March 8, 2025 • 36 mins
Thinking about buying a franchise? Get INSIDER advice from Jeff Elgin, CEO of FranChoice, the premier network of franchise referral consultants! In this episode of the Franchise Freedom Podcast, Jeff shares his decades of experience, reveals common mistakes, and provides invaluable tips for finding the PERFECT franchise for YOU.
Find your right fit at https://ggthefranchiseguide.com/right-fit
DISCLAIMER: The information on this podcast is for general information purposes only. Franchising involves risk and careful consideration should be given before making any decisions.
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The Franchise Freedom: Discover Your New Path to Freedom Through Franchise Ownership, Book by Giuseppe Grammatico https://ggthefranchiseguide.com/book or purchase directly on Amazon.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
I get a tremendous amount ofsatisfaction out of helping
(00:03):
people find their piece of theAmerican dream.
Normally, the economy goes upand down, and one of the
questions I'm always askingmyself when I look at
opportunities is, Is this abusiness that's going to do well
if times tighten up?
Because sooner or later, we'regoing to have another recession.
I'll tell you that the biggestmistake that most people make,
and it was true of me when, whenI first became a franchisee is
(00:26):
they focus on the widget.
They focus on the product orservice that the business is
delivering to customers.
And, and that's the last thingyou should be looking at.
Welcome to the Franchise FreedomPodcast, where you can escape
the corporate trap throughfranchise ownership.
Here's your host, GiuseppeGrammatico, The Franchise Guide.
(00:52):
Welcome to the franchise freedompodcast.
I'm your host, GiuseppeGrammatico, your franchise
guide, the show where we helpcorporate executives experience
time and financial freedom.
Really excited for today'sepisode.
we have Jeff Elgin fromFranChoice, super excited.
Jeff has been a, a mentor to me,learned a lot from Jeff over the
years.
I think I jokingly say, I thinkhe created franchising.
(01:12):
He's been in the business solong.
But before we bring them onstage and again, super excited
to have them on, you've beenAsking for more and more guests.
That's what we're bringing tothe table.
Lots of guests, lots ofknowledge lots of different
perspectives, which is the wholepoint of the show is educating
where we can.
But wanted to encourage you.
We've been getting a lot ofrequests.
If you're ready to chat or learna little bit more about
franchising, you could reach outto us directly right on the
(01:35):
website, ggthefranchiseguide.compeople always ask me am I a good
fit for franchising?
We included a survey right onthe website.
Gives you some quick questions,some things to think about if
franchising may be a good fit.
So check it out again,ggthefranchiseguide.com.
You can book a call, you canlisten to previous shows and
we'll have this show with Jeffpretty soon here in the next
(01:56):
couple of weeks.
So let me bring Jeff on stagehere.
Jeff, welcome to the show.
We really appreciate you.
You coming on today.
Thank you.
And I did not invent franchisinga long way, but not quite that
far.
I see that jokingly.
So we'll, we'll get some jokesin, but now it's, it's been a,
it's been an honor having youon.
If you could give.
(02:16):
Audience, maybe a little bit ofa, of a bio, kind of how you got
into franchising and what you'reup to now.
I actually started infranchising as a multiunit
franchisee in 1983.
83 is, you probably weren't evenborn yet at that point in time,
but and I have the distinctionof being the absolute worst
franchisee in the history offranchising.
(02:37):
That's funny.
I I got in the video rentalbusiness when it was red hot.
In those days, every, everyvideo would rent on Saturday
night, the store's shelves wouldbe bare.
And I thought, boy, this is agreat way to make money.
It never occurred to me thatabout every third person in
America would go into the videorental business at the same time
I did.
And very quickly it wasoverbuilt.
(02:57):
And and then I got to learn anew term called shakeout.
And which is what happens when,when you get too much supply in
a retail environment.
Some people have to go bye bye.
I got very lucky becausesomebody came along even dumber
than me and bought the businessfrom me.
So I got out from under it.
And, and and the franchise orasked me to get involved in
(03:18):
franchise development and intalking to people who wanted to
become franchisees since I'd hadthat experience and, and maybe
provide a few warnings aboutwho's appropriate and what are
appropriate concepts for people.
And, and so I did that for awhile and, and spent most of the
nineties with a company calledgreat clips.
the hair cutting franchise andbuilt that up very, very large
(03:38):
and, and then left there andstarted franchise, which is a
service that helps people whowant to find a good franchise,
but they really don't know howto go about doing it.
