Latest / Success Story with Scott Clary / Jon Ostenson - FranBridge CEO & Author of Non-Food Franchising | Why Smart People Buy Franchises Instead of Starting Companies

Transcript

Jon Ostenson - FranBridge CEO & Author of Non-Food Franchising | Why Smart People Buy Franchises Instead of Starting Companies · Success Story with Scott Clary

• 0:00
  So left the corporate world, had a couple young kids at the time, started 10x5 with a business partner, scaled to 40 employees. We were doing a couple million a year in revenue, but end of the day we weren't making money. We were just keeping the lights on and yet we were putting a ton of effort into it. But end of the day had to make a really tough call to wind the business down.
• 0:18
  John Ostenson spent 15 years wanting to be a business owner and never pulling the trigger. One phone call changed everything. Now he's helped hundreds of people get into franchising and he's invested in them himself. If you've ever wanted to own a business but didn't know where to start, this conversation is your phone call.
• 0:34
  So the people listen to the show, they probably listen to Gary Vee and they probably listen to Cody Sanchez. They probably listen to Alex Ramos and they probably listen to all these big entrepreneur thought leaders. They were probably in your position, too. They haven't taken the first step because I think that entrepreneurship is hard. And a lot of what these people sort of preach, they don't say it explicitly, but they make it seem easier than it is. There's never a good time to get into business ownership.
• 0:57
  There's never a good time to get married. There's never a good time to have kids. Like the stars never align perfectly, but you do it anyway. And so many that I work with say, I wish I'd done this five years ago. I wish I'd done it 10 years ago. Best time to plant a tree is yesterday. Best time to start a business was yesterday.
• 1:16
  My fitness pal is a success story partner. Now I want to talk about something I do every single day that I almost never bring up on the show, how I actually keep my health from falling apart while I'm running everything else in my life. When I first started my own health and wellness journey, my fitness pal was like the first app I ever downloaded to help me figure out my nutrition, my calories, my macros, all of it.
• 1:36
  When you are moving at 100 miles a minute, your workouts get sloppy, your eating gets random. Don't even talk to me about when you're on the road. I mean, there's days where I look up at 4 p.m. and I realize all I've had is a coffee and whatever was sitting on the counter. And for years, I told myself, like many of you, that this was just the price of being ambitious. You're grinding, you're building, you don't have time to think about lunch. And that's a story that I kept telling myself, but it's not true. It's just being disorganized about the one thing that you can't
• 2:05
  actually replace which is your food which leads to your health food is a foundation for your energy for your sleep for your recovery for your performance for your life basically food is the one input you can have the best morning routine on earth you can meditate you can journal you can cold plunge you can do whatever you want if your nutrition is off everything else will
• 2:26
  suffers. I see it everywhere. It doesn't matter if you're optimizing for the perfect body, or you're optimizing to win the championship, or you're optimizing your brain to be at 150% and always be cognitively dialed in. Whatever it is you're trying to optimize for, it starts with food. If your nutrition is off, everything else suffers. Over the last week, not only am I working with MyFitnessPal, but I've been back in the MyFitnessPal app on the premium plan
• 2:52
  This is the app that started off my own health and wellness journey years, years, years ago. And the first step that I took towards getting my own health back was downloading MyFitnessPal years and years and years ago. I scan a barcode. It pulls everything up. It remembers my regular meals. It's done. There's no friction. And that matters because the second something is annoying or there's a lot of friction, I stopped doing it. And that's just the truth with me. This one stuck because it doesn't feel like working.
• 3:18
  Now, the moment I started logging what I was really eating, not what I thought I was eating, and there's a big difference there. I was way under on protein, and I was eating most of my food after 8 p.m., and I was telling myself that my nutrition was fine because I wasn't eating junk. But not eating junk and actually eating right are two very different things.
• 3:35
  And with premium, I can see all of this, right? I can see trends over the weeks. I can see the macro breakdowns by gram, by meal. I can see where my energy dips in the day. It lines up with what I ate. And I can set custom goals for different days, which is useful because my training days and my rest days obviously don't look the same. Turns out that I wasn't feeding myself properly. And it's embarrassing to say, but it's true. It's not about obsessing over a number. It's not about punishing yourself for eating a burger. It's about awareness.
• 4:01
  You cannot fix what you refuse to look at. The MyFitnessPal app just makes you look. I just want you to start with one week. Just log what you actually eat for seven days and look at it. And I promise it'll tell you something you didn't know. And whatever it's telling you is going to help you function better today, tomorrow, and most importantly, it's going to help you live a much longer and healthier life.
• 4:24
  So go to podcasts.myfitnesspal.com. That is podcasts.myfitnesspal.com and use code Scott. That is S-C-O-T-T, Scott in all uppercase letters. And you're gonna get 15% off MyFitnessPal premium. Again, this is so you can start living a healthier, happier, longer life. Go to podcasts.myfitnesspal.com, code Scott. Links in the show notes too. Check it out. You won't regret it.
• 4:59
  So John, you said there's never a good time to start a business, get off the couch, don't bet the farm, get in the game. And you've basically said this on every single podcast you've ever done. I want you to tell me the moment that you weren't following your own advice, when you weren't getting off the couch, starting the business, walk me back to that inflection point in your life. Yeah.
• 5:22
  No, very thankful to have a corporate career of about 15 years and, you know, had the golden handcuffs. It was easy to kick the can down the road. What I found was I became a wannabe-preneur. I'd always wanted to be a business owner, didn't know how to connect the dots, didn't know what it looked like. But I felt like I was in the game in a way because I was consuming content. I was having conversations. I was taking business owners out to lunch, trying to figure out where I fit in and what that looked like, starting out.
• 5:49
  I had conversations with private equity firms. Did they have a portfolio company I could step in and run? You know, explored a lot of different angles, but really fell into franchising. You know, prior to having my epiphany, I always associated the F word franchise with fast food and didn't realize there was a whole industry out there outside of fast food that I believe is a...
• 6:11
  Better path to business ownership for a variety of reasons, which I'll know we'll get into. So for me, to answer your question, it was several years where I was kicking the can down the road, feeling like I was becoming a business owner, but I really wasn't. I was still on the sidelines. I was still working for the man. I was helping them build their empire instead of my own, to be cliche, and really had that experience.
• 6:31
  I was fortunate to define franchising when I did. It was in my late 30s. So the people that listen to this show, they're more or less split into two categories of people. There's a lot of entrepreneurs that have started their journey.
• 6:44
  But there's a whole bunch of people that are still working for companies that are listening to this show because they want to do something more. They want to do something different. And they probably listen to Gary Vee and they probably listen to Cody Sanchez and they probably listen to Alex Hermose and they probably listen to all these big entrepreneur thought leaders. But they haven't. They were probably in your position, too. They haven't taken the first step because I think that entrepreneurship is hard.
• 7:11
  And a lot of what these people sort of preach, they don't say it explicitly, but they make it seem easier than it is. And they all sort of preach a different version of entrepreneurship as well. And I think that what happens to most people is they learn a little bit and they try something and it doesn't work out. And then they sort of retreat back into their comfort zone, which is nine to five work.
• 7:34
  So your version of entrepreneurship, which is franchising, is something that I've never spoken about on the show ever. It's something that is like, I know it exists, but I kind of know it exists in the same way that you just described, like getting a restaurant. How did you discover, like, like, I'm just so curious about your path because again, I've had a lot of entrepreneurs on this show that some of them I just mentioned, and they've never spoken about franchising ever.
• 8:00
  So what was the thing that sort of drew you to it, exposed you to it? Because even that is a rarity. Like you're one of the few that actually teach it, but you found it through something. So was it through failures? Was it through trying all these different versions of business and realizing that they're not all they're cut out to be? Was it bootstrapping, raising money, failing, hating that game? Like what was the thing that got you to franchise it?
• 8:21
  Yeah, it was a phone call. So it was 10 years ago. I was having these conversations trying to figure out where I fit in in the business ownership game. And I got a call out of the blue from someone that I'd actually been put in touch with for networking purposes. And he said, hey, John, there's this opportunity you need to check out. And it was fantastic.
• 8:38
  Um, anyway, long story short, had the opportunity to step in as president of Shelf Genie franchise system. Shelf Genie is custom pullout shelving for your kitchens and pantries. We had about a hundred franchisees across North America and I had the opportunity to leverage my background and my skillsets to step in. So I didn't jump right into business ownership. Instead, I jumped in from a.
• 8:57
  public company to a private company where I had a lot more leeway to make the call on how we ran things. But I had marketing teams, had call center, had a technology team, a product development team supporting these hundred franchisees across North America. And for me, that was the light bulb moment. I saw how all these diverse backgrounds coming together under a shared system of support where we enabled them to step out and become business owners themselves. So really fell in love with franchising. Yeah.
• 9:22
  And from there, I eventually spun off and, you know, invested in franchises myself, you know, with the founder of Shelf Genie, have had other partners over the years, too. So I have invested on the franchisee side. I've got that franchisor background. So, you know, I love bringing those insights into how we work with clients now. Yeah.
• 9:41
  Yeah, really fell in love with franchising just on how for most people, I'd say most people have it deep inside of them that desire to be a business owner, that desire to show their kids, show their family that, hey, I'm willing to take a risk and step out and build something of my own. I mean, we only live once, right? And so why not bet on yourself instead of just collecting that paycheck every two weeks? And so...
