Latest / Glovisor Podcast / Want to Own a Business? Why Franchising Could Be Your Shortcut - Latino Franchise Council [Ep 90]
Transcript
- Joe Abreu - GLOVISOR.com: Many generational fortunes begin with businesses. How can you start a business without building everything from scratch? Welcome to the Glovisor Podcast, where we explore business growth, communication, and personal development through real conversations with people who make an impact. Franchising can give entrepreneurs access to an established brand, proven systems, and an established roadmap to ownership. Today we're looking at how to approach franchise ownership with confidence in how one organization is reaching the Latino market. Glovisor welcomes Latino franchise council advisors Andres Sanchez and Rick Morgin. ANDRESCAPITALTV: One too. Rick Morgin: Hey John. Joe Abreu - GLOVISOR.com: Right. ANDRESCAPITALTV: Hey Joe, how are you? Joe Abreu - GLOVISOR.com: great thanks. A pleasure. I'm looking forward to hearing more about the franchise market. So, but let's start it off on this. Tell us a little bit in 60 seconds, a little bit about your background. What did you do before franchising and ultimately what made you jump ship? ANDRESCAPITALTV: Well, thank you so much for having us. We're really grateful and excited to come and at least bring a little bit of a light of really what we do with the Latino franchise council all over the United States and even Mexico and Canada and other places. So I come from a background of what? Capital. So I've been working in banking let's say for over 20 years. And what I did is I started analyzing okay from all of my clients from thousands of financials that I was reviewing on the personal financials statement side or on the business side. you know balance sheet income statements, what were the ones that were more successful? And I came across a group that was very successful. They did really well and they didn't have the problems of the up and downs of the startup stage all the way up to exit. And it was the franchising investor. So I consider them really investors because they understood the business model of franchising. So over 20 years I've been a business capitalizer and consultant. In the areas of expansions, mergers, acquisitions, turnarounds. And of course, franchising is one of the best ways for you to either expand a brand or get into business ownership. So that's how I got here. And I've worked with all of the big banks and you know had all of the you know successes and of course recognitions. but I decided that I wanted to take care of clients, and that's why I believe that the mission was to be able to lead this organization now with the Latino franchise council and of course have my partners like Rick Morgin that is here with me today. Joe Abreu - GLOVISOR.com: Right, Rick, please tell us a little bit more about you. Rick Morgin: Thank you, Joe. Prior to leaping into the franchise world, I've spent my career in the beverage alcohol industry. My my entire career. And I I was exposed to every just about every function from sales to marketing operations and then of course finance. And when I was in a sales role in Southern California, that's when I was first exposed to the greatness and largeness of the Hispanic market. After a long career, I wanted to do something for myself. And luckily I found the franchise world. Just by it was pure luck. Joe Abreu - GLOVISOR.com: I love both of your backgrounds. But you know, typically when you start an organization, it's usually to s solve a problem or to identify something or to improve a process. So, Andres, tell us a little bit more about what problem is the Latino franchise council trying to solve for entrepreneurs? ANDRESCAPITALTV: Well, thank you. So, really, our mission is to increase Latino ownership of franchise businesses across the United States and empowering communities through economic growth and opportunities. We need to go into those locations, into those markets and actually explain to who? To cities, to economic development groups, to chambers, how all of these let's say entrepreneurs. are getting into business ownership and why they need to look at franchising as one of the best tools for them to have successful rates. And we can explain a little and expand a little bit more about that, of why the numbers don't lie. I love numbers. Joe Abreu - GLOVISOR.com: Yeah, me too. Now Rick, why is this mission so important right now? Rick Morgin: I think in twenty twenty six and beyond, the growth of entrepreneurship, small business is really going to be extremely important to all communities. And There are certain things that small business franchises can do that AI can't replace, technology can't replace. When you look at the overall Hispanic community and its economic power, why not expand it through franchising? Joe Abreu - GLOVISOR.com: Now Andres, do you have some numbers as to the ownership percentages that Hispanics are purchasing the into the franchise market? Because I do know that the the Latino market is very local, right? And it has very local businesses and that's just part of the culture. But are are they making that shift now into the franchising? ANDRESCAPITALTV: Not only are they, they're actually thriving and they are really impacting communities all over the United States. Hispanics really are driven, their market is driven by nostalgia. So everywhere you go, any city in the United States, you're gonna find probably pockets where maybe Latinos congregate more or they have more businesses and they have those meat markets, they have