Podcast Summary: Franchise Friday: How Long It Really Takes to Open a Franchise With Jeff Dudan #166

On The Homefront with Jeff Dudan delivers insightful discussions for aspiring entrepreneurs aiming to build their dynasties through franchise ownership. In Episode #166, titled "Franchise Friday: How Long It Really Takes to Open a Franchise," host Jeff Dudan delves deep into the timelines and processes involved in launching a franchise. This comprehensive summary captures the key points, discussions, insights, and conclusions from the episode, complete with notable quotes and timestamps for reference.

1. Introduction to Franchise Timelines

Jeff Dudan opens the episode by addressing a common query among prospective franchisees: "How long does it take to open a franchise?" He emphasizes the growing landscape of franchising, noting that "there are over 300 new franchise brands that launch every year in the U.S." (00:00). This surge presents both opportunities and variables that can impact the timeline to ownership.

2. The Discovery Process (45 to 60 Days)

The initial phase, termed the discovery process, spans approximately 45 to 60 days. This stage is crucial for assessing the compatibility between the franchisee and the franchisor.

• Structured Evaluation: Jeff outlines a structured approach involving introductory phone calls, brand presentations, and validations with existing franchise owners. He states, "It's a very intentional process, it's very prescriptive and that's a good thing because the most important thing is that you get educated and you get a clear expectation about what the business is." (00:00)

• Unit Economics Review: Understanding the financial performance of existing franchisees helps potential owners gauge potential profitability.

• Discovery Day: The process culminates in a Discovery Day or Meet the Team Day, where prospective franchisees meet key personnel and other franchisees, solidifying their decision to move forward.

3. Signing the Franchise Agreement and Moving Forward

Upon signing the franchise agreement, the timeline diverges based on the nature of the business—service-based (mobile or home-based) versus location-based.

a. Service-Based Franchises (Up to 120 Days Total)

For franchises that do not require a traditional storefront, the process can be relatively swift.

• Timeline: Jeff explains, "If you're working with a home based or mobile franchise and you're ready to go and you're committed... you can be operating within 90 to 120 days." (Release Date)

• Key Activities:

  • Initial Training: Engaging with training modules and attending hands-on sessions.
  • Equipment Setup: Ordering and upfitting necessary equipment or vehicles.
  • Local Marketing: Establishing an online presence and initiating local advertising.
  • Grand Opening: Planning and executing an event to launch the business in the community.

b. Location-Based Franchises (9 to 12 Months or More)

Establishing a physical location involves additional steps, extending the timeline significantly.

• Site Selection and Lease Negotiation: Collaborating with real estate professionals to find suitable premises and securing leases.

• Build-Out Process:

  • First-Generation Spaces: Raw spaces requiring extensive construction can take 9 to 12 months or longer.
  • Second-Generation Spaces: Previously built-out locations may require 3 to 6 months for modifications.

Jeff notes, "First generation space sometimes isn't even built yet... it's a cold dark shell." (00:00)

• Permits and Approvals: Securing necessary permits from local authorities adds to the timeline.

4. Financing Options and Timelines

Securing adequate funding is a pivotal component of opening a franchise. Jeff outlines several financing avenues, each with distinct timelines.

• SBA Loans (60 to 90 Days): Government-backed loans that offer favorable terms but involve a thorough application process.

• ROBS (30 Days): Rolling over retirement funds to invest in the franchise, though it requires strict adherence to IRS guidelines.

• HELOC and Margin Lines: Quick access to funds by leveraging home equity or investment portfolios.

• Traditional Bank Loans: Dependent on the borrower’s relationship with the bank and collateral availability.

Jeff advises, "If you're not writing a check and most people don't, then you're going to have to consider a few different options to fund your business." (00:00)

5. Employment Considerations: To Keep or Leave Your Job

Deciding whether to maintain current employment during the franchise setup phase is a personal choice with significant implications.

• Pros of Keeping a Job: Reduces financial pressure and provides stability during the initial stages.

• Cons: May delay full commitment to the franchise, potentially impacting the speed and focus required for successful launch.

Jeff shares his perspective, "I'm big about going all into businesses and making sure that I understand everything about a new business that is important so that I have the greatest chance for hitting the plans that I need to hit with the business." (00:00)

6. Market Timing and Seasonality

Aligning the franchise launch with optimal market conditions can drastically influence early performance.

• Seasonal Businesses: For franchises like lawn care or pressure washing in cold climates, launching in spring maximizes potential.

• Pre-Marketing Activities: Initiating marketing and networking during off-seasons prepares the business for a strong market entry.

Jeff emphasizes, "Training, timing your launch around these realities can make a meaningful difference in early performance and not opening kind of into the trough of a year." (00:00)

7. Personal and Tax Considerations

Personal life events and tax implications play a role in determining the optimal timing for franchise ownership.

• Life Events: Major personal commitments can divert attention and resources away from the business.

• Tax Calendar: Leveraging tax codes, such as accelerated depreciation, can offer financial benefits.

Jeff advises consulting with tax professionals to navigate these aspects effectively, stating, "Although I will tell you, CPAs and financial planners are ones that always kill deals... you will need to get tax advice if you're thinking about year end timing for investing in your business." (00:00)

8. Regulatory Considerations: Registration States

Operating in one of the 15ish registration states introduces additional regulatory steps that can extend the timeline.

• Franchise Disclosure Document (FDD): Annual updates must be filed and approved by state authorities, which can take months.

Jeff warns, "If you're in a registration state... you need to really be aware of that, especially if your timing is critical." (00:00)

9. Summary and Final Thoughts

Jeff consolidates the discussion by reiterating the estimated timelines based on the franchise type:

• Home-Based or Mobile Franchises: 90 to 120 days encompassing discovery, training, setup, and launch.

• Location-Based Franchises: 9 to 12 months or longer, influenced by site availability and build-out complexities.

He concludes with actionable advice: "If you're serious about franchising, timing matters, pay attention, get the facts, lay it out and lay out a plan and work that plan and don't guess your way through the process." (00:00)

Jeff encourages listeners to engage with the content, seek professional guidance, and meticulously plan their franchise journey to align with both personal and market factors.

Key Takeaways

• Thorough Preparation: Understanding each phase of the franchise process helps mitigate delays and uncertainties.

• Financing Strategy: Exploring multiple funding sources ensures financial readiness for franchise ownership.

• Timing is Crucial: Aligning launch with market conditions and personal circumstances can significantly impact success.

• Regulatory Awareness: Compliance with state regulations, especially in registration states, is essential for a smooth franchise rollout.

For aspiring franchisees, Episode #166 of On The Homefront with Jeff Dudan serves as a vital resource, providing clarity on the multifaceted journey of opening a franchise. By meticulously following the outlined steps and considering the highlighted factors, prospective owners can navigate the franchising landscape with confidence and strategic insight.

Timestamp References:

• [00:00] - Introduction and Overview
• [00:00] - Throughout the Episode (as the transcript provided does not include varying timestamps)

Note: The transcript provided had timestamps starting at [00:00] without differentiation for different segments. In a typical podcast, timestamps would increment as the episode progresses. For accurate citations, listeners are encouraged to refer to the episode directly.