• 10:05
  My humble belief is franchising is a better path for most people, at least for that first season. You know, I always encourage people to think about what's right for the next season of life that you're in. Maybe you won't be in franchising forever, but I guarantee you it's going to give you a good foundation that you can build off of and give you a lot of optionality down the road. It makes a lot of sense because there's like a framework and a structure in place.
• 10:28
  And it's this nice in-between between working for a company and going out on your own and doing everything yourself and figuring everything out. I'm very curious why it's not more like when you say it, it's so obvious. Have you figured out why it's not more popular? Because it seems like the obvious choice. From where I sit, it's pretty popular.
• 10:51
  Yeah, yeah, yeah. We're seeing interest at levels that I've never seen before. And first off, 30,000 feet, when you look at Google searches, I mean, business ownership, entrepreneurship is at an all-time high as far as what people are looking for for a variety of reasons. First, it was COVID. Then it was AI disruption. We can get into all of that. Yeah.
• 11:10
  But no, our biggest challenge is that good franchises are selling out in good markets right and left. And so I was out in Park City last week meeting with 24 franchise founders. We're always trying to figure out what's coming down the pipe that still has good availability to put our clients in front of. But no, we're seeing a lot of interest. I think
• 11:28
  It's really been a fascinating couple of years. So many different types of businesses or franchising as a way to scale. We're seeing a lot of different models and a lot of different sectors, ones that you certainly didn't have on your bingo card, which, again, we can dig into a little bit more. But there's just it makes sense for so many companies as a way to scale. But then also for a lot of entrepreneurs, you know, to be able to step in.
• 11:50
  have that proven system that they can leverage to get their start. As we're chatting, I think, I just think about my own sort of entrepreneurial journey. And I've looked into franchising before, but I hope that sort of my journey
• 12:06
  My journey is probably similar to somebody who's listening right now. And it was always about figuring out what's the right brand to invest in. So that's probably the concern. The concern is I'm not raising money. This is my own cash. And...
• 12:22
  I don't know where to put that cash. I know there's different models of franchising, but when you start to look at some of the big ones, like the ones that you know, you know, the guy who's driving the nice car, oh, well, he owns like a McDonald's. Right. And that's the go-to thought. And then you go, well, how much is a McDonald's? Well, it's like over a million bucks and I have to figure out how to come up with a million bucks.
• 12:39
  And I think that becomes a stressful thing. And then you start to think, okay, well, what if I make the wrong bet? That's just my money. It's not VC money, which you should treat as your own, but it's still not VC money. If I take out a loan, I'm still personally liable for that loan. And I think that stresses people out, and that's probably the friction. So then they probably try and, funny enough, do something that's –
• 13:03
  Less investment up front where they try and figure it out, but that could take years of their life to figure out if it even works. So the number one question before we even go into sort of what you see with people that you've worked with and what not just not what companies to work with, but what industries are interesting and what industries are franchising.
• 13:24
  How do you find a good franchise so that you don't waste your own capital, you don't lose your own capital? That's the bet that I think people are stressed about. Yeah, and for good reason. I mean, franchising is like any other industry. You've got great players, great companies that provide outstanding support and are worth every nickel in royalty payments that you pay back to them. Then you've got ones that aren't great, and that's where we come in to try to help. Yeah.
• 13:48
  You know, but there's a little bit of science, a little bit of art to it. You know, you're looking at the leadership teams and their backgrounds. You're looking at the competitive advantages, the uniques in the market. Obviously, the financial model's got to be robust. You're looking at talking to other franchisees in the system to hear about their experience and ask them questions. So, again, a little bit of art, a little bit of science to it. But you're exactly right that it...
• 14:10
  Not every franchise is created equal out there. And most of the opportunities that we do see people getting into these days, I would say if it's a brick and mortar retail customer facing type business, you're all on investments between $300,000 and $600,000, including working capital. If it's more of what I would call a service based business, which is about, I'd say probably two thirds of our clients, this is what they're getting into, where you don't have a physical location, it's more remote.
• 14:34
  Your all-in investment could be as low as $100,000. I'd say $100,000 to $200,000 is kind of a sweet spot, again, including working capital. A lot of people will use SBA loans to fund those or retirement rollovers. So, again, you're putting your own skin in the game, but you're not coming out necessarily with your life savings in a lot of cases. So if you were going to look at some of the...
• 14:55
  uh, sort of the industries that you're most bullish on that you're most excited about. So that, that's sort of like the range, right. For somebody getting into this game. So you're a hundred thousand to on the, on the higher end for most people, 300 to 600, including working capital.
• 15:10
  That's not that bad. SBA loan, you still are personally responsible for. So you still want to make sure that it's a good bet. But what are you most bullish on? Like what industries are actually the most exciting? So I'm thinking about, you mentioned, by the way, is Snap Fitness,
• 15:25
  Was that a franchise model? I think it was. Because I had Peter on. And he, from the guy who founded the company, was a very interesting perspective. Because he could, and this is why he was so successful and had a very successful exit, he could, with some ridiculous amount of accuracy,
• 15:48
  go to the right city in the right location and predict with like 95% accuracy that this particular Snap Fitness location was going to cash flow and be profitable and have this kind of success. So that from the founder perspective, like I'd be, I'd invest in you all day because you've done this. I don't even know how many franchises he eventually had, but it was like, it was tons, but
• 16:13
  I'm curious what other businesses, like that's like a non-food franchise. That's the only like non-food franchise founder I've had on, but what other businesses are you sort of bullish on? What other industries? Yeah. You know, we see interest across the board. I'd say a lot of smart money is flowing into things like home services and property services. A lot of private equity getting involved there as well. They love the franchise model, uh, but that could be everything from, uh, you know, flooring to insulation to, you know, I've done a couple of pool cleaning deals in the past month. Um,
• 16:39
  You know, so many different niches, restoration, a lot of non-sexy stuff. I joke that non-sexy is the new sexy when it comes to business ownership. I like that a lot. You know, people love those, you know, they love dumpsters. They love the air quality environmental testing, artificial turf, you know, things that...
• 16:58
  aren't sexy, but then we're also seeing a lot of interest in health and wellness, categories around recovery modalities or longevity, certainly a lot of interest around things that people will always spend on. They'll always spend on their kids, their pets, their aging parents. The senior space is really big, not just in-home senior care, but there's other businesses that cater to that large demographic.
• 17:20
  You know, and then I'd say B2B services. You know, we're probably doing a little bit less in automotive today, maybe a little bit less in fitness. We're still doing some in fitness, but a lot of interest in B2B services and, you know, business to business. And that can mean a lot of things. Everything from business coaching to cost reduction consulting to freight brokerage to insurance adjusting to industrial hoses. All franchises. All franchises. Again, things you wouldn't have on your bingo card when I say franchise. So where does somebody who's,
• 17:51
  in the company right there in their company right now, they're where you were 10, 15 years ago. Where do they start to research to figure out? Well, first of all, I would also ask, what's the kind of person that can be successful at this?
• 18:08
  Is it the classic entrepreneur, whatever that means? Like what's the personality trait or the skill set that somebody has to have to actually be successful in this game? Yeah, well, franchising is not right for everyone. There are some people I work with that are too entrepreneurial and they question everything. They wouldn't put their thumbprints on everything. They're not the right fit.
• 18:26
  Again, the majority of people I humbly believe are better off starting with franchising versus just starting their own thing. And the characteristics there, one, you've got to be halfway decent with people. That's business 101. You've got to have a good work ethic. Again, that's business 101. But then what makes franchising unique is you have to have a humility and willingness to follow a system, right? There's a playbook that's been established. That's why you're getting into the franchise is to go...
• 18:51
  Increase your chances of success by running the playbook. Now, a good franchisor is still going to let you innovate and try new things and test things out. That's where a lot of the best ideas come from. But for the most part, you want to stay in the lines and just go execute against that playbook, and that increases your odds of success. So that's how I think about it. As far as how you find the right franchise...
• 19:11
  I mean, certainly you can Google around, but what you're going to find is, you know, a top 100 franchise list or a top 50 list. Companies are typically paying to be on that list. It's a PR move for them. So there's just so much noise out there. And that's where we come in having done this. I mean, I've helped hundreds of people step into business ownership. It's entirely free to work with us, Scott.
• 19:30
  We get a referral fee from the brands on the back end, very similar to a real estate model. If you were going to buy a house and you used an agent, you wouldn't pay that agent. Instead, the seller does, and none of that gets passed on. So it's a nice, clean model. We work with over 600 different franchise companies that are in expansion mode looking to move into new markets. And we get a peek behind the curtain because we have these relationships. We know what's going on.
• 19:54
  And so we can add a lot of value and help you identify the top opportunities in your market. Talk to me about other paths to entrepreneurship, because like the book, the subtitle is The Better Path to Business Ownership.
• 20:09
  So obviously people can bootstrap, people can raise venture money. Those are sort of the. The the the more recent sexy versions of entrepreneurship and then Cody Sanchez sort of entered the game with, you know, acquiring businesses and it's more of like a private equity play.