We have consultants that thatwork with them, that spent a few
hours asking questions andgathering information to try and
figure out.
What the people want toaccomplish, what resources they
have to work with, and and whattheir interests are.
(04:00):
And, and based on that, we canusually narrow down to a few
franchise businesses that have ahigh likelihood of giving the
people what they want in, interms of their goals for a
business.
And, and it's been verygratifying.
We've now, 25th year in businessand franchise, and I've enjoyed
every moment of it.
That's great.
And, and as the audience now, Iam also a consultant with
(04:23):
franchise.
It's been great.
It is the premier agency outthere, a premier company, excuse
me, out there.
And just absolutely loveeverything about it.
What obviously, it sounds like acrazy topic as you mentioned how
we help individuals, but it'salmost reverse engineering it,
as opposed to looking at listsand lists and lists and trying
to figure out what the heck is agood match.
Yeah.
(04:43):
We're figuring out what's,what's more, most important to
you.
Can you, can you talk a littlebit more about, what, maybe a
little bit more of what'sinvolved in that process and
maybe some things to thinkabout, I can indeed, I, I, if
you go back to my ownexperience, I got in a business
that I thought I was going intomovie business, I'm thinking in
a couple of months, I'll be downin Hollywood having lunch with
(05:03):
Jane Fonda or something.
But the reality was I, thebusiness I selected was just a
standard retail business.
It could have been a shoe shopor a bookstore or anything else.
It was just plain retail.
And, and that did not suit mybackground or my interests at
all.
And frankly, was excruciating.
Now, what we do with people issit down and the very first
(05:26):
thing we we just start askingquestions.
Tell me a little bit aboutyourself.
Tell me what you hope toaccomplish.
What motivates you to getinvolved in a in a business
entity?
Because it's it's difficult tobuild a business.
It's not an easy fall off a logthing.
So you've got to have somethingdriving you something you want
to accomplish that makes itworthwhile to to hit a few
(05:47):
potholes in the road and takesome risk and then and then
become a business owner.
And so we asked about that.
We asked about their tolerancefor risk.
And we, we talked about whatresources they have available
and what skill sets they have.
And, and, and then a lot of veryspecific question.
How do you feel about employeesand what type of employees do
(06:07):
you most like to work with?
And how do you feel aboutselling?
Are you a good advocate?
Are you, is that somethingthat's a strong suit for you?
And just lots and lots ofquestions like that.
And at the end of that process,we build a model that talks
about what the person that we'reworking with wants to accomplish
and, and, and, and frankly, whatthey have to work with and, and
(06:29):
and how they'll know if they.
at the end of the process havevictory.
What does that look like if itturns out to just be fantastic?
And, and then based on thatmodel, we go out and analyze a
number of different franchiseopportunities and, and try and
narrow down to a small handfulthat, that look like they might
be a great match for thatperson.
(06:50):
And quite often it's not abusiness that the person's ever
thought of.
And a lot of people come to usgoing have you got a good Subway
sandwich?
Or a McDonald's or somethinglike that.
And, and, those businesses are,are, are perhaps not as
attractive when you get involvedin them as they look from, from
perhaps the idea that, thatthere's a long line out the door
(07:10):
at lunchtime you have to, youhave to have a skill of dealing
with a large number of minimumwage employees that turn over on
a very regular basis.
That's a skill that a lot ofpeople have.
But I don't.
And, I would much rather workwith more highly skilled and
educated people.
And, and, and there arefranchises that focus on that
kind of activity.
(07:30):
There are executive franchiseswhere instead of the franchisor
or the franchisee, ratherdealing with the customer
delivering products or services,they usually work with managers
that run the individual unitsand, and they manage the
managers.
Lots of different types offranchises and it just, it boils
down to one thing.
What's the perfect opportunityfor you?
(07:52):
I like that.
I always say, let's check offall the boxes, not just check
some of them off.
And that's extremely importantbecause we're getting super,
super specific.
And that's a perfect example, asyou mentioned with the food
franchise, because people alwayscome to me and say I don't, I
don't want a lot of employees.
But I want a subway.
I want some of these, some ofthese businesses.
And I go, have you ever, haveyou ever worked or actually
(08:12):
just, have you ever eaten at arestaurant?
How many employees have you seenbetween the food runners and the
waiters?
And I grew up in the, I grew upin that space.
