1 00:00:00,120 --> 00:00:05,120 The challenge that most people have is if you get into the wrong business or 2 00:00:05,240 --> 00:00:09,160 franchise, it's going to be a lot harder. The reason you get into 3 00:00:09,240 --> 00:00:14,160 a franchise is to mitigate your risk. Hopefully, if you get into the 4 00:00:14,240 --> 00:00:19,079 right franchise it fits your criteria, you've got a fighting chance. You're listening 5 00:00:19,120 --> 00:00:24,480 to Carrie Letz's Financial Survival Network, where you get valuable information you just can't 6 00:00:24,519 --> 00:00:30,480 find anywhere else to thrive in today's trying times. You need the Financial Survival 7 00:00:30,559 --> 00:00:36,039 Network now more than ever. Go to Financial Survival Network dot com and get 8 00:00:36,039 --> 00:00:46,520 your free newsletter in gift Financial Survival Network now more than ever, and welcome. 9 00:00:46,759 --> 00:00:50,679 You are listening to watching the Financial Survival Network. I'm your host, 10 00:00:50,759 --> 00:00:56,520 Carrie lets Well, if you are an executive at a big company and looking 11 00:00:56,520 --> 00:01:03,799 for greener pastors, you might just consider purchasing a franchise opportunity. Many of 12 00:01:03,840 --> 00:01:07,200 you out there are doing that even if you're not an executive, but you've 13 00:01:07,239 --> 00:01:11,840 always wanted to start your own business and don't know where to start from. 14 00:01:11,280 --> 00:01:18,000 Well, Patrick Elsner is with us now. He is a franchise consultant and 15 00:01:18,519 --> 00:01:23,079 Patrick, welcome to the show. So Hey, when people start getting into 16 00:01:23,120 --> 00:01:26,760 franchises. What are the pitfalls here? Yeah, I think the challenges for 17 00:01:26,799 --> 00:01:32,040 a lot of people carry is they get into the wrong franchise, They get 18 00:01:32,040 --> 00:01:36,680 into franchises for the wrong reasons. One of the reasons that people like working 19 00:01:36,719 --> 00:01:41,159 with me is I help them figure out two things, which franchises they actually 20 00:01:41,280 --> 00:01:45,879 qualify for and also which franchises are going to be available where they live. 21 00:01:46,280 --> 00:01:51,480 So my freematching service really just helps them sort of cut through thousands of franchises 22 00:01:51,640 --> 00:01:57,280 identify the ones that are most recognizable for their particular situation. All right, 23 00:01:57,439 --> 00:02:00,799 so they swipe left for the franchises they don't want, and they swipe right 24 00:02:00,920 --> 00:02:07,920 for the ones that they do want. So what for executives, you know, 25 00:02:07,639 --> 00:02:13,199 mid to upper management executives, what kind of franchises are they going for? 26 00:02:13,479 --> 00:02:17,879 They're going for food, they're going for services? What exactly? Yeah, 27 00:02:19,000 --> 00:02:23,680 what we do is a customized set of selections based upon their criteria. 28 00:02:23,800 --> 00:02:28,719 So I learn about their criteria through a questionnaire and an interview, and then 29 00:02:28,759 --> 00:02:32,439 I go in and find specific brands. Now what I'm seeing it really runs 30 00:02:32,479 --> 00:02:38,360 the spectrum. Some of them are in food related franchises, but the majority 31 00:02:38,400 --> 00:02:44,000 of the people are choosing franchises that fit a particular criteria. I always tell 32 00:02:44,000 --> 00:02:46,560 people, at the end of the day, it comes down to three questions. 33 00:02:46,560 --> 00:02:51,319 What's the investment, what's the return, and what do I have to 34 00:02:51,360 --> 00:02:53,520 put up with every day? All right? So are they going mostly for 35 00:02:53,680 --> 00:03:00,280 passive franchises? Are they going for ones where they actually have to actively match? 