The Science of Flipping - The Franchise Gold Rush: How to Build Wealth, Cash Flow, and Real Estate Through Franzy | Alex Smereczniak

Episode Date: December 12, 2025

In this episode of The Science of Flipping, I sat down with 33-year-old serial entrepreneur Alex Smereczniak, the founder of Franzy.com — what he calls the Zillow of franchising. Alex walked me through how franchising really works, why it’s far more accessible than people think, and how everyday entrepreneurs can build serious wealth through franchises, cash flow, and real estate. We talk about the hottest industries, the best opportunities, how to choose the right brand, and how the franchise + real-estate model can create multiple streams of income and even multi-million-dollar exits. This conversation opened my eyes to opportunities I didn’t even know existed — and it might do the same for you. About Alex Smereczniak Alex Smereczniak is a serial entrepreneur and the Co-Founder & CEO of Franzy, the platform known as the “Zillow for franchising.” Before building Franzy, Alex launched and scaled 2ULaundry and LaundroLab, raising over $30M in venture capital and expanding the brands across multiple markets. His experience as both a founder and franchisor gives him unique insight into business ownership, franchise systems, operations, and scaling. Today, Alex is on a mission to democratize entrepreneurship and help create the next one million business owners through accessible franchise opportunities and transparent data. Connect With Alex Website: https://franzy.com Instagram: https://www.instagram.com/alexfromfranzy LinkedIn: https://www.linkedin.com/in/alex-smereczniak Podcast: How I Franchised This (search on all platforms) About Justin: After investing in real estate for over 18 years and almost 3000 deals done, Justin has created a business that generates 7 figures in active income through wholesaling and fix and flipping as well as accumulating millions of dollars of rental properties including 5 apartment buildings, 50+ single family homes, and 1 storage facility Justins longevity in real estate is due to his ability to look around the corners, adapt to changing markets, perfecting Raising private capital, and focusing on lead generation which allows him to not just wholesale and fix & flip, but also accumulate wealth through long term holds. His success in real estate led him to start The Entrepreneur DNA podcast and The Science Of Flipping podcast and education company, and REI LIVE where he’s actively doing deals with members. He has coached and mentored thousands of aspiring and active investors over the last decade. Connect with Justin: Instagram: @thejustincolby YouTube: Justin Colby TikTok: @justincolbytsof LinkedIn: Justin Colby Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

What is up the Science of Flipping Family? Welcome back to another incredible episode. This guest is phenomenal. He's 33 years old. He's already exited two businesses. On his third, what I think, Swansong, Outro, and if you are in business, this is going to be an episode that you want to listen to because franzi.com is taking over. Alex Smersnack is here.

All right, dude. Well, excited to have you here. You're 33, as I was just giving you a little bit of a hard time. You've already built this incredible resume with two exits. You're working on a third. Franzy.com is phenomenal. But let's jump into Franzy to start. What is Franzy?

What's your mission? What are you thinking about moving forward in the next three to five years with it? Yeah. So our mission with Franzy is to help enable the next one million entrepreneurs starting in the U.S. And the way that we're going to do that is through democratizing access to ownership and businesses, starting with franchising. So think of Franzy as the Zillow for buying and selling small businesses. So you have all this data, 4,000 brands, investment cost, average revenue, who's the executive team behind it? What territories are available?

Does this match my risk tolerance? All the stuff that you need to do, just like Zillow has square footage, bedroom, school district. Yeah. Franzy has that for small business. All at your fingertips, don't have to talk to a broker unless you want to. Don't have to commit to anything unless you want to. It's all just the data and the information that. you need and the support that you need to get lending and finding the right the right brand no kidding

so when you think like mergers and acquisitions is such a big topic right now i've had a more and a handful of people here as guests with that does this play into that realm of merger and acquisitions is this just the franchise model how are we looking at franzi dot com yep so for now it's just de novo units or territory so new net new development of you know a jimmy johns or a gutter brother franchise, a service business where you don't need retail, you would buy the territory for Fort Lauderdale or for Miami and then go develop that out and start it from scratch. Yeah. We are starting to work towards a resale marketplace where Justin could come on and also buy the existing Jimmy John's franchisee in Miami or the existing Gutter Brothers territory. Yeah. Depending on, you know, where you

want to jump in. Some people like an existing business. Yeah. Other people want to have their stamp on it and build it up from scratch with the franchisor. So we are talking to any and all on entrepreneurs here because at the end of the day I today Justin Colby can go to franzi.com and I can say you know what I want to get into the restaurant business yes you have a list of restaurants let's just use Jimmy Johns but you'd likely would have more maybe you can name them but like 4,000 brand on the pop 4,000 brands it's almost every franchise concept that exists in the United States are is on franzi.com right now go check out franzi dot com I was so excited about this because I just think as I'm a serial entrepreneur like I got to to be careful with our conversation right now because next you know i'm going to be on frames you're like what's the next industry i'm going in sorry right in a few times people we've met have bought a business with us yes as us having a conversation like this and three months later they're like well now i own this operating company right and now i got to go do this thing uh i'm reading a great book big shout out to the road less stupid if you've ever uh heard or read that one it just is kind

of the fundamentals of business where people just react and make emotional decisions like i get all fired up here and I go buy a franchise like is that really the best thing I should be doing right now um so this is exciting because I think um well let's jump into what I believe is a great industry sector home services I'm a real estate guy we all know that right we're we're listening to me because that platform but how many of those I mean do you have a number of how many you know home services type companies roofing like you just mentioned gutters, windows, flooring, HVAC, like, I just, I think that's a major play for a lot of individuals.

