're undercapitalized. They really did not run a proper pro forma or projections in the business. And they end up opening and they're like, what do you mean I need operating capital? It's like you needed 300 grand to open the business. Now you need to keep the lights on, pay rent, pay staff, cost of goods, advertise. So I think a lot of people really shorten their runway of success by being really grossly undercapitalized.

These are the things that we address as consultants to make sure that our clients don't end up a statistic because I don't want to see anyone fail. Yeah. And most franchisees, they're set up to have a great support team. For me, any company I've ever started, there's very few people I can call for help. Usually the only people I can call for help are my competitors and they're not going to give me answers. That's right. Hey, we're trying to figure out figure out a square this how to round off this square you get this widget to work can you tell me how you made yours work that's right yeah good luck hello hello right but you know if you've got and then of course like you said the collective brain you know if you've got 3 500 offices or units producing you

know if you're like i'll just throw an example a subway you know somebody figures out how to i don't know cut the meats thinners and save five percent you know which is a lot of money over time and volume you know or somebody figures out i don't know some sort of innovation you know you've got a collective mind there that's huge. You know, I remember I used to sit at my first startup. Our one company was me and my business partner and our first employee sitting around going, how do we innovate? Right. That was our collective mind. That's right.

Three of us in a 10 by 10 office. And so, yeah, it's much important to have those sort of feedback and stuff that you can get. You've got several resources. There's an E2 visa. What is that? We have a lot of folks that, and you're seeing this with AI, like there are trends in my industry and a trend we're seeing right now is that AI is finding its way in corporate America.

And a lot of these people that were brought over here on visas are out of a job. So a work visa does not translate if you're no longer working for Amazon or Microsoft, because you've been replaced by AI. So a lot of folks want to stay. They have family, they have children here. They want to get an E2 visa, purchase a business, and there's some requirements there. It's not a huge portion of our business, but it's significant enough, especially, as I said, when things are trending in America a certain way, it ends up enough being a resource. And we have people internally dedicated just to that. And you've got the Pursuit of Profit podcast that you probably have advice for. Tell us a little bit more about that. Yeah, Pursuit of Profit has quickly become one of the most popular pods in franchising.

It's high level. It's only interviewing founders of franchise brands. And we have a deep dive into how they got started, unit economics, the cost to acquire, how they acquire customers, length of stay, the staffing model, just margin, everything. So I think prospective investors that kind of listen in, a lot of times people would say, I would never, ever have thought of being involved in that business. But after hearing that founder and that conversation, I like to speak to them. It happens all the time. Again, like you, the show is a resource to add value to our client base that they can listen in with windshield time in the car.

I think podcasting is one of the greatest mediums ever created. I mean, to be able to listen to some of the folks you bring on the show for free, absolute for free. I mean, and in many cases, unedited, these people are very candid like look at you it's crazy yeah well we send invoices to all the audience and they just never paid them so it's a great resource it's a lot of it's a lot of mail that we sent invoices to but no it's it's it's you're right there's great stuff in podcasting what we could do there so why should you use a franchise consultant like yourself to purchase a franchise? I know it's one of the things you also do is you give consulting on franchising your business, if you have one as well.

That's right. Yeah. Matter of fact, right before this call, I was having a conversation with a guy that created a concept out in California. And you know the headwinds in California and how they're, and it's like, listen, we've become pretty good at hedging California risks. I mean, the risks right now are unprecedented and my heart goes out to these folks, what's going on in California. But just speaking about business in California, there were headwinds prior to fires. It's a, just a business unfriendly state. And it doesn't mean you don't do business. It means that you learn and align yourself with

professionals that know how to hedge, mitigate and overcome some of these risks. And we've been, quite frankly, masterful at dealing with California, whether it's supply chain risk, rent risk, labor risk. I mean, they have employees in fast food making $20 an hour as a starting conversation. I mean, he's like the worst governor ever. He's not trying to build anything. Obviously, he's not trying to build anything. It's just bizarre what goes on. Every decision out there, I feel like it's missiles and missiles defense.

