Navigating the Franchise Landscape: Expert Insights with Giuseppe Grammatico

Speaker 2: 0:11

Welcome to Side Hustle City and thanks for joining us. Our goal is to help you connect to real people who found success turning their side hustle into a main hustle, and we hope you can too. I'm Adam Kaler. I'm joined by Kyle Stevy, my co-host. Let's get started. All right, welcome back everybody to the Side Hustle City podcast today. Giuseppe Gramatico, how you doing, sir?

Speaker 1: 0:38

Awesome, Adam. I appreciate the invite. I'm looking forward to the show today.

Speaker 2: 0:42

Yeah, yeah, I'm excited to have you on. I'm reading a little bit about what you do. It's very exciting to me because I'm always looking for passive income and ways to, you know, not have to be at the office every day necessarily, and not that every franchise is going to be like that. You got a lot of franchise opportunities that require you to actually be in the business working for sometimes a specific amount of time, and you know Chick-fil-A franchises are awesome, but you actually, I think with those don't own the franchise. You're essentially buying yourself a management position.

Speaker 2: 1:16

And then you've got other franchises, like Dunkin' Donuts you see popping up all over the place now in the Midwest. But the problem with those is you really don't. I mean, the margins really aren't that great. You don't make a lot of money. There's a lot of waste. Do you want to deal with food all day and run rats off? I don't know, and not that you know Dunkin' Donuts is a bunch of rats or anything run around. But you know every franchise has their own issues and they're not necessarily something that might work for you. And one of the things that you do is you talk to people, you target former executives, you have your own niche, and then you just have a conversation with them and say, hey, what's best for me? Well, here's, based on everything I know, maybe you'd be best suited for this franchise, is that? Is that pretty clear? Is that a pretty accurate representation there?

Speaker 1: 2:03

Yeah, you nailed it. A lot of people are looking at the franchise brands and they spend years looking at them and I go let's take a step back and just let's just figure out if owning a business is the right fit. But you know owning a franchise or a startup. So, absolutely, you know we spent a lot of time working in reverse and figuring out what's a good match based off of skillset and interests and investment, and you know part time ownership, full time ownership. So a lot of time spent there and at the very end which is the opposite of what normal, what people normally do, including myself when I first started that's when we look at the brands as opposed to starting with brands and trying to make them work and fit.

Speaker 2: 2:42

So yeah, yeah, well, I mean that's, that's important. I mean I've looked at a lot of things too, just because I mean I'm in the side hustle business here and you know, it's kind of like people ask me all the time Adam, oh, what do you think about a? What do you think about a Jiffy Lube franchise? What do you think about this franchise? Or that franchise? We had somebody on I don't know, maybe three or four weeks ago from Everest and they do vending machines that spit out water and ice and I mean there's no overhead. Really, you stick those things in a good location and you could profit. I mean, the profit actually looked great on it. So I mean people ask me these questions all the time about this stuff and I'm like I don't know, like it depends on what you like, and now, after talking to you, I have somewhere to sit.

Speaker 1: 3:28

Yeah, we could. We could definitely break it down, and that's the big thing. The biggest thing is, which is better? And I'm going to answer it.

Speaker 1: 3:35

You know, I've been doing this 20 years and it's very simple a startup or a franchise, and I always I always tell someone to do drumroll, and the answer is simple. There is no one is better than the other. It's all about what you're looking for, and part of what we do is education and telling people. Simply put, do you want the business built for you so that you can run with that business, you know, in 30, 60, 90 days especially, you know, if it's like a home service business or do you want to build that business from scratch and develop the logo and get a revender on board and such such a creative system from scratch? So one is not better than the other.

Speaker 1: 4:14

A franchise could give you that unfair advantage that I talk about, but it's not the right fit for everyone. So I like to really start there and then, once you make that decision, it's like okay, which are the brands? So, if I'm looking at, let's focus on side hustles, which are the brands that will allow me, and that's very you know. I want to be very clear allow me to be semi absentee. That will allow me to keep my job, because there are certain brands to your point that you have to be full time and there's nothing wrong with that.

Speaker 1: 4:42

You want someone to be full time in the beginning. Learn the ropes, learn the business before bringing on a general manager. And there are other brands that will support you as a part time side hustle, support you via. You know they'll train the trainer, they'll help find and train a general manager, they will provide a call center, they will provide turnkey marketing for you. So it will vary by brand. So don't look at just the industry. You got to look at the specific brand, because two brands that offer a similar product, one will be full time and one will offer part time ownership.

Speaker 2: 5:17

I like that. Well, I just literally the last two days I've been around these college students. There's an IT company here in Cincinnati. They have a bunch of interns. They said, adam, come up, talk to the kids, tell them about side hustles.

Speaker 2: 5:30

You know we don't want them thinking that you know if they've got a full time job, that's it. Right, I mean you remember. I mean you and I. You know we're about the same age. I mean you there was a time when your dad could go to work, your mom could have stayed home with the kids and there was enough money there. Right, I mean there was possibly a pension that was promised at one point, you know, in a generation earlier than us. There definitely was. Right, I mean you work at, you know, the auto workers union or whatever. There's going to be a pension that wife's taken care of. You know there's this and that. Well then the wife had to start working. Well then, the two incomes didn't work. Now you both have to have side hustles.

Speaker 2: 6:09

So you know, going in here talking to the kids, saying look, guys live cheap, like one of the problems that happens with people in America is is they get these jobs? You're working with executives. You know, the more money you make, the more money you think you can spend. Now you're living in a $1.2 million house out in the burbs, you're driving at Escalade, you're doing all this stuff. Well, all your disposable income is going out the out the window and you're not investing that in your freedom. You could live like you're still poor. I tell them. I said look, you're eating ramen noodles in school. Just because you got your first job doesn't mean you go out and buy a $3,000 month apartment all of a sudden. Be cheap, save your money, Build up a nest egg.

