The Most Overlooked Way to Get Rich in America - Ep. #326

How are people out there buying franchises with none of their own money?

Franchising has 85-ish percent success rate. It's 50% for independent businesses. I think franchising is probably the most overlooked path to wealth creation in America.

What would you say is the cheapest franchise concept that you would put your own money into right now?

He just like couldn't figure out what he was good at. He makes multiple 6 figures now. He again didn't have formal training for this.

When you're looking at a franchise document, what is a red flag that That makes you run away every time. Is Subway the worst franchise deal in America? Defend your answer. My friend Alex knows more about how to get wealthy from franchising than almost anyone on this planet. So today I flew him here to Dallas, Texas to ask him, what franchises can I get into with a very low startup cost and a very high profit potential? What should we look out for in a franchise that appears to be legit but is actually shady? Which franchises are fads? Which are the next big thing? What are some overlooked franchises that are making people millionaires? And specifically, what are the 4 best franchise opportunities in the world right now? Alex, you probably know more about high-profit potential franchises that don't cost that much to start than almost anyone on the planet.

True. I have— true. I've read thousands of what are called FDDs, franchise disclosure documents. So I see average investment range, average revenues, And today we've got some of the most interesting low-cost but high-revenue potential franchises you can get into.

Okay, and that's why you flew here today, so we can break these down. I want to talk about franchises that are popular, that are growing in popularity, but they're not like crumble and it's just tired, there's no opportunity left, right? Franchises that don't cost a ton to start and that have proven profit potential, not just like hopes and dreams on a spreadsheet, but you can look at their publicly filed franchise disclosure documents and see provably that they're profitable and that there's a lot of promise left in them. We're still early on them. Cool?

Let's do it.

Okay. I have in my notes here freight brokerage franchise.

Yep. So, the first one I brought is a really interesting business. It's in the freight brokerage category which essentially is you in an office. It could be at your house. It could be a small office where you're helping people that want to move goods. Pairing them with carriers that have, you know, trucks and logistics and routes, etc., then you're making the spread on what that vendor is willing to pay to move their items and what the supplier is willing to charge for moving those items.

Okay.

So you make the difference.

Okay.

So it's really B2B sales, so it doesn't cost a lot to get into this, but some of these individuals are putting up really big numbers. Let me pull exactly what the average is. So the average franchisee in this business is doing over $1 million a year in revenue. And this is a mature UK and Europe-based concept that's moving to the US for the first time. They're actually headquartered here in Dallas.

Okay. So you say $1 million a year in revenue. That's not like an industry-wide statistic. This is for this franchisor.

This brand specifically.

Okay.

Yep.

So I'm flashing back to high school. It's been a good, you know, what is it, 22 years now? My best friend was Chase and his dad owned a freight brokerage company. And it was his dad's that he inherited from him, and Chase will inherit it from him. And I'll never forget this because I'd go to Chase's house and it was like, oh, where'd you go on vacation? Salt Lake. Oh, I just shipped a load of onions from Atlanta to Salt Lake. Oh, where'd you go on your mission here? Oh, I just shipped a bunch of cabbage. Like, that's what he did. He, he would pick up the phone and say, oh, you need this load moved? All right, I can do it for this much, this much. You can leave on that. And then he would just take a margin on that shipment. Is that accurate?

That's exactly how it works.

Okay. And then recently when Tesla announced their Tesla Semi, I reached out to my friend Chase. I'm like, dude, what are you gonna do, man? These trucks, they're gonna drive themselves. And he's like, we're gonna buy some. Like, we will own them. We won't need as many truck drivers. So this feels like a pretty AI-resistant industry.

Yeah, I think so. 'Cause even if the trucks get more efficient, they're still gonna need people drumming up interest of, you know, people that need to move goods and services or, you know, mostly goods with the logistics piece, whether those are automated trucks or people behind a wheel, there's still gonna have to be sort of brokerage happening in the middle. Eventually, do algorithms come in and fully wipe things up? Probably. But I think we're a decade away from that. And there's still plenty of money to be made over the next 5 to 10 years.

Well, just like anything, like 3 years ago, everyone's like, wow, every white-collar job is done. And now, it's like, actually, this is growing jobs. AI is growing jobs. Actually, wealth managers want a human. Accountants kind of— or business owners that have accountants, they kind of want a human to talk to, even if ChatGPT does it better. They want a human that uses ChatGPT so they can be better. I feel like this is an industry that goes along the same lines.

Especially if you're moving hundreds of thousands of dollars worth of goods across the country, you don't want to just click a button and be like, I hope that this gets where it needs to go on time and doesn't get damaged or ruined along the way.

So you don't need an office. The franchise doesn't require you to have an office. You could work from home. You're on the phone a lot, emails. It's a relationship business, I'm assuming. Once you get in with a good company, then they're probably going to send you a bunch of shipments on a regular basis.

Yep. And they've built all the tech, the backend. They help with the carriers, they help you with initial customers. And that's where things get a little complicated. It's like, how do you price things and how do you do that? A lot of these independent freight brokerages build this in-house. It's a lot of money, software engineers, etc. And so they provide all of that. The kicker though is they do charge one of the highest royalties that I've seen in franchising outside of Chick-fil-A even. Or Chick-fil-A is the highest. They're up there. They charge 30% royalty on the gross margin, not on the revenue.

Okay.

And this is actually common in freight brokering for a number of reasons because of all the investment into technology and the relationships are pretty defensible.

Okay. So let's break that down. Let's say that there's a shipment from, you know, Los Angeles to Seattle and it's a $10,000 shipment. Break that number down. Where does all the money go there?

Yep. So you'll make about a 40-ish percent margin on the 10, let's say, Say, was it $10,000? $10,000. So you'll make $4,000. Then the franchisor is taking 30% of that $4,000.

$1,200.

So they'll take $1,200. The left— the, the rest is left for you to cover any local expenses you have if you do rent an office. If you have decided to start scaling and hire more sales reps, more account executives, that cash would be left for them. Otherwise, you're pocketing the rest if it's just you and your home office. Okay, so your cost— your cost of goods in this freight brokerage example on the 10-K is $60,000 because you're paying— it's probably more like GMV. Yeah, $6,000 in cost. So you're, you're left with $4,000. The franchisor is taking 30% of that.

Okay. And presumably it's because your overhead's not that high, right? Whereas with a restaurant, that 30% might be 8%. And I'm, I'm hoping and assuming that they help you find customers.

Yes.

Because if I, if I'm a franchisor and I take such a fee, it's going to be because I'm feeding them leads all day.

Good leads. And then all the technology, and they are handling all of the back office. They handle— here, let me pull up one other thing. Yeah, they're running all of your invoicing, carrier payments, carrier relationships. Really, you're just effectively B2B sales. Yeah.

Okay. I have to think that the— since this is a relationship business, the churn is pretty low. Like, once you have a good relationship, it's recurring revenue, essentially. Yeah.

And you can upsell into warehouse management, facility management, other services that, you know, carriers and buyers need alike.

Okay.

So the average revenue is a little over $1 million across all the different open territories today, and then the average margin is about 40%. So you're making $400K in gross margin before you pay that 30% royalty. Wow.

Okay. So net margin would be what? It would be 30% less, $400 grand? Is that right?

Yeah. So take $120K off, you're at $280K.

Okay, average 28% net margin. Some are significantly lower, some might be significantly more.

Yep, it depends on what your local operating costs are. If you've got a nice office and you got a team of 6, I imagine the average isn't that big yet. Those are probably the top quartile performers, and they're in the multiple millions, making a lot more that justify adding headcount and an office.

Because if you have a team of 6, your, your percentage margins are probably going to be lower, but your volume— yeah, your volume would be higher. Your Net revenue to your pocket will be higher.

Yep. And this is a fir— one of the first franchises in the US doing this. That they've— this brand that expanded here has been very successful in the UK and across Europe. So I get excited about this because it's new. I have a buddy too, similar to yours, who he throughout college was trying a number of different things. He was doing music at one point. He was chasing storms. I was telling Max about this. He was doing like hail insurance and hail damage, and he just like couldn't figure out what he was good at. He does freight brokerage now for an independent freight broker. He makes multiple 6 figures now. He again didn't have formal training for this. He's just good with people and relationships and jumped into this and is very good at it. And so I like it because it's super accessible. The revenues are high. The cost to get in, which we'll talk about later, is low. I mean, in some cases, sub-6 figures to get started.

Wow. Okay. So if you are a people person, extrovert, don't mind being on the phone, you love conversations, relationships, working from home, It's a good fit for you.

Absolutely.

Okay. All right, what do you got next?

The second one is also really interesting. This is one of the highest revenue-generating franchises that I've seen, and it's commercial facility management. So think about office buildings, warehouses, all these different properties. Let's say you and I own a bunch of them together. We now have to deal with landscaping and HVAC going out and janitorial services and striping the parking lot and all these things that come with owning a property. This franchise or this business handles all that. It's one, for lack of a better word, one throat to choke. It's one relationship and they handle everything else for you. And they make a very, very, very high volume of revenue. The highest grossing revenue franchisee in 2025 in their FDD did over $50 million in revenue, and the average is doing $9 million in revenue.

