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