Speaker 2: 6:52

You probably talk to executives because a lot of times those executives have $100,000 in net worth. At least They've got $50,000 in the bank that they could probably throw at one of these things, because that's what you're going to need. You're going to need maybe 50. I've seen some of them up to $250,000. A million-dollar investment for a laundromat, for a Speed Queen laundromat franchise. A lot of capital expenditures go up front to buy the equipment and things to get your franchise off the ground. Is that one of the reasons that you said hey, look, I'm going to focus on these executives. They understand business for one. They know how to read the documents that these franchises give you, but also they do. They have some disposable income and they're looking to free themselves from the corporate world they've lived in.

Speaker 1: 7:41

Yeah, absolutely, corporate execs have been doing it. They've been able to hone their skills, whether they're in sales or marketing, whatever their skill set is and what they do. Well, they have a few bucks aside which, quite frankly, you'd be surprised that I see some really large incomes and very low net worth because you start to make more, you start to spend it on cars. Cars, for the most part, are depreciating day one as soon as you drive it off the lot, so you'd be really surprised. But yeah, my thing is, you got some experience, you've had your taste of employment and now you want to know what else there is. And the great part is we show people hey, you don't have to leave your job, you can keep your job and your income and your benefits and have this side franchise. And eventually we put together a time frame, maybe in two years, the transition out of the job and then full-time business ownership. I've worked with families, one in particular, where a person was doing really well, had this side business and never left his job because he's only working a handful of hours a week I think the last time we spoke was a couple hours a week, if that the business has been up and running for several years and he just kept his job because he loves his job and it creates. It's giving him that income, the flexibility he gets to work from home. So he's like, why would I leave that? So it's really up to you.

Speaker 1: 9:11

You may have this plan of what the next couple of years looks like, but in reality it can be flexible. You may decide to stay at the job a little bit longer because you want to acquire a couple of complementary brands. And, to your point, with investment, the investments are you have a franchise fee and then you have the all-in investment that they break down the agreement. So they could be anywhere from 50,000 to 100,000 into the millions. And that's when you're getting into standalone buildings with buildouts and things like that. But there are 70 plus different industries, 4,000 plus different franchises just in the US and Canada, from picking up pet waste to eyelash extensions, to business coaching, all the way up to your Chick-fil-A. So there's a franchise truly for everyone. It's just spending the time and being honest with yourself to find that brand.

Speaker 2: 10:05

Yeah, and it has to be something that's right for you and you know. I also wanted to ask you, like what are some of the if you could pick, say, three or four franchises that seem to be popular for the target that you're going after? Do you see a pattern? Is there like, oh, I want to do that, you know, or is there something that people always come to you asking for and then maybe you steer them down a different path?

Speaker 1: 10:32

Yeah, so I'll answer this way. So everyone is going to be specific, right? They're looking for a lot of the similar things like financial and time freedom, and then you have to unpack that dig a little deeper. But ultimately what I'm hearing and this is just what I'm hearing with the candidates we work with are we don't want food, we don't want a restaurant because of the margins and the build-out. So that's been very common. I would say. At least the last since COVID, I would say, has been a very popular comment. People that I work with may have an idea in mind. They like a certain bagel or they may like, you know, massages. So they want to look at that. And I said ultimately, we want to make sure that your role in the business matches up right. You could buy a Chick-fil-A franchise and get massages all day long, and vice versa.

Speaker 1: 11:22

So, you know, at the end of the day, you want it to be a good fit, but what I'm seeing are where the interest lies is, you know, people are wanting to keep their investments on the lower end and, with that being said, it rules out a lot of the brick and mortar retail types of businesses. So what we've seen a lot of, especially since COVID, because people are working from home is a home service-based businesses that offer home services, such as, you know, residential cleaning, roofing, siding, windows, painting, you know the list goes on anything to do with the exterior of the home, lighting and things like that. So we're getting a lot of individuals coming to us saying I want the investment to be on the lower end and I want it to be up and running relatively quickly, and the typical characteristic of a service brand is 30 to 90 days. That's a range, depending if a truck is needed or equipment, versus something that's brick and mortar that may take six months, up to a year plus, to get open. And these are ranges because it all depends on approvals and permits and things like that. So the interest has shifted towards a lot of service brands where you're up and running quickly. And you know, let's call it what it is right.

Speaker 1: 12:38

People are concerned about finding employees. So a lot of our brands we have a franchise around windows and doors and it's a one to two employee model utilizing subcontractors to do the work. So I'm not saying, you know, yes, a subcontractor, they have to find their own employees, but it's on the subcontractor to manage that part and it's kind of taken off your plate. There's no ongoing payroll. They get paid, obviously, after the job is complete. So we're seeing service with a. You know there's various pillars or elements where subcontractors are involved and you're keeping the investment lower, payrolls lower. You're solving and checking off that box, saying okay, the subcontractors are going to deal with that. And now you're talking about if you're going to be part-time, maybe two employees, if you're going to be full-time, possibly one employee. And that saves the headache. You know how hard is it to find one employee, you know, given your market. So that's been increasing in popularity.

Speaker 2: 13:37

Yeah, I had a my cousin. She's married to a dentist and he started a sandwich. There's a sandwich brand out there that was popular across the country that he purchased. It didn't end up working out for them and I think they ended up selling that franchise maybe a year or two into it, because this was before COVID. It was hard to find employees to work at that sandwich shop.

