When looking for a franchise to invest in, there are many ways to get yourself into the pipeline with a franchisor. But most of the avenues turn out to be sales, sales, sales. They are treating you like a commodity.
Choosing a franchise consultant is a little different... and not all of them are equal. Your consultant should be like a concierge. They should get to know you and help you find the best fit.
Nat and Pete discuss all the different options someone has when investigating and how to discover the best route on this episode.
Pete: All right, Nat, another great podcast today for us. I thought we'd talk a little bit about; I had a candidate I was working with the other day; he goes God Pete, I got to tell you, this franchising this is big business, right? I can't believe how many businesses or how many franchises are out there. Do you get that too?
Nat: Oh yes, I always tell people there's over 4,000 franchises out there, and everything seems to be a franchise these days. Whether it's painting or cleaning, or of course the McDonald's and all the big boys too, but they're everywhere.
Pete: Yes, they're really taking over the mom and pops. And to kind of put it in real numbers, right? There are nearly eight 800,000 franchise establishments out there. They employ eight and a half million people, and the contribution to the GDP, if you can believe this is a half a trillion dollars.
So it is big business from that standpoint. So the interesting thing is okay, franchising is big business. There are lots of opportunities out there, as you mentioned, 4,000 or so franchise concepts out there. How the heck do you find a franchise in this crazy world of all these different concepts out there?
Nat: Yes. I think a lot of people like I talk to are feeling overwhelmed because you can go to like the different websites or portals and you find there's, you're just kind of searching or throwing darts at a dartboard to see what might be interesting, but you don't really have a strategy.
But yes, I think it's overwhelming. I forget how much I know about franchising because I've been doing this since 2001.
Pete: Yes. Break it down to people; I think there are three primary ways that you can look for franchise. So why don't we spend some time chatting about that? So the first way that you can go and start figuring out what you want is you can go to the wild, wild web.
Maybe we should have you pull up your screen and show all the, if you just Google franchising, right? There are all these different sites. And the interesting thing about these sites is they're there to capture your information, right?
Nat: Yes, lead generation, clickbait.
Pete: Right, absolutely. So you can go to any of those sites, and they're going to have lists, and you just check the ones you want, give them your information, and you'll get some information.
But you'll also get thrown right into their sales pipeline meeting that they're going to sell your information. So they sell your information, you're going to want to shut off your phone, you're going to get rid of your email and stuff like that. It's very interesting; I mean, I get approached all the time to buy leads from those locations or those sites from that standpoint.
And it's not much different; I was telling you the story the other day; I went to the franchise show here in Chicago, right? And I just wanted to walk through, and I just wanted to look, I didn't want to talk to anybody. And so I get off the elevator at the parking deck to walk across the ramp to get to the show.
I literally get approached by a franchise salesperson right there, not even in the building yet, and I'm getting approached. Then I walk in, and I check-in, and it was well organized; I mean, it was a great show from that standpoint. But I would walk down; I purposely walked down the middle.
And I didn't try to make eye contact; I just wanted to kind of look because I understand most of the franchises, right? I got to tell you, a couple of them they literally almost came out and tackled me. They stood out in the middle of the row, and they were going to have a conversation with me.
And I thought to myself; this is crazy whether you're going to the web or you're going to these shows, it's not the way to do it. So that's good from that standpoint; maybe a better way is if you come across a franchise that you're interested in, and you've probably done this before Nat when you've looked at franchises.
You find something you like, and you go right to that company's website. Most of them will have something on franchising.
Nat: Yes. I get a lot of people they're like, oh, I put in my information for chick-fill-a or orange theory, but I never heard back from them. And I hear that all the time. I think those guys because there's almost like famous brands at this point; they get so many people; we call them organic leads or people organically off the website that wanted more information.
But most of their territories sold out anyways by the time it hits that level of awareness, and so you just are going into like a bucket somewhere, and who knows if they're ever going to get to you.
I found that that's typically kind of frustrating too. Because people are actually kind of waiting around hoping to hear back for days, weeks, months, and a lot of times, they don't hear back.
Pete: I believe that as you go to some of these sites, you're going right into their sales funnel, right? You don't have anybody helping you, you're going directly into the sales funnel of that.
And nobody's there helping you through the process, and to your point, you made earlier, a lot of times if you know the name of the franchise concept, if it's a household name, you've already missed the opportunity, right? And so, going right to the company that has some benefits, it's a little bit more streamlined. But certainly, you don't get the help.