We owned an Italian restaurantand we just had dozens and
dozens of employees, lots ofturnover.
Once you kind of lay it out thatway, it really clears things up.
And I think it's a, it's trulyhelpful.
really makes them kind of take astep back to say, yeah, you know
what?
I don't, this is not what Iactually want.
(08:34):
Or if, if I want to be in foodor certain restaurants, I'm
always settling here.
I'm constantly saying I don'twant lots of employees.
I'll suck it up on this one.
I'll settle.
I also don't want to work niceand weekends, but I'm settling.
Now we have a complete oppositeof what that ideal model is.
Yeah, you nailed it there.
I couldn't agree more.
Equally, it's important who,who, who is not a good fit for a
(08:56):
franchise.
I get that question all thetime.
And I want to hear from you,what are your thoughts on the
simplest process of figuring outif a franchise is a good fit or
not for an individual?
I think that a lot of peopleprefer.
Certainty to to uncertainty and,and in an employment
environment, it's a very certainenvironment.
(09:18):
You go to work when somebodyelse hires you, they tell you
how much you're going to make,they tell you when to be there
and what to do when you'rethere.
And, and so you don't have tomake a lot of those kinds of
decisions for yourself.
An independent business owner ismaking those kind of decisions
for themselves all day, everyday, right?
And and the, the, the, thebeauty of the role, if you look
at the positives are just oftenunlimited potential in terms of
(09:41):
of long term earnings andlifestyle and lots of other
things.
But there's also, you, you'renot only the CEO, you're the
janitor and everything inbetween in a small business and,
and, and the buck stops here andyou, you might end up making a
lot of money long term, but youare the last person to get paid.
I will vouch for that.
(10:02):
That is absolutely true.
So it's gotta be, it's gotta besomething you really want,
right?
You gotta look big picture andfast forward that, that first
year there's a lot ofreinvesting.
Back in that business the firstyear, there's that learning
curve.
It's finding, the role that youenjoy in the business.
You may have a sales background,but maybe you prefer the
networking aspect and viceversa.
Lots of things to consider.
(10:23):
switching gears a little bitfranchise trends, you've been
in, in, in the business for awhile now you've seen a lot.
And I just found out prior tohitting the record button that
you were at the pre the recentIFA conference.
What were some key takeawayswhen it comes to franchising
things you've learned, maybesome changes would love to,
cause I, I was unable to attend,so I'm really excited to kind of
(10:44):
get your thoughts.
I think two questions there.
As far as the IFA is concerned,this is the trade group for all
of franchising, franchisors,franchisees, suppliers, all
attend this meeting.
And there were over 4, 000people out in Las Vegas in one
of those giant casinos.
And it's so much fun when you'vebeen around a long time because
(11:06):
there are a lot of friends Ihave in the franchise industry
that I only see once a year.
Right at that convention.
So I always try and get outthere and, and and, and see the
folks, there are lots and lotsof new concepts.
There are, there are newfranchisees, new franchisors
starting every year.
And, and so it's just, it's justa fun place to to go see your
(11:27):
peers and get to know thembetter and, and look at, take a
look at what's happening in thebusiness and, and, and Yeah.
And, and make your plansaccordingly.
The, the other question youasked about concepts was one
that I just love because, there,there are certain businesses
that are, they're, they're,they're kind of the new toy in
the toy box.
(11:47):
They're sexy and exciting, butthey don't have a whole lot of
track record.
And there are others that aresort of the steady eddies, and
they may not be quite asexciting, but, but a lot of
times they have a marveloustrack record of success.
Taking people like me who don'tknow their business and giving
them a system to operate and,and to become successful in the
business.
(12:07):
And, and and even though it'sfun sometimes to get involved
and be a pioneer, that, a lot ofthe pioneers didn't make it all
the way to Oregon.
You, you've got to be prettycareful about that as well.
And, and and, and frankly, thereare just so many tremendous
franchises that have been aroundfor a while.
And.
And they're, they're verypredictable in terms of their
outcomes and that, and that,especially for someone that is
(12:30):
concerned about security andmaybe a little more risk
adverse, then you probably wantto go with a concept that is
going to eliminate most of therisk.
Now, there's no such thing aseliminating all of it, right?
Because all business startups,even good franchises contain an
element of risk.
And you just have to recognizethat going in.
A lot of the people that we workwith, as you know from your own
(12:53):
experience, Giuseppe, a lot ofthe people are not appropriate
for franchising when it comesright down to it.