Speaker 2: 13:58

And you know, just being in, you know doing what I do. After 140 episodes of side hustle stuff, I'm realizing people are waking up and then talking to these kids the other day, yesterday and today they're just waking up to all these different opportunities. I mean you could door dash and make more than you do sitting working at a sandwich shop every day. You could Uber and make more money. You could rent your car on Turro and probably make more money than you're making at one of these places. So people are. There's so many opportunities. Now it seems like I mean, from when we were kids, I mean we had there was like five things we could do. You know, when we were in college you had to work at a restaurant you had to work at. I worked at a phone bank. You know it was awful.

Speaker 1: 14:38

There was no internet. Yeah, exactly there was that problem. The heck was that.

Speaker 2: 14:42

Yeah now you've got so many things open to you. It's crazy. So investing in a franchise that requires people, not only are you worried about going out and finding business, but now you got to worry about going out and find employees on top of that. So you're selling yourself to not just your customers. Now you're selling yourself to hey, why should I do this and not just go make a thousand bucks a week or whatever working at doing door dash? You know?

Speaker 1: 15:08

That's actually. It's a great point and I'm glad you brought that up. And that's a question we had this morning with a family I'm working with and I said you know, the particular business model we were looking at had one employee because they were going to be running it full time. And I said you know, that employee is a key employee. You're going to maybe need a second hire at some point, but the franchise company does all the marketing for them. So that's done. They have a call center, that's done and taken off their plate.

Speaker 1: 15:32

So what the franchise are and this is very common coming from our last conference here in Nashville, you know a lot of 130 franchise companies, ceos, founders, everyone in a room and having discussions and some of the big takeaways were how do you keep those key employees on? And the idea I don't know if you've heard of this is phantom equity. Phantom equity has come up quite often where your general manager or your key employee. You're not giving them straight up equity but you're giving them a percentage of the profits every quarter. So when you go to sell the business it's still 100% yours but they're getting, you know, 10%. Maybe they're earning their way up to 10% of the profitability of the company. So what is that? What problems that solve? Number one you prevents that GM from leaving because now they're earning up to just say, you know, 5%, 10%, 15% plus percent equity in the business and their decision making, progress. Decision making, you know, just another progress process, excuse me is going to be different, because every decision they make, they're going to look at it as like, all right, we have to ensure there's going to be a profit here. We're not taking a loss because I'm going to be getting 10 cents on the dollar for every you know, every dollar on profit. I'm making 10%, 10 cents, so that will number one they're going to think twice do we need to really bring on an employee? Or can we figure this out, you know, utilizing AI, utilizing some other type of method? Where can we cut costs? So it incentivizes them to stay on and incentivizes them to keep the headcount lower and it just, you know, incentivize them to make as much money as possible. So they get a base, they get a piece of the profits and typically, from what I've seen, people then tend to stay on a little bit longer because now it's like all right, if I leave for this job, I'm giving away 10% of the potential profits in the business. So that's a big takeaway.

Speaker 1: 17:22

When people say it's hard to find people and it's like all right, well, do you really need two people? Can the role be consolidated into one? Are you being competitive with your compensation? Are you giving them a cut of the profits? Because that alone, you're giving that cut. I noticed in my last business giving my general manager a cut of the profits. He's like you know what we can solve this utilizing XYZ. He went back to vendors to negotiate rates, lower our costs or payment terms. So that makes a huge difference. So it's finding people, and then stage two is how do we keep them in on, how do we keep them motivated and while reducing the headcount as much as possible?

Speaker 2: 18:03

And I have. I'm surprised. I've never heard of this. It sounds a little bit like stock options almost, but not as I don't know. It's almost seems like, hey, look, stick around, you're going to get it, if you don't, you lose it, kind of thing. Yeah, and it's. It actually makes a ton of sense. You want to incentivize people and you've got to be able to offer them something. They're not getting equity in Uber. They're not getting equity in DoorDash. You know this gives them something. They feel like entrepreneurs in a way. They're tied into this.

Speaker 2: 18:35

So if something happens, you know at the company, you know water, pipe, bus or something. You're out of town. Hey, I need somebody to go down and meet the plumber. They're not like well, I'm off the clock, right, I'm not going down. Do you want this business to stay open, like, let's get down there and knock it out, right, so you've got, you've got a little bit more incentive with the employee to go out there and do this stuff. Now you know what is, what is, what are the benefits? I guess People out here that you're dealing with are going to say Giuseppe, look, you know why. Why do I want to do a franchise? What do I want to bring on the franchise for, like they're just going to take a chunk of the money. You know I'm a businessman. I now had to run a business. Why don't I just start my own landscaping brand? Why don't I just start my own window cleaning brand? What do I need to? What do I need to franchise for?

Speaker 1: 19:27

Yeah. So you know that's a great question because you know, when people look at financials right, you know or performance, it goes back to financials. It's something easy to gauge, right? It's $50,000 franchise fee versus starting it myself. But I'm a finance guy, my first career was was on Wall Street, and you know it's opportunity, costs, time, value of money, and the list goes on.

Speaker 1: 19:49

So what I tell everyone and again not making the case for franchising, but distinguishing the difference is that you create a business plan. You don't need to pay 50K to start to launch that business. Maybe it's much less, but how long have you been sitting on that business plan? And then you have trial and error. So you try vendors, you try different CRMs and systems. You know you lose a thousand here, 10,000 there. A franchise is really going to get you up and running If that's your goal, as quickly as possible. As I mentioned, in some service brands you could be up and running in as little as 30 days. So you're benefiting number one from their systems in place. The trial and error they figured out the hard way via experimentation. They're not charging you the hundreds of thousands, if not millions, of dollars to get the system up and running.

