Top 4 Businesses You Can Get Into Right Now (Low Cost) Transcript, AI Summary & Key Points

and you're making over half a million dollars a  year. I think franchising is probably the most overlooked path to wealth creation in America.  It's super accessible. The revenues are high. The cost to get in is low. You can get going in  less than 30 days. Okay. I like to go fast. How are people out there buying franchises with  none of their own money?

There's an express loan where you can get half a million dollars  in less than 60 days. Wow. What would you say is the cheapest franchise concept that you  would put your own money into right now? garage renovation business. They do like epoxied  floors, custom shelving with slapboard and stuff. The average revenue is over a million. No  heavy equipment.

There's clearly a ton of demand and not a lot of supply. Is Subway the worst  franchise deal in America? Defend your answer. My friend Alex knows more about how to get  wealthy from franchising than almost anyone on this planet. So today I flew him here to Dallas,  Texas to ask him, "What franchises can I get into with a very low startup cost and a very high  profit potential?

What should we look out for in a franchise that appears to be legit but is  actually shady? Which franchises are fads? Which are the next big thing? What are some overlooked  franchises that are making people millionaires? And specifically, what are the four best franchise  opportunities in the world right now?" Alex, you probably know more about high-profit potential  franchises that don't cost that much to start than almost anyone on the planet.

True. I've True.  I've read thousands of what are called FDDs, franchise disclosure documents. So, I see average  investment range, average revenues, and today we've got some of the most interesting lowcost  but high revenue potential franchises you can get into. Okay. And that's why you flew here today  so we can break these down. I want to talk about franchises that are popular, that are growing in  popularity, but they're not like crumble and it's just tired.

There's no opportunity left, right?  Franchises that don't cost a ton to start and that have proven profit potential, not just like  hopes and dreams on a spreadsheet, but you can look at their publicly filed franchise disclosure  documents and see provably that they're profitable and that there's a lot of promise left in them.  We're still early on them.

Cool. Let's do it. Okay, I have in my notes here freight brokerage  franchise. Yep. So, the first one I brought is a really interesting business. It's in the freight  brokerage category, which essentially is you in an office. It could be at your house. It could be a  small office where you're helping people that want to move goods, uh, pairing them with carriers that  have, you know, trucks and logistics and routes, etc.

and then you're making the spread on  what that vendor is willing to pay to move their items and what the supplier is willing to  charge for moving those items. So, you make the difference. It's really B2B sales. So, it doesn't  cost a lot to get into this, but some of these individuals are putting up really big numbers.  Let me pull exactly what the average is.

So, the average franchisee in this business is doing  over a million dollars a year in revenue. And this is a mature UK and Europebased concept that's  moving to the US for the first time. They're actually headquartered here in Dallas. Okay. So,  you say a million a year in revenue. That's not like an industry-wide statistic. This is for this  franchiseor, this brand specifically.

Okay. Yep. So, I'm flashing back to high school. It's been  a good 22 years now. My best friend was Chase and his dad owned a freight brokerage company and  it was his dad's that he inherited from him. And Chase will inherit it from him. And I I'll never  forget this because I'd go to Chase house and like, "Oh, where'd you go on vacation?" Salt Lake.

Oh, I just shipped a load of onions from Atlanta to Salt Lake. Oh, where'd you go on your mission  here? Oh, I just shipped a bunch of cabbage. Like, that's what he did. He He would pick up the phone  and say, "Oh, you need this load moved. All right, I can do it for this much, this much. You can  leave on that." And then he would just take a margin on that shipment.

Is that accurate? That's  exactly how it works. Okay. And then recently when Tesla announced their Tesla Semi, uh, I reached  out to my friend Chase. I'm like, "Dude, what are you going to do, man? These trucks, they're  going to they're going to drive themselves." And he's like, "We're going to buy some. like we will  own them. We won't need as many truck drivers.

So, this feels like a pretty AI resistant industry.  Yeah, I think so because even if the trucks get more efficient, they're still going to need people  drumming up interest of, you know, people that need to move goods and services or, you know,  mostly goods with the the logistics piece, whether those are automated trucks or people  behind a wheel.

There's still going to have to be some sort of brokerage happening in the middle.  Eventually, do algorithms come in and fully wipe things up? probably. But I think we're a decade  away from that and there's still plenty of money to be made over the next 5 to 10 years. Well, just  like anything like 3 years ago, everyone's like, "Wow, every white collar job is done."

And now  it's like actually this is growing jobs. AI is growing jobs. Actually, wealth managers want a  human. Business owners that have accountants, they kind of want a human to talk to. Even if Chad  GPT does it better, they want a human that uses Chad GPT so they can be better. I feel like this  is an industry that goes along the same lines, especially if you're moving hundreds of thousands  of dollars worth of goods across the country.

You don't want to just click a button and be like,  I hope that this gets where it needs to go on time and doesn't get damaged or ruined along the  way. So, you don't need an office. The franchise doesn't require you to have an office. You could  work from home. You're on the phone a lot. Emails, it's a relationship business. I'm assuming once  you get in with a good company, then they're probably going to send you a bunch of shipments  on a regular basis.

Yep. and they've built all the tech, the back end, they help with the carriers,  they help you with initial customers. And that's where things get a little complicated like how do  you price things and how do you do that? A lot of these independent freight brokerages build this  in-house. It's a lot of money, software engineers, etc. And so they provide all of that.

The kicker  though is they do charge one of the highest royalties that I've seen in franchising outside of  Chick-fil-A even, or Chick-fil-A is the highest. They're up there. They charge 30% royalty on the  gross margin, not on the revenue. Okay? Okay. And this is actually common in freight brokeraging for  a number of reasons because of all the investment into technology and the relationships are pretty  defensible.

Okay. So, let's break that down. Let's say that there's a shipment from, you  know, Los Angeles to Seattle. Um, and it's a $10,000 $10,000 shipment. Break that number  down. Where does all the money go there? Yep. So, you'll make about a 40ish% margin on the 10,  let's say. Was it 10,000? 10,000. So you'll make four grand. Then the franchiseor is taking  30% of that 4 grand.

1,200 bucks. So they'll take 1,200 bucks. The rest is left for you to cover any  local expenses you have. If you do rent an office, if you have decided to start scaling and hire  more sales reps, more account executives, that cash would be left for them. Otherwise,  you're pocketing the rest if it's just you and a home office. Okay. Your cost of goods in this,  you know, freight brokerage example on the 10K is $6,000 in cost.

So you're you're left with four.  the franchiseor is taking 30% of that. Okay? And presumably it's because your overhead is not that  high, right? Whereas with a restaurant, that 30% might be 8%. And I'm I'm hoping and assuming that  they help you find customers. Yes. Cuz if I if I'm a franchiseor and I take such a fee, it's going  to be because I'm feeding them leads all day.

Good leads and then all the technology and they  are handling all of the back office. They handle they're running all of your invoicing, carrier  payments, carrier relationships. Really, you're just effectively B2B sales. Yeah. Okay. I have  to think that the since this is a relationship business, the churn is pretty low. Like once  you have a good relationship, it's recurring revenue essentially.

Yeah. And you can upsell into  warehouse management, facility management, other services that carriers and buyers need alike.  Okay. So the average revenue is a little over 1 million across all the different open territories  today. And then the average margin is about 40%. So you're making 400k in gross margin before you  pay that 30% royalty. Wow.

Okay. So net margin would be 30% less than 400 grand. Is that Yeah.  So take 120k off, you're at 280k. Okay. Average 28% net margin. Some are significantly lower, some  might be significantly more. Yep. And it depends on what your local operating costs are. If you've  got a nice office and you got a team of six, I imagine the average isn't that big yet.

Those  are probably the top quartortile performers and they're in the multiple millions making a lot more  that justify adding headcount and an office. Cuz if you have a team of six, your your percentage  margins are probably going to be lower, but your volume Yeah. your volume will be higher. Your net  revenue to your pocket will be higher. Yep. one of the first franchises in the US doing this that  they've this brand that expanded here has been very successful in the UK and across Europe.

So  I get excited about this because it's new. I have a buddy too similar to yours who he throughout  college was trying a number of different things. He was doing music at one point. He was chasing  storms. I was telling Max about this. He was doing like hail insurance and hail damage and he  just like couldn't figure out what he was good at. He does freight brokerage now for an independent  freight broker.

He makes multiple six figures now. He again didn't have formal training for this.  He's just good with people and relationships and jumped into this and is very good at it. And  so I like it because it's super accessible. The revenues are high. The cost to get in,  which we'll talk about later, is low. I mean, in some cases sub six figures to to get started.

Wow. Okay. So, if you are a people person, extrovert, don't mind being on the phone, you love  conversations, relationships, working from home, it's a good fit for you. Absolutely. Okay. All  right. What do you got next? The second one is also really interesting. This is one of the  highest revenue generating franchises that that I've seen and it's commercial facility management.

So, think about office buildings, warehouses, all these different properties. Let's say you and I  own a bunch of them together. We now have to deal with landscaping and HVAC going out and janitorial  services and striping the parking lot and all these things that come with owning a property.  This franchise or this business handles all that. It's one, for lack of a better word, one throat  to choke.

It's one relationship and they handle everything else for you. And they make a very,  very, very high volume of revenue. The highest grossing revenue franchisee in 2025 in their FDD  did over $50 million in revenue. And the average is doing 9 million in revenue. Holy crap. For the  franchisee, not the franchise? The franchisee. You say facilities management.

