← Unemployable with Jeff Dudan
Unemployable with Jeff Dudan
Family-First Wealth Through Franchising: Franchise Secrets with Erik Van Horn #208
01:31:55
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- [00:00]
A
Welcome everybody to the unemployable podcast. I'm Jeff Duden. If you live on the grid in rural South Dakota, yet somehow has managed to be a successful entrepreneur in multi unit franchising as a franchisee, become as successful as a franchisor, and is respected as an advisor to emerging franchise brands. Plus for good measure, hosts one of the longest running and most successful podcast in franchising called Franchise Secrets and a franchise, a Facebook group by the same name. Your name can only be Eric Van Horn. Welcome.
- [00:38]
B
What a great intro, Jeff. That's. That's me, man. Yeah, I'm. I am. I'm out in the middle of nowhere. I'm in Timbuktu, South Dakota.
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A
Is that really the name of it?
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B
Well, the, the actual name is Spearfish.
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A
Okay, cool.
- [00:56]
B
It's a town of like 10. It's a town of like 10, 000 people. I graduated high school here. I've been here since first grade. Moved away for 10 years and eventually came back. But like where we live now, we live on an 80 acre ranch and on a dead end on a gravel road. We got elk and mountain lions and deer and turkey and all the farm animals. And so that's like, that's my little life out here in, in the middle of nowhere. And it's, there's, it's like not mountains like Colorado, but they're hills. And so there's like a, a hill behind me that take about hour and a half to get to get to the top from my house. So, you know, there's some elevation there. It's a beautiful area, it's a fun area. But. But you're out there in the sticks.
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A
Yeah, I've heard you say many times that you chose family first and business integration. You're. You're a family man that is a businessman second. How does being out where you live help you live that life?
- [01:58]
B
I was just talking to somebody about this the other day. Who? A mutual friend of ours. Not you and I, but a friend that I was talking to who chose business first and his family is going through a very difficult time right now, and he's gaining back his family. And I was talking to this friend of mine. I'm like, it just reminded me that I chose family first over business, which meant like in real terms, less money, period. Less money. But to your, your question, like, being out here in South Dakota, there's no keeping up with the Joneses. There's people out here that have, you know, hundreds of millions of dollars net worth that are in our Our little town. But you wouldn't know who they are. You wouldn't know that they have that kind of money. I think people think people like that have a couple million dollar net worth. They have no idea how much money they really have. But you're not like, I'm friends with these people and we talk about business and money and things like that, but in terms of like everybody, all my friends here, they don't have a clue of how much money I have and really what I do. And it's so fun that way because there's, there's doesn't matter what you drive and you know, it just. There's no keeping up with the Joneses out here. So I would say that makes it really easy for me. So when I say I'm family man first and business is second, the cheat code is to live somewhere where that's easy and, and, and it's easy to do that here. And I, and I knew that, but that was intentional because I felt myself getting pulled into having more stuff and more things and my wife could care less about things, so I purposely moved back here. And that was one of the reasons to be in an environment where stuff was not as important.
- [03:53]
A
You have three kids and I can only imagine the benefits of living in a small town. We're connected. We've got the Internet, we've got everything and more than we could possibly want to get exposed to, especially as kids growing up. And you want them to have educational opportunities and you don't want them to be, you know, like mushrooms in the dark. Right? But like with the Internet and then with the, with the experience that you get to have, somebody said to me a long time ago, and we, I raised my kids on a small mini farm. We bought some acreage and I literally rented a backhoe and mowed down 53 small pine trees. And with that backhoe, I built the footer to my house, I built the fence, I built the barn. I did all that. I was a contractor early in my life and somebody said to me once, like, your kids are, are like dogs in as much as they need time with their nose in the dirt. And that is just like there was, you know, huge tract of land next to us that was undeveloped. My kids. Remember the show Moonshiners?
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B
Yes.
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A
Yeah. My kids tried to build a still in the creek on that land. They put, put up tree stands and hunted deer on that land. We rode, we had horses. We rode horses on that land. And I have to tell you, man, I, it just played such a huge Part in their development, using their resources and touching all five senses and growing up that way. And it's difficult for people, I think, today to get their kids that same experience.
- [05:24]
B
I think it's almost impossible. They have to. They have to force. They have to force it. They have to, like, be intentional to make it happen. We have to be intentional in different ways with our kids. But, like, they're here, and we have 20 chickens in the chicken coop, and we have horses. We have a rabbit and cats and dogs and. And all of that kind of stuff. But, like, the horses need water. They need. They need water. They need hay. They got the back part of the property. They got the hay fields to go in certain parts of the day or parts of the year. But you need to move them around. They get. They go from the horse pen to the pasture to this area to that area. They need shots. They need deworm, they need all of these. The chickens need fed every day. The coupe needs clean. Like, so they. They. They've grown up doing that. They don't know any different. And when you were saying they dirty hands, get your hands dirty. Like, these girls come in with dirty hands. Now, not all my girls like dirty hands either. Like, one of them comes in and she's washing her hands all the time. The other one doesn't want her hair to get messed up. But, like, they're out there working and. And they love it. And it's just part of life. And whether, you know, taking care of the dogs or the chickens or pulling weeds or whatever it is, they're out there doing that. But I think part of it is they see me out there doing that and having fun. Now, I don't want to paint the picture like I'm out there working the land all the time because I have. My dad actually does a lot of work out here, and it's because he wants to. I pay him a good amount of money because it's going to come back to me someday anyway. But I give him a good amount of money, and he comes out when he wants, but he mows it. He takes care of all the. All the fruit trees and berry bushes and fences and all this stuff. And he does it because he enjoys it. And there's certain things that I enjoy. I'll get in the bobcat, I'll plow snow, I'll push dirt around, I'll move gravel around. I'll haul stuff here and there. And then I get the kids doing that kind of stuff, too. And it's so rewarding to See, you know, the little girl, you know, nine years old in the big bobcat skid steer, picking up the flower, the flower pots and moving them from the barn to the house and you know, just doing different things like that. They've been driving, you know, don't let them drive four wheelers, but the defender, the side by side, they've been doing that since like, you know, as long as I can remember. So driving vehicles is easy for them and it's just, it's just so much fun. But the challenge is the other side of it. Like you can get so ingrained in your own little world here and it's a little cocoon. There's a whole world outside that. If they don't see it then, then shame on me for not exposing to, to the real world. Because we don't live in the real world here. And it doesn't matter what your world is. You could just be live in suburban America and that's your neighborhood. If you don't expose them to other parts of the US or the world out there, they're, you know, that's on you. So we've really taken the approach that they are growing up here in South Dakota, but they are not going to be like small minded South Dakota girls when they're grown up. We want them to understand what the real world is like, some good things and bad things about the real world out there. So we're pretty intentional on that aspect of it as well.
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A
Living out there and giving your family that experience. You've also created a great career in franchising. Is franchising the greatest wealth creation business model ever invented?
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B
For sure. The greatest one that I know of. Yeah, I mean, Elon might differ and might say something different, but Buffett might, Buffett would say yes, because of Dairy Queen. So I mean, I'm going with Buffett over, over those boys. And it's the, it's, it's the greatest one that I've seen and I have a lot of friends, I have a lot of friends have made a lot of money. But then you get into these franchising conversations and you and I have a lot of friends and they've made a lot of money in franchising and it's like there's so much money to be made, wealth to be created, the franchisee side and the franchisor side. Jeff, I was just talking to a friend of mine. No, yes, a friend of mine. Quick story there. He sold half of his franchises that he bought about seven years ago for about $10 million and kept half of them. That's a good, that's a good thing.
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A
Yeah.
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B
Somebody else paid me for a consultation. He's like, Eric, you helped me buy this one franchise, you know, about seven years ago. I'm at a crossroads. I don't know what to do. I want to pay you $1,500 for an hour of your time. Said, okay, let's go. And I want to, you know, just to really be able to help him. And he's, he's probably going to sell his 10 franchises that he owns, no, seven franchises that he owns right now for $7 million. And he was just wanting perspective on timing and, and some different things. But you know, that's as a franchisee and that's after. He's been making money, lots of money for many years, having a $7 million payday and, and, and that's, and that's really good. So is there money to be made in franchising? Is that the greatest we building tool? It certainly has been for, for me, even though other people might, might differ.
