527: Is Franchising Right for You?

Wealth Formula by Buck Joffrey

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17d ago 33:10

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If you look at the wealthiest people in the world, they almost always get there through business ownership or real estate. The only real exceptions are athletes and entertainers—and let’s be honest, that’s not a realistic path for most of us.

We talk about real estate a lot here and through deal flow in our investor club. But today I want to focus more on business ownership.

One way in is to start a business from scratch. I’ve done that a few times—sometimes it worked out really well, other times it was a total disaster. That’s the reality of startups. They require a certain wiring, an appetite for risk, and the ability to move forward without much of a safety net. It’s harder to do when you’re 52, have three kids heading to college and alimony to pay.

Another option is to buy an existing business. The advantage here is that you’re stepping into something that has already worked, which gives you confidence in the viability of the business. But it’s not without risks. Some businesses depend heavily on key people or relationships that don’t transfer, and the ones that truly run themselves tend to be very expensive and often out of reach.

The third option is franchising. It’s not risk-free either, but it does give you a roadmap. If you’re the type who can follow a proven system, your chances of success go way up. You’re not starting from scratch—you’re plugging into a model that’s already been tested and supported. For people who don’t necessarily have the renegade startup personality but want more than just a paycheck and index funds, franchising can be a great fit.

We’ve talked about franchises before, but this week’s episode brings a fresh perspective from someone focusing on non-food franchises. I think you’ll find it really interesting.

Transcript

Disclaimer: This transcript was generated by AI and may not be 100% accurate. If you notice any errors or corrections, please email us at [email protected].

We’ve seen so many real estate investors saying, where’s another tax advantaged alternative investment that I could participate in? More and more of them are migrating over to franchising. So that’s been a huge trend I would say.

Welcome everybody. This is Buck Joffrey with the Wealth Formula Podcast. Coming to you from Montecito, California. And, uh, before I begin, I wanna remind you that there is something called wealth formula.com. It is the home base of the Wealth Formula Podcast. So if you want to, uh, go check that out, check out the resources.

One of the things you can do there is sign up for the, uh, credit investor club, AKA investor club. See, uh, opportunities gill flow that you might not otherwise see because they are private. As we get here later in the year, more and more opportunities particularly for, uh, potential tax mitigation, lots of real estate, uh, some other, uh, real asset funds that I think you may want to, you may wanna learn about.

So go to wealth formula.com, sign up and um, get onboarded. This is a little building a little bit on, uh, last week, uh, when we talked about, you know, how the wealthiest people in the world. Typically, unless you’re like an entertainer or a professional athlete or whatever, uh, you’re typically going to get there through business ownership or real estate.

Right? Of course, we talk about real estate here a lot and we have a lot of opportunities coming through on, um, on uh, investor club. But you know, today I wanna focus more on that whole business ownership concept because I think it’s something that probably more people could be involved with. Um, you know, but if you do wanna be in business, so there are a few different options, right?

So one is to start a business from scratch. I’ve done that a few times and I’ll tell you sometimes it’s worked out really, really well. And other times it was a total disaster. But that’s a reality of startups. Um, they require certain. Wiring too. I mean an appetite for risk and the ability to kind of move forward without much, much of a safety net.

By the way, speaking of safety net, it’s much harder to do when you’re 52 and I have three kids heading to college in alimony to pay, by the way, ask me how I know that. Anyway, another option if you’re interested in a world of business, is to buy an existing business. The advantage here is that you’re.

Stepping into something that already has worked, which gives you confidence in the viability of that business, right? I mean, it’s a little bit, uh, if something’s been around for a few years, for 10 years, well that’s a pretty good chance you could keep it going. But it’s not without risk because some businesses depend heavily and key people or relationships, uh, relationships that might not transfer.

And then there are, you know, businesses that can truly run themselves out there too. Those are great to buy. The only problem is they tend to be very, very expensive and out of the reach for people. So the third option, um, and I’m sure there are others too, but the third option I’m gonna talk about, again, we’ve talked about it before, it’s franchising, right?