We'll spend some time talkingand, and, and we let people know
right up front that, at the endof the process, you're going to
have to make some decisionsabout individual franchises.
And yes, is wonderful, but no isalso wonderful.
If it's not the right thing foryou, don't do it.
(13:14):
And and, and don't feel anypressure to do it.
And when we run into somebodythat just doesn't seem to be
able to fit the pattern verywell, quite often we are really,
we'll have a conversation withthem.
That's pretty frank going.
I'm not completely convincedthis would be a good idea for
you to pursue.
And and, and even if they don'tmove forward with anything,
(13:35):
there's still, we've made a newfriend and that's a, that's a
good outcome too.
Absolutely.
Yeah.
It's it's funny you bring thatup.
Cause I got the one comment,this will make you laugh is this
is someone just out of, out ofcollege and said that he heard
on a podcast that you couldn'tlose money with the franchise.
So that I got a kick out of thatcomment because I said, then why
would, why wouldn't you just ownevery single franchise out
(13:57):
there?
And I think I, I go, I think youmisunderstood what they were
saying in the business, becauseobviously, as you mentioned,
there's going to be risk.
The question that I getsometimes is what is your
success rate?
And this is specifically for,for someone on my end.
Then I go I don't understand thequestion.
How many people you've placed?
If you, if you work with 10people, how many people end up
moving forward with thefranchise?
(14:17):
And I go that, that numbervaries.
I don't really keep, I don'tconsider success that if I work
with 10 people, 10 people buy afranchise, I guarantee one
thing.
You're going to learn somethingfrom the process.
You're going to learn somethingabout yourself.
You're definitely going to learnsomething about a franchising,
but our job is not to place and,and have every single person
move forward with the franchise.
In many cases, I have a, I havea list of people that I follow
(14:40):
up with probably in six monthswhere the fit is there, but
financially they have to work onsome things like credit scores
and getting some liquiditythere.
So the timing wasn't right.
We really are able to helppeople meet them where they're
at.
And then if the timing isn'tright, we figure out if the
timing is ever right, we followup down the road.
But I found that, that, thatquestion interesting because
(15:00):
they were looking for, I guess,a percentage and franchising, as
I mentioned, is not, is not.
The right fit for everyone.
And I always jokingly say, ifyou're going to buy a a burger
franchise and go in with theexpectation of changing the menu
franchise may not be the rightfit for you.
And although, and I'm sure this,the 5 foot long, the the filet
of fish sandwich at McDonald'swere actual ideas from franchise
(15:24):
owners, which is kind of cool,but at the same time, the
expectation is not to changethat, that entire system.
What, what are you.
Excited about in franchising,being in the business, kind of
what's, what's to come in, inthe franchising space.
I, I get a tremendous amount ofsatisfaction out of helping
people find their piece of theAmerican dream.
(15:44):
That's what's driven franchiseall along.
And, and you mentioned a whileago about the success rates.
We, we place about onefranchisee for every five or six
people that we work seriouslywith.
And so most of the time, theanswer is no, not right now.
When, when they do it, but, butthat doesn't mean never.
(16:04):
It just means, as you said,maybe they need to work on
their, on their finances orsomething.
Maybe they just need to to workone more time at a job.
And then two years from now, getlaid off again and go, okay,
I've had enough of thatnonsense, but, and that's okay.
That's, that's, that's whatdrives our business and it makes
(16:25):
it so exciting.
When I see people getting intothat, and the timing is right,
and then the excitement as theygo through their initial
training, and the euphoria, andalso the anxiety, the first day
you open for business, and atleast in my case, I had probably
a little more anxiety than I hadeuphoria, but that's okay, and
(16:48):
then customers start coming in,you start doing business, and
the next thing you know, you'reoff to the races.
And as well.
That's a marvelous thing.
Absolutely marvelous experienceto be involved in.
And, and we get to do that everyday.
It's a, it's a great job.
And yes, anxiety happiness,excitement, y'all feel the same.
You start to sweat theheartbeats a lot faster.
(17:09):
So I remember purchasing myfirst franchise handing,
literally handing the check overa franchise or says, do you have
any questions?
And I asked him how do I, how doI sell this business at some
point?
And looking back, probably,probably not the best time to
have asked that question.
I think he was ready to give meback the the deposit.
So we kind of joked and he said,no, I'm kind of thinking, 20
(17:30):
years down the road, if I everwanted to sell, what is that
process?