- [10:55]
A
Yeah, I built a franchise brand over some 15 years. Really. I, I was in the business direct for 10 years before that, so 25 year run altogether. I couldn't have conversations with franchisees that I can have today about the ability to exit and private equity, something that was really created in its current form in the mid-90s. If you wanted to sell a company before then, it was a strategic buyer and you know, people, you know, somebody figured out that you could play this monopoly game with companies and you know, the arbitrage of, of multiples and, and high finance and get a, get a platform company and then start, you know, doing acquisitions. And now there's a way to manufacture additional value out of a, out of a single asset or a subset of asset based on, based on finance. And franchising became popular with private equity firms maybe in the, oh, I don't know, early, maybe 2000, early late 2005, 2006, 2007, you started to see some of the big platforms turning and then it expanded out into the smaller individual franchisors and it really has become. I had one private equity guy say, look, there used to be a dozen private equity firms that knew anything about franchising, and now there's like 400 that are trying to get deals out there. But what's happened is to the benefit of our franchisees, private equity has gone through the brands, into the boxes. And you know, you hear some really incredible stories in Food about people that operate hundreds of Food restaurants wants Planet Fitness. I know an operator that owned 110 Planet Fitnesses. And those are, you know, you add up five or six hundred thousand dollars of EBITDA times a hundred. I mean, that's a big number. And they'll give you a big number. So there's a, there's this opportunity. And, and I think, you know, when you talk about the greatest wealth creation business model ever invented, it's because, I mean, to get into a franchise, a service franchise, it's 50 grand plus your operating capital and, and your, maybe your truck and your equipment and all that kind of stuff. But literally it's a game that almost anybody can play. And you know, one of my basic tenets in life is you have to succeed in the opportunity that you're in to get the next opportunity. But if you get into a painting franchise or a restoration for any of these franchises that are low cost, no office to start those types of things, no big lease exposure, and you just put your muscle to it, you can start the beginnings of a portfolio of assets. It could include real estate, other investments, operating partners, all these types of things. And you can really play this game that anybody can enter and anybody as long as, if you're willing to work hard and you're willing to be successful in doing it. So as you mentioned, you're, you advise people who are at the franchisee level and they're putting these deals together, like what are you seeing and what, what is happening where some of these people you're talking about are able to, to exit? What did they do to get there? And you know, how did they put together a group of, a group of franchises that was actually appealing and attractive to a buyer like that?
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B
So they, this was an emerging brand. So this, these two stories I was telling you about, it was an emerging, same emerging brand about seven years ago, less than 20 open locations. And they got involved early. They bought multiple units. One of them bought quite a few, open quite a few unopened territories with a plan to open them. One of them bought, I think three, so kind of two different plans. The one that bought quite a few of them, opened all those up and, and then bought and built out his entire market and then started buying. It wasn't an acquisition spree. He was buying out other locations in other, in other markets. The other guy that started with three would just buy another territory here, another territory there and open them up. And he just opened up one last year. And so he's still kind of in that slower acquisition, you know, just Opening things up. He hasn't, he didn't buy any of his own, but I'm sorry, he did not acquire any from anybody else. But they both found themselves in this place where like, okay, there's multiple buyers out there within the franchising network. So the network's getting, getting pretty full. There's still white space, there's still opportunity to open up new locations. But there's, there's probably three to five active buying groups out there. Two of them have money behind them, private equity or high net worth individuals that have money behind these buying groups. Some of the buying groups are just themselves. Some of the buying groups are buying in, buying franchisees out, but they're letting the franchisees roll into that portfolio that they're, that they're acquiring so they can still have some, some, some, you know, exposure to the brand. So there's multiple different buyers out there and they've been in acquisition mode for probably three years in this particular brand. So his question was like, you know, this other guy exited, he got about $10 million of cash, kept half of his location, still cash flowing very well, not involved in it day to day. And this, the guy that I was advising is like, when should I, when should I sell? And, and I said I'm the guy that sells too early. Like I'm the guy traditionally that is sold too early. Things will probably go up after I sell. But I'm always okay with that because I'm not on the decline. So that's just my, like what I've done in the past. So then before I got in the call them, I reached out to some of my key contacts in this particular brand and I'm like, what's going on? And they're like, multiples are changing. Multiples last year were this and now they are 1x lower than they were last year. And so, and, and they see that as a trend moving, moving forward. And so I told that to this guy and I thought it would be happening for a different reason. The multiples were decreasing. Um, but it's happening for a reason that I, that I didn't think about. And it really has to do with management of the, of the company versus a main leadership, C suite leadership of the company versus too many of these buyers that are just wanting to hold off on buying and wanting to operate. I thought they were buying too many of them and they just wanted to sit on the sidelines for a little bit and optimize what they had. That's not the case. Leadership at the corporate level does not have the trust of the franchisees right now. And so that's causing the buyers to be less, less enthusiastic. So that's kind of what's going on there. But still, multiples are like more than, you know, an average. If you had an average location of your own store without any branding, the multiples are still higher. And I know this, you get two people competing on one store, that multiple is going to go up. And what's interesting about this, this one, like, you know, he's in a good market, Charlotte, you know, that's a good market and, and he's in, in, in that Charlotte market. And that's a very attractive market and it has white space. There's opportunity to, to open up more locations in this particular brand. And so just with conversation, like you've got gold here. It's not like one location in south, in Spearfish, South Dakota, you know, that's not going to demand a higher multiple, but you got a group of them together with opportunity to grow. That's very attractive to a buyer. And, and so I bet he gets a higher multiple than what is, is, is, is an average multiple that these things are selling for right now.
- [19:04]
A
Yeah. Eric, for the benefit of the audience, can you share just an overview of what you do and who you help?
- [19:13]
B
I've been in franchising for 20 ish.
- [19:15]
A
Years.
- [19:17]
B
On all sides of franchising, franchisee, franchisor, franchise consultant, a lot of time in franchise development and then just, you know, creating content out there in, in franchising today, me and my three other business partners have a company called Front Street Equity Partners. And, and we all have kind of our key role to play in that, in that company. What we do is we work with emerging brands. We're part fso, like to say we're a non traditional fso. We're, you know, where we will help brands sell franchises and, you know all about that. We do that where we are just very aligned with the brand and then we help these brands from an advisory standpoint. We help them go from where they are to a successful exit. And, and we, we want to participate in that exit with the brand and that's where we're kind of different. We don't want to make a lot of money along the way. We want to just get in the trenches, get our hands dirty, our fingernails full of dirt, grinding it out with them. And, and we can't take on very many brands each year because we are so involved with them. And then we want them to have a successful exit so that's what, that's what we do at. At Front street. And each of us part different things. Just other things are kind of relevant. You know, I, I've got a mastermind for franchisees and a mastermind for franchisors, and, and, and it's really fun helping franchisees out. Jeff. I haven't. I'm still a franchisee and, and I think I'll try to always have some type of involvement as a franchisee because it keeps me current and with what's going on as a franchisee in that franchisee mindset, working with the franchisors. So I, I got a group of people that I've had since COVID hit. I started that group and it's been. It's been fantastic. So I kind of do a little bit of. A little bit of everything. But my main focus is Front Street.
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A
Every day they say one franchisor goes in business and one goes out of business. There's about 4,000 actively growing brands. I don't know if that number's updated, but that seems to be the consensus. And then 75 to 90% of brands fail within 12 years. What it, what is the challenge with emerging brands and what are the pitfalls? If you had an emerging brand, you were advising somebody to franchise or not franchise their business today, what would you tell them that some of the challenges are going to be for them as a brand?