Holy crap. For the franchisee, not the franchise?

The franchisee.

Did you say facilities? Management. How is that different than being a commercial property manager?

It's effectively the same thing. You're just handling— I mean, I guess even property managers are handling the whole thing. You're effectively being the property manager for the building, but it's a franchise model instead of an independently owned.

So you're also finding tenants and evicting?

You're not doing that. It's actually just the— it's just the maintenance.

So I guess that would be the difference, the differentiator then. It's kind of an unbundled version of a property manager.

Yeah, you don't have to deal with leasing up the units and working with tenants that way.

Okay, we'll make sure that an extra dumpster gets out there, that the lines get striped, etc.

Yep.

6— you said $6 million was the average?

$9 million is the average revenue.

And what are the net margins on that?

So their gross margin is a little over 3. It's $3.3 million average margin, so 33.5% margin off of an average of $9.8 million. It's almost $10 million in average revenue.

Holy crap.

And my guess is that, again, it's almost like this GMV thing. So you hear with like Instacart, they're doing billions of dollars in revenue. Well, they're just transacting billions of dollars of groceries, Instacart's taking a membership fee or some smaller amount. My guess is the revenue is so high here because they're saying, hey, we're charging for janitorial, landscaping, etc. They're having to pay those subcontractors.

They're capturing that revenue and then passing it on.

Because even the, the royalties on gross sales, not margin, but I imagine that, you know, 65% that's going out the door is to the subcontractors. And so you're still left with a lot. You probably don't have a lot of overhead or costs at that point because you're Outsourcing every bit of the services actually happening.

Do you know how much, like, lead generation the franchisor provides on this one?

This one is more on you, and they charge a lot less of a royalty as a result. So it's 5% of gross sales is the royalty.

Okay. And they're gonna— are they gonna help you find and vet, like, the line striper? That—

so that's on you too. So that's where I think, as the franchisee, you're getting a brand. They're helping with some brand awareness and marketing. They probably have national tenant or, you know, landlord relationships with some of the large property owners. But from there, they exclusively say, or they specifically say in the FDD, you are responsible for building the subcontractor relationships. So that's where the, the rub is, probably the headache of running this business is I gotta go find good contractors. But for $3.3 million in gross margin and a pretty good business, yeah, worth the headache.

I mean, any given franchise is a terrible fit for someone And an amazing fit for someone else, right? So I'm thinking if you're a 40 to 60-year-old dude that's been doing real estate for a while, either commercial or residential, you've got a bunch of contractors in your back pocket, you have relationships, you speak the language, you could plug into a bunch of stuff, you're a leasing agent, this could be a great fit for you.

Yeah.

If you have no experience there and you're going in cold, you have no sales experience, it could be a terrible fit.

Yeah, I asked too, you know, why are the top 5 You know, why are some of these folks doing $50 million? And they said the main differentiator is that they've had 5 years of B2B sales experience before joining as a franchisee. It's fundamentally a sales leadership business.

Okay, so that's the other type of person, B2B sales. Work from home, you don't need an office to do this. Okay, and you can hire as needed, you don't need to start with employees.

Yep.

Is this like an owner-operator situation?

I think most franchises— my advice at least is you should start your first year as an owner-operator, learn the business from the ground up, clean the bathrooms, go on the job sites, change the oil, whatever the thing is, do it because it makes you that much more effective as an owner to train the next group, the management layer that you start to put in place. If you're wealthy enough and you have enough back— you know, background and business ownership experience, you can leapfrog some of that and hire a GM out of the gate and not be as involved day one.

I agree with that, by the way. Okay, so, so far we've covered freight brokerage, facility services, and these are kind of tangential to each other. Yep, kind of tangential skills. Work from home, don't need an office. Relationship-based, highly recurring, high gross margin potential, low cost of entry. What downsides would you say there are that we haven't already covered to both of these so far?

So for the first one, it's new in the United States, and so I think anytime there's anything new, there's additional risk. But they've been doing it for 15+ years, the freight brokerage, in the UK and across Europe. Yeah, it's like, to me, they've proven themselves. Yes, it's a different market here, and there might be different competitive angles you have to be considering of. And so I would say, looking at that one, just go look at the landscape. Is there a reason no one's done this here before? Why are they entering now? If I were to talk to this franchisor, I'd press them on that, you know. Why is now the right time? And who's tried this before you, and why did they fail?

Yeah.

And just to make sure that there's no gotchas or regulatory things that only a really nuanced, you know, niche understanding individual would have.

Are you able to see on the franchise disclosure document the difference in numbers between the UK, Europe locations and US locations, or is it brand, brand new to US?

You, you can see both.

Okay.

I don't have them top of, top of my hand right now, but you can see the differences.

Because a lot of franchise concepts are like inherently tied to cultural norms and they don't translate very well in other countries, but some of them do. And maybe what you're saying is that's— that could be somewhat of a gamble in this case is The cultural norms don't cross over from Europe to the US. But if you can see in the FDD the delineation between both, then that might be a non-issue at this point.

Yep, that's where I would press at least, because otherwise a lot of the day-to-day motions are going to be the same there as they are here, Europe or the United States. You're building relationships, you're helping people that need to move goods with people that have the ability to move those goods, and like that at the core is not going to fundamentally change. Some of the regulatory stuff could happen. Some of the larger players might have boxed people out. And those are the things that I would dig into to see, is this an impenetrable market and that's why no one's done this before? Or was it just you needed enough resource and the right timing and that's what this UK-based company has now?

Yeah, gotcha. Okay, oil filtration.

Yeah, so this one changes, uh, you know, turn a little bit here. The first 2 were more B2B. You can do it in your comfort of your own home. So oil filtration, if you think about all these restaurants, there's tens of thousands, hundreds of thousands of QSR restaurants in the United States.

Quick-serve restaurants, right?

Yep. QSR, quick-service restaurants. So those are like your McDonald's, your Bojangles, Burger King, etc. But there's also restaurants that just have, you know, fryers and oil. They have to do something with that oil. They can't keep reusing it over and over and over. And so this concept has a proprietary truck that comes on site They run a hose into the building through the back door and they filter that oil on site. So they clean it, they pull out the gross chunks and things, and they actually put different chemicals into it to cleanse it and make it more useful again. They'll do full-blown replacement of the oil as well, and they'll take that unusable oil and they'll sell it to other people that can use it in different businesses.

Like biofuel or—

Correct.

Okay. So sorry, let me make sure I understand this correctly. Does this remove the need for a restaurant to have that nasty pit in the back where they dump all the oil?

It does. Okay. Yeah. They're coming in, they're taking it out and removing it from the site entirely, or they're cleaning it on site. They're pumping it into their vehicle, running it through their proprietary process, and then putting it back into the—

Filtering it.

Yeah.

So I'm just picturing a big— like, kind of like my kids' aquarium. They have this big filter that sits outside of it with 2 tubes, right? One of it sucks all the dirty water out, and then the other one spits all the clean water back in. They're doing that with oil. Or if the oil is just too far gone, they're just taking it, putting it in a tank, Taking it to a different facility, recycling it, selling it as biofuel, and replacing it with clean stuff.

So there's multiple revenue streams. There's the recycling on site, there's the full pull resell over here. So I'm taking what you think is trash to you as the restaurant owner, I'm making money on it, and then I'm selling you new oil. So I've made money twice here in this instance that you're happy and, you know, thrilled about. And then they also do full drain cleaning and replacement. So they start to get into some of the equipment, and then they also do refrigeration and freezer cleaning and maintenance as well.

What about like hood and vent cleaning?

They don't do that yet, but I wouldn't be surprised if they start to. So they have 4 or 5 revenue streams now.

Yeah, I mean, once you get your foot in the door of a small business, thank you, you might as well keep adding more.

And it's recurring again because this has to happen on a certain frequency and cycle.

And people don't understand, like, there's 30,000 McDonald's, but there's like, you know, 500,000 no-name mom-and-pop restaurants.

Yeah, just in franchising alone, there's about a million retail locations open. 400,000-ish are food.

Wow.

And that's just franchising. So to your point, however many one-off Alex and Chris's Rib Shack or whatever it is, is out, you know, there's, there's 2 to 3 times more of those.

Wow. Okay, so this is also probably relationship— well, it's, it's heavy on sales.

Yep.

It's highly recurring as long as you don't screw it up. I have a friend that does this business. He doesn't own a franchise. He's, he's ran it for 20 years. He also does hood and vent cleaning. He does like Panda Express and he has like, you know, probably like franchisors that have multi-units and he does really well. I know he does well. He founded it himself. But any concept that works as a standalone, not any, but I would say most concepts would also work as a franchise. This is no exception. Okay, so what are, what are the revenue numbers, the profit numbers, the, and the fees that the franchisor takes?

Yep. So this one's lower revenue. It's $517,000 in revenue for one territory, but it's— and that's That's the average.

Okay.

As soon as you start doing multiple territories— so in a route-based business like this, they're giving you either a radius or, you know, a set of zip codes or a set of households in a, you know, again, a certain polygon again. So for one territory, which they, you know, they draw up, $517,000. As soon as you get into multi-territory, the average goes to one, a little over $1.5 million.

Okay.