36 00:03:00,599 --> 00:03:04,080 Yeah, I'd say seventy five percent of the people that I'm placing our 37 00:03:04,199 --> 00:03:08,919 people that are keeping their jobs in corporate America, but they want to find 38 00:03:08,960 --> 00:03:13,280 other ways to generate revenue. So it's going to be what I call semi 39 00:03:13,360 --> 00:03:19,240 absentee, a passive opportunities, keeping that W two job, that perceived safety 40 00:03:19,240 --> 00:03:23,479 of W two job, and then building a franchise on the side. So 41 00:03:23,560 --> 00:03:28,439 what are the top the hottest three franchise concepts now, Patrick? Yeah, 42 00:03:28,560 --> 00:03:37,280 probably the most place franchises with me and my inventory today are brands like Supercuts, 43 00:03:37,800 --> 00:03:42,840 Great Clips, brands that you and I wouldn't normally work in these stores, 44 00:03:43,120 --> 00:03:46,639 but we would hire a manager. The manager would run the franchise day 45 00:03:46,680 --> 00:03:53,479 to day, oversee the operation. But those individuals keep their jobs and build 46 00:03:53,479 --> 00:03:59,039 the franchise on the side. Okay, I heard that home improvement franchises were 47 00:03:59,080 --> 00:04:02,479 really on the rise. What's your experience there, Yeah, there's no question. 48 00:04:02,599 --> 00:04:09,599 Since the pandemic care you've seen a huge surge in home service franchises, 49 00:04:09,960 --> 00:04:14,360 especially during the pandemic when people are spending more time at home instead of going 50 00:04:14,439 --> 00:04:18,079 on that ten thousand dollars European vacation, they spend money to spruce up their 51 00:04:18,160 --> 00:04:23,279 house. That has definitely been a huge category for sure. All Right, 52 00:04:23,319 --> 00:04:27,519 what about healthcare type franchises? What are you seeing there? Because we are 53 00:04:28,079 --> 00:04:33,560 the population is aging, the boomers are retiring in droves, and a health 54 00:04:34,480 --> 00:04:40,120 is really a paramount. Yeah, there's no question about it. Healthcare is 55 00:04:40,160 --> 00:04:45,360 a huge category. People like the category because of the fact that it's pretty 56 00:04:45,480 --> 00:04:51,199 recession resistant. What I like about the healthcare category and franchises You don't have 57 00:04:51,319 --> 00:04:57,160 to be a doctor to own these franchises. It allows you to hire a 58 00:04:57,240 --> 00:05:02,079 manager to run them. Really about the business model carry if you've ever heard 59 00:05:02,120 --> 00:05:09,079 the notion that doctors don't make great business owners, it's really taking that out 60 00:05:09,079 --> 00:05:13,319 of the equation and letting the franchise system run with it. Okay, So 61 00:05:13,399 --> 00:05:18,600 what are the hottest concepts in healthcare franchises right now. Yeah, one of 62 00:05:18,680 --> 00:05:25,959 the ones that we're working with here lately is a men's health concept that is 63 00:05:26,040 --> 00:05:30,680 related to believe it or not, a rectile dysfunction and men that have low 64 00:05:30,720 --> 00:05:35,120 testosterone. And it's a touchy subject for a lot of guys. Look, 65 00:05:35,160 --> 00:05:39,759 guys, we as just by our nature don't like to go to the doctor. 