The Most Hidden Path to Financial Freedom in America

Summary

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My First Million – “The Most Hidden Path to Financial Freedom in America”

Hubspot Media – December 30, 2025

Hosts: Sam Parr (B), Shaan Puri (C)

Main Guest: Alex, “The Franchise Guy” (A)

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Episode Overview

Theme/Purpose:
This episode dives deep into why franchising is one of the most underrated and overlooked ways to build substantial wealth in America. The hosts, joined by franchise entrepreneur Alex, explore the economics, strategies, and hidden opportunities in the franchising world—debunking myths and surfacing stories of quietly wealthy operators, both small-scale and large.

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Key Discussion Points & Insights

1. Why Franchising is an Overlooked Path to Wealth

• Alex opens with a bold claim: “Franchising is one of the most overlooked paths to wealth in America.” [00:00]
• Franchising creates more millionaires than the NFL.
• It’s not just McDonald's and Subway—a pervasive misconception. There are 4,000 franchise brands spanning far beyond food: hospitality, fitness, home services, and more. [00:26, 09:27]
• Franchising as a business model, not an industry.
• Increasing interest from private equity and family offices buying up large franchise portfolios—a trend toward white-collar sophistication in what’s often seen as a “blue-collar” space. [13:13, 15:03]

2. Alex’s Story: From College Laundry to Franchise Evangelism

• Early start: Bought a laundry service (Wake Wash) at Wake Forest University as a freshman, learned seller financing and discounted cash flow analysis at 18. [02:32]
• Scaled the business (from $30k to $280k/year in revenue) by targeting affluent parents at orientation week. Sold it for $400,000 as a college senior. [05:27, 06:59]
• Jumped into “Uber for X” wave—founded 2U Laundry after a stint in corporate consulting. [07:26]

“We went full ShamWow guy… Step right up, we’re the premier laundry service at Wake!”
— Alex [04:25]

3. How Franchising Works: Fees, ROI, and the Models

• Entry cost ranges from $10k (small service brands) up to multi-millions for large concepts.
• Franchise fee vs. buildout cost: The fee gives territory rights; build-out covers real-world setup. [12:12]
• Example: Chick-fil-A – $15k franchise fee, they do the build, but you pay higher royalties and profit split.
• SBA loans are a go-to financing path for many franchisees, accessible with $50k liquid/$150k net worth in many cases. [25:03]
• Typical expectation: Franchisees look for 25%+ IRR—significantly higher than real estate. [19:22]

4. The Roll-Up & Private Equity Trend

• Large funds (e.g., Garnett Station Partners, Roark Capital) and players like Cal Gullapalli are aggregating dozens to hundreds of units via acquisitions and tight operational structures. [13:13, 16:05]
• Smart ops: Operators like Cal own minority equity in many locations with private/family office backing, while systematizing operations with layers of management.

“Seven years later at the peak, he’s had 120 locations open across eight different brands.”
— Alex on Cal Gullapalli [17:25]

5. Franchise Economics: Concrete Examples

• Food: Dave’s Hot Chicken

  • Build cost: $650k–$1.8M; Revenue: $3M avg; Profit margin: 20%+ ($600k/year)
  • Needs experienced operators and $2.5M+ liquidity; multi-unit mandates. [21:18]

• Alternative: Another Nine (Indoor Golf Franchise)

  • Build: $320k–$800k; SBA eligible; minimal staff; 55% margins; $150k/unit in profit
  • No heavy labor, passive income potential with multiple locations. [23:45, 29:19]

• Home Services: Waterloo Turf

  • Investment: $100–$150k; Revenue: $1.3M; Profit: $270k
  • No physical locations, scalable, high margin [30:51]

• Senior Care: Home Watch Caregivers

  • $120k–$177k investment; $2.5M avg revenue; huge demand due to aging population [51:40]

6. Identifying & Vetting Franchise Opportunities

• Look for trends (e.g., golf simulators, synthetic turf, senior care) and bet on both the brand and the people building it. [30:21]
• Always scrutinize the Franchise Disclosure Document (FDD), especially “Item 20” for closures/openings. [56:03]
• Talk directly to “non-recommended” franchisees to get honest appraisals. Ask: “Would you do this again?”, “Is support worth the 6%?”, “How much are you making?” [57:49]

7. Red Flags & Broker Pitfalls

• Franchise broker commissions can be 60% of the franchise fee (!!), with no required licensure or disclosures—ripe for abuse. [38:49]
• Brokers show only a tiny fraction of potential brands; seek out transparent platforms (like Alex’s “Franzi”).
• Regulation lags; Diligence and self-education are essential. [41:05]

“For anyone that’s ever done sales… does anyone else know a sales commission that’s that high and that incentivized?”
— Alex [38:49]

8. Is Food the Best Vertical? Pros & Cons

• Food offers glamour and growth but comes with more “fad risk” and expenses; unsexy businesses (plumbing, home services, etc.) offer high margins, scalability, and consistent demand. [46:05]
• “What would happen if you owned not three, but 3,000 of them?”—The PE roll-up playbook. [15:07]

9. Success Stories & Quiet Wealth

• Roark Capital runs mega-brand systems (Dunkin, Cinnabon, etc.) by owning franchisors and collecting royalty streams. [41:16, 41:55]
• Flynn Group: A family of franchisees generating $6B+ revenue. [62:06]
• Most big operators are low-key, not internet-famous, and often reluctant to talk publicly.

“There are more millionaires generated from franchising than all combined players ever in the NFL.”
— Alex [00:09, 63:44]

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Notable Quotes & Memorable Moments

• Franchise Wealth Stealth:
  “We had a mentor assigned who had the biggest Rolls Royce and the freest schedule… he owned 13 Applebees. Broke my frame of what entrepreneurship actually looks like.”
  — Shaan [64:54]

• On Starting vs. Owning Franchises:
  “If you’re the 1% who wants to build, go for it—franchise from scratch. But for the 99% who just want to own and operate, you can get rich just following the playbook.”
  — Alex [35:32]

• On Brokers:
  “It’s always the brokers.”
  — Shaan [38:49]

• On Unsexy Businesses:
  “They’ll do $1.3 million a year in revenue, going around pimping out garages and cash flowing half a million a year, dude.”
  — Sam [47:39]

• On Diligence:
  “I just try to detect the underlying pain… regardless of what they’re saying!”
  — Shaan [58:55]

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Timestamps for Key Segments

| Time | Segment Description | |--------------|----------------------------------------------------------| | 00:00-01:54 | Why franchising is underrated; intro to Alex | | 02:32-07:02 | Alex's origin story: buying and scaling college laundry | | 09:00-13:13 | The scope of franchising and private equity interest | | 16:05-17:43 | Case study: Cal’s 120-unit, multi-brand portfolio | | 20:44-22:50 | Franchise economics: Dave’s Hot Chicken case study | | 23:45-29:19 | Another Nine: low-labor passive franchise, cost/returns | | 30:51-32:42 | Home services/turf trends; affordable, high-margin ops | | 38:49-41:05 | Broker pitfalls, commission gaming, solution platforms | | 46:05-49:41 | Food vs. services; untapped home service riches | | 53:01-57:10 | Franchise disclosure docs, how to dig up real numbers | | 57:49-59:40 | Three questions to ask current franchisees | | 62:06-63:05 | Flynn Group and mega-franchisee family success | | 63:44-65:01 | More millionaires than NFL: The true scale of franchising |

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Takeaway: Who Wins in Franchising? What To Watch Out For

• Franchising offers many “needles in the haystack”: Wealth is built in both obvious (food) and hidden (turf, garage, home services) places.
• Real profits accrue to those willing to run tight systems, build teams, and either spot trends early or go after unsexy/high-margin verticals.
• Diligence is critical: Vet brands, talk to existing franchisees, beware high-commission broker hustles.
• The “quiet wealth” in franchising is real—often bigger and more stable than tech, with many private equity sharks swimming closer to the surface every year.

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In the Guest’s Own Words:

“I used to be a franchise model hater… then I realized: follow the playbook, work hard, build a system—you, too, can make $20M a year without having to invent something new.”
— Alex [66:22]

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For Listeners:
This episode is invaluable if you ever considered “buying your job” with a franchise, want to understand how the biggest franchise operators (and their private equity backers) are getting rich, or just need expanded perspective on the realities of building generational wealth outside of the tech echo chamber.

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Next Steps:
Curious about the nitty-gritty? Check out franchise disclosure documents (FDDs), avoid broker-only perspectives, and look for the “pain in their voice” when vetting other operators. There may be an overlooked, cash-flowing business waiting for you in the franchise world.

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Transcript

[A]

Franchising is one of the most overlooked paths to wealth in America.

[B]

That's a very bold statement.

[C]

They said the most overlooked.

[A]

There are more millionaires generated from franchising than all combined players ever in the NFL. And there's a number of private equity family offices starting to get further and further into franchising. And they're buying both large franchisees or they're doing roll ups.

[B]

You made this bold claim and I wanted to fight you about it. Now I'm totally on your team.

[A]

Traditionally, franchising gets looked at as like, all right, it's either McDonald's and Subway and you got to have $3 million to. So only the wealthy can actually do it. But there's 4,000 franchise brands. And if you're willing to do the research, willing to do the work, there are a lot of hidden gems of brands and industries that are really taking off.

[C]

So explain the path. What's the game plan?

