The Koerner Office - Business Ideas and Deep Dives with Chris Koerner - The Most Overlooked Way to Get Rich in America - Ep. #326

Episode Date: August 14, 2026

Check out my newsletter at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠��⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://TKOPOD.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and join my community at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://TKOwners.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠━I sat down with Alex Smereczniak, co-founder of Franzy, to break down why franchising might be one of the most overlooked ways to build wealth. We went through four interesting franchise models including freight brokerage, facility management, oil filtration, and mobile fuel delivery, looking at startup costs, revenue potential, royalties, and how much can potentially be financed. Alex also explains what to look for in a Franchise Disclosure Document, the red flags that should make you walk away, and why the right franchise depends heavily on the person running it. We also get into Chick-fil-A, Subway, Crumbl, boring franchises quietly making millions, and how people build large franchise portfolios without putting up all the capital themselves.Check out Franzy: https://go.franzy.com/chris-koernerFollow Alex on Instagram: https://www.instagram.com/alexfromfranzy/X: https://x.com/AlexfromFranzyLinkedIn: https://www.linkedin.com/in/alex-smereczniak-40310329/Enjoy!---Watch this on YouTube instead here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tkopod.co/p-yt⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ask me a question on or off the show here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://tkopod.co/p-ask⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Learn more about me: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://tkopod.co/p-cjk⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Learn about my company: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://tkopod.co/p-cof⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Follow me on Twitter here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://tkopod.co/p-x⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Free weekly business ideas newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://tkopod.co/p-nl⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Share this podcast: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://tkopod.co/p-all⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Scrape small business data: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://tkopod.co/p-os⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠---

How are people out there buying franchises with none of their own money? Franchising has 85-ish percent success rate. It's 50 percent for independent businesses. I think franchising is probably the most overlooked path to wealth creation in America. What would you say is the cheapest franchise concept that you would put your own money into right now? He just couldn't figure out what he was good at. He makes multiple six figures now. He, again, didn't have formal training for this.

When you're looking at a franchise document, what is a red, flag that makes you run away every time. Is Subway the worst franchise deal in America? Defend your answer. My friend Alex knows more about how to get wealthy from franchising than almost anyone on this planet. So today, I flew him here to Dallas, Texas to ask him, what franchises can I get into with a very low startup cost and a very high profit potential? What should we look out for in a franchise that appears to be legit, but is actually shady? Which franchises are fads? Which are the next big thing? what are some overlooked franchises that are making people millionaires? And specifically, what are the four best franchise opportunities in the world right now?

Alex, you probably know more about high profit potential franchises that don't cost that much to start than almost anyone on the planet. True. I've read thousands of what are called FDs, franchise disclosure documents. So I see average investment range, average revenues. And today we've got some of the most interesting low cost, but high revenue potential franchises you can get into. Okay. And that's why you flew here today so we can break these down.

I want to talk about franchises that are popular, that are growing in popularity, but they're not like crumble and it's just tired. There's no opportunity left, right? Franchises that don't cost a ton to start and that have proven profit potential, not just like hopes and dreams on a spreadsheet, but you can look at their publicly filed franchise disclosure documents and see provably that they're profitable and that there's a lot of promise left in them. We're still early on them. Cool? Let's do it. Okay. I have it my notes here. Freight brokerage franchise. Yeah. So the first one I brought is a really interesting business. It's in the freight

brokerage category, which essentially is you in an office. It could be at your house. It could be a small office where you're helping people that want to move goods, pairing them with carriers that have trucks and logistics and routes, et cetera. And then you're making the spread on what that vendor is willing to pay to move their items and what the supply. is willing to charge for moving those items. So you make the difference. So it's really B2B sales. So it doesn't cost a lot to get into this.

But some of these individuals are putting up really big numbers. Let me pull exactly what the average is. So the average franchisee in this business is doing over a million dollars a year in revenue. And this is a mature UK and Europe-based concept that's moving to the US for the first time. They're actually headquartered here in Dallas. Okay. So you say a million a year in revenue. That's not like an industry-wide statistic.

This is for this franchisor. This brand specifically. Okay. Yep. So I'm flashing back to high school. It's been a good, you know, what is it? 22 years now. My best friend was Chase and his dad owned a freight brokerage company.

And it was his dad that he inherited from him and Chase will inherit it from him. And I'll never forget this because I'd go to Chase House and was like, oh, where'd you go on vacation? Salt Lake. Oh, I just shipped a load of onions from Atlanta to Salt Lake. Oh, where'd you go on your mission here? Oh, I just shipped a bunch of cabbage. that's what he did. He would pick up the phone and say, oh, you need this load moved. All right, I can do it for this much, this much, you can leave on that. And then he would just take a margin on that shipment. Is that accurate? That's exactly how it works. Okay. And then recently, when Tesla announced their Tesla semi, I reached out to my friend Chase. I'm like, dude, what are you going to do, man? These trucks are going to drive themselves. And he's like, we're going to buy some. Like, we will own them. We won't need as many truck drivers. So this feels like a pretty AI resistant industry. Yeah, I think so. Because even, even if the trucks get more efficient, they're still going to need people drumming up interest of,

you know, people that need to move goods and services are, you know, mostly goods with the logistics piece, whether those are automated trucks or people behind a wheel. There's still going to have to be some sort of brokerage happening in the middle. Eventually do algorithms come in and fully wipe things up, probably, but I think we're a decade away from that. And there's still plenty of money to be made over the next five to 10 years. Well, just like anything, like three years ago, everyone's like, wow, every white-collar job is done. And now it's like, actually, this is growing jobs. AI is growing jobs. Actually, wealth managers want a human. Accountants kind of, or business owners that have accountants, they kind of want a human to talk to. Even if chat

GPT does it better, they want a human that uses chat GPT so they can be better. I feel like this is an industry that goes along the same line. Especially if you're moving hundreds of thousands of dollars worth of goods across the country. You don't want to just click a button and be like, I hope that This gets where it needs to go on time and doesn't get damaged or ruined along the way. So you don't need an office. The franchise doesn't require you to have an office. You can work from home. You're on the phone a lot.

Emails. It's a relationship business. I'm assuming once you get in with a good company, then they're probably going to send you a bunch of shipments on a regular basis. Yep. And they've built all the tech, the back end. They help with the carriers. They help you with initial customers. And that's where things get a little complicated.

How do you price things and how do you do that? A lot of these independent freight brokerages build this in-house. It's a lot of money, software engineers, et cetera. And so they provide all of that. The kicker, though, is they do charge one of the highest royalties that I've seen in franchising outside of Chick-fil-A even. Or Chick-fil-A is the highest. They're up there.

They charge 30% royalty on the gross margin, not on the revenue. Okay. And this is actually common in freight brokeraging for a number of reasons because of all the investment into technology and the relationships are pretty defensible. Okay. So let's break that down. Let's say that there's a shipment from. from, you know, Los Angeles to Seattle, and it's $10,000, $10,000 shipment.

Break that number down. Where does all the money go there? Yep. So you'll make about a 40-ish percent margin on the 10, let's say, was it 10,000? 10,000. So you'll make $4,000. Then the franchisor is taking 30 of that $4,000. $1,200.

So they'll take $1,200. The rest is left for you to cover any local expenses you have if you do rent an office. If you have decided to start scaling and hire more sales reps, more, account executives, that cash would be left for them. Otherwise, you're pocketing the rest if it's just you in your home office. So your cost, your cost of goods in this freight brokerage example on the 10K is $60,000 because you're paying, it's probably more like GMV. Yeah, $6,000 in cost. So you're left with four. The franchisor is taking 30% of that. Okay. And presumably it's because your overhead's not that high, right? Whereas with a restaurant, that 30% might be 8%. And I'm hoping and assuming

that they help you find customers? Yes. Because if I'm a franchisor and I take such a fee, it's going to be because I'm feeding them leads all day. Leads and then all the technology and they are handling all of the back office. They handle. Let me put one other thing. Yeah, they're running all of your invoicing, carrier payments,

carrier relationships. Really, you're just effectively B2B sales. Yeah. Okay. I have to think that since this is a relationship business, the churn is pretty low. Once you have a good relationship. It's recurring revenue essentially.

Yeah. And you can upsell into warehouse management, facility management, other services that, you know, carriers and buyers need alike. Okay. So the average revenue is a little over $1 million across all the different open territories today. And then the average margin is about 40%. So you're making $400K in gross margin before you pay that 30% royalty. Wow.

Okay. So net margin would be, what, it would be 30% less? 400 grand. Yeah, so take 120K off. You're at 280K average. 28% net margins. Some are significantly lower. Some might be significantly more.

It depends on what your local operating costs are. You've got a nice office and you've got a team of six. I imagine the average isn't that big yet. Those are probably the top quartile performers and they're in the multiple millions, making a lot more that justify adding head count in an office. Because if you have a team of six, your percentage margins are probably going to be lower, but your volume. Yeah, your volume would be higher.