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B
Yeah, like we so be so kind of two parts of that. One, before they're a franchisor and then one, they are an emerging franchisor. We try to talk them out of franchising. Like, you know, we have. I did two podcasts with, with Jeff her, and it's like questions to ask yourself before you franchise. Because there's way too many people out there that are starting franchises because when they shouldn't be, they. They go to somebody and they're like, can you help me franchise my business? And this person's like, absolutely. That's what I do. That's my business. Help you franchise your business. And they don't ask all the hard questions. I'm like, really? Are you ready to be a franchisor? And we like to talk people out of franchising. We say the first rule of franchising is never, never franchise your business. But no, let's say they've done that. They are an emerging franchisor now. They've got their FDD and they're starting to sell franchises. And they are. They have franchisees. So that's an emerging, emerging franchise brand. I think some of the big pitfalls are they, they don't know what it's like to work with franchisees. They're used to working with employees and tell them what to do. And if they don't do what they're supposed to do, or vendors or subcontractors, then they're gone. With a franchisee, you can't just tell them what to do and then fire them if they don't do what they say they're going to do. And so there's just this mentality with founders that go into it with the complete right intentions but now they're having to deal with that franchisee franchisor relationship and they don't understand that dynamic. And, and then they might not have the system built to be duplicatable for franchisees, for franchisees to be successful. And, and they, I don't think they put enough weight on their first 10 franchisees being as successful as they can be. I think emerging franchise, emerging brands, the founders and their team should just be hyper focused on those first franchisees on one who they bring in to make sure that they're the right fit culturally and they have what it takes to, to be successful. Like if you need to get out there and be the face of your business, need to be the mayor of the town and you're selling it, like you can just do this passively or semi passively, that's probably not going to be the most successful launch. So bringing in the right franchisees early on, because that's your base and you'll probably get some of them wrong. Like most emerging brands are going to have some of those first franchisees wrong. No. No matter what. But then as a franchisor, get your hands dirty and do whatever it takes just because the franchise agreement says you need to be out there for a grand opening or whatever. The thing is, maybe you need to be out there before the grand opening, during the grand opening and after the grand opening. Like whatever it takes to be successful, that's what you do as a franchisor. That's the thing that the franchisee should be doing. Whatever it takes to be successful. If I am not hitting my numbers to have a successful grand opening, then maybe that's a hundred customers that first day or whatever that metric is. And if you're on pace for 50, then you need to double whatever you're doing to get customers in the door from a pre grand opening standpoint. So it's just that whatever it takes mentality to help those franchisees be successful and I think the other thing is kind of goes along the lines of these emerging founders not understanding franchisees. They just don't understand franchising yet because they've just never done it. So why would you expect them to understand franchising is if they've never done it before? So I think it's so smart and wise for emerging brands to immerse themselves in the franchising world, attend conferences like Springboard. Listen to your podcast, Jeff. Listen to, you know, read your book. Listen to really smart, successful people that have been there, done that, have calls with them, whatever it takes.
- [26:10]
A
Yeah, I'll tell you, one out of every eight people in this country works for a franchise brand. It's incredible. Like as an employee of a fast food chain or anything. Like, like almost 9 million people work in the franchise industry. It's, it's incredible how pervasive it is, yet there's only a small handful of universities that have any classes on it whatsoever. And you just, there's nowhere to go to, to get the truth. Now we have a great trade association called the International Franchise association, but even there you show up, there's 5,000 people. You go to the panels. They're vendors on the panels in a lot of cases. So are they telling me what I need to know or to, to, to build this aspect of my business, or are they telling me what I need to know to hire them? So it's, it's very difficult and there's a lot of monetization that goes on inside of that. And you know, I had, I had a reason recently and I had never done it before. Interesting. But like, I vote. I've operated for franchise brands or platforms specifically, and I've had somewhere over 700 franchisees and maybe 16 to 1800 units or something like that across that. And, and I met every single one of them personally. Every single one. And I can't pick them.
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B
I can't pick them.
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A
I mean, you know, like, I guess, you know, if I could do a work, if I could do a Chick Fil, a working interview, go work the Henny for six months and go work in the front and you work in the, so you have to go and you work for six months with Chick Fil Filet. If you can, you know, 10,000 people on the waiting list. You go work there for six months. Then, you know, then you go sit at home and you wait to the phone to ring. And then they'll call you maybe, or maybe never. And when you pick it up, they say, you got three days here's the three markets. Pick one and you got to be there. And then you go, well, we don't have the opportunity to do that in this home service industry. Like, people just aren't going to do that. So I mean, you get some of the most successful people, they look great on paper, they look good from a resume perspective, from a financial perspective. But yet the things that you might have to do to operate a home service franchise, they haven't had to do since that job in high school. And you know, at some point somebody's got the somebody shirt on. And when somebody needs to do something, that's you, you look down, you read the shirt and that's you. And you got to do it. And you know, or you can hire a bunch of people, but that doesn't always fit the cash flow model. So at the end of the day, there is a path business, you know, I share with these people. Businesses, people and math. Okay, you, your business will be a. Every business has a dollars per. So the more people that you can get on board aligned with your business, employees, subcontractors, referral partners, stakeholders, suppliers, vendors, all of these people, the more people that know like and trust you and know what you do, the bigger business you can build. So if your leadership lid says I'm kind of a jerk, I can only get five people that will tolerate me to help me build this business, well, then your business will be five times the number of dollars per person that that industry is. And you might build a $500,000 business. Then you get somebody that is like the mayor of their town and they go out immediately and they follow our plan and they have 100 conversations with 100 of the right people. And 60 of those people love them and start referring them work and people to work for them and all that kind of stuff and they just take off. So there's the people piece of the business of any business that matters. If it's a retail location where people are going to walk into you, maybe it's less, but in our businesses it's material. And then there's the math. And the math is the path. The math is the path. Because the, you know, good managers use words, but great managers use numbers. And every business has performance KPIs. And it's just the absolute point of truth to begin and end. So you know, at the end of the day, can we give people an absolute plan to follow within a 99th percentile of accuracy and clarity? Yes. How many people will actually will take the curse of knowledge will be Extrospective and really say, I'm not good at this, I'm good at that, I'm uncomfortable with that, so I'm not going to do it. And to the extent that they don't get that plan executed is the extent that it's going to delay their success. So sometimes the more highly capable skilled people are the biggest challenge. I mean I had an executive from Siemens Corporation and the guy, and you know, come to find out after figuring out, after observing behavior, his job was to go into departments and fire everybody. So you know, so, so his, his, you know, so managing up into the franchisor, the tech system, this system that, you know, if you spend all of your time fixing other people's, your, your perception of it, but you spend none of your time following the business plan, how do you expect to be successful? And then they can't understand why somebody with their background as a consultant advising billion dollar companies can operate this simple business. Right? But it's, but that's what you deal with. And then, you know, and then there's the conversations of all right, well who's really responsible for, for this situation? And, but at the end of the day, I believe that everybody has good intent. There's nobody that gets into a franchise with the intent of failing. They all believe and they've, they, they, they're driving the truck, they put themselves in the seat, they are driving it, right? And they're like, this is going to be great and I'm gonna do it and people are gonna love it. And, and then once you get into it, there, there becomes this point where people understand the reality of the business that they've joined and they must then come to terms with what the business is. And you know, for us, we're a company of outcomes. There's a lot of talk about responsible franchising in the industry. You know, we talk about outcomes within the four walls of Homefront Brands. So what are the outcomes that we want for a franchise? Number one, people are going to operate our businesses for two decades with their family and kids or as part of a cash flowing asset, as part of a wealth portfolio of businesses and assets and real estate and everything else. Or they're going to build a business and flip it in five or six or seven years, take that bag of money, everything they learned and move on and do something else. But at the end of the day, we want people to say this was a good commercial use of my time, my energy, my money and my opportunity cost. I'm better off when I left this business than when I joined it. I learned more. I know more. I built capacity. I stretched muscles I didn't know I had. I have contacts and I have something on my resume that's successful. And then the other thing is, we would want them to say that even though we didn't tell them what they wanted to hear, we always told them what they needed to hear. And that every piece of advice and every interaction was always with their best intent. And it was clear that we cared more about their business than we did about anything in our business. And that good intent. And if we can do that, like, we don't talk about I tell them and meet the team day, I said, I don't care about your franchisee satisfaction, because guess what? The best business owners are impatient and irritable, and they push. So if you're satisfied, la la la la la. You're probably not pushing hard enough. But I do care about your franchisee experience, and this is the experience that we want you to have because you didn't hire us as a franchisor just to lollygag along with you. You hired us to stretch you, to push you, to challenge you, to do, to be, to be better and to actually build something. You know, that last 10% is whether they sell their business for, you know, $700,000 or $7 million. It's that last 10% of excellence that pushes them to that outsized outcome. It matters more than, you know, you're gonna. That last 10% is going to get you that 80% of your upside in terms of it or, you know, or because we all have the right to be mediocre. So, I mean, I know that was a bit of a solo, but. But I could tell you, man, I get, man, just like the, the franchisee experience and what I've learned and directly working with 700 new business owners a lot of times is just, I have such a clear view of, you know, what it takes and, and how people need to approach it. And I love it. And I know that you must love it as well, because it's really the human experience. And when it goes well and somebody comes in and look, they didn't. They weren't deep, they barely qualified, but they build an incredible business and it changes their life. That makes it all worth it.