[A]

This is such a good hidden gem. I don't want to talk about how I did this. I feel like I could rule the world. I know I could be what I want to.

[B]

I put my all in it like.

[A]

No days off on a roller. All right, what's up?

[C]

Welcome, Alex. Alex is the franchise guy that we have invited on the pod. So I don't know if that's what you normally get called, but that's what we're calling you. So this podcast called My First Million. One of the reasons we originally called it that was because there was all these different ways people made a million dollars. And in my first 10 episodes, I think I had a guy who did it in real estate, a guy who did it with Amazon, fba, a guy who did it playing poker. And I was very fascinated just to hear all the different ways you can win in business for two reasons. One, I wanted a menu of options I could go choose from. How can know which one sounds most appealing to me, which one sounds like it fits me? And the second is I like just hearing that you could be do it in all these different ways because it makes the impossible feel extremely possible. I remember when I was sort of pre success, it felt like winning was like just this needle in a haystack. I couldn't find it. And then as I've been doing this podcast, I realized it's a haystack full of needles. You there's so many to choose from. There's so many different ways to win. You're going to talk about kind of retail and franchising. Did I do you justice? There Setting that up.

[A]

Yeah, absolutely. I honestly, up until four or five years ago, was a bit of a, I think, franchise hater and thought, oh yeah, that's. Is that really entrepreneurship or is that, you know, are there viable paths there? And the more I've gotten into it, the more I've realized it's probably the most overlooked path to wealth creation and in America. And I've become a big fan.

[B]

That's a very bold statement. That's a very bold statement. But he said most overlooked looked all right.

[C]

Yes. Well, let's, let's start with who, who you are. So you're, you're a guy who made your initial wealth in laundry, in the laundry business. So can you give us the fast forwarded quick version of your story?

[A]

Yeah, I'll try to be, try to be short. So I'm originally from small town Minnesota, town of 15,000 people. Ended up in North Carolina for college, went to, to Wake Forest, studied finance, was about to have a pretty kind of boring, plain life and then bought a laundry business my freshman year of college. Did seller financing. Had to learn what that was at at 18. Learned what a discounted cash flow analysis was at 18. Just talking to, you know, business school professors before I got into the biz school and ended up buying that business and learned more doing that than any class I took at Wake. You know, we ran it, we grew it, we sold it for a little over 10 times what we bought it for and had an exit our senior year for. I got about 10 times what we bought it for. And that set the path to complete addiction.

[C]

Why did you buy a laundry business as a college freshman? Who does that?

[A]

So I was, I was working for them. I was working for them as a way to make a little extra beer money. And hooked. I was like, this could work at Duke and Chapel Hill and Vanderbilt and you guys are graduating. I want to buy it. And they asked for 30 grand. And my jaw hit the floor. I was like, that's the most money I've ever heard of. And I had maybe two grand saved up. So had to get creative and figure out how are we going to buy this and structure it.

[B]

And well, that's sort of like one of the, one of the three businesses college kids starts. It's usually like some type of like app or something where like college kids could sell stuff to other kids or a roommate. Matching apple, which I did. Or like a, like a laundry map. A laundry business. I know Blake Myowski, I think that's his name, the guy who started Tom Shoes that was his first business, was the laundry business.

[A]

What were you doing?

[C]

You just go pick up the laundry from students dorm rooms. You said like, hey, you. You know, I remember when I went to college, I didn't know how to do laundry. I had like, you know, grown up and my parents did my laundry. And so by the time I got to school, I was a little confused. My roommate had to teach me, like, what is a dryer sheet? And like, why do you use this? What are all these different components? How long do you leave this in?

[A]

Yeah, so Tuesday was pickup day. You'd leave your stuff outside your dorm room door. We'd have runners, you know, mostly football players that could hold like 200 pounds of laundry at a time. They just, you know, run up and down the hallways, grab your bag. We'd partner with vendors off campus. They would clean it, we'd return it Thursday. But the big unlock for us was kids aren't paying for this. You know, it's a bunch of broke college kids. It's their, you know, affluent parents or your parents that are worried about them, you know, being at college, not knowing how to do laundry. And so the big thing that changed it for us, that allowed us to go from, you know, call it 30 ish thousand in revenue when we first bought it to just under 300 grand is a school year in revenue was get a booth at orientation week. And for whatever reason, Wake gave us a booth next to where you got your meal plan, where you got your parking pass, where you got your keys to your dorm, like all the, like marquee things you need to do. And we went full shamwow guy. Like, I was like, step right up. We're the premier laundry service that Wake, you got your kids gotta have it. You don't want them to go, you know, clothless. You got to sign up for this.

[B]

Yeah.

[A]

And they loved it. They thought it was like the cutest thing. And they're like, yeah, that's true. My kids, you know, screwed going here and not knowing how to do laundry. And I want them studying or having fun or whatever it was. And so we went from, yeah, 30k a year and school year to like 280,000 our first year.

[C]

Is this still a business that any college kid could do today? Like, has this been a solved problem or does every campus just have kind of like a version of you? Who's who hustles and makes the. The campus, the freshman laundry service?

[A]

Yeah, I think Sam's right. Like the number of people I've met that have Gone on to be serial entrepreneurs that were like, oh, I did that in college too. Like, I thought I was so cool and special and unique that I meet like 30 other college kids that had a laundry business at their school. So I don't think it's been like systemically or like at a scale, you know, solved. It's just, you know, the business that we had was called Wake Wash and it's been owned by nine other groups of college kids. It's changed hands that many times. Been such a cool launch pad for all these other entrepreneurs because it's this like safe, fairly simple business model. But you do learn so much. How to hire people, manage them, fire people, work with universities on your contracts and agreements, market to customers, sell to people again, it changed my life entirely. I wouldn't, I don't think be an entrepreneur at the level that I am and have the level of obsession I have over it if it wasn't for that college laundry experience that I had.

[B]

How old are you now?

[A]

Just turned 34. You.

[B]

And so you sold that for what, six or $700,000? You said mid six figures?

[A]

It was, yeah, it was like four. Little over 400,000.

[B]

Oh, that's badass. So in college you sold a business for $400,000.

[A]

I thought I could retire.

[B]

Well, you know how that.

[A]

No, you didn't. No. As a 21 year old, you're like, oh my God, I don't have any college debt. And I.

[B]

You didn't pay attention to finance class, so good thing you didn't go down the finance career path.

[C]

Well, the funniest thing is, like any good laundry man, he ran another cycle, he goes and he starts another laundry business right afterwards. Right.

[A]

Well, I sold, I sold out for a little bit. I went and worked for Ernst and Young. I thought as far as corporate jobs go, consulting's gotta be entrepreneurial. You're jumping from project to project. You're working with different teams. And again, loved the people I worked with, did learn a lot, but I, it was like soul crushing work. I hated the type of work I was doing. And in 2014, 2015 is when all the Uber for X businesses were taking off. So Instacart and Shipt and Wag and Rover and Drizzly and Doordash and, you know, all of these. And I thought, someone's going to do this for laundry and dry cleaning and if it's not me, I'm going to hate myself and I need to go at least throw my hat in the ring. So quit my job at EY started a company called 2U Laundry in January of 2016, and we had a pretty wild roller coaster of a ride from there. And the story is still being written to a degree there.

[B]

Hey, real quick, if you like this episode and you want more ideas on overlooked businesses, I have something you might like. A while back, Chris Corner came on MFM and we called him the side hustle king because he built so many businesses. Well, he ended up giving us a list of 200 ideas and, and the blueprints to build them. It's a great resource and totally free if you want it. Just click the link in the description to get it now. All right, now let's get back to the episode. You made this bold claim. You said that franchises are. What did you phrase it exactly? Because I'm going to, I'm going to try and prove you wrong. But I want, we're going to have a, we're going to have a fun debate. What was. Tell me the exact phrase.

[A]

Yeah, so I think franchising is one of the most overlooked paths to wealth in America. And I think it deserves more attention and people giving it a shot.

[B]

Great. I want you to be right. But we're going to, we're going to like have a conversation about that. And the reason, you know this is you have a software company where you, it's like a marketplace for franchises. So you have perhaps one of the best, like bird eyes view of like the industry. Where are the numbers that would make you make that claim?

[A]

Yeah. So franchising as it's a business model. First of all, I think a lot of people think franchising is an industry. It's a business model that spans food to hospitality, health and wellness, early childhood development. Most of us probably don't even realize we're using franchises on a daily, you know, for sure, a weekly basis. Hotels, Marriott, Hilton franchise businesses. You know, there's all the food that we all know, McDonald's, Subway, you know, Chick Fil A, et cetera. But then gyms that we all go to, orange theory, F45, Barry's. They're some form or fashion of a franchise. And then you talk about your home, gutter cleaning, painting, you know, pest control, et cetera. All franchise. It is 8% of our country's GDP is produced from franchise business models. And I think traditionally franchising gets looked at as like, all right, it's either McDonald's and Subway and you got to have $3 million to do it, so only the wealthy can actually do it. Well, or it's these like kind of slimy ones that are just popping up and they don't have systems and they're telling you going to sell you a dream. But there's 4,000 franchise brands and if you're willing to do the research, willing to do the work and willing to look, there are a lot of hidden gems of brands and industries that are really taking off and have valuable systems and a valuable peer group that the everyday average entrepreneur could benefit from. If it's the person that doesn't have the original tech idea or wants to go raise venture capital but wants to build a business and build wealth. Franchising I think again is one of the most, you know, underrated, overlooked paths to doing that.

