Right Now is a Great Time to Become a Franchisee

Posted by Pete Gilfillan and Nat Truitt on Apr 8, 2021 11:33:00 AM

A business is like a tree. You plant it and let it grow. Everyone who planted a tree a few years ago isn't feeling this pandemic as hard as those who rent their income from a corporation. 

If you have been laid off, or are fearing it, that is because your income isn't yours. You were borrowing your job. It's time to own it. 

Nat and Pete have eight reasons why now is a terrific time to begin investigating a franchise. Even though we are in a downturn, there will be an upside and you will want to ride the wave up and own a franchise.


Pete:                All right, Nat, so today what I thought is we're all under shelter with the pandemic going on right now, COVID-19. I thought it'd be interesting to talk a little bit about America, right? America, we are underdogs, right? We always we go into some things, whether it's World War II or the Spanish flu, and we go through these big things, 911, major events, and we come out stronger from it.

And I believe in my heart that America, this is going to be a really tough month, right? But when we get through this, we will bounce back like we always have for major events. Do you kind of see the same way?

Nat:                  Yes, I do. I kind of like catchphrases, as you know, and so I've been saying, hey, when the going gets tough, the tough get going. That's been kind of motivating me over the last couple few weeks to get saddled up and get to work every day and keep on moving the ball down the field.

Pete:                Yes, it's like Jocko we were listening to last week, or was it two weeks ago? Where Jocko hey, something happens good, let's go, let's learn from it and become stronger. And I think that's what we're going to do. Now both of us, we get the opportunity to work with senior-level executives, to explore franchise ownership.

And it's really kind of a hard time thinking about anything but your family being under shelter and stuff like that. But what I want to have us talk about today is looking at franchises now with this idea that America, we're going to get through this, we're going to have a tough month, but we're going to get through this, and we're going to recover like we have in the past.

And we become stronger and better. And I believe that this could be, as we come out of this in a couple of months, be an awesome time to invest in a franchise. So I thought maybe we'd talk a little bit about the reasons why maybe we should be looking at franchises and why that is.

Nat:                  Well, how far back do you want to go, Pete? You want to go like to the Civil War?

Pete:                Well, we could. I don't know if I necessarily want to talk about all the major events. But more so, as somebody looks at why would I consider investing in a franchise? I'm looking in through a lens right now that I'm in my house.

I'm worried about getting toilet paper for my family; bottom line is when this clears, is it a good time to get out there and invest in a franchise business? And I believe there are eight things or eight reasons why you should consider looking at investing in a franchise as we come out of the pandemic or COVID-19.

Nat:                  Yes, I totally believe that. So yes, so now I think it's a great opportunity. What I've been talking to a lot of guys that they're kind of sitting at home, or they got laid off at this point. So it's easy to feel like things are totally out of your control. We have the pandemic; we have the company calling the shots. But I think with a franchise, it's the opportunity to create career in income stability, like even for my senior care business, right? We took a big hit, and I didn't fire myself.

I had to lay off some other people, but I was able to still maintain my career and income security through that. So I think that that's kind of one way to take a little bit more control back into your life. Also, you always have like the tax advantages and the stimulus package you're able to apply for all that too. So there's a lot of benefits of having your own business.

Pete:                Absolutely. Well, I think you talk about that career and income security, that's something that I've been talking people for about the last six months really focusing on. Because when we do go through economic downturns, we now are in a recession. It is the idea that we're going to have more layoffs.

You can clearly see it, unemployment numbers jumped, and we're seeing how companies furlough or lay people off. My son's company, he just got his first job, first week, they announced they're furloughing people and cutting their salaries by 10. So welcome to the corporate world.

When we talk about senior-level executives when we're 50s, we're going to see that you're already a target being in your 50s. But now, these companies have to just kind of slow down or get rid of people. You're going to get laid off, right? Or most likely. And so having your own business to your point, you could be the last person standing.

Nobody's coming in and saying we're going a different direction, or sorry we have to let you off, it's your business. And you could be in charge. And I think that's one of the big things why you set yourself up as we come out of this, instead of getting another job, go invest in a franchise where you do have that career and income security.