those restaurants, they have all of those places that we love to go and eat and support, and they become tellers in the community. Because of course, you know, we see it in the either the quick service restaurants or the restaurants you full service restaurants. Well. We want to go and eat. You know, this is one of the things that we are in consumables. We're always gonna go do. And we always gonna want a different place, you know, because we want variety. Well, all of these Latino entrepreneurs, business owners come and actually establish brands. And those brands do really well. You see them expand. And and they come to you, like and next thing you know, you have one. Next thing you know, you have 10. You know, like so, and then you say, Okay, Rick Morgin: Ha ha ha. ANDRESCAPITALTV: what is the secret sauce? What happened? They understood the franchise model, they established it. And they got, of course, advisors like Greg Morgin, you know, to be able to do that, and of course our team at the Latino franchise council. Joe Abreu - GLOVISOR.com: Now, Rick, the Latino franchise council, how did you guys come together and and what made that switch that you said, okay, we we have to improve that process and we're gonna put together Latino franchise council? How did it all begin? Rick Morgin: the leadership of the franchise consulting company started to develop these councils and to penetrate certain segments of our our population. And then we had the great fortune of Andres stepping up and saying, I can lead this charge. And when you have that enthusiasm I re with Andres leading I recognize the importance of the mission that we're on. Joe Abreu - GLOVISOR.com: Now, Andres, you know, there are thousands of franchise opportunities. What should someone look beyond the brand name when they're deciding when a franchise is actually a good fit for them? ANDRESCAPITALTV: That is that is the million dollar question, Joe. Because Joe Abreu - GLOVISOR.com: Yeah. ANDRESCAPITALTV: here's the thing. You can have all of the business models, all of the industries that you want. And a lot of people come to me and say, like, okay, which one is the one that gives the most money? So the first thing I tell them is, okay, so it's gonna require you a million dollar of you know liquid injection, probably about five million of assets in your, you know, under your portfolio. You are gonna work seven days a week, 24 hours a day, and you're never gonna see your family. Is that the one you want? And then people rethink the question and say, okay. So it is very subjective to the person. The first thing that we love to do, and Rick, you know, one of the things I love about Rick, as he was mentioning before, is that he has a lot of empathy for the Latino community because he actually it's his family too. So his bloodline as well is a mixed bloodline. You know, they are also Latinos as well. And he understands, you know, basically the the value of the Latino culture. Hard working, we love to work hard, we're loyal. What we are lacking right now that we want to deliver through the Latino franchise council is really free education that teaches the whole process. So the process starts with we'll sit down and we'll try to understand your perfect picture, your let's say life goals. And we start with your lifestyle and then also your financial balance sheet, you know, right? Your personal financial statement. And then we say, okay, if you were to get into a business, we're gonna do what we call a SWOT analysis. strengths, weaknesses, opportunities, and threats of a person. Because we need to know what they know and what they don't know. So then we can support either through, you know, different strategies to bring in people that actually knows the part that they don't, or they need to maybe elevate their their education on this piece. And then we start understanding how each business model works. What is the lifestyle? What is the territory? What is the opportunity really, you know, that the business has for each person. Joe Abreu - GLOVISOR.com: I mean that that's a great start. Now, Rick, what happens then? I mean, you you go through all of these processes in order to help them filter it out. Now, sometimes as an individual, I think I want the X. But after your processing that I just mentioned, you think otherwise. So, how do you handle that when you're working with new franchisees? Rick Morgin: As Andres described, we we build a personal business model about their goals. And then once we have that and we can communicate that, then we can identify the franchises and the way that they're gonna be operating in the market and link it back to those goals. Not everyone that we present may resonate, but at least they they do align with th those goals. It's really giving once you you can do that and you can give the person the picture of how they're gonna operate the business, then you're creating that that real connection to that business model. Kind of that's how that's how I approach it anyway. Joe Abreu - GLOVISOR.com: Rick, does it seem like some people follow along or the majority of people follow along with your suggestions? Or do you see some people that probably have a little bit more of a challenge, like they need to learn more so they can make the right choice? Rick Morgin: Well, it's both. Yeah, there there are candidates who get it right away and and they want to learn more. But and then there are other candidates that they just need more information before they leap into the process. So, you know, it's like we say we're not going anywhere, we're