Jeff Dudan | On the Homefront with Jeff Dudan #44

Hey, everybody, Jeff Duden here coming to you on the Homefront podcast. Oftentimes, people are asking me, why do you say franchising is the greatest wealth creation business model ever invented? Well, there's a variety of reasons for that. Many people think franchising is just food, and they don't realize that in the United States alone, there is over or nearly 800,000 franchise establishments in this country, which is crazy. There are one in eight people that of the people that want to be employed in this country are employed either by or for a franchise system. Small business is 60% of our GDP in this country. Franchising is between 4 and 5% of that, but still a big part of our economic engine. So why does that really matter? Well, a couple of things. So as many of you know, I'm the CEO of Homefront Brands, and we care about really three things, the first of which is creating economic freedom and security on Main Street USA. When I sold my business when I was 50 years old, I had to have a compelling reason to come back, and that was 2019. I had to have a compelling reason to come back into the workforce. And really, what was I going to do with the rest of my life? How could I drive deeper into my purpose? I had my economics solved. I didn't need any more money. So, like, what did I want to do and what did I want to contribute for the rest of my life? Well, number one, first thing we care about is we care deeply about this country. And a strong middle class is fundamental to a healthy country. People need to be able to afford homes. People need to be able to afford to raise their children, have experiences, whatever that means for them. Take a vacation, go somewhere, contribute to society in some way. Without economics, it's very difficult for you to do that. Business ownership is critical to those things. Homeownership is critical to those things. There's a real problem in this country with people being able to afford homes. So some starter homes in some markets are now $400,000, which is a real challenge because for many of us when we were growing up, we would buy a home. My first home I bought in Boone, North Carolina, $62,500. I rented that home for years. I paid it off over a short time. I rented that home for years, and then ultimately, many years later, I sold it for many times what I paid for that home. That home was probably worth 4 to $500,000 to me in passive income and equity appreciation over the course of my life. So it's really important for young People to be able to start that and to create some economics around homeownership. So we're very passionate about that. And small business and franchising in particular is a huge contributor to people creating security, financial security, economic freedom, the freedom to choose what they want to do and who they want to do it with in this country. So that's one reason that franchising is important in this country. The second thing we care deeply about is veterans, US veterans. Right now, we're about 60% of where we'd like to be in the armed forces. It's a volunteer force, and I get it. But it's a great option for people to do that, are looking for a career, are looking for skills, are looking for income, if you hang in there, great pensions and things like that. So we're passionate about helping transitioning, veterans transition out of the military through our work with Operation Home Front and encouraging people to serve because they know that they're going to be taken care of. And then the other thing that we care tremendously about is children pouring into children early. They are our future. They're the people that are going to be running this country in the years to come. And what we learned in manufacturing and some of the technology or the consultancy around Six Sigma and, and Lean Manufacturing, is that the earlier in the process that you correct a defect, the cheaper it is in the overall process. So investing in children early, we're doing that at Homefront Brands with our partnership with Carson Scholars, building reading rooms across the country in Title 1 schools, where resources are tight and people don't have the ability to fill libraries with the kind of books that kids want to read these days. So those are things we care about, and we choose to do that through franchising and using that as our business model. Now, I had said to start this little talk that, you know, why is franchising the greatest wealth creation business model ever invented? Well, I talked about the numbers, but also understand that this country is becoming more and more franchised. In fact, there are 72 categories of franchising overall. It started actually in France hundreds of years ago, but in this country, some would say Singer sewing machine was one of the early franchise models. And then of course, we all know that franchising is pervasive in food, child care, haircutting, fitness, child education. All of these types of industries have been heavily, heavily franchised. Well, why is that? Well, because franchising is a leveraged business model. By joining a franchise system, people share in the expense to acquire customers, to build a brand to build equity, to stand up technology platforms, to invest, to opportunity, to participate in learning management systems. So instead of going and building all of these things yourself, things that small business owners would never be able to invest in or would never think about investing on their own, a franchise system provides that through everybody contributing and everybody being part of the growth of those platforms. So franchising is also transitional. And here's what I mean by that. People use franchising to put their entrepreneurial suits on for the very first time. So going from corporate America to a first time entrepreneur or sometimes, and oftentimes being a solo entrepreneur, somebody who's had a small business, they built it for years and they just haven't been able to break through that ceiling. And they want to get in a community of people and they want to use bigger tools and take their skills that they've learned and, and try to expand their portfolio of businesses. Business ownership is a high class asset. Especially now, sitting here in the January of 2024, that is a high class asset. It's an asset that everybody has access to. It's an asset that needs to be in everybody's portfolio. And franchising is the best way to be able to do that. So it's a transitional thing, but it's also transformational. In my previous franchise, we would sometimes have people that would come in from overseas, maybe using one of the visa tools, like an E2 visa. And I remember there was this one family that came in from Venezuela and they were a wonderful family, highly educated, advanced degrees, engineers, MBAs, they owned manufacturing. But they were in Venezuela and Venezuela fell on tough times from the political and economic climate and they decided that they wanted to move their family out of Venezuela. So they invested in this franchise. They bought three of our territories in South Florida. They put their brilliance and their hard work to it. And three years later they had built one of the most profitable businesses in the system. And they sold that business for a seven figure outcome. In the process, they had moved their entire family to Miami, Florida and then they invested in an import export business which they still own to this day. So for that family being able to use franchising as a vehicle to save their family from what was going on in Venezuela, bringing over here new start, new country and new opportunity. Franchising serves that purpose. From having little choice in what they did to having a lot of choice. I talked about leverage and why franchising as a business model creates leverage for people, but it