It’s not risk free either, but it does give you a roadmap, you know, if you’re the type who can follow a proven system. Your chances of success go way up. Right. So, and this is actually an interesting thing ’cause I, I think about the types of people who listen to the show and a lot of, a lot of you are highly successful students.

So a franchise is kind of a interesting way to look at, you know, business because then you’re basically studying what other people have already done and you’re mastering it and you’re already really good at that. You’re not starting from scratch, you’re plugging into a model that’s already. Been tested and supported.

So, you know, for people who don’t necessarily have that, you know, have the renegade startup personality, but wanna. Want more than just a paycheck in index funds, franchising can potentially be a really great fit. And again, like we talked about before, if you get into this world, I mean, there’s people who own tons of franchises who end up becoming really rich.

Um, just because, you know, they can sell like a bunch of them and, uh, you know, and stack ’em up and, and get ’em going. Uh, but again, we’ve talked about franchises before. Uh, I just wanted to make sure this is sort of, again, on your radar as an option. Uh, so this week’s episode is kind of bringing a, a perspective from a, a guy who’s an expert in non-food franchises, and we’ll have that, uh, interview right after these messages.

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It’s a refined strategy used by some of the wealthiest families in history, and it uses century old rock solid insurance companies as its backbone. Turbocharge your investments. Visit Wealth formula banking.com. Again, that’s wealth formula banking.com. Welcome back to the show, everyone. Today. My guest on Wealth Formula podcast is Jon Ostenson , uh, CEO of Fran Bridge Consulting, and one of the nation’s, uh, top experts in non-food franchising.

He’s a former franchise president of Fortune 500 Executive, and now a bestselling author and consultant who helps investors build semi passive income through scalable businesses. Welcome to the show, Jon. Hey, buck, excited to be here. Yeah. And uh, uh, apparently Jon is a listener of the show too, so that’s, uh, that’s helpful.

He kind of knows what we’re we’re about and what we talk about in the show, so that’s, that’s great. Um, Jon, uh, you’ve been a, I guess a Fortune 500 executive of franchise President, uh, and now you run your own consulting firm. Uh, how did that journey bring you to, uh, you know, focus specifically on non-food franchising?

You know, buck, I like so many others, you know, when they hear the F word franchise, you know, immediately thought fast food. And uh, and I spent many years in the corporate world, had a great run, but franchising was not on my radar ’cause I didn’t want anything to do with food. And uh, really it was when I had the opportunity about eight or nine years ago to step in as president of Shelf Genie franchise system that I realized, hey, there’s a whole world of franchising outside of fast food.

And um, you know, I really fell in love. With the franchise model through that experience and just saw how all these diverse backgrounds could come together under a shared system of support and become successful business owners. Long story short, ended up becoming a franchisee myself of a number of different brands, still am today.

And, um, started my consulting practice about six years ago to help others get plugged in. And, and I’ll start by saying, we’ve got nothing against the food guys. We, we need them. But, uh, in my humble belief, there’s simply easier ways to make money. And I’m happy to go into the reasons why. Yeah, why don’t, why don’t you kind of tell us a little bit about that?

I mean, I mean, just the differences and you talk specifically about sort of specializing this non, uh, food world. I mean, what. What’s the big difference there? Yeah. You know what? You can do really well with food if you’re in with one of the big brands. But, you know, oftentimes if you get in with a smaller one, it is just, there’s just a little more risk associated with it.

Um, you know, consumer whims oftentimes change, you know, I, I joke the frozen yogurt was big until it wasn’t. Right. And so that’s a piece of it, but you’re really making a big CapEx investment in most cases. You know, it’s, those are not cheap to get into. And then once you’re in it, you’ve got, you know, long operating hours.

A lot of hourly employees, uh, oftentimes the margins aren’t that good. So, uh, when you, you know, put that side by side with some of the opportunities that we go deep in things like home and property services, health and wellness businesses, uh, B2B services, you know, businesses that cater to kids or to pets or to seniors, you know.