[C]

So explain the path. All right, so I'm a person and you know, explain a blueprint or a model that you could see. So you know, you take X dollars that you have saved up or you raised from somebody, you buy what type of franchise and then what type of returns do you get? What's the game plan?

[A]

So I always use analogies and I think a good one for, for franchising it's akin to real estate. You could buy a trailer, you know, one lot trailer and rent that out. Or you could buy 100 door multi unit deal and there's everything in between. And franchising is no different. Of those 4,000 brands, there's some as affordable as $10,000 to get into. Chick Fil a actually is only a $15,000 franchise fee because they want to pick from the best crop of operators. But they're a lot more restrictive on how many units you can actually open, how you operate, how involved you need to be in the business, et cetera.

[C]

Isn't Chick Fil A you can only have one, right?

[A]

Yeah, you can only have one. There's unicorns they allow to do two, three more and then brands like R Mark or these, you know, food service providers that do stadiums and campuses. They've got dozens if not hundreds because they have those agreements on those, those, those venues. But some of these franchise will be 10k all the way up to there's 4 million plus dollar swim schools where you've got six pools you're building. And yeah, it's a much higher stakes but higher reward opportunity.

[C]

Franchise fee the same thing as what the build out is. So let's say you said chick fil a 15k but then you have to build the restaurant, right?

[A]

So the franchise fee every brand will have and that can range from 10k to 70k in some instances. And that's basically your ticket in line. It's your I now own the rights to this territory or this, you know, 10 mile drive radius, etc. And then there's the build out cost. Just like if you were to do it on your own. How much is this going to cost to upfit the location, buy equipment, you know, boilers or you know, stoves and all the stuff that you need for a restaurant? There's that investment cost as well. Chick Fil A is a little bit of a pseudo franchise. It's 15k for the franchise fee. But then Chick Fil A actually build, you know, buys the site, they pay for all the build out, but they're taking a 15% royalty instead of 6% which is standard. So 6% on your revenue is standard. Chick fil A taking 15, but then they take 50% of your profits as well, which no other franchisor does. They take 0% of your profits. So you're effectively with Chick Fil A buying yourself a high paying job.

[B]

Did you guys read about this? This article went viral or not viral, but maybe in the business world. It was popular, I think it was in the Wall Street Journal and it was March 1, 2025. It was about the friends, these two buddies, I think they're only 35 to be honest. And they, they had started a business called Garnett Station Partners. Did you read about this?

[A]

No. Yes.

[B]

Okay, so correct me in the story, but two guys, I think they looked like 35, 37, two buddies who raised a fund and bought a bunch of franchises and now have a multi billion dollar fund. And I think they've taken out, you know, hundreds of millions of dollars out of the business.

[A]

Yeah, so they, and there's a number of private equity family offices starting to get further and further into franchising. And they're one good example of it. And they're buying both large franchisees or they're doing roll ups essentially of. All right, Sam, Sean And Alex own five Jersey Mike's and they find six of us and they go buy all 30 of them. You know, they're doing these kind of one off deals, but now they own a 30 unit portfolio that's doing an average of two and a half million per location. And you now have close to 100 million dollar a year revenue business via acquisition. And it was five acquisitions or six acquisitions. So there's a lot of that happening.

[B]

And so they, the Wall Street Journal phrased it so differently because when I think of franchise, I think of a little bit blue collary or an ex NBA basketball player. That's what I think about the headline was meet the best friends who are private equity's newest young stars. And it said that they bought, they, they so far have raised $3.5 billion. They're only 38 years old and they bought everything from gyms, funeral homes, car washes. And they bought hundreds of these. And they've just operated it really well. And I think their big win was betting on Little Caesars. I think they bought a bunch of Little Caesars if I like maybe eight years ago now. It's been really popular. But the way that they've rebranded this was actually amazing.

[C]

What do you mean rebranding it? What's the rebrand?

[B]

The rebrand is like, it's just like they made it a lot more white collar.

[C]

So.

[B]

So when I think of franchise, I think like a mom and pop business who just wants to get into it. And they got, they put $40,000 together and they work for 15 years and slowly acquire one or two at a time. And hopefully they have their. It's almost in the same category as like a dentist, right? You know, like the middle America wealthy people who have done it, you know, year after year and been very consistent. These guys were 38 year old Manhattanites who raised a billion dollars and they've just crushed it. And it kind of reminded me, I think there's been a handful of things like this, Sean, where it's like things that serious operators, operators don't take serious. And that is how I kind of read it about these franchises where it was like, yeah, mom and pops have done well owning three or four of them. What would happen if you own 3,000 of them?

[A]

And that's what there's, there's a lot more smart money coming in. And using that real estate example again, it's. There's all these folks that might own five doors or a duplex or a quadplex and private equity and family offices or ex investment bankers are saying, what if I go roll up 100 of these, 200 of these? That's exactly what Cal did. The story that I shared with you guys tell that story.

[C]

Who's Cal?

[A]

Yeah. So Cal Gullapalli, he's a franchisee based in Florida. Former investment banker. I think he worked up in New York or in the northeast and you know, decided he wanted to do something for himself. He's like, I know how to put deals together. I know how to structure and, you know, analyze a business. And so he bought a few butcher shops at first. So Independent businesses, more like ETA or a search fund of seven years ago, eight years ago. And that went okay. Like he learned a lot, how to be an operator and you know, learn some retail. But then he was at his Orange Theory, his gym that he goes to, and he's a curious guy. He asked, you know, the manager, you know, is the owner around or can I get in touch with him? Gets in touch with the owner, ask the owner, how much money are you making? The owner was forthright, shared his financials and I think he was making four or five hundred grand for that, you know, profit from that one location. Cal's like, you make that from one gym? And he's like, yeah, I own three of them. He's like, so you're making over a million dollars a year off of three locations? And so he goes and buys two orange theories, like immediately. That was in 2018.

[B]

Dude. An ex banker doing this is sort of like a young gay couple gentrifying a neighborhood. You're like, you're like an outsiders are like something's up, like it's starting. Yeah, this is like that story. Or a retired New York baker in Florida who's on his second, his second thing.

[A]

Well, so he, he starts doing this in 2018. Seven years later at the peak, he's had 120 locations open in seven years.

[C]

Of Orange Theory or of other things, eight different brands.

[A]

Marcos Pizza, Restore, Hyper Wellness, European Wax Center, Pop Up Bagels.

[B]

Did he raise money?

[A]

So what he's done. And so I have a podcast as well called How I Franchise this. And he talks through exactly how he finances it, how he structures the deals, and a lot of the times he owns 30 to 60% of the equity in these kind of like sub deals that he's doing. So he's using private equity, family office, independent investors, but he's the operator. And owning 30 to 60% of a system that likely does over half a billion a year in revenue across all of his, you know, his units. In seven years, who the hell can.

[C]

Operate 100 different franchises? That's so difficult. How is he doing this? What is the model that lets this happen?

[A]

So he as he was scaling, and usually it's going from 6 to 10 is the really challenging part because you start having district managers managing a unit. But he's so far removed from the day to day now that he's got this system in line of defense where each brand has basically a COO over it within that organization there's multiple district managers and then underneath them they manage four to five stores each and GMs and assistant GS once that system is in place, there's so much redundancy that you know, you've got people calling out and all the headaches you'd worry about with a business like this. He's got a couple thousand hourly employees across the system and that sounds like a massive headache. But because of the system and you know, the things that come with franchising, it is much easier for him to have these playbooks for training. And how do you handle employee turnover.

[B]

And how much profit would it make a year or cash flow and how would it be? Do you value it? Is the value in the equity value that you build up or is it just the profitability?

[A]

So, so both franchising and this is something that opened my eyes a bit is a real estate investor would be jumping up and down about 12 to 16% IRR. A franchisee is upset if they're not north of 25% IRR. So the cash on cash return is, you know, double in many cases or the expectation the floor. Yes, there's more risk. Yes, there's more. Or in some cases there's more risk and there's more.

[C]

Well, you're running the business, right?

[B]

Yeah.

[A]

But as you get these systems in place, it becomes similar to owning a portfolio of 100 doors in a commercial real estate. And so the cash on cash return from the cash flow of the business is north of 25%. That's not factoring in the enterprise value. When you go to sell and franchises trade at 1 to 2x more of EBITDA than an independent business because it's de risked across the thousands of units or hundreds of units in the brand. Banks de risk it that way, investors de risk it that way. And you have this peer group again and this franchisor to rely on 25% cash on cash.

[B]

What was the cash? I don't even know what it would cost to have 120.

[C]

Well, just do it. Do it in a simple. Do one. Right. So yeah, one location. Let's walk through the economics of a single location of pick your favorite franchise. If you were advising your, your little brother or your cousin to go do one of these, where would you guide them? And then let's walk through a one location economics.

[A]

Yeah. So it. And I know people hate the answer. It depends. But there really is a franchise for everyone. So I'll pick, you know, let's just pick Dave's Hot Chicken, a brand that a lot of people know has had this kind of Viral growth the last few years, the average Dave's Hot Chicken, you know, is anywhere from 650k to 1.8 million to build. And that depends on size, the market you're in. I know it's a big range, but the average revenue of a Dave's Hot Chicken is over 3 million with, you know, 20ish percent, you know, cash flow margin. So we're talking about 600k in profit.

