551: Entrepreneurship Built for A Students?

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Most people assume a high income leads to wealth.

Sometimes it does. But more often, it leads to a very comfortable lifestyle that depends on getting paid dollars for hours.

There’s nothing wrong with that. For many people, the best path is to keep doing what they do well and invest their income into real estate and other real assets. That alone can create significant wealth over time.

But if you look at the people who build outsized wealth, there’s usually another element involved—they own something that scales.

The key difference isn’t how hard they work. It’s what they own that has leverage.

And that leverage typically comes from systems.

If a business runs because you’re there every day, it can be profitable, but it’s still tied closely to your time. When systems are in place, the business can grow beyond you. That’s when it starts to become a true asset—something with enterprise value that could eventually be sold.

For high-income professionals, this creates a bit of a dilemma.

You’re already doing well. Walking away from that to pursue something uncertain doesn’t make much sense, and I don’t recommend it (even though I did it myself).

A more practical approach is to build something alongside what you’re already doing—something that has the potential to become scalable over time.

There are a few ways to approach that.

Starting a business from scratch can work. I’ve done it multiple times. Some turned out very well, others didn’t. Candidly, being a startup entrepreneur requires a certain kind of personality—one that’s comfortable with a lot of risk. You have to have the stomach for it and, if you don’t, it’s better to recognize that early and stay away!

Buying a business is another option, but most businesses in the price range of a typical high-income professional aren’t that large. Smaller acquisitions often come with hidden risks—key personnel, operational quirks, and issues the seller understands far better than you do (and may be part of the reason they’re selling).

Then there are franchises.

What makes franchises interesting is that they provide a structured roadmap. If you were an A student—someone who is good at following a curriculum and executing—this model can fit your wiring well. Franchise ownership is about learning a system and applying it consistently.

You don’t have to invent the model. You’re executing one that has already been proven.

Of course, there are trade-offs.

Franchise fees can be significant. Upfront capital requirements can be high. And the advisory landscape isn’t always objective.

So the real challenge is figuring out how to evaluate opportunities in this space with a clear, unbiased perspective.

That’s what we cover in this week’s episode of Wealth Formula Podcast.

My guest breaks down how to think about franchises, where they fit into an overall wealth strategy, and how to approach them in a way that actually makes sense for high-income professionals.

If you’ve been curious about building something beyond your primary career—but want a more structured path—this is a conversation worth listening to.

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Transcript

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

Welcome everybody. This is Buck Joffrey coming to you from Montecito, California. And, uh, before I begin today, I wanna remind you once again, as I always do that there is a website associated with this program. It’s at wealthformula.com, and that’s where you go. If you’re interested in participating in this ecosystem beyond simply listening and, and watching, or whatever you do.

Lots of resources there on the website. In addition to that, I draw your attention to the Accredited Investor Club. Again, this is in a group of accredited investors. It’s basically a way to get access to private deal flow. If you are an investor, which you don’t have to go to school for, you just have to make enough money, $300,000 per year if you’re filing jointly, or a million dollars.

Net worth outside of your personal home and you are an accredited investor, go ahead and sign up for the Wealth Formula Investor Club because who doesn’t wanna join a club? The price is right because, uh, well, it’s free. All you have to do is get onboarded and the rest is just sit back and look at the deal flow and if nothing else, you’ll learn something.

Let’s talk today a little bit about how you can make some more money to invest because you know, most people assume. That high income leads to wealth. Sometimes it does, but I gotta tell you, more often than not, it leads to a comfortable, current lifestyle. Uh, that depends on getting paid dollars for hours.

And listen, there’s nothing wrong with that. There really isn’t. And I don’t criticize that. I don’t encourage people to do things that are out of their comfort zone For most people, the best, best path is really to keep on doing what you do well and invest your income in the real estate and other assets, and use that as your growth mechanism for wealth.

Uh, and that alone. It can create significant wealth over time. But if you look at people with outsized wealth, there’s usually another element involved, and that is that they own businesses, uh, they own something that can scale, and the key difference isn’t how hard they work, it’s what they own as leverage.

And what do I mean by that? Well. In this case, the leverage comes from systems, right? If a business runs, because you are there every day and you get paid for that amount of time that you are there, it’s, it can be profitable, but it’s, it’s got a upward limit, right? But when you get some systems in place, the business can grow beyond you and you might be ending up, you know, working the same amount of time or even less, but profitability goes up.

And that’s when it really becomes a true asset, something that actually has enterprise value that you can actually sell to somebody. Now, for high income professionals, you know, that creates a little bit of a problem, like how in the world are you gonna do that? If you’re working a full-time job as a physician, for example, it’s not like you have a ton of extra time and you’re already doing well, and walking away from that to pursue something uncertain doesn’t make a lot of sense and frankly.

For almost anybody. I don’t recommend it, although I did that myself. Now, a more practical approach is probably to build something alongside what you’re already doing. Yeah, it’ll be a little extra work, but it’ll be worth it. Something that has the potential to become scalable over time. Now, there’s a few approaches to that.