I’d say the general theme out there is understandable, cash flowing businesses, that’s what people are gravitating towards. And you know, food just has a lot of moving parts and a lot more complexity. So most people that we work with say, Hey, we want nothing to do with food, but we wanna go deep on these other ones.

You know, I wanna start, I wanna ask you some very practical questions because I think, you know, we, as you know, we’ve discussed franchises on the show. Uh. Few times. Um, and I think people are still kind of, a lot of people are interested, but, you know, they kind of want to know a little bit of the nuts and bolts, you know.

Can you give us a little bit of a sense for, you know, when we talk about non-food f franchises, you mentioned they’re, they might be a little bit less expensive to get into, uh, than food franchises. You know, what, what kind of investments are we talking about? I mean, for someone who’s. Um, you know, high paid professional, obviously you’ve, you’ve got some capital, but you also don’t wanna spend all your, of your investible capital in one year on a franchise because inherently, I mean, it is a business.

Uh, it may have a higher likelihood of succeeding than a pure startup, but it’s still, there’s still possibilities of failure. So, so, you know, what are we talking about in terms of, uh, startup costs for. Your typical non-food franchise that people can expect. Yeah. You know, and some of these non-food categories aren’t cheap, right?

I mean, we just had clients that bought 10 trampoline parks at $3 million each year. You do have some large ones. I’d say probably 75 to 80% of those that we work with. When you look at the franchise fee and the startup cost and several months of working capital, all built in your investment range is oftentimes in the.

I’d say two or $300,000 ballpark in most cases. Um, you know, if it’s more of a larger customer facing retail play, then it might be a little bit larger, four or 500,000. But a lot of our clients are gravitating towards more service-based businesses. You know, where you can get in, maybe get multiple territories for that two or 300,000 mark.

Some people are using all cash to fund it. Most are using SBA loans where you put in 20%, you know, fund the other 80%. Banks obviously prefer lending to franchises. Um, some are using a retirement rollover. It’s what’s called the Robs program, ROBS, where you can roll over and you have to purchase the business as a C corp or set it up as a C corporation, purchase it with a retirement plan.

You can pay yourself a salary, somebody’s that in conjunction with sba. There are a lot of ways to make it happen, but no, you’re exactly right. I mean, business ownership. There’s a reason why you can make. Inherently larger returns, it’s because you’re also putting in a little more effort and there is risk associated with it.

Right? Um, franchising does de-risk it in a lot of ways. You look at the sheer numbers, but end of the day it does take effort and. I always tell people if it was easy, everyone would be doing it right. Um, but it’s obviously something the government incentivizes. They want you creating new companies, new jobs, and so there’s a big tax play with it as well.

Um, but yeah, no, it’s, it’s not easy. And, and when you talk about tax play, you’re just mostly talking about like bonus depreciation, that kind of thing, or? Yeah, if it’s heavy, heavy CapEx business, certainly section 1 79 and the whole bonus side, uh, with the new tax bill that gets extended. But, um, no, it’s, it’s things like, I mean, for me, I, I pay my kids in the business now.

They’re all elementary age, but I’ll put ’em in my ads, they’ll ship my books out, that sort of thing. I then take some of that, roll it into a Roth IRA for each of them. The other part I pay. Back for private school tuition and I’m paying stuff, you know, there are things you could do if I get a tax write off for the business.

Um, you know, certainly all the home office and travel expenses, you know, can be justified as write off. So there’s just a lot of things that as a high paid W2, you don’t have access to in the tax. Tax code. Yeah, yeah. Um, do you think. Uh, you know, obviously when you go, when you look, you know, I’ve, I’ve sort of looked through franchises in the past.

Um, not too seriously, but just to kind of get a sense. But is it your sense that the more safer, the more stable, the better likely to hit? Franchises generally tend to be more expensive. Not necessarily. No, I think it’s it. A lot of it comes down to the model. How much equipment is needed, whether you need a retail storefront, how many employees.