not in any rush. So what tell me what you need. Tell me what's missing. Joe Abreu - GLOVISOR.com: Andres is how long is that process from the the time that an individual contacts you to the time that you're able to sort of provide them that initial sort of report that gives them a little bit of a direction? ANDRESCAPITALTV: Clearly it all depends on basically, you know, the the the conversation setting, let's say, the expectations of how the process works. And I actually have a visual roadmap when we start talking to the client, the first step will be get to the candidate qualification. So we start basically by the completion of a questionnaire, you know, a confidential questionnaire, personal interview, and submitting your resume. We need to know what you've done, where you've been all our lives, and then see how we can tie in that experience. To the goal is to determine. If franchising is the right path for the person. And of course, we evaluate the background of the person, the experience, goals, review financials, identify the deal business profile for the person. Then we get to the discovery and qualification call. We learn how the goals and really how explaining how franchising works, including the risk, timelines, and realistic expectations, because it's all basically understand making the person understand really how. The franchising world works. We discuss background investment, clarify lifestyle. We talk about lifestyle, right? And explore the industries of interest. I've I noticed that a lot of people can connect the dots if they are in a specific industry that really they have experience of being and doing through the resume. So that's why we want to tie that in. And of course, understanding the whole franchise process. We get to mapping the opportunity mapping. We do our research and evaluate the franchise brands that really fit the budget of the person. And then we go we get to let's say the consultation, the market territory. We need to understand if the territory is available for the person, you know, that is really looking into getting into this. And we present you know a couple of options. You know, we cannot throw, you know, 400 brands, you know, like to a person to try to understand and figure out how each model works. No, we need to really go you know, baby steps two to three. For them to understand the whole process. Once we get to the business model review and financial planning, we prepare a detailed business overview of the investment presentation. And then we get to brand introductions and validations. Usually that takes about, it's all but probably about 45 to 60 days. So just to give you a little bit of scenario, depending on how fast really the all of the situation, if it involves, let's say brick and mortar. Well, we're gonna have of course a little bit more of a time that we need to add to the actual process from A to C for somebody to get into franchising. I hope that answers a little bit your question, Joe. Joe Abreu - GLOVISOR.com: absolutely. Thank you. I love that. All the different steps. Now, Rick, most people have heard of franchising before. But sometimes I think we equate everything that franchising is solely McDonald's, Burger King, those big brands, and you have to spend two, three, five million dollars. and that's not the case. Can you tell us a little bit more of where the majority of the franchising's pricing it pretty much lies? And is it available to the regular common guys like us? Rick Morgin: I'm gonna cite an older stat from the IFA International Franchise Association. Fifty five percent. Well, there's roughly four thousand franchise brands in the US, give or take. 55%, so a little twenty one hundred, are two hundred and fifty thousand dollars or less to open your doors. And when you look at the itemization of the estimated cost to open your doors in the franchise disclosure document, you'll see that everything's covered. Another portion of that stat is 17%, roughly 700 or so, or under 100. So there are some fantastic business models in that 75 to 150 range. And of course, financing is available and different types of products to finance, as our as Andres definitely knows. So the yes, you can spend as much as you want, but you can find some great business models within a more comfortable range. Joe Abreu - GLOVISOR.com: not every single franchise is for multimillionaires. Now, Andres, can you talk to us a little bit about the financing? How difficult is this financing? Do I have to have stellar credits? ANDRESCAPITALTV: Well, yeah, so that's why, you know, one of the b one of the first things that we start with is with the personal financial statement of the person or the capitalization of the project. Because we consider it as a project, right? If you are investing into a franchise or doing a acquisition of a franchise, well you have to plan for how does that gonna look like? What do you have in regards to liquid capital and in liquid in regards to assets? So we can identify if you are a fit for each brand because each brand has different type of requirements. Think about opening you know, and we can go, you know, let's say big retail brands, you know, the you know, let's say you know that can cost four or five million dollars to open. Well, you're gonna have to have a certain type of wallet for that. But as Rick mentioned, there are so many valuable brands that are right now impacting your community. And you go and actually consume or use those to service your homes, your offices, your your basically maintenance, everything around you is built and maintained