66 00:05:40,160 --> 00:05:45,000 And so this is a franchise concept that addresses low t and ED. 67 00:05:45,800 --> 00:05:48,600 And again I'm not a doctor, but I could certainly own one of these 68 00:05:48,639 --> 00:05:54,720 franchises and have that address that market. What about these meta spas, Have 69 00:05:54,839 --> 00:05:58,319 they run their course? I don't think so, Carrie, because here's the 70 00:05:58,399 --> 00:06:03,240 situation. As a boomers age. They have that disposable income. They can 71 00:06:03,319 --> 00:06:08,399 spend that money on health and wellness. I mean, look what a massage 72 00:06:08,759 --> 00:06:12,639 envy did to the massage market. You know, getting a massage used to 73 00:06:12,639 --> 00:06:15,519 be kind of one of those things that you did when you're on your vacation. 74 00:06:15,959 --> 00:06:20,959 Today, with massage envy, getting a massage is common as going down 75 00:06:21,000 --> 00:06:26,079 to Main Street and you know getting a one hour massage. So you see 76 00:06:26,120 --> 00:06:30,120 that predictable and a recurring revenue. Hey, are those good franchises? What 77 00:06:30,279 --> 00:06:34,439 kind of startup costs involved with a massage Envy. Yeah, you're probably looking 78 00:06:34,519 --> 00:06:41,120 somewhere around four hundred to six hundred thousand to launch one of those. They're 79 00:06:41,240 --> 00:06:45,639 pretty simple. If you've ever been inside a massage Envy, you're looking at 80 00:06:45,839 --> 00:06:51,319 basically ten little rooms. So it's really droll expense, the sign out front, 81 00:06:51,360 --> 00:06:57,040 on the door, the rents probably anywhere from four to eight thousand dollars 82 00:06:57,079 --> 00:07:00,279 per month. That's probably going to be your biggest expense. You want to 83 00:07:00,319 --> 00:07:03,959 put those next to a Whole Foods, a Trader Joe's one of those type 84 00:07:04,000 --> 00:07:09,439 of anchors in a strip center. Yeah, I've actually no one in Florida. 85 00:07:09,600 --> 00:07:16,040 It's in the same shopping center as as a Whole Foods, But there's 86 00:07:16,079 --> 00:07:23,199 been some knockoff franchises like Hand and Stone. They're a little bit higher end. 87 00:07:23,600 --> 00:07:26,800 Do you go for the higher end or do you go for the massage 88 00:07:26,920 --> 00:07:29,399 envy? Well, I think it's a lot of it's going to depend upon 89 00:07:29,480 --> 00:07:33,720 the consumer. I mean, massage endby definitely feels a little medicinal. It 90 00:07:33,759 --> 00:07:39,639 feels like you're walking into a doctor's office. Hand and Stone's point of difference 91 00:07:39,959 --> 00:07:45,879 is it feels more like a spa. They also offer some ancillary services like 92 00:07:46,079 --> 00:07:49,959 facials and now you're seeing Massage Envy ship. They were the number one brand, 93 00:07:50,360 --> 00:07:54,560 Hand and Stone gets to be the number two brand in terms of number 94 00:07:54,600 --> 00:07:59,399 of locations. So people can go in and decide what's the environment that they 95 00:07:59,439 --> 00:08:01,160 want to be in. Do they want to be in more of a medicinal 96 00:08:01,240 --> 00:08:05,079 feeling environ like a Massage Envy or do they want to feel more like a 97 00:08:05,160 --> 00:08:13,439 spa with Ann and Stone. Okay, so you know it's like hotels Hilton, 98 00:08:13,000 --> 00:08:20,560 Maria and Hyat. They've got these huge reservation networks even for hotels they 99 00:08:20,600 --> 00:08:26,759 don't own, they just manage. Is there a benefit with franchises to have 100 00:08:26,920 --> 00:08:33,039 these networks, to have the apps and the software online Like Massage Envy's got 101 00:08:33,039 --> 00:08:37,200 its own app, it's got remote scheduling, all these things. What's your 102 00:08:37,240 --> 00:08:43,120 take on that? Yeah, there's no question about a technology is a huge 103 00:08:43,200 --> 00:08:48,039 point of difference for any franchise brand versus say a mom and pop. I 104 00:08:48,080 --> 00:08:52,200 mean having that technology is convenient. Look, I look at great Clips. 