Net revenue to your pocket will be higher. Yep. And this is one of the first franchises in the U.S. doing this. This brand that expanded here has been very successful in the UK and across Europe. So I get excited about this because it's new. I have a buddy too, similar to yours, who he throughout college was trying a number of different things. He was doing music at one point. He was chasing storms.

I was telling Max about this. He was doing like hail insurance and hail damage. And he just couldn't figure out what he was good at. He does freight brokerage now for an independent, broker. He makes multiple six figures now. He again didn't have formal training for this. He's just good with people and relationships and jumped into this and is very good at it. And so I like it because it's super accessible. The revenues are high. The cost to get in, which we'll talk about later is low. I mean, in some cases, sub six figures to get started. Wow. Okay. So if you are a

people person, extrovert, don't mind being on the phone. You love conversations, relationships, working from home. It's a good fit for you. Absolutely. Okay. All right. What do you got next? The second one is also really interesting. This is one of the highest revenue generating franchises that I've seen, and it's commercial facility management. So think about office buildings, warehouses, all these different properties. Let's say you and I own a bunch of them together.

We now have to deal with landscaping and HVACs going out and janitorial services and striping the parking lot and all these things that come with owning a property. This franchise or this business handles all that. It's one, for lack of a better word, one throat to choke. It's one relationship and they handle everything else for you. And they make a very, very, very high volume of revenue. The highest grossing revenue franchisee in 2025 in their FDD did over $50 million in revenue. And the average is doing $9 million in revenue.

Holy crap. For the franchise Z, not the franchisee. The franchisee. Do you say facilities management? How is that different than being a commercial property manager? It's effectively the same thing. You're just handling, I mean, I guess even property management. are handling the whole thing. You're effectively being the property manager for the building,

but it's a franchise model instead of an independently owned. So you're also finding tenants and you're not doing that. It's actually just the maintenance. So I guess that would be the differentiator then. It's kind of an unbundled version of a property manager. Yeah, you don't have to deal with leasing up the units and working with tenants that way. Okay. We'll make sure that an extra dumpster gets out there, that the lines gets drived, etc. You said six million was the average? Nine million is the average revenue. And what are the net margins on that? So their gross margin is a little over three.

It's 3.3 million average margin, so 33 and a half percent margin off of an average of $9.8 million. It's almost $10 million in average revenue. Holy crap. And my guess is that, again, it's almost like this GMV thing. So you hear with like Instacart, they're doing billions of dollars in revenue. Well, they're just transacting billions of dollars of groceries. Instacart's taking a membership fee or some smaller amount.

My guess is the revenue is so high here because they're saying, hey, we're charging for janitorial, landscaping, et cetera. They're having to pay those. You're capturing that revenue and then passing it on. Because even the royalty is on gross sales, not margin, but I imagine that, you know, 65% that's going out the door is to the subcontractors. And so you're still left with a lot. You probably don't have a lot of overhead or costs at that point because you're outsourcing

every bit of the service is actually happening. Do you know how much, like, lead generation, the first? franchisor provides on this one? This one is more on you and they charge a lot less of a royalty as a result. So it's 5% of gross sales as the royalty. Okay. And they're going to, are they going to help you find and vet like the line striper? So that's on you too. So that's where I think as the franchisee, you're getting a brand. They're helping with some brand awareness and marketing. They probably have national tenant or, you know, landlord relationships with some large property owners. But from there, they exclusively say, or they specifically say in the FDD, you are responsible for

building the subcontractor relationship. So that's where the rub is probably the headache of running this business is. I got to go find good contractors. But for 3.3 million in gross margin and a pretty good business, worth the headache. I mean, any given franchise is a terrible fit for someone and an amazing fit for someone else. So I'm thinking if you're a 40 to 60 year old dude that's been doing real estate for a while, either commercial or residential, you've got a bunch of contractors in your back pocket. You have relationships. You speak the last. language. You could plug into a bunch of stuff. You're a leasing agent. This could be a great fit for you. Yeah. If you have no experience there and you're going in cold, you have no sales experience,

it could be a terrible fit. Yeah, I asked too, you know, why are the top five, you know, why are some of these folks doing 50 million? And they said the main differentiator is that they've had five years of B2B sales experience before joining as a franchisee. It's fundamentally a sales business. Okay. So that's the other type of person, B2B sales. Work from home? You don't need an an office to do this? Okay. And you can hire as needed. You don't need to start with employees. Yep. Is this like an owner operator situation? I think most franchises, my advice at least is you should start your first year as an owner operator, learn the business from the ground up, clean the bathrooms, go on the job sites, change the oil, whatever the thing is, do it because it makes you that much

more effective as an owner to train the next group, the management layer that you start to put in place. If you're wealthy enough and you have enough background and business ownership experience, you can leapfrog some of that and hire a GM out of the gate and not be involved day one. I agree with that, by the way. Okay, so so far we've covered freight brokerage facility services. And these are kind of tangential to each other. Kind of tangential skills, work from home, don't need an office, relationship-based, highly recurring, high gross margin potential, low cost of entry. What downsides would you say there are that we haven't already covered to both of these? so far. So for the first one, it's new in the United States. And so I think anytime there's

anything new, there's additional risk, but they've been doing it for 15 plus years, the freight brokerage in the UK and across Europe. Yeah. And so, like, to me, they've proven themselves, yes, it's a different market here, and there might be different competitive angles you have to be considering of. And so I would say looking at that one, just go look at the landscape. Is there a reason no one's done this here before? Why are they entering now? If I were to talk to this franchisor, I'd press them on that. You know, why is now the right time? And who's, who's tried this before you and why did they fail? Yeah.

And just to make sure that there's no gotchas or regulatory things that only a really nuanced, you know, niche understanding individual would have. Are you able to see on the franchise disclosure document the difference in numbers between the UK, Europe, locations and U.S. locations? Or is it brand, brand new to U.S.? You can see both. Okay. I don't have them top of my hand right now, but you can see the differences.

Because a lot of franchise concepts are like inherently tied to cultural norms. and they don't translate very well in other countries. But some of them do. And maybe what you're saying is that could be somewhat of a gamble. In this case, is the cultural norms don't cross over from Europe to the U.S. But if you can see in the FDD, the delineation between both, then that might be a non-issue at this point. Yeah. That's where I would press at least, because otherwise a lot of the day-to-day motions are going to be the same there as they are here, Europe or the United States.

You're building relationships. You're helping people that need to move goods with people that have. the ability to move those goods. And like that at the core is not going to fundamentally change. Some of the regulatory stuff could happen. Some of the larger players might have boxed people out. And those are the things that I would dig into to see, is this an impenetrable market? And that's why no one's done this before. Or was it just you needed enough resource and the right timing? And that's what this UK-based company has now. Yeah, gotcha. Okay. Oil filtration. Yeah. So this one changes, you know, turn a little bit here. The first two were more B-to-B. You can do it

in your comfort of your own home. So oil filtration, if you think about all these restaurants, there's tens of thousands, hundreds of thousands of QSRs, restaurants in the United States. Quick serve restaurants, right? Yep, QSA, quick service restaurants. So those are like your McDonald's, your Bojangles, Burger King, et cetera. But there's also restaurants that just have, you know, friars and oil. They have to do something with that oil.

They can't keep reusing it over and over and over. And so this concept has a proprietary truck that comes on site. They run a hose into the building through the back door. and they filter that oil on site. So they clean it, they pull out the gross chunks and things, and they actually put different chemicals into it to cleanse it and make it more useful again. They'll do full-blown replacement of the oil as well, and they'll take that unusable oil and they'll sell it to other people that can use it in different businesses.

Like biofuel? Correct. Okay. So sorry, let me make sure I understand this quick. Does this remove the need for a restaurant to have that nasty pit in the back where they dump all the oil? It does. Okay. Yeah.

So, like, they're coming and they're taking it out. and removing it from the site entirely, or they're cleaning it on site. They're pumping it into their vehicle, running it through their proprietary process, and then putting it back into the filtering it. Yeah. So I'm just picturing a big, kind of like my kid's aquarium. They have this big filter that sits outside of it with two tubes. One of it sucks all the dirty water out, and then the other one spits all the clean water back in.

They're doing that with oil. Or if the oil is just too far gone, they're just taking it, putting it in a tank, taking it to a different facility, recycling it, selling it as biofuel, and replacing it. with clean stuff. So there's multiple revenue streams. There's the recycling on site. There's the full pull resale over here. So I'm taking what you think is trash to you as the restaurant owner. I'm making money on it. And then I'm selling you new oils. I've made money twice here in this instance that you're happy and you're thrilled about. And then they also do full drain cleaning and replacement. So they start to get into some of the equipment. And then they also do refrigeration and freezer

cleaning and maintenance as well. What about like hood and vent cleaning? They don't do that yet, but I wouldn't be surprised if they start to. So they have four or five revenue streams now. Yeah. I mean, once you get your foot in the door of a small business, you might as well keep adding more. And it's recurring again because this has to happen

on a certain frequency and cycle. And people don't understand. Like there's 30,000 McDonald's, but there's like, you know, 500,000 no-name mom and pop restaurants. Yeah, just in franchising alone, there's about a million retail locations open. 400,000-ish are food.