No, I’d say the franchise fee, what you’re actually paying the franchisor is pretty consistent across the board. Um, you know, franchising is like every other industry out there in that you’ve got good players and you’ve got ones that are not as strong, ones that don’t provide as good of support. And that’s where we come in to try to help identify the, the strong ones.

But, um, no, it really is similar. You know, franchising’s not right for everyone. You know, there are. People that we work with that I have to explain, you’re too entrepreneurial. You wanna put your thumbprints all over it, it’s not a good move for you. Um, but if you have some degree of humility and you recognize you’re not always the smartest guy in the room, um, you know, I think it, it truly is a better path than business ownership for most people.

So, um, but again, it’s not right for everyone. Not everyone’s cut out to be a business owner. Um, we see all types. You mentioned, uh, SBA financing, but these kinds of things too. There is. When we talk about cost, there’s sort of the upfront cost, but a lot of times it takes a year or two years to get something up and running.

Right. So how do you, how do people deal with that? ’cause they’ve got a lot of, you know, they’re carrying a lot of costs for a long time. Mm-hmm. I’ve had multiple conversations on that topic already this morning, and everyone’s situation is different. Um, but I, I, I always want people to go in eyes wide open.

You know, we have a whole discovery process where they can really ask questions, learn more, talk to existing franchisees in the system, hear about their ramp up, what that was like with their profitability. Looks like. Certainly the franchisor has their financial representation, but always tell our clients, let’s go conservative and assume it does take longer to.

To get to the break even point to that point of, you know, I call it the oxygen of profitability, where you have that monthly p and l that’s in the black. Um, so no, it it, a lot of models, you know, you may not hit that profitable month until month six or month ninth, uh, the ninth month or even a year into it, depending on the business.

Yeah. There are some that, and sometimes it’s, uh, and, and then sometimes it might just take a year to even set it up. Right. I mean that, that pretty. Typical to go from soup to nuts and starting in about a year, you know, from your first call with the franchisor. I’d say the process usually takes about two months, uh, to, you know, get to that point of signing the franchise agreement.

From there, if it’s a retail business, then it is going to take site selection and build out, which takes time. Typically it’s not a full year, but sometimes it can be. Um, oftentimes if it’s a service-based business, which at least half of those that we work with are getting into, and I’m happy to give examples.

If it’s a service-based business, you can be up and running oftentimes two or three months later. So it does condense the, the time period. Um, you know, so we’ve, we’re talking about this in the context of Yeah. Maybe diversification also, uh, you know, in the context of saying. There’s, you know, this is an earning opportunity.

I know we we’re calling it semi passive. Um, but in order to do that, you have to justify that with the type of returns you’re gonna get. And I know you can’t really give projections in general, but how should people think about this in terms of, you know, if they’re getting. 8% in real estate. And you know, right now the stock market people, I mean, are getting a lot more there.

Obviously that’s a volatile situation. It always is. How, how do you justify this to somebody who’s, that’s what they, they typically do. Yeah. You know, the juice has to be worth a squeeze, right? For the e effort that’s being put in. Absolutely. And, and I personally invest in real estate directly and through syndications and energy funds and private credit.

I’m an all of the above guy myself, and, and a lot of our clients are too. Uh, we like the role that business ownership does play in the portfolio. That being said, most franchises will market themselves as, you know, you can be an owner operator running the business day to day, or you could be semi-passive.

Some call it semi-absentee, some call it executive model. The idea there is that you put a manager in place, day one to run the business. Now, my preference is to call it semi involved because I think that’s a better term for it because you’re not gonna outsource the running of your business entirely.

Right? And if you don’t have the right person in that seat, you’re gonna find yourself leaning in until you do. So if. Countless case studies we have of clients who are running the business as executive model, but they usually weren’t on day one entirely. It takes a little while till they get to that point, they can really pull themselves back.

So I always wanna give that, uh, upfront disclosure, but no, from a return standpoint, I mean, some of these property services franchises as an example, you, you’re all an investment. Call it 200,000 in round numbers. A lot of these businesses can then return a hundred, I’m sorry, a million dollars in revenue, oftentimes at a 15 to 20% bottom line margin, sometimes even north of that.