[C]

Okay, but we got to slow down. So you tell them, hey, Dave's Hot Chicken, great brand. Your little brother says, okay, what am I going to need to go build this to start a Dave's Hot Chicken? So I got to apply, and then I have to pay a fee, and then I have to come up with a million or $1.5 million to build this thing. How am I going to do that?

[A]

Yep. Yeah. So in Dave's Hot Chicken case, they now require you to do at least five. And so in this case, this is one of those examples where you do need two and a half million liquid, $5 million net worth, or to have raised that money from investors. So if it was little brother and he didn't have that cash, I'd say, hey, we got to go find some investors. You're going to be the operating partner, just like what Kyle does today across his system. So, little brother, can we prove that you're a good operator, that you have experience managing a Chipotle or whatever it may be to go raise this capital if he wasn't capitalized?

[C]

So he's got to go raise 5 million bucks.

[A]

Yes. Yeah. So to get started, he would need two and a half million liquid in this case to build the first one or two. SBA is a great option as well. So, Cal, even someone at his scale, is still using SBA because it's designed and meant for buying small business like.

[B]

This, for getting us all to eat hotter chicken. That's what the SBA do. You also have to be good at spotting a trend. Because, for example, if Dave's Hot Chicken, you know, was a thing 20 years ago, I lived in Nashville when our hot chicken got started, and it was, like, not that popular. And then something happened on TikTok where hot chicken got cool. But then, I don't know, is it a phase? Like, do you have to be. Do you have to get good at picking what a winner is?

[A]

Yeah, absolutely. So one of the things that I think about a lot is what makes some of these wildly successful franchisees versus the ones that aren't. And I think, like, picking an independent business, whether it's trash or, you know, these other unsexy businesses, you need to find something that, you know, I think carries long term value. Unless you know it's a trend and you're like, as long as I get in early, I can build a substantial business and ride the wave and ride the trend. I think it's very similar to buying an independent business as well. But Cal is an example. Spotted. Dave's early. He spotted pop up, you know, bagels early and they're taking off right now.

[C]

Okay, so let's redo this because you, you gave us Dave's hot chicken and now your little brother needs $5 million. And I think we've hit the wall. So let's do something that's not going to require that. Let's take it more realistic. I don't have friends and family that will give me, you know, two to two and a half to $5 million liquid. And I don't have the operating experience of running a Chipotle for three years yet. So what else would I do? European wax center. What are we thinking?

[A]

So let's do, let's do another nine. That's one that I'm in full disclosure. I'm developing five another nines in Minnesota right now. It is indoor.

[B]

What's another nine?

[A]

Another nine, Another nine.

[C]

Is that the name of a franchise?

[A]

It is a fully unattended, so no employees, no food and bev. Indoor golf simulator. Franchise golf is very, you know, trendy and popular right now. It's making a comeback. You got the Netflix effect with full swing. This past year, actually more Americans played off course golf, so like topgolf simulators, etc than actual green grass golf for the first time.

[C]

That sounds substantial. Okay. So you basically say, hey, there's this trend and this movement. Indoor golf simulators. You said yourself you're building five of these out. Okay, so let's walk through again, the one unit example. Does little brother need some special sauce to do this or what does he need? What's the steps?

[A]

Yep. So this case, you are going to need an SBA loan. That's what we're using to finance some of these. The build up's substantially lower than a Dave's and they don't require you to build five of them. So you can get into one or two of these.

[C]

When you go to get that SBA loan, do they need you to have proven anything yourself or can you just say, look, this is a franchise, I'm going to operate it. I've had this corporate job And I'm ready to go do this. Do you need some. Something to qualify for that SBA loan?

[A]

Yeah. So typically, depending on the brand you're getting into, you need 50k, I'd say liquid and over 150k net worth. So again, I think attainable for a lot of people wanting to go escape corporate or add onto their real estate portfolio, et cetera. SBA will borrow you up to $5 million across multiple loans over time and they will make you sign personal guarantees. So you are, if you own a house, that's collateral they're looking for. Does the individual have enough collateral and does the brand have enough data and proof points that this is a concept we want to back and be involved in? And most banks like, I think, a lot of opportunities. Some love food and that's what they do. They're the food lenders. There's others that love fitness and they're the fitness lenders. And so you gotta find the right lender that is comfortable with the concept you're looking at.

[C]

So how much does it cost to build one of these?

[A]

Yeah, so one of these is anywhere from, you know, 320ishk to 800,000, depending on the number of private bays you want. So another nine is different than these social experiences you see where it's food and Bev and staff. This is like anytime fitness. You fob in with your phone. You can go at 3 in the morning if you want. They're 24, 7 and you go play, you know, sim golf on some of the nicest equipment out there. You know, the guys that started this out of Cincinnati, they said they got surgeons that go three times a week at three in the morning when they're off shift and they go play pebble beach for an hour before they go home and, you know, call it a day because that's their routine and that's when they can get away and do it. But they don't have five hours to go play an actual round.

[B]

So I'm on another nine dot com. It looks really fun. I don't even golf, but this looks like it would be really fun. But it looks very new. Like, I think their headline says just, just two Dads are going to play more golf. That's who founded it, that it's a, it's got pretty funny language actually says, like, did we mention that we're byob? Like, it seems, it seems cool, but it seems like, why would I need them? Why wouldn't, why would you pay them money versus going doing it on your Own.

[A]

Yep. So one thing I always tell people, they're thinking franchising. And again, here's another analogy. It's like a lot of brokers or people will say, like I know Sam and Sean, they just assume they want ice cream. So it's like which flavor do you want? And I say we got to take a step back. Maybe they don't even want ice cream. Maybe they want cookies or cake and you know, the dessert type being franchise versus real estate versus buy your own business. And so I usually tell people if you're going to do franchising you need to think about this over a 10 year period. Because most franchise agreements are 10 years. You need to say in 5 years what value is this brand going to be providing me that justifies this ongoing 6% royalty. And so in food it makes a lot of sense. McDonald's is going to give you 10 cent per pound, burger, meat versus a dollar that you get on your own. You're getting more value in the bulk purchasing power of the brand, the menu innovation, the marketing, et cetera than you are keeping that 6%. And so a brand like another 9 because a lot of the value is front loaded. They're getting breaks on equipment and build out and helping you with site selection and design. You know, how do they create value over time? And for me it was I'm doing Franzi full time. They are going to provide resources on an ongoing basis, training, they're building software that I don't want to spend time building or investing that allows better scheduling and easier marketing and lessons to go partner with existing golf courses to drive volume from that channel. They're building this really cool league software where Sam could be in New York and Alex is in Charlotte and we could be doing a fantasy football type league where all of your high school or college buddies could play against each other, you know, in your respective markets and have this like fun ongoing competition. So they're investing in technology that I think creates stickiness within the, the consumer base. They make the operations a little bit easier. Maintenance contracts. Right. And that's probably one of the least value add five years from now kind of examples versus a restaurant. But even then it's worth it to me to not have to think about all that.

[C]

Okay, so finish up the economics for me. So you said you're going to go, you're going to build this thing out for, let's just round it to 500 grand and you're going to franchise this from these guys. They have a 6% royalty. What are you and you got the, you got that 500 grand from the SBA.

[A]

10% down.

[C]

Yeah, 10% down. So you put 50K down and you're gonna, you're gonna get the rest as a loan. So what are you looking for and how do you, why, you know, I guess you're trying to do five locations. Maybe it takes five for this to really like be meaningful. Is that, is that right?

[A]

So I always tell Bill, if you're gonna try to replace your income or have, you know, kind of like a side hustle or some side income, you can do that with one or two units. If you're really looking to fully replace. If you have, if you're a high earner, 250k plus in salary, you're going to need three plus locations to replace your income and eventually build wealth beyond that. So for me and my partner was, let's do five. They're very passive. There's no employees, there's no food. In Bev, we can run five as essentially a side hustle without having to be super involved in the day to day. One unit on average is doing just under 300k a year in revenue, which might not sound like a lot, but they have 55% margins because there's no labor, there's no food. And Bev, it's just the build out costs and rent essentially. You don't need high occupancy to get to a meaningful amount of profit. So we're expecting each one to do 150k in profit after all expenses. You get to five of those, you know, generate 750k in relatively passive income. You know, a lot of work for us up front to find sites and build but meaningful cash flow in the long term.

[C]

And Sam had a good point a second ago where he was like, do you have to almost think like an investor and spot things a little earlier than the curve and figure out what's going to have staying power? And you had this interesting thing you texted us, you said turf businesses. And I think in this one you were saying there's almost like a regulation that you will benefit from. You said like Vegas, for example is prohibiting new homeowners from growing grass. So they have to go turf. Can you talk a little bit about that? Like that idea and how you would capitalize on it?