How is that different  than being a commercial property manager? It's effectively the same thing. You're just  handling I mean I guess even property managers are handling the whole thing. You're effectively being  the property manager for the building, but it's a franchise model instead of an independently owned.  So you're also finding tenants and evicting.

You're not doing that. It's actually just the it's  just the maintenance. So I guess that would be the different the differentiator then. Um it's kind  of an unbundled version of a property manager. Yeah. You don't have to deal with leasing up the  units and and working with tenants that way. Okay. We'll make sure that an extra dumpster gets out  there, that the lines get striped, etc.

Yep. Hey, believe it or not, about 62% of you don't actually  subscribe to this channel, even though you see my videos in your feed. So, just take a second, hit  the subscribe button, maybe even the notification bell, and it would mean the world to me. You  said 6 million was the average. 9 million is the average revenue. And what are the net margins  on that?

So, their gross margin is a little over three. It's 3.3 million average margin. So  33.5% margin off of an average of 9.8 million. It's almost 10 million in in average revenue. Holy  crap. And my guess is that again it's almost like this GMV thing. So you hear with like Instacart,  they're doing billions of dollars in revenue. Well, they're just transacting billions of dollars  of groceries.

Instacart's taking a membership fee or some smaller amount. My guess is the revenue is  so high here because they're saying, "Hey, we're charging for janitorial, landscaping, etc. they're  having to pay those that revenue and then passing it on because even the the royalties is on gross  sales not margin but I imagine that you know 65% that's going out the door is to the subcontractors  and so you're still left with a lot you probably don't have a lot of overhead or cost at that  point because you're outsourcing every

bit of the services actually happening. Do you know how much  like lead generation the franchiseor provides on this one? This one is more on you and they charge  a lot less of a royalty as a result. So it's 5% of gross sales is the royalty. Okay. Are they going  to help you find and vet like the line striper the So that's on you too. So that's where I think  as the franchisee you're getting a brand.

They're helping with some brand awareness and marketing.  They probably have national tenant or you know landlord relationships with some of the large  property owners. But from there they exclusively say or they specifically say in the FDD you  are responsible for building the subcontractor relationship. So that's where the the rub is  probably the headache of running this business is I got to go find good contractors, but we're  3, you know, 3 million in gross margin um and a pretty good business.

Yeah. Worth the headache.  I mean, any given franchise is an terrible fit for someone and an amazing fit for someone else,  right? So I'm thinking if you're a 40 to 60 year old dude that's been doing real estate for a  while, either commercial or residential, you've got a bunch of contractors in your back pocket,  you have relationships, you speak the language.

uh you could plug into a bunch of stuff, you're a  leasing agent, this could be a great fit for you. Yeah. If you have no experience there and you're  going in cold, you have no sales experience, it could be a terrible fit. Yeah. I asked  too, you know, why are the top five, you know, why are some of these folks doing 50 million? And  they said the main differentiator is that they've had five years of B2B sales experience before  joining as a franchisee.

It's fundamentally a sales leadership business. Okay. So, that's the  other type of person, B2B sales. Work from home, you don't need an an office to do this. Okay.  And you can hire as needed. You don't need to start with employees. Yep. Is this like an owner  operator situation? I think most franchises, my advice at least is you should start your first  year as an owner operator.

Learn the business from the ground up. Clean the bathrooms, go on the  job sites, change the oil, whatever the thing is, do it because it makes you that much more  effective as an owner to train the next group. the management layer that you start to put in place.  If you're wealthy enough and you have enough back you background and and business ownership  experience, you can leaprog some of that and hire a GM out of the gate and not be as involved  day one.

Okay, I agree with that by the way. Okay, so so far we've covered freight brokerage facility  services and these are kind of tangential to each other. Kind of tangential skills, work from  home, don't need an office, relationship based, highly recurring, high gross margin potential,  low cost uh of entry. What downsides would you say there are that we haven't already covered to both  of these so far?

So for the first one, it's new in the United States. And so I think anytime there's  anything new, there's additional risk, but they've been doing it for 15 plus years, the freight  brokerage in the UK and across Europe. Yeah. And so like to me, they've proven themselves.  Yes, it's a different market here and there might be different competitive angles you have to  be considering of.

And so I would say looking at that one, just go look at the landscape. Is there  a reason no one's done this here before? Why are they entering now? If I were to talk to this  franchiseor, I'd press them on that. You know, why is now the right time? And who's tried this  before you? And why did they fail? Yeah. And just to make sure that there's no gotchas or regulatory  things that only a really nuanced, you know, niche understanding individual would have.

Are  you able to see on the franchise disclosure document the difference in numbers between the UK  Europe locations and US locations or is it brand brand new to us? You you can see both. Okay. I  don't have them top of top of my hand right now, but you can see the differences because a lot  of franchise concepts are like inherently tied to cultural norms and they don't translate very  well in other countries, but some of them do.

And maybe what you're saying is that's that could be  somewhat of a gamble in this case is the cultural norms uh don't cross over from Europe to the US.  But if you can see in the FDD the delineation between both Mhm. then that might be a non-issue  at this point. Yep. That's where I would press at least because otherwise a lot of the day-to-day  motions are going to be the same there as they are here Europe or the United States.

You're  building relationships. You're helping people that need to move goods with people that have the  ability to move those goods. And like that at the core is not going to fundamentally change. Some  of the regulatory stuff could happen. Some of the larger players might have boxed people out.  And those are the things that I would dig into to see is this an impenetrable market and that's  why no one's done this before or was it just you need enough resource and the right timing and  that's what this UK based

company has now. Yeah. Gotcha. Okay. Uh oil filtration. Yeah. So this  one changes uh you know turn a little bit here. The first two were more B2B. You can do it in your  your comfort of your own home. So oil filtration if you think about all these restaurants there's  tens of thousands hundreds of thousands of QSRs restaurants in the United States.

quick serve  restaurants, right? Yep. QSA. Yeah. Quick service restaurants. Those are like your McDonald's,  your Bojangles, Burger King, etc. But there's also restaurants that just have, you know, fryers  and oil. They have to do something with that oil. They can't keep reusing it over and over and over.  And so this concept has a proprietary truck that comes on site.

They run a hose into the building  through the back door and they filter that oil on site. So, they clean it, they pull out the  gross chunks and things, and they actually put different chemicals into it to to cleanse it and  make it, you know, more more useful again. They'll do full-blown replacement of the oil as well, and  they'll take that uh unusable oil and they'll sell it to other people that can use it in different  businesses, like bofuel or Correct.

Okay. So, sorry, let me make sure I understand this correct.  Does this remove the need for a restaurant to have that nasty pit in the back where they  dump all the oil? It does. Okay. Yeah. So, like they're they're coming and they're taking  it out and removing it from the site entirely or they're cleaning it on site. They're pumping  it into their vehicle, running it through their proprietary process and then putting it back into  the filtering it.

Yeah. So, I'm just picturing a big like kind of like my kids uh aquarium. They  have this big filter that sits outside of it with two tubes. One of it sucks all the dirty water out  and then the other one spits all the clean water back in. They're doing that with oil. or if the  oil is just too far gone, they're just taking it, putting it in a tank, taking it to a different  facility, recycling it, selling it as bofuel, whatever, and replacing it with clean stuff.

So,  there's multiple revenue streams. There's the recycling on site. There's the full pull resell  over here. So, I'm taking what you think is trash to you as the restaurant owner. I'm making money  on it. And then I'm selling you new oil. So, I've made money twice here in this instance that you're  happy and, you know, thrilled about. And then they also do full drain cleaning and replacement.

So  they start to get into some of the equipment and then they also do refrigeration and freezer  cleaning and maintenance as well. What about like hood and vent cleaning? They don't do that  yet, but I wouldn't be surprised if they start to. So they have four or five revenue streams  now. Yeah. I mean, once you get your foot in the door of a small business and they like you, you  might as well keep adding more and it's recurring again because this has to happen on a certain  frequency and cycle.

And people don't understand like there's 30,000 McDonald's, but there's like,  you know, 500,000 no-name mom and pop restaurants. Yeah. Just in franchising alone, there's about  a million retail locations open, 400,000ish are food. Wow. And that's just franchising. So to  your point, however many oneoff Alex and Chris's Rib is out, you there's there's two to three  times more of those.

Wow. Okay. So this is also probably relationship. Well, it's it's heavy on  sales. Yep. Uh it's highly recurring as long as you don't screw it up. I have a friend that does  this business. He doesn't own a franchise. He's he's ran it for 20 years. He also does hood vent  cleaning. He does like Panda Express and he has like, you know, probably like franchiseors that  have multi-units and um he does really well.

I know he does well. Uh he founded it himself. But  any concept that works as a standalone, not any, but I would say most concepts would also work  as a franchise. This is no exception. Okay. So, what are what are the revenue numbers, the profit  numbers, the and the fees that the the franchise or take? Yep. So, this one's lower revenue. It's  517,000 in revenue for one territory.

And that's average. That's the average. Okay. soon as  you start doing multiple territories. So in a route based business like this, they're giving you  either a radius or you know a set of zip codes or a set of households in a you know again a certain  polygon again. So for one territory which they you know they draw 517,000 as soon as you get into  multi- territory the average goes to one a little over one a.5 million.