Speaker 1: 20:35

Your everyone pays the same franchise fee, which is a one time fee, by the way, the ongoing, you know fees and the 5% royalty, 10% or whatever it is. You're getting something in return. So if you're, when you're doing your due diligence, if you feel like you're not getting anything return, I would say don't. Don't invest in that business. You want a business that's giving you something. So you can call it an expense, you can call it an investment, but they're doing something on behalf. Some franchise companies will have, just say, a 10% return I'm sorry, 10% royalty, excuse me, and in that royalty it's itemized. Maybe 5% is just for support, any questions? You have training 2% maybe rolled in as a call center, 2% maybe for online marketing and then 1% national advertising fund.

Speaker 1: 21:20

You know some some will bundle them, some will break them up, but you're benefiting in a big way because you're utilizing the system. You're getting up and running. We have a donut franchise, for example. It utilizes a trailer where they go to special events really high margins. They own the manufacturing plant that they make these trailers, so you could be up and running in as little as 90 days versus having to go out and buy from another vendor. So they control. You know that aspect of the business and you're getting better pricing since it's becoming. It's coming directly from the franchise company.

Speaker 1: 21:54

So there are a lot of benefits for those that want to get up and running quickly, let alone the added benefits of we call them annual masterminds, where you get to sit with 10, 100,000 of other franchisees from all different backgrounds, sharing ideas and best practices. That alone, I think, is just is priceless because you get to work with the other other guys you know and you know in your area and I'm in New Jersey and if at one point I ever want to sell my business, a broker typically could charge it a nice percentage. It could be anywhere from 10% or more. Some have a fixed cost. You can have your neighbor acquire you and save that fee. You pay maybe just a small transfer fee or those people can be your future acquisitions, which we've seen quite a bit for the brands that are doing really well.

Speaker 1: 22:44

The franchisees are really kind of selling and buying from one another. So there are a lot of benefits there for the person looking for that. We've even had people buy the franchise, get inspired by the system because the franchise or their goals are in line. As you grow, they make money on the royalty. They don't make money necessarily when you buy it. They make it on the royalty. So you get inspired with your franchise and because of that motivation and systems, you go back and launch your startup on your Word document, on your laptop. So we've seen that happen as well. You can own both. There's no limit as to what you can own.

Speaker 2: 23:19

Wow, yeah, now we had a lady on. She runs an organization here called Aviature Accelerators and it's a women's startup kind of platform and they help them kind of get you know, hey, what kind of business you want to start, similar to what you're doing for franchises. But the interesting thing that I took away from that was that there was a lot of women who started their own businesses at home type of businesses from you know, during COVID, before, as COVID was happening and they're still doing it at a much higher rate than guys were doing it. Is there now, when these women executives come to you, are they looking at starting a different type of business? Is there something that? Are there things that you would mention to them? Hey, have you considered this? Or are there things that they're telling you, where they're saying, look, you know, I need to stay home with kids. I've got this going on, I've got that going on. Are there different needs and are there different types of businesses that they're looking to start?

Speaker 1: 24:17

I wouldn't say so because what happens is whether the husband or wife, boyfriend, whoever's contacting me I make one request and I go. You know everyone that's going to be part of this business. If it's a married couple, we'd like both of them on that, at least on one conversation, to make sure everyone's on the same page, because having these conversations there needs to be a comfort level right. So-and-so is on board with it. Well, you know what? Let's have them get on a call because I want them to realize, you know, that there's an investment, that there's funding options. I want them to make sure that they're comfortable with it and they may come in and say you know what? I didn't realize. I can be involved part-time because I have a skill set of marketing and I could do some online marketing on the side. Or I have a sales background and I could do some networking at the Chamber of Commerce events and things like that. So really, I like to get everyone involved, you know, in the decision-making process and you know whoever it is. You know women, men, whoever's contacting me, you know, depending on you know if there's anyone else going to be involved in the business. I want everyone to be on the same page. I want to know their skill sets and I want them to understand that.

Speaker 1: 25:26

You know you may have an interest in a certain brand or service or product, but I want you to realize that if you're in a golf retail type of business because you like golfing, realize that your role is going to be, you know, dealing with lots of employees working holiday, nights and weekends. You know, let's look at what the role is. Do you have to be on a golfing franchise to enjoy golf or can you own a business coaching franchise and still be able to enjoy golf? So we really get into the characteristics. What does it look like? What do you want? What do you don't want? What are you trying to accomplish? If this is a legacy for your children or your family or whoever it is, we want to make sure it's a business that you know can grow, that there's additional territory. So we really spend a lot of time there. But it's really you know everyone I work with it's truly case by case once they start to explain the entire process.

Speaker 2: 26:21

Yeah, because I just know, if you know, my wife and I wanted to start a franchise. If we're like, look, we're both doing, stop doing what we're doing, it would be hard to find something that overlaps because we both have such different interests. And to find something that we're both like, hey, look, we want to work on this. I'm sure you've had those challenges too, with couples and everybody trying to get on the same page.

Speaker 1: 26:44

Yeah, and that goes to the and it's very, very interesting you bring that up because it goes back to the passion piece. And I'm all about passion. But I think where some people, including myself, you know I was very passionate about soccer, I'm a big soccer fan, but that doesn't mean I have to own a soccer franchise. It's also a quick path of losing my passion. So, when you look at passions, the passion, when I took another step back and said, okay, what am I truly trying to accomplish? It's to spend time with my family. We love to go to games, right, Big difference. Right, Love going to games versus having to do that in the business. We love traveling. We just got back from Europe. We love trying new restaurants. So, if you take a step back, what are we trying to accomplish here? And it's that time freedom. So what is a business that's not going to require nights and weekends? Maybe it's a business that operates normal business hours, like a business coaching business, where that operates nine to five, Monday to Friday, giving me the time to do what I'd like on the weekend and evenings.