[A]

Yeah. So Waterloo turf is the brand. He's a former private equity guy and this is a big thing that I look forward to. Just like Sam said, find trends. You're betting on people as well because this is a partnership. I think Another thing people might discount in franchising is I'm not just buying Sean's old business. We shake hands and Sean and Alex don't really interact beyond that. No, I'm looking at sean as a 10 year partner. We're going to work together, you guys are going to make investments in the brand, help me with marketing and problems that I have and you know, build a system of other franchisees that hopefully can all benefit from and learn from one another. And I think people maybe take that part for, for granted. So I just wanted to stress that the founder of Waterloo Turf is phenomenal. Former Cal like guy, you know, very deal driven investment banker, very analytical and he's looking for this trend and seeing the turf industry in the United States as $4 billion today. It's going to grow by another half a billion next year. And there's no clear winner, there's no national brand, no one's dominated this. Why don't I go build a franchise brand around it and do that and build capabilities in bulk purchasing power on an ongoing basis for the materials. There's ongoing maintenance to kind of returf and make sure the grass is still enjoyable for young kids and you know, it's not wearing out quickly and it's another pretty affordable business to get into. It's only 105 to 150,000 to get into because you don't have the overhead of a retail store. There's no physical location, you don't need a lot of equipment. And so for 100 to 150k grand you can own a business that on average is generating $1.3 million in annual revenue with profits around $270,000 a year. So again, one location in this example could replace a lot of high earner incomes. But now you're your own boss, you're an entrepreneur with a playbook and a team behind you versus having to have this completely original idea, you know, to convince you or make, make that push for you to leave your corporate job.

[B]

Why are you selling software to this? Why don't you just go buy a bunch of these? That sounds great.

[A]

So I'm trying to do both, which maybe sounds like a not great idea. But I have partners on the franchise side that are, you know, my version of Cal. I'm being more capital a capital partner. I have operating partners in the franchises because I can't physically build a software company and operate a franchise portfolio. But the goal is to get to 50 to 100 unit portfolio just like.

[B]

Cal's doing and, and let's just say hypothetically, let's say you get to 50 to 100. What are you telling yourself? You're like, oh, that I'll make 5 million a year off of that.

[A]

Yeah, at least. And then the enterprise value. So like Cal with Papa Bagels or Dave's Hot Chicken. I mean the exit multiple for him will be 6 to 10x on, on EBITDA compared to 3 to 5x if he just owned Cal's Chicken Shop. OrangeTheory at its height was trading for 21x EBITDA. It was insane. I mean it was like a software business multiple on a gym. But because it was a part of a system, they had some recurring revenue. They, you know, investors and private equity groups rolling them up. Treated it like a software business.

[B]

Sean, have you heard of Pop up bagels?

[C]

No.

[B]

They were started in this little town that I used to live in, Westport, Connecticut. And they have this crazy model where you can only buy 12 bagels at a time. I think you have to pre buy or some. Sometimes they're like changing their rules. But it was like you had to pre buy 12 bagels in advance. And now I live in Manhattan. And two things. One, they're better than like the normal mom and pop bagels. They are phenomenal. And two, every time you see one there's a line. The, the pop up bagel phenomenon is incredible. I've never seen anything like this. And it, I think it's just like a husband and wife started making bagels like in during COVID times and it kind of turned into this like they could have been a billion dollar plus brand at this point. What's. But what's your. Alex, what's like the calculus here both in terms of like emotion, work and money on starting Pop Up Bagel or starting Orange theory versus owning a bunch of them as a franchisee.

[A]

So you're saying starting as you know, like the franchisor, like what the husband.

[B]

And wife did with Pop Up Sam.

[C]

Saying should I shoot to own 45 of someone else's chain or should I shoot to create the franchise and then franchise it to a thousand people? Right, Sam, is that kind of what you're asking about or like what's the difference?

[B]

Yeah, exactly. For example, we had Brian Scudamore on MFM a while ago. Brian started this thing called 1-800-GETJUNK. It was a horrible bit of business for like I think 14 years. I think it took him 14 years to a million revenue. And then he was like year five after we decided to franchise. It took off. And now he's one of the. He's a. He's a multi. He's a multi billionaire. And I'm like, that sounds cool. But you're advocating towards the other stuff of owning someone else's franchises.

[A]

Yeah, I think it goes back to like the entrepreneur archetype. Like if you're like that builder, you know, creator type, where like, you know, you are the less than probably 1 or 2% of the population that thinks that way and has those types of aspirations and doesn't want to have a boss. Like, you're likely the kind of tech software entrepreneur or yeah, creator type. But I think 99% of the population is not like that. But they want to do something entrepreneurial. They just don't know what. They don't know how. That's why I'm such an advocate is, you know, had I not had that small college entrepreneurial experience, I might not have learned things to go be a successful entrepreneur later on. And the more people we can get getting some of these reps in of like, all right, go build a team. Go have to find a location. Go have to solve these problems real time and have some of the shitty stuff that happens to you as an entrepreneur happen to you. So you learn how to take, you know, those punches and, you know, become an operator and an entrepreneur. That's why I'm an advocate for it. As me as an individual, I like the creator. Like higher risk, higher reward, let's go try to build this system to a thousand locations. And I, you know, I started that. The reality is I don't think that's the majority of America or the majority of people.

[C]

What do you think is the thing to look out for who's lying to me? So in any legitimate way of making money, there's always going to be, if there is a legitimate way of making money, there's gonna be a bunch of people who come in and say, you know what? Let me ride the back of that legitimate way of making money. And I will over promise I will under deliver, I will try to, you know, sell a lemon to somebody. And this happens in real estate. This I could tell you, hey, you know, tech investing, startup investing, that sounds great, right? You can invest in the future of entrepreneurs. Well, I could tell you the people who are gonna basically, it's not a scam, but it's like, dude, you're gonna lose your money if you do it that way. And I could tell you the people who do it in a certain way where you have a good shot of Making money. And there's a clear difference when you're on the inside, you know, you know who's who. Right. And so in every industry, I think this exists in the franchise world, what are the red flags? Who's lying to me, Who's. Who's out there trying to take advantage of you, and what should you look out for? That would be those sort of signs to run away.

[A]

Yeah, there are. The reason I was kind of smirking is there are so many. And it is one of the main drivers behind Franzi is that regulation. And I'm not a big proponent or, you know, over, you know, fan of over regulation, but it is the wild west in business brokering and especially in franchising. So there's no licensure to become a franchise broker, you know, like real estate, you have to go get licensed and you're registered in the state, you have to take coursework, you have to disclose your commissions and fees and how you make money in franchising. It is absolutely insane about what's allowed. So the three of us, boom, we're all franchise brokers in this moment. You're done. That's it. You don't have to go get registered in a state, you don't have to take a course or an exam. And then you can go charge a 60% commission on the franchise fee. 6, 0. And for anyone that's ever done sales, I mean, outside of insurance, does anyone else know a sales commission that's that high and that incentivized? No, I can't think of anything else that's that, that high of a commission. And so what does that attract a lot of people who are going to say what they need to say to get a huge payday? If they close a couple deals a year, it's 2, 3, 400 grand. Some of these brokers are making a million dollars a year not having to run anything other than, you know, convincing someone to buy the right business.

[C]

It's always the brokers.

[B]

Yeah, it's like a, it's like a timeshare presentation.

[A]

So like, I, I hope some regulation happens and pushes it. At least tell people how you make money and how much so that you know, because half the time they're not telling you. And you think, as the person receiving their services, this person's smart, they're going to help me. This is great. It's free for me. And you know, you know, they're making some money on the back end, but you don't realize just how much the bigger issue on top of it is. They might only be showing you the 15 to 20 brands that they have an agreement with. And so there's 4,000 brands. And you're being shown this universe of 15 to 20 having no idea what's happening out in the background. It'd be like buying a house from a real estate agent that's also the listing agent on the house. And they're only showing you the listings that they are. Also, the brokers work.

[C]

So are they, where do they, where do they sit in this ecosystem? Are they cold calling people? Are they running like webinars? Like, what are they doing to even get in the middle of the transactions? How are they generating the transactions?

[A]

You guys probably both get a lot of LinkedIn messages and I'm sure you've got a bunch of franchise brokers in your inbox saying, hey, Sean, have you ever thought about owning a car wash franchise? Or this? You'd be a great entrepreneur, great operator in this business and a lot of LinkedIn outreach. Yeah, webinars, some of them make YouTube channels, right?

[C]

Telling you how easy it is.

[B]

Wait, is it. And is this Franzi's business model? You get 60%?

[A]

No. So I wanted to build Francis.

[B]

Yeah, I want brokers, except me, they suck.

[C]

I'm trying to disrupt that broker model.

[A]

I'm trying to disrupt the broker model and democratize it. So hey, Instead of the 20 brands that a broker might show you, here's 4,000. Here's all of them. Because we scraped what are called ftds, franchise disclosure documents. It's like what Zillow did with the mls. So now every brand is out here. The good, the bad, the ugly. Which ones have failed, shut down locations, have declining AUVs and revenues, and then we charge a flat dollar amount to the brand. So instead of 60%, it's about half of that. It's flat across all brands and we disclose that up front to our clients. So think of us as more of a franchise fiduciary. So we're, here's how much we make, here's how it works. We have AI that's matchmaking you with the right brands based on all these unique things about you. And then we just help you find the right fit, get financing, get your entity formed, get the right franchise CPAs, franchise attorneys involved, etc.

[B]

What brands would I have bought 15 or 20 years ago that just crushed it today? Like, what can we look back on and, and put together some dots for the mattress?