Okay. And I think part of  that has to do with you again you're using the same equipment base for the most part. You might  maybe adding trucks, but you're getting to upsell those four or five different revenue streams to  an exponential number of, you know, different businesses. And so you start to get, you know,  more leverage out of the existing assets that you already have in those trucks because you're  servicing a wider range.

Economies of scale. Yep. Do you know how many units or territories they  have in the US today? They have a lot. Let me pull up the exact number. This one's been around  for a while. They were also founded in the UK, but they've been in the US since 2002. And they  have 377 territories across 119 franchises. Okay. So that means the average franchisee has 3.2  territories.

Okay. Any idea how saturated this is? Like how many territories are left for these guys?  They seem further along than the other two we've they're further along. They're actively trying  to grow. They're growing every year. I think they have room for another couple hundred territories.  A lot of mature brands, you mentioned McDonald's, granted it's retail 30,000 locations.

This one's  servicing a wider, you know, radius. It's going to be less than 30,000, but it's definitely more than  377. Yeah. On the three we've talked about so far, if we were to make a scale of like a brand new  franchise with zero territories, that's a one. And a 10 would be like a Subway or McDonald's,  that's very mature. Mhm. Crumble would be like an eight or a nine.

Yeah. Right. Where would  you put all three of these so far? Yep. So, the freight brokerage, I would put them at a  six or a seven overall because they have such a presence in the UK and Europe. In the US, two or  three. Yeah, it's new. They don't have as much of a presence here. There isn't a national brand yet  in franchising for freight brokerage in the United States.

And I think they have a good good shot at  being the first. So, that one earlier emerging, more risk comes with that. The second one is the  facilities management concept. They've been around forever. They start out doing just janitorials  and they've added all these other services on. They've been around since I think 1961. So 100  plus units already open, sold, profitable, high revenue numbers.

I would give them more of a eight  or nine. Okay? So less risky, more proven, longer tenure, more established. Yeah. I want you to  do something right now. Open your bank statement and add up every single software subscription  that you're paying for. your CRM, your email marketing tool, text message platform, calendar  booking app, funnel builder, review management, even a separate form builder or automation tool.

I've talked to business owners paying $500 to $3,000 a month across eight or 10 different tools  and half of them don't even talk to each other. So then they go pay for Zapier on top of that just  to make things connect. Highle replaces all of it. CRM, email, SMS, funnels, websites, calendars,  automations, reputation management, invoicing, one login, one dashboard, one bill starting at 97  bucks a month.

A guy in my community was paying 3.47 just for ClickFunnels, 99 for Mailchimp,  25 for Calendarly, 79 for a review tool, and 49 bucks for Zapier just to glue it all  together. That's 600 a month if you're not counting. He moved everything to high level and  cut his software cost by over 80%. But the best part isn't even the savings. It's that everything  just works together natively.

A lead fills out a form on your funnel that creates a contact in your  CRM, which triggers a text and email sequence, books an appointment on your calendar, and then  ask for review when the job's done. One workflow, zero duct tape, and then you can white label the  whole platform to resell it to other businesses as your own software. Charge them 2 to 500 bucks  a month.

Check out gohighlevel.com/tkopod. They'll give you a 30-day free trial to see what I mean.  The third one, same thing. And they've been around since the early 2000s in the United States since  1960 I think in the UK. 1996 sorry in the UK and then 2002 in the US. Okay. So probably another  seven or an eight there. Okay. Is there like a a right number to get in with a franchise?

So that  that's an interesting question because it comes down to your unique risk tolerance. So when people  ask me like well which one would you buy because I just want to buy that. You look at all these I'm  like well my answer is going to be way different. I have a much higher appetite for risk than most  people do inherently. And so like I couldn't work at a Chick-fil-A even though Chick-fil-A will pay  me 6 to 800 grand a year in profit.

Amazing job. It's a job. Yeah. You're less of a business owner  in my opinion. Great money. Some people would love that's a 10 out of 10. They've been doing  it forever. They got this thing down. They are all the way dialed in. Yeah. I wouldn't want to  do that even though the money is great and it's proven. I like getting in at these like threes or  fours because I have more upside because sometimes they'll you can get equity.

You can invest in the  business the franchiseor. you have way more white space to develop way more territories than  Chick-fil-A. I can only get one of them. And so like I like the idea of empire building and  you know scaling to a 10 plus unit portfolio. I'm developing 10 pop-up bagels right now. It's  I think you told me that. Yeah. So like I like that.

It's an early brand but lots of promise  and upside and big well-known investors behind them and a great executive team. Um so I like  that kind of stage. So to answer your question of like is there a right number? I tell people if  you're more riskaverse, try to find a system that has more than 50 units already open. 50 units  is usually like that magic number.

You have to choose a number. Yeah. 50. 50 is it because the  brand is now royalty profitable and sufficient. So they have less of a need to just sell units to  anyone who can, you know, get into the business and be an operator. So they're much more selective  on the operators that they pick. That's a good point. and they're less, you know, dependent  on franchise fees out of the gate to fund that early growth before they get to profitability on  the royalty side.

And so once they've done 50, they've seen a number of things. They've been  in different markets. They've probably made the mistakes they need to on marketing and lead genen  and all these other things. Still not perfect, but early enough they can get in and still have a say  and enough whites space and upside. Not so late that you're purely buying a job.

Yeah. Because  from what I understand, those first 50 or whatever territories, they're not self- sustaining. like  they're relying on those upfront fees to pay the bills, but you're saying they get to a magical  point where their percentage fees over time cover their overhead and then start to become  profitable and then they're in a a luxurious position to make better decisions.

Y whereas for  those first few franchises they probably have to make some compromises that they wouldn't have made  at number 51 or there's this chart and I'm going to maybe butcher this a little bit but it's on one  axis it's the val it's the franchiseor's value and then what you get as a franchisee over time on the  x- axis on the y it's the you know the cost of the value so at first the franchiseor is providing  a ton of value but they're getting nothing from the franchisee in the form of royalties because  you're

starting at zero no revenue there's nothing coming in Over time, the value the franchiseor  provides starts to decline, but the value that you're paying, the money that you're paying them  in royalties, they intersect eventually at one point. And so, five years in, you as a franchisee  start to forget all that value that you got, didn't really pay anything for and you're like,  why am I doing this?

I'm six years in. I know what I'm doing. I'm an expert at this oil business  or whatever it is. But the franchiseor has front loaded so much of that value. This happens a  lot in systems that franchises need to ask the question hey what are you doing for me lately  franchiseor and that's where lead genen and you know national brand campaigns and investment  in technology that you and I as an oil you know filtration franchisee might not be building  homegrown AI agentic technology to make our lives and workflows and

whatever easier but  the franchiseor is yeah okay that makes sense because at the end of the day a franchiseor is  no different than a normal business and that most will fail right there's thousands out there that  no one's ever heard of. They had one location and failed or whatever. They never even got off  the ground. So, that's too early unless you just somehow get lucky, which I'm sure you would  not recommend to take a flyer on those guys.

So, you're saying get in at a two or three. But then  there are also situations, let's use Pop-Up Bagels or Crumble as an example, where they might be a  seven, eight or a nine, but there's a last handful of territories that haven't been sold yet. And  you can kind of have the best of both worlds. It's like a d-risked concept and there's a lot of data  behind them.

Their FDD has a lot like it shows good numbers on a large sample size which are both  important and for whatever reason in Cape Coral, Florida, they they never sold that franchise  but it's a great market. Like there are also situations which are probably much harder to find  where you can kind of have your cake and eat it too. 100%. Some of these empire builders have  figured it out.

I know guys that they started 7 years ago with zero and they're up to 80 units,  90 units now because they got into the game. My advice usually is you need to be in the good old  boys club of franchising to start seeing all of these hard to find deals, these brands that are  coming up that have I don't want to say a sure thing, but they have all the early signs of a  great executive team.

They've got really smart, sophisticated private equity behind them, and they  have a track record of doing this with Dave's Hot Chicken and, you know, two or three other wildly  successful brands. Like Mike's Red Taco is another one that's just taking off right now. Still very  early. That brand is going to do well. They have all the elements, all the ingredients.

And so  these guys that are in the game, they're buying up 20 units in Dallas, you know, 50 units here, like  they're getting in early, even though it's a zero out of a 10 or a one out of 10. It has all the  signs to be a seven or an eight. And that's where taking those flyers early is almost an unfair  advantage. Yeah, but those guys got the right to do that because they came in at some point on a  concept that might have been a five or a six kind of middle of the road.

They got their reps in.  They became an operator. They learned how this space works. And now they've got their anchor,  their safe stuff. Like one of these individuals owns I think it's like '9s Carl's Juniors. Wow.  It's like random kind of stable, not a Chick-fil-A or Raising Canes, but a steady couple million  a year in average unit volume. Makes the money.

Some stores probably lose money, but the majority  he does well and that's his bread and butter. And then he takes flyers on all these other things  from from a a position of safety. And you know, he's d-risked over here. Yeah. And then if you're  in the game, like if you're in the conversation, you're going to find opportunities where like  a guy bought 10 Dave Hot Chicken franchise territories in Miami and for whatever reason, he  can really only handle seven of them.

