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