And the first one is what I have done multiple times, but just starting a business from scratch, and that can work. As I said, I’ve done it multiple times. Sometimes it turned out very well. Others didn’t turn out very well at all. But you know what, candidly, being a startup entrepreneur, it requires a certain kind of personality.

One that’s comfortable with a lot of risk, you have to have the coronary arteries for it. And if you don’t, it’s probably better to recognize that early and stay away not only for your own good, but for the good of your family and everyone around you. Now buying a business is another option. And I think, you know, you think about something that’s been there, it’s already proven its way, it makes money, it’s just less risky, right?

But most businesses in the price range that can be afforded by someone with a, you know, high income, a high income professional, that is, they aren’t that big. The businesses themselves, and the problem with smaller acquisitions often come with hidden risks. There’s key personnel that you don’t know about our operational quirks, uh, issues as the seller understands way better than you do, and may in fact be part of the reason they’re selling.

Now, that’s not always the case. It certainly isn’t, but those are some of the things that do come up when you’re buying a business that. Is not that big from somebody else right now. The next option is franchises. We’ve talked about this on the show a few times and I keep coming back to it because what makes franchises interesting, in my opinion to people like us is they provide us structured roadmap.

Now, when I say people like us, a lot of you were a students, right? You doctors and lawyers and professionals, whatever, and what you were good at in school. Following a curriculum and executing right, that’s what you were really good at. You had a model that you can, you can follow and do it really, really well.

Franchise ownership is about learning a system that’s worked in the past that’s worked for others, and applying it consistently. Now, you don’t have to invent the model like. For me, as a startup guy, I had to kind of invent the model, and that’s very risky. Um, I was younger and stupider, and it was, it was, it, it, it paid off.

But, you know, in your fifties and you’re already established, it may not be right. So in a franchise, you don’t have to invent the model all again. All you’re doing is you’re executing one that has already been proven. Now, of course, there are also trade-offs in franchises as well. I’ve been down this road before, and you’re gonna hear a little bit about my story there.

I never actually bought a franchise, but I thought about it. First of all, I, I noticed that franchise fees, well, they can be pretty significant. I, I started wondering, well, hey, how, you know, how am I gonna get any bottom line with this stuff? Um, upfront capital requirements, they’re, they’re, they can be pretty high.

Right? And again, even though it’s not a startup in the sense that it’s a new business concept, you still have sort of this. Upfront capital requirements, sometimes build outs and stuff like that. And then finally, the thing that, uh, I would say has been my experience is that the LA advisory landscape isn’t always objective and it’s difficult to find out.

And it’s not just about objectivity, it’s about like, you know, the getting to try type of information you want in your initial search. So the real challenge, uh, in this space is figuring out how to evaluate opportunities. Um, getting an unbiased perspective, really digging down, and that’s what we’re going to cover in this Week’s Wealth Formula podcast.

Yes, it is another franchise podcast, but this one is different, is with the starter, uh, founder and CEO of Franzi, which is kind of like the Zillow for franchises. I think it’s a really interesting concept. We talk a lot about the challenges of franchising, why it might make sense still for many people.

And then kind of go into what they’re doing over at Franzi, which again, I think is pretty interesting. You may want to check out, I’ll have that interview for you right after these messages.

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Welcome back to the show everyone. Today. My guest on Wealth Formula podcast is Alex Snick. He’s the co-founder and CEO of Franzi, a platform that helps people discover and evaluate franchise opportunities using data and technology.

He previously co-founded two U Laund and Lauro lab skilling, uh, the concept into a national franchise network with more than a hundred licensed sold. Uh, and today he’s focusing in helping aspiring entrepreneurs understand the landscape of franchising and really to identify opportunities across a wide range of industries.

So we’re gonna, uh, explore what that franchise world really looks like in 2026. Uh, Alex,

welcome to the show. Buck, thanks for having me. Excited to talk about what I think is the most overlooked path to wealth creation in America, and that’s the franchise business model. So thanks for having me on.

Yeah, you got it.

And so let’s, let’s start with this. How, how did you, you know, how did you get into the franchise business yourself? Were you, did you buy a franchise or what’d you do?

Yeah, so I’ve, I’ve been a serial entrepreneur ever since college. I did a, a laundry and dry cleaning delivery business my freshman year at Wake Forest, uh, down here in North Carolina.

Uh, learned more doing that than any class I took at Wake Forest. I was hooked on problem solving and doing the marketing and the contracts and operations, and started a venture backed. Laundry and dry cleaning delivery business in 2016. Raised $33 million in in venture capital for it over an eight year period.

And it was through that business that I got into franchising because we eventually started franchising part of that business. We started franchising the physical laundromats that we were building to handle all of the delivery volume, and I knew nothing about franchising before that. So we got a crash course on.

What is an FDDA Franchise disclosure document? How do you structure it? What should the royalties be? What should the territory rights be? How will people finance this? What’s the average build out cost mean? All the things that went into it. And then in 2021 started franchising. We sold 118 locations in our first year.