I think the other thing that I hear people saying Nat is, hey, listen, I just lost a bunch of money in the stock market, right? I just lost 20, 30%, and they're freaking out. And I always kind of tell people that hey listen, if you don't like the roller coaster ride, because the roller coaster doesn't always go up, right? It literally, from the standpoint is it goes down, and that's what we're seeing.

Now we had great 11 years, but it's going to go down. And if you look even like the last week, it went up; it went down, you're going to always have that. So if you can take your assets and you can diversify them, so that maybe you're not on that crazy roller coaster, you're not being controlled by somebody in New York, a fund manager. You literally have your money, you're watching over your money every day with your business.

Nat:                  Totally. You know Easter's coming up, and just as you were saying about diversifying your assets, that made me think about kind of like if you're all invested in the stock market, you're like have all your eggs in one basket basically. That's the connection to Easter. And the other thing, as you were talking when you own a business locally like I feel like franchising has always been the definition of hyper-local.

So you actually have your business is in the community, typically where you live. And so I know a lot of things are going to change with the COVID and everything, but one thing like if you owned your own local business, you don't really have to worry about hopping on an airplane and flying to China or to other countries, because your business is in your backyard.

And so your commute, instead of taking the train downtown or flying all over the world, you could literally hop in your car or maybe even walk or jog to work. So that's another way you're diversifying, but you're also actually being hyper-local, which I think is pretty cool too.

Pete:                Well, you could say making an impact in your community.

Nat:                  Yes, making jobs.

Pete:                And the money that flows through your business helps support your community. And I think when we talk about communities, we talk about labor, right? The people that we're employing. And we've been in a tight labor market, right?

Every time you go into a restaurant prior to COVID, going under sheltered home, bottom line is every place you go, haircut place, restaurant, retail store, they're all looking for labor. And I think as we come out of this, there's going to be lots of opportunities to find good people. The labor market is going to loosen up a little bit, and I think as a business owner, that's a good thing, right? Putting people back to work.

Nat:                  Unfortunately, there's going to be companies or businesses that go out of business. So probably, I'm guessing there's going to be more retail open up. I also think just with observing all the delivery and everything else; I think that there's probably going to be a trend kind of like a cloud kitchen, where maybe the kitchen start to be centralized, and then the restaurant just focuses on delivery, because they're realizing after COVID actually it's profitable.

They have a kitchen, a chef and some delivery people. So I think that the real estate is going to soften up, and we're going to see people get much better deals on real estate, which could make it kind of interesting too.

Pete:                Yes. Well, we know the real estate market's been really tight, and it's really been, we'll call it a landlord's market. And now it's going to be kind of the leasey, or the small business owner, they're going to have a chance. And I agree with you 100% when it comes to the restaurants.

The restaurants now are learning how to try to manage their business or maybe don't need that really large facility; maybe we can just kind of continue this. Out of just survival, they're learning to adapt. And we're seeing many different businesses adapt based on what's going on. I think a little bit about; I was talking to a guy that owned a painting franchise.

And they've now went to where they do virtual estimates, where the person takes a picture of the room that they want, and they will do a virtual estimate which is really cool. So we see us evolving, which is innovation, right? That's kind of what you're talking about earlier.

Nat:                  I think that is what a lot of times the value proposition of a franchise is bringing to the table, is the innovation. And the technology stack. Some of the most successful companies right now are Panera, Jimmy John's, McDonald's, they figured out kiosk ordering, they figured out Uber eats, they figured out delivery, all of that.

And so then with the pandemic, they just basically flipped a switch and closed the dining room, but they were running from day one on all the delivery and everything. They didn't have to figure that out. Whereas, like where I lived, there's like a breakfast place that's been there probably for 50 years.

And I was actually went on to Uber eats because I wanted to order some breakfast, and they're not on there. So they're basically SOL. They didn't embrace the current technology, and I don't know if they're going to come back. But with franchising, whether it's painting or whether it's Jimmy John's delivery.