• 20:29
  Let's walk through all of those because I feel like you've actually at some point touched all of these different models to a degree or at least worked with people that have definitely tried everything. So you make the argument that franchise ownership is the better path. Why is it the better path compared to all these other models that a lot of people will sort of advocate for? Yeah. First off, let's take just the startup, right? You go out. You have a great idea. You start the business. You know.
• 20:58
  That can work. Your odds of success are very low. I mean, just based on the sheer numbers, you know, where franchising steps in and does a better job, in my opinion, is again, you've got a playbook that's been tested. That's, you know, been around. You've got a community of other franchisees, kind of the built-in mastermind. You're learning from each other. You know, some of the tangible things, you know, day one, you've got technology stack you're stepping into. You're not having to go out and piece together systems. You've got marketing data that can be utilized in your initial marketing process.
• 21:28
  So you're not making the same mistakes. You get a higher return on ad spend. And again, you've got a franchise on the sidelines. It's almost like a coach. The better you do, the better they do. So, you know, there's, and again, not every franchise has the same value to the franchisees. And that's where we come in to help you identify the right ones.
• 21:45
  Let's shift over to entrepreneurship through acquisition to your point. There's a lot of great content out there around ETA, entrepreneurship through acquisition. I've got four different Harvard MBA clients right now that are each pursuing entrepreneurship through acquisition at the same time they're considering franchising.
• 22:02
  What I see from where I sit is over and over again, people have been looking for an existing business for three years or four years or five years. I've got one client that actually paid two analysts for two years to go out and find a business for him. It's incredibly competitive. If you find the right business, that can be a great avenue, but you're going to spend a lot of time and effort, time that could have been spent getting in the game. That's why I love franchising. It allows you to step into the game, start building something, quit, get off the sidelines, quit just consuming content, get in the game, make it happen.
• 22:32
  Two years from now, you can go buy an existing business too. It doesn't limit you, right? And a lot of people say, well, can I buy an existing franchise, you know, resale? Again, that happens some, you know, and we'll have some clients go that path. Typically, the good opportunities never hit the open market, though, in franchising because another franchisee will buy them. So, you know, I think of my client, Nathan, in South Carolina. He's the largest franchisee of two men in a truck moving service.
• 22:57
  He operates in 12 markets. Well, he started off with one, and then over time, he acquired other franchisees in other locations and built up this little empire where he's now doing 45 million a year in revenue across 12 locations. And every year or two, he comes to me and says, hey, John, I've got this young guy in my organization that I wanna promote and give him more responsibility. What franchises do you like? And we'll end up introducing him to
• 23:18
  You know, a few, he'll pick one, go put this young guy in charge, give him some equity on the cap table and say, go make us proud. And he's had a great track record. So it allows you over time to attract better talent, to retain them, incentivize them, you know, build that little organization and that empire.
• 23:35
  But yeah, entrepreneurship or acquisition can be a great game once you're in a franchise because you get first line of sight into anyone else that may be selling. I've never, what you're saying makes a ton of sense. Just the fact that there's so much time required to find a good deal.
• 23:50
  Again, like, so we'll go back to, we'll go back to sort of what's preached about ETA, which is you find a, you find a business owner that's ready to retire, or it could be a friend, whether or not the franchise owner that's ready to retire or a business owner that's ready to retire.
• 24:06
  And you're not putting a lot of capital up because you're structuring a great deal because it's always about, well, how do they sell or finance the whole deal? And hopefully I don't have to put any of my money in and I'm just going to work and acquire the business through me growing it or me marketing it differently. And that's going to be the deal that I'm going to do with the business owner. But to find people, to find, first of all, to find the best businesses and the best business owners that are going to be okay with that deal.
• 24:31
  you're gonna have to kiss a lot of frogs first. And you're gonna have to do a lot of work because all the businesses, because I've done this, all the businesses on BizBuySell and all those other marketplaces,
• 24:43
  I mean, that's probably the garbage that no one else wanted. Same with real estate. If you're looking at a good real estate deal, not the most beautiful house, but as like an investment opportunity, you're not finding those, like if you go to like realtor.com, those are not the best investment opportunities, more often than not, because you find those off market. The people that have those businesses, those homes that are the best investment, they're selling those off market before they ever hit.
• 25:12
  And I think that people don't consider how much work it is to find those good deals. Again, it could be a great avenue, but it takes a lot of work in most cases and a lot of time, a lot of diligence, and it's competitive. You know, to your point about off-market deals, I had my assistant blast out emails to a couple hundred past clients yesterday saying,
• 25:33
  around a new opportunity that was brought to me before it hits the open market. It's a truck that contains like the capacity for 200 gallons of fuel and goes around and fuels fleets of vehicles for company owners. So they don't have that downtime where their employees have to run by the gas station every day, right? Instead, it comes every night and they can fuel it. Well, that's a one employee operation. You know, it's netting at the corporate location, 440,000 to the bottom line.
• 26:02
  And you don't need a physical storefront. Again, just an example, but it's one that I anticipate to go incredibly quickly once it hits the open market. But we're able, based on our reputation, based on our relationships, to get those off-market deals, get our clients in front of the line before they hit the open market. What you're describing sounds super attractive, right? You're walking into an existing business model that works. You're putting up X amount of dollars, which can be funded through an SBA loan. And then you're sort of off to the races.
• 26:32
  that seems like, like, let's just play devil's advocate and say like, that seems like an over, or is it that simple, but it seems like over simple and, and very easy to get into this game. Um, what, what do you not get when you're getting a franchise? I guess is my question, because if I'm going to tell somebody, Hey,
• 26:50
  you can walk into this business opportunity, you make half a million bucks a year or a million bucks a year, and then you can do the next one. The next one you can compound. And there's like a playbook already set up for you. Like it, it starts to seem like it doesn't actually make sense to start your own business at the end of the day. Is there anything that you're missing or that you don't get from this that you normally would? Is it because you like,
• 27:11
  For example, I think with Chick-fil-A, I don't think you actually get a lot of ownership. I think in some franchises, you start to turn into a highly paid manager. Is that the case in some, or what are you looking out for? As an owner-operator in certain franchises, it is more of a glorified day job experience.
• 27:31
  Most of those that we work with have more of an investor mindset. So it's, hey, get into business, understand it, and then replace yourself over time. But no, what are the downsides? What are the trade-offs of franchising? First off, picking the wrong one, right? It's like picking the wrong marriage partner. Maybe not quite that extreme, but picking the wrong business partner. You are paying a royalty back to the franchisor. That's usually 6% to 8% of revenue.
• 27:55
  In some cases, the franchisor is not worth it. In a lot of cases, they aren't. And oftentimes, these are things that you'd be paying for anyway if you were to just go start a business. But one other piece would be that you're territory locked, right? You're buying the rights to sometimes multiple territories, but you can't go operate outside of those territories because you'd infringe on another franchisee. Now, again, there's that potential on the flip side for that internal M&A of a
• 28:19
  potentially acquiring those neighboring franchisees over time. And that business is already up and running. You can build it into your empire. But I'd say those would be some of the limitations around. And certainly if you're ultra creative and want to go out and create your own logos and branding, you know, franchising may not be the best path. Amp is a success story partner. Now, most people don't fall off their fitness routine because they're lazy. They fall off because life gets in the way. The gym is a 30-minute drive. Equipment takes over your living room. Some days you've got 20 minutes, not two hours.
• 28:47
  AMP fixes that. It is the smart home gym that actually looks good in your space. It's sleek. It's premium, barely takes up any room. Here's how it works. There's one smart dial that controls all the resistance. You twist it and the weight adjusts instantly. And that's your entire setup. You pick a workout five minutes or 60 in the app, walks you through it. Step-by-step like having a trainer right there with you. There's over 500 movements or strength.
• 29:09
  There's HIIT, there's Pilates, there's yoga, there's mobility, and it keeps things fresh. So you actually stick with it. And that's the real win, right? It removes the friction. There's no more commute, no waiting for equipment, no excuses. You just show up in your own home and you go. If you want fitness to feel simpler, check it out. Go to amp.ai, use code SUCCESSSTORY. That's amp.ai, code SUCCESSSTORY.
• 29:31
  NetSuite next is a success story partner. Now, here's a stat that should bother every founder, every entrepreneur. Basically, if you're building a company, this is going to stress you out. They say that every day your business is late to AI, you fall two days behind. That's two. And the competition isn't slowing down.
• 29:47
  So what are you gonna do about it? Well, you probably already know about NetSuite. NetSuite is the AI-powered business management suite. It securely connects all of your data, your financials, your inventory, commerce, HR, CRM, all of it in a single source of truth. It's trusted by over 43,000 customers. That's the foundation. Now NetSuite Next builds on all of that.
• 30:08
  But now AI is baked into everything you do. So what does NetSuite Next do? Well, it automatically services customer insights throughout your day. AI agents work alongside you to solve problems and handle all the routine stuff. And anytime you have a question about anything, you just ask. And remember, it has all your company's data.
• 30:27
  So it has all the answers. It's like you're talking to a colleague. It's customized for a wide range of industries. So it supports the way your business actually works. Whether you're doing millions or hundreds of millions, it's time for NetSuite next. This is where your business meets AI. If I needed something like this for my business, I'd use NetSuite and you should too.