So let’s just call it 20% for round numbers. That’s a $200,000. Payback. Maybe it’s year two. You know, it’s not necessarily year one, but I mean, you’d call that a hundred percent return on your invested capital. Now again, you’re putting in effort, that’s why you get, you know, an outsized return. But it’s interesting.

I mean, that would be a hundred percent. Um, and you’re building an asset that you’re gonna be able to sell one day as well. So when a lot of times people are looking to leave their W2 jobs to run a business and they say, well, I’m making. 400,000 in the corporate world. I can only make, you know, two 50 here as a business center.

But then when they start layering the tax benefits they get and the fact that they’re building an asset that they’re gonna be able to sell one day, it starts to justify it. Yeah, yeah. Um, let’s talk a little bit about, you know, what it looks like. I mean, we, again, just a review. What does it look like to be, uh, somebody who owns a franchise?

You know, you, so you go into one of these, you sign your franchisor agreement, you’re going to essentially, uh, you know, probably for, you know, at least six months, you’re gonna be like getting something up and running. Right? A lot of times people will be hiring managers and stuff like that at that point.

What is the, what’s the typical route? Like what, what do you see like people doing, you know, just put putting people into the shoes of somebody who’s going into this process? What does it look like? Yeah, so first off, at the very beginning, I encourage people to date around to have conversations with multiple brands.

I mean, we usually have our clients evaluate a dozen opportunities that are available in their area. That’s where the magic starts happening. You start to prioritize the characteristics you like in the business or don’t like, and compare and contrast. Um, they’ll usually pick three or four to talk with.

So again, once they through that process, they decide on one to move forward with, um, you know, they sign the paperwork. Alright, what happens next? Typically, the franchisor has almost like a checklist of things that they’re doing on your behalf and things that you need to do in the months leading up to that launch of the business.

Um, and again, it depends on the type of business, but part of that would be training. You’ll, you’ll probably do some online training. You’ll probably get with a franchisor and in person for a period of time at their home office. Maybe that’s a week. Uh, you know, you’re able to talk to other franchisees in their system.

It’s kind of this built in Mastermind where you’re exchanging best practices, learning from each other. Hey, where did you find your people? Hey, how are you compensating them and incentivizing them? And so. If you’re able to take the franchisor’s job profile and then kinda layer in some real world experience from other franchisees to go out and find that team, um, you know, and I’d say start doing some secret shopping too.

You know, get to know the competition. How are you gonna differentiate in the market, um, along with the franchisor’s training. So, you know. If it were getting really brass tacks here, let’s say it’s a service-based business, you would then run some sample appointments with friends and family, get your feet wet, uh, get used to it, and then, um, or have your team do that and then, you know, start launching to the market.

But the franchise order’s gonna be running a lot of that opening marketing that’s gonna make the phones ring, draw people in. Usually it’s kind of a. Franchisors handling a lot of the digital marketing and if there’s any print, that sort of thing. And then you’re handling a little bit more of the organic, you know, maybe that’s doing some networking, getting involved in the Chamber of Commerce, getting word out there locally on social media post.

Um, so it’s a combination of the two. Um, you know, but the franchisors there for support and I think the, oftentimes it does get overlooked that community of other franchisees. It’s cliche to say, but you’re in, in business for yourself, not by yourself. There’s a group of people that are living the same thing day in, day out, and so you really are learning from each other.

And the more you lean into that, I think it fast tracks your success. Can, is there ways to find out likes, I mean this is, uh, I, I’m assuming all under NDA, but data in terms of which franchises? Um, I think, I think the big thing that most. That anybody who’s gonna get into this is like, okay, I’m gonna put a bunch of money into this and then it’s gonna fail and I don’t want that to happen.