Um, saw the good, the bad, and the ugly of how people buy and discover franchises and thought. Hey, this is a really good model, but the way that people access the data do di uh, do due diligence, finance, these things, find the right fit, et cetera, is pretty opaque and not super transparent. And so that’s what’s led us to, you know, focus on franzi and what we’re building now, which is essentially the Zillow for the franchise marketplace.

Cool. Well, let’s talk a little bit about franchises in general. It’s not just fast food. How would you sort of. Put out the main categories of franchising out there today.

Yeah. So that, that was one of the surprises for me was that I, I think like a lot of people, I thought, oh, it’s McDonald’s, it’s Subway and it’s all food and you need to have millions of dollars to get into it, otherwise you can’t do it.

Or it’s these like emerging concepts that are very risky and not proven out and, you know, I don’t know if I wanna do that. The reality is, is there’s a very. Dense middle as well. And there’s everything in between. There’s home services franchises, there’s health and wellness, there’s hospitality, there’s early childhood development.

If you really pay attention the next time you’re driving around in a car or using a home services business, I’d say eight or nine times outta 10, it’s a franchise system. Um, franchising represents 8% of our country’s GDP. Uh, it’s a huge part of our economy. Um, and there are options for. Everyone on that spectrum, either you’re the, yeah, you’re more affluent, you know, you wanna be a restaurant operator to, Hey, I’ve got 20 grand in cash saved up and I want to get started.

There’s franchises under 150, a hundred k to get into that can do seven figures in revenue. Um, you know, once you get into them. So there really is something for everyone if you want to become an entrepreneur and if you wanna become a business owner, but you don’t know where to start.

Yeah. So of the categories in general, like which sectors do you think are sort of growing the fastest race right now?

Why?

Yeah. So food’s declining a little bit because I think it’s, you know, it’s saturated. There’s a ton of concepts, there’s a lot of new concepts. Replacing some of the old, um, home services is seeing a really big boom right now. I think it. There’s a departure from people you know, worried about losing their jobs to ai.

A lot of people wanting to invest in themselves and home services is something that AI is not going to touch or be, you know, replacing anytime soon, maybe in the future, but. Those tools when they do come out, will benefit the owners of those businesses. So home services is really big. Um, health. When you say

home

services, is that like cleaning services and stuff

or what?

It’s, it could be gutter cleaning, roofing. Um, there’s one that is a, it’s, it’s window boxes actually. They go install these custom window boxes on your home, and then there’s a subscription where they come and they fill new flowers, you know, once a month. And they even do themes like around Easter. They’ll do like Easter decorated window boxes around Christmas.

They’ll do Christmas themed window boxes, and you know, the average revenue of those franchisees is, is over $1.2 million and it’s window boxes. And so you, you have a lot of, of, of businesses and business models that I think you wouldn’t typically think of or would overlook that are quietly very boring, but cash flowing and cash printing, uh, concepts.

When you, when you think about, like, you know, and, and you’ve been, I guess mostly on the selling side of the franchise, not so much buying or is that, how, how do you, what’s your experience on the buying side?

So I’m a franchisee as well. Um, one in a, uh, uh, a, a golf simulator concept. Um, you know, so it’s no employees, no inventory.

They’re private bays. So I have five of those locations in Minnesota. And then starting to develop a food and beverage concept. Now that’s more of a, you know, snack kind of categories. It’s, uh, bagels, um. Lower investment to build out the location. Less employees, but still high, high AUVs, average unit volumes and high, high revenue still.

So I’ve, I’ve seen both sides.

When you’re looking at something as a buyer, because obviously you know this audience you’re talking to right now, they’re not gonna be selling them, uh, is you’re buying them. Like, what are the key metrics that you’re looking at to determine whether a model works?

Yeah, so I, I almost start with the individual and their preferences first.

So some people say, well, I just want the one that’s gonna make me the most money. And that might seem obvious, but a lot of people get into this for a number of reasons. It’s, they hate their job and they just wanna replace their income. Some people want Empire Build. They’re going for 10, 20, 30 plus units over a 10 to 15 year period, and they really wanna build this massive wealth generating and creation, you know, creating machine.

Others don’t have that aspiration. And so I always, when we work with individuals, I look for four things from them first before we even go look at businesses. And that’s Buck. Are you, you know, you know, risk seeking or risk neutral or, or risk averse of understanding people’s risk profile because there is something on every part of that spectrum, a Chick-fil-A or essentially buying yourself a job.

It’s almost guaranteed. You can only do one of them though, all the way up to, you know, white space, brand new concept with promising, you know, economics and a promising team. You could buy the whole market and develop 15 of them in your, you know, home city. Much more risk seeking though. So risk is the first thing we, we, we get to, you know, get a handle on the second is bucks, you know, financial readiness, you know, is this a huge bet for you?

Is this part of your portfolio? You already have real estate, uh, and you know, equity investments and other, you know, things there, and this is just. An add-on to the portfolio, or is this you betting the bank and you’re, you know, again, you’re, you’re, you’re stretching a little bit. So financial readiness.