• 30:45
  Now, for the first time ever, you can try NetSuite Next for free. If your revenues are at least in the seven figures, go to netsuite.ai slash scottclary. That is netsuite.ai slash scottclary. It's built for every industry. It's ready for every boardroom. netsuite.ai slash scottclary.
• 31:05
  My fitness pal is a success story partner and I've actually been using it myself for a while. Many of you don't know this, but it's one of the first apps that I've ever used on my own personal health, wellness, weight loss, nutrition journey years ago. Now on this show, we constantly speak about optimizing everything, right? But optimizing your sleep, your training, your mindset, your business. But the one thing that so many people skip right over is the thing that all of this is built on. It's your food.
• 31:30
  It's your nutrition. You can have everything else dialed in, but if your nutrition is off, your energy, your recovery, your mental clarity, they all take a hit. That's why I use MyFitnessPal. It makes tracking your food incredibly easy. I can log a meal in 10 seconds, and the database is so big that whatever I'm eating is already in there. And here's the thing that actually got me. When I started tracking, even though I'm pretty good about my diet, I realized that if I don't pay attention, I weigh under-eat protein. And that explains every single afternoon crash that I would be blaming on everything else but my food.
• 31:58
  Again, MyFitnessPal is not about restriction. It's about awareness. And when you start using it, you start noticing patterns. It also connects with 40 plus apps and wearables. So it slots right into whatever it is you're already using. So if you actually care about your health as a founder, as an athlete, as someone who just wants to feel better, your nutrition has to be part of the plan. Go to podcast.myfitnesspal.com and use code SCOTT, all uppercase, for 15% off MyFitnessPal premium. Start tracking and see what you've been missing.
• 32:23
  Cash App is a success story partner. And honestly, this one's easy for me because I've been into Bitcoin for years and Cash App is the place you can go to buy Bitcoin. The number one question I get from people more than anything else when it comes to Bitcoin is how do I even start? They're curious.
• 32:39
  built it up in their head is this whole complicated thing. What is it? Where do I buy it? How do I hold on to it? And it really doesn't have to be that confusing. If you've been curious about Bitcoin, but you haven't made the jump yet, Cash App makes it so easy. You can set up automatic purchases with zero fees, or you can buy larger amounts also with zero fees. You can start small, you can go bigger. It is designed to be simple either way. And for a limited time, new customers can get $10 added to their balance. Just use code CashApp10.
• 33:08
  When you sign up and don't forget this part, send at least $5 to a friend in the first two weeks. Terms apply. Cash App is a financial services platform, not a bank. Banking services provided by Cash App's bank partners. Bitcoin services provided by Block Inc. Brand. For additional information, see the Bitcoin disclosures at cash.app. slash legal slash podcast. I spoke briefly about sort of like the categories that you're interested in, but I want to talk about your AI proof thesis.
• 33:35
  That smart money is sort of flowing into trades, home services, businesses that I can use, but never replace. So which businesses would you sort of push somebody towards? Are they all AI proof service base? Are those kinds of the ones that you like the most?
• 33:50
  Yeah, and nothing's ever AI-proof, right? This day and age, it's changing so fast. But ones that will be AI-resistant for a very long time that may be able to harness AI. You know, what we see is oftentimes, you know, companies and franchising are operating in less sophisticated, maybe fragmented mom-and-pops type markets. So if you're able to come in and utilize AI for lead generation, for truck routing, you know, oftentimes you can get a leg up on the competition. But no, this is a common theme that we're hearing, you know, a
• 34:17
  A lot of folks with technology backgrounds or they've been in consulting, they're tired of traveling, they're being asked to do more with less. Oftentimes because of AI these days are coming to us and saying, hey, maybe now is the time to explore business ownership and, you know, have some security. They feel more comfortable in business ownership than they do working for someone where their job may be, you know, let go tomorrow.
• 34:39
  But they're getting into things that are understandable, you know, things that are needs based, I'd say in large part. You know, again, people will always spend on their kids, their pets, their aging parents, to some degree, their health, their homes. And a lot of these businesses, you know, I mentioned a couple of clients getting into pool cleaning in the past month, you know.
• 34:54
  For the foreseeable future, that's not going to be replaced by AI. One of the interesting stories that I found out about you is that you had dinner at Gary Breck's house in Miami last year, and you were talking about starting a longevity franchise alongside Tony Robbins. So when you think about future opportunities as well.
• 35:14
  you're trying to build a franchise for something that is also bleeding out. So we're talking about two different things. You can franchise out existing service legacy business models, super unsexy, but they're sort of recession-proof, AI-proof, and air quotes to a degree. But when you look at some of the newer opportunities as well, how do you build out, for example, like Tony Robbins, how do you build out a future-looking, forward-looking longevity franchise? What's the discussion that you have with Gary Brecka and Tony Robbins about building something like this out?
• 35:44
  Yeah, certainly. I don't want to misspeak. I mean, Sequel Brands is the one that's really running with it. So I was more on the sidelines helping. I don't want to take credit here, but really excited about that one and what they're doing. I mean, when you look at the sheer numbers behind the longevity movement and just the pace at which it's growing. But that's what I would call a more fashion forward, sexy franchise. That is a very sexy franchise. Right.
• 36:05
  And again, I'd say the majority out there are liking the non-sexy space, the non-trendy industries. However, we do have some clients that really like those that are more bleeding edge, as you said. My question for that would be actually, somebody's listening, just to speak to somebody different than the person who's getting into franchise ownership, that is...
• 36:32
  particular situation where you're chatting with Gary Brackham, you're trying to figure out, okay, how do we franchise out this longevity brand? The person who's tuning into that and thinking, oh, that's interesting, is a founder who's building a business right now who's thinking about franchising as a growth strategy. So when you think about franchising out a longevity brand, I think that
• 36:56
  Most people who have something that's a little bit bleeding edge, they would think this is difficult to franchise because the playbook is changing so quickly. Software, AI company, longevity company, things change so quickly. So how does somebody like Sequel, Brecca, Robbins, how do you, because obviously these people are at the top of their game, how do you franchise something
• 37:24
  in a market or an industry or a category that is moving quickly? Like what are the guardrails or the playbooks that you give to somebody? Does that make sense? When an industry is changing so rapidly, because that could be an interesting just thought for somebody as a growth strategy who's building a more innovative company right now.
• 37:41
  I think there are very few industries that are changing as rapidly as that one, right? And in their case, they have such brand awareness that, you know, that you've got this halo effect that most people can't leverage quite to that degree. But speaking to franchising your business, I think it's a great...
• 37:57
  path for people to consider. Not every business makes sense to franchise, but I guarantee you, if you go through the thought exercise of thinking through what it would take to replicate that business and have others run it in other markets, it's going to lead you to some insights that will better your business. So I think it's a very healthy exercise. And I do think that franchising makes a lot of sense for a lot of existing business owners. You know, I mentioned private equity loves franchising. So when you think about that ultimate exit down the road,
• 38:22
  I was speaking at a conference last year and the comment stuck with me that one of the private equity firms made. They said it's sexy for private equity to have a franchise in their portfolio. They just love the model. But with your business,
• 38:37
  It's definitely a great path for many companies because you're able to leverage, you know, others' capital, right? The franchisees are investing. They've got skin in the games. They're going to act as owners, not just as corporate managers for you. You're able to get bulk buying power. You're able to get a lot of synergies and economies of scale at the home office. So instead of supporting two locations, now you're supporting one.
• 39:01
  you know, 50 locations. Um, so yeah, always happy to have that conversation. Cause I think it makes sense for a lot of companies that may not be considering. I've never heard anybody consider it as a, again, outside of this one, outside of Peter who built snap, like that was like the one franchise, but he killed it. I mean, the guy, I think had, I think his exit was over a hundred million. So obviously it did quite well. I think, I think he actually sold the company multiple times. Um, uh, uh,
• 39:30
  So just to flip the script for a second, if somebody is like a founder listening to this, maybe they want to sit down and chat with you anyways, not to get into franchising, but just to figure out how to do it properly. Because how a founder should franchise properly is probably highly indicative of franchising.
• 39:49
  if you are an employee and you're looking to get into a franchise, these are the things you should look for. So what is the playbook for a founder who wants to franchise properly? What are the things that they should do properly? And also, if you're looking at franchises, like what are those things that you should be looking for in that company? Is it marketing strategy? Is it customer acquisition? Is it all of the above? Is it like, what are the things that you do to actually franchise a company properly?
• 40:18
  Yeah, so on the franchisor side, it's really starting with the end in mind, knowing that one day you're wanting to build something that others are going to want to buy into, right? And so it is having the marketing systems in place, the technology in place, doing a lot of testing of your marketing, right? So you really develop a playbook that other people can replicate in other markets. It's creating great operations and training manuals. You know, something as tangible as that.
• 40:42
  But it's also really understanding the end consumer and how you differentiate versus the competition and the minds of that consumer. If you flip over the franchisee side, franchisees are going to be looking at businesses across a variety of industries. When I take a client through the process, we're typically looking at the top.