Wow. And that's just franchising. So to your point, however many one-off Alex and Chris's rib-jack or whatever it is, is out there's two to three times more of those. Wow. Okay, so this is also probably relationship. Well, it's heavy on sales. Yeah.

It's highly recurring, as long as you don't screw it up. I have a friend that does this business. He doesn't own a franchise. He's ran it for 20 years. He also does hood and vent cleaning. He does like Pandexpress and he has like, you know, probably like franchisors that have multi-units. And he does really well. I know he does well.

He founded it himself. But any concept that works as a standalone, not any, but I would say most concepts would also work as a franchise. So this is no exception. Okay. So what are the revenue numbers, the profit numbers, and the fees that the franchise work takes? Yep. So this one's lower revenue. It's $517,000 in revenue for one territory.

And that's average? That's the average. Okay. As soon as you start doing multiple territories, so in a route-based business, like this, they're giving you either a radius or, you know, a set of zip codes or a set of households in a, you know, again, a certain polygon again. So for one territory, which they, you know, they draw 517,000. As soon as you get into multi-territory, the average goes to one, a little over one and a half million. Okay. And I think part of that has to do with, you

again, you're using the same equipment base for the most part, you might be adding trucks, but you're getting to upsell those four or five different revenue streams to an exponential number of, you know, different businesses. And so you start to get more leverage out of the existing assets that you already have in those trucks because you're servicing a wider range. Economies of scale. Do you know how many units or territories they have in the U.S. today? They have a lot. Let me pull up the exact number. This one's been around for a while. They were also founded in the U.K., but they've been in the U.S. since 2002, and they have 377 territories across 119 franchisees.

Okay. So that means the average franchisee has 3.2 territories. Okay. Any idea how saturated this is? Like how many territories are left for these guys? They seem further along than the other two. They're further along. They're actively trying to grow.

They're growing every year. I think they have room for another couple hundred territories. A lot of mature brands, as you mentioned, McDonald's, granted it's retail, 30,000 locations. This one's servicing a wider, you know, radius. It's going to be less than 30,000. but it's definitely more than 377. Yeah.

On the three we've talked about so far, if we were to make a scale of like a brand new franchise with zero territories, that's a one, and a 10 would be like a subway or McDonald's that's very mature. Crumble would be like an eight or a nine. Yeah. Right? Where would you put all three of these so far? Yep.

So the freight brokerage, I would put them out of six or a seven overall because they have such a presence in the UK and Europe. In the US, two or three. Yeah. It's new. They don't have as much of a presence here. There isn't a national brand yet in franchising for freight brokerage in the United States. I think they have a good shot of being the first. So that one earlier emerging, more risk comes with that. The second one is the facilities management concept. They've been around forever. They start out doing just janitorials and they've added all these other services on. They've been around since I think 1961. So 100 plus units already opened, sold, profitable, high revenue numbers. I would give them more of an eight or nine. So less risky, more proven, longer, tenured, more established. If you or someone you know made thousands of dollars in a period of months with a random niche business idea, growth hack, moneymaking scheme, I want to have them on this podcast.

It'll be great free exposure for their business. And if it's not you but a friend, you'll get a thousand bucks for sending them my way. You can go to tkos.com to fill out the application. The third one, same thing. They've been around since the early 2000s in the United States. since 1960, I think, in the UK, 1996, sorry, in the UK, and then 2002 in the U.S.

Okay. So probably another seven or an eight there. Okay. Is there like a right number to get in with a franchise? So that's an interesting question because it comes down to your unique risk tolerance. So when people ask me like,

well, which one would you buy? Because I just want to buy that. You look at all these. I'm like, well, my answer is going to be way different. I have a much higher appetite for risk than most people do inherently. And so I couldn't work at a Chick-fil-A, even though Chick-fil-A will pay me

six to 800 grand a year in profit. Amazing job. It's a job. You're less of a business owner, in my opinion. Some people would love, that's a 10 out of 10. They've been doing it forever. They got this thing down. They are all the way dialed in.

I wouldn't want to do that even though the money is great and it's proven. I like getting in at these like threes or fours because I have more upside because sometimes you can get equity. You can invest in the business, the franchisor. You have way more white space to develop way more territories than Chick-Fleigh, I can only get one of them. And so I like the idea of empire building. and scaling to a 10 plus unit portfolio.

I'm developing 10 pop-up bagels right now. Oh, I think you told me that. Yeah. So, like that. It's an early brand, but lots of promise and upside and big, well-known investors behind them and a great executive team. So I like that kind of stage. And so to answer your question of like, is there a right number?

I tell people if you're more risk-averse, try to find a system that has more than 50 units already open. 50 units is usually like that magic number. If you have to choose a number. Yeah. 50 is it. because the brand is now royalty profitable and sufficient. So they have less of a need to just sell units to anyone who can get into the business and be an operator.

So they're much more selective on the operators that they pick. That's a good point. And they're less dependent on franchise fees out of the gate to fund that early growth before they get to profitability on the royalty side. And so once they've done 50, they've seen a number of things. They've been in different markets. They've probably made the mistakes they need to on marketing and lead gen and all these other things. Still not perfect, but early enough that you can get in and still have a

say enough white space and upside, not so late that you're purely buying a job. Yeah. Because from what I understand, those first 50 or whatever territories, they're not self-sustaining. Like they're relying on those upfront fees to pay the bills. But you're saying they get to a magical point where their percentage fees over time cover their overhead and then start to become profitable. And then they're in a luxurious position to make better decisions. Whereas for those first few franchisees, they probably have to make some compromises that they wouldn't have made at number 51 or There's this chart, and I'm going to maybe butcher this a little bit, but it's on one axis, it's the franchiseer's value, and then what you get as a franchisee over time on the x-axis.

On the y, it's the cost of the value. So at first, the franchisor is providing a ton of value, but they're getting nothing from the franchisee in the form of royalties because you're starting at zero, no revenue. There's just nothing coming in. Over time, the value the franchisor provides starts to decline, but the value that you're paying, the money that you're paying them in royalties, they intersect eventually at one point. And so five years in, you as a franchisee, start to forget all that value that you got, didn't really pay anything for. And you're like, why am I doing this? I'm six years in.

I know what I'm doing. I'm an expert at this oil business or whatever it is. But the franchisor is front loaded so much of that value. This happens a lot in systems that franchisees need to ask the question, hey, what are you doing for me lately, franchisor? And that's where lead gen and, you know, national brand campaigns and investment in technology that you and I is an oil, you know, filtration franchisee might not be building. homegrown AI agentic technology to make our lives and workflows and whatever easier,

but the franchisor is. Yeah. Okay. That makes sense. Because at the end of the day, a franchisor is no different than a normal business, and that most will fail. There's thousands out there that no one's ever heard of. They had one location and failed or whatever.

They never even got off the ground. So that's too early unless you just somehow get lucky, which I'm sure you would not recommend to a flyer on those guys. So you're saying get into two or three. But then there are also situations. let's use pop-up bagels or crumble as an example where they might be a seven-eight or a nine but there's a last handful of territories that haven't been sold yet and you can kind of have the best of both worlds it's like a de-risk concept and there's a lot of data behind it their fdd has a lot like

it shows good numbers on a large sample size which are both important and for whatever reason in cape coral florida they never sold that franchise but it's a great market like there are also situations which are probably much harder to find where you can kind of have your cake and eat it 100%. Some of these empire builders have figured it out. I know guys that they started seven years ago with zero and they're up to 80 units, 90 units now because they got into the game. My advice usually is you need to be in the good old boys club of franchising to start seeing all of these hard to find deals, these brands that are coming up that have, I don't want to say a sure thing, but they have all the early signs of a great executive team. They've got really smart, sophisticated private equity behind them. And they have a track record of doing this with Dave's Hot Chicken and two or three other wildly successful brands. Mike's Red Taco is another one that's just taken off right now. Still very early, that brand is going to do well. They have all the elements, all the ingredients. And so these guys that are in the game, they're buying up 20 units in Dallas,

you know, 50 units here. Like they're getting in early, even though it's a zero out of a 10 or a 1 out of 10, it has all the signs to be a 7 or an 8. And that's where taking those flyers early is almost an unfair advantage. But those guys got the right to do that because they came in at some point on a concept that might have been a five or six kind of middle of the road they got their reps in they became an operator they learned how this space works yeah and now they've got their anchor their safe stuff like one of these individuals owns i think it's like 90s carles juniors wow it's like random kind of

stable not a chick filer raising canes but a steady couple million a year an average unit volume makes them money some stores probably lose money but the majority he does well and that's his bread and butter and then he takes flyers on all these other things from a position of safety and yeah you know he's de-rissed over here yeah and then if you're in the game like if you're in the conversation you're going to find opportunities where like a guy bought 10 Dave's hot chicken franchise territories in Miami and for whatever reason he can really only handle seven of them so he goes to Dave's and says hey can I unload three you kind of have to know someone to buy those three off them right you're not just going to get those like on biz by sell exactly you're not how do you get in

that conversation. How do you get to know the good? Honestly, by whether it was one of these four that we talked about, you know, today, we have one more we're going to, but just being an operator gets you enough credibility, cloud, connection, awareness. You start going to these conferences that all the franchise people are out, whether it's Dave's Hot Chicken and the freight brokerage franchise, that you're all in the same room. And you start to meet people, you start to build a network, and that's how you start to hear about these things. Like the individual I mentioned that went from zero to at his peak, 11, like 18 units in seven years. He started out in Orange Theory.