Third is operational ability. What’s. Past experience. Are you really good at sales? Are you, have you managed teams of people before? Um, what is your personality like there operationally as well? And then the last one is ultimately, what are your goals and interests? Are you doing this for legacy for your kids and you wanna build a business with your family?

Are you doing this to replace a W2 income? Are you doing this to, you know, to generate somewhat passive, you know, cash flow as part of your other portfolio? Or are you empire building and this is gonna be a 10 to 15 year, you know, time horizon and you’re gonna go build out. 50 to 60 plus locations or acquire 50 to 60 plus locations over time.

So we start there and get a sense of the whole person, and then we use this ai, uh, algorithm that we’ve built to go scan the 4,000 brands that are out there. So we have every brand that you can possibly imagine on our platform, and we have things like AUVs, average unit volumes of revenues, the cost to get into them, how many units do they have opened or closed to determine, again, risk, uh, what’s available in the markets you’re after.

We have all the lenders that you need to, to, to get this going operationally. What do you need to be good at for this business to be successful? Is this a, uh, you know, owner operator model, an executive model, a semi-absentee model? We factor all of these hundreds of different factors into a. Calculus to then come back to you buck with your top 10.

And then it’s iterative from there. What do you like, what do you not like? What resonates with you? What fits your goals? And we can just get smarter and smarter as we do that exercise with you to ultimately find you the best fit. So long answer, but the goal is fit.

You mentioned, uh, lenders. How, how, uh, likely or is it depending on the franchise, is the SBA loan an option for brand new franchise, uh, owners?

I almost, I I’d say that, you know, the SBA is built for this. The SBA loves franchising for a number of reasons. One, you have a proven new system or somewhat proven, even if it’s only five units open and it’s a, you know, a, a nascent or an earlier brand, a bank would still rather that than bucket. Alex going off to go build a coffee shop for the first time, at least for part of a system that has playbooks and vendor relationships and a brand and a website and, you know, some of the, the things already figured out.

And so the SBA. You know, is the primary financing source for franchising. And a lot of the times you can get 80 per 80 to 90% loan to value. And so for a number of these startup or you know, these franchises you can get into for five to $25,000. If, if, you know, if you’re looking on the lower end of the investment spectrum all the way up to, you can borrow a couple million dollars in USBA, you know, financing for a restaurant or, um, other more expensive co uh, formats or concepts.

You mentioned like your own, some of the stuff you owned and. You own ’em in Minnesota? Do you live in Minnesota?

I don’t. So that’s the thing is I have a, an operating partner in Minnesota. I’m more of a capital partner. I’ll help with real estate site selection, you know, managing our books strategy. Uh, but my partner in Minnesota, he’s on the ground and he’s more of, you know, managing the team, looking at sites in person.

Um, going to see the stores in person. Uh, and that’s what I like about franchising as well, is you can get to a certain size. You can hire operators and, and have a full blown team in multiple lines of defense between you and the, the day-to-day operation of the business. Um, but at first you start out, you know, in the business, then it’s.

The thing I’ll say is you have to work. Uh, it’s, I do it, you know, at first, in the early days when you have less than five locations, then it’s, we do it when you start to have managers and GMs and then it’s, they do it once you have, you know, 10, 15 plus locations and you have a whole management team in place, GMs district managers, and they’re effectively running the business for you.

Um, and that goes back into fit, you know, what is your ultimate goal and what are you trying to accomplish with the franchise model and how far are you trying to take it?

Yeah. Yeah. And I, I was gonna, you know, that, that ends up being a little bit of a challenge for some of, um, you know, my audience because, uh, we typically are, so in some ways the franchise model sounds great, right?

Because, you know, I’m, I’m a physician, uh, I make good money. I’m, I’m invested in real estate, and I like the idea of, of doing something else. But, you know, I don’t have. 20 hours, 30 hours a week to devote to this. Is that, I mean, realistically, how big of a hurdle is that for people like, like me?

Yep. So that’s where there’s these, and that’s part of our, you know, franzi processes.

We’ll go ask you, is this a 10 hour a week thing, 0, 20, 40, full-time, et cetera? And there are. Concepts and brands that fit each of those, those answers, um, or there’s at least solutions. Many people, if they want a brand that has more hands-on requirements, they’ll bring a spouse on board. They’ll have them get involved.

They’ll bring a business partner or an operating partner on board with them. Uh, maybe it’s a family member, maybe it’s a son or a daughter. Maybe it’s a neighbor. Maybe it’s someone from. You know, there’s their network that they bring in. So like me as for an example, the golf simulators are very passive.

You can do that and keep your full-time job because it’s zero employees, it’s zero inventory and it’s all self-serve. It’s 24 7, kinda like a 24 7 unattended gym, and that kicks off, you know, a hundred to 150 grand in cashflow per location. And it’s like a nice. You know, cash flowing investment, that is an asset that’s also appreciating.

