Franchising Can Be Affordable (Sort Of)

Franchising Can Be Affordable (Sort Of)

Announcer: You are listening to the Mastering Business Basics podcast, where we discuss how to build a solid foundation under your small business to improve your chances of success. And now, here is your host, Roger Pearson. 

Roger: Today, we have a special guest by the name of Adam Goldman, and for the last nine years, he's been helping people get into franchising. And a few weeks ago, I did a basic podcast on franchising, but I'm glad to follow that up this week with an expert in the field. And so welcome, Adam 

Adam Goldman: Thank you so much, Roger. Great to be here. 

Roger: What got you into this field? 

Adam Goldman: So I'm kind of a franchised person by mistake, right? Many people in my industry are in it by mistake. Had a really impactful visit with one of my closest friends. I was in between things, this is a while back, and, had a real estate investment company that's doing really well, but was kind of drying up when it came to finding deal flow. He said, "Hey, you should talk to my friend. She opened a, tax, a, a competitor Liberty, Liberty Tax. You should go ahead and talk to her about this. Seems like an interesting business. She's a franchise expert." I've always been the kind of person that's really good at following process, but not necessarily creating it from scratch. 

And, opened my own office cleaning master franchise. Owned that for eight and a half years. Got a deal that I could not refuse to sell it, and have been helping others to find out more about the franchising world since then, for about nine years now. 

Roger: If people are thinking about franchising, I mean, what are some of the-- what do you believe are some of the basic things they seriously need to consider? 

Adam Goldman: First thing is whether or not they have a compelling emotional reason to invest in this. Yes, money is one factor, but I find that many people are doing this for other reasons too. Maybe it's a situation where corporate America has decided that their career is over, but they don't, they're not ready to call it quits. Maybe it's a kind of thing where their job might be interesting and satisfying, but the lifestyle of their job isn't what they're looking for. And the other thing I wanna say is that, besides having an emotional reason, one thing people tend to, misunderstand about my industry is that not all franchises are built the same. So most people look at franchises the wrong way. There are 4,000 of them in the United States. They think that all of them are the same. That couldn't be more, that couldn't be, more untrue, meaning there's so many different business models out there. 

Roger: Oh yeah. I mean, a service business versus a restaurant is two totally different things. Two totally different things. 

Adam Goldman: Not only that. It's, it's more about look, I mean, the way that people typically decide to invest in a franchise is kind of by happenstance or by accident. Drive down a road and you see some sort of a lemonade stand or a custard place. You say, "Gee, I wanna open one of those." 

And you probably shouldn't have even looked at that one to begin with because it doesn't have the right characteristics that would make sense for you. 

Roger: And I think the other thing is that, when people look at these things, they don't take into consideration the background of knowledge they have. You just, you just can't open the doors and people are gonna flock in. And just because you're a good businessman in one area doesn't mean that that's the right one for you based on your experience. 

And I assume that's one thing that you do, is you learn the people's background and their experience, and try to match them with the proper type of franchise. 

Adam Goldman: So Roger, it's really interesting. Last week I had someone got me on the phone and she was adamant that I should give her, without knowing her, my top three brands. Didn't wanna talk to me more, right? Probably not a good fit for this person because you're right, I'm here to really give a personalized service to get to know my candidate and then to give them the right top three brands that match them the best. 

Roger: Otherwise you're just setting yourself up for failure, I think. 

Adam Goldman: Yep, absolutely. Absolutely. And I mean, I'm really here to deeply know people and to connect them with, brands that are pre-screened in 75 different industries. 

Roger: 75. Wow. I really didn't realize there were that many different franchise opportunities in this world. 

Adam Goldman That's a misconception. People think franchise and they think, "I'm gonna be an owner/operator and flipping burgers in the back of my business." 

Roger: Well, I can understand that because, I mean, the restaurants are probably the most out-front, version of them there are, but other things, ServiceMaster and all kinds of other things out there also that you can get into if you want. It's scary in some ways because I'm constantly seeing people opening these burger places or chicken places or whatever you want, and, they're going out of business constantly, constantly. 