And I think part of that has to do with, you know, again, you're using the same equipment base for the most part. You might maybe adding trucks, But you're getting to upsell those 4 or 5 different revenue streams to an exponential number of, you know, different businesses. And so you start to get more leverage out of the existing assets that you already have in those trucks because you're servicing a wider range.

Economies of scale.

Yep.

Do you know how many units or territories they have in the US today?

They have a lot. Let me pull up the exact number. This one's been around for a while. They were also founded in the UK, but they've been in the US since 2002, and they have 377 territories across 119 franchisees. Okay, so that means the average franchisee has 3.2 territories.

Okay, any idea how saturated this is? Like, how many territories are left for these guys? They, they seem further along than the other 2.

They're further along. They're actively trying to grow. They're growing every year. I think they have room for another couple hundred territories. A lot of mature brands, as you mentioned, McDonald's— granted, it's retail, 30,000 locations. This one's servicing a wider, you know, radius. It's gonna be less than 30,000, but it's definitely more than 377.

Yeah. On the 3 we've talked about so far, if we were to make a scale of like a brand new franchise with zero territories, that's a 1, and a 10 would be like a Subway or McDonald's that's very mature. Crumble would be like an 8 or a 9.

Yeah.

Right? Where would you put all 3 of these so far?

Yep, so the freight brokerage I would put them at a 6 or a 7 overall because they have such a presence in the UK and Europe. In the US? In the US, 2 or 3. Yeah, it's new. They don't have as much of a presence here. There isn't a national brand yet in franchising for freight brokerage in the United States, and I think they have a good, good shot at being the first. So that one, earlier emerging, more risk comes with that. The second one is the facilities management concept. They've been around forever. They started out doing just janitorial, and they've added all these other services on. They've been around since, I think, 1961. So, 100+ units already open, sold, profitable, high revenue numbers. I would give them more of an 8 or 9.

Okay.

So, less risky, more proven, longer tenured, more established.

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The third one, same thing. They've been around since the early 2000s in the United States, since 1960, I think, in the UK— 1996, sorry, in the UK, and then 2002 in the US.

Okay.

So probably another 7 or an 8 there.

Okay. Is there like a, a right number to get in with a franchise?

So that, that's an interesting question because it comes down to your unique risk tolerance. So when people ask me like, well, which one would you buy? Because I just want to buy that. You look at all these, I'm like, answer is going to be way different. I have a much higher appetite for risk than most people do inherently. And so like, I couldn't work at a Chick-fil-A even though Chick-fil-A will pay me $600,000 to $800,000 a year in profit. Amazing job. It's a job.

Yeah.

You're less of a business owner in my opinion.

It's great money.

Some people would love— that's a 10 out of 10. They've been doing it forever. They got this thing down. They are all the way dialed in.

Yeah.

I wouldn't want to do that even though the money's great and it's proven. I like getting in at these like 3s or 4s because I have more upside because sometimes they'll you can get equity, you can invest in the business, the franchisor. You have way more white space to develop way more territories than Chick-fil-A. I can only get one of them. And so like, I like the idea of empire building and, you know, scaling to a 10+ unit portfolio. I'm developing, uh, 10 Pop-Up Bagels right now.

Oh, I think you told me that.

Yeah, yeah. So like, I like that. It's an early brand but lots of promise and upside and big well-known investors behind them and a great executive team. Um, so I like that kind of stage. Um, and so to answer your question of like, is there a right number, I tell people if you're more risk-averse, Try to find a system that has more than 50 units already open. 50 units is usually like that magic number.

If you have to choose a number. Yeah, 50.

50 is it because the brand is now royalty profitable and sufficient. So they have less of a need to just sell units to anyone who can, you know, get into the business and be an operator.

Yeah.

So they're much more selective on the operators that they pick.

That's a good point.

And they're less dependent on franchise fees out of the gate to fund that early growth before they get to profitability on the royalty side. And so once they've done 50, they've seen a number of things, they've been in different markets, they've probably made the mistakes they need to on marketing and lead gen and all these other things. Still not perfect, but early enough that you can get in and still have a say and enough white space and upside. Not so late that you're purely buying a job.

Yeah, because from what I understand, those first 50 or whatever territories, they're not self-sustaining. Like, they're relying on those upfront fees to pay the bills. But you're saying they get to a magical point where their percentage fees over time cover their overhead and then start to become profitable. And then they're in a luxurious position to make better decisions. Whereas for those first few franchisees, they probably have to make some compromises that they wouldn't have made at number 51.

There's this chart, and I'm going to maybe butcher this a little bit, but it's on one axis, it's the value, it's the franchisor's value, and then what you get as a franchisee over time on the x-axis. On the y, it's the, you know, the cost of the value. So at first The franchisor is providing a ton of value, but they're getting nothing from the franchisee in the form of royalties because you're starting at zero. No revenue. There's nothing coming in. Over time, the value the franchisor provides starts to decline, but the value that you're paying— the money that you're paying them in royalties— they intersect eventually at one point. And so 5 years in, you as a franchisee start to forget all that value that you got, didn't really pay anything for, and you're like, why am I doing this? I'm 6 years in. I know what I'm doing. I'm an expert at this oil business or whatever it is.

Yeah.

But the franchisor has front-loaded so much of that value. This happens a lot in systems that franchisees need to ask the question, hey, what are you doing for me lately, franchisor? And that's where lead gen and, you know, national brand campaigns and investment in technology that you and I as an oil, you know, filtration franchisee might not be building homegrown AI agentic technology to make our lives and workflows and whatever easier, but the franchisor is.

Yeah. Okay. That makes sense. Because at the end of the day, a franchisor is no different than a normal business, and that most will fail, right? There's thousands out there that no one's ever heard of. They had one location and failed or whatever. They never even got off the ground. So that's too early unless you just somehow get lucky, which I'm sure you would not recommend.

No.

Take a flyer on those guys. So you're saying get into 2 or 3, but then there are also situations— let's use Pop-Up Bagels or Crumbl as an example— where they might be a 7, 8, or a 9 But there's a last handful of territories that haven't been sold yet, and you can kind of have the best of both worlds. It's like a de-risked concept, and there's a lot of data behind it. Their FDD has a lot— like, it shows good numbers on a large sample size, which are both important. And for whatever reason, in Cape Coral, Florida, they never sold that franchise, but it's a great market. Like, there are also situations which are probably much harder to find where you can kind of have your cake and eat it too.

100%. Some of these empire builders have figured it out. I know guys that They started 7 years ago with zero, and they're up to 80 units, 90 units now because they got into the game. My advice usually is you need to be in the good old boys club of franchising to start seeing all of these hard-to-find deals, these brands that are coming up that have— I don't want to say a sure thing, but they have all the early signs of a great executive team. They've got really smart, sophisticated private equity behind them, and they have a track record of doing this with Dave's Hot Chicken and, you know, 2 or 3 other wildly successful brands. Like Mike's Red Taco is another one that's just taken off right now. Still very early. That brand is going to do well. They have all the elements, all the ingredients. And so these guys that are in the game, they're buying up 20 units in Dallas, you know, 50 units here. Like they're getting in early even though it's a 0 out of a 10 or a 1 out of 10. It has all the signs to be a 7 or an 8. And that's where taking those flyers early is almost an unfair advantage.

Yeah.

But those guys got the right to do that because they came in at some point On a concept that might have been a 5 or a 6, kind of middle of the road. They got their reps in, they became an operator, they learned how this space works.

Yeah.

And now they've got their anchor, their safe stuff. Like, one of these individuals owns— I think it's like 90 Carl's Juniors.

Wow.

It's like random, kind of stable, not a Chick-fil-A or Raising Cane's, but a steady couple million a year in average unit volume. Makes them money. Some stores probably lose money, but the majority he does well, and that's his bread and butter. And then he takes flyers on all these other things from a position of safety. And yeah, you know, he's de-risked over here.

Yeah. And then if you're in the game, like if you're in the conversation, you're going to find opportunities where like a guy bought 10 Dave's Hot Chicken franchise territories in Miami, and for whatever reason, he can really only handle 7 of them. So he goes to Dave's and says, hey, can I unload 3? You kind of have to know someone to buy those 3 off them, right? You're not just going to get those Like on BizBuySell. Exactly.

They're not.

How do you get in that conversation? How do you get to know the good—

Honestly, buying— whether it was one of these 4 that we talked about, you know, today, we have one more we'll get into— but just being an operator gets you enough credibility, clout, connection, awareness. You start going to these conferences that all the franchise people are at, whether it's Dave's Hot Chicken and the freight brokerage franchise, like you're all in the same room and you start to meet people, you start to build a network. And that's how you start to hear about these things. Like the individual I mentioned that went from 0 to at his peak 118 units in 7 years, he started out in Orangetheory. And then he, before that, was doing a butcher shop that was an independent business. But him running the butcher shop, when he talked to the Orangetheory owner, was like, oh, you've, you've done this before, just in a different thing. And it was non-franchising. I trust that you'll be able to run a gym if you've been able to run this butcher shop.

Yeah.