And California is a very large part of our practice. Very large part. It's highly populated. It has a ton of capital. It's a beautiful state. Say what you want, but it's a beautiful state. I'm very critical of it because I don't like the business risks in California. Yeah.

Hopefully, they'll look at, I mean, they've got a, right now, for those of you watching this five to 10 years from now on YouTube, the we're at January, 2025, we just had a horrific fire, the Santa Ana winds and wiped out large parts of LA and LA let's put it as LA, but you know, hopefully they're going to look at some of their building codes, maybe their business codes. They're talking about how things need to be streamlined so that things can get back to normal sometime in the next five years. But yeah, it's a crazy thing. But you need an analyst like yourself to analyze these wins, right? You can't do this alone.

I don't recommend it. There's 4,000 brands in this country, approximately 4,000. Most of them are not worth000. Most of them are not worth buying. Most of them have razor thin margin. I'm being candid. That's the beauty of working for the client for free. There's no BS. It's like, look, I'm working for free. Let's tell the truth. Let's get you level set. Most brands are not worth buying. They have razor thin margins. I wouldn't get out of bed for less than 15, 20% net to the bottom line. Most brands don't align with the investor's objectives, whether it's income. Like you mentioned Subway.

Everyone wants to talk to Subway. Subway makes like 30 to 50 grand a year net. It's a horrible business. You have to own, oh, goodness. Horrible. Razor thin margin. You can't make, well, here's the unintended consequence of a $5 footlong. You can't make any money with a $5 footlong.

When you're in an inflationary environment like we've been in, how are you making money to do it? So they have to quickly pull that ad. That doesn't work anymore. And now they're trying to charge $7, $8 for a $5 item. Right? I mean, it's like the dollar store. The dollar store as a brand name and a concept never thought about inflation. Because when you go into a dollar store today, it's actually a $1.30 store.

It's a $2 store. It's now a $3 store. And these stores are closed on the left and right, as you know. I mean, you could look it up. Dollar stores are getting the crap kicked out of them. And for that reason, look, there's consequences to naming your company a certain way and not forecasting inflation. That $5 footlong, that was such a, I don't know what you call it, a mnemonic.

It was the mnemonic? It was such a, just, you know, they locked, you know, it's like the baby back ribs from Chili's. It's just, they hammered the shit out of the advertising. They did. And now if you go in there, you're like, well, where's this $5 foot longs? I always heard about these last 20 years of marketing and yeah, it's just, it's just fricking crazy.

But so you need, you need people, there's 4,000 of those brands in the, in the U S you need to have someone kind of help you narrow those down and, and probably market fit. I don't know if market fits right where customer owner fit right you know if you're an owner there are certain things you gotta you gotta try and find and love like we we talk a lot about this on the show mainly because a lot of my early companies i didn't really love i really wasn't a passion about them i was passionate about running them and innovating and making money off them and just the challenge of it. But a lot of them in the end, after time, I just wasn't waking up for excited to go to work. And you think that you make a lot of money, it makes all the

difference in the world. It doesn't. And so finding something you're passionate about, something that you love showing up for work every day is probably another fit that you need to have in franchising, right? Yeah. You know, that's a great statement. So when I'm working with a client that is a capitalist, it's obviously easier because now it just comes down to unit economics and appeal to the capitalist within them. When the person comes to us and says, I've spent a career in law and I never liked it, I hated it, the next gig I need to love, and I put emphasis on love, what I do. It's a very... Because now it's emotion-based, it's feelings, it's emotions. It's way more challenging. But then you made a comment before too that reminded me of a lot of the things that we deal with in this business, which is a lot of investors will love a brand,

but they will not love, and they do not have the skillset required to build it. So it's interesting how many people will love, let's say signage. They want to make signage for Burger King and, you know and they want to make corporate neon channel letter box signs, that type of signage. And it's like, how do you feel about networking? Oh man, my hands sweat at the thought of it. It's like, how do you feel about selling and cold calling? They're like, no, I'm an engineer.