It has been increasingly popular because there's average unit volumes of revenue of these service businesses, you know, well over a million dollars, but the startup costs are 150K,000K, 200K, 250K versus a retail restaurant or health and wellness franchise could run you half a million, a million, two million in some, your restaurants case. or more for not too dissimilar of revenues. I mean, restaurants, Chick-fil-A, McDonald's, will have, you know, kind of gold-standard revenues. But these home services brands, again,

seven-figure revenue for a low six-figures investment. And so there's a lot of money in people, you know, moving into home services, because one, it's cheaper, revenue upside is still there. Plus, AI is likely not to disrupt, you know, people washing windows or creating, you know, sidewalks, or painting houses for a while. while. I mean, it's probably going to happen at some point, but at some point, these are safer for

a little bit longer. What is, okay, so do you ever get excited about a business or an industry that you get on Fransy? All the time. I mean, I'll see things. I'm like, if I had endless money in time, I would buy one of those, buy one of those. And so I have a podcast, too, called How I Franchise this, where I'm interviewing people that have gone from everyday corporate America or they were at Tesla or they were, they were born into it, whatever their story was before franchising. then how they got into it, how they specifically found the right brand, how they financed it. So it's tactical, you know, storytelling. But I've interviewed a few people that started, you know, seven years ago with zero franchise locations

and now have 100 plus across six or seven brands. They've got Orange Theory. They've got restore hyper wellness. They've got Dave's Hot Chicken, Pop-up bagels. And I see that and I hear their stories and exactly how they did it. Yeah. And to me, it's like if you're willing to work hard, if you're willing to go raise some capital, and bring on private equity or private debt partners anyone can literally go do this it's the

american dream if you're willing to go and do it and franchising just provides this platform that i think is unlike anything else the playbooks are there the brand is there the recipes are there the training the marketing it's all there you just need to be willing to go do the work and operate and i've seen this story over and over and over again and the same consistent theme across all of them is they were willing to do the hard work they found the right capital partner and then they went all into the franchise model and six, seven years in, like a diamond, you know, they put the pressure in it. So what I think is the key is most franchises.

And I don't know a lot about franchises, right? But you hear the stories of McDonald's, right? Just the concept of like, there's a book. They give you the book. You run the play. They're in to repeat. Every day it works. Right?

And that is in large part. I'm the real estate guy, right? And so are there real estate people or is there a real estate sector to Francie? So a lot of these big multi-unit franchisees will also go in and buy the underlying asset that they're developing on. Unless the franchise or McDonald's kind of does a lot of that corporately, they're one of the largest real estate businesses in the world. People don't think about it that way. They're disguised as a burger shop.

Right. But some franchise concepts, a lot of them actually aren't thinking about that because they're not at that scale yet. In fact, most franchise brands are considered emerging. 75% of them have less than 100 locations open. over 100 is more mature and that's their 25%. But if you get in with an emerging brand that you like that has the upside, Dave's Hot Chicken early, pop-up bagels early, you can go develop the real estate yourself and have this owner-operator play

where you've got cash-flowing operation on top of an asset that you own. I've heard of some franchisees purposely paying themselves higher than market rent because then they can go borrow against that cash flow on the real estate side to go over in their second and third one. And so there is a whole, you know, strategy for those interested in, you know, commercial real estate and a real estate play on top of the operating business. That's a really smart angle. That's a real estate guy. I'm really, that way you just hit, like, you buy the, the, whether it is a current location or maybe even develop one, right?

You buy that corner. That's just this rundown thing. Tear it down. Build your new Dave's Hot Chicken, right? Whatever the franchise. you pay yourself higher in market rent the income shows strong finances thanks love it banks love it they go give you more money to do it again yep it's almost like that like burr method for residential yeah i mean different i love that you know there's a you're not a real

estate guy and you're throwing out real estate terms this is good yeah no it is i mean this is where i go as a real estate play we could even be the mcdonalds right we don't i don't have an Allegiance to name me three. You said, Papa Bagels, Dave's Hot Chicken, in Orange Theory. Yep. Besides working out, which I do love. But I wouldn't have an allegiance to any of those brands as a brand. But what I do know and what I do love is the business model of buying the real estate, understanding the economics of that, getting higher than market rent, understanding bankability. Yep.

And now I have real businesses that have real operations. There's a formula. running a real estate play, the bigger play is the McDonald's real estate play. Yep. And again, when you get to 100 units, I mean, this is real, real scale. Wow, that's... And you get to five, that's significant for people. I mean, there's everywhere in between, there's an opportunity to run both of those plays if you have the capital and the desire to go structure it that way. The issue I think a lot of people run into is they're not

capitalized well enough to be thinking about, you have to develop five net new locations, plus now I've got to buy the real estate, which could be, you know, six figures, high seven, or mid-seven figures, and so they're trying to navigate, you know, how do I finance all this? Franchises are five times more likely to succeed in the first five years than traditional startups, but finding a franchise ownership opportunity can be overwhelming with over 4,000 brands to choose from and brokers with misaligned incentives. That's why my friend, Alex Smearsnik, co-founder and former,

or CEO of 2U laundry built Fransy. Whether you're interested in fitness, home services, automotive, or food, Franzy make it simple to find your perfect match. When you visit franzi.com and answer a few simple questions about your goals, lifestyle, and budget, and get access to hundreds of personalized opportunities, plus free top-of-the-line coaching that will never cost you a dime. Fransy is completely free to use from start to finish. You'll never have to pay them.

If you're ready to take the next step towards franchise ownership, visit franzi.com. That is, F-R-A-N-Z-Y dot com to get started today. So the real estate individuals listening to this right now, they come up with the same challenge, right? They say, okay, I want a single-family burr, right? I want a fix and flip. I want an apartment. I want a fourplex. Whatever those things are,

the secret of raising capital that I found and I've raised tens and tens and tens of millions dollars, the secret's always this. Give the opportunity out there. Someone's going to like that opportunity, right? What I believe for most real estate investors and business owners, if you are in need of capital and you don't actually let anyone know there's an opportunity, it's very hard. Like, everyone goes to the bank to let the bank know I'm in need of capital. There's no difference in running a business, being a real estate investor, needing capital, and not going outwardly, like posting on Facebook or Instagram, not, hey, can I get a loan everybody?