- [35:14]
B
Yeah. The person that you are debating on whether to let them become a franchisee, to award them a franchise because they're light on capital, they're not polished with this. They're just like, should we approve them or not approve them and they get approved and then they just absolutely crush it. And that is just. That's like, it's the most amazing thing. And I've seen it, you know, I've, I've, you know, I've been. Been a part of seven different franchise brands, as you know, in different. At different levels. And there's always these conversations should, should we approved them? And, and there's been a lot that have been approved that I've seen over the years that have just gone on to do amazing, amazing things. And like, their lives are literally changed.
- [36:03]
A
Yeah.
- [36:03]
B
For generations, they were on the road to make $50,000 a year for the rest of their lives. And then they got involved and now they're multi or deca millionaires because of that. Like, it's literally changed their, Their, Their, their family's lives. And then the flip side, there are people that I thought, boy, these guys are just going to crush it and they just fail.
- [36:29]
A
Yeah.
- [36:29]
B
But a lot of it comes down to, like, what. What do you do as a franchisee? And the responsibility that you take as a franchisee versus just relying on the franchisor. I remember early on in my first franchise as a franchisee, I thought, I'm doing what it takes from a marketing standpoint, and I'm not getting the results as some of these other people are getting. Something must be wrong with my market, my location. Something must be wrong. That has nothing to do with me as the, as the franchisee. And then because other franchisees were telling me the same thing, like, the corporate's wrong, your market. This is wrong. It has nothing to do with you, Eric. And then, yet I would see other people doing very well. Like, something is off here. And I'm glad I had the perspective to, like, pick up the phone and call some of these other franchisees that are having outsized results compared to me. And I'm like, what are you doing? And they told me, and I'm like, I'm doing the same thing. I'm doing the same thing that you're doing. Tell me what you're doing. And, and they told me the same thing again. And then I listened to it differently that second time. And I didn't want it as a checklist. I wasn't listening to make a checklist that I was doing everything that they're doing. I'm like, what are they doing that is different than what I am doing? And, and really looking at myself, and I'm like, I must be missing something. What am I doing wrong? So they were, they were marketing they were passing out donuts. They were dressed as the Statue of Liberty. They were handed out X amount of coupons. I'm like, I'm doing all of that. But then what I realized, well, two things. They were actually delivering four times the amount of donuts to neighboring businesses than I was. I'm like, okay, if they're 4x in it, I need to forex what I'm doing because they're getting better results. And then, oh, they're, you know, so you can go into a business and be like, here's some donuts and here's some coupons. And you leave it on the front desk. You leave the coupons there and you're out and you're on to the next ones. Well, what I, and I was doing that check, doing that. What I realized after asking more probing questions and wanting to figure out what I'm doing wrong is they're going in and looking for the first one with the smile, not the manager. And they're building relationship with that employee with the smile because they're the most inviting. And then, then all of a sudden you're getting invited into the back room, into the break room to go leave the donuts and talk to people on the way and give the coupons out. And it's like, you know, you could be doing on the outside everything right, but are you really doing it the right way? And there are things that we were doing wrong and, and that, and that changed everything. And I can just look back in franchising and, and I've taken that and I'll go visit locations as a franchisee and be looking for the things that I'm doing, doing wrong. And it changed everything for me, Jeff. But then I talked to other franchisees and they just won't do that. You have to be okay being wrong. Like, you literally have to be okay, like not being successful. You have to be okay being the dumbest guy in the room. Jeff, you go back to the small town, I mean, small town kid. I go to these big cities, big events and franchise. I'm a small town kid. It's easy for me to get intimidated and whatnot as a straight C student. So I'm not like, I wasn't, I wasn't an A student. So I, you know, so. But I got comfortable not being the smartest guy in the room. But I'm like, I'm going to use that to my advantage. And, and in business, I was around people that were more successful than me. I was around these franchisees that were more successful than me. And it was easy for me to be humble and find out what they're doing that I'm not doing. And then all of a sudden, then I'm at the top again. And I'm like, I'm. I'm at the top in this franchise. I need to be around smarter, more successful people. And that's when I started to join mastermind groups and things like that. And I know that you know all about that, but the first one I did, I was so intimidated going into this, into this room with all these successful, successful people, a lot of the same people that you know now with Joe and, And. But then I'm just like, I have to be comfortable being uncomfortable. I have to be comfortable being the dumbest guy in the room. And then. Because if you do that and you ask questions and you don't try to posture yourself, then all of a sudden you, you. You level up. And that's how I've continued to. To level up over the years, is put myself in those situations. I just did it again last week. I had a call with somebody on AI and I knew he was doing AI and just doing it internally within his organization. I'm like, teach me some stuff. I'm like, holy cow. I wasn't doing all of this with replit and creating these, these agents and doing all this stuff. Sent it to some people that I know, and then I sent an email to a buddy of mine. I'm like, hey, I know that you're in franchising. You're deep into AI. What, is there a group that's meeting on a. On. On a monthly basis just to talk about this stuff? He's like, no. I'm like, well, let's start one. And so just before you and I hopped on, I just got off of our first call. There was five of us on there that are doing things in AI. And I open it up like, I'm the dumbest guy in the room. Like, I'm the guy that's doing least in AI out of this group, some of these people have developed software. That's not me. But it felt good being there because. And I'm comfortable being in that room, comfortable being. Being the dumbest guy in that room. Because I know being the dumbest guy in that room, I'll be one of the smartest guys in AI in franchising around in the industry. So I don't know how I got off on that tangent, but it's exactly.
- [42:27]
A
Where I. I'm happy that you took it there because you know, there's franchise candidates that are listening to this. There's people that are thinking about leaving their jobs and getting into business. And your example of not just walking into the business and dropping the donuts off and putting the coupons on it, but actually looking for somebody that smiles, going to them, spending five minutes and creating that bond and creating that reciprocity. I'm giving you this. I'm smiling at you. It was nice. And, you know, now you've got reciprocity. That's that last 10%. And what. What franchises have. They all come to this point. Most of them come to this point. Top 20%. They'll take whatever you give them, and they will Crush. Okay, bottom 10%. They're gonna be like, they're gonna struggle and. And then, you know, and then, you know, there's a certain amount of them that will get in performance and, you know, that will. Will turn it around. And there's some that just, you know, at the end of the day, they. They can't or, you know, it's either. Anything in life is either can't or won't. I mean, and generally it's just won't. Because everybody can, right? If you really, really wanted to gun to your head, you had to do it. You'd do it. Oh, I can do it now. But the thing about this, you're walking down a trail. You're a franchisee. You're in the middle of the pack, and you come to a trailhead, and you have to choose whether you look left and up the hill or whether you look right and down the hill. And I was just on a call with a franchisee today, and you can tell they're talking to everybody that's at the bottom. Well, I talked to this person. Well, I talked to that person. Well, I did this. Well, I talked to that person, and I'm like, well, let me ask you a question. You know, your business is actually going well. It's growing fast. You're doing the right things. Why are you spending so much time talking to people that, you know, haven't figured it out or. Or when you have all of these people at the top of the hill where you could just turn that left and start walking up the path towards the top of the group? And it's actually just that simple. It really is. It's like, you know, you are my. Your will is an exhaustible resource. And every. You wake up in the morning and you got a full battery, and every action you take and every decision that you take starts to Drain your battery. So if you blow the first 70% of your day on things that will not help you, that are going to distract you, they're going to burn your dopamine, that are going to piss you off, that are going to create doubt inside of yourself, you know, now you've just, you've just put yourself behind. Now you got to climb all the way back up and forget all that stuff. To me, it's, it's like if you're, I mean, think about it. If you're a driving teacher, right, and you're, you, you're looking, you know, you're, you're in student ed and you're driving and the guy's like, and there's a girl riding a bike in the bike lane. Don't look at the girl, don't look at the girl. You know, next thing you know, you're, you're driving right at, I mean, you, your eyes will take you. It's a rule in football, by the way. Like, it's called getting dirty eyes when you play as football player, right? So, like, if, if where my eyes are and if my, if I'm reading the right keys and I'm looking at the right things, it's going to take my feet and my body to the right place, and I will be in the right place on time. But if you get dirty eyes and you look at the wrong things, you look in the backfield when you're playing man to man, you, you, you, you know, you don't, you don't have eye discipline. It's all about where you're looking. And it's the same for franchise owners. You know, if you're looking at the wrong things and you're filling your head up with the wrong things, you are pushing out your bandwidth to do the right things. It's just. And some people are super disciplined and super positive, but most of us, we're distractible because we're trying to, we're trying to justify how we feel emotionally by searching for the logic that, you know, that, that we want to create and, you know, so my question to you, how many fireplaces do you have on the 80 acres out there? Like six fire pits. Fireplaces.