And then he, before that was doing a butcher shop, that was an independent business. But him running the butcher shop, when he talked to the Orange Theory owner, was like, oh, you've done this before, just in a different thing. And it was non-franchising. I trust that you'll be able to run a gym if you've been able to run this butcher shop. So then he does two Orange Theory's, it goes to four, adds restore hyper-wellness. He's like, I need to get into food. That's where a lot of people seem to be making a lot of money.

I'm going to go raise some private capital and go buy, I think it was five or six days to start. And then he just snowballed from there. want to tangent us a little bit. We might end up editing this out. I'm personally just curious. What do you see is the future of like Dave's hot chicken, for instance, or all the hot chicken stuff? Is it, are we reaching like hot chicken bubble? Like, kind of like we got like Froyo bubble 10 years ago? Not that they're all going away, but like only the best locations will be around in five, 10 years. Or is that a category that's just here to stay and here to keep growing? I think categories like that. Like even, you know, Chipotle becoming more like fast casualish, like leading that way. And then you see like Kava and. And some of these are healthier alternative. Not that Dave's is healthy, but certain categories get so popular. The numbers don't lie. Like the average unit volume of a Dave's is great almost everywhere. It's such a fantastic restaurant.

They're doing four and a half to five and a half million in revenue, which is like a McDonald's, but it's just chicken. And the same with raising canes. And Chick-fil-Aid, now the average is over $9 million per location. Out of one box, doing $9 million in chicken. And something I talked to someone about recently was, it's a little messed up, but the genetic kind of production we've been doing with chickens, the cost per calorie of chicken has gone down so much.

That's just so much easier to mass produce chicken and sell it. And that's why chicken as a category is beating beef and pork because it's so cheap, but the caloric density of it's so high. Us as humans who want protein and all this, it's just a perfect, perfect storm for that for chicken. Ever since I learned that hot chicken, like all the sauce they put on it is literally just vegetable oil with red pepper in it, I can't do it. Like, just seed oils poured all over my food. Like, it's bad enough to fry it. Sure, I love French fries. Not hating on seed oils, but like to pour a half a cup of it and then eat it. That's a lot. Another thing is like a crumble cookie.

People don't realize the. Oh, I know. 900 calories for a cookie. When they tell you the serving size is a quarter of a cook, no one's going to do that. That's a joke. Speaking of crumble, so Swig, right? They're trying to be like the crumble of dirty sodas. They're doing a good but I feel like to actually be again I'm just tangenting here and we might cut this out but to actually be the crumble of X you have to have the technology to do that they're so good they're so good and I just downloaded and used the swig app for the first time I'm not a swig fan but my wife is so I did it for her and it was just a terrible experience it's like it said I could pick it up at the window but that location didn't have a window so I had to get in line to everyone else and

then I got in line and I ordered it at half hour in advance and then I had to get out of line and wait because it wasn't right. I'm like, Crumble would not do this. No. Their app is like top notch. Dialed in. They spent a lot of money on it. Right. Do you think to be the Crumble of X, technology has to play a central role? Technology and what Crumble did so well is scarcity and exclusive releases. So every week, new flavor. It's only here for a week or two. So you have to come in and get it. And really interesting brand collaborations. Social media is fantastic. Popup is running a very similar playbook where they'll partner with Kraft Mac and Cheese for a

two-week period and they have Kraft Mac and Cream Cheese smear where it's mac and cheese flavored cream cheese and people are like I love mac and cheese and this is only here for a week so like I need to go do this now and like pop up have an app like do they have the technology they do and like they're starting to invest more and more but they're relying a lot on third party you know apps for now I think they'll start to invest more significantly in that but they're they want you to come to the store and they want it to be quick you grab it and go the insides are purposely small with no seating because they want you to grab it and go to a park or go somewhere, go to an office and enjoy it as a kind of a community of coworkers or a family. What was I going to say?

The other thing Crumble has or had going for it is is how polarizing it is. It's like Jim Gaffigan has a bit where he's like, he talks about how no one admits they like McDonald's. Oh, McDonald's is gross. It's like they sell a billion hamburgers a week. Like you guys are eating McDonald's. Nobody likes it, but we're all eating. That's how Crumbull it is. I post about Crumbull and all the comments are like, it's gross.

It's so gross. It's a sugar bomb. It's like they're like a $5 billion company. You guys are all lying. They are good. Yeah, I actually like it. Each cookie has a stick of butter. I know.

Of course they're good. I forgot where I was going with that. But I was going to say something else. I heard a story about a guy who signed up for a franchise. And it was a good franchise, well known, got in over his head and told them like, hey, I'm struggling. Can I sell this back to you? And they're like, no.

And then they were like, it's like, I might have to declare bankruptcy. And they were like, can you, can you give us that in writing? And he's like, yeah, I guess. So he did. And they're like, okay, thank you. We're taking this back. Wow. Because they didn't want to show on their FD that they had a closure.

Is that common? This is common. So if we do keep this on, this is like a good, good fact for anyone looking at buying a franchise business. There's the item 20 in the FD. And that shows how many stores have been open that year, closed that year, and then transferred that year. So what sophisticated franchisors do that want to hide closures is they transfer them to either themselves as a corporately run location or they convince another franchisee to buy it

or someone, a new person coming into by that existing. So if you look at transfers and there's a high number of them, almost look at a transfer as a closure. Like what happened here? Why did you have? It should be, it should be looked at that I would, if I'm looking at a concept, like why did they all of a sudden have 10 transfers last year and 40 this year? Like that's not normal for a system this early in its life. Yeah. If it's sub five, sub 10 years and they have a ton of transfers, Why are this many people getting out? If it's going well, they're just going to, they just hold on.

For closures and transfers are the numbers. Obviously closures are more obvious. Transfers are a way to hide closures. Yeah. More often than not, unless it's a really mature brand and they just have, like Wendy's as an example, their average age of their franchisee is 64 years old. Average. And so it's just an older brand, older system.

A lot of those individuals don't have succession plans. So Wendy's is looking to sell like 700 in some locations in the next, I think it's 10 to 12 months. Wow. It's a lot fast. It's like they are going to have a lot of transfers. That doesn't mean necessarily that Wendy's is failing and it's still a good brand. And yes, they have competition across all the other big burger players.

But that's an example where it's a mature system where transfers maybe just make a little bit more sense based on the life cycle of where they are. Gotcha. So that's something to look out for is transfer. Item 20 transfers. 19 finance stop. 20 transfers. Yeah, it was sad because I heard this story because he had to sell his house to my friend.

He had to sell his house. My friend bought it. And now they have to rent it. They rent it back from him. And I don't even think they had to declare bankruptcy because of the franchise. I think they were having other issues. But it was just a double dozy because no one ever knew that that happened on the FDD, but he kind of got screwed.

But just like run it through Chad GPT. Yeah. Like Chad GPT could have totally seen that before he emailed that in writing to the franchise. Well, that's the problem I have. I think I used to be a pretty big franchise skeptic for this reason. I hear all these horror stories. We've all heard tons of them. But I also have a ton of friends who have started independent businesses or bought independent

businesses and have horror stories. It wasn't until I started really looking under the hood to see that. Right. Franchising is still small business. It's just a business model on top of a bunch of different industries. Health and wellness, hospitality, food, etc. And franchising has a 85-ish percent success rate after a five-year period. It's 50 percent for independent businesses. So after five years, half of independent businesses are shutting down.

Yeah. Franchising. You have a better shot, but you're still going to, you're still going to hear these horror stories of the, you know, the 15 or so that shut, 15% that shut down. They lost everything. They declared bankruptcy. And I think it's almost like these outlier cases are louder. You hear about them more because of the way they happened. This is what gives franchising a bad rep.

It's this kind of shady character, this brand that wasn't being a good partner. They were trying to do these transfers. And so you just need to identify those and find ways to flag them, just like you would buying a house looking for structural issues or mold or whatever else. There just isn't as many guardrails and protections as there should be. I'm usually not a huge advocate for regulation. This is an area where I'm like, why is the government not stepped in and said, hey, when you buy a house, you have to, you know, if you use a real estate agent, they're licensed in that state.