It's, hey, there's an opportunity I have. What do you like to be a capital partner? There's a lot of money out there. I literally had one yesterday. And I think he owns a Dave, because he talked about this chicken. I swear to God, he was like, I had a buddy who had this operation. He needed some capital. It's a chicken spot.

I threw 150 grand at it. And the revenue is incredible. It could be one of those, which is funny. But the point being is that individual I came across because I have apartments. And he's thinking about lending on the apartments, but he also lends in partners on this operation. And so I would tell anyone out there listening to this, like, this is very real. Like, in my world, the upside, I have no genuine want to own a, like a Dave's chicken or like, but the real employees, right. But if I could just put it together, let the booklet run itself, right, but have the upside

of the real estate, there's a very exciting play for those individuals. Especially if you do more than one location, you start to get these local economies of scale where you can have one general manager, one GM, run the business for you essentially. Like, you still have to be involved as far as, like, site selection, you know, build out costs and modeling it out. But if you're willing to do that work, find the right capital partner, you know, and operate to some extent, you can hire GMs. And there's a story I tell a lot of a guy that I know,

met him five, six years ago. I don't want to name his name because he likes to be under the radar. But he, when I met him, owned 43 or so McDonald's. McDonald's on average do four to five and a half million in revenue with like an individual location and then do 600, 800K in cash flow. So you do the math on his 43 location. Makes a couple bucks. He's paid almost like an NFL quarterback.

And since I'd last, you know, I talked to him about a year ago or recently. and he's up from 43 to like 90 or so McDonald's now because he's just he's got this cash machine he's just going to buying up three over here Justin's six you know in Greensboro yeah and here yeah and you can just you know that momentum doesn't stop and I asked him I was like how do you manage all this

he's like I have one COO that I think he pays 350 grand a year so not it's you know not insignificant but also not a crazy amount for that large of a business yeah and that individual runs the whole thing He's like, I haven't been at a McDonald's from an operation, you know, operating perspective in a long time. And so like to go buy a McDonald's.

I mean, that's on a huge scale. Like, imagine now you have three of some new concept. You can take the same lessons, hire a GM, pay them well. Yeah. They'll run that business. Give them some profit sharing. Yeah. And you're now, you know, the one operating two, three steps ahead.

You're looking for location four, five, and six or a group of five that you can bundle up and and buy together becomes an acquisition game. As long as you have that operation. team that's properly incentivized and how much you may not know this answer but how much would a what's an average income for the owner operator of a of a franchise i'm sure they vary but like if if people are thinking like i'm tired of my nine to five i don't want to do this thing i'm looking for something else like what could you consider if you go buy a franchise and again i'm sure it varies and i'm not going to hold you to it and neither should they don't hold them to it um what what are you talking about Whether it's McDonald's, maybe that's the most known or Dave's chicken or Orange Theory, what would you consider?

So I'll give a couple answers because I think the common misconception is like you think McDonald's. Do you think Subway when you think of franchising? Yeah. And immediately one or two things happen. You think that's too expensive. I could never own that. This franchising isn't for me. But they're wrong because they don't realize there's a franchise that costs 10K to get into.

It's not going to replace your income, but it can kick off, you know, 20 to 30 grand a year and cash flow. And that's a great return of investment. Just a good investment. Just depends on how much you have to work for that investment, but great returns. So all the way on that end of the spectrum, and Chick-Fleigh, even, is only 10 grand to get into because they, it's not really like a full franchise. They make you work 40, 50 hours a week. You're more buying a job and they get 50% of the profits, which is not normal for franchises. So even a Chick-fil-A you can get into if you're the right operator and willing to do their work.

And then it goes all the way up to some of these swim-school franchises where you're building seven pools and you're teaching kids out of swim. It's an expensive investment. The average unit volumes are very high. That's more like $3, $4 million to get into. And there's everything in between. I always, you know, people think I'm joking when I say it, but there really is a franchise for everybody. If you want to go do this and depending on what your goals are,

I think you have to have, I'd say to do this right, 30K minimum in cash and then go borrow. You know, an SBA loan is meant for businesses like this if you're just getting started. So it really is accessible to, you know, you're kind of, I don't know, middle class working person can go do this if they're wanting to be entrepreneurial and to go take some of that ownership back all the way up to the more sophisticated. Maybe they've got entrepreneurial experience. They've got a little bit more

capital saved up. There's the opportunity to take bigger swings and do the real estate play or do a multi-unit deal. And so there truly is a, you know, an answer for everyone in their goals. And there's a certain group that, you know, they may be just getting started and they don't have more than five grand saved up like I you know my advice to them is work and save like you would to pay off debt and then go buy the business when you've got a little bit of a nest egg to go invest in you know a services business that you can start it's interesting because I'm just such a serial entrepreneur like the the other side of this is being make making sure you are in a financial place I think that was a great point like maybe don't push all your chips in if you're going

you go quit your job and like every last dollar you have you're going to go start x franchise like maybe give yourself some level of a bridge right yep and i am just more curious for my own interest what is the more expensive level of franchise like what's a mcdonald's franchise um what else would be considered expensive so some of the quicksrs a quick service restaurant franchises because there's so much build out there's all this equipment refric huge massive refrigerators and freezers that are sure you're already 50 grand to pop yeah um those can be to three, in some cases, $4 million development, depending on where it is.

And maybe you're leaving that percent to get into it, I would guess. Yeah, and so the franchise fee typically is, it's not crazy, $30,000 to $50 grand to get the rights to a territory or location. It's really just the buildout cost. I mean, mining the site, developing it, getting the right gas line in,

electrical. What do you see is the newest, hottest franchise that on the market right now? I mean, you have $4,000 of them. Yep. So there's a few categories. One is golf right now. taking off. I think it's with the Netflix effect of them having the swing and

Tiger Woods and Rory doing the stadium golf stuff. Right. Live even, you know, creating that kind of more like, I don't know, entertainment approach or version of golf. It's kind of like what Netflix did F1, there's just a lot more interest now. And so these indoor golf simulator

franchises are taking off. It's almost like any time fitness. Do you remember that? I do. You can fob in. It was a great franchise model. worked in these really small markets across the United States, has no employees. It ever happened to that. They're crushing. It's there.