by someone. And that someone, a lot of them are franchises because they're business models that started with national account contracts and then they started impacting all of the cities all over the United States. So the first thing that we need to do is say, okay, how much do you have in liquid capital? And Then we start going through the routes. Is the one of the reasons why I mentioned, you know, when I was looking at you know, balance sheets, you know, in my commercial international lending you know, world, it was, okay, why are I see people investing into franchises? They needed either a way for them to diversify maybe their portfolio of where they put their money and then also create jobs. Maybe some of them needed it for visa status, you know, because of course there are brands that are actually you know, E2, E5, you know, basically qualifiable, or the locals, you know, here in the United States, that they say, hey, you know what? I knew I want to have this business because it integrates horizontally or vertically into the clients that I already serve with my other businesses. So let's say you start with a let the simple calculation that most people can say is okay, if it costs me, let's say 200,000, 250,000, you know, to get into a business, all right. How much do I need to have, you know, in order to get into this business? So you gotta calculate to have probably between, you know, and I'll say, you know, from the least, about 10% of injection. Why? Because we're just doing a general calculation. This is not basically set in stone, but at least it's a mark. 10% of the equity injection that you're gonna need to do into the business. So you can maybe get SBA financing, you know, which which is you know one of the areas that we studied. That said, okay, there are SBA programs that love the franchise models because they know that basically the numbers don't lie. The US franchise industry generates almost a trillion dollars of economic output. So this is where we need to look at the numbers. Why does it create a trillion dollars of economic output? Because 92% of franchises survive after two years compared to 50% that are individual startups. And this is according to the International Franchise Association. The franchise the franchise output is projected to be about 4.4% in 2026 and up from almost a trillion dollars to more. So franchising is going to continue to grow because we're seeing right now one of the biggest explosions into new businesses. And most people that understand that franchise models create basically a safety that you don't have in most startups. It allows you to get into a business model that is proven that is already impacting all over the United States. Joe Abreu - GLOVISOR.com: Now Rick, the Latino franchise council has an awesome website by the way. You guys did a great job with it. will the training and information be provided both in English and Spanish? Rick Morgin: Absolutely. Joe Abreu - GLOVISOR.com: Great. Now I can see the direction that you're taking with the council and and it's fantastic what you're doing because it at a minimum what you're doing is you're educating a lot of individuals to learn that there are a lot of opportunities out there aside from what you know we we're accustomed to. but Andres, what do you think is gonna be the biggest challenge penetrating the Latino market? ANDRESCAPITALTV: Well, the biggest challenge that the Latino population here in the United States has is education. And this is why we tackle this with the education that we have. We are blessed, you know, to be invited by several chambers, organizations, other you know, nonprofit groups that want to really bring valuable information to educate. So what happens? we are right now, and and I say this because I want to bring in actually I am the vice chair of one of the biggest Hispanic chambers of commerce here in Houston. It's CEL Camera de Empresarios Latinos. So from babysitting my, you know, almost 540, 50, and 60 year old kids, I've seen their startups, how they pedal, how they struggle. And then I see the ones that maybe did franchising and okay, then and and it's a smaller percentage, all right. Because again, it's the education piece that they that most of them then have. So when we explain about the numbers on how hey, you started with this startup and you've been you've invested a hundred thousand, two hundred thousand trying to get this going, and you're still not up to the black. Guess what? You see this business model right here? They got to the black way faster because they understood the business model, they follow it to the T and they understood the value of the SOP, what we call standard operating procedures. The supply chain of you know value that the brand brings. And of course, anything from the national you know marketing to the local marketing that you can establish with these brands. So to me, it's about education. That is the biggest challenge that the Latino population has. I always say, understand, go and study. We have provided actually, you know, through different I'm I'm I'm I've given classes with the SBDC, I've given classes with everybody to try to educate the entrepreneurs. And I always say, Educate yourself in this so you understand if you like this industry, why how does it do in franchise? And then start looking at the businesses. And then they start identifying, that's a franchise. Yeah. there's they're in the light industrial. I like construction and I want to be able to get into maybe this type of you know servicing national accounts and everything. Yeah, and