So he goes to Dave's and says, "Hey, can I unload three?"  You kind of have to know someone to buy those three off them, right? Correct. You're not just  going to get those like on bis by sell. Exactly. You're not. How do you get in that conversation?  How do you get to know the honestly buying whether it was one of these four that we talked about,  you know, today we have one more we'll get into, but just being an operator gets you enough  credibility, clout, connection, awareness.

You start going to these conferences that all the  franchise people are at, whether it's Dave's Hot Chicken and the freight brokerage franchise, like  you're all in the same room. and you start to meet people, you start to build a network and that's  how you start to hear hear about these things like the the individual I mentioned that went from  zero to at his peak 11 like 18 units in seven years.

He started out in Orange Theory and then he  before that was doing a butcher shop that was an independent business. But him running the butcher  shop when he talked to the Orange Theory owner was like, "Oh, you you've done this before just in  a different thing and it was non-franchising. I trust that you'll be able to run a gym if you've  been able to run this this butcher shop."

So then he does two orange theories, goes to four, adds  Restore Hyper Wellness. He's like, I need to get into food. That's where a lot of people seem to  be making a lot of money. I'm gonna go raise some private capital and go buy I think it was five or  six Daves to start. And then he just snowballed from there. I want to tangent this a little bit.

We might end up editing this out. I'm personally just curious. What do you see is the future of  like Dave's Hot Chicken for instance, or all the hot chicken stuff? Is it are we reaching like  hot chicken bubble like kind of like we got like fro yo bubble 10 years ago? Not that they're all  going away, but like only the best locations will be around in 5 10 years, or is that a category  that's just here to stay and here to keep growing?

I think categories like that, like even, you  know, Chipotle becoming more like fast casualish, like leading that way, and then you see uh like  Cava and some of these other healthier healthier alternative, not that Dave is healthy, but certain  categories get so popular the the numbers don't lie. Like the average unit volume of a Dave is  great almost everywhere.

It's such a fantastic restaurant. um they're doing, you know, four and  a half to five and a half million in revenue, which is like a McDonald's, but it's just  chicken. And you same with Raising Canes and uh Chick-fil-A. Now, the average is over 9 million  per location out of one box doing $9 million in chicken. Yeah. And something I talked to someone  about recently was it's a little messed up, but the the genetic kind of production we've been  doing of with chickens, the cost per calorie of chicken has gone down so

much that it's just so  much easier to mass produce chicken and sell it. And that's why chicken as a category is beating  beef and pork because it's so cheap, but the caloric density of it so high. Us as humans who  want protein and all this. It's it's just perfect perfect storm for that for chicken. Ever since  I learned that hot chicken, like all the sauce they put on it is literally just vegetable oil  with red pepper in it.

I can't do it. Like just seed oils poured all over my food. Like it's bad  enough to fry it. Sure, I love French fries. Not hating on seed oils, but like to pour a half a cup  of it and then eat it. Oh yeah, it's a lot. Um, another thing is it's like a crumble cookie that  people don't realize the Oh, I know. 900 calories for a cookie. They when they tell you the serving  size is a quarter of a cook.

No one's going to do that. It's a joke. Speaking of crumble, I  So Swig, right? They're they're trying to be like the crumble of dirty sodas. They're doing a  good job, but I feel like to actually be, again, I'm just tangenting here. To actually be the  crumble of X, you have to have the technology to do that. They're so good. They're so good. And  I just downloaded and used the Swig app for the first time.

I'm not a Squid fan, but my wife is,  so I did it for her. And it was just a terrible experience. It's like it it said I could pick it  up at the window, but that location didn't have a window. So, I had to get in line with everyone  else. And then I got in line and I ordered a half hour in advance and then I had to get out  of line and wait cuz it wasn't.

And I'm like, Crumble would not do this. No, their app is like  topnotch. Dialed in. They spent a lot of money on it, right? Do you think to be the Crumble of X,  technology has to play a central role? technology and what Crumble did so well is scarcity and  exclusive releases. So, every week new flavor, it's only here for a week or two, so you have to  come in and get it.

And really interesting brand collaborations. Social media is fantastic. Pop-up  is running a very similar playbook where they'll partner with Craft Mac and Cheese for a two week  period. And they have Craft Mac and Cream Cheese Shmear where it's mac and cheese flavored cream  cheese. And people are like, I love mac and cheese and this is only here for a week, so like I need  to go do this now.

Does Pop-Up have an app? like do they have the technology? They do and like  they're starting to invest more and more, but they're relying a lot on third party, you know,  apps for now. I think they'll start to invest more significantly in that, but they're they want you  to come to the store and they want it to be quick. You grab it and go. The insides are purposely  small with no seating because they want you to grab it and go to a park or go somewhere, go to an  office and enjoy it as a kind of like a community of

co-workers or a family. The other thing Crumble  has or had going for it is how polarizing it is. It's like I Jim Gaffin has a bit where he's  like he talks about how no one admits they like McDonald's. Like oh McDonald's is gross. It's  like they sell a billion hamburgers a week. Like you guys are eating McDonald's. Nobody likes it  but we're all eating it.

That's how crumble it is. I I post about Crumble and all the comments  like it's gross. It's so gross. It's so it's a sugar bomb. It's like they're like a five billion  dollar company. You guys are all lying. They are good. Yeah. I I actually like it. Each cookie has  a stick of butter in it. I know. Of course they're good. I heard a story about a guy who signed  up for a franchise and it was a good franchise, well-known, got in over his head and told them  like, "Hey, I'm struggling.

Can I sell this back to you?" And they're like, "No." And then they  were like he's like, "I might have to declare bankruptcy." And they were like, "Can you can you  give us that in writing?" And he's like, "Yeah, I guess." So he did. And they're like, "Okay,  thank you. We're taking this back." Wow. Because they didn't want to show on their FTD that they  had a closure.

Is that common? This is common. So if we do keep this on, this is like a good good  fact for anyone looking at buying a franchise business. There's the item 20 in the FTD and that  shows how many stores have been open that year, closed that year, and then transferred that year.  So what sophisticated franchiseors do that want to hide closures is they transfer them to either  themselves as a corporately run location or they convince another franchisee to buy it or someone  a new person coming in to buy that existing.

So if you look at transfers and there's a high  number of them almost look at a transfer as a closure like what happened here? Why did you  really it should be it should be looked at that I would if I'm looking at a concept like why did  they all have 10 transfers last year and 40 this year like that's not normal for a system this  early in its life.

Yeah. If it's sub five sub 10 years and they have a ton of transfers why are  this many people getting out if it's going well they're just they just hold on. But closures  and transfers are the numbers. Obviously, closures are more obvious. Transfers are a way  to hide closures. Yeah. More often than not, unless it's a really mature brand and they just  have like Wendy's as an example, they're average age of their franchisee is 64 years old.

Average.  And so it's just an older brand, older system. A lot of those individuals don't have succession  plans. So Wendy's is looking to sell like 700 and some locations in the next I think it's 10  to 12 months. Wow. It's a lot fast. It's like they are going to have a lot of transfers.  That doesn't mean necessarily that Wendy's is failing and it's still a good brand and yes,  they have competition across all the other big, you know, burger players, but that's an example  where it's a mature system where transfers

maybe just make a little bit more sense based on  the life cycle of where they are. Gotcha. So, that's something to look out for is transfers.  Item 20 transfers. 19 finance stuff, 20 transfers. Yeah. It was sad because he I I heard the story  cuz he had to sell his house. He had to sell his house. my friend brought bought it and now  they have to rent it they rent it back from him and I don't even think they had to declare  bankruptcy because of the franchise.

I think they were having other issues but it was just a  double doozy because no one ever knew that that happened on the FDD but he kind of got screwed  but just like run it run it through Chad GPT like Chad GPT could have totally seen that before  he emailed that in writing to the friend. That's that's the problem I have. I think I used to be  a pretty big franchise skeptic for this reason.

I hear all these horror stories. We've all heard  tons of them. But I also have a ton of friends who have started independent businesses or bought  independent businesses and have horror stories. It wasn't until I started really looking under the  hood to see that all right, franchising is still small business. It's just a business model  on top of a bunch of different industries, health and wellness, hospitality.

Yeah. Food,  etc. Yep. And franchising has a 85ish percent success rate after a fiveyear period. It's 50%  for independent businesses. So after five years, half of independent businesses are shutting down.  Franchising shot. So you have a better shot, but you're still going to you're still going to  hear these horror stories of the, you know, the 15 or so that shut 15% that shut down.

They lost  everything. They declared bankruptcy. And I think it's it's almost like these outlier cases are  louder. You hear about them more because of the way they happened. This is what gives franchising  a bad rep is it's this kind of shady character, this brand that wasn't being a good partner. They  were trying to do these transfers and so you just need to identify those and find ways to flag them  just like you would buying a house looking for structural issues or mold or whatever else.

There  just isn't as many guard rails and protections as there should be. I'm usually not a huge advocate  for regulation. And this is an area where I'm like, why is the government not stepped in and  said, "Hey, when you buy a house, you have to, you know, you use a if you use a real estate agent,  they're licensed in that state. They have to disclose how much money they make and when."

Yeah.  Um, but in franchising, it's the wild west. The broker doesn't take a financial decision. Yeah.  With less collateral backing. At least the house, you have the asset backing. At this, you could be  buying a a lease in a strip center that you've put two or 300k into renovating the space, and if  the business doesn't work, there's no recourse. Mhm.