And the low ticket thing is huge in terms of the clientele. So you service the clientele that doesn't need to spend a lot of money for you, I would assume that's got to be huge. And so this, there's no employees. There's no inventory of private golf simulator bays, you know, a fourth of the size of this. This is why I did. There's a home station. And the investment cost isn't high. It is a good real estate play because you put them in these smaller, you know, out parcel.

et cetera um they're 200 to 400k to fully develop and then they cash flow 100 to 150k a year no way um with no employees and it's b yob so people can bring a six pack and play pebble beach in an hour when the kids so this is so i'm going to bring this back to real estate so storage facilities versus apartments people will always make the argument and by the way i own both they tend to support this argument no tenants no headaches versus apartments which is always something tenants et cetera right this is the the equivalent in the franchise world right and i'm sure there's a couple of them but like that's exciting you go put a hundred what did you say to start it it's like 200 to 400 k again depending on size how does that the build out that's also the franchise fee like you're somewhere

in there yep and you'll spit out 150 grand gross or net that stop it that return is insane yeah a lot of these franchises you want to look for should have the ability to generate revenues at least one times the cost to put in and then you want a payback period of you know ideally as little as possible with two to three years you know ideally is what you're made whole now should be left three can work five can work but you start to get into this longer yeah the time frame there's a little bit more risk there and things have to be executed better um but if you can get to three years or so that's usually a good something like that could you i mean what's the locale like what is the typical location for like a golf indoor golf simulator type of so it's kind of like middle class upper middle class households dual income families with kids um it's they're busy families they can't go golf for six hours because realistic let's be honest that's right how long it takes i was like i didn't pack look i love to go i rye weekend play on back right no so you can go play pebble beach in an hour you know at 10 p m when the kids go down or what you know you can do it whenever you want one of the brands

that I, you know, we work with, they have an example of, they've got these surgeons that play every day at 3 a.m. They get off their shift and they go to the location and go play around and then go home. Well, where are these locations? Like, what kind of facility would it look like? Is it a more like a rural area? Like, is it big? Like, what is that? Well, like, the bourbon areas, like, by, you know, near a target in a, in a strip center or, you know, their center development could work. You're in like Class B property, I'd say. You're not in like the Barry's boot camp or the like Primo real estate, which is great. Yeah. You can be in class B, maybe even Class C in some instances as long as you're backed up to a neighborhood that has, you know, a few thousand households that fit that demographic of busy family, you know, enough income to like golf and enjoy it, but don't have the time to go. For all my entrepreneurs are aspiring, like you got to look at this, right? Even if you're the real estate. guy like me. This is something that like I'm genuinely now, you have 4,000 opportunities. Like, this one now is intriguing to me because I actually was thinking this weekend I want to play

more golf. By more, I mean any at this point because I just have two kids in life, right? This is a big real estate play. Like that one would probably be hard to own the asset, right? You'd probably have to do a lease, I'm guessing. Yeah, because if you're in a strip center, unless you take down the whole center and put two or three different concepts, they could put two or three. I mean, I see people. Which you can, absolutely. They'll buy a strip center and they put three, complimentary franchise businesses next to each other. And we have a few hospitality groups that are developing hotels and different mixed use development.

I asked me like, hey, we got six open, you know, spots or bays. What concepts, what franchises can we put in? They're going to own and then operate the franchise. That's phenomenal. Like, I hadn't heard of... I almost feel like this is only a real estate play at this point. Maybe because, like, I just... You go buy a strip mall, which is right now, like, on the cheap.

Relative. Lending is not perfect, but that's why it's on the cheap. You now have the businesses you can put into the strip mall. Everyone's concerned about strip malls because of COVID obviously changed the game for a lot of different things. But like lending's not great. But if you actually occupy the units with your own businesses, you are your own tenants. You increase your rents to pay down the loan and you rents and repeat. Like I just feel like now here's the key. Operations. systems. Like, I'm on a big push. Processes, principles, people, procedures, right? And then you can profit. But if you don't have these processes, principles, people, and procedures, like, dialed, your profit is going to either suck or go the other way and you won't profit, right? You're going to lose. Are most of these franchises extremely dialed in? So someone like myself that doesn't have a lot of time, or maybe someone that doesn't have the business acumen and is going to learn this, are they pretty dialed in with these books and game plans and processes? Like, can you literally, people think about it this way.

So I want you to kind of tell me, is this like a plug and play and you just follow the recipe and it'll come out as a beautiful cake? The honest answer is it does depend on the stage of the brand. This is where Franzy comes in to help. We do get free coaching from folks at our franchisees themselves. So if you came through and you said, this is kind of my. background this is my operational experience my risk tolerance my capital situation and hear my goals we go match of the 4,000 specific brands partially using AI so we've indexed uh 26,000 what we're called

fdds franchise disclosure documents and we pair it up against justin's unique set of criteria interest goals etc because while there's some different similar flavors to what people are looking for you have very different hobbies passions like that is an important part you don't want to buy a business that in a year you're like, I don't really align with that or have time for it or agree with it. And so it is important that it's something that you can get excited about five years from now, 10 years from now, and you're not going to be like, I own the, you know, gutter cleaning thing and people are complaining all the time. I'm not passionate about it.