Um, and you can exit, you know, multiple years down the road if you want to as well. But it doesn’t require, you know, me to leave what I’m doing full-time to go focus on all the way up. So you’ve got the restaurant where there’s 30 employees and it’s a lot more hands-on. You need an operating partner at that point.

If you’re not gonna be involved in the day to day, and there’s tons of great operators that you can find out there to give five to 15% equity to that will treat it like their own. But you’re the capital be behind it. And you know, you’re maybe involved in site selection and some of the more strategic decisions, but outside of that, your operating partner will run, you know, they’ll run the business for you.

Um, and so the answer is yes, it’s, it’s, it’s possible, uh, just depending on. Do you wanna partner or not? Or do you want something truly passive? Um, and there’s solutions for both.

So I wanna um, tell you a little bit about my experience so far. ’cause you know, I mentioned to you before, Alex, I’ve had a couple people on the show regarding franchises.

First with regard to the franchises, uh, themselves, the one thing that I was having a real hard time with is a lot of the times that the commissions were. The franchise commission or whatever you call that, they were pretty high. I mean, they’d be like eight or 10%. And that’s off revenue. And you know, I’ve, I’ve started, uh, you know, three businesses in my life and I think about like what that would mean for the bottom line.

And it was really hard for me to figure out. The, the risk profile on that is really tricky, right? ’cause you’re, yeah, you’re giving 10% or 8% and you know, you’ve got a, say you’ve got a million dollar revenue. Um, that’s fine. But, you know, if, if you’re starting out, how do you, how do you navigate that? I mean, because that’s, that’s a big part, especially in startups where, you know, 10% of gross revenue could take you from being profitable, you know, to being underwater entirely So.

How’s that? What? What are your thoughts on that?

So you, for franchising, you know, one of the first questions I’d tell people to ask themselves is, what will the brand do for you in five years that justify, you know, six to eight, sometime 10 is the high, I mean, that’s the highest, and you’ll see, but six to 8%, you know, royalty.

What will the brand do for you five years from now? ’cause a lot of the value front is definitely there. They’re training you, they’re helping you find the right site. They’re giving you all these playbooks, materials, marketing tactics, and support. Technology, I mean, all this stuff that is valuable the first few years, but five years from now and you now understand the business, you become somewhat of an expert.

What justifies you paying multiple thousands of dollars, you know, a month or a year to be a part of their brand? And there needs to be an answer there. And so that’s things like, oh, well they have some sort of access to national accounts that I would’ve a hard time getting on my own because of the scale we’re getting, you know, these national partnerships that’s generating my location revenue and that is worth giving up, you know, six to 8% for or in, you know, food, for example.

Buck on his own can go buy burger meat for a dollar a pound, but I’m getting it for 20 cents from McDonald’s. And like that alone makes up for the six to 8%, you know, tenfold, you know, to do. And so like, there’s clear obvious answers. Some franchises don’t have a great answer. And that’s when you need to really ask yourself, am I better off doing this on my own or investing somewhere else?

And so I start, there is, what are they gonna do for me five years from now? And the math should always equate, it should always make sense that the 6% you’re putting in, you’re getting at least that, if not some multiple of it back. In the form of learnings, revenue, supply chain efficiency, technology efficiency, like you and I as a, you know, as an independent gym, might not go invest half a million or a million dollars into technology and wearables.

But Orangetheory has done that. They have whole wearables that they sell to their members. They generate additional revenue off that they all this additional data. Um, you and I as independent operators just wouldn’t, you know, just wouldn’t do that. And so we make up for the royalty and investments like that.

So you have to ask that question first. The second thing I look at too is franchising is a, it’s another asset class. It’s, it’s, it’s business ownership, which could be independent or franchise base, but I look at it as a, you know, return on investment decision and franchising. You know, listeners can go look this up historically has a, you know, 15 to 35% cash on cash return.

Where else are you gonna produce that type of outcome? Yes, there’s more work and there’s more. In some cases risk involved, but you are generating a substantially higher return on capital than you would in an equity, you know, where the average is eight to 11%, granted, way more passive. Um, but you al you also don’t have this, uh, you know, ownership piece.

Uh, and, and a and a business that’s, that’s cash flowing underneath it. And then with real estate, you know, real estate investors I think would jump up and down at a, you know, 13, 14% IRR 15 to 16% IRR. We’re talking double that. Franchising or in business ownership in general, whether it’s a franchise or not, and that’s, that’s inclusive of that royalty.

And so from a peer return perspective, I think franchising still presents one of the best performing assets there are. You just need to pick the right one and make sure it fits your, again, risk tolerance lifestyle, what you’re good at operationally and, and what your goals are.

Yeah, I, I think that’s an important thing to point out because the profit margin typically on any operating business, I mean, it should be.

Hopefully 20% you should be able to get a 20% IRR. And um, people look at that and they’re like, well, why am I doing real estate? Well, the reality is it’s a little different, right? Because if you’re in real estate, it’s not as much of an operating business. I say that with one caveat as when, you know, for example, we buy.