And that's the issue here. I think that's why  again franchising gets a bad rep and that's why, you know, we're building this platform and, you  know, on this mission to go educate people on what to look for and give you the data to make the best  decision for you and your family or your business partner that you can. Please, I need you. I need  you to send me your stories.

If you or someone you know made thousands of dollars in a short  period of time with a business, a side hustle, a growth hack, I don't care what it is. I want  you on this podcast to give you free publicity and to help grow my podcast. So, if that's you, go  to tkos.com, fill out the form. If it's a friend of yours, send them tkos.com, have them enter  your name, and I'll give you a thousand bucks for the referral.

That's tko yes.com. If someone  is like dead set on jersey mics, and they're like, I want to own a jersey mics. And they had they  could choose between buying into it, buying a territory, starting from scratch, or they go to  bis by sell and see a jersey mics for sale that, you know, profits 70k a year selling for 200  grand. If they are dead set on jersey mics, what's a better option for them?

Would you  say if I can get into an existing one for a deal because the operator is tired or burned out  or you mentioned earlier, I own 10 of them and this one happens to be a 2-hour drive time from my  closest store, so my GM is driving out three days a week and it's a headache. Um, and they're kind  of willing to let it go because it's a headache.

Those are always the best outcomes because  you're not having to now build millions of dollars in equipment. You're paying a multiple on  cash flow instead. Yeah. Yeah. And so they likely lost a little bit or broke even. I'm making up  for I get the other side of that zero game. I'm getting the benefit of not having to go build a  brand new building or you know renovate a whole new site.

And so I would rather in a restaurant  specifically. I'd rather buy existing if I can. But it sounds like your upside might be a little  capped. It's already known unless they're really screwing it up and you have a way of not screwing  it up. you know, it feels like the the downside to that option is your upside is more known, more  fixed, but you're also your risk is is less.

Well, and do I own another portfolio of similar concepts  in the area and it's easier for me to just plug it right in? Is it is it the first one I'm buying?  And a pattern I've seen with these larger kind of again empire builders is they start out with  one brand dense area. They're developing for the most part. They borrow money and they develop new  stores cuz to your point the upside and then they start growing inorganically through acquisition to  go faster because now they have a team in place.

So it's like every incremental store even though  it might not have as much upside is almost I don't want to say pure profit but economies of scale  the local economies of scale especially and then they start getting risky and they're like okay  I own Tampa basically for Jersey Mike's let's go add this hot new you Mike's Red Tacos coming  in like it's very popular in LA it's taking the country by storm right now I'm going to be  the first I'm going to build 20 of these here and that's the risk and if they get that

right  that's the brand that has a you 7 to 12x multiple versus your kind of like steady older legacy  brands that might only get four to seven. Yeah. And back to our Chick-fil-A example, like that's  the downside and upside with Chick-fil-A. Upside is if you're one of the very few people that  are chosen, you're going to make 500 to a mill a year. But you will never make 10 a year and you  will probably never fail either.

No. You know, you're it's just going to be more predictable. And  this goes back to like who are you and what do you want to accomplish? And there's no wrong answer.  That's it's funny how many people come to me and say again like I just want the one that makes  me the most money. I'm like you're one arc type. Yeah. Some people do say I don't care if it's  oil chicken.

I don't care what it is. Whatever is going to make me the most money I'll learn it and  I'll figure it out and I'll do it. Isn't that what everyone says? Like no. Some guys have come to us  and they're they're already wildly independently wealthy. They're bored and they're like I've never  done a retail concept and I don't want to start from scratch.

Like I want to do a franchise and  this is golf to them. It's a competitive sport and business is that and they want to do a franchise.  Others are my kids. You know, I want them exposed to entrepreneurship. My business is like metal  fabricating and it's kind of unsexy and it's going away. We'll keep the family business, but I want  to buy them two or three franchise concepts that I'll do with them.

We get that and then we get the  AI group that we're seeing a ton of right now that they're corporate, you know, warriors. They've  been a deote or a bank for 15 years and they just want to replace their income. They're worried  about getting laid off, especially with what's going on right now. and they're like, I make 200  grand a year. Give me concepts where I can just use my background or my skill set to replace my  income and I'll see what happens from there.

But if that's all that happens, I'm happy with that.  Yeah. And so very wide ranging reasons to do this goals, backgrounds. Yeah. And that's what again  I love about franchising is it's a menu of dozens of verticals, dozens of indust industries with  a proven playbook and a group of peers that you can rely on when you inevitably want to quit.  Yeah.

Which is I think happened to all of us. You've probably had those weekends where you're  talking to your wife or a business partner and you're like, "Why did I do this? I want to quit. I  want to give up." And you need someone to be like, "Chris, just stay in the game. Persevere." And  that's usually what it takes to get out the other end is there's usually an answer.

And there's  a way out. But when it's you against yourself, it's very hard. Yeah. Well, it's like when people  come to me and they're like, "What's your favorite business idea? What what should I start?" Like,  "I don't know. Who are you? I don't know anything about you." We could talk for four hours and I  might give you a few good ideas, but you got to figure that out for yourself.

We use an analogy of  like desserts. Like people would come to us and be like, "Well, which one should I do?" And they're  like, "Whoa, whoa, whoa. Imagine franchising as ice cream and there's a thousand flavors of ice  cream. We need to figure out if you even want ice cream." Like, "What if you should be doing real  estate instead? What if you should be lactose intolerant?"

Seriously, you don't even know  it yet. Exactly. And so our job a lot of times we turn people away like franchising is not for  you. You're way too entrepreneurial and you love technology and tinkering and like franchiseors are  you're like the worst nightmare cuz you're just trying to change everything. Yeah. I don't know if  you've seen the movie The Founder.

Oh, yeah. It's great. And like his first franchises were all the  rich country club guys that like were never at the stores. They were going rogue. They're introducing  like lobster rolls to the burger shop. And they're like, what are you why are you selling crab at  the McDonald's? What are you doing? He's like, I thought it'd be cool. And he's like, all right,  get out of here.

And he got the kind of middle, you know, middle income person. Like this really  meant a lot. And they were going to be associated with that store, working it every day. And some  brands want that and need that and others don't. Yeah, I would be a terrible franchisee for sure.  Of certain brands, I bet there's some you might be great. They let me do whatever I want.

All right.  What uh what other concepts are interesting to you right now? Yeah. So, the the last one is a  fuel delivery franchise. And so, okay. They also do deaf, which is diesel exhaust fuel or fluid.  and they'll go to these large long uh long haul trucking businesses, also uh local logistics as  well, and they'll replace fuel and deaf on site so that you don't have to make another stop with both  your trucks, but also your heavy machinery.

So, they're fueling up your, you know, Bobcats and  other, you know, tools that you have. And that's the franchise that they're delivering you fuel  and doing it on site. Do they do consumer stuff at all? This one specifically is commercial. All it's  all B2B again, it's all mobile. So they only do like B2B stuff exclusive. Yeah, B2B mostly fleets.  They boats at all?

I don't think they do boats. I didn't see anything about boats. It's all been  in yards and refules for vehicles and equipment on site. Okay, so what what are the numbers on  this one? Yep. So this one is pretty interesting. The average revenue is just under 5 million. Wow.  But the margins are a little bit lower because I think we're back into that kind of GMV territory.

This is fuel, too. Yeah. Okay. So what are the margins? So 5 million gross revenue. They're  walking away with a little over a million in gross profit. Okay. Which is a little misleading.  It's not like the overhead is four million. It's the gas. Like the ga the margin on gas is low.  So a million in gross profit. Do you know what net is? I don't have net.

A lot of franchises are  weary of posting that in their item 19. Is there any upside for that? I mean, if it's really good,  there's upside, right? Yeah. So, I look for that, too. Like, if it's a if it's a new brand, they try  not to show just because it's small data. And then if it's a more mature brand, you do see it a lot.  And if they don't show it and they're mature over 50 units and they don't show it, there's usually  some sort of red flag.

And I would at least ask, why are you guys not showing it, they might have  had a bottom 10% that just really drag down the average. And similar to publicly traded companies  in their uh what's the quarterly filing? S9 or S1 S10. Yeah. What S? Yeah. Similar to publicly  traded companies, you'll see all sorts of adjusted EBIT uh and madeup metrics that you just  read the footnotes and be smart about.

plug them into chat or claw and just make sure that you're  peeling the layer of the onion back. Okay. Now, what are the the fees on that one? Yep. So, the  fees on this one, it's a 9% gross profit royalty. Okay. So, 90 90 grand on the average unit of  doing a million in in gross profit. Yep. And then they are requiring you to use uh and they do  a ramp too, which is is nice.

They do zero royalty for the first six months and then 2500 per month  by month. You basically by year two. Okay. So, a lot of brands that do that, that is a good sign  to me that it's a mature, thoughtful, aligned brand. Like, take Five Oil, publicly traded  company through driven brands. Ror owns them. ROR is this behemoth that owns everything or a ton  of, you know, brands and franchising.

They do a ramp for almost every brand because they know in  the first year, yeah, you're the most vulnerable. You're in that J curve where it's you're losing  money because you're investing in marketing and training and get just getting off the ground. And  so, they don't want to be taking money from you while you're in that phase. So very thoughtful  aligned partners, franchiseors will typically do a ramp like this.