- [46:32]
B
Oh, we have like, well, we have one big burn pit and then we have fire, like two in the house and then one in the yard.
- [46:39]
A
Okay, so pick one. And you're with a franchisee friend who's getting ready to be a franchisee for the first time. You care. You're not, you're not part of the deal. So you can be completely honest with them. What are you going to tell this first time franchisee? What are the three or four things that they need to focus on the most to be successful?
- [47:01]
B
I have these conversations with people too, and it's great not having a dog in the fight. I mean, you can just be completely honest with people. And that's why people pay for consultations too. They pay people like you and pay people like me to give them honest feedback.
- [47:15]
A
So you get, you get paid. I just pick up the phone.
- [47:20]
B
Oh, you and I both have. You and I both are huge givers and I know we get paid too. And. But that's a great question. I. One of the things one, I, I want them to understand that franchisee, franchise or relationship. And, and Greg Nathan kind of came up with the, like the path of a franchisee. You know, it starts out with the Glee stage and ends up in the we stage and, and, and then in the middle of all of that as a franchisee, when you first buy a franchise, everything's great and then everything's hard and then everything is great again. You go through these different stages. So I want them to understand they're going to go through different stages and then I also want them to understand you need to know your KPIs, you need to know your numbers and you need to make decisions based off of those. Based off of those. I also am a huge proponent of talking to the top performing franchisees and staying away from the bottom performing franchisees. Like, it doesn't mean that they're bad. The bottom doesn't mean that they're bad. People just means like, why spend any time and energy having conversations with somebody that's not going to help you get to where you want to be, period. And Jeff, I have taken that same advice myself when I've been a part of a franchisor where hardly anybody was making money. Like, it was not a great franchisor. I did whatever I could. I'm like, okay, the franchisor is not going to help me. They don't have the secret sauce. It's if it. And what mentor mine told me, like these, these are the great. I think the 72 words. If it is to be, it's up to me. Like, this is my responsibility. What am I going to do? And I'm going to talk to the franchisees that are actually doing well in whatever it is, a grand opening, phone calls, retention, you know, Google reviews, whatever it is, I'm going to talk to them. So this is just not generic. Advice. Everything that I talk about is stuff that I, that I have lived out or do live out. So it is talking about to top performing franchisees, separating from all of the bottom ones. This like period, full stop, end of story, right? And then, and then looking at the things that actually move the needle in revenue in the business and profitability in the business. So understand the key drivers of revenue and then make sure I'm executing at a level 10 of 10 of those revenue drivers. Let's say marketing is one of them. Let's say visiting local business is one of them. 10 out of 10 execution looks like making eye contact with the first person that smiles. It means having that conversation with them. It means, you know, there's a lot of things that level 10 out of 10 means. And then just because I think it's level 10 out of 10, take it to 10 franchisees that are doing it and ask them what a level 10 out of 10 looks like. And now I have that playbook and go execute that playbook on all the revenue drivers. And then, you know, understand the, the profit, what drives profitability. And a lot of that has to do with labor. You need to understand the, the, the labor and the economics around, around that because it's so easy to overstaff, overpay, not fire, all of these different things. So you know, I would want, I would just encourage them to really lean into that and then just lean on the franchisor. I mean the franchisor may be a great one, it may be an average one, but, and it may be a poor one, but they have resources. So lean into that franchisor. If the founder. Here's something that probably doesn't get talked about very often. It's, you know, if the founder was successful, they weren't, should have been successful. Like all the founders that most founders that I know out there, if they are a franchise or it's because they had a successful business and so find out why they were successful. Get the time with the founder. If you're on group calls, ask them questions, just be, just, just go hard after that one at one, one brand that I was a part of, the founder made a ton of money, had just, just a great business. And not everybody was as successful as the founder. I'm like, what is it? And so as I was around them at one point and I'm just like, what, what? Tell me about your first business and just asking them the story, not saying what advice would you give me but like, tell me the story. What, what do you do here? How do you do this? What do you do? And come to find out. The big thing that they did that they never talk about in any of the trainings is this person hired their key person was basically the marketing person from a competitor. And this, this was a relationship driven business. They hired the relationship expert from the competitor, brought them in, and that person brought all the business with them. So I'm like, well, I didn't know that. So, you know, so there's things that you, the point of it is there's things that you can learn from the founder and, and here's the other thing. With founders and, and their, and their key people in the business, they've probably forgotten so many things that made them so successful. You can pull out things that they've forgotten that are just gold. And so I would just lean in, into these founders. And one other thing, I talk to so many new brands every, every year, as do you. You. And I get the opportunity to talk to a lot of these emerging brands. I all of them, or most all of them, they're like, I want successful franchisees, I want to help franchisees. I don't want to charge this much royalty. I don't want to do this because I want my franchisees to be successful. Like most franchisors out there want you as a franchisee to be successful. Most people don't have the privilege of being in the rooms having the conversations that you and I get to have. It's not like, how do we, how do we screw our franchisees? These aren't the conversations that we have. We're like, right, they want to help franchisees, so ask them for help.
- [53:52]
A
You have invested time in what I've learned as I've looked at the next phase of my career in an education business and an education business. If you look at Tony Robbins or, you know, Grant Cardone or all of these people, you know, they basically, it's whatever they were, they had success in a business or developed content and then they, then they run an education business. And you know, education businesses include things like podcasts, they include things like masterminds, they include things like programs, Facebook groups that create an opportunity for these types of engagements with brands or with franchisees. How important has your education business been to you? Because you've built a real collection of complementary assets in this regard and it's allowed you to, you've continued to invest in it, so how important has it been for you? And then what advice could you give to people about, you know, and you already have a little bit Getting outside of themselves, getting themselves in bigger rooms, taking advantage of education platforms like this, or even if you're a franchisor founder, like, what are some of the things that they need to do that would help them grow their brand?
- [55:13]
B
Well, I started out just as a brick and mortar normal business guy, and I got into these rooms with a lot of marketing people, a lot of people that are in education businesses like you just described. And it was so foreign to me. And then there's really nobody doing it within franchising for years, right? And I had a friend of mine, a good friend, and now he's a mentor of mine. He doesn't know. I've never called him that, but he's definitely mentored me years ago. He's like, eric, you gotta start a Facebook group. Gotta start a Facebook group. I started a Facebook group in this one industry brick and mortar business. He's like, and now I have an education business where I help all these, all of these people. And, and he's, you know, he's pulling in eight figures a year in net profit from his education business. And, and he's still got his brick and mortars, which are probably producing a very healthy amount. And so I'm like, okay, I'll start it. I started it two or three years after he told me to start it. And he'd sit with me for hours, Jeff, and tell me how to do it, which is pretty simple. But I finally did it. And then Covid hit and I had this Facebook group and it was just going to be for franchisees. And then Covid hit and I'm like, I'm going to open it up to franchisees and franchisors. And then, and then I just started to go in there live during COVID and give value and help people. And at that time, everybody was doing that. I had some amazing people come in there and, and, and speak to the Facebook group. You know, Alex Hermosi? Do you know who he is?
- [56:45]
A
Oh, yeah.
- [56:46]
B
Alex came in there and did, did a session for me. I had a conversation with Alex when I was out walking in the, in my, on the, on the ranch. And he's like, is that a chicken I hear in the background? I'm like, yep. So the point is, like, I had access to people because of that, because of that time, and, and I was, was giving. Given a lot of value in that group. And then he's like, okay, it's great that you're doing that, but now, you know, people want to pay you to get more time with You. And so I'm like, okay, here we go. And I, and I just made an offer and I said if you want to join a group, I'm going to be, you know, having meeting twice a month and for franchisees and if you want to join, you know, just, just text me or message me and I'll send you the, the link to the, to the credit card. And just people just started just like I think I had like 70 or 80 people just within a month join and then I ended up having a higher level group within that too. I'm like, okay, now. I think it was like it was about 200amonth and I was 150amonth and I bumped the price up to 200amonth, month early. People were grandfathered in. And then I'm like, you know, for, I think it was like 500amonth or something like that. I'll do a quarterly six hour like marathon session, going deep. And that's when I'd have bigger speakers come in and share stuff and Cameron Herold would come in and do stuff. And you know, it's people, a lot of people that you know. And that was great, but then became too much work for me. I'm like, I'm not enjoying this anymore. So then I'm like, I want an educational company that I enjoy doing that's not, that is giving value but not too much. And so then I, I just stopped offering that. And, and then I was just so. I still have that franchisee mastermind. It's $200 a month. I offer one meeting a month for that one zoom meeting a month. I always give two, sometimes three. But I want, I always want to over deliver. So that's the key there. And then I have one for franchisors and it's 500amonth and it's not. I actually had one earlier, Jeff. It was $2,000 a month and I had about 10, 10 franchisors in it. And it was great. But I was having to like $2,000 a month is a lot of money for someone to pay. And I had to be there, had to be delivering. I think I was on there weekly giving, giving stuff. I'm like, this is too much. I don't enjoy this anymore. So I dropped it to $500 a month. And, and it's a, it's a place for people to get time with me that they normally wouldn't.