So we help you do that. And to answer your question about, you know, how plug and play is it, it does depend. Some brands over 50 units especially have full-blown teams, training, marketing playbooks, technology that they've built out for procurement and their CRM and their point of sale is all just dialed in but these emerging brands are not as dialed in it's more entrepreneurial so when we get clients that come

through they're like I want to do this because I want to be entrepreneurial I want to have a say in what gets built we actually tell them to not join like a chick fillet or mature brand because you're basically buying cash flow or and or a job yeah at that stage they're like Justin here's what you do don't sneeze this you know this is how you sneeze this is like they'll probably exactly what you need to do and you have to do it and for some that's great some people love that

i'm doing this like their purpose their why is i want to be an owner i want to be entrepreneurial i want to let my creativity run yeah and we tell those individuals you should take an earlier brand because you're not going to get to let that's not going to scratch your itch fully you might be your own boss you might have cash flow coming in but you're not you're going to be miserable just like you might be now on this nine to five and so go take the additional risk of joining a brand early and with that comes other upside. You get an influence on the franchisor. You might get to negotiate franchise fees, royalties, because they're earlier. You get the ability to white space territory, you add a fourth unit, a fifth unit, it's six territory, et cetera, as you go versus Dave's hotchick

and McDonald's. They're mostly sold out. So now it becomes an acquisition game for that. Yeah, you got to buy up to yours. Resellers and all that. And you guys are getting into that space at some point here. So we've started building a prototype of the resale marketplace. The reason we didn't start there is with de novo or new territories it's we have structured financials that fddd that franchise disclosure document i mentioned is a standard document that the federal trade commission regulates across all franchises it's easily indexable scrapable and so we can give you accurate clean data yeah as soon as we get into resales justin's books look different than Alex's books even though both own at jimmy johns and your definition of seller discretionary areas is different

than mine and Florida's different than North Carolina and there's all these things that come into play. Yeah. And so AI allows us to get, you know, kind of more apples to apples faster and not needing as much human underwriting and modeling. But that's the interesting problem we're trying to solve with technologies. How do we build a resale marketplace that has clean, accurate data and is still, you know, mindful of people's sensitivity around their financials and when do we show Justin's book to a seller? How much do we verify the seller? How much friction do we And all this goes through Fransy. Yep.

So let's talk a little bit more in Fransy because I just geeked out on this opportunity. Describe Fransy for everyone and the understanding what it is and then where is what the trajectory is. Yeah. So I know I use this almost maybe too much, but the way I describe it, just to get it clear quickly as possible is honestly what Zillow did for real estate buying for franchise. It's a platform that has and houses every brand you can imagine with all this data and information on. the revenue, the cost to get in, what the royalties you're going to pay are, who the executive team is, has there been any bankruptcy or litigation so that you can see those red flags? And we're starting to pull in more third-party data.

What do consumers of this brand, the customer going to go buy the Dave's hot chicken sandwich, what do they think about it in each region in the country, what are commercial rents and leases? So we start pulling in just more and more so that you have the information you need to make a smart, thoughtful diligence decision. So that's all the data piece. There's also this very emotional part of this. Some people aren't doing it purely as an investment. So I had one guy come through.

He's like, just show me the business that makes the most money. Like some people, that's what they want. They don't care what it is. There's a franchise called Bio1. It's a bio one. They clean up crime scenes and like dead bodies and like, that could make the most money. And like, all right, guy, that this one's for you.

But other people are like, I want to build a business with my kids. And it's a legacy thing. We're probably not going to send you to buy or one. We're going to send you to a milkshake or a dessert concept. Yeah, you still can cash flow, but it's something your kids could work out in high school and could be a part of, you know, as you've built. And some people come. They've made more money than, you know, they need.

And they're doing this because it's intellectually stimulating. They want to show their kids entrepreneurship. There really is all these different reasons people do it. And think of Franzy is the, again, database and diligence information with that kind of softer coaching where we talk you through. What is Justin's why? What can you afford? How do we think about all these different brands?

Does it actually solve your goals, your financial picture, and what you're operationally good at? Yeah. And that's that, like, nuanced piece that I think a human does need to stay involved in because people buy from people. That's right. And give you all the data in the world. But after a while, you're like, now what do I do?

I like these three, I think, but I'm not really sure what to do next. Brandsie answers that question, too, with human interaction. We'll meet you in person. We'll jump on Zoom calls as much as you want to use it. It's free for you. We get paid by the brands, a flat dollar. success fees so that we have no incentive to promote one rand over another. And we're going to keep it that way from here on out because this is such a critical life

decision. It would be, I think, morally and ethically wrong to allow brands, oh, I'll pay you triple the amount. And now we're showing Justin brands that might not actually be the best fit. And that's what's happening today in the kind of franchise brokerage world is they're making a 60% commission on the franchise fee, 6.0. So if one brand's franchise fee is $60,000 and another is $30, you just have the wrong incentives. It would be hard for a lot of individuals to say, I'm going to show you the $30K1, even though this one is going to share you double if you buy that.

Right, right. So we're just trying to flip that on its head, make it fully transparent about how this whole world has worked and why. How long has you been around for? So we started last summer, took about six months to really get all the data. Last summer. Last summer. And you were able to onboard and basically sell all these franchises to be able to use you as a platform to go come on and talk. That is how big of a pain point this is for the brands because there's so much of the franchise fee.

They're hemorrhaging out to all these different middlemen and commissions and fees. So they're desperate for another solution to get high quality, you know, potential franchisees for much lower cost. And that's our goal of franchisees. How do we can democratize this whole process? empower the brand if we do that they're going to reinvest into the franchisee use the franchisee have a higher chance of success because you're getting more and more capabilities resources support being invested in versus 60% going out to a broker duvase later so that's the one of the end goals here is how do we enable and support again the next million entrepreneurs so i'm going to

have two questions one how did you come up with this concept like just no one wakes up one days man i need to solve for this problem about franchising that doesn't happen right um but then too like how did i want to get the origin story of like how did you push into it because that's what a lot of entrepreneurs struggle with right they found the pain point they found the solution they realized they have some gold and they go now what right and then and i guess let's even take one step before that and then we'll get to the other two you've already done two businesses you've exited two business let's talk about those What vertical were they in?