[A]

Yeah, yeah, yeah. Nothing. Bundt cakes is still one of the best unit economic Businesses there was, I mean, Roark, Roark Capital, is this also kind of hidden behemoth that owns the majority of brands that most people don't realize. They own driven brands, which is Meineke Mako, Take Five, they own Inspire Brands, which is Auntie Anne Cinnabon.

[B]

So Roar Capital, according to Wikipedia, has 1.4 million employees and $37 billion under management. So it's just a huge company that owns tons of franchises.

[C]

So when I'm on their site and I see Dunkin, like Dunkin Donuts, what does that mean? They own some locations or they own part of Duncan.

[A]

They are the franchisor. So Roark's playbook is let's go buy up the franchisors. And now they have that 6% royalty stream into perpetuity across all of these brands.

[C]

So they have Splash Swim School, they got Jimmy John's Dunkin Donuts.

[B]

Are you gonna let, are you gonna let these guys come after the Patel mobile? Everything you worked for, they're coming at it.

[C]

No, everybody needs exit liquidity and this is ours. These guys love Indians.

[B]

Okay, so which other businesses were cool 10 or 15 years ago? Nothing. Bunt cakes. I've never heard of that.

[C]

That was hilarious.

[A]

Choice. You gotta try it. It is really good. And again, the economics are low. Food costs, very the good AUVs. I think it's3.3 million or so. The box is small and simple.

[C]

There's one near me. There's this location could on average would do 3 million in revenue.

[A]

Yes.

[C]

Selling these cakes.

[A]

Selling cakes.

[B]

I'm telling you, it's a bunch. Yeah, I don't even know what a bunt cake is. This looks horrible.

[C]

It looks disgusting.

[A]

Don't knock it till you try it. I'm telling you, they're.

[C]

If they just changed the name from Bundt cake to something else, I would be.

[B]

So in.

[C]

Today'S episode is brought to you by HubSpot. Did you know that most businesses only use 20% of their data? That's like reading a book but then tearing out 4/5 of the pages. Point is, you miss a lot. And unless you're using HubSpot, the customer platform that gives you access to the data you need to grow your business, the insights that are trapped in emails, call logs, transcripts, all that unstructured data makes all the difference. Because when you know more, you grow more. And so if you want to read the whole book instead of just reading part of it, visit HubSpot spot.com okay.

[B]

But nothing Bunt cakes. That one was a Winner. What else was a winner?

[A]

A lot of home services, like Benjamin Franklin Plumbing, Mr. Smart, Mr. Sparky, your electrician.

[C]

Oh, wait, you could just use Benjamin Franklin's name apparently.

[A]

Yeah, the home services business, George Washington's gutter suckers. I mean, you guys talked about 1 800, you know, junk as well. And then Omar Solomon from college hunks moving junk. They did really well. Same thing as one. Very similar to one 800 junk. Obviously, hotels, Marriott Hilton have done incredibly well.

[B]

We had this guy named John Morgan. He's a billionaire. He is a Morgan and Morgan law firm. He kind of like, you know, he's a billionaire. So he owns just crazy amounts of stuff and he's got all these stories and like two or three times he said, I don't know if you remember this, Sean. He was like, yeah, we own some Marriott hotels. Like, he just like made these comments that were fairly offhanded, but it was probably like an eight or nine figure like thing. It was like probably a pretty big deal. I'm shocked at how many like ballers are, are in on this. It's pretty amazing.

[A]

They, I've found like with the podcast, the ones that have more than 50 units open, they don't want to come share what they've done because they're like, this is such a good, good hidden gem. I don't want to talk about how I did this or that it's out there because again, it is substantial wealth creation. I know a guy that owns. When I first met him, he was at 47 McDonald's and he was producing. I want to say it was like 35 or so million a year in cash flow. He's paid like an NFL quarterback. And he told me, he's like, I don't remember the last time I stepped foot inside of McDonald's unless it was one I was looking at buying. But I haven't eaten here, I haven't worked here. I've got one COO who runs the whole thing for me. I've got two private planes because one's not enough, I guess. And he just does whatever he wants and has this thing, you know, cash flowing. I talked to him recently. He's up to 90 McDonald's now. And you know the math on that's probably close to 70 million or so in cash flow a year.

[B]

You're doing a good job of proving your thesis to be true. What? What's the nothing? Bundt cake. But today.

[A]

Oh, but it's like the one that's just taking off. I mean, we mentioned it earlier, but just, you know, the pop up bagel has this cult like following a phenomenal brand, great revenues, simple business model.

[B]

Is food the best, most all the best ones you've mentioned is food. But food seems a little bit more fatty.

[C]

Yeah, exactly. It seems like I would want to own the plumber type of business or like, you know, home services or turf or whatever those things. Naturally I would try to go to the unsexy, maybe recurring, maybe higher ticket, maybe kind of local monopoly. It's not a fashion choice, it's not a trend. I don't need to be able to keep coming to the gym and stay motivated. I don't need people to, to change their, their diet habits. You know. Am I wrong in that? Is that, is that the wrong lens for this sort of thing?

[A]

No, I think, you know, home services does phenomenally well. Food is tough too. Like if you don't get the right brand and hit the right trend at the right time, like it's very expensive, it's harder to get in and out of. But if you find the right one, they're highly profitable. There's a lot more systemization and you know, tools that the franchisors are providing that peer network. But if you're looking as like, hey, I'm the everyday kind of average person that wants to get into franchising and still have, you know, pretty significant upside, you're right. Home services, because you're not building a retail location. You're not constrained by what if I picked the wrong location and now I'm stuck here with this huge investment and I can't move this box. It's you know, million dollar two million investment. But if I own Benjamin Franklin Plumbing or There's one called GarageKings that, you know, I think Damon John from Shark Tank was hyping up at one point. But they go epoxy your garage and like kind of pimp out your garage. Custom shelving and epoxied floors and racking and all this stuff. They'll do 1.3, 1.4 million a year in revenue and very high margin because again, not a lot of variable costs or fixed costs either. And here's going around pimping out garages and cash flowing. Half a million dollars a year, dude.

[B]

Sean, we have this guy named Tommy Mello coming on. Have you ever googled Tommy Mello?

[C]

Tommy Mello sounds like.

[B]

So yeah, he is. He is gangster. Wait till you talk to him. He's cool. I think he's coming on in a couple. A1 garage, A1 garage, I think all they do is garage doors. And he sold a half the business, give or take. I think at a for sure it was in the billion dollar plus valuation. And his garage doors, I think they do something. He shares everything. I think it was like 250 or $300 million a year in garage door replacement.

[A]

That was the thing with garage kings too is like the average unit volume is 1.3 million and they're like, we're not even doing garage doors or other fixtures yet. And that's going to add another half a million, you know, per territory annually. So it's just these like unsexy, overlooked things that, you know, if I.

[B]

But I do think that a lot of people make a mistake there. So I have a friend named Chris who took over his father's HC H vac company and he' scaled it from 10 million to 200 million in revenue. And wow. He was, he was, yeah, it's called Hoffman Bros. And it's in St. Louis now, Nashville. And he was telling me, he was like, you know, all the, he was like making fun of me. He was like, all you tech bros think that it's so cool to get in this business. He's like, you don't know the half of it. What I have to deal with when you're working with a blue collar H vac guy. But what he said was he was like, my competitors, they're a lot smarter now because it's a lot of the young guys have taken over. But he was like, we give our guys iPads and we teach them. Like we literally have a checklist for them. So when you go to the door, pet the dog, we ask permission, say, may I come inside here? I've got these things I'll put on my feet. When you leave, you say something like, hey, I'll get a $50 bonus if you leave me a Google review here. Like just this checklist of things that a lot of mom and pop businesses, they just don't do. And so on one hand I do think that like people like us are like, yeah, it's just an overlooked thing. Like, you're so smart, you went to a good college, just go start a garage door business. When in reality it's way more challenging than that. But also at the same time, I do think that there are a lot of like people who don't sweat the details. Like maybe a little bit more of a militant operator would.

[A]

Yeah, no, that's completely fair. But I think whether it's a corporate job, a tech startup or one of these unsexy blue collar kind of base things. There is no shortcut. It is all going to be hard work. And you know, for me it's that person that's willing to work hard. They're smart, they're capable and they have capital or they have access to capital. Like you can go do this. Most people can go figure this out. It's not going to be this cakewalk and it's completely downhill. But if you got the work ethic and you're willing to do it, franchising is a great way. That's de risk. Then what is this?

[C]

This is, this is the, this, this should be the only thing in the MFM merch shop. This giant flag you put up on your wall, it says we do this not because it is easy, but because we thought it would be easy. The story of entrepreneurial ventures for me start this way.

[A]

We, we get dozens of people that come through. They're like, what's like a good business I could invest in where I don't really have to do anything. I'm like not this. So go. I don't know. I go, maybe buy bitcoin. I don't know. Like I not.

[C]

I'm unique in that I want a lot of money with the least amount of work but I really don't want to take a lot of risk either. So what do you got for me?

[A]

Like nothing Sean. I was thinking of another, I was thinking of another one when we were talking. You're like what other kind of trends? And I think one that we haven't talked about is you know, seniors, aging population, baby boomers. There is a ton of demand, pent up demand right now for senior care that you'd think would be. Everyone else has this idea they're going to go build other facilities and in home care. But we'll like every once in a while for market kind of validation we'll call places up and say hey my, my grandmother, my mom, et cetera. And like oh we, you know, we're, we're booked out or we have a list that's eight months long, 12 months long. And this is in most markets. So there is not enough supply for the amount of demand there is. And so there's another one that's been around for a while. It's called Home Watch caregivers. Total investment 120k to 177k. 2 1/2 million average yearly revenue doing senior care.