- [59:27]
A
Sure.
- [59:28]
B
And, and, and I have all of these, I have, you know, probably 50 hours of recorded content in there for people so, you know, and so I got some franchise awards in that. But it what I found too, people want to want to pick your brain. And like, like, okay, the best way to pick my brain is my mastermind. There you go. You can go in there and, and pick my brain and they'll say, no, I don't want to pay, I don't want to do that. I don't want to pay the money for that. I'm like, then you really don't want that much help. And interesting. And, and so it's helped me kind of filter that out. And I'm a giver. Like we give so much with so many brands. I know you do too. You're always helping, but there's a point when you just pay for it. And people that pay, pay attention and, and I've been on the pain end of that and I've been on the receiving end of that and I want to take care of the people that, that pay me, whether it's a lot or a little, I just want to take care of them and I'll do whatever it takes. So I'm a huge fan of that. And as a matter of fact, somebody reached out to me in the QSR space last week is like, Eric, I want to join your mastermind as a franchisor. And he's like, I'm ready to pay. He's like, but I have some questions first. Are you going to be able to help me with this? I'm like, actually probably, but I think there's a better one for you. And I sent them to somebody else that has more of a coaching program because that's what I think that they want. So I think if you're in that space, you just got to be a giver. You can't just do it just for the money. You just got to be, you got to be a giver. And, but it's really cool because you get to help a lot of people and you get to know people as well. And I've made a lot of friends that joined my masterminds and now they're just, they're good friends of mine. So I love, I love the, the education space.
- [61:19]
A
Yeah, I have a, an acquaintance and I was talking with him at an event and he says, I just created this thousand dollar. He's an AI expert. And he goes, I just created a thousand dollar cup of coffee. And hey, I've got some questions for you. Can I jump on a call and pick your brain just like you said? It's like, sure, you know I can get on, but if you really want my attention, we need to do a full 30 minutes. You tell me what you want to send, go to this link, pick a time, pay the thousand dollars, and then tell me what you want to talk about. I'll show up prepared, and I promise you, you will get $5,000 of value out of it. So, you know, I mean, when. When I agree to get on a call with somebody, I get every day, like, hey, you know, you know, I'm from ypo and I, you know, franchising and, and whatever, and it's. And sometimes they'll offer to pay for your time and, and whatnot. But moreover, you know, I'll, I'll. I've probably given away too much without having a charging model for it, but at the end of the day, you know, I operate more as an investor and then occasionally as an operator, and. But I do. I do see moving into the education space more. So I was just interested in that. And then if, and look, I mean, if, if, if you're a franchisor, should you be constantly making contact content? Should you, you know, have some sort of a pod, even if it's an internal podcast that you're promoting to your franchisees? There's a lot of. There's a lot of things in leadership that I think we are obligated to do now to get connections into our business, and I think even our. Our podcast right here, unemployable. Having you on, it's incredible with all of your experience and all the success that you've had. And, you know, I think we're over 200 episodes now, and I've met some of the most incredible people through this, some of which we've ended up doing business with. And we would have never broken. We know each other, but we would have never broken the ice with these people if I hadn't researched them, read their book, brought them, you know, and had a good show with them. So it's just, it's. It's interesting how to compete in. Inside of that space. You talked a little bit about AI. We've got robotics, man, qsr Space robotics. You know, I mean, we're in the property services space. Are we going to have machines, cleaning gutters and painting houses and all this kind of stuff and Tesla robots? I'm not sure. Maybe. When you look at the future of franchising, what are the trends that you're excited about and which ones are you concerned about?
- [64:04]
B
I'm excited about AI and saving franchisees money. I think there's just huge opportunity to help franchisees make more money utilizing AI. I, I'm concerned that franchisors are not really doing anything with it. Most franchisors.
- [64:29]
A
Right.
- [64:29]
B
I think it needs to be top of mind for franchisors. And even on this call that, that I was on earlier, I was like what franchisors are doing, like actually doing good stuff with it and they're like, we hear a lot of them that say they are but when it comes down to it, they're really not doing anything with it. Not even, they're not even making custom GPTs, doing stuff internally. They're not, they're just not utilizing it. They might be having conversations about an AI voice agent or something like this, but they're not actually implementing hardly anything. But I think there's just huge opportunity from like franchise business coaching, like the business coaching to be a better business coach with internal, like think about having all the brain, the brain of the franchise, the brain of the founder and then having the franchise business coach having access to that. So that's right, you help the franchisee with this. Here's what they're going to follow up on. Like if the founder was there because you have the founder's brain, like what are the next steps? And it doesn't take away from what that franchise business coach is going to do and how they're going to help but it gives them, it helps them focus on the right things on their next call. With the, with the franchisee, I think there's a lot of things that, especially with, with the phone and answering and interacting with customers. I was just, as a franchisee I was on with my team and I said what, where are we doing everything marketing that we should be doing, like are we missing anything? And my partner's like I think we're doing it all. I'm like, I bet we're not. So let's get everybody on a call. And, and so we were, we had a call and my first question to the team, everybody, you know, different, different locations. The marketing managers were there and the managers were there. I'm like if you had to get 10 new customers this week, what would you do? And so it just, they just, this is what I need to do. And it all came down to customer referrals and, and like, you know, we're not, and they're not doing enough to get, to get customer referrals. Like that's the easiest low hanging fruit and they're not spending much time on it at all. And then what came out of it too? I said how many phone calls are going to voicemail? And they're like, I don't know, about, about 20%. Well, 20% is not, I mean any call going to voicemail is not good. But they thought that was fine. I bet it's a lot. And they said, but on Saturday like everything goes to voicemail because the employees are working with customers all the whole, all Saturday. And they said not only that, the customers get annoyed with the phones ringing and then eventually goes to voicemail. And so I'm like, there's a big opportunity there. Franchisor is not doing anything for us. They're not proactive at all with anything. I don't care. I mean would I like a solution from the franchisor? 100%. But if it is to be, it's up to me, right? And I didn't ask the franchisor about all this marketing stuff. I'm like, this is my problem and we're going to find a solution for this. So we, we came away with like 10 different things to do and I said what do we need to stop doing? Like what doesn't work? And there's a list of those. I'm like, okay, look, we're not focusing on these things. Here are the 10 things that we're going to focus on. We're going to start with customer referrals and, and then I wanted them to talk to the top franchisees or the top managers in their case and that are really good with customer referrals so we can understand what 10 out of 10 looks like. So that's what we're doing there. And then, but going back to AI the voice, like we're missing phone calls and if we're, and if they do get answered, I don't think they're getting answered like a level 10 phone call, like an answering. So we are, we're going to start working with a, with a guy that I know that is able to give us a voice agent pretty inexpensively, like a hundred dollars a month.
- [68:31]
A
Right?
- [68:31]
B
I mean it's not, it's not his main business. And so I'm like, at least let's start testing this out. But I think that's low hanging fruit. I think in a year from now like most everything's going to be AI voice agent answering, but right now it's not. And it's low hanging, low hanging fruit. But shoot, there's going to be other low hanging fruit if we don't embrace this right now at the franchisee level. I mean the franchisor should be doing it, but at the franchisee level, if the franchisors aren't helping with that, a year from now it's going to be something else that's low hanging fruit, that's going to be the, the norm. Franchisors need to be on the cutting edge and the leading edge of this stuff. And, and, and I'm just seeing most of them are not. Jeff.