So then he does 2 Orangetheories, goes to 4, adds Restore Hyper Wellness. He's like, I need to get into food. That's where a lot of people seem to be making a lot of money. I'm gonna go raise some private capital and go buy— I think it was 5 or 6 Dave's to start, and then he just snowballed from there.

I want to tangent us a little bit. We might end up editing this out. I'm personally just curious, what do you see is the future of like Dave's Hot Chicken, for instance, or all the hot chicken stuff? Is it— are we reaching like hot chicken bubble, like kind of like we got like froyo bubble 10 years ago? Not that they're all going away, but like only the best locations will be around in 5, 10 years, or Is that a category that's just here to stay and here to keep growing?

I think categories like that, like even, you know, Chipotle becoming more like fast casual-ish, like leading that way. And then you see like Cava and some of these other healthier alternatives. Not that Dave's is healthy, but certain categories get so popular, the numbers don't lie. Like the average unit volume of a Dave's is great almost everywhere. It's such a fantastic restaurant. They're doing, you know, $4.5 to $5.5 million in revenue, which is like like a McDonald's, but it's just chicken. And the same with Raising Cane's and Chick-fil-A. Now the average is over $9 million per location out of one box.

Wow.

Doing $9 million in chicken.

Yeah.

And something I talked to someone about recently was— it's a little messed up, but the genetic kind of production we've been doing with chickens, the cost per calorie of chicken has gone down so much that it's just so much easier to mass-produce chicken and sell it. And that's why chicken as a category is beating beef and pork because it's so cheap, but the density of it's so high. Us as humans who want protein and all this, it's, it's just the perfect, perfect storm for that, for chicken.

Ever since I learned that hot chicken, like, all the sauce they put on it is literally just vegetable oil with red pepper in it, I can't do it. Like, just seed oils poured all over my food. Like, it's bad enough to fry it. Sure, I love french fries, not hating on seed oils, but like, to pour a half a cup of it and then eat it It's a lot.

Another thing is like a Crumbl cookie that people don't realize the—

Oh, I know, 900 calories for a cookie.

When they tell you the serving size is a quarter of a cookie, no one's gonna do that.

It's a joke. Speaking of Crumbl, I— so Swig, right? They're trying to be like the Crumbl of dirty sodas. They're doing a good job, but I, I feel like to actually be— again, I'm just tangenting here and we might cut this out— but to actually be the Crumbl of X, you have to have the technology To do that.

They're so good.

They're so good. And I just downloaded and used the Swig app for the first time. I'm not a Swig fan, but my wife is, so I did it for her, and it was just a terrible experience. It's like it said I could pick it up at the window, but that location didn't have a window, so I had to get in line with everyone else. And then I got in line and I ordered a half hour in advance, and then I had to get out of line and wait because it wasn't ready. And I'm like, Crumbl would not do this. No, their app is like top-notch.

Dialed in. They spent a lot of money on it, right?

Do you think to be the Crumbl of X, technology has to play a central role?

Technology and what Crumbl did so well is scarcity and exclusive releases. So every week, new flavor. It's only here for a week or two, so you have to come in and get it. And really interesting brand collaborations. Social media is fantastic. Pop-Up is running a very similar playbook where they'll partner with Kraft Mac and Cheese for a 2-week period and they have Kraft Mac and Cream Cheese Schmear. Where it's mac and cheese flavored cream cheese. And people are like, I love mac and cheese and this is only here for a week. So like, I need to go do this now. And like—

Does Pop-Up have an app? Like, do they have the technology?

They do. And like, they're starting to invest more and more, but they're relying a lot on third-party, you know, apps for now. I think they'll start to invest more significantly in that, but they're— they want you to come to the store and they want it to be quick. You grab it and go. The insides are purposely small with no seating because they want you to grab it and go to a park or go somewhere, go to an office.

And yeah.

Enjoy it as a kind of like a community of coworkers or a family.

Oh, what was I gonna say? The, the other thing Crumble has or had going for it is how polarizing it is. It's like, Jim Gaffigan has a bit where he's like, he talks about how no one admits they like McDonald's. Oh, McDonald's is gross. It's like, they sell a billion hamburgers a week. Like, you guys are eating McDonald's. Nobody likes it, but we're all eating it. That's how Crumble is. I post about Crumble and all the comments are like, it's gross, it's so gross, it's a sugar bomb. It's like, They're like a $5 billion company. Yeah, you guys are all lying.

They are good. Yeah, I actually like each cookie has a stick of butter in it.

I know, of course they're good. Uh, I forgot where I was going with that, but I was gonna say something else. I, I heard a story about a guy who signed up for a franchise, and it was a good franchise, well-known, got in over his head and told them like, hey, I'm struggling, can I sell this back to you? And they're like, no. And then they were like He's like, I might have to declare bankruptcy. And they were like, can you, can you give us that in writing? And he's like, yeah, I guess. So he did. And they're like, okay, thank you. We're taking this back. Wow. Because they didn't want to show on their FDD that they have a closure. Is that common?

This is common. So if we do keep this on, this is like a good, good fact for anyone looking at buying a franchise business. There's the Item 20 in the FDD, and that shows how many stores have been opened that year, closed that year, and then transferred that year. So what sophisticated franchisors do that want to hide closures Is they transfer them to either themselves as a corporately run location, or they convince another franchisee to buy it, or someone, a new person coming in to buy the existing. So if you look at transfers and there's a high number of them, almost look at a transfer as a closure. Like, what happened here? Why did you— Really?

It should be, it should be looked at that way.

I would, if I'm looking at a concept, like, why did they all of a sudden have 10 transfers last year and 40 this year? Like, that's not normal for a system this early in its life. Yeah, if it's sub-5, sub-10 years and they have a ton of transfers, why are this many people getting out? If it's going well, they're just gonna really— they just hold on. So closures and transfers are the numbers. Obviously closures are more obvious. Transfers are a way to hide closures. Yeah, more often than not, unless it's a really mature brand and they just have— like Wendy's as an example, their average age of their franchisee is 64 years old. Average. And so it's just an older brand, older system. A lot of those individuals don't have succession plans. So, Wendy's is looking to sell like 700 and some locations in the next, I think it's 10 to 12 months.

Wow.

It's a lot fast. It's like they are going to have a lot of transfers. That doesn't mean necessarily that Wendy's is failing and it's still a good brand. And yes, they have competition across all the other big burger players, but that's an example where it's a mature system where transfers maybe just make a little bit more sense based on the life cycle of where they are.

Gotcha. So that's something to look out for is transfers.

Item 20, transfers.

19, finance stuff. 20, transfers. Yeah, it was sad because he— I heard this story because he had to sell his house to my friend. He had to sell his house. My friend bought it, and now they have to rent it. They rent it back from him. And I don't even think they had to declare bankruptcy because of the franchise. I think they were having other issues, but it was just a double doozy because no one ever knew that that happened. On the FDD, but he kind of got screwed. But just like run it, run it through ChatGPT. Yeah, like ChatGPT could have totally seen that before he emailed that in writing to the franchise.

That's that's the problem I have. I think I used to be a pretty big franchise skeptic for this reason. I hear all these horror stories. We've all heard tons of them. But I also have a ton of friends who have started independent businesses or bought independent businesses and have horror stories. It wasn't until I started really looking under the hood to see that all right franchising. It's still small business. It's just a business model on top of a bunch of different industries— health and wellness, hospitality, food, etc. And franchising has an 85-ish percent success rate after a 5-year period. It's 50% for independent businesses. After 5 years, half of independent businesses are shutting down. You have a better shot. So, you have a better shot, but you're still going to hear these horror stories of the, you know, the 15 or so that shut— 15% that shut down. They lost everything. They declared bankruptcy. And I think it's almost like these outlier cases are louder. You hear about them more because of the way they happened. This is what gives franchising a bad rep, is it's this kind of shady character, this brand that wasn't being a good partner.

Yeah.

They were trying to do these transfers. And so you just need to identify those and find ways to flag them, just like you would buying a house, looking for structural issues or mold or whatever else. There just isn't as many guardrails and protections as there should be. I'm usually not a huge advocate for regulation. This is an area where I'm like, why has the government not stepped in and said, Hey, when you buy a house, you have to, you know, use the— if you use a real estate agent, they're licensed in that state. They have to disclose how much money they make and when. Yeah, but in franchising, it's the Wild West. The broker doesn't—

It's a bigger financial decision.

Yeah, with less collateral backing. At least the house, you have the asset backing it. This, you could be buying a lease in a strip center that you've put $200K to $300K into renovating the space, and if the business doesn't work, there's no recourse. And that's the issue here. I think that's why, again, franchising gets a bad rep, and that's why You know, we're building this platform and, you know, on this mission to go educate people on what to look for and give you the data to make the best decision for you and your family or your business partner that you can.

If someone is like dead set on Jersey Mike's and they're like, I want to own a Jersey Mike's, and they had— they could choose between buying into it, buying a territory, starting from scratch, or they go to BizBuySell and see a Jersey Mike's for sale that, you know, profits $70K a year selling for $200 grand. If they are dead set on Jersey Mike's, what's a better option for them, would you say?