Nat: Well, and I think it's always important, just like when you go to buy a house, is to look at comparable investments. You kind of want to shop other opportunities too. So that's what I'm pretty sure the next topic you're going to say is the best scenario is to work with a franchise consultant.
Pete: Well, yes, let's take a step back, though. Because when you were young when you invested in your first in-home care franchise, right? In your 20s, now did you find that on the wild world web? Did you basically go right to the company? Did you basically use a consultant? How did you find your first franchise?
Nat: Yes. So probably, like a lot of people, I was looking for a caregiver for my wife's grandmother, and then this was back in 2001. And I still remember at the top there was like own a franchise; I remember clicking on that. And it was like you could own your own caregiving company, just the whole pitch, right? So I thought that's pretty interesting. So just keep on clicking and putting in my information and all that, and senior care back then that was a new industry, so it's kind of up and coming or emerging. And ended up going through that process.
But in hindsight, like it would have been super helpful for me to have looked at several other comparable franchise companies. And also like I kind of messed up on my territory too. I bought too small of a territory.
So just all kinds of like little nuances that, in hindsight, I wish I could have optimized my opportunity if I had known kind of the ins and outs at that point. But live and learn, right?
Pete: Yes, absolutely. So really, you went directly to companies. And so, as we talked, kind of the best way is leveraging a franchise consultant, and you and I know a little bit about this. We've both been doing it for a long time.
And the idea is somebody kind of coaching you through the process, helping you, educate you, and helping you get in front of some really good franchise concepts. But more importantly, is being there by your side as you go through the process. So as we talk about franchise consultants, not all franchise consultants are treated or are the same, right?
They're not at all at the same caliber, would be a fair way to say it. I'll tell you my story; when I left the corporate world, I decided I was going to invest in a business. And I got introduced; I can't remember how I got introduced to this franchise consultant.
And this franchise consultant didn't spend much time getting to know me, really what I was looking for. He was really just trying to present as many franchise concepts and hope that I bite on something, right? And so he gave me like a list of 10 franchises and said, hey, tell me which one you want to talk to.
And I look at that as being really lazy, right? Now when you work with people, one of the things you do, I know, is you haven't fill out a questionnaire, right? That gives you a good understanding, right? And then you also have them basically do a consultation call with you. So tell me a little bit about the consultation call.
Pete: You know our process is very educational, it's much more like a concierge level. So it's kind of for those more VIP guys that like to really have someone to take some time with them and understand what they're looking for in a business.
What's important to them? What's important to their spouse? What's going to work for their family? We're going to take quite a bit of time just learning about someone and their family. I kind of think of a little bit like kind of like an executive recruiter or headhunter, just taking time to understand what's important.
What your skills are, what your background is, getting some high-level finances to get a little better understanding about your budget, or what you can properly capitalize to get started. Understand geography, there's all sorts of things that we're going to talk about and take deeper dives as we're kind of doing that consultation and starting to build a model that will make sense.
And then really, it's kind of the fun part, is then kind of once we nail all those things, we roll up our sleeves, and I'll go and do a territory search or franchise search. So kind of go, start with the 4,000 franchises through our different conversations, kind of start to narrow things down, roll up our sleeves, do the checks.
And ideally, come up with three or four franchises that are really good fits you can properly capitalize and have basically your ideal territory available, and then turn you loose for some conversations with those guys. So that's kind of what I'll do.
Pete: Well, yes, I introduced them to the franchise companies, and you're also there coaching them, right? Continuing to educate them. I think one of the things that it's important with the consultant is they've got some experience in franchising, right? They've owned their own franchise, or they've been involved in franchising, so they've kind of lived it.
And I think the other thing is that a good franchise consultant is going to be always educating you, teaching you, educating you, taking you through different things because that's a big part of this, is the education. And the cool thing about working with the franchise consultant is you don't pay for it, right?
Nat: Right. It's almost like the too good to be true; everybody pays the same franchise fees. So it's like we're paid by the franchisor when somebody invests in a franchise. So it's a beautiful kind of win-win situation, where someone can get the help that they need to research these, but it's a free service for them.
Pete: And it's cool for us as franchise consultants because we help people realize their dreams, right?
Nat: Exactly.
Pete: I've always wanted to be an entrepreneur, I want to be my own boss, I want to take control of my destiny, right? I want to live life on my terms, and in today's world, career and income security might be a big one that we help people accomplish at some point. So fast forward, I invested in the franchise, right?
The franchise consultant didn't even send me like a thank you note. Anything like that, like great working with you, I wish you the best of luck. It's kind of crazy because, like when I work with somebody, and they end up investing in franchise, I send them a bunch of resources.