- [69:13]
A
Yeah, well, I mean it's within the franchise model. The franchisor operates under a certain amount of fees and there's fee sense sensitivity. So it's like where does the money come to implement, to do all this research, development and implement this stuff. So you got to have a franchisor that's pretty gamey in terms of going out there and finding solutions, getting outside of their industry to other industries, which is something that I've always done. I go outside who is, what industry is doing this the best. And that's where I show up and then I try to bring it back to us. And you know, and if, and you're in the franchise industry, like, like being first isn't that hard because I mean, to be honest with you, no, it's like I'm not, I'm not a, I'm not that smart. But I, but I, you know, I do have a pattern of going out and trying to find stuff in other industries and bringing it back and then, you know, getting stuff implemented and, and all of that. Do you see any trends in franchising? You know, there's, right now there's 95 million dogs in this country versus 88 million kids. So you know, there's kind of been a big pet surge here lately. And then people will invest anything in their kids and their kids sports and stuff like that. Fitness got crowded fast, but there is a lot of health and wellness things that are popping up. Infrared sauna, which is a concept I was involved in and med spas and all this kind of stuff. And then of course we had, there's a big run with game day men's health. So you're getting, getting hormones to the masses for anybody who, you know, drive through hormones or whatever, whatever it is. So at the end, you know, we have an aging population. There was a huge run on senior care and I don't know that it's over. I know that it went from a small handful of concepts up to 150 concepts in a short number of years doing that. As you look over the next 10 years or so, are there areas of Opportunity that you've identified in terms of categories for franchising.
- [71:14]
B
Yeah, so we like the pet space. Like, okay, that's an interesting space to be in. And, and you know that's a broad term, right? You say pet space. It could be like pet supplies plus, it could be a dog grooming thing. It could be all kinds of stuff. But, like, we had a dog that got sick out of the blue. We were $4,000, 5,000, $6,000 deep before, you know, she, she eventually died about six weeks later. But like, we were doing anything to save her. She's the most amazing dog we'd. We'd ever had. So, like, we were going to do anything to save her. And, and we're not alone in how we think about, about that. And we spend who knows how much money every. Every month to groom our two doodles, you know, and. And then.
- [72:04]
A
You got doodles on the range out there?
- [72:06]
B
Yeah, we got. Dude, we got a burner doodle and a golden doodle.
- [72:09]
A
All right.
- [72:11]
B
And the, the Bernadoodle, just. She's the, she's the dog that goes out to the, out to the chicken coop with the girls, sits there, waits for them, follows them around everywhere, and then chases the deer to the fence and then comes back. Chased away a mountain lion last year when she had no business chasing away a mountain lion. Yeah, but you know, it's like that's the kind of dog that she is. She's just a, a great dog. But we spend a ton of money getting, getting them groomed. And then they had. One of them had a lump on their chest. And so my wife's like, well, got to go to the vet. So we took them to the vet and yep, it's a fatty, it's a fatty tissue, fatty tumor thing. Just leave it. But the point of it is like, you know, we just spend a lot of money on, on our pets, and so we really like that space. We think there's some innovative concepts coming out with that that are going to be very interesting. I think we also, with everything. We look at the labor model, you know, one of our brands, the labor model is really interesting. And that's why, you know, they didn't. It didn't need specialized labor, which, you know, the. You would think that it might. It doesn't need specialized labor, and it's a lot of tips, so it's not a lot out of the franchisees pocket. So. So when you look at that. So we look at grooming and there's things that we really liked about it. And then there's things that are just not so great about that space that we didn't like about that space for ourselves, but people pay a lot of money for grooming. Dog training is one that we looked at, and I think that's a really interesting one. But even within you just say grooming or training, I think there's some really good spaces, really good concepts that could be in that space. And there's some that are just like, no, that's, that's boring. That's old. That's outdated. That's not, that's not the way to do things. So pets in general. Yes. I just gave you two examples of kind of verticals within pets that we like. And even within those two verticals, there's things that we like and don't like about them. And we think in each of those, there might be a brand that can be a major player in that health and wellness. That's one that I've scratched my head at a little bit as well. I've got some strong opinions, and they might be right and they might not. That's where I've come to the conclusion. Like, Jeff, I'm pretty good at looking at different brands and understanding things, but I'm the first one to admit I'll get it wrong half the time. But I, I, I, like, I'm a, I've got a concierge medical doctor that. And functional doctor that, that I go to. So I'm a huge, like peptides nad, you know, all these different concoctions. Like, I'm a fan. I get blood work done every quarter, full panels, full consultations with my, with my guy. And it's, it's. I, I love that stuff. I've got a whoop. I've got an infrared sauna. I've got a cold plunge. I mean, I've got lifetime fitness here on the ranch, and so I'm huge into that. But there's certain things that I just don't understand. Like I don't understand how a hyperbaric. Hyperbaric oxygen chamber franchise is going to be right nationwide. Even though I love the hyperbaric chamber.
- [75:29]
A
Yeah.
- [75:30]
B
You know, I'm a huge tanks.
- [75:32]
A
Right.
- [75:32]
B
Yes.
- [75:33]
A
Float tanks were out there. You know, we made a good run in infrared sauna with beam light sauna. Great concept. Mr. Geisler owns that now over at Sequel. But that, that's, you know, I'm a, I do infrared sauna three or four times a week, and I love doing it. You ever heard of the concept called.
- [75:52]
B
45 Plus, I don't think so.
- [75:55]
A
Yeah, you know why? Because I never launched it. But, but I came up with it. Like, and so, you know, I'm 57, right? And as I was getting to be like 48, 49, I'm like, oh man, my testosterone's going. I, I have brain fog. I have this, you know, I got pizza under my fingernails. I have all these, all you have all these, you know, you know, maladies happening to me. And I literally came up with basically game day men's health in, you know, whatever. And I looked at it and I'm like, it's a, it's a retail model. I don't want to do it. But you know, at the end of like, I saw that coming because as a 47, 48, 49 year old guy, I had to go to like five different places to get the blood work, then the concierge doctor and then the hormone therapy and then the supplementation and nobody and I, and I had money and I said, I want to do this. And it was so difficult to get that that, you know, I was going to combine all of that into one little clinic right there. So if anybody wants to buy the domain name 45 +, it's available, it's reasonable. But you know, and then, but in franchising, like, you have like being first matters. It's, you know, like if you really want to get out there. Franchising is the greatest business model to put a brand out there and to stake your claim into the marketplace. We've, I've only got one that was first to market that I've ever been affiliated with is our temporary walls business. But you know, and it's tough because you got to educate the marketplace, but you know, you get out there and you get your, get your sharp elbows and you kind of stake your claim and you know, keep running. But yeah, it's, it's, you know, I, the health and wellness space, people are investing more and more in the way they look and they feel and there's more science coming out, you know, when you get, get when you get these podcasters saying, you know, putting stats out there about infrared sauna, you know, you do it four times a week, you're 27% less to get this. And then you've got the cold, all the coal plunge benefits that people do. But to your point, I mean, retail is expensive and what's too complicated and what's just simple enough and you know, that sweet space of, you know, low enough cost to, to build out, low enough cost to operate with a, with a staffing model. And we've seen all kinds of things. I mean I, I went and saw a fitness concept that had LED lights all around the room and it had eight to 12 stations and it would literally. And it had cameras from every angle and each person could do an individualized workout and it would run, it was no staffing, so it run 24 hours a day, you know, every 45 minutes. It was a new class. And it would basically even give you form corrections on the screen and it was all gamified. So if you're doing the curls the right way, you're getting it and you're kind of building and you can all work together in the same game building this wall, but you're all doing, the person's doing an elderly workout, you're doing a hit workout, you're doing this workout. And the freaking cost to build that out was millions of dollars. You know, and at the end of the day, you know, you're competing with a gym membership for 1:19 to $149 a month. And that's just so, it's really, you know, we, you know, so much in franchising that I know gets brought to people like you and people like me is like, sounds like such a good idea. And, but again it is it, you know, is the dog going to eat the food and is the model really going to work? And the worst thing that happens back to the. I think what originally got us into this was why do so many franchisors fail? And you know, the worst thing that can happen, like if a business is going to fail, I want it to fail. If it's going to be a rocket ship, I want it to be a rocket ship. But the worst thing that can happen in franchising is that the business muddles along. And you know, you get five or 10 or 15 franchise owners out there, the franchise or is not experienced or not capitalized can invest. And you get these 12 to 15 owners out there and they're trying to make a go of it. And the franchisors, you know, kind of, kind of in, in it and over time you, in any system there will be attrition. And if you're not, if you're not putting at least two owners a month out there in a brand, you know, over a five year period to have a hundred owners out there doing the thing, then, you know, it creates an opportunity where it's like a, you know, it's like countries that get a birth rate of 1.4, like they're gone. They're not, you're not making enough, we're not making enough to replace us. And you know, so as the curve went up, the curve stalls out and then ultimately the curve goes down. And you know, and, and about, it's about a 12 year model for people to give up the ghost and just say, you know what, everybody just go do their own thing. This didn't work. Work and that. And, and my problem with that is families get hurt. Families that made that investment, they, they might lose their money. And so, you know, yeah, I've seen.