I'm a software engineer. I love the CAD. I love the design. I love all the technical aspects of owning a signage company. Yeah, but you don't like one thing that required to build it. And you could always see these disconnects. And that's what we advise these folks on. And again, the answer isn't don't look at signage. The answer is you need to put up more money now because now you need to hire a salesperson. Your labor costs just went up because you're going to hire the skill sets you don't have. So the answer isn't always just walk

away, look at something else. It's be realistic. You're not a salesperson. You're a social introvert that hid in a cubicle for the first 40 years of your career, right? You don't even really like people, but yet you want to be in a business to business enterprise it's kind of weird right yeah we see it all the time with the engineers they're everywhere and these people are being displaced at an astounding rate with ai like you wouldn't believe it it's crazy what's happening i'm seeing it it'll be interesting and there might be some franchising opportunities i don't know in ai one thing you talk about is people people investing in real estate or investing in franchising versus real estate agents or real estate, I should say, in franchise versus real

estate. Talk to us about some of that. And I guess real estate agents make good franchise investors or franchises. Yeah. So when you look at, when I'm working with a client, it's like, what brings you to us? I need to generate additional income, right? I mean, Chris, you've seen this front row. We went from single family, had a household, dual income. Now we need a third income stream. So you got two people living in a house, raising kids that now need a third income.

I mean, and where do they get it? Yeah. And there's one, I'd never brought that to the table. There's one solution to that problem. Multiple income streams, multiple people. Multiple income streams. That's right. It's going to have more wives. Right. So we advise them. It's like, well, what are you looking at? Well, we were going to do an Airbnb. It's more passive. And then they go on about real estate. Airbnbs right now are getting annihilated. And I think everyone knows what's going on in real estate right now. When you look at the cap rate, when you look at the return,

and you look at the cash intensity of doing a deal like real estate, it's a massive investment. I don't care where you live. Real estate's expensive. You're either going into debt or you're putting up a ton of cash. When you compare a real estate transaction and an annualized tenant compared to a small business generating X revenue, 15%, 20% margin, by any measuring stick, the franchise is going to outperform the real estate play. And the reason that you made the comment about the realtors, the reason why I do like realtors to look at franchising is that think about all the components in a home. When you touch a home, you have roofing, you have siding, you have window replacement, you have window treatments, you have paint,

you have junk removal, you have landscaping, you have tree trimming, electrical plumbing, site like my God, my head's about to explode with all of the spokes on the hub when you just say house to me, right? There's restoration, there's water, fire, mold, and biohazard. There's all sorts of issues that go on with a structure. Realtors are touching these homes multiple times a day. They're also telling people to have the home inspected before they buy it. Well, own a home inspection company or be invested in one. Or what is the number one, number two thing on a home inspection report? Roofing issues always.

I mean, unless the house is new, there's a roofing issue. There's a cracked tile. There's asphalt issues. There's a gutter issue. There's an issue up in the roof. And every home in America has drywall. There's always drywall repair issues corner bead popping off nail pops galore right think about the doorknobs that went through the

wall an angry son that put his fist through the wall there's always something going on with drywall in america be in that business you know like you could recapture a lot of revenue that realtors just keep giving away. That's why I like realtors to just own little side gigs. And the nice thing about franchisees is, I guess, depending upon the one you can get into, a lot of it will run itself, right? You don't have to be so much in the day-to-day. You can hire the people around you to do it. And the job description is already there. The manual is already there. You just pop them right in and away you go,