also creates leverage inside of community. So when I talk about community, obviously if you're a business owner, you have your local community, your other business owners, your vendors, your suppliers and your partners. You also are in community with whoever's running the franchise at the home office. People that are absolutely invested in and focusing on your success, having worked with many, many other people that have been on the same journey, helping you move your business from a startup phase to a launch, through maturity and oftentimes even through exit when you go eventually to sell your business because cash flow is king, but equity is the kingdom. And that is the goal of starting any business ultimately is to one day to be able to monetize it. And you can't overlook in a franchise, which I think is one of the most important things, is who are you in the room with? Who is the peer group in your franchise system? Is it people that you meet at training? Is it people that you meet at your annual conference, which we call homecoming? These are the people that are building the same exact business that you are in another market and they're facing the same challenges and the same opportunities. So the ability to collaborate, collaborate in a high engagement platform such as a franchise that's facilitated by good systems and good process and good leadership is an opportunity to really be in business for yourself, but not by yourself. I do want to take a moment because Homefront Brands is a property service platform to talk a little bit about why I think property services is the most durable segment that you can absolutely operate in. Now, I've been involved in other franchise businesses along the way. I've got a long career, almost 30 years in franchising now working with other emerging brands as an investor, as an advisor in multiple things. I've been in fitness, I've been in health and wellness. I've been in education, I've been in clothing. I've been in all kinds of franchise business models. But I believe the economic fundamentals and the really the property service marketplace is durable. And I'll give you a few reasons why I think that is. Number one, we're sitting here in a housing shortage. There is a shortage of available homes, of the types of homes that people want to live in today. Number two, so there's a quantity problem with affordable inventory. If you believe Maslow and his hierarchy of needs. One of the very first things that people need is shelter. I used to like to camp. Tent camping is tough. I don't like sleeping on the dirt. I like a roof over my head and I think everyone does as well. So everybody needs a home. So in addition to the quantity of homes currently being insufficient in this country. There's also a quality problem and a lot of that has to do with track building and a lot of the high production things. Tyvek house wraps, building materials being increasingly granular, particle board where things used to be real wood. And that goes from everything from subfloor to base moldings to cabinetry. These things just don't stand up to water and moisture and wear and tear as they used to. So homes need to be repaired more frequently. There's an increasing population that we're facing and we're sitting here in 2024 like I mentioned. But in 2050 we are anticipated to have anywhere between 430 million and 496 million people in the United States alone. We're 339 million people right now. That's an increase of somewhere about or over 100 million people. Where are all these people going to live? They are going to need affordable housing to live in and maintained housing to live in. You don't, you might think 2050, well, Jeff, that's a long way away. Well, for those of US I remember Y2K like it was yesterday and that was just 24 years ago. So it will be on us before we know it. And we are going to have to have the building inventory ready repaired for these people to live in. Also there's an increased migration in this country, at least right now, where people are moving west to east, north to south, cold to warm because of the remote work and your ability to work from anywhere. Also a lot of people being entrepreneurs and having the ability like you to change your life through business ownership, whether it be through a franchise or some other thing that you're doing there. The fifth thing is, man, we are really in a do it for me type situation here where people are less, less likely. Our children are less likely to know how to do plumbing, electrical, to know how to put a roof on. I don't know about you, but we all did that growing up. We all worked in the trades, we all repaired our own stuff. People don't do it anymore. So it's a real do it for me type economy. So from a franchise perspective, who by the way, franchises will always over time beat standalone businesses because of our ability to intercept leads at a higher level, to acquire customers at a lower rate, to be able to process through those, through greater technology and to continue to ascend our ability to acquire, attract and retain customers to our brand. So as we get in this do it for me place, franchise systems are always going to win over time in terms of getting the eyes of those customers and getting that repeat business. So those are some of the reasons that property services are real durable. And really excited to share my perspective of why franchising is the greatest wealth creation business model ever made. And you can see it everywhere. You can see celebrities today that are investing in franchise systems. Whether it be Peyton Manning owning his Papa John's or Drew Brees with his walk ons or Shaq with his big Shaq chicken. These people have realized that franchising is a way for them to continue to balance their portfolio and to create passive income off of the money that they've made. By the way, interesting story and if I don't get the facts right, I have to recheck his book. But Jerry Richardson, who was the founder, the first owner of the Carolina Panthers football team was Johnny Unitis tight end back in the day. And I believe, if I remember correctly, he wanted, he asked for $500 a game and they only wanted to pay $250 a game. So he quit the NFL and he bought a Hardee's restaurant. And over time in growing that business, he ended up with four Hardee's 400 Hardee's restaurants, which he then invested in real estate in the Charlotte area and the Carolinas and insurance and ultimately in the bringing the Carolina Panthers football team to Charlotte, North Carolina, which, oh by the way, the NFL is a franchise. So it helps. You can start from nothing and as long as you're willing to follow a plan, you're willing to work hard and you're willing to contribute and be part of a community, franchising can be great for you and it can change your life much like it has mine. So in closing, if you want to learn more about the franchise offerings at Homefront Brands, I would encourage you to go to homefrontbrands.com, subscribe to on the Homefront Podcast to get more content from me and from us about the Hero's Journey business owners. Also we have scientists and chefs and all kinds of people on there. They share their story about their entrepreneurial journey and it will inform your journey as well. So wherever you get your podcast, go to YouTube, go to Apple, go to Spotify, check us out on Instagram at our on the Homefront Podcast page. You can fill out a form@dudenext.com if you want to franchise your business. I'm interested in speaking with you about that. I can connect you with the right people, put you in the right direction. Just go to wwe, fill out the form, it'll come right to me. And you can always grab me on LinkedIn and connect with me. I look forward to connecting with there. And remember, all of you are destined to do great things. Thank you for listening.