105 00:08:52,240 --> 00:08:56,320 I'm a customer of Great Clips, and I love using my phone to go 106 00:08:56,440 --> 00:09:01,159 on the app and look at the weight times for the local great clips and 107 00:09:01,200 --> 00:09:05,879 that I can check in online and by the time I walk into that great 108 00:09:05,919 --> 00:09:09,639 Clips, I usually don't end up having to wait. This is the point 109 00:09:09,679 --> 00:09:13,960 of difference. This is the value carry that a franchise brings to a franchise 110 00:09:15,000 --> 00:09:20,279 owner. All right, well that makes a ton of sense. So banking 111 00:09:20,320 --> 00:09:26,399 crisis all that. How much harder now is it to get financing for franchises? 112 00:09:26,039 --> 00:09:30,960 I would say it's not harder as much as it is costlier. With 113 00:09:31,240 --> 00:09:35,159 the spike of interest rates, getting an SBA loan is certainly a lot more 114 00:09:35,279 --> 00:09:41,000 costly. That's probably what is turning more people off. A good portion of 115 00:09:41,000 --> 00:09:43,759 the people that I'm placing, or high level executives, a lot of them 116 00:09:43,759 --> 00:09:50,120 are using their four O one k or ira without taxes or penalties in lieu 117 00:09:50,159 --> 00:09:54,679 of investing in the stock market. I've seen that as a common approach for 118 00:09:54,080 --> 00:09:58,120 funding those types of franchises. All right, so a lot of self funding 119 00:09:58,240 --> 00:10:03,679 going on. What kind of returns can you make in these franchises here? 120 00:10:03,759 --> 00:10:09,960 Patrick, You know, I'd say a rule of thumb twenty twenty five percent 121 00:10:09,480 --> 00:10:15,919 is pretty typical. Now, I've got some non retail franchise concepts where you're 122 00:10:15,919 --> 00:10:22,320 talking about net margins of seventy five to eighty percent. All right, so 123 00:10:22,879 --> 00:10:28,480 how long does it usually take for these concepts to turn profitable? Patrick? 124 00:10:28,679 --> 00:10:31,919 Yeah, if you're talking about a retail based concept, carry you know, 125 00:10:33,039 --> 00:10:39,639 getting the location going through least negotiation and build out, you're talking probably upwards 126 00:10:39,639 --> 00:10:43,279 of a year to get that done, and then obviously during the ramp up 127 00:10:43,279 --> 00:10:48,480 phase, you know, you might do a pre opening special. I mean, 128 00:10:48,559 --> 00:10:54,320 that's why Massage Envy drives their membership is they basically market to the local 129 00:10:54,399 --> 00:11:00,639 consumer during the build out and then hopefully by the time that Massage the location 130 00:11:00,720 --> 00:11:05,679 actually opens, then they have a stable of members already up and operating. 131 00:11:05,879 --> 00:11:09,919 So that's how they begin to cash flow pretty quickly. Right. Okay, 132 00:11:11,000 --> 00:11:16,440 so how successful are your clients with their franchise endeavors. Yeah, great question, 133 00:11:16,679 --> 00:11:20,360 And this is what I tell everybody that I work with, Carrie. 134 00:11:20,679 --> 00:11:24,679 Franchising is definitely not perfect. It's not for everybody. I've definitely put people 135 00:11:24,720 --> 00:11:30,799 into franchises that unfortunately have failed. I mean, business ownership is not the 136 00:11:31,440 --> 00:11:35,000 magical lixer for everybody. But I've had other great success stories of people that 137 00:11:35,080 --> 00:11:41,240 have gone on to be wildly successful. The challenge that most people have is 138 00:11:41,279 --> 00:11:45,279 if you get into the wrong business or franchise, it's going to be a 139 00:11:45,279 --> 00:11:50,919 lot harder. The reason you get into a franchise is to mitigate your risk. 140 00:11:50,320 --> 00:11:54,679 Hopefully, if you get into the right franchise that fits your criteria, 141 00:11:54,039 --> 00:11:58,200 you've got a fighting chance. All right, Well, it makes total sense. 