200 unit buildings, that’s a business, right. But

yeah.

Um, but there is, but there is a stability because people have to live somewhere. It is a big piece of, you know, concrete and all that stuff. So you are getting a higher return, uh, presumably if it works. However, you do have to understand that it’s actually work.

It’s a, it’s more work, right? You’re gonna have to pay more attention to it. You’re gonna have more, probably more fluctuations and stuff like that. That’s not to deter from it. I think it’s something that, you know, I as a, you know, guys started businesses like you, I mean, we, we know the value of that business when it starts cranking and, you know, and, and my strategy has always been take that income and then invest in the more.

Quote unquote stable asset in real estate. So, um, um, one, okay. Let, let me ask you something else, Alex, because this, this is actually kind of, uh, interesting to me because again, I’ve had an opportunity to go through this process before and obviously haven’t pulled the trigger. And the other thing I found frustrating for me is the, a little bit on the, the broker relationship.

And that is that he, my process is basically we, you know. And, and, and, and this is not to put down any brokers, but you know, uh, I think like when you’re talking about busy professionals, right? You, you kind of need somebody to really kind of really guide you. And what, I had a, a few experience where you would sit, spend 30 minutes or so going through a lot of the questions that you just, you know, you talked about with me.

Then you get just sort of a, you know, 10, uh, a list of literally 10 companies to look at and like, well. What are, what do you think of these? Well, I don’t know. I, I don’t know. Tell me about them. Tell me about ’em. I mean, you want me to go and, you know, I can just read about them and say, yeah, that sounds interesting, but I have no idea because what I’m looking at are metrics.

Like, how’s, how likely is this to be successful? Um, you know, what, you know, where, why, why is this a good idea? Um, you, you know, those kinds of things where you really dig into it. When people are thinking about this from. For me, it’s a lot about, you know, risk mitigation. I, I wanted to do something, I wanted to do something that was, you know, it doesn’t have to hit it outta the park.

It doesn’t have to be a 40, 50% cash on cash, but I wanted it to be a, uh, something that I felt like there’s, you know, higher risk of success and okay, if I’m getting, you know, 15 to 18% cash on cash, I, I’m cool with that. Um, instead of the 30. So I, I, I, I go, I, I’m, I guess my big question is how do you, uh, I don’t know how, what your process is and if it’s any different, but I find that it’s, there’s also a motivational element that I, I can’t say for sure that, uh, is true, but I get the sense that there’s certain ones that kind of get pushed at you and you’re not really sure why, but you kind of feel like there’s probably some.

Economic incentive behind it, you know, because it doesn’t really make sense why they’re pushing one so hard. Um, so, so, so tell me about that conversation, and again, I have no experience with your business folks know that I’m just talking to Alex for the first time. How, how are you different if you’re different?

Yeah. I’m glad you’re bringing this up too. And I’ll all. I’ll, I’ll let everyone in on a little secret on how the brokerage world works. And this is, you know, my main motivation and driver why I started Franzi and the platform that we’ve built is as a franchisor, I saw it firsthand. A lot of franchisees take their 4 0 1 ks, you know, use half of it.

’cause you can do what’s called a Rob’s rollover. Um. Which is essentially accessing early retirement assets without penalty to invest in a business. The IIRS allows you to do that. A lot of people don’t realize you can do that, and so I saw people Is

a tax free thing, is it? Is it

tax free? It’s tax free.

Tax free. No penalty.

Okay. Wow. Okay.

So many people don’t realize. I think the government figures, Hey, if we’re allowing you to use retirement assets to invest in publicly traded companies, why wouldn’t we let you invest in yourself if you wanted to start a business or you know, buy into a franchise? So it’s called a Rob’s rollover.

So I saw this happen and I saw brokers pushing these concepts, and as I learned more and more about how this works, I realized these brokers take a 60% commission on the franchise. He’s six zero. My dad was in sales for 35 years. My brother’s been in sales for 20 years. I’ve never heard of a commission.

That high in anything else. And so the incentive is. Very much there for these brokers to make sure that you buy a business, even if it’s not the best decision for you. And so I saw that and thought, one, this needs to be regulated. I’m not usually a big proponent of regulation, but this is like the wild west.

There’s no licensure requirements, there’s no disclosure requirements for brokers. So boom, buck, you and I can both be brokers in this very moment on this call. There’s no coursework like there is a real estate, you know, agent. There’s no disclosures like a real estate agent has, et cetera. And so high commissions.

Little to no reg, you know, regulation on disclosure or licensure. And so you get reached by all these people that you think are in your corner, and when you brought up, Hey, it seems like they’re pushing these same concepts over and over. You’re exactly right. It’s because those brands have maybe cut unique deals to say, Hey, we’ll pay you 70% instead of 60 or 80%.

And so they’re gonna try to push that concept. So at Franzi, what we’re doing is the same thing Zillow did to the real estate discovery and research processes. We’re democratizing access to all of the data we have. Every brand you can imagine, all the cost data, all the revenue data, how many are, you know, being litigated right now, how much bankruptcy has been claimed, how many locations have shut down.