- [80:56]
B
I've seen these, I mean I've had these conversations with people that are losing money, they're going bankrupt. And, and that's real. And, and it does hurt. And, and it's nice, it's good that you and I see it because it just like there's pressure, there's pressure on the founders to get it right for them.
- [81:14]
A
There is.
- [81:15]
B
You know, we talk about these franchisors wanting to do things right. Like I'm in these closed rooms with franchisors. Like we've got to do it for these franchisees. Like, because they've seen the stories, they see the people struggling and like they care, they care about these franchisees, families and they know what losing money can do. And so it's not just like follow the system, follow the system, do this, make a bunch of money. It's like they don't want to see people get hurt because, because it happens out there. I'm glad, I don't see it a lot, but I, and I think it's just kind of some of the rooms that we run in, we don't get to see it a lot. And these, you and I get to talk to founders that are, that are doing the right things or listening to smart people. Yeah, but I, but, but I hear the stories out there and, and it's rough. And so I'm glad we, we're around the right people that are trying to make the right decisions for franchisees with them, with them. Top of mind.
- [82:13]
A
Do you think franchising is going to continue to accelerate in terms of its penetration into business markets? I mean, my view of franchising is that it creates efficiencies inside of business models. It organizes disorganized or fragmented markets, it creates opportunity for a responsible entry of franchisee operators and all of these things. And you know, I just, just it just every industry that is, I mean I'm looking at an industry right now that is not have one franchise in it, and when you look at this industry, it should, I mean it, absolutely. And you know, occasion, if you, if you're looking around and you're paying attention, there's things that are happening out there that are not franchised and somebody is going to, is going to franchise that industry and start rolling things up and, and all of that under the model. So do you see, even with AI and even with some of the efficiencies that are going to be more available to small business owners through AI, do you see franchising continuing to be such a pervasive part of our business community?
- [83:24]
B
I think so. And I think even, I mean, because of AI, like, think about, even if founders aren't embracing AI, there are companies that are creating AI agents and, and tools to help franchisors be better franchisors and their franchisees to make more money. So even if franchisors aren't like super proactive with AI, there are companies and vendors in two to three years that are not, not alive today, are not known today that are going to be there to help franchise franchisors and it helps them save money, helps franchisees make money, helps things more be more efficient and you know, ultimately helps these, helps these franchise franchisees at the end of the day. So anything that can help franchisees make more money is, is a good thing for franchising. And I think, and then, you know, like with economies of scale, it's one of the things with franchising you get economies of scale and you get the learnings of the franchisor. And so now think you get the learnings of the franchisor over years of business and years utilizing different AI technology. So you get the normal entrepreneur that's going to go try to break into an industry or start a business, but now they can do it with a franchisor who knows AI in that particular industry because they have, they have, they have reps with it, then it's easier for them to go in and slide into, slide into that business because it's all there. It's a business. I mean, franchises should be a business in a box. But now it's wrapped with an AI. It's wrapped within all the productivity and cost savings that AI is going to, going to give us. So, you know, I think, I think so. And you know, there's, there's a brand that I'm thinking about right now that, that like you said, it's, you know, it's very similar to what you said, probably might even be the same one, but it's like, why has this not been franchised yet? And there's multiple different industries that, that you and I don't even know about today that should be franchise and it's not franchise yet. And then I think some are overly franchise. Like you don't need a franchise to do some of these things.
- [85:34]
A
That's right.
- [85:34]
B
But, and then I think with, with, with people like us at Front street, some of our competitors and friends and, and, and you know, the things that we're doing to help brands grow, I think it's going to be more attractive for some of these emerging brands to the, where they would just sit and stall out and not go anywhere. They'd be what you kind of described. They're four years later, they got 15 franchisees now working with somebody like us or you or any of our friends who are competitors. Like, they can be, they can have a large exit in four or five years versus sitting at 15 franchisees. The difference is getting the right people in the room and, and having the right mindset of being. I'd rather have a, a large exit and have a large piece of that exit versus having a hundred percent of 15 franchisees.
- [86:34]
A
Right.
- [86:34]
B
And so I think that's starting to change within franchising. I think there's some things coming down in the broker world that will bring some consistency and parameters to how brokers are helping candidates find franchises. And I think there's some good things with that and I think that will help the right candidates find the right brands and they'll just be more structure, accountability, or I don't know what the right words are for that process. I think it's going to be interesting to see this next kind of generation of franchise owners is probably going to look different than generations that have been buyers in the past. So, like, it'd be interesting to see who is going after Gen Z owners and what do they look like and how do they fit into a franchising model, you know, versus just millennials or, you know, Gen X or whatever. So I think if, you know, I think that's an interesting topic or an interesting conversation at some point to see what brands are really focusing on, on them and how do you help them be successful as a, as a franchisee? Because it's not just going to be, you know, Gen X buying franchises.
- [87:53]
A
Right. Eric, I realize, you know, you told me that you're just coming back from COVID right now, and I realize I've kept you on this podcast too long, sir, but you've been a trooper and A champ and been amazing, providing amazing value for our guests and our listeners here today. I have a curveball and a fastball right down the middle for you if you're willing to play. But before we do that, tell people where to get in touch with you.
- [88:18]
B
Probably the best place is franchise secrets.com franchisesecrets.com or Front Street EP like equitypartners.com.
- [88:27]
A
Got it. All right. Eric Van Horn. Curveball. Gun to your head. Your favorite doodle held over a cliff, fed to the lions. You had to start a business in the next 30 days. And it can't be a business that you're currently in, but you have to do it. Where would you go? Where's the opportunity in the market?
- [88:52]
B
Oh, chap. That is that, that, that's, that's a tough one because my mind, I'll answer that question. My mind thinks cash flow or like building enterprise value. That's, that's first thing that comes to mind. Like, what's that opportunity? I would probably go cash flow. I probably start something with AI. I would probably start a company with an AI, probably a voice agent because that's the stair step into other things with AI and that's the future of, of, of, of everything. So easiest entry there is to have like an AI voice agent, answering phones. And then I would just sell that as a subscription and then you could scale that by starting as a subscription to franchisees and then get into the franchisor and then you can just scale that into franchisors and it would be easy to move into other things within AI after that.
- [89:51]
A
Awesome fastball right down the middle. Last question of the day. If you had one sentence to make an impact in somebody's life, what would that be?
- [90:02]
B
Get comfortable being uncomfortable. All right.
- [90:07]
A
Any color or we just leave it right there.
- [90:11]
B
It's so easy to surround yourselves around people that don't push you. It's so easy to surround yourselves around people that are always going to say yes to you. You have a good idea, you're doing the right things. It's not easy being around people that are going to tell you the truth that when you, when, when you go to somebody and, and they, they give you their, their, the, they give you the real answer. Things are going to challenge you. It's uncomfortable. So like have friends that push you, get into rooms that make you uncomfortable. And, and, and it's, you know, it's something that I, that I, that I'm very comfortable, very comfortable doing. I push my girls all the time to do uncomfortable things. I'm like, van Horns do uncomfortable things. Van Horns do hard things. And whether it's taking their first taekwondo class because they're intimidated, I'm like, you know, when they do it, like, I love to see my daughters doing things that make them uncomfortable.
- [91:15]
A
Awesome. Eric, thanks so much for being on the Unemployable podcast. Jeff.
- [91:19]
B
It's been an honor. I was so excited to be on. I love what you bring to the world of franchising. You are so well respected. You're a friend, you've taught me so many things and you're one of the, one of the guys out there with a tremendous amount of experience, yet is very approachable and always very helpful. So thank you for all that you've done and all that you do with enfranchising.
- [91:45]
A
You're very kind and feelings mutual. Thanks for being on. This is Jeff Duden. We've been here with the incredible Eric Van Horn on the Unemployable podcast. Thanks for listening.