142 00:11:58,320 --> 00:12:01,960 And hey, who is the biggest success. You don't have to name 143 00:12:03,039 --> 00:12:05,320 him by name, but just give us an example, biggest success of all 144 00:12:05,360 --> 00:12:09,080 the people that you've worked with in your conner. So I worked with a 145 00:12:09,159 --> 00:12:15,519 gentleman in Houston about six seven years ago. He was an executive with Bank 146 00:12:15,559 --> 00:12:20,559 of America. Now, this guy was flying every week from Houston to New 147 00:12:20,639 --> 00:12:26,440 York to go to corporate for boa and can you imagine every week he did 148 00:12:26,440 --> 00:12:33,080 this for six years. It was an arduous task to go and do this 149 00:12:33,120 --> 00:12:37,519 flight every week back and forth. So he and I worked together and we 150 00:12:37,639 --> 00:12:43,360 looked at the number of different franchises. I ultimately placed him in a restoration 151 00:12:43,559 --> 00:12:48,639 franchise called Paul Davis. Now, Paul Davis may not be recognizable to the 152 00:12:48,679 --> 00:12:54,240 consumer. Most people have heard a competitor called like Serve pro or Service master. 153 00:12:54,840 --> 00:12:58,639 But what these companies do is they sucked the water out of your basement 154 00:13:00,080 --> 00:13:03,639 when you have fire, flood, water damage, what have you. He 155 00:13:03,720 --> 00:13:09,159 went on to build a very successful business. I think last year he did 156 00:13:09,279 --> 00:13:13,360 like nineteen million dollars in revenue. He's gone on to open up a second 157 00:13:13,399 --> 00:13:20,440 location in Riley, Durham. Clearly this is a guy that's no longer on 158 00:13:20,480 --> 00:13:24,639 that flight to New York every week. All right, So we'd love to 159 00:13:24,679 --> 00:13:28,600 hear happy stories, happy customers. People want to find out more about you, 160 00:13:28,720 --> 00:13:31,120 Patrick, want to connect with you on the web. How do you 161 00:13:31,200 --> 00:13:35,799 do that? Yeah, I have a website. It's pretty pretty simple. 162 00:13:35,840 --> 00:13:43,120 It's fran inside dot com, so fram inside dot com. They can also 163 00:13:43,240 --> 00:13:46,639 look me up on LinkedIn, Carrie, I've been doing this for twenty years. 164 00:13:46,960 --> 00:13:50,960 Look me up on LinkedIn, Patrick Elsner. There's over one hundred written 165 00:13:50,000 --> 00:13:54,559 testimonials of people at Placed just in the last couple of years. All right, 166 00:13:56,039 --> 00:14:00,000 that's excellent. Well, hey, you got a question for Patrick myself? 167 00:14:00,320 --> 00:14:05,000 Email address kl at Karreltz dot com. You'll find a link to patrick 168 00:14:05,080 --> 00:14:09,639 site in the show notes this interview on Financial Survival Network dot com. And 169 00:14:09,759 --> 00:14:13,600 while you're there, sign up for your free newsletter. Patrick really appreciate you 170 00:14:13,720 --> 00:14:18,480 coming on and I'm sure you'll have no shortage of takers with the revamping of 171 00:14:18,519 --> 00:14:22,679 the American workforce, and we will talk to you again soon. Thanks Carry, 172 00:14:22,120 --> 00:14:28,720 thanks for listening to Carrie Lets's Financial Survival Network, your solution to today's 173 00:14:28,840 --> 00:14:33,720 trying times. For the latest, go to Financial Survival Network dot com. 174 00:14:33,720 --> 00:14:37,559 Financial Survival Network now more than ever,