And I spent 10 years in the restaurant business, working restaurants and managing them, and I wouldn't wish it on my worst enemy really because it, it eats you up. It really does. It's a type of franchise or a type of business that, it's, it's really all-consuming, even more than most businesses. 

I mean, you get most small businesses, starting out especially, you're working 60 to 80 hours a week. And, and if you don't know the business going in, you're just, you're setting yourself up to fail because, you don't have catch-up time. The nice thing about the franchise model is that you get this package and it says, "Okay, you gotta do this and this and this and this and this and this and this if you wanna succeed." 

How you implement that , that's really what you have to take into consideration. And if somebody knows how to implement that correctly. 

Adam Goldman: And you bring up a great point, right? Because the person that's a franchise entrepreneur is someone else than an Elon Musk that loves to create something from scratch, right? So it's gotta be someone that sees the value in the system and that can go ahead and implement that system. And, and look, the, my candidates that call me up and that are grateful for their placement are the ones that see the value in all the mistakes and costly mistakes that they otherwise would have made if they didn't invest in this system.

Roger: Oh, that's absolutely true. That's absolutely true. One thing that I noticed that you'd like to talk about, and that I didn't know about this, is the visa program for franchisees. And could you tell us about that? 

Adam Goldman: Absolutely. Absolutely, and I'm just very grateful because today one of my candidates has decided to invest in the United States. It's the American dream. We even have a case study for this. there are everywhere, there are lots of headlines, there's lots of noise coming out about whether or not, people are still welcome in the United States, and there's one visa type that is still alive and kicking and thriving. It's called an E-2 visa, and I really believe that E-2 visas and franchising are a match made in heaven. And what I mean by that is, is that this E-2 visa says that if you go ahead and you invest a significant sum, which typically is about 100 to $125,000, in a American company and create American jobs, then you and your family are allowed to come into the United States. 

You can kind of figure things out. This specific path does not preclude you from getting a green card or actual citizenship another, in another way, but this is kind of a way to kind of get in and get started and have your kids in American schools. as opposed to other visas such as, things such as the golden ticket visa, you are able to do this in perpetuity and you actually have an asset if you have an entrepreneurial bent. 

And even more exciting, Roger, is that this visa works for 80 different countries, right? So for instance, my candidate was from, is from Brazil. he has dual citizenship in Portugal as well, which is an E-2 treaty country, he's able to come to Florida with his family, and his, the kids' grand-parents can be closer to them, and they can start a great business. 

His wife already is, working in, a clinical setting in Brazil, helping people that have issues with weight and using medically, medical, related therapy for that, and, they're able to do this now in, in, in Florida. So it's really a win-win-win situation. 

Roger: It does. See, it's, it's not easy to get a visa anymore in the United States. But one, yeah, it is really, and it's getting harder all the time, and they're, and they're even revoking visas right now. 

Adam Goldman: I saw. 

Roger: And I really like that because it is a positive thing. It adds to the country instead of subtracting from it. 

Adam Goldman: Absolutely. This visa's not going anywhere because it's literally creating American jobs. in fact, you need to go every five years and prove to the consul that how many jobs you're creating and you're going ahead and providing to Americans for this. 

Roger: And I, I tend to find that, when we have people coming into this country, wanting to come into, the country like that, they probably are more willing to work harder than somebody that's born here for the same thing. 

Adam Goldman: Look, we are a nation of immigrants. My grandfather was an immigrant, right? My great-grandparents were immigrants as well. And the people that are coming here and that are providing things for the economy and building things, they are the backbone of our country in many ways. 

Roger: Absolutely. That's a great program. If I were to flip the script, so to speak, I'm sure there's some people that you say, "This is not the right thing for you." How do you handle that? 

Adam Goldman: Well, look, I would say the number one reason why it's not a fit for someone is that it's typically, unfortunately, it's a resource situation. Many people have the resources to invest in this. So, most franchise brands are looking for people that have at least $50,000 in cash, a net worth over 150K. Many people that I talk to have an entrepreneurial bent, but don't necessarily have the means to do that, which is very sad, right? Even when it comes to getting an SBA loan or even an unsecured loan. So it's very hard for me, for someone that has an entrepreneurial bent, that doesn't necessarily have friends or family that could become financial partners to say, "Hey, look, this isn't the right path for you now." 

