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Franchise with Bob -- Robert Bernotas #5829 · Financial Survival Network

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Some of these franchise models are simple enough that you can operate and manage to
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three people without having a manager. Others there's more moving parts too. In
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terms of me buying five territories or five franchises, one that I have,
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I need a manager not to start with. So the person who I'm partnering
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with, he is going to operate directly manage it for ten to twelve hours
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a week. You're listening to Carrie Letz's Financial Survival Network where you get valuable
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information you just can't find anywhere else to thrive in today's trying times. You
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than ever, and welcome you are listening to watching the Financial Survival Network.
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I'm your host, Carrie lets Well. I always encourage you people out there
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to become entrepreneurs if you're not already. One of the most surefire ways to
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succeed at being an entrepreneur is through franchising. Now, for myself, that
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wouldn't have been a good option, but it might be the perfect option for
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you. Usually you talk about franchising. You think in McDonald's, Burger King,
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big fast food entities, But the fact is that some of the most
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profitable opportunities are not there at all. Robert Berdodas is with us now.
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He's going to give you the franchise hacks that will help you succeed and become
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a wealthy franchise. Robert, it's great to have you on. So you've
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been enfranchising since eighty six, nearly forty years, so you've seen everything.
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I guess I should ask you, what are the most money making franchise opportunities
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out there with the least investment. No, you cut straight to the chase,
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don't you. You know what I bought a franchise as not too long
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ago. It's it's in the service sector. It's non brick and mortar type
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of franchise. It's actually a service that does grout entile cleaning. Sounds innocuous,
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sounds boring, but there's money and things like that. So if I
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had to name him a sector enfranchising that, I think harbor is some of
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the best opportunities in franchising financial opportunities. I think the home service category,
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which also crosses over to B to B as well. I think is probably
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the well it is the hottest category and franchising right now. There's I'm watching
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a really interesting migration of franchise investors that are were traditionally into brick and mortar
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retail type concepts doing uh, you know, things like boutique fitness or beauty
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or food. I'm watching a migration of these franchise investors savvy people own other
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franchises into the service types types of concepts. The reason being is because your
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ROI is infinitely better. Meaning in other words, if you if a candidate
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or a client that I'm working with says to me, Bob, show me
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to just show me the best financial opportunities. I don't care what the widget
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is as long as it's something that is I can do on a part time
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basis, because most of my franchise investors are looking for part time, semi
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absentee or semi passive franchises, but franchises that can be operated on a part
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time basis best ROI, best earnings. I don't care what the widget is
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as long as it's something that's ethical provides a valued service to the community,
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then that's the direction I would typically steer to. Them in those are where
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the best financial opportunities land. It's funny you mentioned that because I'm currently updating
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my kitchen and I used a franchise a kitchen tune up yep, And you
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know, the guy is pretty hands on. It's definitely not passive because these
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people don't show up your employees what it's like now. But I assume his
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investment was pretty low up front, and he probably had to go for like
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a two three week training period where he learned all the ins and outs of
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updating kitchens. Right, And it looks like a great business, but like
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every business, there's aggravation, right, absolutely, depending upon how you approach
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the model. More and more franchise companies are developing what's called a semi passive
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model, simply meaning they put the tools in place to support you doing it
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on a part time basis. Now the individual, if that was the franchise
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that came in, was doing it in your home, their old school,
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they're doing it. That's a full time franchise. Franchise companies are trying to
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get away from that, and the reason being is how much can he grow?
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Can you really scale doing it that way? So more and more franchise
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companies are developing models to allow franchise us to do it on a part time
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basis. Hire people, manage a manager in a lot of cases, and
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scale a business into something much much larger, because if you're depending on yourself
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to do it so many so much bandwidth you have. Of course, you
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can only be in so many places at once. Most people it's one place,
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I could be in three or four. But I'm the exception. I'm
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a multisker. Hey sot like, how much for these home improvement ones like
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your grout and tile cleaning operation there? What did it cost to get into
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it? Well? That one good, Yeah, that one cost me about
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one hundred and ten thousand dollars if I was buying one franchise. And the
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reason I'm and so typically those types of franchises will will range from maybe up
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to a few hundred thousand for most of them, depending upon the type it
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is. But one thing that I love about these types of franchisees is the
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scalability. Meaning and this is why I think it's so interesting for franchise investors
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that a lot of people who traditionally invest in real estate, I think this
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is an infinitely better model to generate significant income return on your investment and also
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build a lot more equity a lot more quickly. But for instance, what
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I did with that franchise that I acquired, I didn't buy one franchise.