Speaker 1: 27:45

And just because it's a business coaching franchise, you may be passionate about coaching and your wife can be a complete introvert. That's fine, because it's not what the service offering is, it's what's. You know what the roles are in the business and your wife may be. You know analytical, reviewing KPIs, financials, working with the accountant, working with the attorneys, doing all the back end which you're going to have in any business. So it's not necessary what the business produces, it's what your role specifically is in the business. So once I break down the role, it opens up. You know the ideas of various brands. So, whether it be a business coaching or a window replacement franchise, your roles in the business may be very similar, believe it or not, offering a completely different service or product.

Speaker 2: 28:31

So it's just amazing to me. Like you know, I've done a little bit of digging around on the internet and stuff, looking at franchises and everything. But I mean, in order to do what you do, I mean you've probably got this stuff just boom automatic in your head and there's new franchises popping up all the time. But I mean, how much of this stuff do you just like? Do you have to research versus like, you just know this stuff?

Speaker 1: 28:55

It's an ongoing thing, so we have twice a year we have meetings in person to meet with 100 to 130 franchise companies. Meeting face to face. Updates, challenges. You know what's working, what's not, what's been working since COVID. So we're constantly getting updates on brands.

Speaker 1: 29:12

Some brands are adding revenue streams, but the big thing is I don't do this all alone. We have a team that works full-time employees that are pre-screening companies on a daily basis. So they're meeting management of the brands, they're contacting random franchisees to make sure they're getting the supporter happy. They're reviewing the franchise disclosure documents, making sure that there's not a million lawsuits in there. And if there is, you know what happened here, because every lawsuit has to be disclosed. What's your training like? Right, so you may have a brand, a trendy brand that just sells itself. But okay, you're at 30 franchisees. How do you get to 50? And then how do you get to 100? Very few. There's less than 10% of franchises pass 100 locations or 100 territories. So how do we get to 100? Is there a clear path? And this is in no way replacing the due diligence and the coaching and everything we help out with and working with every family we work with, but it's a way of narrowing down the search to a manageable amount, to say okay, now you know this, 4,000 brands should we be looking at 4,000? That's, you'll never get 4,000 due diligence completed in 4,000 brands. Maybe we chunk that down to 50 or 20.

Speaker 1: 30:33

I present three brands to each one of my candidates because it's specifically based off of what they're looking for. So that's why we have full time staff. It's literally all they're doing is pre-screening brands and sometimes we're working with the brand. Sometimes maybe things change or the brand is having issues. They may come back and say we are no longer bringing on new franchisees which rarely happens, but it does because we want to restructure our training. So let's put a pause on everything, pump the brakes until we fix some systems.

Speaker 1: 31:02

So it is a lot of work, but typically, you know, we like to break down and the number one factor is is there availability in your market? Right, you're in one state, I'm in another. It may be available to me, but not available to you. So if it is not available, what else is out there? Do they allow full time ownership and or part time ownership? That's another way of reducing that list of, just say, 50 names down to 20. Is your investment in line, you meet the financial requirements.

Speaker 1: 31:32

Again, that's another way to whittle down the list, and usually we get down to two or three initially and work from there, and each one will have different ways of doing business. One may be B2B, one may be B2C, but it's a way to compare and contrast between the brands. So it's a lot of work. So, yeah, it's not always the same brands, it's you know. Let's find something available and a lot of times a good brand will sell out in your market. So we're looking for alternative brands that offer great support, that can help you flourish and do well in business.

Speaker 2: 32:05

Yeah, and it's not like you go to McDonald's and say, hey, mcdonald's, I want to open a McDonald's in my neighborhood. No, mcdonald's told you where you're about to go. Like you're moving. If you want a McDonald's franchise, you're moving to Omaha, nebraska. I'm sorry. Like you're going to be there or wherever right. Like you're not. You know there's those limitations. Are you open to the idea of leaving? Are you? You know Doug Deep and whatever city you live in?

Speaker 1: 32:31

Tech territory is big. So we'll come back and say this is a home-based business covering, you know, these three counties in New Jersey. Are you open to that? And that's a service-based business that doesn't need a brick and mortar location For the brick and mortars. We have a lot of people call us and say I have some commercial real estate, what can we put in here?

Speaker 1: 32:50

And it's not that simple because at the end of the day you want to find the brands you like and then go back to the franchisor and say these are some areas, you have availability in these in these three counties. Yes, great, now is this specific location? Could you approve that? And they're going to have to go back and do tests. Is there enough foot track traffic? Is there enough? You know traffic in general. How many cars are passing on a daily basis? Is it facing the main road? Is it not so? Is it in a Class B? Is it in a Class A building?

Speaker 1: 33:19

So the franchisor will have to approve the actual location and the franchisor will have to approve the actual territory. And the territory is for those service brands, because some brands will look for a specific number of populations, some will look for a specific amount of household income that they're looking for because their service or product is at a premium. So they're looking for, you know, households that are making over 100,000 in income. So, yes, everything has been kind of predetermined A little bit more work on the brick and mortar, but much easier to put together on the service side.

Speaker 2: 33:54

Yeah, and I, you know I love the website like some of the terminology used on here tired of feeling stuck in your corporate job, working 60 plus hours a week to make someone else rich. I mean, there's so many things. Not only am I feel, do I feel stuck, I'm also it sucks that I'm working 60 hours and oh yeah, by the way, I'm doing all this to make someone else rich. Like that is the reason I can't. I just I can't do corporate Like I can't. I just it's not in my thing, it's not in my personality. And you've got people who have that personality type, who have that entrepreneurial mindset, who just thought they had to go work in a corporate setting. They just thought that you, this is what you do in America, right?

Speaker 2: 34:34

You go to work and this is what you do, right, and they're miserable.

Speaker 1: 34:38

And I don't know, they don't know, they don't know, they don't know, they don't know, they don't know, they don't know.