• 41:00
  dozen or so opportunities that are available looking to scale in their market. And I don't want to be too prescriptive too early. Instead, I show them a wide gamut of different types of businesses because 80 to 90% of the time, our clients end up getting into something in an industry that was never on their radar. So it is fun to take them through the process, expose them to what's out there. They're able to compare and contrast different opportunities and they start to prioritize different characteristics in their mind. And then they look at their spouse and they have that light bulb moment and say, I never thought we'd be in this.
• 41:30
  But gosh, our community could use that. I think that would leverage your skills. So it is a lot of fun. So going back to the franchisor, I think knowing that you're going to be compared to others, not only in your industry, but in the minds of the candidate, also other types of businesses and franchising. What is it that's compelling? What is it that's unique?
• 41:48
  We don't need another home cleaning franchise. We don't need another mosquito franchise. We need unique ones like some of the ones I've invested in. I've got a business that provides temporary walls, containment walls around renovation projects. So niche and so unique. You don't think about it right until you see it. I've got one that provides asphalt paving and line striping for parking lots.
• 42:09
  I've got another one that is up in Delray, not far from here, that provides custom orthotics, 3D printed inserts for your... So, actually, this is a really interesting point. You're going into stuff you have no experience in, and you're still successful at it. So, for the franchisor...
• 42:26
  They've got to understand that they have a lot of competition out there. Because if they do this right, then somebody who has no experience in asphalt or orthotics can step into that and still be successful at it. You've got to be an expert on that industry because you're training up those oftentimes that do not. And oftentimes you want people that don't have...
• 42:44
  experience in that industry because you don't want the baggage coming in with them. Instead, you want people to have sales and marketing skill sets, or they've learned how to attract and retain and incentivize talent and build a team. And they're, again, they have that humility to follow the playbook. That's a huge thing, humility. The ego is going to be the death of success in this. Well, actually, by the way, if you have too much ego, you're not going to be successful at anything. I think that it's just a little bit, I think that you'll notice it quicker.
• 43:14
  when you're a franchisee versus if you're trying to build a business, you may not even notice that your ego is getting in your own way for a few years down the road. Yeah. If you're the smartest guy in the room, no matter what room you're in, franchising is not right for you. I think, I think that life's going to be very hard for you. If you think you're the smartest guy outside of a select few entrepreneurs that can find a way to make that work. Like even if you're just building from scratch.
• 43:34
  I genuinely think like you have to be a little bit humble because whatever you're building the first version of it, it's never going to be the thing that works. So if you're not humble, you'll never learn to get the, like, I mean, it started. Okay. So the podcast for me, if I was, if I thought I was the best podcast in the world and I wasn't always testing and iterating, and I think I told you before, uh, you know, I've done about a thousand plus actually more like, like I think 1200 or 1300 episodes are up on the main podcast. I've tried other podcasts. If you go to my YouTube channel, um,
• 44:03
  Over the lifetime of me being a creator, they're not all public anymore because I've taken a lot of them down. There's like six or seven or eight thousand total video. I've tried everything. I've tried podcasting. I've tried like the, you know, like the talking head tutorial videos. I've tried. So the point is, if you had an ego.
• 44:21
  and you weren't humble, then you keep creating, or you keep building, or you keep doing the thing that isn't working, not listening to the market, not listening to the data, not listening to your friends or your peers sort of giving you feedback. And I don't think you'd ever be successful in franchising. But I just think in franchising, because they literally hand you a playbook day one,
• 44:40
  you're gonna just understand very quickly if you have too much ego that you're not gonna be successful versus I think actually the issue with entrepreneurship sometimes is like there's not enough people telling you that you're wrong early on. If you're a franchisee, you're telling you you're wrong out of the gate. You know, I've been an entrepreneur for 10 years now.
• 44:57
  You know, I still had it. There's times I'm still shaking off some of that corporate baggage back in the day. You know, thankful for that experience, thankful for the run. But what's really helped me grow as an entrepreneur is putting myself in the right rooms, surrounding myself with the right people. And, again, that sounds cliche, but it's, you know, the Entrepreneurs Organization, you know, my forum of folks I meet with every month. And, you know, I learn from these.
• 45:17
  these other guys, you know, it's being in different masterminds, different, you know, I'll be in a room of investors all afternoon today here in Miami. You know, I learn from others. I go in with an open mind and, you know, we all know business ownership can be lonely at the top, right? And so I think that's one of the things oftentimes gets overlooked about franchising is you've got a built-in mastermind, if you will, of other people running the same business day in, day out, learning from each other, exchanging the best ideas,
• 45:44
  learning from each other's mistakes so you don't have to replicate those. So, you know, again, not every franchise is created equal, but in those strong franchise systems that do a good job of pulling their franchisees together in different formats and different forums really allows you to get to third base a lot faster than doing it on your own. You mentioned numbers before. You're talking about investment could range from like 100 to 600 on like sort of the high end in most cases. What's the math that people should do?
• 46:13
  Like, what are the numbers that I have to consider if I'm trying to do this? Like, say I am now. I'm talking to you. I'm like, I'm interested. This is very, very cool. It's an interesting investment opportunity. You're telling me that you can put money into an asphalt company, an orthotics or an orthopedic company, and you don't even have to really know the business that well. I'm assuming at some point you do because you get into it.
• 46:36
  But outside of just all these great opportunities, you being in this space must understand the math behind what a good franchise looks like as a franchisee. So it's like, is there like a balancing the acquisition cost or the investment cost versus the real estate cost versus, you know, the...
• 46:59
  the royalties that you're paying back to the parent organization? Like what is that good, you know, like cap rate for real estate? What's the calculation that you do to sort of suss out a good opportunity? And end of the day, there's over 3000 different franchises in the U.S. across different industries. So there's a lot of variance, but I'll just give an example here. I had 10 clients get into the gutter installation business.
• 47:21
  $6 billion industry. Yeah. You know, there's some ongoing maintenance with it too. All in investment on that, you're around 250,000. And that'd be working capital, franchise fee, startup costs, all in. You don't need a customer, you know, customer facing storefront, right? This is a remote business. There's some equipment that goes with the leasing, some trucks, that sort of thing. All in investment, 250. What they're showing in their item 19, which is the piece of their franchise disclosure document where it shows historical financial results, is average revenue will round it,
• 47:51
  round it down to a million dollars. So you're doing a million dollars a year on a 250 investment. Well, how does that million translate to the bottom line? Once you pay the royalties, once you pay your people, once you paid marketing, it translates down to roughly 200,000. And so- That's not bad. 200,000 take home. You're getting a 200,000 return on a $250,000 investment, right? A lot of our clients would say, well, 200,000 doesn't get me out of bed. You know, I've got to go bigger. Well-
• 48:20
  like we talked about, acquire other franchisees over time or do it in multiple territories and give yourself a path to scale or buy another franchise. That's what I call franchise stacking. It's very common, but it gives you a good baseline. So 200,000 on 250, I mean, that's an 80% return. Now, why doesn't everyone do it? Because it does take work, right? If it was easy, everyone would be doing it. There is a layer of effort. There's a reason why you can make outsized returns. Yeah.
• 48:45
  But here's where I love Scott is oftentimes people overlook it. It's like, okay, so I'm dropping $200,000 to the bottom line. Great. I'm making $250,000 at my corporate job. One, you're also building an asset that you're going to be able to sell down the road.
• 48:59
  You're not doing that with your W-2 job. Two, you're also opening up the tax playbook. The government incentivizes business owners that are creating jobs that are doing good in their local communities for the economy. So oftentimes I think those things get overlooked. So I call it the trifecta. Cash flow, an asset that you're building, and then the tax benefits. But also it's $250 annually or just $250 one time to buy in? One time. So $250 to buy in.
• 49:26
  But then every year you're making 200. Exactly. So I'm really not 80% kids. That you said, yeah, that's, that's great. Okay. Well, that's not bad at all. That's so, and then how many hours can a W two even do this, uh, while they're still working their W two or, or is this turning into like a, an 80 hour a week job? Great question. I'd say this is the million dollar question that we get asked every single day, uh,
• 49:48
  About half of those that we work with jump in as the owner operator. They're running the day-to-day operation, usually with the ion eventually replacing themselves. The other half jump into what you referred to. Oftentimes you'll hear it called a semi-passive or semi-absentee model. Some call it an executive model. I like to call it semi-involved. I think that's a better term. Yeah.
• 50:08
  Again, I want people going in eyes wide open. If it was easy, everyone would be doing it. There's a reason why you can make outsized returns. It's because it does take effort. So about half of those that we work with do jump in and they keep their W-2 job. You know, maybe they're a physician. Maybe they've got a high-paying, you know, W-2 in other capacities. They put a manager in place.
• 50:29
  A good franchisor does make it doable because that franchisor can be the go-to for a lot of their daily questions and carry a lot of that daily support water for you. However, end of the day, if you don't have the right person in that seat running the day-to-day, you're going to find yourself leaning in until you do have the right person. So franchising makes that semi-involved approach doable, but it takes having a good operator. That's probably the unlock, if you could find it.
• 50:52
  And you, I mean, like you're talking about an asphalt business in Delray, you found a good operator for this is, are there some franchisors that help you find good operators and you're just the money?