So I I always see this as a  huge green flag when a franchiseor doesn't know royalty for 6 to 12 months. Yeah. Okay. Is this um  do you need like an actual facility for this? Uh you do not. This could be from home as well. So  this could be from home. You do need equipment. You need trucks. One truck, one driver to start,  but the the the franchiseor is helping on the fueling piece because it's all mobile.

Okay. So,  you're picking up gas from a distributor in the truck and you could be the one driver to start.  Yep. Probably should be. Yep. And then you're just making deliveries and you're adding trucks  from there as you go. Okay. On a scale of one to, you know, Subway, McDonald's, how established  is this one? This is more of a one. This is a brand new franchise in the United States.

They're  based here, but even in their FDD for this year, they have no franchise locations open. So,  this is a Yeah. zero or a one. Okay. What about the founder? like does he have franchiseor  experience? He has experience in this industry specifically but not in franchising. Okay. Uh  but based on how he's structuring the royalty, I have to imagine he's got good franchise people  around him because that's not a common thing to do.

Yeah. Yeah. So if you're a one on the scale  and you you have established revenues, those are all corporateowned locations, right? And do you  kind of put an asterisk on corporate owned numbers on the FTD a little bit? So it's if it's a small  sample, yes, because they're so laser focused on it. Over time though, let's say I'm a McDonald's.  Corporate stores will typically perform worse than franchise because the franchise is so there's so  much personal skin in the game.

It's my family's well-being versus a corporation with hundreds  or thousands of locations. They've got a 50 to 70 grand a year person running it. And they they  care. They have so much scale. Yeah. They care less about a couple duds here and there. you and  I like all three of ours better work and we need them to work. But wouldn't you say the opposite  would be true on the first two or three locations like Yeah.

Yeah. So that the first two or three  the corporate outperforms because they have every resource being poured into it. They want it to  work because it both of them are kind of skewed. Yeah. In in either direction. You have to look  at the where is the brand in the life cycle of a franchise brand. If they're early, they should be  outperforming their franchises.

If they're later, they're likely underperforming their franchises.  Okay. And what's interesting too is if you think about franchising as a business model again it's a  business model not an industry franchiseors early on Hormosi talks about this he's like I don't it's  funny Hormosi invested in our company but he's like a little anti franchise um he was like if  you know if the business is so good why wouldn't you just own the whole thing and a lot of it is a  trade-off of scaling if I want to get to thousands of

units I can't possibly go raise hundreds and  hundreds and hundreds of millions of dollars otherwise this is going to take like we talked  about Panda Express that is almost all corporate Same with Chipotle and Starbucks, right? But  it's taken decades, right? 30 40 years. Like they did it. It's possible, but it's very slow.  And meanwhile, a bunch of competitors enter in, you know.

Yeah. Dutch Bros and Seven Brew  coming in, you know, coming after Starbucks now. But they're doing it so fast because they're  franchising like within 5 years. Trade-offs. And so that's the trade-off. And what ends up  happening is the franchiseor sells out of country, they start buying all their franchises back.  Hormosi is right. If it's doing so well, why would you just own the whole thing?

And so franchiseors  do eventually come back to you and I and say, "Hey, you guys want to get out? We'll buy you for  7x ibida, 6x ibida." Okay, let's talk uh startup cost for all four of these concepts and then we'll  just cover them real quickly again. So number one was freight brokerage. Yep. How much does it cost  to get involved and how much of that cost can you finance?

Yep. So the freight brokerage one because  you're doing it at your home, small office, small team, it's mostly you B2B sales, it's 75,000  to 193,000. How much of that is the upfront fee to the franchiseor? So the franchise fee is  typically $35 to $60,000 depending on the brand. For these guys specifically, it's about 50,000.  Okay. And the rest is technology software fee, training.

They also are required in the FDD  to put three months of working capital. So a lot of times that range is including three  months of cash. There's probably a minimum too, like three months of working capital or  $30,000. Well, so they're required in the FDD, the franchise disclosure document in the  item seven, that's your startup cost, okay section.

So whatever that number is, they're  legally required to show three months of working capital. I tell people double or triple that.  You probably need six to nine months of working capital. That's true for any business franchise or  not. You should have enough for a rainy day and it to take longer to get to profitability. They're  just for whatever reason the FTC said 3 months is the number you are required to show.

Okay.  So call it 125 would be the the middle median between those two numbers. How much of that can  you finance and how you finance 90% through SBA loans on the high? Like that's the best you're  going to get realistically probably 70 to 80% can be financed. You need to come with 10 to 30%  of of these numbers. So if it's let's say 125, you need to come with to 25 grand.

And could you  borrow that from friends and family if you need to? Yep. And I mean the SBA process is probably  a little annoying, right? I've done a few. So, I used to own a number of laundromats and I remember  all the horror stories of SBA, you have to, you know, give blood, you know, give a blood sample  and everything else and it honestly wasn't that bad.

They make you fill out a personal financial  statement of PFM, which you do that if you buy a house. You're doing it anyway. And once you do  it once, you have all the information. Like, the annoying part is doing one of those personal  financial statements cuz you're having to find accounts and over here and brokerage statements  and retirement stuff and that part's a little annoying, especially if you own other businesses.

You have to start pulling some of that stuff, too. But once you do it one time, you can go shop at  20 banks and find the right partner and the right rates. And guys, tkowners.com, that's my community  where people are building businesses. I do AMAs, Q&As's every week live. You can ask me anything  you want. You can have accountability partners. It's about a thousand people in there building,  starting, growing businesses.

Check out TKO as in the Kerner office. TK owners.com. I even  had the individual I mentioned that owns 120 locations. He told me recently cuz he's a pop-up  franchisee as well. He's like, "Look, I I'll even entertain SBA still at times." He's like, "It's  a necessary evil." Yeah. He's like, "It's a good source of cash. It's a good source of capital.

You  can borrow up to 5 million." An aggregate. I think they actually increased the limits recently. And  then there's an SBA Express loan where you can get half a million dollars in less than 30, less than  60 days. Wow. So, you could use that for this and you can keep doing it after the 60 days is up.  You can do it again for another location up to 5 million again.

Up to half a million per SBA  Express loan. So, yeah, you could use that for all of this or most of this. And then 5 million is  the aggregate. So yeah, you can do 10 territories, 10 locations. Okay. And yeah, I used to think 5  million was like like you had to buy one business and you might as well get as much close to 5  million as you can. But you could do that across multiple businesses, multiple loans.

It's like a  line of credit basically. Y and what the applying the first time is the hardest part and then after  that they probably just want updated statements, right? And the brand too, this is also a  caveat, the brand has to be on the SBA registry, which most franchiseors do because they understand  they want more franchises are going to be doing this.

Yep. Outside of SBA, the other options  for financing this are friends and family and are there any other like conventional bank loans  or options out there depending on your personal standing. If you have enough collateral and  assets, you can get conventional loans. Like we're entertaining conventional loans for the pop-ups  we're developing. They might come with a personal guarantee.

They might be more relaxed and just  require a corporate guarantee. It depends on the health of the franchise system as well. And banks  love franchising because there's 100 units or 50 units or even 20 units of the same business out  there today that they have data on and financials on that make them feel better versus Chris and  Alex's bagel shop that we're doing for the first time and they're like what is Yeah.

Yeah. What  what how do you know these this perform is right and that this will actually do this? Yeah. So  franchising again is derisked statistically you know shown but from a bank's perspective also  derisked because they have way more data and locations to look at. So for freight brokerage if  the range is 75 to 150 then theoretically if you finance 90% of the 75 very base case is 7500 cash  in which you could borrow from friends and family up to like 30 40 cash in which you could borrow  from friends and family.

What was the next one again? The next one was the facility management  where you're doing you're effectively a GC managing 20 subs to go do cleaning, landscaping,  HVAC maintenance, etc. This is one that has very high revenues. The total range that they  have is 229,000 up to 410,000. Okay. So again, 29 to 100K cash from you or friends and family  and finance the rest with SBA.

Yep. So sub Yeah, sub six figures to get into the city if you  borrow money. Okay. And then the third one was oil filtration and that because you have trucks again  you can start with one. So this range is smaller. It's as soon as you start with one 140,000 to  163,000. Okay. So 15 to 50k give or take. Yep. Um and then the last one was fuel delivery is 172,000  to 490,000.

Okay. So 17 to 150 to 200k. Yep. Okay. Do you advise people to to do SBA to borrow to  to start the So I personally am with the pop-ups with my my business partner. We're also raising  a little bit of private equity. So we're raising a million in exchange for a percentage of the  company as well because we have to develop 10 over 5 years. Okay. And so SBA will be used to fund  part of them cash flow from stores as they get open and ramped.

We'll fund you know additional  stores. Him and I are both putting a good chunk of equity in. So, we're using a mix of a number  of different sources because we're biting off a decent sized chunk of this of this apple. But for  most people, depending on your situation, I would say again, just get into the arena, get one or two  going, get it profitable, demonstrate that you're a good operator, and now you've unlocked and  you've earned the right to start raising private equity to getting conventional loans to

opening  up other financing sources. That then starts the snowball like the individual I mentioned, going  from 0 to 120. his 120 location portfolio does anywhere from 350 to half a billion dollars a year  in revenue in seven years. I don't know what other you know paths can you do something like that  with I don't want to say no risk but less risk for sure and a clear again playbook on how to do  it and he told me he's like look I don't own 100% of this portfolio I own of this brand 30 to 50%  equity because the rest

I've raised enough money but I've proven myself as an operator I'm good  at managing these teams and these directors of operations and district managers and GMs of these  locations and so he's earned the right now he can any concept pops up the brand's not only going  to give him however many territories he wants, but he has capital waiting on the other end of  that equation.