If I can get into an existing one for a deal because the operator is tired or burned out, or you mentioned earlier, like, I own 10 of them and this one happens to be a 2-hour drive time from my closest store, so my GM is driving out 3 days a week and it's a headache, and they're kind of willing to let it go because it's a headache. Those are always the best outcomes because you're not having to now build millions of dollars and equipment. You're paying a multiple on cash flow instead.

Yeah.

And so they likely lost a little bit or broke even, but I'm getting— I'm making up for that. Like, I, I get the other side of that zero-sum game. I'm getting the benefit of not having to go build a brand new building or, you know, renovate a whole new site. And so I would rather— in a restaurant specifically, I'd rather buy existing if I can.

But it sounds like your upside might be a little capped. Yeah, it's already known unless they're really screwing it up and you have a way of not screwing it up. You know, it feels like the downside to that option is your upside is more known, more fixed, but you're also— your risk is less.

Well, and do I own another portfolio of similar concepts in the area and it's easier for me to just plug it right in? Is it the first one I'm buying? And a pattern I've seen with these larger kind of, again, empire builders is they start out with one brand, dense area, they're developing for the most part, they borrow money and they develop new stores because, to your point, the upside. And then they start growing inorganically through acquisition. To go faster because now they have a team in place. So it's like every incremental store, even though it might not have as much upside, is almost— I don't want to say pure profit, but—

Economies of scale.

The local economies of scale especially. And then they start getting risky and they're like, okay, I own Tampa basically for Jersey Mike's. Let's go add this hot new, you know, Mike's Red Tacos coming in. Like, it's very popular in LA. It's taking the country by storm right now. I'm going to be the first. I'm going to build 20 of these here. And that's the risk. And if they get that right, That's the brand that has a 7 to 12x multiple on EBITDA versus your kind of like steady older legacy brands that might maybe only get 4 to 7.

Yeah. And back to our Chick-fil-A example, like that's the downside and upside with Chick-fil-A. Upside is if you're one of the very few people that are chosen, you're going to make $500,000 to $1,000,000 a year, but you will never make $10,000,000 a year and you will probably never fail either. No, you know, you're— it's just going to be more predictable.

And this goes back to like who are you and what do you want to accomplish? And there's no wrong answer. That's— it's funny how many people come to me and say, again, like, I just want the one that makes me the most money. I'm like, you're one archetype.

Yeah.

Some people do say, I don't care if it's oil, chicken, I don't care what it is. Yeah, whatever's gonna make me the most money, I'll learn it and I'll figure it out and I'll do it. Isn't that what everyone says? Like, no. Some guys have come to us and they're already wildly independently wealthy. They're bored and they're like, I've never done a retail concept and I don't want to start from scratch. Like, I want to do a franchise. and this is golf to them. It's a competitive sport, and business is that, and they want to do a franchise. Others are, my kids, you know, I want them exposed to entrepreneurship. My business is like metal fabricating, and it's kind of unsexy, and it's going away. We'll keep the family business, but I want to buy them 2 or 3 franchise concepts that I'll do with them. We get that, and then we get the AI group that we're seeing a ton of right now, that they're corporate, you know, warriors. They've been at Deloitte or a bank for 15 years, And they just want to replace their income. They're worried about getting laid off, especially with what's going on right now. And they're like, I make $200 grand a year, give me concepts where I can just use my background and my skill set to replace my income, and I'll see what happens from there. But if that's all that happens, I'm happy with that.

Yeah.

And so very wide-ranging reasons to do this— goals, backgrounds.

Yeah.

And that's what, again, I love about franchising is it's a menu of dozens of verticals, dozens of industries with a proven playbook. And a group of peers that you can rely on when you inevitably want to quit.

Yeah.

Which is, I think, happened to all of us. You've probably had those weekends where you're talking to your wife or a business partner, you're like, why did I do this? I want to quit. I want to give up. And you need someone to be like, Chris, just stay in the game, persevere. And that's usually what it takes to get out the other end, is there's usually an answer and there's a way out. But when it's you against yourself, it's very hard.

Yeah. Well, it's like when people come to me and they're like, what, what's your favorite business idea? What, what should I start? Like, I don't know. Who are you? Yeah, I don't know anything about you. We we could talk for four hours, and I might give you a few good ideas. Yeah, you got to figure that out for yourself.

We use an analogy of like desserts. Like people would come to us and be like, "Well, which one should I do?" And they're like, "Whoa, whoa, whoa! Imagine franchising is ice cream, and there's a thousand flavors of ice cream. We need to figure out if you even want ice cream." Yeah. Like what if you should be doing real estate instead? What if you should be?

What if you're lactose intolerant? Yeah. Seriously, you don't even know it yet. Exactly.

And so our job a lot of times we turn people away. Like franchising is not for you. You're way too entrepreneurial. entrepreneurial and you love technology and tinkering, and like franchisors are— you're like their worst nightmare because you're just trying to change everything. Yeah, I don't know if you've seen the movie The Founder.

Oh yeah, it's great.

And like his first franchisees were all the rich country club guys that like were never at the stores. They were going rogue. They're introducing like lobster rolls to the burger shop, and they're like, what are you— why are you selling crab at the McDonald's? Yeah, he's like, I thought it'd be cool.

Yeah.

And he's like, all right, get out of here. And he got the kind of middle, you know, middle-income person like this really meant a lot, and they were gonna be associated with that store working it every day. And some brands want that and need that, and Yeah, I would be a terrible franchisee for sure. Of certain brands. I bet there's some you might be great.

They let me do whatever I want. All right, what, uh, what other concepts are interesting to you right now?

Yeah, so the, the last one is a fuel delivery franchise. And so, okay, they also do DEF, which is diesel exhaust fuel, uh, or fluid. And they'll go to these large long, long-haul trucking businesses, also local logistics as well, and they'll replace fuel and DEF on site so that you don't have to make another stop with both your trucks, but also your heavy machinery. So they're fueling up your, you know, Bobcats and other, you know, tools that you have. And that's the franchise that they're delivering you fuel and doing it on site.

Do they do consumer stuff at all?

It's all— this one specifically is commercial. All— it's all B2B again. It's all mobile.

So they only do like B2B stuff exclusively?

Yeah, B2B, mostly fleets.

Do they do boats at all?

I don't think they do boats. I didn't see anything about boats. It's all been in yards and refuels for vehicles and equipment on site.

Okay, so what, what are the numbers on this one?

Yep, so this one is pretty interesting. The average revenue is just under $5 million.

Wow.

But the margins are a little bit lower because I think we're back into that kind of GMV territory.

This is fuel too.

Yeah.

Okay, so what are the margins?

So $5 million gross revenue, they're walking away with a little over $1 million in gross profit.

Okay, which is a little misleading. It's not like the overhead is $4 million, it's the gas. Like, the gap— the margin on gas is low. So $1 million In gross profit, do you know what net is?

I don't have net. A lot of franchises are wary of posting that in their Item 19.

Is there any upside for that? I mean, if it's really good, there's upside, right?

Yeah, so I look for that too. Like, if it's a new brand, they try not to show just because it's small data. And then if it's a more mature brand, you do see it a lot. And if they don't show it and they're mature, over 50 units, and they don't show it, there's usually some sort of red flag. I would at least ask, why are you guys not showing it? They might have had a bottom 10% that just really dragged down the average. And similar to publicly traded companies in their— what's the quarterly filing?

S-9 or S-1?

S-10. Yeah. Similar to publicly traded companies, you'll see all sorts of adjusted EBITDA and made-up metrics that you just read the footnotes and be smart about, plug them into ChatGPT or Claude and just make sure that you're peeling the layer of the onion back.

Okay. Now, what are the fees on that one?

Yep. So the fees on this one, It's a 9% gross profit royalty.

Okay, so $90 grand on the average unit of doing $1 million in gross profit.

Yep, yep. And then they are requiring you to use— and they do a ramp too, which is nice. They do zero royalty for the first 6 months and then $2,500 per month by month, you know, basically by year 2. Okay, so a lot of brands that do that, that is a good sign to me that it's a mature, thoughtful, aligned brand. Like, Take 5 Oil, publicly traded company through Driven Brands. Roark owns them. Roark is this behemoth that owns everything, or a ton of, you know, brands and franchising. They do a ramp for almost every brand because they know in the first year, yeah, you're the most vulnerable. You're in that J-curve where it's— you're losing money because you're investing in marketing and training and get— just getting off the ground. And so they don't want to be taking money from you while you're in that phase. So very thoughtful, aligned partners, franchisors. will typically do a ramp like this. I, I always see this as a huge green flag when a franchisor does a no royalty for 6 to 12 months.

Yeah. Okay. Is this— do you need like an actual facility for this?

You do not.

This could be from home as well?

So this could be from home. You do need equipment, you need trucks, one truck, one driver to start, but the, the, the franchisor is helping on the fueling piece because it's all mobile.

Okay, so you're picking up gas from a distributor? In the truck, and you could be the one driver to start.

Yep.

Probably should be.

Yep.

And then you're just making deliveries.

And you're adding trucks from there as you go.

Okay. On a scale of 1 to, you know, Subway, McDonald's, how established is this one?

This is more of a 1. This is a brand new franchise in the United States. They're based here, but even in their FDD for this year, they have no franchise locations open. So this is a 0 or a 1.