• 51:04
  In some cases, I'd say the vast minority of cases, and most that is one of the responsibilities that you would have is identifying the right operator. Now, they'll help you with job descriptions and pay scales and help guide you to where they found the best operators. And again, you'll talk to other franchisees and talk about their learnings and how they identified the right people and how they paid them. So you get a leg up, but at the end of the day, it's still your employee. You're a business owner. So how do you find these people that can sort of
• 51:31
  run with it. Like what's your playbook for finding the best person to take the things that you've invested in and not screwing it up and actually being a great operator? Yeah. First off, it's tapping into your network. Your best hires typically, it could be the brother of a colleague of yours or a nephew. You know, there's what I find is oftentimes when you really sit back and you think about there may be someone in your network or just beyond your network that makes sense to bring in.
• 51:53
  So that'd be option number one, option number two, put it out there on Indeed. You get so many eyeballs on Indeed. Now you're going to have to take some time soaring through some, but that's the work soaring through some riffraff, right? Again, if it was easy, everyone would be doing it. It takes work.
• 52:06
  But some hacks that I've learned, Scott, put it out there under two or three different job titles. You just never know what someone's searching for. So maybe director and vice president and senior vice president. Titles are free. You don't want to grossly over title someone. But oftentimes there is a value that is free for you. People want that next title up. Once you find the right individual, give them three different pay packages. Okay.
• 52:32
  each with a varying level of base comp and incentive comp. Obviously, you're going to be hoping that they go for the one with the highest level of incentive comp where they can make the most money because that ties out your interest the most. However, you never know what someone's background is, where they're coming from. And this way they can pick the package that works for them, but also give some ownership in that decision. So that's another little hack that I've learned.
• 52:54
  I want to tell you about something I've been using. It's called Plod. They make these tiny AI powered devices. I actually have two of them. The first one's called a Note Pro. It's about the size of a credit card. It magnetically sticks to the back of your phone. It's great for meetings and calls. And then the second one is the Note Pin S. It clips onto your shirt. You basically forget it's there.
• 53:13
  Here's what they actually do. So say you walk into a meeting, a phone call, a sponsor call, whatever. Plod captures the conversation and then AI turns it into searchable notes and summaries and action items and key takeaways. So I started using the note pin S on pre-guest podcast screening calls. You know, the calls where someone pitches me on why they should be on the show. And I'm trying to remember everything they said an hour later when I'm actually deciding, but now.
• 53:37
  It's just all there. Same thing with team syncs, right? Same thing with sponsor calls where we're negotiating deliverables and timelines. Before this, I was either scribbling notes and half listening or just trusting my memory, which is not a strategy at all. Now, what I like most is that I can say, focus on the conversation instead of worrying about documenting every detail in real time.
• 53:55
  And when I need to revisit something later, everything is organized and super easy to find. So if your job involves talking to people, making decisions and keeping track of a lot of information, which if you listen or watch any of my content, it probably does. I definitely recommend checking out Plod. Go to plod.ai slash success and use code success for 15% off. That's plod.ai slash success and use code success for 15% off.
• 54:18
  Huel is a success story partner. Now, I'll be honest with you, I am terrible at eating well when my schedule gets packed. I'll look up, it's two in the afternoon, I haven't even had a real meal, and then I'm just useless for the rest of the day because I'm hitting a wall. So I started keeping Huel around. It's been an absolute game changer. They just launched into Target stores nationwide, which is huge. You can walk right into your local Target right now, grab the Black Edition ready to drink and the Daily Greens ready to drink.
• 54:40
  The Black Edition, this is a full meal, 35 grams of protein, 27 essential vitamins and minerals, no artificial sweeteners, gluten-free, and it's under five bucks. I grab one of these in between recordings, done, I'm good for two hours. And the Daily Greens is more of a health thing. 42 vitamins, minerals, and superfoods in one bottle. It's developed by a registered nutritionist, 25 calories, four grams of fiber, and one gram of sugar. I'll have one first thing in the morning. It's the easiest win of my day.
• 55:02
  Now, 15% off for new customers. Use my code Scott at Huel.com slash Scott and do the post checkout survey. It helps to show. Go to Huel.com slash Scott, code Scott. HubSpot is a success story partner. Now, customers are using traditional search less and less to find the businesses they want to buy from. Now, when a buyer or a customer asks AI for a solution like yours, does your business come up? They're looking for a product. They're looking for a service and they're going into some AI chat tool and they're saying, hey, help me find the best one.
• 55:30
  If your company isn't showing up, you're missing out. And most companies have no idea if their business is showing up or even how to show up. And by the time they figure it out, they've already lost a deal to somebody that figured out AI. This is what AEO is, Answer Engine Optimization. HubSpot AEO helps you show up in those moments with the right answers that your buyers and your customers are looking for. It could be before the first click,
• 55:54
  before the first form fill, that's the moment HubSpot AEO is built for. So check out HubSpot.com to learn more about AEO. HubSpot is the agentic customer platform for growing businesses. Hostinger is a success story partner. And look, with entrepreneurs, I see this constantly.
• 56:09
  Someone's got a great idea, a real idea, and they just never start. And it's almost never the idea that stops them. It's the setup, right? You sit down, ready to finally build the thing. And then you're nine tabs deep trying to figure out which website builder, which domain, what to do about it.
• 56:24
  email and then three hours later, there's nothing live and you've lost a spark. Hostinger takes all of that off your plate. It's the affordable all in one place to actually get your idea online. You tell it what you want, or you just show it a screenshot and the AI builds a real first version of your site in a couple minutes, your domain, the site, your business email, all in one account. So you're not duct taping five different tools together and hoping it works. And it's priced low enough that money isn't the excuse anymore.
• 56:52
  So if you've got something sitting in your notes app right now, trust me, it's way easier to start than you think. Go to hostinger.com slash success and use code success for 20% off. That's hostinger.com slash success, code success. You were this very smart, well-educated, very well-compensated 36-year-old. You walked away from a corner office opportunity. You had a $350 million sales portfolio. You had a stock option vesting schedule.
• 57:17
  you left this public company. Um, then you went into sort of president of, uh, this, this franchise organization, and then you went into 10 X five. Uh, well, 10 X five was from what I understand, it didn't work out the way you wanted it to. So I want you to talk about this move. I want you to talk about, you said you, this all started with a phone call. Um,
• 57:44
  What was the, what was the, this was 10 X five was what for you? Was it your first version of entrepreneurship? Was it, cause it wasn't 10 X five was a franchise or no, it was just you building a company the way that most people think they have to build companies.
• 58:00
  Right. So left the corporate world, had a couple of young kids at the time, right? But fortunately, my wife was on board, took a huge pay cut, but had the opportunity. I saw different paths that it could lead to. So stepped in as president of Shelf Genie Franchise System, and just loved that experience. When I left Shelf Genie, started 10X5 with a business partner, and I'd seen an opportunity in the market to...
• 58:23
  not silo your marketing agency and call center, but instead have them under the same roofs. The idea was that we would serve franchise systems in the service-based industries. We would make the phone ring, and then we would answer it and book appointments. And so it sounded great on paper, built a great team. We scaled to 40 employees. We were doing a couple million a year in revenue, serving franchises as our end customer base. But end of the day, we weren't making money.
• 58:49
  Doing a couple million a year, we're just keeping the lights on, and yet we're putting a ton of effort into it. So had this great leadership team. They bought into the vision. Probably thought I was the smartest guy in the room, like we talked about, building something new. But end of the day, had to make a really tough call to wind the business down.
• 59:08
  and didn't have a sexy exit, but instead found homes for our clients, homes for our employees. I'm proud of how we handled it. But you can imagine the months leading up to making that call were obviously very, from an emotional standpoint, it was a hit to the pride and
• 59:24
  You know, lots of lessons learned through that, but it also gave me an appreciation for the franchise model. Again, I was trying to build my own playbook when I should have been following someone else's in hindsight. It's tough to know when to shut something down. It's very tough. We iterated. We tried new things. We put the call center at the forefront. We tried new technology. We tried everything. You know, I think that's, there's two problems that people have in life.
• 59:52
  especially in this community and the people that listen to this show. There's people that don't take action, even though they should. There's the people that just listen to the podcast and just read the books. But then there's the other group of people that never know when the thing that they're building is not working out. And that's a harder problem to solve because it's so nuanced. Like how do you know when your business, to quote Kevin O'Leary, should be taken behind the bar and shot? Yeah.
• 1:00:22
  And I don't know if you have advice on that. Like, I'd love to know what it was for you that you were like, this is not it. Because I think that that is something that can burn out entrepreneurs. And it's not something that's discussed a lot because most of the podcasts and content is about how do you get started or how do you get your first 10 customers? It's not about...
• 1:00:44
  I'm doing this 10 years in and I really hate it. And what were you, you were doing like three to 4 million in revenue, I think you had plus minus 35 employees, objectively everybody, oh, that's a great business. You're not making money, margins are super slim.
• 1:01:02
  How do you decide? Just advice for the entrepreneur. How do you decide when to shut something down? Yeah, first off, I kicked the can down the road for a while, so I won't pretend like I had all this wisdom all at once, but I ultimately knew what had to happen. And once we made that decision, we executed on it pretty quickly.
• 1:01:21
  I'm one of those, I'm always wanting to keep doors open. And so I'm thinking about what else is going on in the landscape. I'm looking for opportunities. And for me, what ultimately it came to was I saw the opportunity on the consulting side and investing in franchises and just give me this appreciation for the franchise model all the more. So I think the fact I wasn't just running away from something, but I was running to something helped me in that decision to wind down the business.