Why did you exit and then why are we here now with Fransy? Yeah, so I'll give you the origin story because the first one for me started my freshman year of college. So I went to Wake Forest and from Minnesota originally and I grew up with a dad that was 100% sales, 100% commission, eat what you kill. So entrepreneurial in a big way. I remember in the summer he'd golf all summer long

and then fall, winter, spring, especially in Minnesota, was busting his ass. I was like, how are you able to do this? All my friend's parents are constantly working, nine to five. And you have, it seems to all this kind of flexibility and freedom to work when you want. And his advice that has always stuck with me is there's three kinds of careers, you know, careers you can have, Alex. You can work for someone else.

You can work for yourself. We can have people working for you. He's like, I'm in the second bucket. I work for myself. I can, you know, some months I make zero commission dollar months that's, you know, half of someone's annual salary. Right. And he's like, but it gives me and affords me that time and that flexibility.

And so that's just always stuck with me as I know I need to go do something either sales working for myself or some sort of like subject matter expert or working or working for me. And so when I got to college, I was looking for entrepreneurial things to do. And I worked for this laundry and dry cleaning pickup and delivery. Oh man. Business in college. Yeah. This is fascinating. This could work at Duke and Chapel Hill and Vanderbilt. I want to I want to buy this thing. And so they were selling it for 30 grand. My jaw hit the floor. I'm 18. This is the most money. in the world yeah and i'm thinking how cheap oh my god how can we get 20 of those now well so i had 18 i thought this is right i have quite as two grand maybe saved yeah maybe and so i found two other partners we got to like 11 grand still not enough so then i'm going to the the business school before i'm in the business school at wake asking finance professors i want to buy this business how do i structure it so they're teaching me about seller finance they're out really and like 18 year old is like trying to sure I'll help them so like professors you know from wake thank you like they didn't have to do any of that they started to work this hours before I was even in the business school helping me figure out this deal so we figured out the deal we did seller financing and paid them a percent of revenue over the course of a few years you mean the owners that we bought it from okay I was in the no not the professors not the professor oh my god I was like good for you professor so we bought the business we immediately went to to the university and said, this needs to be a checkbox option for your incoming freshmen,

parents, et cetera. We took the business from like, it was like 26,000 in revenue it was doing, but high margin, 80% margin or so. And we 10x the revenue our first year. It was like $250K because they gave us a booth at orientation week. So all the parents are coming through, like get your meal plan, gets your food, get your marketing. Yeah. Oh, yeah, get the laundry service too. Brilliant, bro. And so we sold that business when we graduated and sold it for about 10 times that we bought it for. Good for you. I was like,

we can retire. Yeah, right. Yeah, right. Old, like, very many. But then I went and worked for Ernst & Young doing consulting for a year and a half. And I really wanted to keep growing to other colleges,

but my partners at the time wanted to go do investment banking, marketing for Pepsi. I didn't want to be the laundry guy, even though that was probably the best time in our life to go do it. I still give him crap.

So, we could be here. Right now, I'm like, bro, you should have leaned in. You should have. I kind of did. I kind of came back. I went to E. for a year and a half.

And I hated it. I was like, this is not as entrepreneurial as I thought. I love the people. I mean, very smart people. I learned a lot, but it just wasn't, it was not fulfilling. Like, going into Wells Fargo and how do we squeak out a tenth of a percent of efficiency and resistance? Things moved slower.

And I just was hooked from that college laundry thing. I would obsess over it. It was this game almost. Yeah. And I saw all these Uber for X businesses pop up. This was 2014, 2015. So you're seeing Instacart, shipped, Wag, Rover, Postmates, DoorDash, Uber for anything. And I thought, someone's going to do this for laundry and dry cleaning.

It's not just college kids. Like, there's busy families. No one likes doing laundry. It's time consuming. People outsource lawn maintenance all the time. Why wouldn't they pay us to do their laundry? Let's take what we learned in college and do this on a larger scale. So we started in Charlotte.

And over the course of eight years, we ended up raising 33 million in venture capital scaled to a dozen markets or so and then realized unlike door dash and you know ride sharing which is point A to point B you go to the airport you need it now oh just things we're going now we're going to be to split it up into dry cleaning and laundry then bat you know run a process and so it's way more logistically complex sure and so we did route based instead of on demand so we'd go into your your neighborhood and pick up 30 orders um we started vertically integrating and building physical laundromats to support all the volume. And it was through that process that, you know, eventually we got to the franchise piece was

these stores aren't cheap. They're a million dollars with all the equipment. They're very profitable because we have a delivery business coming in as well as a walk-in customer base now using the same asset base. And we needed to scale more medications. And so we thought, well, why don't we franchise the brick and mortar, layer the technology platform on the delivery piece on top and that's how we got into franchising in 2021 started franchising a subsidiary called Laundra Lab and we sold 118 locations in 14 16 months

franzi didn't maybe it wasn't it wasn't franzi i was i thought this was the name would call that as the franchisor like we were the we were the dave's hot chicken we were the company selling franchise licenses and part of that was we worked with franchise brokers and we worked with what's called an fSO a franchise sales organization and that's where this idea for franzi was born on we were the brand paying out 60% commission that's 80% revolution they're like we need this money to invest in site selection support and construction support and marketing or we're just like hemorrhaging out you know cash and we had this unique advantage that most brands never have if you and i franchise this podcast studio or we franchise you know a run club or whatever the concept is we don't have venture

capital behind us typically. And so even more so, these brands need that franchise fee to invest in themselves and their capabilities and support of their franchisees. And that's when the light bulb and offals, like, if we're having a hard time, you know, scaling the team appropriately with the amount of stores we have to open, how does anyone else ever do this? And the answer is they end up giving up way more equity to like friends and family or like maybe more, not predatory, you know, VC or private equity, but Grush's like really get good valuations. Or they take 30 years and they go very, very slow. Or they don't scale.

