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Franchising Opportunities -- Patrick Elsner #5867 · Financial Survival Network

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  The challenge that most people have is if you get into the wrong business or
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  franchise, it's going to be a lot harder. The reason you get into
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  a franchise is to mitigate your risk. Hopefully, if you get into the
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  right franchise it fits your criteria, you've got a fighting chance. You're listening
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  to Carrie Letz's Financial Survival Network, where you get valuable information you just can't
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  find anywhere else to thrive in today's trying times. You need the Financial Survival
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  Network now more than ever. Go to Financial Survival Network dot com and get
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  your free newsletter in gift Financial Survival Network now more than ever, and welcome.
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  You are listening to watching the Financial Survival Network. I'm your host,
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  Carrie lets Well, if you are an executive at a big company and looking
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  for greener pastors, you might just consider purchasing a franchise opportunity. Many of
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  you out there are doing that even if you're not an executive, but you've
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  always wanted to start your own business and don't know where to start from.
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  Well, Patrick Elsner is with us now. He is a franchise consultant and
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  Patrick, welcome to the show. So Hey, when people start getting into
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  franchises. What are the pitfalls here? Yeah, I think the challenges for
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  a lot of people carry is they get into the wrong franchise, They get
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  into franchises for the wrong reasons. One of the reasons that people like working
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  with me is I help them figure out two things, which franchises they actually
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  qualify for and also which franchises are going to be available where they live.
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  So my freematching service really just helps them sort of cut through thousands of franchises
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  identify the ones that are most recognizable for their particular situation. All right,
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  so they swipe left for the franchises they don't want, and they swipe right
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  for the ones that they do want. So what for executives, you know,
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  mid to upper management executives, what kind of franchises are they going for?
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  They're going for food, they're going for services? What exactly? Yeah,
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  what we do is a customized set of selections based upon their criteria.
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  So I learn about their criteria through a questionnaire and an interview, and then
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  I go in and find specific brands. Now what I'm seeing it really runs
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  the spectrum. Some of them are in food related franchises, but the majority
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  of the people are choosing franchises that fit a particular criteria. I always tell
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  people, at the end of the day, it comes down to three questions.
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  What's the investment, what's the return, and what do I have to
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  put up with every day? All right? So are they going mostly for
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  passive franchises? Are they going for ones where they actually have to actively match?
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  Yeah, I'd say seventy five percent of the people that I'm placing our
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  people that are keeping their jobs in corporate America, but they want to find
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  other ways to generate revenue. So it's going to be what I call semi
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  absentee, a passive opportunities, keeping that W two job, that perceived safety
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  of W two job, and then building a franchise on the side. So
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  what are the top the hottest three franchise concepts now, Patrick? Yeah,
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  probably the most place franchises with me and my inventory today are brands like Supercuts,
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  Great Clips, brands that you and I wouldn't normally work in these stores,
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  but we would hire a manager. The manager would run the franchise day
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  to day, oversee the operation. But those individuals keep their jobs and build
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  the franchise on the side. Okay, I heard that home improvement franchises were
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  really on the rise. What's your experience there, Yeah, there's no question.
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  Since the pandemic care you've seen a huge surge in home service franchises,
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  especially during the pandemic when people are spending more time at home instead of going
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  on that ten thousand dollars European vacation, they spend money to spruce up their
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  house. That has definitely been a huge category for sure. All Right,
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  what about healthcare type franchises? What are you seeing there? Because we are
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  the population is aging, the boomers are retiring in droves, and a health
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  is really a paramount. Yeah, there's no question about it. Healthcare is
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  a huge category. People like the category because of the fact that it's pretty
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  recession resistant. What I like about the healthcare category and franchises You don't have
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  to be a doctor to own these franchises. It allows you to hire a
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  manager to run them. Really about the business model carry if you've ever heard
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  the notion that doctors don't make great business owners, it's really taking that out
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  of the equation and letting the franchise system run with it. Okay, So
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  what are the hottest concepts in healthcare franchises right now. Yeah, one of
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  the ones that we're working with here lately is a men's health concept that is
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  related to believe it or not, a rectile dysfunction and men that have low
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  testosterone. And it's a touchy subject for a lot of guys. Look,
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  guys, we as just by our nature don't like to go to the doctor.
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  And so this is a franchise concept that addresses low t and ED.
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  And again I'm not a doctor, but I could certainly own one of these
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  franchises and have that address that market. What about these meta spas, Have
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  they run their course? I don't think so, Carrie, because here's the
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  situation. As a boomers age. They have that disposable income. They can
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  spend that money on health and wellness. I mean, look what a massage
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  envy did to the massage market. You know, getting a massage used to
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  be kind of one of those things that you did when you're on your vacation.
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  Today, with massage envy, getting a massage is common as going down
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  to Main Street and you know getting a one hour massage. So you see
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  that predictable and a recurring revenue. Hey, are those good franchises? What
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  kind of startup costs involved with a massage Envy. Yeah, you're probably looking
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  somewhere around four hundred to six hundred thousand to launch one of those. They're
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  pretty simple. If you've ever been inside a massage Envy, you're looking at
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  basically ten little rooms. So it's really droll expense, the sign out front,
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  on the door, the rents probably anywhere from four to eight thousand dollars
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  per month. That's probably going to be your biggest expense. You want to
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  put those next to a Whole Foods, a Trader Joe's one of those type
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  of anchors in a strip center. Yeah, I've actually no one in Florida.
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  It's in the same shopping center as as a Whole Foods, But there's
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  been some knockoff franchises like Hand and Stone. They're a little bit higher end.