So you’re seeing very transparently what is happening with this brand and in the system. And we’re leveraging ai. To curate that list for you. So there’s actually reason and logic behind it versus Alex saying, fuck, here’s your top five that I just made up, because they pay me the most money in the background.

Yeah. Um, so that’s the first thing we do differently. And then the second is our fee structure is we get a flat dollar amount from every brand that we help someone, you know, identify and match with. And. It’s the same across each branch. So we have no incentive to promote one concept over another. It’s truly what is the best fit for Buck.

And then we monetize other, other areas, lending referrals. We get paid, you know, basis points on loans we originate. Sure. But again, very objectively,

I think no one expects, you know, people I don’t, brokers or people who are facilitating things not to get paid. I mean, that’s their. You know, that’s what they do, that’s their job.

But I think just alignment is really important. And I didn’t sense that there was always alignment because it seemed like there’s some that I’m like, why are you so into this one? It, you know what I mean? Like it, so, so I, I was sort of, um, not, uh, not as, uh, I, I was turned off by that. Whole thing because I just felt like we’re not really, I don’t, I don’t feel like I’m really know what’s going on here and I’m not, it’s, I’m, I’m just gonna turn it off.

So that’s, that, that’s what happened to me.

I, I’ve had the same experience. I’ve talked to no, a number, you know, hundreds of others. I’ve had the same experience. And something that I think is also unique about buying into a franchise is if you, if you think about a traditional broker, whether it’s real estate, a car.

Uh, you know, an existing independent business. There’s, there’s, there’s a seller and there’s a buyer, and you’re gonna have some sort of negotiation. You’re gonna shake hands and you’re likely move on in your life and never interact again. If you’re developing a franchise business or a, you know, series of territories, maybe you have five that you’re developing over four years with this brand, you’re gonna, it’s a marriage.

You’re gonna be working with that brand for the next 10 years, at least. And so I look at the franchise brokers, they shouldn’t be brokers. They’re more matchmakers. It’s more buck. I’m here to guide you, educate you on what questions to ask, what to look out for, how to identify the right fit, how to find the right lenders, how to get your entity formed.

It’s these types of tactical things, but also matchmaking because. It’s not a buyer versus seller relationship. It’s a buyer and a brand who are going to now be in a marriage for the next 10 years. And it’s our job to make sure it’s a good marriage and a good fit. Um, and so even the idea of it being a broker I disagree with and, you know, the relationship and what the purpose of what we do and what a broker does in franchising should be looked at and done very differently.

So, so you’re, but once you, you describe it as sort of a Zillow process where you’re basically kind of doing a search and you’re, things are coming up once you decide. Um, well, so, so on that end, it’s sort of a do it yourself kind of situation.

We, we have a, a little bit of each, like for, for the very, like data analytics, self-driven, self-motivated people.

You can go all the way on our platform without talking to someone. You can get, you can find a lender, you can find the right brand, you can do it all on your, on your own, di you know, DIY. But then we do have access to expert coaches. They have been or are franchisees themselves for decades. They play that coach, that matchmaker.

They’re there to be on the phone with you whenever you want. It’s all free for you because again, when we place someone into the right fit brand or the right lender, we generate revenue and that’s what covers the ability to have those. Expert resources at your disposal for free. Some people come to us and they’re like, look, I’m a real estate investor.

I’ve been curious about this. I’m gonna take two or three calls with you just to educate myself and I’m likely not to do it. Great. We, you know, we’re there for that. If you’re coming and saying, Hey, I ca I hate my job. Mm-hmm. Or I’m the same real estate investor and I just wanna add you an operating business to some of my commercial sites, great.

We can, you know, we can help you find the exact right fit based on that market, the demographics, the complimentary businesses, et cetera. Um, and all of that is free too. The prospective buyer,

do some franchises not want to participate in Franzi for any, for any reason.

We launched about a year and a half ago, and we’ve had one brand say no to us.

They all look at it as, Hey, this is like us showing up on Google. We need to be out there. We need to be shown. And the value of a really good franchisee is worth so much to them because it’s a new location, it’s new revenue, it’s new royalties over a 10 year period. And so the cost that we charge is so low and so minimal.

It’s almost cheaper than a brand acquiring a new franchisee on their own, um, through traditional marketing, you know, methods. So brands are very aligned. Buyers are very aligned. We’re really just creating that, you know, what, what it was typically asymmetric information. We’re making it symmetrical and fair and open and honest.

And, uh, the process and the, you know, end result is just a lot more aligned and, and better.

What’s the secondary market on franchises? Like, so obviously people, maybe they accumulate. Maybe they only have one franchise, but they want to eventually sell it, whatever. Uh, what does that market look like? And, and.

To me, it sounds like it’s a very difficult market to penetrate.