Roger: I actually thought that the requirements would be more than that. 

Adam Goldman: That's the shocking thing about franchises where, yes, McDonald's is over a million dollars, but I have many, many amazing service brands that you can get into for as low as about $125,000 all in, and that might be a situation where you put 30,000 of your own money and 95,000 from SBA loans, for instance. 

Roger: That's very reasonable. I'm surprised at that. You always hear about the McDonald's and the big boys and what they cost, and I didn't realize you could actually get into one for that low of a cost. 

Adam Goldman: Just because something's inexpensive doesn't mean that it's gonna be bad. So for instance, I have people... I have a acquaintance in Houston, started a service business with one truck. Now his business is doing in revenue over $10 million per year with a healthy profit margin. just because you start small doesn't mean that you can't scale.

Roger: Oh, absolutely. In fact, if, if you're gonna be in business, that's what you wanna do. You wanna grow your business. And it, that's what they call the American dream. You know, you want to start and build, and build, and build. And then at some point in your life, when you get old like me, you wanna sell it and retire, and have the money to have a nice retirement there. 

And of course, this is one model that can get you there. You could do it the hard way and start from scratch, or you can kind of go this way and, and have it built for you. And if you have not run a business before, and I've run several. I've started several and decided I didn't like them and went and did something else. 

But, it's not easy. It's really, really not easy. And another problem in this country is that, our education system doesn't teach business properly. They don't teach business at all, you know? And so unless you're very, very, lucky to have a mentor in this area, and those are hard to find, I think what you do really gives people a leg up where they wouldn't normally have. 

Because most people that, are running businesses today probably have failed at least once or twice until they finally got it right, until they finally learned what they needed to learn to run a business. And having managed franchises myself in the past, I mean it's a nice package, you know? If you follow it and you work hard, it's a nice package. 

And you speed up your education so, so much than starting from scratch. 

Adam Goldman: Yes. You're preaching to the choir here, right? It's, allowing people to do things they otherwise wouldn't be able to do. It's creating entrepreneurs. I liken the franchising world of, of allowing entrepreneurs who are riding bicycles by giving them training wheels for those bikes 

Roger: That's, that's a very good analogy. I like that. So, let me ask you, How is the franchising world, how's it changing? What are the trends going? What do you see coming up in the future that people might want to, be aware of? 

Adam Goldman: The, one of the most interesting trends is AI. That's a big trend in business, and I wanna argue that that's actually a positive trend for franchising. I saw an article in The Economist a couple weeks ago that talked about how AI is a godsend to American entrepreneurs, and it allows franchisees, just like any American entrepreneur, to run their business more efficiently, which means higher profit margins for them. Now, the one exception is if you are in a business that AI can somehow take over, right? Then that's a, that's a challenge. But many of my successful franchisees are in service-related businesses where AI cannot provide that service. AI can't clean a house or clean a pool, provide medical advice for someone, or actually do a workout for you, but it can help a business owner. So that's a positive trend that I've found in franchising. The other thing that I've found is that the whole idea of semi-passive ownership is becoming more and more hot. Yes, I have some brands that require people to be owner-operators, but franchise brands have listened to potential franchisees that wanna be semi-passive, maybe not forever, but at least start semi-passive, and especially ones that have ability to manage others. They're able to start this out without quitting their day job, and that's actually a positive trend for the franchising world. 

Roger: When you say semi-passive, are you talking about they just invest in it, but they don't operate it? 

Adam Goldman: The definition of semi-passive ownership is you are operating this, but it is not something where you've quit your day job. You're somehow able to juggle your day job and this business too.

Roger: That would be tough. You'd have to have, you'd have to have some good, good managers helping you out to be able to do that. 

Adam Goldman: Good systems, right? And one of the great things about AI, I even talked to a friend of mine who's an entrepreneur, and she said, "I have two employees, but I actually really have two and a half because Claude is my third employee," right? So, there are certain models that are more conducive than others to semi-passive ownership 

Roger: And what kind of task do your AIs do in a franchise model? 