They have to disclose how much money they make and when. Yeah. But in franchising, it's the Wild West. The broker doesn't have. It's a bigger financial decision. Yeah, with less collateral backing. At least the house, you have the asset backing at this. You could be buying a lease and a strip.

center that you've put two to 300k into renovating the space and if the business doesn't work there's no recourse and that's the issue here I think that's why in franchising gets a bad rep and that's why you know we're building this platform and you know on this mission to go educate people on what to look for and give you the data to make the best decision for you and your family or your business partner that you can if someone is like dead set on jersey mics and they're like I want to own a jersey mics and they had they could choose between buying into it buying a territory starting from scratch where they go to business by sell and see a jersey mic's for sale that, you know, profits 70k a year selling for 200 grand.

If they are dead set on Jersey mics, what's a better option for them, would you say? If I can get into an existing one for a deal because the operator is tired or burned out, or you mentioned her like, I own 10 of them, and this one happens to be a two-hour drive time from my closest store. So my GM is driving out three days a week and it's a headache. And they're kind of willing to let it go because it's a headache. Those are always the best outcomes because you're not having to now build a million. of dollars and equipment you're paying a multiple on cash flow instead.

And so they likely lost a little bit or broke even. But I'm making up for the, like I get the other side of that zero-sum game. I'm getting the benefit of not having to go build a brand new building or renovate a whole new site. And so I would rather, in a restaurant specifically, I'd rather buy existing if I can. But it sounds like your upside might be a little capped. Yeah. It's already known.

Unless they're really screwing it up and you have a way of not screwing it up, you know, it feels like the downside to that option is your upside is more known, more fixed. But you're also, your risk is less. Well, and do I own another portfolio of similar concepts in the area? And it's easier for me to just plug it right in. Is it the first one I'm buying? And a pattern I've seen with these larger kind of, like an empire builders is they start out with one brand, dense area.

They're developing for the most part. They borrow money and they develop new stores because, to your point, the upside. And then they start growing inorganically through acquisition to go faster because now they have a team in place. So it's like every incremental store, even though it might not have as much upside, is almost, I don't want to say pure profit. Yeah, economies of scale. The local economies of scale, especially. And then they start getting risky. And they're like, okay, I own Tampa, basically for Jersey Mikes. Let's go add this hot new, you know, Mike's red tacos come in. Like, it's very popular in L.A. It's taking the country by storm right now. I'm going to be the first,

I'm going to build 20 of these here. And that's the risk. And if they get that right, that's the brand that has a 7 to 12x multiple on Ibita versus your kind of like steady older legacy brands that might maybe only get four to seven yeah and back to our chick-fil-a example like that's the downside and upside and upside is if you're one of the very few people that are chosen you're going to make 500 to a mill a year but you will never make 10 a year and you will probably never fail either no you know it's just going to be more predictable and this goes back to like who are you and what do you want to accomplish and there's no wrong answer. It's funny. How many people come to me and say, again, like, I just want the one

that makes me the most money. I'm like, you're one archetype. Some people do to say, I don't care if it's oil, chicken. I don't care what it is. Whatever is going to make me the most money. I'll learn it and I'll figure it out and I'll do it. Isn't that what everyone says? I'm like, no, some guys have come to us and they're already wildly, independently wealthy. They're bored. And they're like, I've never done a retail concept and I don't want to start from scratch. Like, I want to do a franchise. And this is golf to them. It's a competitive sport and business is that and they want to do a franchise. Others are my My kids, you know, I want them exposed to entrepreneurship.

My business is like metal fabricating and it's kind of unsexy and it's going away. We'll keep the family business, but I want to buy them two or three franchise concepts that I'll do with them. We get that. And then we get the AI group that we're seeing a ton of right now that they're corporate, you know, warriors. They've been at Deloitte or a bank for 15 years. And they just want to replace their income. They're worried about getting laid off, especially with what's going on right now. And they're like, I make $200 grand a year.

Give me concepts where I can just use my background and my sky. skill set to replace my income and I'll see what happens from there. But if that's all that happens, I'm happy with that. Yeah. And so very wide ranging reasons to do this, goals, backgrounds. Yeah. And that's what again I love about franchising is it's a menu of dozens of verticals, dozens of industries with a proven playbook and a group of peers that you can rely on when

you inevitably want to quit. Yeah. Which is, I think happened to all of us. You've probably had those weekends where you're talking to your wife or a business partner and you're like, why did I do this? I want to quit. I want to give up. And you need someone to be like, Chris, just.

stay in the game, persevere. And that's usually what it takes to get out the other end is there's usually an answer and there's a way out. But when it's you against yourself, it's very hard. Yeah. Well, it's like when people come to me and they're like, what, what's your favorite business idea? What should I start?

I don't know who are you. I don't know anything about you. We could talk for four hours and I might give you a few good ideas. You got to figure that out for yourself. We use an analogy of like desserts. Like people would come to us and like, well, which one should I do? And they're like, whoa, whoa, whoa. Imagine franchising is ice cream and there's a thousand flavors of ice cream.

We need to figure out if you even want, ice cream. Yeah. Like what if you should be doing real estate instead? What if you should be like a tecolran? Yeah. Seriously. You don't even know it yet. Exactly. And so our job, a lot of times we turn people away like franchising is not for you. You're way too entrepreneurial and you love technology and tinkering and like franchisors are, you're going to the worst nightmare because you're just trying to change everything. Yeah. I don't know if you've seen the movie, the founder. Oh yeah. That's great. And like his first franchisees were all the rich country club guys that like were never at the stores. They're going rogue. They're introducing like

lobster rolls to the burger shop. And they're like, what are you, why are you selling? crab at the McDonald's. What are you doing? He's like, I thought it would be cool. And he's like, all right, get out of here. And he got the kind of middle, you know, middle income person that like this really meant a lot. And they were going to be associated with that store working it every day. And some brands want that and need that. And others don't. Yeah, I would be a terrible franchisee for sure. Of certain brands, I bet there's some you might be great. They let me do whatever I want. All right. What other concepts are interesting to you right? Yeah. So the, the last one is a fuel delivery franchise. And so they also do DEF, which is a,

diesel exhaust fuel or fluid. And they'll go to these large long, long haul trucking businesses, also local logistics as well. And they'll replace fuel and DEF on site so that you don't have to make another stop with both your trucks, but also your heavy machinery. So they're fueling up your bobcats and other tools that you have. And that's the franchise that they're delivering you fuel and doing it on site. Do they do consumer stuff at all? It's all, this one specifically is commercial. all it's all B2B again. It's all mobile. So they only do like B2B stuff. Yeah, B2B mostly fleets. Do they boats at all? I don't think they do boats. I didn't see anything about boats. It's all been in yards and refueles for vehicles and equipment on site. Okay. So what are the numbers on this one?

Yep. So this one is pretty interesting. The average revenue is just under five million. Wow. But the margins are a little bit lower because I think we're back into that kind of GMV territory. Oh, this is fuel too. Yeah. Okay. So what are the margins? million gross revenue. They're walking away with a little over a million in gross profit. Okay, which is a little misleading. It's not like the overhead is four million. It's the gas. Like the margin on gas is low. So a million in gross profit. Do you know what net is? I don't have net. A lot of franchises are weary of posting that in their item 19. Is there any upside for that? I mean, if it's really good, there's upside.

Yeah. So I look for that too. If it's a new brand, they try not to show just because it's small data. And then if it's a more mature brand, you do see it a lot. And if they don't show it and they're mature over 50 units and they don't show it, there's usually some sort of red flag. And I would at least ask, why are you guys not showing it? They might have had a bottom 10% that just really dragged down the average. And similar to publicly traded companies in their, what's the quarterly filing? S9 or S1?

Yeah, similar to publicly traded companies, you'll see all sorts of adjusted EBITDA and made up metrics that you just read the footnotes and be smart about plug them into chat or clause. and just make sure that you're peeling the layer of the onion back. Okay. Now, what are the fees on that one? Yep. So the fees on this one, it's a 9% gross profit royalty. Okay, so 90 grand on the average unit of doing a million in gross profit.

Yep, yep. And then they are requiring you to use, and they do a ramp too, which is nice. They do zero royalty for the first six months, and then $2,500 per month by month, basically by year two. Okay. So a lot of brands that do that, that is a good sign to me that it's a mature, thoughtful, aligned brand. Like take five oil, publicly traded company through driven brands. Rourke owns them. Rourke is this behemoth that owns everything or a ton of brands and franchising.

They do a ramp for almost every brand because they know in the first year, you're the most vulnerable. You're in that J-curve where it's losing money because you're investing in marketing and training and just getting off the ground. And so they don't want to be taking money from you while you're in that phase. So very thoughtful aligned partners, franchisors, will typically do a ramp like this. I always see this as a huge green flag when a franchisor does a no royalty for six to 12 months. Yeah. Okay. Is this, do you need like an actual facility for this?