That's sure you need 20 million, 30 million to develop all these. We'll give  it to you and he still retains close to half of the equity in the business. He just needs to  work hard and earn it, right? Why do you think that franchising is so overlooked when it comes to  building wealth? I think for the same reasons that I didn't like it at first as you hear the horror  stories of the person who got sold snake oils, you know, and smoke and mirrors.

And I think  there's not enough good educational resources and enough regulation to prevent that from happening.  And so like that there's a psychological study on if you lost 20 bucks, the impact it has on you  versus if you found $20 walking on the street and you losing $20 has like a 3x more negative  impact than the happiness you find from finding the 20.

And so I think whenever any of these bad  things happen, they take up the whole, you know, space in the room. Yeah. And so part of it's that,  part of it's the lack of regulation. And so again, we're on this mission of how do we give people  the data they need to make the right decisions for their unique situation because there isn't a  one-sizefits-all.

So I think that's why I think it's starting to turn a corner and there's a  lot more attention to it now, especially with AI coming in and people wanting to own assets,  businesses, have more control over their lives, their careers, etc. And so I think we'll start  to see a shift and I hope that you know these conversations can be at the forefront of educating  people on what's possible and what to look out for.

I think that horror stories are people love  horror stories because it's a comfort blanket to people. If we're kind of entrepreneurally  minded or we're thinking about franchising, we want to quit our job and then we hear a horror  story, they're like we're like, I feel so good I didn't do that. I feel so good about myself that  I didn't take that risk that I've been wanting to take forever that I didn't bet on myself because  it look it would have failed.

Like we latch on to those as we all do in different things in  life. It's just not just business stuff because it makes us feel better about not acting. Yep.  Right. That's why the horror stories get all the clicks. That's why the news is full of negative  stuff because it it can be a comfort blanket in times. What would you say is the cheapest  franchise concept that you would put your own money into right now?

So, the cheapest and  I don't know if I would personally run it, but I would do with a kid or maybe a spouse or find  a high school kid that would want to do it with me and they could learn entrepreneurship through  it. But it's Card My Yard is the brand. And it's $10,000 to get into it. So very cheap. And it's  these yard signs that are like happy birthday Chris or congratulations.

And it's like the most  quintessential suburb activity. Yes. So easy. It's almost like art the modern paper boy route I would  say. And you can make 30-ish grand a year doing that. Wow. So it's like a nice little side hustle.  Could be fun to like work with again son daughter on it and relatively low risk, low investment  part time. If I handed you 150 grand right now, what franchise would you buy into today?

So, one  that I really like that 150k would allow me to do is this garage renovation business. They do like  epoxied floors, custom shelving with slapboard and stuff. The average revenue is over a million.  No heavy equipment. It's just a team of two or three individuals coming to pour the epoxy and  and hang shelving. Yep. And you know the Damon John from Shark Tank.

Yeah. Recently used this  company and was on Instagram talking. They did such a fantastic job. So the brand is great, the  quality is great, the revenues are fantastic, and the overhead is pretty small. I like services  businesses because you can get going in less than 30 days. Okay. I like to go fast. Yeah. I  actually interviewed an epoxy flooring guy right there a couple months ago.

He doesn't own  a franchise, but he does really well. So again, a franchise is a great option if you want a little  more handholding, a little more support. What does the average Chick-fil-A owner really take home  and would you recommend that franchise? Yeah, the average is around 650,000 and Chick-fil-A  really isn't a franchise. It it kind of packages itself as one, but they take 50% of profit  as a royalty, but they build everything.

So, you only really need it's like 15 grand or so to  get started because they're building the building, they're identifying the site, they own the land,  but you're buying a job. And so, for the right person, it's the best thing ever. Imagine being a  person who maybe might not have all these amazing career opportunities, but if they're really good  with people and they're willing to work hard, Chick-fil-A could be this path that materially  changes yours and your family's life and you're making over half a million

dollars a year  in income, but you're a general manager of a restaurant effectively for the rest of your  life. It's funny cuz they don't even call themselves a franchise and they almost they  almost do themselves a disservice if they did because the fees would look so egregious if they  were. But it's really not like they're partnering with you to start a business, right?

Is crumble  a fad? Yes. I think it's a fad. I think you can't sell thousand calorie cookies forever. I think  there's too much of a health trend happening right now. You're starting to see it with a lot of their  numbers starting to fall off now. I mean, granted, they've been doing this for a number of years  now, and so it might just be running its course, but it should have more staying power than it's  had.

What about this new concept they launched, the pies? Do you know anything about that?  how that's I I just can't think that that would do well like buying prepared pies. I think  they've started offering the sugary drinks too, the dirty sodas. They've started offering those as  well. They're it's menu innovation. They're trying to claw back to, hey, cookies can't aren't cutting  it anymore and what else we have to do to get out of it.

So, they're making an effort. They they  know store volumes are declining and they need to do something. And this is adjacent enough that I  guess it makes sense. Pies, dirty sodas. Let's try it. To me, that's always a signal that a brand  is like really is struggling, floundering, but we're still like years ahead of that being public  knowledge. There was a Thai restaurant in Madison, Alabama that I used to love.

And every time we  went there, they were empty, but it was good. And then one day we went there and they were serving  breakfast. This is a Thai restaurant. And I open up the things for breakfast and I'm not I'm not  exaggerating, they were like Pop-Tarts. And this was like a good it was a nice Thai restaurant. And  I was like, "Okay, what's happening?

This place is done." That's like, so we we do content sometimes  on these like Frankenstein concepts. So Taco Bell, KFC, and what's the third Pizza Hut all combined  under one roof. And the thought when they started doing this about 20 years ago was, "All right,  same overhead. We have three restaurants out of here. We're brilliant. You know, we got three  different menus you can choose from."

But what ended up happening is they're all cannibalizing  each other because you're you're going to eat those types of meals at the same time. But what's  starting to work now is Applebee's and like uh I think it's IHOP. They're doing that same menu  out of the same location because one's breakfast and one's lunch and dinner and it actually can  make sense and you actually get that overhead savings.

But at the time, pizza, chicken, tacos.  It doesn't it doesn't make sense. I just know that the the Crumble executives and founders are  smart and they're astute and they wouldn't be making those frankly embarrassing decisions if  it wasn't pretty clear that they had to. Yeah. You know, Crumble offered ice cream once, and  this I'm a little embarrassed to admit this, but you know, everyone wants ice cream with their  cookies.

So, I went to Crumble one day and like, "Oh, ice cream." And it came in these prepackaged  little tiny things, and I got one, and it was it was it was frozen chalk. It was the worst thing  I'd ever put in my mouth. It wasn't good. It was so bad that I went so far as to go to the crumble  founder on LinkedIn and message him, "Use one of my my precious LinkedIn credits and was like,  "Dude, I there's no way you ate this ice cream because there's no way you would have allowed  this."

He never responded to me, but I was like, "This like cuz Crumble, they're put together.  They have an amazing app that I think they have delicious cookies. Like, they pioneered the space.  This is not Crumble." And I messaged it to him and I doubt it had anything to do with my DM, but like  a week later they were gone. Really? I mean, you probably never even knew they had.

I didn't know  they had ice cream. It was like a flash in the pan. So, the fact that they're doing this is like  if Chipotle started selling breakfast, A, I would be excited because I love Chipotle. B, I would be  like, as a shareholder, I don't know. Like, you're reaching now, right? That's the signal I get from  companies like reaching. It makes me wish I could short some of these brands.

I know. I know. What  is the most boring franchise that quietly makes people rich? The one that comes to mind is brands  that do accessibility infrastructure for seniors. So like they're coming and putting ramps into  your home. They're putting those like kind of elevatorish things that go up your stairs. And the  baby boomers, you know, this aging population.

We have 10,000 people I think a day turning 65  or older. It's a ton of people. And we'll do like random market surveys where we call into  Philadelphia or Cincinnati and we act as though we have a parent that's aging and we want to put  them into a facility or see if there's inhome care available. Every city we call doing this wait  list wait list 6 months 12 months every city.

So like there's clearly a ton of demand and not  a lot of supply. But I like the idea of building the infrastructure versus the care itself. Yeah.  It's because there's less liability, there's less labor I have to manage. You come in, you build  a infrastructure and you're out. So, I don't know if that's boring or not. Kind of is. You're  building like ramps.

I know. And they do millions of dollars. Mill some of these franchises. And  one of the brands I'm thinking of is, you know, 10 million plus a year in revenue, very good margin.  It's funny because I have a phrase for this type of business and it matches perfectly that type  of business is I call them grandparent businesses where you know why is being a grandparent better  than being a parent?

Because you come in, you see the kids, you play with them, they're happy, you  sugar them up, they need a nap, then you bounce, right? That's a grandparent business. This is  literally a grandparent business where you're not managing them. You're coming in, you put a  handrail next to the toilet, thousand bucks, I'm out. Yep. Right. The insurance pays for it in many  cases.