[B]

What about funeral homes? Are funeral homes franchises?

[C]

We're just going to vertical sleeves here. Get it?

[A]

The whole thing.

[C]

Cremation walls right now.

[B]

Well, I was asking for a bunch of reasons. One, baby boomers are at that age. But also Sean has this thing called One chart businesses, and a few years ago, he showed us the charts of cremation, and it was just, like, astronomical. How many people preferred being cremated now versus 20 years ago?

[C]

It went from, like 10% to 50% of the market.

[A]

Wow.

[B]

And you said that everything or you said that a large percentage of the stuff that we work with, everyone we know about, is a franchise are funeral homes.

[A]

I haven't actually seen. I'm sure there is one, but I haven't seen a funeral home franchise. But if you're trying to do your vertical play here, there is crime scene cleanup franchises. So you can start there, and it's called Bio1 is one of them. There's a few.

[B]

They literally talked about that.

[A]

Yeah, they're. They're going and cleaning up crime scenes and everything that comes with that.

[B]

Wow, that's incredible.

[C]

Yeah, there. There definitely are franchises for this in both funerals and cremation. There's also the pet. Isn't the pet cremation one like a big one now? It's everywhere. There's no. There's. I don't think there's any space where you're like, is there a franchise? Like, the answer is pretty much always yes. It's just a question.

[B]

Check this out.

[C]

How good?

[B]

Go to aftermath.com Alex.

[A]

Aftermath. Oh, God.

[B]

You know, this business is doing really well. If they bought Aftermath.com?

[C]

This is the crime scene. Crime scene cleanup.

[B]

Yeah.

[A]

Oh, wow.

[B]

This is for the folks out there who have a business that does at least $3 million a year in revenue. Because around this point, that's when you're able to look up after being heads down for years building your company, and you realize two things. One, you've done something great, but you're still a long way from your final destination. And two, you look around and you realize, I am all alone. I've outrun my peers. Which means you're now making $10 million decisions alone, by yourself. And that is when mediocrity can creep in. My company, Hampton, we solved this problem by giving a room of vetted peers of other entrepreneurs who are going to hold you accountable, call you out on your nonsense, and help show you the way. Because the fact is, is that there's only a tiny number of people in your town who know what you're going through and who have been there, and they're hard to find the biggest risk is not failing. You have a company and it's working, you're going to be fine. But the biggest risk is waking up 10 years from now and saying, shit, I barely grew in business and in life. And for people like you who are ambitious, wasted potential and regret is what we want to help you to avoid. We have made so many of these groups and we have a thousand plus members. And I know this stuff actually works. It can change your life. It changed mine and I know it will change yours. So check it out. Joinhampton.com by the way, you said you scraped the data.

[C]

So they have these disclosures and the disclosures basically have to say the good and the bad, right? So it's like, basically there's a required set of financial reporting that these franchises have to do, similar to like how public companies have to report their numbers, but almost more structured. Right. Because you specifically, I've seen this with MLMs. MLMs also have to publish all of their data about how their, you know, whatever their associates are doing. And it's basically, you know, you look at this table and it's like, well, so 98% generate less than $1,000. And then after that, you know, the rest of these people do well. And so all the number, all the data is very structured because they're legally, you know, they're legally required to do that. Is it the same thing with franchises? Like, can I go get very clear pictures? Because I tried, I looked into this one activity place and I was like, oh, this is great, this is gonna crush. And so I was thinking about buying a franchise for my sister, for my trainer. Like, you know, a business in a box that they could run. And they were so evasive. I shouldn't say evasive, but like, it was not easy to just get clear answers to like three questions, you know, what is the range of revenue to expect? What is the range of profit to expect? And how many, how many of the locations are, you know, profitable or unprofitable? Like, you know, is the average, you know, is it 2% of the locations are unprofitable or, you know, 50%? And you know, just general questions like that. It was like, well, you know, it'll all be in the packet. And I was like, it's not in the packet, you know, because they're not required to report in certain ways. So I guess. What have you found in scraping all this data?

[A]

Yeah, so every brand is regulated by the ftc, the Federal Trade Commission. They are required to have this 200 page legal document called an FDD. It's a franchise disclosure document and it's very structured to your point, but kind of like a public, you know, company's filings. There's little tricks and adjusted EBITDA and you got to read 30 footnotes to figure out what the hell is going on. Brands are doing the same thing. And so we help people navigate those. We. The reason we built Franzi again was just like Zillow. You can go here and see what's this going to cost. Is there bankruptcy, Is there litigation? How many have shut down? I tell people to go look at the item 20. It's where they show how many units they've sold, how many are open and how many stores have shut down. Because it's the best way to go. See, is the system relatively healthy? Are a bunch of people selling? Are they actually opening the units that they've sold or is there a huge delta? It's a good indicator of do they have their, you know, systems and their together basically to go sustain this and do this well. And then the best validation is just go talk to other franchisees, people who are actually doing it, who are in it. And what you described is a red flag. If a brand is not willing to share certain things that they're allowed to share, it's a red flag.

[C]

What's the best practice for contacting? Is it just you cold call and you say, hey, I'm looking into franchising in a totally different territory?

[A]

Yeah. I look at it like hiring someone like, you know, you ask them for their references and they're going to give you like their mom and their best boss they've ever had and they're going to say all these great things. But then you should go talk to their bosses or employers that they didn't give you, but they mentioned in the interview. And that's really how you get validation. Same thing here. The brand is going to serve up their top two performing franchisees. They're going to say all these great things and you're gonna feel like, I have conviction now. You should go on LinkedIn and find two or three others that they didn't list and just go, you know, cold outreach. People will, if you reach out thoughtfully, they will spend 20 to 30 minutes with you telling them, you know, you the good, the bad and the ugly.

[C]

Let's say you got a 20 minute phone call with them and you got to ask three questions. What are the three questions you would ask one of those other franchisees?

[A]

Yeah, immediately, you know, would you do this again? Knowing everything you know now. And that should be pretty telling because they're either like, knee deep in it at that point. Like, this sucks. I'm spending way more time. I've lost money. This is brutal. Or they're like, in the hard part still. They're in the J curve and they're coming out. They're like, I see light. I'm super bullish on this. And, yeah, I would do this again. Or they're killing it, and, you know, they love it. So, like, that question, usually you get a lot out of, But I then would ask about support and what it's like working with the brand. Because a lot of the reason you're franchising versus going on your own is, is the team actually providing values at 6% worth it, or would you have been better off doing this on your own? And so that's a good indicator of should I franchise this or not, or be a franchisee of this or not? Lastly, I'd ask how much money you're making? How profitable is this? Is it what you expected? Is the juice worth the squeeze? Because they might be making some money, but it was a lot of investment. It was a lot of time for something they could have produced in the stock market or in real estate or something else.

[C]

I'm just looking for the pain in their voice. Regardless of what they're saying. I just try to detect the underlying pain that I can sense.

[A]

Well, the good thing about doing this, these validation calls, is, yes, while they have an interest in the brand, you aren't going to compete directly with them. You aren't going to add necessarily value to their location. And so they have no incentive to protect the brand and lie and be like, sean, I would do this in a heartbeat all over again. Because it doesn't actually directly benefit them. So you are going to get real, raw responses most of the time because they don't want someone else to go make if it was a mistake. The mistake that they made. They have, you know, they want to help you out. They're hopefully not vindictive people for the most part. And if they're doing well, they're going to be happy to share that, too.

[B]

This kind of the. The franchise industry seems kind of cool to us as content people because we have these guys that are kind of these cowboys. They're like these Midwestern or Southern guys who are really wealthy. And, you know, it's like that meme of, like, when you get on an airplane, if you see a guy with, like, baggy blue jeans and loafers and like a fat Rolex that he's like reading like, you know, like prospects reports just like via. On paper, you know what I'm saying? Like, do you meet a lot of people like that? Because that seems like. It seems like there's like a lot of really cool stories here.

[A]

There are so many. And that's part of what we're doing with our show is like, how do we highlight these? And it's trying to just get them comfortable to even tell because it's such a. They've got such a good thing going. They don't want to mess it up. And you attract more private equity than is already flooding the franchise model, you know, today and is only growing. But yeah, there is a lot of stories like Cal's where five years ago they weren't doing this and now they've got a business doing a couple hundred million a year in revenue. And that's where my. I flipped. I used to be, again, franchise model hater and I should just go do this myself and everyone should just go do it themselves. You can extract 6% and, you know, then you. You realize how many corners, not that you're cutting, but just how much value is created in that system and bulk purchasing power, branding, etc. I've become a believer for the right person and the right brand. I mean, there's a lot of ifs still and things you need to check off and make sure it's the right fit. But yeah, there's a lot of these cowboys out here that are kind of unassuming and running massive businesses.

[B]

One of my favorite franchisers was the dad in the movie the Blind side. Do you remember that, Sean?

[C]

Wait, what was it? What was your franchiser?

[B]

The joke in the movie was Tim McGraw's character and it was based on a real character. And he ended up selling this for nine figures. But he was like, you know, the kid with debt brag. He goes, My dad owns 50 Taco Bells.