You do not. This could be from home as well. So this could be from home. You do need equipment. You need trucks. One truck, one driver to start. But the franchisor is helping on the fueling piece because it's all mobile. Okay.

So you're picking up gas from a distributor in this. truck and you could be the one driver to start yeah probably should be yep and then you're just making delivery and you're adding trucks from there as you go okay on a scale of one to you know subway McDonald's how established is this one this is more of a one this is a brand new franchise in the United States they're based here but even in their FDD for this year they have no franchise locations open okay this is a zero or a one okay what about the founder like does he have franchisor experience he is experienced in this industry specifically but not in franchising.

Okay. But based on how he's structuring the royalty, I have to imagine he's got good franchise people around him because that's not a common thing to do. Yeah. So if you're a one on the scale and you have established revenues, those are all corporate-owned locations, right? And do you kind of put an asterisk on corporate-owned numbers on the FCD?

A little bit. So if it's a small sample, yes, because they're so laser-focused on it. Over time, though, let's say I'm a McDonald's, corporate stores will typically perform worse than franchise because the franchise is so, there's so much personal skin in the game. It's my family's well-being versus a corporation with hundreds or thousands of locations. They've got a 50 to 70 grand a year person running it. They have so much scale. Yeah.

They care less about a couple duds here and there versus you and I, like all three of ours better work and like we need them to work. But wouldn't you say the opposite would be true on the first two or three locations? Yeah. Yeah, so that the first two or three, the corporate outperformers, because they have every resource being poured into it. They want it to work because it will reflect. So both of them are kind of skewed in either direction. You have to look at the, where is the brand in the life cycle of a franchise brand? If they're early, they should be outperforming their franchisees.

If they're later, they're likely underperforming their franchisees. And what's interesting too is, if you think about franchising is a business model, again, it's a business model, not an industry. Franchisors early on, Hormozies talks about this. He's like, I don't, it's funny, Hormozzi invested in our company, but he's like a little anti-franchising. Yeah, yeah. He was like, if, you know,

if the business is so good, why wouldn't you just own the whole thing? And a lot of it is a tradeoff of scaling. If I want to get to thousands of units, I can't possibly go raise hundreds and hundreds and hundreds of millions of dollars. Otherwise, this is going to take, like we talk about Panda Express.

That is almost all corporate owned. Same with Chipotle and Starbucks, right? But it's taken decades, right? 34 years. Like, they did it. It's possible, but it's very slow. And meanwhile, a bunch of competitors enter in.

you know, you know, Dutch bros and seven brew coming in, you know, coming after Starbucks now, but they're doing it so fast because they're franchising. Yeah. Within five years. And so that's the tradeoff. And what ends up happening is the franchisor sells out of country. They start buying all their franchisees back. It is right.

If it's doing so well, why don't you just own the whole thing? And so franchisors do eventually come back to you and I and say, hey, you guys want to get out? We'll buy you for seven X EBITDA, six XEBDA. Okay, let's talk a startup cost for all four of these concepts. And then we'll just cover them real quickly again. So number one was freight brokerage. Yep. How much does it cost to get involved?

And how much of that cost can you finance? Yep. So the freight brokerage one, because you're doing it at your home, small office, small team, it's mostly you, B2B sales. It's $75,000 to $193,000. How much of that is the upfront fee to the franchise? So the franchise fee is typically $35,000 to $60,000 depending on the brand. Or these guys specifically, it's about $50,000.

Okay. And the rest is. Technology, software fee, training. They also are required in the FDD to put three months of working capital. So a lot of times that range is including three months of cash. There's probably a minimum, too. Like three months of working capital or $30,000. Well, so they're required in the FDD, the franchise disclosure document in the item seven.

That's your startup cost section. So whatever that number is. They're legally required to show three months of working capital. I tell people double or triple that. You probably need six to nine months of working capital. That's true for any business franchise or not. You should have enough for a rainy day and it to take longer to get to profitability. They're just, for whatever reason, the FTC said three months is the number you are required to show.

Okay. So call it 125 would be the middle, the median between those two numbers. How much of that can you finance? You can finance 90% through SBA loans on the high. Like, that's the best you're going to get. Realistically, probably 70 to 80% can be financed. You need to come with 10 to 30% of these numbers. So if it's, let's say, 125, you need to come with...

12 to 25 grant. And could you borrow that from friends and family if you need to? Yep. And I mean, the SBA process is probably a little annoying, right? I've done a few, so I used to own a number of laundromats. And I remember all the horror stories of SBA, you have to, you know, give a blood sample and everything else. And it honestly wasn't that bad. They make you fill out a personal financial statement of PFS.

Which you do that if you buy a house. You're doing it anyway. And once you do it once you do it once, you have all the information. Like the annoying part is doing one of those personal financial statements because you're having to find accounts and over here at brokerage statements and retirement stuff. And that part's a little annoying, especially if you own other businesses. You have to start pulling some of that stuff too. But once you do it one time, you can go shop at 20 banks and find the right partner and the right rates. And I even had it, the individual I mentioned that owns 120 locations.

He told me recently because he's a pop-up franchisee as well. He's like, look, I'll even entertain SBA still at times. He's like, it's a necessary evil. Yeah, yeah. He's like, it's a good source of cash. It's a good source of capital. You can borrow up to $5 million. An aggregate, I think they actually increased the limits recently.

And then there's an SBA Express loan, where you can get half a million dollars in less than 30, less than 60 days. Wow. So you could use that for this. And you can keep doing it after the 60 days is up. You can do it again for another location. Up to five million again? Up to half a million per SBA Express loan.

So yeah, you could use that for all of this or most of this. And then five millions is the aggregate. So yeah, you could do 10 territories, 10 locations. Okay. And yeah, I used to think five million was like, like you had to buy one business and you might as well get as much close to five million as you can. But you could do that across multiple loans. It's like a line of credit. Yeah.

And applying the first time is the hardest part. And then after that, they probably just want updated payments, right? And the brand too, this is also a caveat. The brand has to be on the SBA registry, which most franchisors do because they understand franchisees are going to be doing this. Outside of SBA, the other options for financing this are friends and family and are any other like conventional bank loans or options out there? Depending on your personal standing, if you have enough collateral and assets, you can get

conventional loans. Like we're entertaining conventional loans for the pop-ups we're developing. You know, they might come with a personal guarantee. They might be more relaxed and just require a corporate guarantee. It depends on the health of the franchise system as well. And banks love franchising because there's 100 units or 50 units or even 20 units of this same business out there today that they have data on and financials on that make them feel better versus yeah, Chris and Alex's bagel shop that we're doing for the first time. And they're like, what is yeah. How do you know these, this pro forma is right? And that this. this will actually do this.

Yeah. So franchising again is de-risked statistically, you know, shown, but from a bank's perspective, also de-risk because they have way more data and locations to look at. So for freight brokerage, if the range is 75 to 150, then theoretically, if you finance 90% of the 75, very, very base case is 7,500 cash in, which you could borrow from friends and family, up to like 30-40 cash in, which you could bar. What was the next one again? The next one was the facility management where you're doing, you're effectively a G.C. managing

20 subs to go to cleaning, landscaping, HVAC maintenance, et cetera. This is one that has very high revenues. The total range that they have is 229,000 up to 410,000. Okay. So again, 29 to 100K cash from you or friends and family and finance the rest with SBA. Yep. So sub, yeah, sub six figures to get to this if you borrow money. Okay.

And then the third one was oil filtration. And that because you have trucks, again, you can start with one. So this range is smaller. as soon as you start with one, 140,000 to 163,000. Okay. So 15 to 50K, give or take. Yep. And then the last one was fuel delivery is 172,000 to 490,000.

Okay. So 17 to 150 to 200k. Yep. Okay. Do you advise people to do SBA to borrow to start? So I personally am with the pop-ups with my business partner. We're also raising a little bit of private equity. so we're raising a million in exchange for a percentage of the company as well because we have to develop 10 over five years.

Okay. And so SBA will be used to fund part of them. Cash flow from stores as they get open and ramped. We'll fund additional stores. Him and I are both putting a good chunk of equity in. So we're using a mix of a number of different sources because we're biting off a decent sized chunk of this apple. But for most people, depending on your situation, I would say, again, just get into the arena, get one or two going, get it profitable, demonstrate that you're a good operator. and now you've unlocked and you've earned the right to start raising private equity,

to getting conventional loans, to opening up other financing sources, that then starts the snowball like the individual I mentioned going from zero to 120. His 120 location portfolio does anywhere from 350 to half a billion dollars a year in revenue. In seven years, I don't know what other paths can you do something like that with, I don't want to say no risk, but less risk for sure, and a clear, again, playbook on how to do it. And he told me, he's like, look, I don't own 100% of this portfolio. I own of this brand, 30 to 50% equity because the rest I've raised enough money. But I've proven myself as an operator.