Okay. What about the founder? Like, does he have franchisor experience?

He has experience in this industry specifically, but not in franchising.

Okay.

But based on how he's structuring the royalty, I have to imagine he's got good franchise people around him because that's not a common thing to do.

Yeah. So if you're a 1 on the scale and you have established revenues, those are all corporate-owned locations, right? And do you kind of put an asterisk on corporate-owned numbers on the FDD?

A little bit. So it's— if it's a small sample, yes, because they're so laser-focused on it. Over time though, let's say I'm a McDonald's. Corporate stores will typically perform worse than franchise because the franchise is so— there's so much personal skin in the game. It's my family's well-being versus a corporation with hundreds or thousands of locations. They've got a $50,000 to $70,000 a year person running it, and they care. They have so much scale.

Yeah.

They care less about a couple duds here and there. You and I, like, all 3 of ours better work, and like, we need them to work.

But wouldn't you say the opposite would be true on the first 2 or 3 locations?

Yeah, so that the first 2 or 3, the corporate outperforms because they have every resource being poured into it. They want it to work because it's a reflection.

So both of them are kind of skewed in either direction.

You have to look at the— where is the brand in the life cycle of a franchise brand? If they're early, they should be outperforming their franchisees. If they're later, they're likely underperforming their franchisees. And what's interesting too is if you think about franchising as a business model, again, It's a business model, not an industry. Franchisors early on— Hormozi talks about this. He's like, I don't— it's funny, Hormozi invested in our company, but he's like a little anti-franchising.

Yeah, yeah.

He was like, if, you know, if the business is so good, why wouldn't you just own the whole thing? And a lot of it is a trade-off of scaling. If I want to get to thousands of units, I can't possibly go raise hundreds and hundreds and hundreds of millions of dollars. Otherwise, this is going to take— like, we talked about Panda Express, that is almost all corporate owned.

Same with Chipotle and Starbucks, right?

But it's taken decades, right? 30, 40 years. Like, they did it, it's possible, but it's very And meanwhile, a bunch of competitors enter in. You know, you had Dutch Bros and 7 Brew coming in, you know, coming after Starbucks now, but they're doing it so fast because they're franchising. Yeah, within 5 years. And so that's the trade-off. And what ends up happening is the franchisor sells out a country, they start buying all their franchisees back. He is right, if it's doing so well, why won't you just own the whole thing? And so franchisors do eventually come back to you and I and say, hey, you guys want to get out? We'll buy you for 7x EBITDA, 6x EBITDA.

Okay, let's talk startup cost for all 4 of these concepts, and then we'll just cover them real quickly again. So number 1 was freight brokerage.

Yep.

How much does it cost to get involved, and how much of that cost can you finance?

Yep. So the freight brokerage one, because you're doing it at your home, small office, small team, it's mostly you, B2B sales, it's $75,000 to $193,000.

How much of that is the upfront fee to the franchisor?

So the franchise fee is typically $35,000 to $60,000 depending on the brand. For these guys specifically, it's about $50,000.

Okay. And the rest is—

Technology, software fee, training. They also are required in the FDD to put 3 months of working capital. So a lot of times that range is including 3 months of cash.

It's probably a minimum too, like 3 months of working capital or $30,000.

Well, so they're required in the FDD, the franchise disclosure document, in the item 7. That's your startup cost.

Okay.

Section, whatever that number is, they're legally required to show 3 months of working capital. I tell people double or triple that. You probably need 6 to 9 months of working capital. Yeah, that's true for any business, franchise or not. You should have enough for a rainy day and it to take longer to get to profitability. They're just— for whatever reason, the FTC said 3 months is the number you are required to show.

Okay, so call it $125,000 would be the middle, the median between those 2 numbers. How much of that can you finance and how can you finance it?

90% through SBA loans. On the high, like that's the best you're gonna get. Realistically, probably 70 to 80% can be financed. You need to come with 10 to 30% of of these numbers. So if it's let's say 125, you need to come with 25. Yeah.

And could you borrow that from friends and family if you need to? Yep. And I mean the SBA process is probably a little annoying, right?

I've done a few. So I used to own a number of laundromats, and I remember all the horror stories of. SBA, you have to, you know, give blood, you know, give a blood sample and everything else. And it honestly wasn't that bad. They make you fill out a personal financial statement, a PFS.

Which you do that if you buy a house.

You're doing it anyway. And once you do it once, you have all the information. Like, the annoying part is doing one of those personal financial statements because you're having to find accounts and over here and brokerage statements and retirement stuff. And that part's a little annoying, especially if you own other businesses. You have to start pulling some of that stuff too.

Yeah.

But once you do it one time, you can go shop as 20 banks and find the right partner and the right rates. And I even had the individual I mentioned that owns 120 locations, he told me recently, because he's a pop-up franchisee as well, he's like, look, I, I'll even entertain SBA still at times. He's like, it's a necessary evil.

Yeah, yeah.

He's like, it's a good source of cash, it's a good source of capital. You can borrow up to $5 million in aggregate. I think they actually increased the limits recently. And then there's an SBA Express loan where you can get half a million dollars in less than 30 Less than 60 days.

Wow. So you could use that for this.

And you can keep doing it after the 60 days is up. You can do it again for another location.

Up to $5 million again?

Up to half a million per SBA Express loan. So yeah, you could use that for all of this or most of this. And then $5 million is the aggregate. So yeah, you could do 10 territories, 10 locations.

Okay. And yeah, I used to think $5 million was like, like you had to buy one business and you might as well get as much close to $5 million as you can, but you could do that across multiple.

Multiple loans.

It's like a line of credit.

Yeah.

And when applying the first time is the hardest part, and then after that they probably just want updated payments. Right.

And the brand too. This is also a caveat. The brand has to be on the SBA registry, which most franchisors do because they understand they want more franchisees are going to be doing this. Yeah.

Outside of SBA, the other options for financing this are friends and family. And are there any other like conventional bank loans or options out there?

Depending on your personal standing, if you have enough collateral and assets, you can get conventional loans. Like, we're entertaining conventional loans for the pop-ups we're developing. Um, you know, they might come with a personal guarantee, they might be more relaxed and just require corporate guarantee. It depends on the health of the franchise system as well. And banks love franchising because there's 100 units or 50 units or even 20 units of this same business out there today that they have data on and financials on that make them feel better versus—

Yeah.

Chris and Alex's bagel shop that we're doing for the first time, and they're like, What is— yeah, yeah, what, what, how do you know these— this pro forma is right and that this will actually do this? Yeah, so franchising again is de-risked, statistically, you know, shown, but from a bank's perspective also de-risked because they have way more data and locations to look at.

So for freight brokerage, if the range is $75,000 to $150,000, then theoretically if you finance 90% of the $75,000, very, very base case is $7,500 cash in, which you could borrow from friends and family, up to like $30,000, $40,000 Cash in which you could borrow. Now, what was the next one again?

The next one was the facility management where you're doing— you're effectively a GC managing 20 subs to go do cleaning, landscaping, HVAC maintenance, etc. This is one that has very high revenues. The total range that they have is $229,000 up to $410,000.

Okay, so again, $29,000 to $100K cash from you or friends and family and finance the rest with SBA.

Yep. So sub— yeah, sub-6 figures to get into this if you borrow money.

Okay.

And then the third one was oil filtration. And that, because you have trucks, again, you can start with one. So this range is smaller. It's as soon as you start with one, $140,000 to $163,000.

Okay. So $15,000 to $50,000, give or take. Yep.

And then the last one was fuel delivery is $172,000 to $490,000.

Okay, so $17,000 to $150,000 to $200,000.

Yep.

Okay. Do you advise people to, to do SBA, to borrow to start these?

So I personally am with the pop-ups with my business partner. We're also raising a little bit of private equity, so we're raising $1 million in exchange for a percentage of the company as well because we have to develop 10 over 5 years.

Okay.

And so SBA will be used to fund part of them. Cash flow from stores as they get open and ramped will fund You know, additional stores, him and I are both putting a good chunk of equity in. So, we're using a mix of a number of different sources because we're biting off a decent-sized chunk of this apple. But for most people, depending on your situation, I would say, again, just get into the arena, get 1 or 2 going, get it profitable, demonstrate that you're a good operator, and now you've unlocked and you've earned the right to start raising private equity, to getting conventional loans, to opening up other financing sources. That then starts to snowball like the individual I mentioned going from 0 to 120. His 120-location portfolio does anywhere from $350 million to $500 million a year in revenue in 7 years. I don't know what other paths can you do something like that with— I don't want to say no risk, but less risk for sure, and a clear, again, playbook on how to do it.

Yeah.

And he told me, he's like, look, I don't own 100% of this portfolio. I own of this brand, 30 to 50% equity, because the rest I've raised enough money. But I've proven myself as an operator. I'm good at managing these teams and these directors of operations and district managers and GMs of these locations. And so he's earned the right now. He can— any concept pops up, the brand's not only going to give him however many territories he wants, but he has capital waiting on the other end of that equation. That's— sure, you need $20 million, $30 million to develop all these, we'll give it to you. And he still retains close to half of the equity in the business. He just needs to work hard and earn it.

Right. Why do you think that franchising is so overlooked when it comes to building wealth?