[A]

I was gonna say it was like Jack in the Box or Taco Bell.

[B]

I think it was Taco Bell at Domino's Pizza or Pizza Hut. Are they the same, like Yum brands?

[A]

Yeah, Yum brands. Kfc. No, it's Pizza Hut. Pizza Hut, Taco Bell and kfc.

[B]

Yeah, like bragged about it. And I thought that, like, in my head that has been what the franchisor is basically a. A franchisee is an ex high school quarterback who married the high school sweetheart and is a good guy with kids. And he owns about, you know, 10 KFCs and three Taco Bells and he brings it to school for his kids to make the class like him.

[A]

You should, you guys should get, if you, if you can get them on is. I think his name is Greg Flynn, but it's the Flynn Group. They own thousands of franchise locations and their system, their bit, this is like a family run business. They're, and don't hold me exactly to these numbers, but they. A report came out in the last couple months, the Flynn Group did, I think it was 6.3 billion in revenue last year. Owning franchise like they're franchisees. And so that was more revenue than kfc, Domino's, Popeyes, like huge brands. This group of franchisees is doing more revenue than the whole parent, the whole franchisor of, you know, very well known, very large, large brands.

[C]

Their homepage, when you go to the website, the hero banner is just onion rings falling from the sky.

[A]

Just the first thing. Who doesn't want that? Who doesn't want onion rings falling from the sky?

[B]

Now that I think about it, there are so many more ballers than I thought. Sean, do you remember Lorenzo Fetida, the guy who is the founder and CEO of the ufc? Well, he came from a wealthy family, so they've been ballers for forever. But before he was the CEO or founder of the ufc, he was the CEO of Gordon Beersh, if you remember those guys. It's a brewery, it's a franchise, I believe, but it's a brewery and bar is all it is.

[C]

I didn't know that. I thought they were like hotels in Vegas.

[B]

They were the mom and dad. The family was rooted in that. And then also for some reason he, in 1995, he bought controlling interest in the Gordon Beers Brewing company and I think they had franchises.

[A]

Here's an interesting one I saw the other day. It was there are more millionaires generated from franchising than all combined players ever in the NFL.

[B]

Dude, you made this bold claim and I wanted to fight you about it. Now I'm totally on your team.

[C]

My first mentor in college, when I was in college, we entered a business plan competition and we were trying to win and they assigned you a mentor. So the first team they got matched with this guy who was like biotech entrepreneur, sold his company for like $4 billion. The second team that got up, they got matched with the guy from mint.com Aaron, Pat, whatever his name is. And you know, so he's a tech entrepreneur, you know, hundreds of millions of dollars. And they were like, you guys are going to be with Michael. And we Were like, who's Michael? And they're like, michael owns the number one. And I'm like, what is it going to be? He's like, largest chain of Applebee's in North Carolina. And I was like, oh, womp, womp. And so I was expecting.

[B]

I was like, michael pulled up at a Rolls Royce.

[C]

We exactly. We go outside. Michael's got the best car. Michael's got the freest schedule. He's like, I'll meet whenever you guys want to meet. This guy owned, I think, like 13 or 30 Applebee's or something like that.

[A]

And I know exactly who you're talking about. I'm in Charlotte. It's Michael. I didn't even know his last name. Yeah, that's right. Yeah.

[C]

He was such a good guy and he had, like, such a. His story was so cool. And it was kind of inspiring because up till then, my frame of like, well, if you want to make it as a entrepreneur, like, you need genius invention. And here was this guy who was clearly living this wonderful life, who was super successful, and what was his genius invention? Like? He basically was just like, I will take, like, what to me was the most boring food franchise you could.

[B]

Like, literally.

[C]

Applebee's would have been like. If I was coming up with the joke, that's what I would have said. And I just noticed on this Flynn group, there is that on their timeline, it says 1999. Our journey begins with eight Applebee's. And now they have 5,000 plus units or whatever. They have, like, you know, thousands of units. And they're like expanding into New Zealand as territories because they're just like, you know, dominating the whole globe. And I just remember, like, kind of that guy broke my frame because he really had, like, built this wonderful life without doing what felt like, you know, pulling a rabbit out of a hat or catching lightning at a bottle and coming up with the new invention, the new product that just, you know, like, sets the world ablaze. And, you know, there's. Because there's so many different ways to win. It just kind of depends what you're. What you're suited for, you know. He was a great executor, he was a great manager, and he was great at building up and developing people so that they could run the locations. And that's what he needed to be great at. So it's not like it was so easy. He didn't do anything, but he was great at those things. Rather than coming up with, you know, the game changing concept.

[A]

Sam, you asked me earlier, like, why why don't you just go open 100 of these and why are you building a tech company? And what Sean just said is the tempting part of it. It's like all these tech entrepreneurs I meet, I think they sound smarter, they sound more sophisticated than the multi unit franchisee people I meet, they're working way harder. But maybe we got it all wrong because 90% of them go to fail and they're wasting all this hard work and talent and brain time on this thing that has such a small chance of outside success. And then I'm meeting the wild west cowboys on the plane and they're like, yeah, I just followed the playbook. Not again. Not to make it sound like it was all a cakewalk, but they're like, yeah, I just followed the playbook. I am good at finding real estate and making deals with the landlords. And I started with one and now I got 50 and I make 20 million a year and I don't really.

[B]

Yeah, but look, the grass is always greener on the other side. As someone who worked in fast food and worked one of these jobs. Yeah, you don't want it. You didn't want to hang out with me, like, you know what I mean? Like you would not have wanted to like manage to me when I was a kid. And so like there's. The grass is always greener. It sounds so my brother in law owns a moving company and I hear the numbers and I'm like, that's awesome. He's like, dude, I had to fire a guy the other day because he was doing heroin.

[C]

Yeah.

[B]

Like on the job. Like so like, you know, pros and cons. But I tell you what, there seems like a lot of pros right now. Where do you, where do you live?

[A]

I'm Charlotte, North Carolina.

[B]

Are you building the company there or remote?

[A]

Yeah, building it in Charlotte. We have no, we have, you know, team members in South America, Philly, but the majority of us are here in Charlotte.

[B]

How much did you raise?

[A]

We raised three and a half million in our seed round to get going. We launched January of this year. We're up to 35,000 unique visitors a month coming to the site and starting to build out a second product within. Our goal is to basically salesforce, but for the franchise model. So we help you buy a business, we help you operate your suite of franchises or your portfolio of franchises and then we help you sell those back on our, our marketplace.

[B]

What's your revenue range now? Have you crossed eight figures?

[A]

Not yet, no. We're, we're less than 11 months in. So we'll do, you know, seven figures this. This first year, which for a startup in the first year, we're. We're happy with.

[B]

Sorry, I thought you said you'd start a while back. I didn't. Maybe like you seven months said you don't have. You'll have 10 million.

[A]

I was like, wait, where are you finding these companies? Because I want to invest in them.

[B]

This is pretty cool. I. I didn't know what we were getting into when we got into this. I thought, A, you were just going to like P, and in which case that was it going to be great. And you didn't do any of that. And B, I was like, franchises, I don't want to hear about this. And it turns out it was actually one of my favorite episodes. Like, this is the type of people you get to hang out with and the stories you get to hear. And frankly, you. The type of personality you have. That's. These are some of the stories that Sean and I like uncovering. Maybe people that aren't in the SF New York scene, which Sean and I both are in. And so it's really fun to, like, hear your perspective on stuff. It's pretty cool.

[A]

Thank you. That goes a long way. I know you guys see a ton of business models and people, and I felt the same way. And sometimes I still even feel a little crazy about what we're doing. Is like, is this something that can really help people? And, you know, I want them to have the same entrepreneurial experience I had. They just might not want to do a tech company from scratch. Like, how do I show people and educate people that this is a path if you want to walk down it again. I know I use a. Probably overuse analogies, but when you think about, like, the financial housing crisis, like, people are who's to blame? Is it the banks? Is it the administration? And I, you know, using that as an example, banks start originating a ton of mortgages because Fannie Mae and Freddie Mac said, we'll take the risk off your balance sheet. And so of course the bank's going to go originate a ton of mortgages. And was it unethical? Yes, but their incentive got taken away. And I look at franchise brokers the same way. It's like, it's not real. Is it their fault? I don't know. Like, no one's regulating them. They're, you know, everyone else is doing it, and so there's no cap on it. So they're going to go sell businesses and make 60% but my thought is let capitalism do what it's good at and level the playing field and democratize things, and hopefully that's what we're able to do here at franzi.

[B]

Well, sick dude, great stories. You're a great guy. You got a great goatee. Great podcast.

[C]

This is it.

[B]

That's the pod. I feel like I can rule the.

[A]

World I know I could be what I want to.

[B]

I put my all in it like.

[A]

No days off on a road, let's travel Never looking back.

[B]

All right, everyone, if you're listening to mfm, you probably want to make more money. Well, I want to tell you about a podcast you might want to check out. It's called the Sales Evangelist, and it's hosted by Donald Kelly. Each week, Donald interviews the world's best sales experts who share their strategies to succeed in sales. They share actionable insights and stories that will encourage challenge and motivate you to hustle your way to the top. If you're someone looking to raise your income level, check out the Sales Evangelist. You can find it wherever you get your podcast.