Speaker 2: 34:42

They can just go to you and you've got these soldiers that are just out of here all the time digging into these companies and trying to figure out which ones are worth it and which ones aren't worth it. I mean, it's amazing, actually. I mean the fact that, like there's a resource out there, like you, who they could go to, that already knows. Like, let me just talk to you. Find out what your personality, what are you into? Like, if you go to a job, they don't sit down with you and say you know, giuseppe, what are you?

Speaker 1: 35:11

into.

Speaker 2: 35:11

What do you like? Let's do a personality test and then let's put you in a job here. Let's put you in something that suited for your personality. They don't do that. You know you're going to do this and this is the one thing you're going to do for the next 40 years, and then we're going to give you a gold watch, right?

Speaker 1: 35:28

And give you a little hopefully a little bit of a pay raise throughout every year.

Speaker 2: 35:32

And maybe yeah.

Speaker 1: 35:34

And that's the thing. My goal is just to empower and educate people. Most people don't know we exist. I'm not the only person that does this. There's no cost, there's no contract or the franchise companies pay us our fee. So it's just like an executive recruiter, a real estate agent. I tell everyone, you know when they, when they look at insurance and all the various things to protect themselves, a business or a side hustle, again, doesn't have to be millions. It could be much, much less of an investment with plenty of funding options. It's your safety net. You know you're protecting yourself from the next Amazon or tech layoff that we've seen or whatever industry we're looking at.

Speaker 1: 36:12

So you got a job is one income, one revenue stream, and we blindly invest money into a 401k that we don't manage, that we're putting in the hands of the five mutual funds that the employer has given us and some other managers, hopefully trying to beat the S&P or whatever their benchmark or index is. Why not have the side income offset some of your W2? Protect yourself in the event of a layoff? What are they giving you when you get laid off? A month severance, a couple of months severance. So this is a way of generating some income, some major tax benefits. You know your first year in business may not show a profit, could show a loss. You can offset your W2 income. So there's tax strategies, advantages and overall diversification and guess what, With all the profits, I have my own retirement plan.

Speaker 1: 36:59

I invest in whatever I want. I don't have the five funds that I have to invest for my employer. I can invest. There's so many different options. Right now I have it strictly in the stock market, but I'm not fixed mutual funds. I can own equity, I can own index funds. There's so many different options. So, and I can invest what is it in? A SEP IRA up to 66,000 versus whatever a 401k is.

Speaker 2: 37:21

Well, you can do a SEP 401k too. If you have your own business, you can do a SEP 401k and you can actually invest even more Correct.

Speaker 1: 37:28

You can invest as the individual and as the business.

Speaker 2: 37:30

So yeah, which makes it even more awesome. Well, and the crazy thing is, I come from the startup world. Right, we built a business, we sold it, we got up to over 200 employees and I was one of the early founders in that business, and then my co-founders kind of ran with it and built it up and did their thing, but when we sold it, there was only there was a stat One, and I think 100,000 startups ever do what we did, one in 100,000. When you do a franchise, you're not just, it's not a shot in the dark. This is a model that's worked in hundreds of locations, possibly thousands of locations around the country.

Speaker 2: 38:15

You know, people are the same. Cities are starting to even look the same because of franchises. Like, let's be honest, there's a hotel in New Jersey off the highway Looks just like the hotel here in Northern Kentucky right off the highway. Any exit you find the same stuff. There's a Chipotle, there's a McDonald's, there's probably a Burger King. You've got all these things and everything is getting kind of commoditized in a way, and the reason they do it is economies of scale, the reason that these things are the way they are, and every white castle looks like a white castle every, because it's cheaper to do it that way instead of these one-off things, and it's kind of putting mom and pop businesses out, you know, out on the street in a way, because these people can do it a lot cheaper and a lot faster and it's proven. You're investing in something like that. You're investing in a system. You're not investing in a Burger King, you're investing in Burger King system, right?

Speaker 1: 39:12

That's exactly it. And, by the way, to add to that, and you own a. Some of us said, well, they own part of your business. No, you own 100% of your business. You pay a royalty, just hypothetically 5%. It's not like you're giving away 5%. You're getting something in return, but you're not giving away equity, you own that business and economies of scale. I had a painter contact me and said I have my own business for 20 years. I'm thinking about a franchise. I said why? And we talked about and he said just the vendor relationships alone, helping me find my labor and the discount I get alone will offset the franchise fee, and that was his comment to me.

Speaker 1: 39:50

So there are and I'm not saying that's the case for every brand, but that's what he came back to me with. This is not me telling him this, so it's really interesting. But the economies of scale are huge because they're saying, okay, we have another brand that helps. The term they use or the line is we try to make your home, instagram, ready to sell the franchise or offers an in-home studio, a design studio. So all you have to do is take a picture of a home, the franchise or does all the work, and then you provide the labor and the actual, the actual work to be done. So they'll make all the recommendations. But the studio is in one office, there's a team. They do it out of one location via technology, via video and cameras, and that alone saves you trips. It saves you employees that you'll need. So there's so many great options out there, but keeping in mind you got to find because people say, well, how much more successful I'd be, and I say, at the end of the day, I don't like using stats because you know how was the study run and franchise will increase your odds of success, can increase your odds of success, keeping in mind you bought the right franchise, that you were properly capitalized, that you follow the system. The number one reason I see people franchise these fail is that they don't even follow the system. They buy it to be run a different way.

Speaker 1: 41:08

So the good franchise brands will interview you kind of like a job interview. They want to make sure you're a good fit, they want to make sure there are no red flags, that you're going to follow the system, and that's why they have financial requirements. They want to make sure that day one, if it takes you a couple months to generate a profit or generate some revenue, you have a cushion, you have liquid capital there. You know at least you know three to six months working capital, because if the franchise investment is 100,000 and you come in with a total of 100,000, well what happens the first month? Who's going to pay your employees and your rent when you invested the entire sum into the franchise? So the better brands will interview you and at the very end they will award you, based off of how the meetings went, the input making sure there were no red flags, because they want the right fit. You know you're an extension of their brand. So they truly spent a lot of time finding the right partners.