Yeah, so that’s when I mentioned the 20 to 35% cash on cash return earlier, that did not include the terminal value or the exit potential by owning one of these businesses. Many people don’t realize if you and I own, you know, a Dunking Donuts versus Bucking AL’S coffee shop, we’re gonna get a multiple that’s one to two turns higher than you and I would’ve gotten as an inde independent shop because.

Investors, banks, et cetera, look at it as de-risked. You’re part of a system, you have a national brand, and so they put a premium on that. So your exit value’s a lot higher. Now, the liquidity that you asked about, you know, resales and what about people that you know own 10 units and they wanna sell to?

What typically happens is it’s hard for you and I as an outsider to get into these deals because Yeah, as a 10, 10 unit dunking owner, I might sell to the other Dunking guy down the road or the town over the other town. Over. Or the other town over. Yeah. And that’s great, but part of what we’re doing at Franzi is again creating more access to that as well.

Me as that seller. While the brand might like me to sell to another Dunking operator, ’cause it’s, you know, no, no training for them. They already know what they’re doing. They’re already in the system. It’s great for the Dunking, the brand, me as the seller. If my potential pool of buyers is just other Dunking operators, how competitive is that process?

And am I really getting the best price? And so Franzi is creating liquidity. As well in the resale markets. We do have resale opportunities on our platform so that me as the Dunking owner, I can go shop it to the Dunking, the existing Dunk Dunking franchisees, but I can also shop it to the Dave’s Hot Chicken franchisees, the private equity group that’s starting to get interested, the wealthy family office that wants to get into, you know, franchising.

And now I’ve got competition and I’m getting an additional half an X to one and a half X turns on my ebitda. And, you know, that can be meaningful, especially if I’m selling 2, 3, 4, 5 units in a, in a portfolio. This could be the difference of millions of dollars by having more prospective buyers.

Lots of, uh, lots of good stuff here, Alex.

So what, what have I not asked that you think is probably a good idea for, you know, an audience like mine?

Yeah, something that I like, I’m on the path for right now is like, you know, Franzi is a tech company. It’s a much more risky thing than a lot of other things I could be doing. But I also own, you know, cash flowing.

Physical brick and mortar businesses, which is my hedge against ai. Like I, I see how fast technology is moving. I see how many people are being displaced from their work, and I think that owning an asset, whether it’s real estate or a, a cash flowing business. It’s paramount right now. It’s like, to me it’s this hedge that I need to have and I, you know, implore others to take it seriously.

Again, whether it’s a franchise or not, this isn’t me, you know, promoting franzy. It’s just go, go own, own something so that you can have that hedge. And again, I think there is a wider range out there than people realize. Whether that’s the one independent or franchise location or. A brand that has three, 400 plus open, there really is something for everyone.

Um, and I do think there’s this mentality of, you know, you can go as small as you want and one unit can replace your income, or you can go after multiple units and it can change your life. I, I have a, a, a guest that came on our podcast. He started seven years ago in 20, uh, it was 2018. So, I guess eight years ago now, um, he had zero locations.

He started out with a butcher shop that wasn’t franchised, did okay with that. Then he bought one, uh, Orangetheory Fitness franchise. Did really well with the one, bought a second, bought a third. He’s now to 120 franchise locations across Dave’s Hot Chicken Marco’s Pizza. And a few other brands That business does around $600 million in revenue a year.

And seven years ago, he had none of ’em. He was a former finance guy, uh, worked in banking. And my point with that is there really is the ability to chase the American dream in this like guard, railed way. There’s playbooks, there’s a team, there’s peers. You don’t need to go start Uber or Facebook or some tech company to have these types of outcomes and you don’t need to go.

Have some crazy original idea. It’s if you’re a good operator and you know how to put deals together and structure capital. Franchising, to me, is the most viable and again, overlooked path to significant wealth creation in our country.

Yeah. Uh, so how do we learn more about franzy franzy.com or.

So the website, it’s the above my head here.

This is how it’s spelled F-R-A-N-Z y.com. And then we put out a ton of educational content. We have a podcast called How I Franchise This, where we tell stories of everyday people and their backgrounds and what they did to get to one unit all the way up to, you know, a hundred, a hundred plus units. And then I’m on LinkedIn, Instagram, TikTok, Twitter X, et cetera, as Alex from Franzi.

Fantastic. Thanks so much for being on the show today, Alex.

Thanks for having me buck.

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Welcome back to the show everyone. Hope you enjoyed it. Franchises are a great idea to consider, and um, again, it’s one of these things that I’ve been thinking about for a while.

I’m gonna myself check out this Franzi site. I’ll let you know how it goes and, uh, and you should let me know how it goes as well. If you’re doing some franchises, I’d love to know about your experiences, what you’ve done. What kinds of franchises you’ve actually, uh, been a part of and what, what your successes and, and failures were all about.

So shoot me an email at [email protected]. That’s it for me though, this week. This is Buck Joffrey signing up. If you wanna learn more, you can now get free access to our in-depth personal finance course featuring industry leaders like Tom Wheelwright and Ken m visit wealthformularoadmap.com.