I'm good at managing these teams and these directors of operations and district managers and GMs of these locations. And so he's earned the right now. He can, any concept pops up. The brand's not only going to give him how many territories he wants, but he has capital waiting on the other end of that equation. That's, sure, you need 20 million, 30 million to develop all these. We'll give it to you.

And he still retains close to half of the equity in the business. He just needs to work hard and earn it. Right. Why do you think that franchising is so overlooked when it comes to building? I think for the same reasons that I didn't like it at first, as you hear the horror stories of the person who got sold snake oil and smoke and mirrors. And I think there's not enough good educational resources and enough regulation to prevent that from happening. And so like that, there's a psychological study on if you lost 20 bucks,

the impact it has on you versus if you found $20 walking on the street. And you losing $20 has like a 3x more negative impact than the happiness you find from finding the 20. And so I think whenever any of these bad things happen, they take up the whole space in the room. Yeah. And so part of it's that, part of it's the lack of regulation. And so again, we're on this mission of how do we give people the data they need to make the right decisions for their unique situation? Because there isn't a one size fits all. So I think that's why I think it's starting to turn a corner and there's a lot more attention to it now, especially with AI coming in and people wanting to

own assets, businesses, have more control over their lives, their careers, et cetera. And so I think we'll start to see a shift. And I hope that, you know, these conversations can be at the forefront of educating people on what's possible and what to look out for. I think that horror stories are, people, because it's a comfort blanket to people. If we're kind of entrepreneurally minded or we're thinking about franchising, we want to quit our job and then we hear a horror story, they're like, I feel so good I didn't do it. I feel so good about myself that I didn't take that risk that I've been wanting to take forever that I didn't bet on myself because it, look, it would have failed. Like we latch onto those, as we all do in different things in life.

It's just not just business stuff because it makes us feel better about not acting. Yep. Right? That's why the horror stories get all the clicks. That's why the news is full of negative stuff because it could be a comfort blanket in time. What would you say is the cheapest franchise concept that you would put your own money into right now? So the cheapest, and I don't know if I would personally run it, but I would do it with a kid or maybe a spouse or find a high school kid that would want to do it with me

and they could learn entrepreneurship through it. But it's card my yard is the brand and it's $10,000 to get into it. It's very cheap. And it's these yard signs that are like, happy birthday Chris or congratulations. It's like the most quintessential suburb activity. Yes.

So easy. It's almost like the modern paper boy route, I would say. And you can make 30-ish grand a year doing that. Wow. So it's like a nice little side hustle. It could be fun to like work with, again, son, daughter on it and relatively low risk,

low investment. Hard time. If I handed you, you 150 grand right now? What franchise would you buy into today? So one that I really like that 150K would allow me to do is this garage renovation business. They do like epoxyed floors, custom shelving with slapboard and stuff. The average revenue is over a million. No heavy equipment. It's just a team of two or three individuals coming to pour the epoxy and hang shelving. Yep. And you know, the Damon John from Shark Tank recently used this company and was on

Instagram talking about. They did such a fantastic job. So the brand is great, the quality is great, the revenues are fantastic, and the overhead is pretty small. I like services, businesses, because you can get going in less than 30 days. I like to go fast. Yeah, I actually interviewed an epoxy flooring guy right there a couple months. He doesn't own a franchise, but he does really well. So again, a franchise is a great option if you want a little more handholding, a little more support. What does the average Chick-fil-A owner really take home? And would you recommend that franchise. Yeah, the average is around 650,000 and Chick-fil-A really is in a franchise. It kind of packages itself as one, but they take 50% of profit as a royalty, but they build everything. So you

only really need, it's like 15 grand or so to get started because they're building the building, they're identifying the site, they own the land, but you're buying a job. And so for the right person, it's the best thing ever. Imagine being a person who maybe might not have all these amazing career opportunities, but if they're really good with people and they're willing to work hard, Chick-fil-A could be this path that materially changes yours in your family's life and you're making over half a million dollars a year in income, but you're a general manager of a restaurant effectively for the rest of your life. It's funny because they don't even call themselves the franchise.

And they almost do themselves a disservice if they did because the fees would look so egregious if they were. But it's really not. Like they're partnering with you to start a business, right? Is Crumble a fat? Yes. I think it's a fat. I think you can't sell thousand calorie cookies forever. I think there's too much of a health trend happening right now. You're starting to see it with a lot of their numbers

starting to fall off now. I mean, granted, they've been doing this for a number of years now, and so it might just be running its course, but it should have more staying power than it's had. What about this new concept they launched, the pies? Do you know anything about that, how that's, I just can't think that that would do well, like buying prepared pies? I think they're trying to, you know, I think they've started offering the, the sugary drinks, too. the dirty sodas. They've started offering those as well. Yeah. It's menu innovation. They're trying to claw back to say, hey, cookies can't, aren't cutting it anymore and what else we have to do to get out of it. So they're making an effort. They know store volumes are declining and they need

to do something. And this is adjacent enough that I guess it makes sense, pies, dirty sodas, let's try it. To me, that's always a signal that a brand is like, is struggling. Floundering. But we're still like years ahead of that being public knowledge. There was a Thai restaurant in Madison, Alabama that I used to love. And every time we went there, they were empty. But it was good. And then one day we went there, and they were serving breakfast. This is a Thai restaurant.

And I open up the things for breakfast, and I'm not exaggerating. They were like pop tarts. And this was like a good, it was a nice Thai restaurant. And I was like, okay. What's happening? This place is done. That's like, so we do content sometimes on these like Frankenstein concepts. So like Taco Bell, KFC and what's the third of pizza hudder all combine under one roof.

Yeah. And the thought when they started doing this, it was about 20 years ago was, all right, same overhead. We have three restaurants out of here. We're brilliant. We've got three different menus you can choose from. But what ended up happening is they're all cannibalizing each other because you're going to eat those types of meals at the same time. But what's starting to work now is Applebee's and like, I think it's IHop. They're doing that same menu out of the same location because one's breakfast and one's lunch and dinner.

And it actually can make sense. Okay. And you actually get that overhead savings. But at the time, pizza, chicken, tacos, it doesn't. It doesn't make sense. I just know that the Crumble executives and founders are smart and they're astute. And they wouldn't be making those, frankly, embarrassing decisions if it wasn't pretty clear that they had to. Yeah.

You know? Crumble offered ice cream once. I'm a little embarrassed to admit this. But, you know, everyone wants ice cream with their cookies. So I went to Crumble one day and like, oh, ice cream. And it came in these pre-packaged little tiny things and I got one. And it was frozen chalk. It was the worst thing I'd ever put in my mouth.

It wasn't good. It was so bad that I went so far. as to go to the Crumble founder on LinkedIn and message him. Use one of my precious LinkedIn credits and was like, dude, there's no way you ate this ice cream. Because there's no way you would have allowed this. He never responded to me. But I was like, this, like, because Crumble, they're put together. They have an amazing app.

I think they have delicious cookies. Like, they pioneered the space. This is not Crumble. And I messaged it to him. And I doubt I had anything to do with my DM, but like a week later, they were gone. Really? I mean, you probably never even knew. I didn't know they had ice cream. It was like a flash in the pan. So the fact that they're doing this is like if Chipotle started selling breakfast, A, I would be excited because I love Chipotle. B, I would be like, as a shareholder, I don't know, like, you're reaching now, right? That's the signal I get from companies like reaching.

It makes me wish I could short some of these brands. I know. I know. What is the most boring franchise that quietly makes people rich? The one that comes to mind is brands that do accessibility. infrastructure for seniors. So like they're coming and putting ramps into your home. They're putting those like kind of elevator-ish things that go up your stairs. And the baby boomers, you know, this aging population, we have 10,000 people, I think a day turning 65 or older. It's a ton of people. And we'll do like random market surveys where we call into Philadelphia or Cincinnati and we act as though we have a parent that's aging and we want to put them into a facility or see if there's in-home care available. Every city we call doing this, wait list, wait list, six months, 12 months. Every city. So there's clearly a ton of demand and not a lot of supply. But I like the idea of building

the infrastructure versus the care itself. It's because there's less liability. There's less labor I have to manage. You come in. You build a infrastructure and you're out. So I don't know if that's boring or not. Kind of is you're building like ramps. I don't know. And they do millions of dollars. Some of these franchisees and one of the brands I'm thinking of is 10 million plus a year in revenue. Very good margin. It's funny because I have a phrase for this type of business and it matches perfectly that type of business is I call them grandparent businesses where you know why is being a grandparent better than being a parent because you come in you see the kids you play with them they're happy you sugar them up they need an app then you bounce right that's a grandparent business

this is literally a grandparent business where you're not managing them you're coming in you put a hand rail next to the toilet thousand bucks I'm out yep right insurance pays for it in many cases so yeah so there's like no payer like that's another brilliant business model is like the incentives are aligned. And it feels good. Like I talk to some of these franchisees in these exact businesses, and they genuinely feel very good about what they're very mission driven. Like I made a huge difference in someone's life. And in a family's life, they now get to stay in their home X years longer because of what I did. You know, another business that's a lot like this is the autism clinic business. It's very profitable, very needful. And similar to the other one, no one's paying for it, right? Insurance

pays for it. This behavioral therapy is proven to work. So the parent has a better life. So the parent has a better life. The kid has a better life. Parents don't have to come out of pocket. The business owner is profitable. And the only person foot in the bill are these greedy, stupid insurance companies that we all hate. Yep. There's franchises for that too. I believe it. The fear that we work with that are really good. And again, every franchisee is very, that's another thing. Like when we talked about why do people franchise? Is it money? Is it generational wealth? Is it replacing an income? There is a group, too, that's just like, obviously I have to make some money, but I want to do something that I leave an impact on a community on an individual. And a lot of these ABA, because it's autism and

behavioral. I forget the last day, but the ABA clinics are very mission and purpose driven. They're making materially positive impact on people's lives. And to your point, they're also great businesses. So it's like when you get that Venn diagram overlapped, what more can you ask for? Well, my friend is in private equity and he helped work on a deal years ago, an autism clinic deal, four locations, all corporate owned. This is verified and confirmed. These are real numbers.