So yeah. So there's like no payer. Like that's another brilliant business model is like  the incentives are aligned. It feels good. Like I talked to some of these franchises in this these  exact businesses and they genuinely feel very good about what they're very missiondriven. Like I  made a huge difference in someone's life and in a family's life.

they now get to stay in their  home x years longer because of what I did. If you or someone you know went to chat GPT and said,  "Make me money." And then it did, I want to hear from you. I want to have you on my podcast to hear  your story. If it's you, great. You'll get free publicity. If it's your friend, great. I'll give  you $1,000 for sending your friend.

Send them to tkos.com and fill out the form and we'll have you  on the podcast. You know, another business that's a lot like this is uh the autism clinic business.  It's very profitable, very needful, and similar to the other one, no one's paying for it, right?  Insurance pays for it. Y this behavioral therapy is proven to work. Y So the parent has a better  life.

The kid has a better life. The parents don't have to come out of pocket. The business owner is  profitable and the only person footing the bill are these greedy, stupid insurance companies that  we all hate. Yep. So there's franchises for that, too. I believe a few that we work with that  are really good. Again, every franchisee is very that's another thing like when we talked  about why do people franchise?

Is it money? Is it you know generational wealth? Is it replacing  an income? There is a group too that's just like obviously I have to make some money but I want to  do something that I leave an impact on a community on an individual and a lot of these ABA because  it's autism andh behavioral I forget the last day but but the ABA clinics are they're very mission  and purpose driven.

They're making materially positive impact on people's lives. And to your  point they're also great businesses. It's like when you get that ven diagram overlap what can  you ask for? Well, my friend is in private equity and he helped work on a deal years ago, an autism  clinic deal, four locations, all corporateowned. This is verified and confirmed. These are real  numbers.

Four locations sold to private equity for $64 million. Like retail locations. Wow. But now  they have there's over 100. Like it was a great buy too and a great sale because now it's like a  billion dollar company. Wow. Yeah. But that those multiples don't exist anymore. It goes back to  getting in early on the right thing too is like not every concept is going to do that but like my  eye doctor is not a franchise but I know the guy who led the rollup of it.

Same thing. He was his  his father-in-law was an optometrist and he said hey do you like doing all this back office? He's  like we all hate it. He's like are you like that or is it all of your buddies too? He's like all  of us hate it. you just want to provide service and value to our clients. He's like, "Well, what  if I bought your business and I handled all the like stuff you don't want to do?"

He's like,  "Yeah, I'm good with that." He's like, "Would your buddies want to do that, too?" And so, they  started out with like five or six of them with his father-in-law and their buddies. And my eye doctor  is a multi-billion dollar company where they just went across the country and ran that playbook  and again found the right thing early, rolled it up effectively is similarish to a franchise  roll up.

Wow. Another hot tip for the eye doctors out there. My friend is an an eye doctor and he  finds all of his customers through postcards. His postcards have a a 60x return on ad spend.  Really? $60 returned for every dollar he spends on postcards. Wow. He has nine clinics all through  post Everyday direct mail. That's right. EDM. Why are franchise owners failing today even if they  have a great system and a great playbook?

I say the wrong person in the right franchise is still  the wrong franchise. Okay? And that's because their background doesn't align with it. Their risk  tolerance doesn't align with it. It's like you take this ex-military guy who's great with running  a squad of people, but doesn't want to stand in front of a room of 500, maybe is more shy, but is  good with a smaller group.

He's probably not going to want to do like doortodoor sales or like get on  a behind a computer all day and on a phone selling you freight brokerage. Probably be terrible at  that. versus the person who very outgoing uh life of the party, you know, loves to win, is good at  convincing and persuading people. Probably good at both of those things with better at home  selling freight brokerage.

Yeah. And so it's just it's it's really the fit. This is all about  fit, I've realized. And our whole platform and our whole goal is get people into the right thing,  not the one that makes the most money, not the one that it's because that's how you're going to  you have to persevere and do the work. And if you suck at the work or you hate the work, you're not  going to persevere and you're going to fail.

As soon as you're out of the game, you're out. If you  stay in it and work hard enough and long enough, you're going to have some level of success. Well,  that's why you could take two amazing humans, put them together, they get married, and it  becomes a toxic relationship cuz they're just bad for each other and with other people, they'd  be perfect.

Is Subway the worst franchise deal in America? Defend your answer. I think today,  absolutely. I've So, a little inside information. We interviewed someone at my last company who  was a franchise business coach for Subway. So, every brand has these coaches that help franchises  and they're assigned to 10 of them a month or whatever. And she had told me, she's like, "Yeah."

I was like, "Why are you leaving and why do you want to come work with us?" She's like, "It's  just becoming too cannibalistic and toxic." Like, "What do you mean?" She's like, "We're at a point  where we're opening stores now a block or two away from another and the goal is to like let them  fight it out and we'll we'll we'll take the the best one and we'll close the other one."

I'm like,  "That's someone's life again." investing in stores and renovations. Like they're knowingly doing that  as part of their strategy. And if they survive, some of those owners are taking home 20 grand  a year, 30 grand a year. Yeah. I think it's terrible. There's way better options. At one  point, it was probably exciting and all the rage and rave and you know, if you got in early,  probably could open a hundred stores and have made a lot of money, but at what cost and what expense?

And that's where to me like your individual morals and ethics. You have to decide for yourself. Are  you fine being very combative and that extreme competitive or you borderline unethical or not?  Um, and I just I wouldn't be able to. How are people out there buying franchises with none of  their own money? So the individual I I mentioned, he had a background in operating things and it's  like that gave him a unique skill that capital was attracted to because the capital didn't want to  go run a 100 person team or a

200 person team but this individual was a good operator. And so I'd  say if you have a unique skill set where hey I can come in and provide something that others don't  have. And in this case if you don't have capital you need to come with something else. You can't  just be like hey I have this idea give me the money let me go do it. you need to prove or have  some level of proven track record to say hey I can compliment you in a way that you currently don't  have today and most of the time that's operating and so my

advice would be go get some level of  operational experience it's why I tell people like of course we want people to buy businesses and be  entrepreneurial whether it's franchising or not but if your goal is to own and build multiple  businesses you just need to get in the game whether it's a side hustle the card my yard thing  or freight brokerage or or just having a job like an operator doesn't have to be an entrepreneur No,  just being proven at your job, your we I'll give you a real life example now.

Like for pop-up,  we're developing 10. Dan and I have a number of other things going on. So we're busy. We have  capital. We can operate, but we can't operate five things at the same time. And so we brought an  an operating partner on who, to your point, hasn't necessarily been the owner on the other side  before, but she has operated multiple businesses, multiple locations as like a GM, as a district  manager.

But now we've given her equity upside, you know, pretty meaningful equity that she would  have might not have had anywhere else or otherwise that she if she does well here the next three to  five years will be able to parlay that into now I own half 60 70% and I'm attracting the capital  to go do my own thing, but she's having to earn that right these next three to five years in this  kind of first meaningful way that she hasn't had a chance to do before.

Gotcha. So it's going to take  that person longer, but it's possible. Yeah. When you're looking at a franchise document, what is a  red flag that makes you run away every time? Yeah, we talked about it a little bit earlier,  but the the closures and the transfers, especially if they're trying to hide things,  or if the item 19 doesn't have profitability or footnotes that are clearly made up, like, oh,  this revenue is just the top 10 locations.

Like, why aren't you showing the other not even 90%  but the other 95%? Because you're only showing the 10 absolute best. Why? or if this isn't in  the document necessarily, but if the brand is ky about introducing me to other franchises, like let  me talk to some that have failed. Let me talk to some that are performing well. Let me talk to some  that are middle of the road because I need to know what's happening here in the system behind closed  doors under the hood.

And the best way to learn is to talk to people actually doing it. Do you ever  say like because if I'm a prospective franchisee, I don't want to say, "Hey, give me some names of  some people I can call." I want to say I want to see all of your franchises and I'm going to pick  a few secret shop. Yeah, you should. Just like if you were interviewing someone for a job, you give  me your references, Chris, and you're going to give me your best your best friend, your your wife  and Yeah.

Versus if you give me those. But then what I do during the interviews, I say, Chris,  everywhere you've worked, who was your boss there? What would they say to you? How do you spell their  name? Yeah. Yeah. Cuz then I then I go find them and I do talk to them and especially if it was  one that was not on your list. And so, same thing here. here. If you're looking at a franchise,  they're going to give you the three that are the best performing people probably.

And then you need  to go, it's your job in your diligence process, and we'll help you with this. If you want to work  with us, go find the other franchises that filed bankruptcy or aren't in the system anymore.  And there's ways to do this. There's ways to find this information and go talk to them. Yeah.  Now, if people do want to work with you, what do they do?

How do they find you? The easiest thing  is to go to fr.com, franzy.com, and then we put out a ton of content as well. We have a podcast  called The Exit Plan, which is individuals sharing their stories of leaving corporate America to go  become a business owner, franchise or not, as well as people that have built large portfolios and  have exited them to private equity or other large operators.

So, we tell those stories and then  Alex from Franie on Instagram, Twitter, Tik Tok, etc. And we'll link to all those places. Anything  else you need to share, Alex, that we might have missed? I think we covered a lot. I appreciate  you having us on. And again, I think franchising is probably the most overlooked path to wealth  creation in America, and we're on a mission to help put a spotlight on that.

Thank you, Alex.  Thank you. If you like this content, please share with a friend, hit a like or a comment  below, and we'll see you next time on the Kerner