They don't, they, you and I stock cap it at three or four corporate stores, and they're like, honestly, they don't want to go down this path. Right. So I think there's a lot of really good brands that should be national and don't because they, you know, there's not the right resources and tools out there. And I think there's some brands conversely that get propped up by the broker networks that have no business being as big as, you know, as they were. Because the underlying financials aren't sound or proven out,

but, you know, the networks are just pushing these concepts down. everyone's you know throat essentially and so long answer short frenzy was you know born from this idea of how do we put the control and the cash back into the brand's you know pockets so that they can reinvest in the franchisee ultimately creating this more kind of positive self-fulfilling loop versus today which i think is kind of the wild west unregulated so you have what was that original dry cleaning laundry brand uh so it's called two u laundry was the delivery piece and then Laundra Lab is the physical brick. And you owned them and then you franchised them.

Yep. Right? So you went through the whole process of franchising. And you were the company paying all these brokers, 40, 60% commissions, 80% commissions at times. Yep. Found the pain of like, this sucks. Yep. We're not capitalized in a way to grow that we need because we pay it all out.

Yep. And then he said, I could help other brands. Technology can do a lot of what the brokers are doing. It's top of funnel lead gen. It's light matchmaking and it's light qualifying. You buy a house this way, you know, through bank rate and rash companies, you buy a car, and carvana. We're not saying society's ready to go buy a half a million dollar business just online.

Sure. Right. But if you think about franchising, it's not as pure of a brokerage play as you buying a car wash or a house. There's a buyer and a seller. You kind of need someone in the middle to help negotiate and play nice. And then you transact and you're probably done interacting with each other. Yeah.

In franchising, if you think about it, you're like, hey, maybe a golf thing, maybe a restaurant. You need some advising and coaching and then the relationship you're building with that brand is going to be a five to 10 year relationship. So it's not this transactional. I found the one, fine, I'm done. It's dating. It's matchmaking more than anything. And so traditional business brokering doesn't make as much sense because the relationship and the situation is very different. We're more of a matchmaker. Fransy should be a matchmaker, not a broker. Yeah, like a true, so like you're not a dating site that's very transactional where you're swiping left and hit it and quit it. You're more like one of those matchmakers, come sit down, 100 people in a room, get to know each other, spend some time with, like, that's the difference. Yep, because you're on a creditory transactional. One thing else for a five to 10 year commitment with that brand. So you better like the team you're working with. You better like the brand.

You better like what, you know, their mission and their core values are because it's going to be a part of your life, whether you're the hands-on operator or just the investor type. It's still a big part of your life and you need to believe in the team behind it and who you're going to be working with. So you have a team that can hold someone's hand and help them understand all this. I mean, that's the brilliance. So that's what led to Fransy. Yep. Right? So you actually exited your first franchise?

So I'm still on the board of that business. I sold some of my equity. Yeah. Rolled the rest and had a decent liquidity. And now you're going to start up and he's going in. Yeah. I'm back to square one again. Big growing.

I love that stage. Zero one, zero to ten million. Yeah. And I love the scalability of this, but also the mission behind it is entrepreneurship has drastically changed my life. It's the most fulfilling thing I've ever done. I work most weekends because I want to. I have a four and a half month old at home. So I'm trying to balance, you know, family time.

But I, you know, this is my hobby. Like people, what do you do outside of work? Work because I, this is, it's fun to me. I genuinely love doing it. And I think a lot of people go throughout life not having found that kind of purpose or that thing that, you know, lights them up, fills them up every month. morning and so if we help even a hundred people 10 people find that through frenzy like that's the that's the goals like show someone who's been this has been tugging at them their whole life it's been eating at them they've been successful in their own right but it's been for someone else it

hasn't been for them how do we champion that person de-risk it for them find the right fit find the right financing program and structure and like really give them the tools they need to go take that risk that they're more than capable of doing operationally and and you know Intelligence-wise. So your avatar to come see franzi.com. You would like them to have some level financial means. They don't need to be affluent. 50K in cash is ideal because then you can bar,

you can basically get into most franchise concepts, 250K. 50K in cash. Yeah, 150K net worth. 150K net worth. Some level, like above 700 credit or is credit not? Credit, yeah, I think above 700 is good. Above 650 can still work. And you are, do you have a way for, can people from this episode or wherever they're seeing this, can they get a hold of you in the sense of like book a call or find out more? What's the path to do that?

Yeah, if you, if you email me at Alex at franzi.com, it's my direct email. We can set up time with me or other franchisees, you know, other franchise experts on our team. Otherwise, we're all over social media. So Alex from Fransy on Twitter, X, Instagram, TikTok, LinkedIn. There's all sorts of ways for us to engage. We have a newsletter or a podcast. We're pushing a ton of educational information out there because, again, I think most people are capable of doing this that they want to. The issue is most people just don't know where to start. They don't have someone to help them. They don't have any resources.

And so our goal, again, is let's give you that so you can take that push to jump and start building the plane. And there are so I have the science flipping podcast, I have the entrepreneur DNA podcasts, I have these podcasts that I know there's a lot of people hungry to be entrepreneurs, right? some like the real estate play like to me this is a real estate play this is a business play this is a lifestyle play right like you're going to solve for a lot of it i obviously lean into this

real estate play because then you have multiple exits not only have your income on the way in and through you have an exit on the franchise if you want and you can resell it through franza.com if you want you have an exit on the actual property or maybe that's the legacy play that you gift to your kids and you exit the business ownership and you just allow someone else to lease that property i mean i just genuinely i'm should not be doing this podcast because now i'm good now i'm going to be eyeball keeping my ankle unlocked that's right oh the other thing to make it even more exciting someone like you especially is going to love this i that's one of the reasons i like franchising now is if you get into the right system the right brand and you do scale

three four or five locations i mentioned these bigger fish we're constantly looking to buy up oh yeah those those those those three to five pack people there's exits a lot the multiples are higher in franchising because it's almost like a AAA rated bond. It's like you've got it's not just Justin and Alex's coffee shop. It's Starbucks or it's Ziggy's coffee or it's this thing that has a brand behind it, a franchisor behind it, the stop gap. So the risk is less. So we can actually sell for instead of a two to three X multiple, four to six, sometimes seven, eight, nine, ten X multiples on EBITA. So you're talking two to three X on your exit than you would have had if it was independent. And so there's just like the exit opportunities are bigger.