It was just a, a question thatnot sure why popped in my mind
the day I'm, I'm investing in myfirst franchise.
But yeah, it's, it's reallyexciting and it's normal.
This is, this is part of theprocess.
Yeah, we, we.
We absolutely change lives andjust absolutely love, love what
we get to do every single day.
Fun fact.
We were talking early, so I hadJason Pfeiffer, who is the
(17:53):
current.
Editor in chief of entrepreneurmagazine.
We had them back on in December.
We had them on in the beginningof December.
It was before the top 500 listcame out.
So we got the chat and what ittakes to get on the list and
things like that.
But you had mentioned you, youwere you were with entrepreneur
magazine at some point.
Can you, can you share your,your experience there?
I was the franchise writer forentrepreneur for about 10 years
(18:17):
back in the in the early part ofthis century I think from 2000
until about 2012 or somethingright in that period.
So if you go to entrepreneur.
com and Google Jeff Elgin,you'll see a few hundred
articles that I wrote at onetime or another that nobody ever
throws anything away on theInternet.
So they're, they're archived inthere someplace, but the owner
(18:37):
in those days was a guy by thename of Pete Shea.
Absolutely wonderful, wonderfulhuman being and great business
partner.
And we did a lot of, a lot ofwork together and, and have a
lot of fun.
And Pete's now aged out of thebusiness as I'm in the process
of doing.
He's, other people have takenover the magazine and, and keep
driving it forward, but it wasjust a marvelous time.
(19:00):
And when you mentioned, the headof entrepreneur.
com, I thought, okay, I go backa little ways with them too.
It's yeah, it's crazy.
It's crazy how I wish I knewthat I have my, I shared my 2005
copy on the show.
It's much yellower.
It's it was a, it was a whitecover.
It's now yellow.
I've had it so long.
But that was actually the, thefirst time I actually really
(19:20):
started looking intofranchising, starting going down
the list and making everymistake I think a lot of other
people make and started lookingat.
The, the subways and nothingagainst subway, but that was the
number one selling franchise atthe time.
And it was making a lot of themistakes that I try to help
other people avoid just lookingat kind of what was hot out
there and not considering what Iwanted.
(19:41):
And the funny part to that waswe owned an Italian restaurant.
I knew I didn't want arestaurant.
I didn't want all the staff, butI was looking at subway.
And my wife looked at me and shesaid, are you, are you crazy?
Like you work, I mean, love,love the, the the restaurant
business.
I definitely miss certainaspects of it.
It just was the holidays andweekends that we had to work.
So it's the little things youget overly excited and you start
(20:02):
to kind of forget, what is trulyimportant or what you're trying
to do.
And most people, when they thinkof franchising I'm sure you'll,
you'll agree with this is theythink fast food, they see the
signs on the way home.
On the way to work and they justget super excited.
They don't realize there are, Ibelieve, last, last number,
close to just say 4, 000franchises.
(20:22):
And we'll just say in just aboutevery single industry.
So if you can think of abusiness, there's pretty much a
franchise.
Am I, am I correct by sayingthat?
Yes.
And I'll tell you that thebiggest mistake that most people
make, and it was true of mewhen, when I first became a
franchisee is they focus on thewidget.
They focus on the product orservice that the business is
(20:43):
delivering to customers.
And, and that's the last thingyou should be looking at.
What you need to be looking atis what is the franchisees role?
And what am I going to be doingif I become a franchisee in this
business?
And because in a lot offranchise businesses, you're not
the one delivering the productor the service.
So what difference does it make?
(21:04):
What that product or service is.
But, but on the other hand, ifyou, if you say I don't want to
supervise a whole bunch ofminimum wage employees that turn
over all the time, can thateliminates about 70 percent of
all franchise businesses rightthere.
If you say, I don't want to workany nights or weekends.
perfectly reasonable requestthat eliminates a whole lot of
other ones.
(21:25):
And and that's what we really dowith people.
We ask questions that allow usto narrow down very rapidly.
And, and, I, I spent eight yearsbuilding a company called Great
Clips, the haircutting place.
And And I'll tell you, therewasn't a single franchisee in
that entire eight years thatwoke up one morning thinking,
gee, I ought to get in thehaircut business.
Yeah.
(21:45):
It wasn't that way at all.
What would attract them was thelifestyle of the franchisees who
had been in that business, saythree years or longer.
They were all multi-unit owners.
They all had managers.