I guess. Great. So not as easy as you described, right? I mean, it sounds so simple, doesn't it? You do. I love you for it. It's definitely a heavier lift than the way you described it. However, you bring up a good point. Most people come to us and say, I want to buy a business. And then let's just say we bring up dog grooming. The investor immediately reacts and says, I don't want to groom animals. Good. Because the franchisor doesn't want you grooming dogs either. So think about this. When someone purchases or investigates a franchise, just investigate the fundamentals of the business. No one wants you cutting hair. No one wants you grooming dogs. No one wants you standing on a roof or cutting trees. They want you to work on the business, not in the business. This is a really big issue with people where they tend to

only look at things that they're willing to do. Think about all your investments. Let's just say you're invested in bio, pharma. It doesn't mean you would not work for these companies, but you'll make investments in them. Maybe it's Berkshire Hathaway entities or something. Maybe it's now we're talking about quantum computing. Chris, you and I are probably not doing quantum computing, but we'll invest in it. People need to look at franchising the same way. No one wants you doing the work because if you actually wanted to do the work, all you're doing is buying a job. Jobs require day-to-day

involvement. I like to invest in businesses that do not require my day-to-day involvement. I like to invest in businesses that do not require my day-to-day involvement because that's called the job. I want to buy a business enterprise that I'm going to hire people and I'm going to manage my managers and hold them accountable for the execution of the business. So thanks for bringing that up. So important. Yeah, it really is. And if you're not, you know, I'm a CEO leader type type alpha you know i never shut up i'm and i used to be an introvert that's the funny part when i was a kid but so and so i'm used to doing that but you know being an integral part of the company knowing how everything works being involved in stuff it's a it's it's it's a lot of work that you have to do. And so being able to kind of operate as an investor, like you said, oversee the company, see what's going on.

There's kind of a CEO guy who does the franchise for whatever the company is back at headquarters. That can make all the difference in the world in your workflow and what you have to deal with. And you've got somebody kind of inspiring the company. You just have to make sure you have a good relationship with your employees. That's kind of important. But you're right. It has a higher success rate. I think it's – I don't want to make it sound easy again because business is never easy.

But it has an easier turnkey than trying to reinvent the wheel out of whole cloth. That's right. Or just like, let's make a business out of nothing. right this sounds fun let's let's go through this that's right it's it's it's a way easier path yeah and then you're right with the with the exit you know I mean if you own I mean just gonna throw some stuff out here McDonald's subway you know KFC if own something that has a brand name like that, like you mentioned the 4,000 brands, that has probably a higher sell

than buying the Chris Fosch Show podcast. Right, right. People are like, what? What is it? And the brand recognition that those brands have are much more higher profile. Definitely. It's a little hard to do the Chris Voss show if you buy it off me because I won't be on it anymore.

That's right. It's name specific. It's name specific. We kind of fucked that one up, but I love what I do. So that's all. And loving what you do, going back to what we were mentioning too, is so important. I've talked to that ad nauseum on the show. I'm sure my audience is rolling eyes now.

But loving what you do is so important, man, especially when you own your own business or a franchise where you've got to show up for business. Showing up every day can be a real challenge. But when you're passionate, when you're doing something you love, getting up and go doing your thing just makes all the difference you know I mean I my podcast is the only business I've ever fallen in love with that I love doing it and part of is because I love interviewing people and I've talked to people I love hearing their journeys their stories I'm a story collector by nature I guess I'm some sort of weird griot so as we go out give people a final pitch out on to how they reach out to you, how they get to know you better. One question maybe you can fulfill is, do they need

to have a certain amount of net worth or do you figure all that stuff out and what they can afford to buy, et cetera, et cetera? Yeah, I think it's a great question. I think that for the folks listening, if you're considering franchising, you need to have the willingness to invest at least a hundred cash of your own liquidity. No loan borrowing right now is very expensive. I really don't want to see clients borrowing too much. A little is fine, but the rates are high at the SBA. So I do want people to come to the table with an adequate amount of capital. So I think a hundred, if you're willing to part with a hundred, you're in a good spot.

Most brands look for liquidity of one, one 50, and they're looking for a net worth of 350, 500. Again, it depends on the brand, but I'm just speaking in general terms with you. If they wanted to explore this with no obligation and obviously free, they could reach out to me at cliffn at phrenosity.com. That's F-R-A-N-O-C-I-T-Y.com. And if they want it to, you know, a lot of people don't want to engage. They want to wait and see. If you want to listen to the pod, it's Pursuit of Profit, co-hosted by my business partner, Justin Guevara.