So all these, there's all these. It goes back to the principles. Tailwinds. Processes, principles, practices. These are the P's I talk about. Like, that's a business principle. Go into a business that you can have an exit with. Like, no one wants to work forever.

So what is your exit? Go into it thinking what your exit is. This is phenomenal. So franzi.com's where they want to go. I'm going to, and by the way, if you follow me, I'm going to be tagging him all over everywhere, right? So you're going to be seeing that everywhere. What would be one of the bigger misconceptions regarding franchises?

Either outright lies, like people just don't know that that is an outright incorrect fact, like it's not a fact, or a misconception of a franchise. Yeah, I think the number one is that, you know, franchising is just these big brands, McDonald's, Subway. There is truly a franchise for just about any concept you can imagine. Gutter cleaning, window cleaning, health and wellness. Most people don't realize hotels, most of them are. franchises. Hilton Marriott, a lot of them are owned by individual groups or individuals. Yeah. It's not just food. So there are franchises truly. Could be franchises, podcast. I think there is a franchise podcast studio that's starting to expand. Look at this. Like there is, I mean, the crime scene cleanup. Again, there is franchising for everything. And within that, there's also franchising, I think, for just what everyone. Again, it's not for those that are, you know, just starting to get started in their career or just starting to squirrel money away. Like, you know, do. take a risk, but very, very calculated. But for most people that have 30K even saved up, you can get into a franchise business. I think that's the other misconception is you think,

oh, the rich are just going to get richer. It's going to be wealthy people buying another, you know, McDonald's. Like, there definitely is some of that. But there's also the guy who I talked on on our podcast. He had zero, seven years ago, and he's up to 120, and he just went one at a time. And then those started cash flowing, and he built onto those. And then he got connected with, you know, family offices and some private lenders and brought partners on and went to 30 went to 50 and it's the American dream you can do it and go after it if you're willing to take that risk surround yourself with the right people and be thoughtful about the brands you get into um so yeah that'd that'd be my answer is franchising is way bigger more encompassing than way

broader and people are restrictive than people realize it's not just Starbucks or McDonald's it's not these big brands there's also and maybe you want a franchise maybe you reach out and say hey, I have an idea that I want a franchise. Yes. How did you, like 4,000 franchise? Like, is that just call by call? Was it once the word got out, they started coming to you? How did you build that out?

That is really impressive. So very similar. We took the playbook from Zillow. Zillow immediately had all the inventory because they pulled it from the MLS. I don't even know what MLS stands for, but it was essentially. Multiple listing services. Okay, multiple listing services. I don't even know how MLS allowed them to do this or if they did allow them to do it.

but Zillow, day one, had every house, all this price data. And so they wrote in New York, there was a Wall Street Journal article about Newside Zillow. They'll tell you what your house is worth. And so all of us are curious, right? It's probably the biggest investment a lot of people are making. And so, of course, they want to see, well, what is this thing worth? And so all this traffic was coming in, claiming their houses. We took a similar tact where we have all the data, just like the MLS in these FDs.

So we scraped and took us six months to build this whole data set and platform up. So get all this information. We now have all the brands on the platform. And similar tactic, we went to the brands that, hey, we have your brands on here. All this traffic is coming to look at it. They're wanting to buy it. But we're only sending the leads to people that have become verified. So we have all these people looking at you.

So you're verifying them, not the franchise. Yeah, we as the platform are verifying Dunkin' Donuts, like make sure it's someone actually works at the company. They get on board. They sign a legal agreement with us to basically take ownership of that page, just like you and I can claim our house on Zillow. Yeah. Or are you verifying the potential franchisee? Both, but to get all the brands verified on the platform, we propped it up on the, you know, went live with all those brands.

All this traffic started coming in, looking at sites. And then we go back to the brand and say, hey, we have all these people that have favoreded your page. I want to connect with you. Yeah. We want to pass them on, but we can't connect you with them until you've claimed and verified your profile. And so they then all started signing the agreements and take it on.

And 4,000 of them. Yep. Wait, is it 4,000 different? franchises or are you just talking about locations? Different brands. Wow. Yeah. So within those brands, some of them have thousands of locations.

You know, no-gating, Taco Hill, et cetera. Then there's the newer brands that might just have five. And so, again, I keep saying it, and I don't, you know, mean to be cliche, but there really is something for everyone if you want more mature, we've got it. If you want emerging and, you know, more entrepreneurial, we've got it. If you want $4 million investment, we've got it. If you want $20K investment, we've got it. Wow.

Service versus retail versus 15 employees versus. versus two employees, and you can really filter on every bit of criteria you want. This is incredible. Franzy.com. Who would have thought? I should not have found this episode. This is going to drive. I'm going to go into a wormhole because of you and call you all night.

Bro, what about this one? Should we do this one? Who should I be talking to you? This is going to be great. Guys, this is Alex. I am Justin. This has been the entrepreneur DNA. Make sure you look up franzi.com.

Make sure you look up Alex. Is Alex Franzy or is Alex from, Alex from Fransy. All over all platforms. This has been incredible, dude. This is a real estate play. It's an entrepreneur play. It's a young person, an old person, a legacy play. I mean, this is, I'm genuinely excited about this because I just think this way, right? This is why people become entrepreneurs. Appreciate you being here. Yeah. Thanks for having me again. All right, guys, this is Justin. That is Alex. This is the science of flipping. And if you enjoyed that, please share it with two of your friends.