Of course, there’s no guarantees to that. However, is there data to show in any given franchisor if they, uh, you know, what their track record is in terms of, you know, they’ve started, uh, a hundred of these and 98 of them did well, or 75% did well, or something like that. Uh, is that data available? Every franchise system has what’s called an FDD Franchise Disclosure document.

It gets updated every year. Typically in the April, may time period, they’ll come out with a new one and release it. And you know, they have audited financials in there. You know, they’ve gotta cross their ts, dot their i’s, I mean, there’s a lot of legal liability if they don’t do it right. So, you know, it’s full disclosure.

They’re 23 sections within it. There’s what’s called the item seven, where, where it’s your all in investment range broken out. Your item 19 is where they break out the financials, historical financials of franchisees. Now, it would be great if everyone did it in the exact same format. They don’t. And so, um, you know, usually you, you get good information from the item 19.

It’s, it’s audited. Typically, you still have some questions after you review it. A franchise order typically does not have their p and l of all their franchisees locations. So they’ll show the corporate p and l to show how the model is set. But then they’ll show the revenue of all their franchisees. And so you kind of extract that proforma on your end as well as getting talk to other franchisees in the system.

But no, to your point, there’s a section in, uh, the FDD where they do talk about any openings they had, any closures that they had. They list the contact information for all the franchisees. And so again, you have historical information, but also resources that you can reach out to to learn more. How about.

You mentioned, obviously you have an asset that you can sell. What if you’re looking to buy an asset, like buy instead of a skip the startup process? I mean, how does that work? If somebody’s like, yeah, I like the idea of this, but I want to skip the, you know, startup thing, and maybe I’ll get a little bit less return.

But that, that, that creates a lot more potential stability. How does, how does somebody do that? So, within the franchising lane, we do handle resales, uh, franchises. It’s a small percentage of what we do, and here’s why. It’s not that there’s not demand out there for the resales, but there’s lack of supply.

So what happens is franchisee decides they wanna sell their business. The most likely buyer is another franchisee within that system. It’s what I call internal m and a. They’re going to get first rights, essentially. And, um, that’s a way for other franchisees to expand. So oftentimes those good deals, if it’s a good one, it never hits the open market.

The only ones that hit the open market are ones where maybe someone bought and never did much with the business, right? So there’s nothing to buy. And so as a result, we just don’t have a lot of supply, uh, for that. But, uh, internal and m and a is really common. But it’s interesting, there’s so many thought leaders out there today talking about buying existing businesses, you know, buy and build and um, you know, and that can be a great proposition.

However, here’s what I see from where I sit. I have people reaching out every day saying, Hey, we’ve been looking for existing businesses for four years, five years. We hired an analyst full-time to go find businesses for us. Due diligence didn’t shake out. Someone else outbid us. I continue to hear the same through lines over and over again.

All of that time they could have spent building a business. Right? And so it, it just takes a lot of time to find that right business. And even once you find it, there’s inherent risk to it. You’re assuming everything on paper is gonna continue as is. But whenever you inherit someone else’s team and culture.

You’re gonna lose some key employees or key customers, it’s almost inevitable. And here you paid a premium for that business. So it’s interesting. I had conversations with a couple of past clients this past this past week who bought franchises with us two years, three years ago, and are now returning for their next round, their next purchase, to build off of what they’ve already started.

So again, they didn’t spend all this time looking. Instead, they got in the game, started building knowing one, that’s not the only thing they’re ever gonna do, but let’s start it with a good foundation that we can always build off of. By acquiring other franchisees, by starting our own business, by buying another business, but they kind of buy some time while building.

Yeah. Um, what, you know, uh, the one thing I was gonna ask you is that, you know, uh, you’ve sort of got your finger on the pulse of, of what things seem to be working, whatnot. What, what, uh, sectors of non-food franchising are showing the most promise right now? Yeah. You know, I just finished speaking at a private equity conference the other day where the feedback was, you know, the private equity firms were saying it’s sexy to have a franchise in their portfolio.