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  Do you go for the higher end or do you go for the massage
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  envy? Well, I think it's a lot of it's going to depend upon
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  the consumer. I mean, massage endby definitely feels a little medicinal. It
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  feels like you're walking into a doctor's office. Hand and Stone's point of difference
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  is it feels more like a spa. They also offer some ancillary services like
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  facials and now you're seeing Massage Envy ship. They were the number one brand,
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  Hand and Stone gets to be the number two brand in terms of number
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  of locations. So people can go in and decide what's the environment that they
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  want to be in. Do they want to be in more of a medicinal
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  feeling environ like a Massage Envy or do they want to feel more like a
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  spa with Ann and Stone. Okay, so you know it's like hotels Hilton,
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  Maria and Hyat. They've got these huge reservation networks even for hotels they
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  don't own, they just manage. Is there a benefit with franchises to have
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  these networks, to have the apps and the software online Like Massage Envy's got
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  its own app, it's got remote scheduling, all these things. What's your
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  take on that? Yeah, there's no question about a technology is a huge
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  point of difference for any franchise brand versus say a mom and pop. I
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  mean having that technology is convenient. Look, I look at great Clips.
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  I'm a customer of Great Clips, and I love using my phone to go
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  on the app and look at the weight times for the local great clips and
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  that I can check in online and by the time I walk into that great
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  Clips, I usually don't end up having to wait. This is the point
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  of difference. This is the value carry that a franchise brings to a franchise
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  owner. All right, well that makes a ton of sense. So banking
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  crisis all that. How much harder now is it to get financing for franchises?
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  I would say it's not harder as much as it is costlier. With
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  the spike of interest rates, getting an SBA loan is certainly a lot more
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  costly. That's probably what is turning more people off. A good portion of
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  the people that I'm placing, or high level executives, a lot of them
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  are using their four O one k or ira without taxes or penalties in lieu
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  of investing in the stock market. I've seen that as a common approach for
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  funding those types of franchises. All right, so a lot of self funding
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  going on. What kind of returns can you make in these franchises here?
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  Patrick, You know, I'd say a rule of thumb twenty twenty five percent
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  is pretty typical. Now, I've got some non retail franchise concepts where you're
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  talking about net margins of seventy five to eighty percent. All right, so
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  how long does it usually take for these concepts to turn profitable? Patrick?
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  Yeah, if you're talking about a retail based concept, carry you know,
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  getting the location going through least negotiation and build out, you're talking probably upwards
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  of a year to get that done, and then obviously during the ramp up
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  phase, you know, you might do a pre opening special. I mean,
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  that's why Massage Envy drives their membership is they basically market to the local
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  consumer during the build out and then hopefully by the time that Massage the location
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  actually opens, then they have a stable of members already up and operating.
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  So that's how they begin to cash flow pretty quickly. Right. Okay,
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  so how successful are your clients with their franchise endeavors. Yeah, great question,
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  And this is what I tell everybody that I work with, Carrie.
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  Franchising is definitely not perfect. It's not for everybody. I've definitely put people
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  into franchises that unfortunately have failed. I mean, business ownership is not the
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  magical lixer for everybody. But I've had other great success stories of people that
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  have gone on to be wildly successful. The challenge that most people have is
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  if you get into the wrong business or franchise, it's going to be a
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  lot harder. The reason you get into a franchise is to mitigate your risk.
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  Hopefully, if you get into the right franchise that fits your criteria,
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  you've got a fighting chance. All right, Well, it makes total sense.
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  And hey, who is the biggest success. You don't have to name
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  him by name, but just give us an example, biggest success of all
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  the people that you've worked with in your conner. So I worked with a
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  gentleman in Houston about six seven years ago. He was an executive with Bank
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  of America. Now, this guy was flying every week from Houston to New
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  York to go to corporate for boa and can you imagine every week he did
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  this for six years. It was an arduous task to go and do this
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  flight every week back and forth. So he and I worked together and we
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  looked at the number of different franchises. I ultimately placed him in a restoration
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  franchise called Paul Davis. Now, Paul Davis may not be recognizable to the
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  consumer. Most people have heard a competitor called like Serve pro or Service master.
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  But what these companies do is they sucked the water out of your basement
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  when you have fire, flood, water damage, what have you. He
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  went on to build a very successful business. I think last year he did
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  like nineteen million dollars in revenue. He's gone on to open up a second
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  location in Riley, Durham. Clearly this is a guy that's no longer on
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  that flight to New York every week. All right, So we'd love to
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  hear happy stories, happy customers. People want to find out more about you,
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  Patrick, want to connect with you on the web. How do you
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  do that? Yeah, I have a website. It's pretty pretty simple.
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  It's fran inside dot com, so fram inside dot com. They can also
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  look me up on LinkedIn, Carrie, I've been doing this for twenty years.
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  Look me up on LinkedIn, Patrick Elsner. There's over one hundred written
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  testimonials of people at Placed just in the last couple of years. All right,
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  that's excellent. Well, hey, you got a question for Patrick myself?
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  Email address kl at Karreltz dot com. You'll find a link to patrick
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  site in the show notes this interview on Financial Survival Network dot com. And
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  while you're there, sign up for your free newsletter. Patrick really appreciate you
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  coming on and I'm sure you'll have no shortage of takers with the revamping of
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  the American workforce, and we will talk to you again soon. Thanks Carry,
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  thanks for listening to Carrie Lets's Financial Survival Network, your solution to today's
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  trying times. For the latest, go to Financial Survival Network dot com.
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  Financial Survival Network now more than ever,