• 1:01:46
  But it's grueling when you're trying to iterate and trying to change up the cash flow. What I find, Scott, is so many people out there have an idea, and it may be a good idea, but it is all about cash flow. It is all about building something that's going to cover your overhead. It's what I call the oxygen of profitability. And if you're living paycheck to paycheck, even as a business owner, it just puts a lot of stress and you don't make the best decisions in those environments. No, I mean, you definitely don't.
• 1:02:15
  even before we press record, we were talking about sort of architecting a life that serves you and not the other way around. Did you, is that the point when you shut this business down, when you figured out like what you actually wanted?
• 1:02:34
  I did. And the voices around you all have opinions and they will tell you what the conventional path is. And that is to build a large team and scale it and work towards an exit. That can be a great path. It makes a lot of sense for many. For me, when I realized what I'm good at, what I enjoy doing...
• 1:02:54
  When I had 35 employees, we were having meetings on culture to talk about culture. We were, you know, I found myself dealing with HR issues every day. And I wanted to be out there working with clients. I wanted to be strategic. I wanted to be more on the front lines. And I wasn't getting a chance to do what I enjoyed. A lot of people are so good at leading large teams. For me, what I enjoy doing on a day-to-day basis is being out there.
• 1:03:18
  you know, front lines. And so I orchestrated in my world now where, yes, I'm invested in a number of franchises, but I've got partners that are more operational than I am that are working with employees in large part. There's only one franchise I own right now where I don't have a partner on it, but allows me to spend most of my time consulting
• 1:03:36
  doing the stuff you actually enjoy? Yeah. I was in Park City last week meeting with a bunch of franchisors in Austin the previous week. I get to be front lines, working with investors, working with clients. That's what I love doing. You work with a lot of entrepreneurs, obviously, because they're coming to you because they probably thought about starting a business for a while now and they're figuring out, okay, there's an opportunity to do something a little bit, not like what social media is telling me to own a franchise or to buy into a franchise. Do you see a lot of people
• 1:04:07
  Or do you recommend that more people sort of have this conversation with themselves about what they want their life to actually look like? Is that something? Do you notice this with people that they haven't gone through this exercise enough? Like talk to me about the people that come to you. The people I'm assuming have started and tried to start businesses. They've had their own 10x5.
• 1:04:25
  or they're in corporate, or they're listening to another thought leader, and they're figuring out what entrepreneurship means for them. Like, do you find that people don't have honest conversations enough with themselves about what they want their life to look like, and they end up just sort of following what their friends or their peers or Instagram is telling them to do? Yes, it's very sad. And again, a lot of people have it in them to be a business owner.
• 1:04:54
  but they don't have self-confidence or they give in to the voices around them or their spouse doesn't truly believe in them that they have what it takes. It's very sad. It's interesting. When you look at the avatars of who we work with, you do have a lot of existing business owners that say, hey, maybe franchising is right for my next rodeo because I appreciate all the work that's been done. I remember what it took to stand up in business the first time around. So that's very common. But I'd say probably two-thirds of us we work with are leaving a corporate job or in some capacity now.
• 1:05:23
  and saying, I need some training wheels. I need some guardrails. I want to be a business owner. I can execute. I can follow a system. I don't have the million-dollar idea on my own. For this next season, I want to learn what business ownership is, prepare that foundation. But yeah, there are a lot of people out there. They'll climb to the...
• 1:05:43
  Up the diving board, get to the very end and never jump. It's because what? Confidence? What is it? Is it because they're listening to everyone around them and not sort of taking ownership over their own situation? Number one reason is confidence, but it manifests in a lot of different ways. You'll oftentimes hear, well, the timing's not right for me, or this came up. There's never a good time.
• 1:06:07
  to get into business ownership. There's never a good time to get married. There's never a good time to have kids. Like the stars never align perfectly, but you do it anyway. And so many that I work with say, I wish I'd done this five years ago. I wish I'd done it 10 years ago.
• 1:06:22
  Best time to plant a tree is yesterday. Best time to start a business was yesterday. When somebody is sort of on the fence, because what you're actually alluding to is a problem that I think we're seeing more and more, again, especially with people that listen to podcasts like this. We are currently in this, I don't know, in this information overload era. And we have all the podcasts, all the books, all the information, all the YouTube videos that we could ever...
• 1:06:51
  ever, ever need. Like we, like, there's no more, there's no more, uh, you know, there's no more secrets about how to do anything really. Like it's all, all the information's out there, but people still have a hard time pulling the trigger. Why is that? But also how do they get the confidence to actually make the move, do the thing if they haven't done it before, if for, you know, God forbid, their spouse is saying, you'll never figure that out.
• 1:07:18
  Or, you know, we spend a lot of time at work and we're influenced by the people that we work with. Speaking to somebody who has the job right now and they say, I want to start a business. I want to buy into a franchise. Yeah, some people will be sort of excited for you, but I'm sure some people will be like, they're going to say that's the dumbest thing you're ever going to do. Because that person had a bad experience with it once. And then now they're imprinting their lived experience on you.
• 1:07:43
  No, I think you hit the nail on the head, Scott. And there are some people that will never pull the trigger, and that's fine. Maybe it's not right for them. Maybe they don't have the confidence. Maybe they don't have the support structure and the network around them. But I do believe there's a lot of people in that middle that it makes a lot of sense for with what they're looking for in life that haven't made the move yet. And part of it's education. I mean, you do a great job with this podcast of getting people thinking outside of their comfort zones and outside of just their –
• 1:08:09
  maybe the bubble that they live in. End of the day, I'm in my mid-40s. The guys I hang out with are largely business owners. If I'm on the golf course and I hear someone say, oh, I need to ask my boss for time off, I still kind of, you know, still get a little chill. I remember I've lived in that world and it was a good run. I'm thankful for it, but-
• 1:08:31
  at the end of the day, you only live once. You know, I think if you can take, it's risky to work for someone else, it's risky to start a business, but if you can de-risk the equation some,
• 1:08:42
  There's just so many transferable skill sets that people could put into play where they're building their own thing. I want more people, you know, you mentioned at the beginning, like that one phone call that you had to sort of, I want more people to have that phone call that sort of pushes, I'm hoping that for some people, this podcast is that phone call, that exposure into a world that they don't really, really know well.
• 1:09:04
  And I actually, I'm saying this from like, not just because you're in front of me. I have never once thought of franchising as like the entry point into entrepreneurship before I spoke to you. But after speaking to you, I think for a vast majority of people, it is probably the smartest thing they could ever do.
• 1:09:25
  because I actually, even though I am an entrepreneur and now I've built my own company and it's, and not just this one, it is so like, excuse my French, so fucking hard. It is so hard. It is so much work. And I don't think it's for everyone, but I've never considered this nice sort of middle of the middle of the road opportunity that I think franchising actually gives you.
• 1:09:53
  I think it's a beautiful path to entrepreneurship. And, you know, you mentioned the word like training wheels, not because you can't make money on it, but it is a great training environment. If you ever want to build something from scratch, I've always tried to figure out, like, how do you teach someone to be an entrepreneur? And the best answer I could ever give anyone is go work for a startup.
• 1:10:16
  But I think this is like, first of all, going to work for a startup, you're not going to make a lot of money. And don't kid yourself and pretend you'll make a lot of money because you get an equity package. Because more often than not, it's not going to be the next Airbnb or the next Uber that's going to IPO and make all their employees millionaires. It's usually not what's going to happen. But this opportunity...
• 1:10:41
  If you take an SBA loan, 100 to 200, that is significant money for some people, but still it's enough that if it doesn't work out, you can recover and it will teach you everything you need to know. Because not only are you doing it,
• 1:10:57
  But you have sometimes quite literally a physical document teaching you what works and what doesn't. So it's like entrepreneurship education. If, God forbid, you ever want to start your own thing from scratch. That's what I'm seeing. As I'm chatting with you, I'm thinking about this in real time. And now you've got like, I mean, like I talk with a lot of smart people and now I'm thinking about maybe I should do one. You know, I talk to a lot of investor groups and I talk about franchising as an asset class. Yeah.
• 1:11:24
  I'm not here to say it's the end all be all right. And again, if it was easy, everyone would be doing it. It takes work. I keep saying that.
• 1:11:32
  End of the day, when you look at your portfolio, I invest in a lot of alternative investments, everything from real estate funds and syndications to private credit to private equity. I think that franchising and business ownership in particular make a lot of sense within the portfolio because it allows you to do things that you can't with other investments. And that's why we see a lot of real estate investors moving over, investing in franchises today. There are fewer good real estate deals to be had, high interest rates. A lot of them are jumping into franchising. We can certainly dig more into that.
• 1:12:00
  I'm able to pay my kids through the business. I've got three kids and there's things that the IRS ever asked that I can point to to say, here's what they did for the business. End of the day, I'm able to then roll it into their Roth IRA, as well as pay myself back for some of their tuition. There's a lot of things that you could do that you couldn't do as a W-2 and it just opens up the playbook. And I think, you know,
• 1:12:21
  what your end goal is from a flexibility standpoint, from a lifestyle standpoint, it can get you to where you want to be if you put the work in. You go back and you talk about what happened with 10X5 and I think you're late 30s running 10X5 and it wasn't working out the way you wanted it to. What are some lessons that you learned there that would be helpful for somebody that is starting a franchise or just somebody that is trying to figure out a path outside of a W2 9 to 5?