this is a franchise. Wow, how interesting. So you mean that I can get into this business and I'm gonna have the support? Somebody's gonna guide me. How does it work? Yes, that's how it works. Instead of you trying to figure it out with, you know, TikToks or, you know, whatever Instagram clips or whatever. I mean this is the part that I wanna I wanna you know really hone in and and give to people. Go educate yourself with the best, go research, you know, and again, our education is of course free of you know charge to anybody, you know, they can just basically talk to us in Spanish or in English. Joe Abreu - GLOVISOR.com: I like how you mentioned how you watch them pedal along. because that's exactly how you feel. You feel that this some of these new businesses that you're working with, they're sort of your children, right? You're and you're watching them grow and all of that. And so I really I I feel that as well. now, Rick, he just mentioned that it's free. So does that mean that I get to learn all of this without having any cost at all? Is there a process? tell me a little bit more about this? Rick Morgin: education and coaching we provide to help somebody find the right franchise, there's there's no charge to to them. We're not gonna ask it for any retainer. I always tell people I connect with if any con consultant in this franchise space asks for a retainer, run away. That's that's not how we That's not how this space operates. We we get paid just like a real estate broker. So and it doesn't cost the client any more or less to find something on their own or or work with us because we get paid by the franchise company. Our fees are paid by the franchise company and that's how it's free. we can Joe Abreu - GLOVISOR.com: So it's a success rate. If it closes, you guys get paid, but you don't you never charge anything up front for anyone. Rick Morgin: No, we don't. Yes. You know, if a a house goes on the market and it doesn't it's it gets pulled off on the market, that broker, that selling agent doesn't get paid. Same with us. process for whatever reason. We can't just just can't take it personally. Joe Abreu - GLOVISOR.com: Now Andres, if someone's listening and is thinking, maybe I could own a franchise, what is the one thing that you want them to remember from this conversation? ANDRESCAPITALTV: The one thing that I want them to remember from this conversation is that we have seen the most successful really Individuals, you know, that built a life, you know, that is memorable, that they really, you know, like they can look back and say, my God, thank God I did this. Thank God because either I am impacting my community, I'm serving a purpose with my company. Once they see the value of really being into business ownership with a business model that, you know, that is really aligned to their life goals, that is very impactful. I can tell you that, you know, Rick and you know, and myself and and Obed and all of the other consultants that we have, that you can go into LatinofranchiseConsult.com and go and connect with one of them. You're gonna understand that they we're all really trying to help guide people to have a better life through business ownership, through franchising, because we see the numbers, how they impact. And We can explain anything from market research, anything from industry research, anything from what's going on really in your territories, And then we can start from that to see what business models really fit that are available for you right there. And that's really all they need to worry about is ownership. How does it work? How how can we start at least identifying some good business models? Joe Abreu - GLOVISOR.com: Know your market. That's awesome. Now, Rick, how about you? What is one thing you want people to remember from this conversation? Rick Morgin: One thing I want people to remember is that If we have interested anyone into exploring business ownership You don't have to do it on your own. You have resources, multiple resources, and us to connect with who can guide you and help you make that informed decision for for yourself. It's their their call. and just don't do it alone. Joe Abreu - GLOVISOR.com: Good advice. Now that is for listeners who want to learn more about franchise ownership or connect with the Latino franchise council, where should they start? ANDRESCAPITALTV: Well, they should definitely start with going to the LatinoFranchise Council dot com. Go you know, peek around, understand about franchising, look at the resources. There are stories, there are maybe you know, some you know newsletters about business models and maybe industry updates that are really valuable for you. Just go and get a little bit of information about this and and then connect with somebody, you know, that really you know piques your interest. I like I said, you know, like we're all very proud. to be for the family, for la familia. All right. So no matter if you need in Spanish or English, we have it right there for you. So we're very excited, you know, to come and help. Joe Abreu - GLOVISOR.com: Andres and Rick, thank you so much for joining us today. We we truly appreciate your time. And it it's been a pleasure having you. Rick Morgin: It's been privilege to be on your show. ANDRESCAPITALTV: Same here. Thank you so much, Joe. Joe Abreu - GLOVISOR.com: Thank you. You're welcome. Thank you everyone for listening. If this episode inspired you, make sure you share it with someone. And don't forget to follow the Glovisor Podcast for more conversations that make an impact. Till the next time.