And yeah, I mean, I think that just reaching out to me directly or visiting our site, they could also request information through the site. This is what we do. We help people. 20 years of doing this, 12 brands. Love helping people in this process. And does it cost you anything to get an initial consultation and find out what's in it for you? Ever.

Or if you've got a great idea yourself and you've got a great business model that's working great for you and you want to franchise it, that's another big thing. One thing I'll throw in, I meant to throw in is, you mentioned about real estate and the difference between franchising as a business opportunity and investing in real estate. I think investing in real estate is going to become much harder over the next while with what went on with these fires. I mean, over the last couple of years, insurance, homeowners insurance companies have been last couple of years, insurance, home owners, insurance companies have been pulling out of Florida, Texas, and California because they're just tired of all the stuff we're seeing with climate change. And I think nationwide, that's going to affect, I think more and more nationwide, we're going

to see fallout from that, where we're going to see, I mean, just looking at the cost of 10,000 plus homes being wiped and stuff. And more often we're having these climate events. I think everyone's home owner's insurance is going to go up over time. I mean, it certainly has happened in the car business. So I don't see why. I'm in Florida and I'm feeling it it i've been here since 1988 i left for a little while for cartridge world in new york but the the premiums i mean there's now subsidized by the state of florida we have citizens which is a state-run you know carrier is subsidized by the state so i i agree with you and all these folks where they're gonna end up with you. And all these folks, they're going to end up with you. A lot of the Californians end up in Utah. I just purchased a place out by you.

That's true. Yeah. They're probably going to flood Vegas some more. God damn it, too. Vegas is their home. But yeah, Utah, there's going to be a lot of, there's going to be moving to things because people are just going to give up. They're going to be like three years of code regulations.

Exactly. They only get two years of code regulations. Exactly. They only get two years of money, usually, I think, from the homeowners insurance I was hearing. And so, yeah, a lot of people are going to move. A lot of people are already kind of migrating. Like my friends in San Francisco said, a bunch of the people from Pacific Palisades are up there in hotels, filling up hotels and everything. And they kind of just don't want to be in the area for the short term because you know they lost everything number one so there's nothing to go back to but you know it's going to be just a cluster f of rebuilding and contractors and i mean you know i feel sadly for everyone and i had friends that lost like everything and

and they didn't even grab shit when they left the house they a couple of my friends the power went out and they needed to make some calls and so and i think their power their phone calls went down and so they needed to make some business calls and so they just kind of left not grabbing hard drives or computers or anything of value thinking what's the worst that can happen so you know some smoke and they lost everything so yeah i think i think there's going to be that migration i think and i think being in real estate you know you saw in florida when that i think one of the things that really impacted florida was when that condo collapsed right that's right and they started

looking at all the other condos and and their coding and regulations are like holy that's right there's a whole lot more of these running around and i've seen people in florida they've been getting these notices with their condo associations or their hud's their hoas their hoas yeah, yeah, I think being in business is going to be more fruitful over the long term. Of course, I don't know, man. I should have bought a house at the bottom after the 2008 crash and didn't, so what an NEI. Well, it's been very insightful to have you on the show. Thank you for coming by. We really appreciate it. Thank you, Chris. I enjoyed my time with it. Thank you. Thank you. And thanks for tuning in. Go to goodreads.com, 4Chess, Chris Fuss. Oh, and Cliff, let's get a plug in go to goodreads.com fortress chris fuss oh

cliff let's get a plug in for that book real quick what give us the title of that so right we're january 25 we should release it second quarter of 25 it's called beyond the brand a guide for fearless franchising so beyond the brand thanks for joining us for tuning in go to goodreads.com fortress chris fuss linkedin.com fortress chris fusschristmas, LinkedIn.com, 4chesschristmas, christmas1, the TikTokity, and christmasfacebook.com. And we'll see you guys next time.

That should take us out.