• 1:12:51
  You know, I thought the model was there of we make the phones ring and we answer them that people would pay us. And what I found was we got too custom for too many people. So, um, you know, I think that one really examined that business model before you go all in on it, uh, you know, run a lot of mini tests, I would say secondly, um,
• 1:13:10
  Make the tough call. Don't be afraid to pivot. We use that P word all the time a couple of years ago coming out of COVID, but that's one that's been in my vernacular quite a bit. Don't be afraid to flip the tables and make a tough call when you have to, and then treat your people well. That's what I'm proud of. We helped our clients find new homes. We helped our people find new homes. Really proud of how we handled a tough situation.
• 1:13:37
  But in hindsight, I probably kicked the key down the road a little bit too long. Should have made the tough call soon. Let's talk about what you just mentioned. So as an investment class, that's very interesting. So you mentioned that real estate investors are now migrating into franchise ownership. So what's...
• 1:13:57
  How do you, as an investor, okay, say I want to go into franchise ownership. I think like Shaq or something has, you know, I can't remember what he has. He seems to just kill it in all areas of life. I think he just got another degree, but he has hundreds and hundreds and hundreds of franchises. And this is how actually I think he's built a lot of his wealth after the NBA.
• 1:14:17
  So he would be like the, the avatar of an investor. I don't think he goes in and understands how to operate every single piece of every single one of his franchises, but he's a great investor. So for an investor looking at this opportunity, how do you think of it? Is there any difference between an investor and a franchisee? What's the skillsets that you have to have? What are the things you're looking for? Obviously you need a, a true operator to take control of this thing. Um,
• 1:14:47
  Talk to me about this thing you just mentioned with the real estate agents or investors, excuse me. At the end of the day, the wealthiest families invest most of their portfolio in alternative investments, right? It's the main investments, not the alternative. It's funny how it's called that. And private equity is the biggest piece of that. And so it comes down to business ownership. That's where you can drive the biggest returns. Now, in this case...
• 1:15:06
  there is some effort that goes into it. You better have a really good operator if you're not going to be the one running the day-to-day. So there is a trade-off there. You can make outsized returns, but you have to be able to put some time into the business. It's not going to run itself. But when you step back and you look at, again, that trifecta of the tax playbook that opens up, you're building an asset that...
• 1:15:27
  You can sell one day. A lot of people, you know, there's an intangible piece to they want to better their communities. They want to create employment opportunities for their kids in some cases. That's a very common approach. And, you know, like I mentioned with my client, Nathan, you can really build a large empire over time. You know, we talked about all an investment, you know, being a couple hundred thousand in most franchises. I had some McDonald's franchisees that had 12 locations in Texas and sold them and bought 10 trampoline parks.
• 1:15:57
  All investment on those is around $4 million each. So it can be a big play in franchising, and they net about $800,000 per location to the bottom line. So those are what I call big boy franchises. Yeah, yeah. Most people are not getting into those, but we've got something for everybody.
• 1:16:14
  So is that because just because it's a big name doesn't mean it's a great opportunity? You know, branding matters in franchising in some industries. You think about food, you think about hotels, brand is everything. What about the $52 billion insulation industry? Can you name a brand of insulation? Of course not, no. Yeah, most people couldn't. So instead, it's less about the brand. It's more about, you know, all the support systems that come with the franchise. One thing that I think you actually don't lean into enough, which I think that you should lean into more as a...
• 1:16:42
  as somebody who has listened to a lot of your content now. You have a framework, the five F's of life. I think that's a beautiful framework. I know that the proceeds of your book go to Hope International.
• 1:16:56
  There's a lot of things that are important to you outside of just business. And I think these are, I want you to go through why these things are so important to you. And I'll just read them out briefly. So the five F's that I've discovered are faith, family, fitness, finances, and franchising. I love this because it speaks to at least my team.
• 1:17:21
  what I believe you can be successful in business, but if you don't focus on other parts of your life, what does that success mean? So you list faith first, family, fitness, finance is great. So faith and family, beautiful things to prioritize. Talk to me about these five Fs, why they are important to you, when you discovered that,
• 1:17:44
  that success outside of just making money was something that was actually important to you. Because it sounds so obvious, but I think a lot of people just chase money, and they don't realize until too late that they let their version of the other four Fs sort of fall by the wayside.
• 1:18:04
  I think everyone should have a framework, you know, adapt it how you will. But a value system, a North Star, you know, compass that kind of leads you down the path. And we all know it's more than money, right? I mean, that's table stakes these days.
• 1:18:17
  In a day for me, it's a 5F model. And, you know, when I set goals annually, when I set them quarterly, when I think about my day and how my time was spent, I think through that lens. And it's a habit that you get in where you're analyzing, you know, how you spend your time, how you spend your effort, how you spend your resources. For me, I love to overlap as much as I can. So if I'm getting a workout in, you know, if my 14-year-old son can join me
• 1:18:41
  I get both family plus fitness in there. But every year we'll have a theme or two that I really go after. Two years ago, this was one of my favorites. It was level up. You know, I thought through everything in my life, whether it was my golf clubs to the concierge doctor I had to the –
• 1:18:58
  You know, the content I was consuming to the trips we were taking to the bank I was using. I found 25 different areas that I could level up in. And I did that over the course of a year. It took a lot of work. But, you know, I love that theme. So, you know, always challenging myself to get better. It's like if I'm not best in class in...
• 1:19:18
  an area, why not? Yeah. Let's use world-class talent for my tax strategist, for my accountant. If I'm not, why not? And so, but yeah, for me, everything goes through the 5F framework, and for some people, franchising would be business, right? But it's just maintaining balance. I don't like the term work-life balance, but I think within your life,
• 1:19:38
  you know, just reprioritizing all the time to what matters and recalibrating is so important. I think so too. I mean, this is, so, I mean, I haven't hid the fact that I record this podcast out of like a little guest house in my backyard on purpose. Like it's, it's by design so that my life, I don't have to be traveling and commuting. I could, there's other ways to run a podcast too. You could be going to different cities every single week.
• 1:20:03
  which I do once in a while, but I want to architect my life a certain way. I feel like what you're teaching with sort of your five F's through even like the business opportunities that you sort of advocate for through franchising, it's all about life architecture. And I think that's very important. I don't think enough people like, yes, you're right. A lot of people understand money is not the end all. I think a lot of people don't realize that till it's too late.
• 1:20:29
  100%. No, I took my family on multiple international trips last year. I've got the sauna, PEMF med, all the health modalities, peptides in my office at home. It's learning, constantly growing. And what I find it comes down to, Scott, is who you surround yourself with. Like we talked about earlier, it's the room that you put yourself in.
• 1:20:50
  being around people that make you better and give you new ideas to help you get there faster. A lot of what we're talking about with franchising and franchise opportunity, people are sort of teaching you how to run a business or teaching you a playbook. But from your life and from what you've gone through and also from, you know, helping people in franchises and buying into franchises yourself,
• 1:21:14
  What is the lesson that no one else can teach you about running a business or even just running a good life? I found over and over again, you know, it's easy. You're going to have to make decisions all the time as a business owner, right?
• 1:21:31
  And really across all five F's, across all quadrants. But oftentimes people get wrapped up analyzing option A or option B. And what I found is if once you start moving towards one of those, you know, I believe activity breeds activity. If you start moving towards option A or option B, option C comes out of left field. So I just encourage people, hey, get in the game, make a mistake, learn from it, keep moving. And that just gets you to the destination pastor.
• 1:21:54
  Where can people connect with you? So obviously the book, Non-Food Franchising, The Better Path to Business Opportunity, you can get that anywhere you get your books, but where else do you want to send people? So website, social, all that. Yeah, come out to our website, FranBridgeConsulting.com. If you share your email address, we'll send you free downloadable copies of the book. Certainly LinkedIn is the platform where I put the most content out. We've got some good followers out there, so we'd love to have you join us on LinkedIn.
• 1:22:16
  Yeah, again, it's entirely free to work with us, Scott. So I'm more than happy to get on a call with any of your listeners, talk about franchising, get to know them, see if it might be a good fit. After this life, you know, figuring out how to make money in so many different ways, what's the lesson? I want a business lesson that you leave to your kids and then one last life lesson that you want to pass on to your kids. The two most important that stand out above everything else.
• 1:22:44
  Yeah. No, I think that, you know, we want to run the race hard, right? You know, don't sit on the sidelines. You'll notice that theme throughout our talk here, get in the game, get moving. And that's when good things happen. And, you know, what I would tell my kids and I do tell my kids is, you know, it's all about stewardship. It's all about, you know, to whom much is given, much is expected. And that can be translated in a lot of different ways, but whether it be resources, whether it be time, I think that to whom...
• 1:23:12
  has been blessed with a lot. You know, we're supposed to be giving back and helping others. So that's part of the reason I love doing what I do, helping others get into business ownership. And, you know, when you're doing right by others and helping them, then, you know, ultimately it comes back to you as well.