Like as an owner, you don't have to worry about figuring all that out. The franchise is literally like here; this is the technology stack. We have guys at corporate that take care of this and keep it cutting edge: phone systems, website, online ordering, all of that stuff done.

Pete:                Yes, literally. I think we have a little Italian restaurant a couple of blocks from our house. And this Italian restaurant independently owned, not a franchise. And we really want to support them, so we did the take out, right? And you want, in my opinion, right now, take out where there's no touch.

I just roll up, basically throw it in my back seat; we don't have to have contact. They didn't have the technology; you had to literally sign the receipt. Take their pen and sign a receipt, and I'm like, I'm never going to do this again, right? And I thought to myself, if you would have been a franchise, you probably would have the technology where I can just literally well, and I'll give you example we did pizza the other night.

It was a company, a well-established; it was a franchise. Literally, I called them, I said, listen, I want the pizza delivered, I want it at my front step, I don't want anybody to ring the doorbell, just put it right there. It shows up, it's in a bag. I don't have to sign anything, that's what I want in terms of leveraging technology, leveraging a franchise to deliver something that I want.

Nat:                  Yes. And that's what right now, while some of these locations might be closed or whatever, I know that at corporate, they're hustling to reinvent some of these businesses. So that it can be more no touch, or they're more sterilization, so people are more comfortable with the germs.

If you were an independent business owner, you'd have to figure all that out on your own. But with franchise, they're going to, can guarantee when this 30 day to stay, what is it 30 days to stay?

But 30 days to slow the spreads over in the franchises or whenever they can eventually open up, they're going to have retooled, and they're going to have processes in place to make people feel comfortable to come spend their money at their locations.

Pete:                Well, I think there's really going to be real pent-up demand. Whether it's services, I have to get certain services done. I put them off for a month, but I got to get them done. And I was talking to somebody the other day and said, listen, I love yoga, and she's like, I can't go do my yoga.

But she goes I'm just dying to get back to my yoga place. And so I think there's going to be pent-up demand for people call it fun, going out to eat or working out or getting stuff done at your house or for your business, there's just no question about it. There is going to be pent-up demand.

Nat:                  And I was just thinking about how much I probably would pay right now to just be able to either go somewhere or have someone come to my house and make me like a nice steak dinner. But it never tastes quite the same when I make it; I don't know why that is.

Pete:                But no, it's fair enough from that standpoint. But I do think we're at a time whereas we look at this idea of investing in franchises as we come out of this pandemic, COVID-19; I do think this is a great time to be looking at franchises because you get to do a whole level of validation that wasn't there before, right?

A couple of months ago, you couldn't evaluate the leadership team under stress test, right? Of helping the franchisees get through an economic tough time. Whether it's leadership or providing financial support, it's been fun to watch some of these franchisors step up and help their franchisees.

So you're not in it by yourself; you really got somebody that's helping you through it. And you got a bunch of friends, other franchisees that are doing it with you.

Nat:                  Yes. You really cannot underestimate the value of the team, both at corporate. And then a lot of the franchise owners, when you think about the corporate executives we've helped over the years, they're pretty sharp guys.

And so it gives you a pretty strong peer group, and typically the franchise has the, like the leadership team of franchise owners and things like that pitch in and help too. So there's a lot of brainpower.

Again, going back to the when the going gets tough, the tough get going. I think innovation and all that is kind of the hallmark of the American spirit. So figure it out, adapt and keep on going.

Pete:                Yes. Well, you think about the franchisors, where prior the last big step in investigating a franchise, would go do a discovery day. Go out to their corporate headquarters, meet the leadership team, meet support staff and see the operations.

Now you've seen those franchisors; all of them now are doing virtual discovery days, which is very cool, right? They've adopted or adapted; they've adapted their business model so that they can do the virtual discovery days. I heard a great story.

So one of them they do a virtual discovery day, the night before they do the virtual discovery day, they do a virtual happy hour, just to loosen everybody up, right? So they do kind of a pre-happy hour and stuff like that; that was a great idea.