Speaker 2: 42:02

Well, you know what the funny thing is too. One thing I've noticed is you know, I've got a lot of friends who you know they've got disposable income They've. You know they're professionals. What they end up doing is is they end up flipping houses or something. They get into real estate. They think that's the way, and you know what. Real estate's a great game. The problem is it's getting very saturated, and I think it's because of all these shows A&E and Discovery.

Speaker 1: 42:24

Channel.

Speaker 2: 42:25

Flip this house, Flip the house, you know they oh, I'm going to go in and take this whole beat up house and I'm going to make you know 20, 30 grand off of it and it's. I don't think they know how much work it is. And, and you know, finding the right contractor sucks and people show up drunk and they don't show up at all or they finish half the job and now you've got to finish it. Like it is tough and there is a lot of people out there doing that kind of thing right now and it may not be necessarily suited for you. So when these, when these franchiseeers are interviewing the possible, or when they're interviewing me, they're going to say they're actually helping me out because if the franchise isn't right for me, I don't have to do it. I don't have to invest a bunch of money in a house just to find out.

Speaker 2: 43:08

I'm not good at building a house, I'm not good at doing this, I'm not good at managing employees, that type of employee. They have so much of the stuff in place. It's almost like if you just did the work, follow the process, like you said, you're gonna make the money, and they could even show you a lot of times project how much money you're gonna make, Depending on where you're at, they've got the data, they've done the research, they've got, hopefully, hundreds of thousands of use cases and say, look, we could the median franchise in an area like yours, with a population like yours, with a household income like yours, you're probably gonna make about this much money.

Speaker 1: 43:53

Yeah, they're gonna help you put together proformas. Obviously, they can't guarantee what you're gonna make, but there's gonna be a proforma. There's gonna be a low kind of and a high investment. It's called the item seven, with an itemized breakdown of the investments and everything that goes along in the investment, including three to six months working capital. But, yeah, they will assist you because you also have to gauge how many locations, how many territories do I need to offset my $300,000 income. It may be one location and maybe three, so you wanna put together the best number. So they will provide you stats, which is the first phase of the franchise due diligence process.

Speaker 1: 44:30

And the second stage, which is my favorite part, is validation. You're gonna speak one-on-one with franchisees. You're gonna have group calls. You're gonna have prerecorded calls for guys that are working that need the information maybe in the evening that I wanna listen on their time and basically you're gonna go back and say, realistically, what was the investment? Realistically, as a part-time owner and a full-time owner, what could I make my first year? And you're not gonna talk to one, you're gonna talk to five, 10. Maybe a dozen, maybe more, but you're gonna get averages and say, okay, well, this is based off of this. But I'm in New Jersey, so maybe I have to factor in a little bit more on the wage or a little bit less on the rent or wherever you are. So you wanna put those in kind of a high, medium and low amounts and figure that out, because that's gonna affect your overall investment and what you can make.

Speaker 1: 45:22

So, keep in mind. It may happen quicker, it may take a little bit longer, but you wanna general idea of what the costs are If you're involved full-time and if not, you wanna make sure to factor in a GM's salary if you're gonna be keeping your job. So the franchisor will educate you the best they can. You speak with the franchisees and ultimately, with that information, you're like okay, I have a general idea of what we can do. I'm gonna start off with two territories. Maybe I'll develop one year one, develop the other, year two, and by then I'm gonna be doing X amount of revenue at 20% and this is what I'm gonna be netting. So, yeah, they will assist you, but ultimately, as any other business, I always say there's no guarantees. But they can give you kind of averages profit and losses, potentially of other franchisees. So you have all that data to work off of.

Speaker 2: 46:11

Yeah, and there's on your website here it says 4,000 franchise companies. I mean that's just too many to have to go through on your own and chances are maybe you can. What vet? Maybe 10, 15, 20, that's reasonable If you really wanted to dig in. I mean that's. It just seems like you're gonna pick something wrong. I mean, just go to somebody like Giuseppe here and do that. I mean you've got a 25 minute long video on your website. Talks about the buying process. There's three big challenges that you go over facing any successful executive who's thinking about potentially getting into becoming a franchise owner. You've got the five key changes to go from getting stuck working these stupid hours trying to make somebody else rich. You've got a four step process for starting the journey. You've really broken it down to help people and they could just go on the website ggthefranchiseguidecom the letter G G, g the franchiseguidecom. Watch the video. You make it really easy. You've got a book that you're giving away for free franchise free.

Speaker 1: 47:18

Right here, right here, talk about that, yeah, talk about the book.

Speaker 1: 47:21

It's a 48 pages, 30 minute read and it's my entire process summarized in a book. We actually recorded a few podcasts transcribed. It had a copywriter in there cleaning it up with some case studies and it's my exact blueprint. It's everything that I did. So if you're not ready to chat, you could download the book for free. Shows you exactly how to decide, figuring out if a franchise is a good fit, how to go about finding a franchise. I go into details like putting together a team where you have a financial advisor, your accountant, cpa, your franchise consultant, broker, attorneys, putting that team together. But I break it down in 30 minutes. If you're not ready to chat and you can use that, I bring to the table, obviously, the experience and the brands that we can talk about and when we make introductions, the brands are contacting you pretty quickly day or two, typically the same day versus. Let me just blindly fill out a form on a franchise website. I think the odds of getting any response is 50-50. Many cases, states and areas are just sold, so they don't have the time or the manpower to respond to every email. So we're saving you the time.