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I bought five franchises, meaning I bought five territories. Okay, so here's
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the difference. If I were to do a crumble cookie, if I were
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to do a orange theory, I mean, it would have fallen somewhere between
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seven fifty two a million dollars to open one. If I opened a second,
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one, same thing, if I opened a third, one same thing.
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The beauty with these types of concepts is I mean the one that I
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bought again maybe about one ten hundred twenty. To do a single franchise,
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I bought five franchises. My total investment was about two sixty. Because I'm
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just buying more dirt. Okay, I'm doubling, tripling, quadrupling, quintupling
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the size of my territory, in effect, doubling, tripling, quadrupling,
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quint coupling what my potential income can be. But I'm not spending it proportionately
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because I'm just buying more dirt. And then I scale into it over time
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by adding more personnel and and word vehicles. Depending upon the type of concept
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it is, and what can you make off of one of these franchises.
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I mean, I have to give us an income state and just give us
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a range here. Yeah, I mean it really depends upon I mean,
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is it Are you going to see things that can perform like a McDonald's in
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terms of what a grow growth sales can be? Absolutely no, you can,
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absolutely can't. Yeah, I mean it really again depends upon what the
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concept is. But but you find the margins are I mean, you're getting
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food. The margins are going to be small. But if you scale enough
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with these types of concepts, you can build McDonald's type income through it without
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spending a fraction or only spending a fraction of what it would cost open McDonald's.
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Okay, here's a big question. I already disqualified myself as a franchise
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z because I can follow instructions. Okay, type of ideal candidate to be
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a franchise z. Yeah, most of my candidates. Look, I have
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my franchise investor clients that I work with, people who own other franchises and
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are always looking to expand the portfolio. But most of my clients are actually
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coming from corporate America. They're in a management type position, more an executive
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position in some case C suite executive position, and they're looking to start to
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build income so they can eventually exit corporate America. And depending upon what the
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plan is, I mean, it could be five year exit, it could
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be a six month exit. And in some cases people just want to get
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out now and try to get into something that they can start generating income in
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pretty quickly and replace their their their job income quickly. Okay, so all
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right, So corporate corporate types probably excel the best because by nature they're working
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in a controlled environment to some extent, and like you pre call franchise agreements
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come with guardrails sorect. So your your tile and grout cleaning operation. Um,
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how long did it take before it was profitable? I just launched it.
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It's in the process of launching while watching now, and I actually I
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have a partner. It's going to operate a for me. He's going to
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put in ten twelve hours a week to operate it. But no, I
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have no bandwidth. I can't I can't put it. I told him that
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I'm going to put two three hours a month into it in meetings with him.
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But I don't want to be involved in operation. So you mentioned semi
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pass and so you got to get a manager. That's got to be the
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hardest part and the most important thing. When you enter a franchise that you're
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not going to work nine to five or actually eight to seven or eight.
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You got to get somebody to do it. You have to incentivize that person,
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and you've got to make sure that you're they're treated will opportunities are there,
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because if you get a good one, you never want them to leave,
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right, correct. Look, some of these some of these franchise models
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are simple enough that you can operate and manage to three people without having a
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manager. Others just more moving parts too. In terms of me buying five
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territories or five franchises, the one that I have, I need a manager
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not to start with. So the person who I'm partnering with, he is
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going to operate directly, manage it for ten to twelve hours a week.
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And we're starting out with a couple of people, and but as we expand
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it, then we will place a manager. We'll put a manager in place,
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and we may end up with you know, a dozen twenty people working
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for us over over time. But it really depends upon the model managers.