Four locations sold to private equity for $64 million. like retail locations wow now they have there's over a hundred like it was a great buy too and a a great sell because now it's like a billion dollar company wow yeah but that those multiples don't exist anymore but it was a it was a it goes back to getting in early on the right thing too is like not every concept's going to do that but like my eye doctor is not a franchise but i know the guy who led the roll up of it same thing he was his his father-in-law was an optometrist and he said hey do you you know like doing all this back office. He's like, we all hate it. He's like, are you like that or is it all of your buddies too? He's like, all of us hate it. We just want to provide service and value to our

clients. He's like, what if I bought your business and I handled all the like stuff you don't want to do? He's like, yeah, I'm good with that. He's like, would your buddies want to do that too? And so they started out with like five or six of them with his father-in-law and their buddies. And my eye doctor is a multi-billion dollar company where they just went across the country and ran that playbook. And again, found the right thing early, rolled it up. Effectively is similar as to franchise roll up. Wow. Another hot tip for the ad doctors out there. My friend is an eye doctor and he finds all of his customers through postcards. His postcards have a 60x return on ad spend. Really? $60 return for every dollar he spends on. Wow. He has nine clinics all through per day. Everyday

direct mail. That's right. EDDM. Why are franchise owners failing today even if they have a great system and a great playbook? So I say the wrong person in the right franchise is still the wrong franchise. Okay. And that's because their background doesn't align with it. Their risk tolerance doesn't align with it. It's like you take this ex-military guy who's great with running a squad of people but doesn't want to stand in front of a room of 500. Maybe he's more shy, but is good with a smaller group. He's probably not going to want to do like door to door sales or like get on a phone selling you, you know, freight brokerage. Yeah. Probably be terrible at that versus the person who, very outgoing, a life of the party, you know, loves to win, is good at

convincing and persuading people, probably good at both of those things, but better at home selling freight brokerage. Yeah. And so it's just, it's really the fit. This is all about fit I've realized. And our whole platform, our whole goal is get people into the right thing, not the one that makes the most money, not the one that it's, because that's how you're going to, you have to persevere and do the work.

And if you suck at the work or you hate the work, you're not going to persevere. going to fail. As soon as you're out of the game, you're out. If you stay in it and work hard enough and long enough, you're going to have some level of success. Well, that's why you could take two amazing humans, put them together, they get married, and it becomes a toxic relationship. Because they're just bad for each other. And with other people, they'd be perfect. Is Subway the worst franchise deal in America? Defend your answer. I think today, absolutely. So a little inside information, we interviewed someone at my last company who was a franchise business coach for Subway. So every brand has these coaches that help franchisees and they're assigned to 10 of them a month or whatever.

And she had told me and she's like, yeah, I was like, why are you leaving and why do you want to come work with us? She's like, it's just becoming too cannibalistic and toxic. Like, what do you mean? She's like, we're at a point where we're opening stores now, a block or two away from another. And the goal is like let them fight it out and we'll take the best one and we'll close the other one. And I'm like, that's someone's life again investing in stores and renovations. Like they're knowingly doing that as part of their strategy. And if they survive, some of those owners are taking them 20 grand a year, 30 grand a year. Yeah. I think it's terrible.

There's way better options. At one point, it was probably exciting in all the rage and rave. And if you got in early, probably could open 100 stores and have made a lot of money, but at what cost and what expense. And that's where, to me, like your individual morals and ethics, you have to decide for yourself, are you fine being very combative and that extreme competitive or borderline unethical or not? And I wouldn't be able to. How are people out there buying franchises with none of their own money? So the individual I mentioned, he had a background in operating things. And it's like that gave him a unique skill that capital was attracted to.

Because the capital didn't want to go run a 100 person team or a 200 person team, but this individual was a good operator. And so I'd say if you have a unique skill set where, hey, I can come in and provide something that others don't have. And in this case, if you don't have capital, you need to come with something else. You can't just be like, hey, I have this idea, give me the money, let me go do it. You need to prove or have some level of proven track record to say, hey, I can compliment you in a way that you currently don't have today. And most of the time, that's operating. And so my advice would be go get some level of operational experience.

It's why I tell people, like, of course we want people to buy businesses and be entrepreneur, whether it's franchising or not. But if your goal is to own and build multiple businesses, you just need to get in the game, whether it's a side hustle, the card my yard thing, or freight brokerage. Or just having a job. Like an operator doesn't have to be an entrepreneur. No. Just being proven at your job. Like we, we,

I'll give you a real life example now. Like for pop up or developing 10, Dan and I have a number of other things going on. So we're busy. We have capital. We can operate, but we can't operate five things at the same time. And so we brought an operating partner on who,

to your point, hasn't necessarily been the owner on the other side before, but she has operated multiple businesses, multiple locations as like a GM as a district manager. But now we've given her equity upside. You know, pretty meaningful equity that she might not have had anywhere else or otherwise, that she, if she does well here the next three to five years, will be able to parlay that into now I own half, 60, 70%, percent.

And I'm attracting the capital to do my own thing. But she's having to earn that right these next three to five years in this kind of first meaningful way that she hasn't had a chance to do before. Gotcha. So it's going to take that person longer, but it's possible. Yeah. When you're looking at a franchise document, what is a red flag that makes you run away every time. Yeah, we talked about it a little bit earlier, but the closures and the transfers,

especially if they're trying to hide things, or if the item 19 doesn't have profitability or footnotes that are clearly made up. Like, oh, this revenue is just the top 10 locations. Like, why aren't you showing the other, not even 90%, but the other 95% because you're only showing the 10 absolute best? Why? This isn't in the document necessarily, but if the brand is cagey about introducing me to other franchisees. Like, let me talk to some that have failed. Let me talk to some that are performing well. Let me talk to some that are middle of the road, because I need to know what's happening here in the system behind closed doors under the hood. And the best way to learn is to talk to people actually doing it. Do you ever say like, because if I'm a prospective

franchisee, I don't want to say, hey, give me some names of some people I can call. I want to say, I want to see all of your franchisees and I'm going to pick a few. You're in a secret shop. Yeah. You should. Just like if you were interviewing someone for a job, you're going to give me your best, You're a best friend, your wife. Yeah. Versus if you give me those. But then what I do during the interviews, I say, Chris, everywhere you've worked, who is your boss there? What would they say to you?

How do you spell their name? Yeah, yeah. Because then I go find them and I do talk to them, and especially if it was one that was not on your list. And so same thing here. If you're looking at a franchise, they're going to give you the three that are the best performing people probably. And then you need to go, it's your job in your diligence process. We'll help you with this if you want to work with us. Go find the other franchisees that filed bankruptcy.

or aren't in the system anymore. And there's ways to do this. There's ways to find this information and go talk to them. Yeah. Now, if people do want to work with you, what do they do? How do they find you?

The easiest thing is to go to franzi.com, F-R-A-N-Z-Y.com. And then we put out a ton of content as well. We have a podcast called The Exit Plan, which is individuals sharing their stories of leaving corporate America to go become a business owner, franchise or not,

as well as people that have built large portfolios and have exited them to private equity or other large operators. So we tell those stories and then Alex from Franzy on Instagram, Twitter, TikTok, et cetera. And we'll link to all those places. Anything else you need to share, Alex, that we might have missed? I think we covered a lot. I appreciate you having us on.

And again, I think franchising is probably the most overlooked path to wealth creation in America. And we're on a mission to help put a spotlight on that. Thank you, Alex. Hey, guys, if you're still listening to this, it's probably because you haven't had a chance to take your AirPods out. You're still mowing the lawn. You're still driving. What have you. If you're still here with me, I would really, really love and appreciate a five-star review on Spotify, Apple, or wherever you get your podcast.

It would mean a lot if you want to go the extra mile, share this episode with a friend that might have an interest in starting a business. It would mean a ton. Hope you have the best day of your life today.