I think for the same reasons that I didn't like it at first. You hear the horror stories of the person who got sold snake oil, you know, and smoke and mirrors. And I think there's not enough good educational resources and enough regulation to prevent that from happening. And so like that, there's a psychological study on if you lost $20 the impact it has on you versus if you found $20 walking on the street. And you losing $20 has like a 3x more negative impact than the happiness you find from finding the $20. And so I think whenever any of these bad things happen, they take up the whole, you know, space in the room.

Yeah.

And so part of it's that, part of it's the lack of regulation. And so again, we're on this mission of how do we give people the data they need to make the right decisions for their unique situation, because there isn't a one-size-fits-all. So I think that's why I think I think it's starting to turn a corner, and there's a lot more attention to it now, especially with AI coming in and people wanting to own assets, businesses, have more control over their lives, their careers, etc. And so I think we'll start to see a shift, and I hope that, you know, these conversations can be at the forefront of educating people on what's possible and what to look out for.

I think that horror stories are— people love horror stories because it's a comfort blanket to people. If we're kind of entrepreneurially minded or we're thinking about franchising, we want to quit our job, and then we hear a horror story, but they're like— we're like, I feel so good I didn't do it. I feel so good about myself that I didn't take that risk that I've been wanting to take forever, that I didn't bet on myself because it— look, it would have failed. Like, we latch on to those, as we all do in different things in life. It's just not just business stuff because it makes us feel better about not acting. Yep, right? That's why the horror stories get all the clicks. That's why the news is full of negative stuff. Because it, it can be a comfort blanket in times. What would you say is the cheapest franchise concept that you would put your own money into right now?

So the cheapest, and I don't know if I would personally run it, but I would do it with a kid or maybe a spouse or find a high school kid that would want to do it with me and they could learn entrepreneurship through it. But it's Card My Yard is the brand and it's $10,000 to get into it. So very cheap. And it's these yard signs that are like, happy birthday, Chris, or congratulations.

And it's like the most Quintessential suburb activity.

Yes. So easy. It's almost like art, the modern paperboy route, I would say. And you can make $30-ish grand a year doing that.

Wow.

So it's like a nice little side hustle. It could be fun to like work with, again, son, daughter on it, and relatively low risk, low investment.

Part-time. If I handed you $150 grand right now, what franchise would you buy into today?

So one that I really like that $150K would allow me to do is this garage renovation business. They do like epoxied floors, custom shelving with slat board and stuff. The average revenue is over $1 million. No heavy equipment. It's just a team of 2 or 3 individuals coming to pour the epoxy and hang shelving.

Yep.

And, you know, Daymond John from Shark Tank recently used this company and was on Instagram talking about— they did such a fantastic job. So the brand is great. The quality is great. The revenues are fantastic, and the overhead is pretty small. And I like services businesses. Because you can get going in less than 30 days. Okay, I like to go fast.

Yeah, I actually interviewed an epoxy flooring guy right there. He doesn't own a franchise, but he does really well. So again, a franchise is a great option if you want a little more hand-holding, a little more support. What does the average Chick-fil-A owner really take home, and would you recommend that franchise?

Yeah, the average is around $650,000, and Chick-fil-A really isn't a franchise. It, it kind of packages itself as one, but they take 50% of profit as a royalty, but they build everything. So you only really need— it's like $15,000 or so to get started because they're building the building, they're identifying the site, they own the land. But you're buying a job. And so for the right person, it's the best thing ever. Imagine being a person who maybe might not have all these amazing career opportunities, but if they're really good with people, they're willing to work hard, Chick-fil-A could be this path that materially changes yours and your family's life, and you're making over half a million dollars a year in income, but you're a general manager of a restaurant effectively for the rest of your life.

It's funny because they don't even call themselves a franchise, and they almost, they almost do themselves a disservice if they did because the fees would look so egregious if they were. But it's really not like they're partnering with you to start a business, right? Is Crumble a fad?

Yes. I think it's a fad. I think you can't sell thousand-calorie cookies forever. I think there's too much of a health trend happening right now. You're starting to see it with a lot of their numbers starting to fall off now. I mean, granted, they've been doing this for a number of years now, and so it might just be running its course, but it should have more staying power than it's had.

What about this new concept they launched, the pies? Do you know anything about that? How that's— I just can't think that that would do well, like buying prepared pies.

I think they're trying to You know, I think they've started offering the, the sugary drinks too, the dirty sodas. They've started offering those as well.

Yeah, they're—

it's menu innovation. They're trying to claw back. Yeah, hey, cookies can't— aren't cutting it anymore, and what else we have to do to get out of it? So they're making an effort. They know store volumes are declining and they need to do something, and this is adjacent enough that I guess it makes sense. Pies, dirty sodas, let's try it.

To me, that's always a signal that a brand is like real— is struggling, floundering, but we're still like years ahead of that being public knowledge. There was a Thai restaurant in Madison, Alabama that I used to love, and every time we went there, they were empty, but it was good. And then one day we went there and they were serving breakfast. This is a Thai restaurant. And I open up the things for breakfast, and I'm not, I'm not exaggerating, they were like Pop-Tarts. And this was like a good— it was a nice Thai restaurant. And I was like, okay, what's happening? This place is done.

That's like— so we do content sometimes on these like Frankenstein concepts, sort of Taco Bell, KFC, KFC and what's the third one? Pizza Hut are all combined under one roof.

Yeah.

And the thought when they started doing this, it was about 20 years ago, was, all right, same overhead. We have 3 restaurants out of here. We're brilliant. Yeah, we got 3 different menus you can choose from. But what ended up happening is they're all cannibalizing each other because you're, you're gonna eat those types of meals at the same time. But what's starting to work now is Applebee's and like, I think it's IHOP. They're doing that same menu out of the same location because one's breakfast and one's lunch and dinner, and it actually can make sense.

Okay.

And you actually get that overhead savings. But at the time, pizza, chicken, tacos, it doesn't, it doesn't make sense.

I just know that the, the Crumbl executives and founders are smart and they're astute, and they wouldn't be making those frankly embarrassing decisions if it wasn't pretty clear that they had to.

Yeah.

You know, Crumbl offered ice cream once. This, I'm a little embarrassed to admit this, but you know, everyone wants ice cream with their cookies. So I went to Crumbl one day and like, oh, ice cream! And it came in these pre-packaged little tiny things. And I got one and it was, it was, it was frozen chalk. It was the worst thing I'd ever put in my mouth.

It wasn't good.

It was so bad that I went so far as to go to the Crumbl founder on LinkedIn and message him, use one of my, my precious LinkedIn credits and was like, dude, I, there's no way you ate this ice cream because there's no way you would've allowed this. He never responded to me, but I was like this, like, cuz Crumbl, they're put together. They have an amazing app. I think they have delicious cookies. Like, they pioneered the space. This is not Crumbl. And I messaged it to them, and I doubt it had anything to do with my DM, but like a week later they were gone.

Really?

I mean, you probably never even knew that.

I didn't know that.

It was like a flash in the pan. So the fact that they're doing this is like if Chipotle started selling breakfast. A, I would be excited because I love Chipotle. B, I would be like, as a shareholder, I don't know, like you're reaching now. Right? That's the signal I get from companies like reaching.

It makes me wish I could short some of these brands.

I know, I know. What is the most boring franchise that quietly makes people rich?

The one that comes to mind is brands that do accessibility infrastructure for seniors. So like they're coming and putting ramps into your home, they're putting those like kind of elevator-ish things that go up your stairs, and the baby boomers are This aging population, we have 10,000 people, I think, a day turning 65 or older. It's a ton of people. And we'll do random market surveys where we call into Philadelphia or Cincinnati and we act as though we have a parent that's aging and we want to put them into a facility or see if there's in-home care available. Every city we call doing this, waitlist, waitlist, 6 months, 12 months.

Wow!

Every city. So, there's clearly a ton of demand and not a lot of supply. But I like the idea of building the infrastructure versus the care itself. Yeah, it's because there's less liability, there's less labor I have to manage. You come in, you build an infrastructure, and you're out. So I don't know if that's boring or not. Kind of is. You're building like ramps. I don't know. And they do millions of dollars. Some of these franchisees— and one of the brands I'm thinking of is $10 million plus a year in revenue, very good margin.

It's funny because I have a phrase for this type of business, and it matches perfectly that type of business. I call them grandparent businesses where You know, why is being a grandparent better than being a parent? Because you come in, you see the kids, you play with them, they're happy, you sugar them up, they need a nap, then you bounce, right? That's a grandparent business. This is literally a grandparent business where you're not managing them. You're coming in, you put a handrail next to the toilet, $1,000, I'm out. Yep.

Right? Insurance pays for it in many cases.

So yeah, so there's like no payer. Like, that's another brilliant business model is like the incentives are aligned.

And it feels good. Like, I talked to some of these franchisees in this— these exact businesses, and they genuinely feel very good about what they do. They're very mission-driven. Like, I made a huge difference in someone's life and in a family's life. They now get to stay in their home X years longer because of what I did.