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A lot of these companies really have that infrastructure already in place. They lay
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out how they want you to build it, the best and most efficient ways
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to build your business. And some there's enough, there's enough moving parts where
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you're really going to need a manager day one, and others not so much.
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Okay, uh yeah, So I'm looking there's a lot of the websites
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that rate and rank franchise franchises, like Franchise Rankings is Gator. Are they
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accurate or are they kind of and I would I would say not so much.
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And a lot of the rankings really depend upon what their relationship is with
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that franchise company as well, Right, if that makes sense. I see
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one here called in Florida, actually called grout Smith. Yeah, there's a
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few of those, few of them, right. But what I like about
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that category, not not just grout but the home service category in general.
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It is a fragmented mom and pop a category that young people are just not
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going into anymore. So there is a lack of good contractors to do any
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of these types of services. So there's there's yet there's massive demand for it.
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And I don't know if you've you know, you try to hire a
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contract or a paint or anything like that recently, it's nuts. Right.
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So I have a friend he's in the Tampa Tampa, Florida area, and
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he shared with me that is h Oa was given some crapp He had to
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get his He had to get an exterior of his home painted. He reached
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out to a dozen painting contractors. Of the dozen, three got back to
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him. Of the three, he scheduled with all three of them, one
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showed up. You got it. You got the job. Well, well
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not exactly. I mean if the one is showed up. He took some
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measurements, never came back, never heard phone. He had to chase them
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down. Finally got a hold of the guy and got a price from him
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and John, my friend, thought it was an outlandish price, so we
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tried to negotiate. The guy said, no, that's my price. So
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he said, what the heck? I got a schedule. He went to
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schedule with him. The guy was almost a year out. So the category
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not just painting, but a lot of things in his category. There's so
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much demand and there's a lack of sophisticated players, but franchising is really brought
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to that category is a greater level of sophistication, technology, professionalism, and
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consequently, franchises our pulling market share away from the mom and pop operators.
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Okay, so I'm looking at two of them here on the franchise rankings.
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One is called Wow One Day Painting. I assume that they've been around since
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two thousand and eight. They don't have that many units. They only got
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twenty two units ninety thousand to get into it, And I mean, is
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that that Look? I honestly probably not. Look, there's over four thousand
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different franchise concepts out there. I would comfortably tell you I would stay away
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from most of them, not that they're bad companies, but there's some really
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good concepts out there. But trying to find them is kind of like trying
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to find a needle in a haystack. Because when you're going online, which
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is the typical way people start to start the franchise searches to go online,
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Unfortunately, first of all, the vast majority of people that are doing this
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are landing on portals like You're like, you just landed on and these as
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somebody franchise companies are advertising the portals. It's unfortunately didn't boast up, but
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better come pay for play here obviously exactly exactly, and and and most of
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the people that come through the portals and land on these franchise companies end up
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not being qualified. So the franchise companies end up wasting a lot of time.
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But the other thing is they're just showing you what they want you to
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see. And it's impossible to try to evaluate these companies using portals, using
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these using these sites. Okay, so here's another one. It's funny when
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you mentioned like getting stuff done handyman. There's Handyman Connection out of Ohio.
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They got seventy five ye and they got to really ninety six point two percent
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review for what that's worth one hundred k to get in And I mean,
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I see it that it's so hard to find these handyman. My handyman just
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reported back to I'll tell you what, I was heartbroken. If I hadn't
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known he was facing deportation, I would have adopted him so he'd be my
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son and they wouldn't have been able to send him back. Well, don't
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worry he'll be back. Yeah, yeah, I hope. So walk back
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across the border. Hey, my whole neighborhood shed a tear many two.
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Avi was so good and he showed up and sometimes he didn't charge me enough,
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and I said, you know, take another hundred dollars. You're not
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charging enough for the amount of time you spent here. Yeah, how good
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he was. But to find guys like that, you almost you go to
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a franchise, at least you might have a shot, right yeah, well
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yeah, but from an investment standpoint, if you want to be the franchise
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and you are, you are in corporate America. You're not going to go
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out and you're not going to do the handyman work, right. So what's
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important is to identify franchises that have semi passive models. They have the infrastru
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ructure in place to support you. And look, you can look at two
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concepts that do exactly the same thing and it can be a massive difference between
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the two concepts. So I mean, top between ten and twenty percent of
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franchises in any given category of franchising or solid businesses. A lot of them
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are not. A lot of them get launched and they just never go anywhere.