Now. They, they love the model. Most of them are gravitating towards things like home and property services, sometimes non-sexy, non trendy businesses, things that AI is not gonna replace. Maybe ai, AI will enhance how you do something versus the low bar competition in, in a given niche. Um, there’s just so many niches in home and property services that people oftentimes overlook that they love.

And some of the businesses I’m invested in, I’ve got. I have an asphalt paving and line striping franchise. You know that parking lots. I’ve got another one that provides temporary walls around renovation projects and construction sites. Kinda like an equipment rental type business, you know, B2B. I’ve got another one that, um, you know, provides custom shelving, uh, you know, in your kitchens and pantries.

And then I have one in the health and wellness arena that provides custom orthotics. So 3D printed orthotics for people. So I would say property services has probably been the number one, um, out there in the market for diverse backgrounds. We have lawyers and doctors and corporate executives with no experience in the space, but saying, Hey, I see an opportunity.

I’m gonna follow the playbook that the franchise order provides and go down that path. Um, health and wellness is big. The theme is what are people gonna spend on regardless of the economy? And so it’s everything from kids, youth, soccer and tutoring to, uh, tech grooming to in-home senior care. There are a couple in the senior space that we really like outside of in-home care, where you don’t have to have a large team.

It’s more of. Consultative type positions. Like you’re the expert in your community on all the senior facilities. You’re a placement consultant or a senior fitness where they bring you in. Uh, you know, you have a team of trainers that goes around to different facilities and, and trains and, and, you know, helps with stretching and exercise programs.

So there’s just all these different niches that you wouldn’t think about it unless you saw him. Uh, yeah. Right in front of you. Uh, and you, you know what I like about what you just said too is I always tell people like it’s. I’m, I’m a former cosmetic surgeon. Right. And people get, I’ve had people go through franchising and stuff like that, and they start looking at, you know, these beauty businesses and stuff like that or whatever, because they sound a little bit more sexy.

And then my, my impulse is always to be like, boring. Please keep it boring. Because it’s like you don’t want something that is just people can cut outta their lives as second the economy. Um, goes south or, you know, that they just don’t need, and that there’s enormous competition in. Um, is that, I mean, it, those are the kinds of things that you’re looking at when you’re, you know, when you’re focusing on what to do.

Yeah. It, I joke that non-sexy is the new sexy when it comes to business ownership. It, it really is. And that’s what people are looking for. We work with a lot of doctors and physicians and dentists and, um, you know, they, they wanna do something that stretches them intellectually and they love that, you know, idea of, you know, being a business owner and franchising is just a perfect fit for a lot of them.

Um, but most of them are not, not looking to stay within health. They say, we’re passionate about this, but we wanna do something different. They’ll get into a restoration business or a gutter business or things that aren’t going outta style. So that is a very common. Thread exactly what you brought up, that we want a business that’s going to do well regardless of the economy.

Yeah, yeah. How, um, tell me a little bit about what, you know, today’s macro trends, how that’s affecting everything. We’ve got tariffs, we’ve got high interest rates that might start ticking down, but who knows? We’re looking at a labor market that. Looks kind of very suspicious for recession, uh, recessionary ai or at least, you know, a contraction in, in, in job, the job markets.

And then as you mentioned, ai. So what are the macro trends that you think about when it comes to this kind of thing? How do they affect, you know, some of the decision making? I’d say in the industries that we focus in, tariffs haven’t had as big of a play interest rates have, and where I’ve seen interest rates play out, we’ve seen clients do as many SBA loans as ever.

It hasn’t really affected that. And of course, that’s tax deductible interest. Where we’ve seen interest rates is real estate investing. Obviously, the real estate market has slowed down. There aren’t that many great deals to be had. We all know, uh, the, the macro story there. We’ve seen so many real estate investors.

Saying, where’s another tax advantaged alternative investment that I could participate in? More and more of them are migrating over to franchising, so that’s been a huge trend I would say. Another thing on the labor market. I mean, the Wall Street Journal has an article at least every two days, if not every day, on AI displacing jobs and how these big companies are, you know, broadcasting and proud of how much they’re, how they’re doing more with less headcount.