Speaker 1: 48:37

I had a gentleman I worked with. He spent six hours researching a franchise on his own, contacted the brand directly, found that his entire state is sold. Wow, he was not willing to move and I said well, we won't get to that stage, we will. That's one of the first checks. Do you have territory available? No, okay, is he open? He's in New Jersey. Is he open to moving to New York or Pennsylvania, delaware? No, great, let's rule them out, and it's as simple as that. So we take a lot of that off.

Speaker 1: 49:03

But we also we help in the very beginning. Should you own a business at all? And we talk about that. So sometimes I have to, I gotta give some tough love to some people and maybe the franchise is great and it's a perfect match.

Speaker 1: 49:19

But we decide, hey, the timing isn't right, the financials aren't there. You got about. You know, you need a little bit more in liquidity to get you there. Why don't you save for the next 12 months and maybe not vacation, maybe not go out to eat so often, and kind of build up that nest bag? And so I work with people. Sometimes they'll buy, you know, a franchise year, two years later, after fixing their credit score and their financial situation. So anyone that has any interest in franchising, you know, reach out, it's 20 minutes. If the timing isn't right, for whatever reason, then we talk every six months. You have access to the book, the podcast and the webinar. So between those three, there is plenty of info, from franchising to exit strategies, to everything in between. So your investment is 20 minutes and the service is always free.

Speaker 2: 50:07

So yeah, giuseppe, why not? Yeah, why not? This has been great. I mean, you don't seem like you're gonna. You know high pressure sales. You're not. You're not sweating it. You're like look, if it's not right for you, I don't want you coming back on me two years from now and saying, giuseppe, you told me to start a business and I suck at starting a business.

Speaker 1: 50:23

I mean, some people are just institutionalized, you know, they just need to have a boss for some reason, and that's fine, because the franchise, the franchise companies, you need employees as well and that's and that's fine. Maybe they can get some fan of equity. But the worst thing I could do is say yes, you have to buy, everyone should buy a franchise. That I talked to. The franchise companies are gonna come back saying you know, you sent me so and so, but they told me that they don't. They don't want to invest any money, they just want a franchise given to them. Obviously, we're gonna filter that out. So if your intention is to buy, no money down you know a lot of these ads you'll see on TV on home no money down. You could buy real estate. I don't know of any franchise with no money down, unless it's a special kind of funding deal where the franchise or is gonna be funding primarily. You know a big chunk of the franchise fee, but there's no. You know this is it. Everyone pays the same franchise fee.

Speaker 1: 51:13

If you're a veteran, you know certain people will get discounts and they offer discounts First responders, veterans, minority, you know women owned businesses. They'll break it down depending on the franchise itself. So sometimes there is a discount on the franchise fee. But the cool part is you don't need experience in these brands 99% of the time. So if you have the skill set and you're willing to follow a system, for example, a cleaning company has a lot of people. If you have good management skills and a willingness to follow a system, you know you may have not ever cleaned your home ever, or your apartment. You know they're looking for people that can truly follow a system. They will teach you how to clean, they will teach you how to find a manager, to find cleaning and you know personnel. So you know, obviously you know the 1% do require some experience and if you don't have experience but we won't look at those brands. It's as simple as that.

Speaker 2: 52:07

I love it. I love it. Just happy man. Thanks for being on the show. Actually, you've cleared up some things for me and you got me fired up. Now it's like I always thought it was all me. You know, like I would have to do it, I would have to be the one that goes out and does the research and everything. So it's good to know we got somebody out here that's, you know, looking after our backs and doing the research and has an actual team of people who do this all day and go to these events Vegas things and, you know, nashville it sounded like and actually vet some of these companies, and I would be very cautious of any franchise that said, hey, no money down, don't? You know? You don't have to put anything in, you don't need any net worth whatever. I mean, that sounds desperate, so I probably wouldn't go to one of them.

Speaker 1: 52:49

Yeah that, yeah that I don't see many of them, and maybe just because it never passes our screen. But yeah, you know, fine, really fine. You got to be comfortable If your gut's telling you, now figure out why. But if they're pressuring you to go out, you know, meet with the French, the founders. On the first call I would say it's probably someone that's looking for a quick sale. Because why would you, you know, spend money or spend the weekend or a couple of days to go visit a brand when you know nothing about it? You know that's later on in the product. And I also outline when to expect certain things, when you should go to an event. In many cases it's like dating it's the first date. Give it a shot. You're meeting one another. See how the second date goes. If you're going from first date, let's talk about wedding plans and meeting the parents. You know that's kind of moving a little bit too quickly.

Speaker 1: 53:36

Yeah so I would advise people that's way too quick. I would not like that, I would not be comfortable with it and there's a whole process and I outline that for every person I work with.

Speaker 2: 53:48

This is great, giuseppe. So you know, get on the website guys. There's a way for you to get on there and fill it a form, or give him a call and set up a call, and that's how you get started, right, that's it.

Speaker 1: 54:01

Book a call, we'll talk it through. If you're not ready, download the book. But our conversation I may come back to you and let you know these are some options. If it's not, I'll put you in touch with my other. With my, you know, did 156 shows, I put someone in touch with a career transition coach where they just were looking for a new career and that's not a problem as well. So we have those connections LinkedIn profile creators and editors. You know we have those connections as well for those that maybe the you know, the timing is unright, so we're. If we can't help directly, we know someone that can.

Speaker 2: 54:32

That's right. The franchise GG, the franchise guidecom. Thanks a lot, giuseppe. Thanks, adam, it was appreciated, it was fun. Thanks for joining us on this week's episode of Side Hustle City. Well, you've heard from our guests. Now let's hear from you. Join our community on Facebook, side Hustle City. It's a group where people share ideas, share their inspirational stories and motivate each other to be successful and turn their side hustle into their main hustle. We'll see you there and we'll see you next week on the show. Thank you.