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So if it's a franchise that doesn't have growth, and it doesn't matter
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how old the franchise is. I mean, a franchise could be twenty five
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years old, but if there's only twenty units out there, twenty franchise ease
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out there, I'd stay far clear of it. However, if franchises,
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let's say three years old, but it has five hundred franchises, usually there's
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a reason for that, and often it's the franchise investors buying up territory with
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that particular franchise because they recognize it as a strong financial opportunity. Right.
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And it's interesting. I go to this place called the stretch Zone, which
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is like wonderful from my back thing else I'm looking here. It says they're
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making three hundred and fifty seven thousand according to sharpsheets, and one hundred eighty
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seven locations, and you know, it doesn't take a whole lot of money
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to get into it. Three year payback and hey, I can vouch for
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it. But again, I think that one of the biggest stumbling blocks with
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all of these franchises is finding employees in this day and age, no doubt,
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and it really depends upon the category that you're in. If you're if
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you're talking about hospitality, it's exceedingly difficult to get in keep employees. If
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you are talking about something maybe in boutique fitness, like the stretch zone that
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you mentioned, it's more difficult now than it was three years ago, but
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it's still doable. Same thing with beauty. And again and looking at the
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service category you be at home service or home service also crosses over to B
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to B. That's easier. It's not perfect. You're paying more now,
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but there's so much more margin in those types of concepts than there is in
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when you're doing brick and mortar retail. You are tied to a lease for
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at least five years. You have the brick and mortar retail build out which
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is becoming more and more expensive, versus the concepts that you can potentially run
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from an office, small office, maybe a small you know, some flex
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space, small warehouse, or in many cases even from your from your home.
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So the startup costs are heat lowery. So I have to tell you
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a story. So there's a Jersey Mike's. They've been working on it probably
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for almost a year. I mean they could they construct in Florida, they
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build high rises faster than than this. And it's like, but Jersey mikes
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seem to be uh like, I never saw one to go out of business.
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They all seem to be busy all the time, technology, the apps
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and everything else. Is that a good franchise. Yeah, I mean it's
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a solid franchise. I mean again, depending upon what you want to accomplish,
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it's not going to be inexpensive to get into. And sometimes when you
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look at what the price range is online, it's not necessarily representative of what
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the real cost is. Usually the cost is higher. But you're I mean,
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you're talking about typically somewhere between a half a million eighty to a million
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dollars to open one. Unless it's free standing, then it's going to go
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up keep in a good bit a good bit higher. Um. But you
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know food, what the issue that I have with food is that the margins
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are low, you have high turnover minimum wage employees. It's it's become exceedingly
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difficult to hire in that in that category. So it's not when again,
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when my when my clients say to me, Bob, show me the best
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financial opportunities, I don't show them food all right, and you're not You're
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not going to do food on a part time basis unless you have a management
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team and you develop multiple units and you have a solid management team that's going
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to do that for you. All right. Well, hey, you've been
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a wealth of knowledge here, Bob. I know that people are gonna want
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to contact you and find out more. What's the site that we find you
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at. Franchise with Bob dot com and if you like, just reach out
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to me. I'll send you. I'll send you my book. Be happy
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to do so. Oh great, Yeah, that's that's excellent. So franchise
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with Bob dot com. It's in the notes to this interview on Financial Survival
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Network dot com. And when you go there, please sign up for your
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free newsletter U. If you've got a question for Bob or myself, just
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shoot us an email. K L at karreluts dot com. Bob really barely
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scratched the surface of franchising. I'd like to ask you if you'll be available
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to come on again. We'd love to have you back. It would be
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my pleasure. All right, great, Well, we'll talk to you soon.
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Be well, thank you, I'll go. Thanks for listening to carry
22:03
luns's Financial Survival Network your solution to today's trying times. For the latest,
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go to Financial Survival Network dot com. Financial Survival Network now more than ever