Nat:                  Well, actually, they're directly saving money because they don't have to take everyone out to a nice restaurant and fly them in and everything too.

Pete:                Yes. And I think from the standpoint of like one of them was telling me that they are doing uber eats, so how you traditionally if you're at a discovery day have a lunch, they have uber eats delivered to them. And then they maybe give you some tchotchkes, they mail some shirts to you and some other stuff. It's very fun to watch them adapt to a new way of doing things.

Nat:                  That's awesome.

Pete:                Yes. Well, I think the other thing that we're seeing is that the government, they've launched all the two trillion dollar package teas with T for trillion. It's amazing the money that they're throwing out there for small and medium-sized businesses. Have you been looking at that?

Nat:                  Yes, I definitely have. I think that kind of the concept is if it's available to apply for and see if we can get it. And I do think it's really important to help people; help companies keep their employees.

You think about I don't know how like say the barbershop for example, like how they're surviving with sending all their barbers home. Does the owner keep them on payroll or put them on unemployment? Kind of based on this stimulus package.

I think the strategy is give the business money to be able to keep the barbers on payroll. So that the barbers can survive, and then once the shelter in place is over, everybody can kind of go back without having to reapply for a new job basically.

Pete:                Yes. No, I think that's right. The barbershop comment is that, are we doing that because I'm bald? I mean, I'm just, you're taking shots here? All right.

Nat:                  I know. I'm just thinking about when they finally say they're going to lift the shelter in place; I mean, I think everyone's going to be going to the, if you're a franchise, they'll be going to the online scheduling app to schedule their haircut. Those guys will be working 20 hours a day probably.

Pete:                My son, he looks like a mountain man. His beard and his hair, and we can't do much about it. So we'll see about that. But good economic programs, really designed to sure up the small businesses and payroll and keeping people, keeping them busy especially.

Nat:                  When you think about investing in a franchise for the future, in the future kind of short term the next 3, 6, 12, 18 months their credit is readily available. So we're not having a financial issue right now, it's more of a medical issue or pandemic. So the great thing is the infrastructure is good, utilities are good, the internet's good.

Lending is good. So I do think it's kind of a good opportunity for somebody that's a little bit sophisticated or a little bit savvy, willing to work hard and figure out, find the deals out there.

And willing to work hard, I think you can, there's some deals to be had for sure, whether it's real estate or having basically the government fund your business startup. We were doing a ton of the SBA express loans before this anyways. I think somebody that wants to get in business, it's actually, there's some deals to be had.

Pete:                Yes. I heard new SBA loans, and again I'm not an expert on SBA loans. But I heard that part of this economic recovery program, where they're literally waiving the first six months' worth of payments for new SBA loans.

I mean it's, there is to your point, a lot of money out there; you just got to go find it and leverage it, right? So I think that as we talk about investing in a business at any point before the pandemic, after the pandemic.

So many people say to me, Pete, I just want to be in control of my life. I'm done being pushed around by the corporate world. I just want to be in control; I want to live life on my terms. You probably see the same thing?

Nat:                  Yes, totally. The starting your own business is never going to be like super easy. But I think that there's again more catchphrases, but there's never a better time than right now; now is a great time to do the research and invest in a franchise.

And it's kind of like planting trees, right? So if you didn't plant a tree three years ago or five years ago, the next best time to plant a tree is literally today, and let's get that tree growing.

Pete:                Well, Nat, I agree 100%, so we got to plant that tree and get going. And there's so many different reasons, but back to hey listen, we're in a tough time now, we're as a country going to get through this. And there are so many different reasons as we go through this to start focusing on the recovery.

And that's a personal recovery, it's about taking control of your life and leveraging a franchise to be out there having your own business. So that you have income security, and you have that stability that we're looking for.

You've got diversification, your assets, and your income, and you're taking advantage of all the things and making a difference in the community. Creating jobs and just running commerce through the community.

Topics: Funding, Mindset, Franchise, How To Build Wealth, recession, becoming a franchisee

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