They were supervising themanagers.
They weren't cutting hair.
They weren't in the salons on aregular basis.
It was an executive franchise.
And when people understood that,then all of a sudden a business
(22:07):
that maybe was completelyunattractive to them initially
becomes very attractive whenthey look carefully at the
franchisee role.
And that's true of so manybusinesses that, that I think
you just, you need to be focusedon, okay, what does a successful
franchisee do?
basis and am I suited for thatrole?
(22:29):
Does that sound attractive to merather than focusing on the, the
actual product or service of thebusiness?
Yeah.
And I think, I think most of usdid that, as you mentioned, you
were, you in the same, you werein the same boat and I'm looking
at the exact same thing and youjust get super excited.
And I always, I always tellsomeone if you want to be in
the, sandwich business.
You can, you can run yourbusiness and buy all the
(22:50):
sandwiches you want if you'retruly passionate about
sandwiches.
I I'm in Jersey Mike's land.
I live in the same town, thefirst Jersey Mike.
Got to meet family and friendsthat.
That grew up with the founderand it was really interesting
to, to hear his story.
And going back to the, to thewidget, you'll notice that a lot
of brands, your role is going tobe very similar.
You're not actually installingthe roof or cleaning the porta
(23:12):
potty or painting anything in apainting franchise, start to
look, but, but, but look at, Ikind of do it in two, two
different levels or layers.
We'll call it the first layer isgetting the business up and
running.
You may be wearing all hats tolearn the business, get it up
and running, but really figuringout six to 12 months out.
What is that role in thebusiness?
The team's in place.
(23:33):
You've, that learning curve, youlearn the business, you
understand, especially if you,if you've never owned the
franchise or any businessbefore, what does that role look
like?
Six to 12 months out and that'llreally help.
Validation, getting to speakwith franchisees and hearing
directly from the franchiseowner exactly what's an average
day in a life, maybe when youstarted to where you are today,
(23:54):
and that's and that's superhelpful.
So not only hearing it from afriend, the franchise or, but
you're getting to hear it fromthe franchisee.
So a very important part pointabout the widget, because that
is that is an area.
A lot of people just kind of,they get super excited and then
they go, okay what do you havein this specific space?
Or maybe it's.
Maybe it's a misconception,right?
Maybe they, you think you haveto have experience.
(24:16):
You do have to have experiencein a, in a, in the franchise
itself.
Or is it, is it something else?
It depends on the franchise, butfor the most part, the answer is
no.
What, what franchisors are doingis that they've got a business
model that they know if peopleexecute that business model
effectively, they will besuccessful.
That's the foundational approachof franchising and what they've
(24:39):
also developed then is amethodology to take someone who
doesn't know that business andbring them in and in a
relatively short period of time,train them in how to set up and
run that business effectively sothat if the people just follow
the system, do what thefranchisor tells them, they will
be successful most all the time.
And and, and that's, that's twodifferent skills.
(25:01):
First, you have to have theskill to operate the business
effectively.
And this is the path that mostfranchisors follow.
They, maybe they open the firstfour or five, six units of
whatever their business isthemselves.
They run it very successfullyand it's doing well.
But then at that point theyrealize they need somebody
else's money or.
Or management experience orsomething to help grow the
(25:21):
business further.
So they turned to franchising todo that.
Then they have to develop asecond skill that's, that's even
more important than being ableto operate the business
effectively.
They have to develop a skill totake somebody who doesn't know
beans about that business and,and train them in a fairly short
period of time to be able toeffectively run it.
And those are two differentthings.
(25:42):
Quite often you'll see peoplewho are very successful
operators who are not verysuccessful franchisors because
of that.
And that's another reason thatthere's a lot less risk in a
franchise if they've got a trackrecord and they've proven that
they can take people like meand, and, and put them in
business and make themsuccessful.
I like that.
We call it a business ontraining wheels.
(26:03):
That's something I you know,when someone, they want a
comparison, I go, that's reallyone of the best compare it's you
have that support and that'swhat you're really getting in.
You want that support that.
That anything, you, you have anyquestions, have any issues that
you have that go to someone to,to contact to help you out.
One last question on that.
So what would you, what do youthink, and not every franchisee
(26:24):
is going to be successful, sowhat do you think is the main
cause for people maybe not to doso well in their, in their
franchise?
This is the, from the franchiseestandpoint.
I, if you investigate.