Have a speech, it's now that your franchisee speech. So it goes beyond just kind of matching them, it's the coaching, educating them. But also being part of their life as they start that new journey of investing in a franchise.
Nat: Yes, exactly. Not only do they get a franchise, but they also get Pete.
Pete: Well, that might be good or bad, right? But you're kind of, as I say to some people, you're stuck with me from that standpoint. So franchising is a big part of our economy; it will continue to be a big part of our economy. And it really is taking over mom and pops. I know you see that, right?
Whether it's a plumbing business or an in-home care business. Mom and pops a lot of them don't have any kind of succession plans, or they just can't compete with franchises that have very sophisticated sale processes, finding employees. I mean it's almost not a, it's like bringing a knife to a gunfight.
Nat: Yes. I think everybody's kind of seen that over the years. Franchising is always going to be a consolidation of mom and pop industry, and it's always going to be kind of supercharging sales and marketing.
So you think about way back, it was oil change places, the hair cutting like the great clips, supercut, sports clips all those type of things. The franchise owners and corporate they spend a lot of money on sales and marketing.
And franchises just very process-driven; they know how to convert customers, can make them happy, train their employees, provide benefits for their employees; the list just goes on and on and on. I think it's nice as an investor because it's almost like having a franchise.
I can almost think of it like having, yes, you're paying the royalty, but the royalties are almost like a little bit of a property management fee. Or like a management fee, because you you're getting all these tools and resources, point-of-sale website, all the stuff you don't even have to worry about. You just mostly worry about building a good team at the local level.
Pete: Yes. And I think more today as we enter, I think some difficult times ahead, some stormy weather. That you're going to see with franchises, that a good franchises are going to provide that leadership through these tough times. They're going to provide support and guidance of how we make it through this storm.
And so maybe we'll do a podcast on that, talk a little bit about leadership in franchise systems and stuff like that. But franchising is certainly a path that makes a little bit easier when you've got a good leadership team there.
Nat: Yes. I know even it's interesting to watch the leadership of some of these franchises and how quick on their feet they are, or frankly are not. I know some of them with some of the travel restrictions, have come up with some virtual discovery day so you can learn.
The nice thing about this day and age that we live in is that technology is so great. You can have like the Facetime, the iPhone I think started a lot of this. You have the Facetime or the zoom meetings, and you can really learn a lot virtually.
Pete: Yes. Speaking of our kids going to school virtually now, right?
Nat: Yes. My 15 year old actually came to the dining room the other day and was like, I kind of like this virtual learning.
Pete: I bet you, it's hard to keep him accountable.
Nat: Yes. Something to do with like, okay, you could take like six or seven hours of learning, and I think he's doing it pretty quickly, to say the least.
Pete: Yes. So, my daughter, they did it like a hangout, right? So they had; my daughter was in college, all her friends they were hanging out virtually, playing a drinking game virtually, which is kind of crazy. But we can go from there. Well, Nat, again lots of different ways to find the right franchise.
And I always say if you can have somebody that can be there, that gets a good understanding of what you're looking for, wants to really kind of help you realize your dreams and can get you in front of franchises and coach you. Why wouldn't you use a franchise consultant if it's free if it doesn't cost you any more? I think it's the best path to go.
Nat: Yes, I totally agree. Also, again, I know I said this earlier. But I feel like when you're looking at buying a house, which is another big investment that is a kind of a life change. I know from whenever I buy a house, I go look at lots of comparable. And I think that it's amazing how many people I talk to.
Like when we get to the point of the conversation where like, hey, here's the research I've done and here's the franchises, they're like oh my god, I never even knew about that. So we're able because we kind of have our finger on the pulse, and there are lots of up-and-coming and emerging franchises, ones that might have 30 locations in Atlanta or the Southeast or something like that.
They might not be in your neck to the woods yet. But that's actually I always kind of think that's a fun part when they're like, oh my god, I never even knew that, that never hit my radar. So there's lots, there's so many opportunities out there, it's really fun.
Pete: Then you get people that you present a franchise concept to them, and they go I don't know, Pete, I don't know. And that's the one they end up investing in, right? So I always tell people keep an open mind; you never know.
And I haven't seen any engineering franchises like I get people I'm a director of engineering, I like an engineering franchise, I'm like there isn't, right? You need customers; you need something mainstream.
But the good thing is you can take the business acumen, your leadership skills, and you can apply to these very simple business models, right? We call it entrepreneur light.
Nat: Yes. I think people skills are always pretty important in team building, and the franchisor will help you out with most everything else.
Pete: Perfect.