You know, another business that's a lot like this is the autism clinic business. It's very profitable, very needful, and similar to the other one, no one's paying for it, right? Insurance pays for it. This behavioral therapy is proven to Yep. So the parent has a better life, the kid has a better life, parents don't have to come out of pocket, the business owner is profitable, and the only person footing the bill are these greedy, stupid insurance companies that we all hate.

Yep. So there's franchises for that too.

I believe it.

A few that we work with that are really good. And again, every franchisee is very— that's another thing, like when we talked about why do people franchise, is it money, is it, you know, generational wealth, is it replacing an income? There is a group too that's just like, obviously have to make some money, but I want to do something that I leave an impact on a community, on an individual. And a lot of these ABA Because it's autism and behavioral— I forget the last A, but, but the ABA clinics are— they're very mission and purpose driven. They're making materially positive impact on people's lives. And to your point, they're also great businesses. So it's like when you get that Venn diagram overlap, yeah, what more can you ask for?

Well, my friend is in private equity and he helped work on a deal years ago, an autism clinic deal, 4 locations, all corporate owned. This is verified and confirmed. These are real numbers. Four locations sold to private equity for $64 million, like retail locations. Wow! Now they have there's over 100. Like it was a great buy too, and a great sell because now it's like a billion-dollar company. Wow! Yeah, but that those multiples don't exist anymore.

But it was a it was a it goes back to getting in early on the right thing too. Is like not every concept's going to do that. But like my eye doctor is not a franchise, but I know the guy. who led the roll-up of it, same thing. His father-in-law was an optometrist and he said, hey, do you like doing all this back office? He's like, we all hate it. He's like, are you like that or is it all of your buddies too? He's like, all of us hate it. We just want to provide service and value to our clients. He's like, well, what if I bought your business and I handled all the stuff you don't want to do? He's like, yeah, I'm good with that. He's like, would your buddies want to do that too? And so, they started out with 5 or 6 of them with his father-in-law and their buddies. And my eye doctor is a billion company where they just went across the country and ran that playbook. And again, found the right thing early, rolled it up effectively as similar as to a franchise roll-up.

Wow. Another hot tip for the eye doctors out there. My friend is an eye doctor and he finds all of his customers through postcards. His postcards have a 60x return on ad spend. Really? $60 return for every dollar he spends on—

wow.

He has 9 clinics all through everyday direct mail. That's right. Why are franchise owners failing today even if they have a great system and a great playbook?

So I, I say the wrong person in the right franchise is still the wrong franchise.

Okay.

And that's because their background doesn't align with it, their risk tolerance doesn't align with it. It's like you take this ex-military guy who's great with running a squad of people but doesn't want to stand in front of a room of 500, maybe is more shy but is good with a smaller group. He's probably not gonna want to do like door-to-door sales or like get on a computer all day and on a phone selling you, you know, freight brokerage. Yeah, probably terrible at that. Versus the person who's very outgoing, life of the party, you know, loves to win, is good at convincing and persuading people, probably good at both of those things but better at home selling freight brokerage.

Yeah.

And so it's just, it's, it's really the fit. This is all about fit, I've realized. And our whole platform, our whole goal is get people into the right thing, not the one that makes the most money, not the one And that it's— 'cause that's how you're gonna— you have to persevere and do the work. And if you suck at the work or you hate the work, you're not gonna persevere and you're gonna fail. As soon as you're out of the game, you're out. If you stay in it and work hard enough and long enough, you're gonna have some level of success.

Well, that's why you could take 2 amazing humans, put 'em together, they get married, and it becomes a toxic relationship. 'Cause they're just bad for each other.

Yes.

And with other people, they'd be perfect. Is Subway the worst franchise deal in America? Defend your answer.

I think today, absolutely.

I've—

so a little inside information, we interviewed someone at my last company who was a franchise business coach for Subway. So every brand has these coaches that help franchisees, and they're assigned to 10 of them a month or whatever. And she had told me, she's like, yeah. I was like, why are you leaving and why do you want to come work with us? She's like, it's just becoming too cannibalistic and toxic. Like, what do you mean? She's like, we're at a point where we're opening stores now a block or two away from another.

Yeah.

And the goal is like, let them fight it out and we'll, we'll take the best one and we'll close the other one. And I'm like, that's someone's life again, investing in stores and renovations. Like, they're knowingly doing that as part of their strategy.

And if they survive, some of those owners are taking home $20 grand a year, $30 grand a year.

Yeah, I think it's terrible. There's way better options. At one point it was probably exciting and all the rage and, yeah, rave. And, you know, if you got in early Probably could open 100 stores and have made a lot of money, but at what cost and what expense? And that's where, to me, like, your individual morals and ethics, you have to decide for yourself. Are you fine being very combative and that extreme competitive, or borderline unethical, or not? Um, I wouldn't be able to.

How are people out there buying franchises with none of their own money?

So the individual I, I mentioned, he had a background in operating things. And it's like that gave him a unique skill that capital was attracted to because the capital didn't want to go run a 100-person team or a 200-person team, but this individual was a good operator. And so, I'd say if you have a unique skill set where, hey, I can come in and provide something that others don't have, and in this case, if you don't have capital, you need to come with something else. You can't just be like, hey, I have this idea. Give me the money. Let me go do it. You need to prove or have some level of proven track record to say, hey, I I can complement you in a way that you currently don't have today. And most of the time, that's operating. And so my advice would be go get some level of operational experience. It's why I tell people, like, of course we want people to buy businesses and be entrepreneurial, whether it's franchising or not. But if your goal is to own and build multiple businesses, you just need to get in the game, whether it's a side hustle, the Card My Yard thing, or freight brokerage, or—

Or just having a job. Like, an operator doesn't have to be an entrepreneur.

No.

Being proven at your job.

Like, we— I'll give you a real-life example now. Like, for Pop-Up, we're developing 10. Dan and I have a number of other things going on, so we're busy. We have capital, we can operate, but we can't operate 5 things at the same time. And so, we brought an operating partner on who, to your point, hasn't necessarily been the owner on the other side before, but she has operated multiple businesses, multiple locations as like a GM, as a district manager. But now, we've given her equity on upside, you know, pretty meaningful equity that she would have— might not have had anywhere else or otherwise, that she, if she does well here the next 3 to 5 years, will be able to parlay that into, now I own half, 60, 70%, and I'm attracting the capital to go do my own thing. But she's having to earn that right these next 3 to 5 years in this kind of first meaningful way that she hasn't had a chance to do before.

Gotcha.

So it's going to take that person longer, but it's possible.

Yeah. When you're looking at a franchise document, What is a red flag that makes you run away every time?

Yeah, we talked about it a little bit earlier, but the closures and the transfers, especially if they're trying to hide things or if the Item 19 doesn't have profitability or footnotes that are clearly made up like, oh, this revenue is just the top 10 locations. Like, why aren't you showing the other— not even 90%, but the other 95%? Because you're only showing the 10 absolute best. Why? Well, this isn't in the document necessarily, but if the brand is cagey about introducing me to other franchisees, Like, let me talk to some that have failed. Let me talk to some that are performing well. Let me talk to some that are middle of the road, because I need to know what's happening here in this system behind closed doors, under the hood. And the best way to learn is to talk to people actually doing it.

Do you ever say, like— because if I'm a prospective franchisee, I don't want to say, hey, give me some names of some people I can call. I want to say, I want to see all of your franchisees and I'm going to pick a few.

You're going to secret shop. Yeah, you should. Just like if you were interviewing someone for a job You're like, give me your references, Chris, and you're gonna give me your best— yeah, your best friend, your wife. And yeah, versus if you give me those, but then what I do during the interviews, I say, Chris, everywhere you've worked, who was your boss there? What would they say to you? How do you spell their name?

Yeah, yeah.

Because then I—

their phone number—

then I go find them and I do talk to them. And especially if it was one that was not on your list. And so same thing here, if you're looking at a franchise, they're going to give you the 3 that are the best performing people probably, and then you need to go— it's your job In your diligence process, and we'll help you with this if you want to work with us. Go find the other franchisees that filed bankruptcy or aren't in the system anymore, and there's ways to do this. There's ways to find this information and go talk to them.

Yeah. Now, if people do want to work with you, what do they do? How do they find you?

The easiest thing is to go to franzy.com, F-R-A-N-Z-Y dot com, and then we put out a ton of content as well. We have a podcast called The Exit Plan, which is individuals sharing their stories of leaving corporate America to go. Become a business owner, franchise or not, as well as people that have built large portfolios and have exited them to private equity or other large operators. So we tell those stories. And then Alex from Franzy on Instagram, Twitter, TikTok, etc.

And we'll link to all those places. Anything else you need to share, Alex, that we might have missed?

I think we covered a lot. I appreciate you having us on. And again, I think franchising is probably the most overlooked path to wealth creation in America. And we're on a mission to help put a spotlight on that.

Thank you, Alex. Hey guys, if you're still listening to this, it's probably because you haven't had a chance to take your AirPods out. You're still mowing the lawn, you're still driving, what have you. If you're still here with me, I would really, really love and appreciate a 5-star review on Spotify, Apple, or wherever you get your podcasts. It would mean a lot if you want to go the extra mile, share this episode with a friend that might have an interest in starting a business. It would mean a ton. Hope you have the best day of your life today.