Right? And so where I sit, it’s on the ground in all these communities, all across America. I’m hearing the same thing. I have so many mid-level and upper level clients, they. You have a background in technology or they’ve been in consulting and so many of them are gravitating and saying, Hey, we know our days are numbered.

Or you know, all of a sudden we’re having to manage a team twice the size without any increase in pay. We’re having to do more with less. I had a client today that said, Hey, I’ve got a great technology background. I’ve been doing technology recruiting forever. I don’t wanna learn the whole AI space. AI space.

That’s a different ball game for a younger man. So. It is interesting. You see these through lines and a lot of them are saying, I don’t want to go work for another firm. I’m ready for a pivot. The P word pivot, and they’re coming our way. So I’d say that’s the other big trend that we’re seeing people looking to make that jump.

Yeah. I’m, I’m surprised the SBA loans are, are still, as you know, that they’re hot as they, I mean obviously they’re very favorable in terms of loan to value or I’m sorry, they’re, yeah, they’re loan to value, but. Interest rates, man, I was, I mean, I was looking at acquiring a business not too long ago and I was just like, the sb you know, interest is so high.

I mean, all in all, when I was looking at it, it was gonna be close to like 10%. And um, yeah, I’m surprised that doesn’t make people. You know, think twice. Yeah. I, I’d say first it probably did, but really I think we’ve become used to it. Yeah. And maybe we’ve become numb to it. So 10%, you’re exactly right.

That’s what we’re seeing out there as well. You know, again, that’s tax deductible. I keep going back to that, but that kind of nets you down to call it six or 7%. Right. In most cases you can pay that loan back early once you’re cash flowing. So it’s temporary in theory. Um, you know, but people like the idea of leveraging.

And, and again, a lot of those real estate investors are used to leveraging. Yeah, yeah, yeah. Of course. Great. What, uh, uh, what else have I not asked you that do you think would be useful for this audience? Yeah, you know, I think we hit on a, you know, the macro trends, a little bit about the financials. Um, you know, what I found is it just gets people excited when they start looking at real opportunities, you know?

Yeah. Like I said, most of our clients will look at a dozen or so businesses. We’ll share with them, uh, you know, the top ones in their market. Nine times outta 10, they end up purchasing something in an industry that was never on their radar. So I think, again, going back to, there’s so many niches out there, and the challenge is if you start Googling, you’re gonna see a top 50 list or a top 100 list of franchises.

Companies are paying to be on that list. And so it’s just so much noise out there. And so that’s where we come in and you know, I think, you know, our model bucket’s entirely free to work with us. We get a referral fee from the brands. That’s passed on to our clients. It’s very much like a real estate broker and, um, yeah, we love helping.

So no, I think you did a great job of kind of hitting on all the main topics that I would’ve mentioned. Yeah. How do we get in touch with you? Come out to our website, fran bridge consulting.com, FRAN bridge consulting.com. We’d also love to share a free copy of our book, Non-Food Franchising can be a great resource, uh, to read through.

So just share your email address out there and we’ll send you links to the book, uh, to download. And, uh, if you’d like to take a next step and book a call, we’d be happy to chat. Fantastic c Jon, thanks so much for being on Wealth Formula Podcast today. Enjoyed it. Thanks, bud. You make a lot of money, but are still worried about retirement.

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Check it out for yourself by going to wealth formula banking.com. Again, that’s wealth formula banking.com. Welcome back to the show everyone. Hope you enjoyed it. And, uh, again, uh, you know, I think the moral of the story here in the last, you know, episode or two is that you know, if you want a different life, you have to do things differently.

If you want a different level of wealth, you can’t do what you’re doing now. Figure out you know, what it is that you want in your life, and then look at where you’re at now and see if you can draw a straight line. If you can’t draw a straight line, then you gotta figure out. Well, what do I gotta do so that at least I have a trajectory to even have a chance of getting to where I want?

That is the moral of the story. And that is it for me. This week on Wealth Formula Podcast. This is Buck Joffrey signing off.

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