Adam Goldman: Well, it depends on what the business is, right? But one of my favorite brands that's a, really it's a beauty brand, what AI's helped out with the most is in workflows when it comes to, when someone raises their hand and say they wanted to get a beauty appointment, to actually having them inside of the calendar system. So it's just really easy, right? Someone says this, and, it just, the system behind that, it kind of makes the system, like, 100 times better than it was before. 

Roger: Things don't get lost in the cracks, so to speak, 'cause there's a good system there. Yeah. 

Adam Goldman: Yeah. Yeah, exactly. But if it's an amazing, amazing system, when someone raises their hand and then say they want a beauty appointment, and somehow it gets in the calendar and everyone knows that it's coming, and this ... It's, it's ... What, what it does, the analogy is you have this amazing franchise model. In a real great world, the AI is making that model even more robust.  And like you said, things don't fall through the cracks anymore. 

Roger: Yeah. I use, I've started to use AI a lot. I just finished spending two months rebuilding my website from scratch. And, before it was, it's been five or six years since I did the original one. It was all coded in HTML and stuff like that. And this time, and I said, "Well, let me go talk to an AI." And in two months' time, I was able to do the entire website and, and have all the CSS code and, and totally customized from one to the other. 
 

I just, "No, no, I want it to look, this to look like that, do that, that," and, and here comes all the code. It, what would have taken me a year, it took me less than two months, and it's amazing what it can do for you. And, and I remember a couple years ago, we started getting, you know, they started, You'd call a company and this AI would answer, and it was just the most frustrating thing in the world to try to get this thing to understand what you're talking about. But just in the last six months, I've noticed a humongous improvement in these systems, the appointment systems and things. I mean, they are improving to a point where they're actually enjoyable to use now, and I think that's even just gonna continue and get better as we go. And so I think you're right that businesses are gonna have to incorporate into this, and it, helps them, give a leg up to the, to their competition that doesn't.

Adam Goldman: Absolutely. 

Roger: Yeah. 

Adam Goldman: Imagine if you have a head office and other franchisees that are great at using AI. My favorite franchisor, a really close friend of mine, has actually hired a data specialist to figure out how to help his franchisees, with AI. I think that's brilliant. I mean, you could potentially have a huge leg up if it's not only you, but all these other people in the system that are all working towards this one goal of better efficiency. 

Roger: Absolutely. And you have to be efficient. If you're gonna be a successful business. The more efficient you are, the more money you're gonna end up making. 

Adam Goldman: Absolutely. 

Roger: Well, this has been an interesting conversation. Is there anything that we've missed that you'd like to impart to the audience? 

Adam Goldman: I think that the thing is that many people that are franchisees don't wake up and say, "Oh my gosh, I wanna own my own business and I wanna buy a Chick-fil-A or something else." It's more a situation where they're, they kind of become a franchisee by accident, kind of like me. It's more a situation where, "Gee, I don't like what my job is," or, "I've been laid off and I'm whatever age that is," or, "I wanna have multiple streams of income." They kind of explore this and say, "Wait a second here. I didn't realize that this world even existed, and this is something very attractive for what I'm looking for." So one thing that's interesting about my business is that many people have misconceptions about this, and before they really look deeply into it, they, they don't really know what this world is. 

It's a very attractive world once you really look at it. 

Roger: Right. Having been in it, I understand that. So if people wanna learn more about franchising and what you do to help people get into that, how do they get a hold of you? 

Adam Goldman: Best way is go to franchisecoach.net. I offer free 15-minute consultations. My service, by the way, is free. If we make a successful match, it's the franchise brand that pays us a commission, not potential candidates. And if I don't think you're a fit for franchising, I promise to let you know. 

Roger: Can't get more fairer than that. Well, thank you, Adam. I appreciate you being on the show today. 

Adam Goldman: Thank you so much for having me. 

Announcer: You have been listening to the Mastering Business Basics podcast with your host, Roger Pearson. For more information about all of the business education options that are available, we invite you to visit seagulltechnologies.com and continue your journey.