The franchise opportunitiescarefully and, and, and, and
ensure that they do have a trackrecord of success of being able
to help people.
(26:44):
Then if you don't succeed, it'salmost always because you
decided not to follow the systemthat the franchise or laid out
for you.
And you, you decided to improveit.
That's the term I used when Iimproved the system that I had
been taught.
And mind you, there were a fewhundred people that were very
successful in that business.
A lot more successful than me,but you know, the franchisor
(27:07):
would say something like, makesure your location is on the
going home side of the street.
Because people stop and rentmovies on the way home, right?
You need to be convenient forthat half the stores I opened
were not on the going home sideof the street because I thought
What difference does that makeif they've got to make a left
turn across a lot of traffic?
I learned the hard way it makesquite a difference and and and
(27:27):
so and and you know It's justthere's so many little things
like that.
But basically If a franchiseedoes not succeed, it's either
because they weren't careful inthe investigation process.
So they ended up with afranchise that did not have a
track record of success.
And then it's more of acrapshoot, right?
If you want to start anindependent business where you
(27:48):
get to try and invent theairplane while you're flying
through the air.
Then don't get a franchise ifyou if you need that extra level
of excitement But if you reallydon't want that extra level of
excitement and risk Then get afranchise that has a proven
track record and for crying outloud.
Don't be like me follow thesystem Yes, so two two pieces
there first off Yes, you have topick the right franchise and do
(28:10):
the due diligence and follow thesystem sounds pretty basic.
But following the system.
There's lots, lots there.
I talked to people all the timeand they I have a marketing
background.
I'm going to just do themarketing myself.
That's part of the system.
The marketing that they'redoing.
We're not saying it's perfect,but they're catering the
marketing for your specificarea.
They've been doing this before.
(28:31):
They're leveraging Nationalaccounts.
And I hear it all the time whileI have a marketing background or
I have someone that does pay perlead, pay per click, excuse me.
I'm going to, I'm going to justdo it on my own.
Really if the intention is notto follow, then a franchise may
not be a good fit.
So we keep going back to fit andno fit not, not a good fit.
What did what is the, I guess,best advice?
(28:51):
It could be one piece or acouple of pieces of advice.
That you can give to anyonelistening as we mentioned the
beginning of the episode A lotof people first time business
owners whether it's a franchiseor not.
They're exploring side hustles.
They're exploring their firsttime business So what are some
some best pieces of advice youcan give to anyone that's at
this stage?
Researching, maybe they hatetheir job.
(29:13):
Maybe they're just looking forthat, that side income or side
hustle.
What would you recommend or whatwas the best piece of advice you
can give to them?
Be careful, be cautious andtrust your instincts.
There's times when you'veprobably made decisions in your
life.
I have, everybody has thatdidn't work out very well.
And when you look back inhindsight and ask yourself, what
(29:33):
can I learn from that?
From making a mistake, at leastin my experience, I almost
always realized that, okay, Ihad some unease.
I, I, there was, there wasdefinitely a lot of doubt inside
of me, but I, I just pulled myway through it and said, go for
it anyway.
Okay.
Trust your instincts a littlebit.
If something.
Is, is the right thing for you,then you're going to feel it in
(29:56):
your gut.
You're going to know that it'sthe right thing for you and
trust, trust your instinct,trust your gut on that.
I think get to know the peoplevery well.
Don't short circuit theinvestigation process on any
business, because, becauseyou're going to, it'd be like
meeting somebody and decided toget married in a day or two.
Maybe it might work out.
(30:16):
But there's an awful lot ofthings that you don't know.
There's an awful lot ofuncertain facts if you haven't
spent more time together.
And so I think with a franchiseor, often prospective
franchisees will go visit thecompany and, and get to know
some of the executives.
They will certainly, as yourecommended, get on the phone to
existing franchisees.
It's been a lot of time talkingto them and existing franchisees
(30:40):
in my experience are usuallypretty darn.
Frank about telling you not onlythe glory stuff that the good
news, but also, what did yourworst day look like and what did
you have to do and things likethat?
And if they don't volunteer, askhim those kind of questions
because, because you want toknow, I mean, you want to get a
good picture that theinvestigation process for a
(31:01):
franchise opportunity is reallylike creating a window that
allows you to look.
Through the window and see whatyour life is going to look like.
If you decide to pursue thisfranchise opportunity and the
better and clearer the view isthe better decision you're going
to make.
And so take the time to build agreat big, clear window and take
(31:25):
a good hard look through it.
And I think you can avoid a lotof potential trouble.
I think also be real careful ofany business that you think
might be a fad.
Because the beauty of a fad isif you get into it early enough.
You can make a lot of moneyreally quickly.
(31:46):
And then if you're smart, you'llsell before that fad peaks,
because the problem is thesethings come and go very quickly.
And, and a lot of my favoritefranchises out there are,
they're like Mike Rowe, dirtyjobs.
I mean, they're just fundamentalservices, but.
They're fundamental servicesthat have a need and, and, and
(32:06):
quite often they are very highmargin businesses.
There's, there's nothingexciting or appealing about when
a pipe burst in your basementand floods the whole basement
with sewage.
But you know, when that happensto you, you have no choice.
You're going to call yourinsurance agent and say, who's a
good restoration company?
And then you're going to getahold of restoration company,
haven't come out and clean thatmess up.
(32:27):
They, they put a fan down inyour basement and, and, and
probably charged the cost ofthat fan every day while it
burns up your electricity,drying things out, they, they
can be very, very successfulbusinesses.
And keep in mind, it's not thefranchisee that's out there at
1130 at night.
Right.
Getting busy cleaning up thatmess the franchisees the one who
hires all the people that go outand do that work And you know
(32:49):
just just make sure you focus onthat kind of thing and and don't
worry if a business is a littlebit unsexy because frankly You
know, I I was on Fox News onetime and they said what's the
most sexy business out there?
I said I'll tell you it dependson how you spell the word sexy
Cause I spell it M O N E Yeverybody got a good laugh out
(33:12):
of that, but that's true.
If, if, if the object of gettinginto business is to succeed
financially, then let's focus onthe money and a lot more than
the product or service, themoney, and then the lifestyle of
the franchisee.
I like that.
Yeah, that's very, very wellsaid.
I mean, I really can't add toomuch to that.
very well said what are any,anything else we didn't discuss?
(33:34):
I know I want to be respectfulof your time and.
I really appreciate it's been anhonor having you on the meeting
to ask you for a while We justhad our conference back in
january.
So I really appreciate your timeand wisdom anything else that
that we didn't talk about in inthe area of franchising or
things to think about I thinkone other thing i'd be thinking
of if I was looking atfranchises right now, we haven't
(33:57):
Had a recession since the GreatRecession, and that's not normal
in this country.
Normally, the economy goes upand down, and one of the
questions I'm always askingmyself when I look at
opportunities is, Is this abusiness that's going to do well
if times tighten up?
Because sooner or later, we'regoing to have another recession.
(34:18):
And you need to make sure you'regetting involved in something
that is going to stand the testof time.
And be strong kind of no matterwhere the economy goes.
And and I think I'd also beasking the same question about
inflation.
Because we are sort of in aninflationary economy.
It's not out of control, butit's there.
And we need something that hassome pricing elasticity, if you
(34:41):
will, when you get in there.
So that if the cost of eggs,what has doubled in the last
year, if something like thathappens, are you going to be
able to protect your business?
Against that kind of a factorand and stay good.
Waffle house now charges 50cents extra per egg.
Is there anybody who goesthrough more eggs than waffle
house?
They had to make an adaptionthere and they were able to.
(35:05):
That's very interesting.
What would you agree?
We, we almost had a test of it.
I'm not saying this was, we werein a recession, but with COVID,
I always say, look, look at whathappened during COVID everything
shut down.
What were the essentialbusinesses?
What were the businesses that.
There was always that demand,like, as you mentioned,
restoration, regardless of whatwas going on, there were still
fires and floods and naturaldisasters.
(35:26):
Wouldn't you agree that was alittle bit of a test?
Or, or Very much you candisagree.
Oh no, very much I think, youcan't anticipate something like
a pandemic.
But you can ask yourself thequestion that you know, what are
the vulnerabilities of thisbusiness opportunity?
I'm looking at what, what, whatimpact like an economic surge
or, or recession, what impactwould that have on the business?
(35:49):
And just ask yourself those kindof questions.
And, and and, and, if you're,especially if you're looking at
multiple businesses that allseem pretty good, that might
help you really narrow down in away that gets the best possible
choice for yourself.
Love that.
Jeff, again, I really appreciateit.
We'll we'll give you, we'll sendyou an email once the the show
is live here in a couple ofweeks, but always a pleasure.
(36:10):
If there's anything we didn't,we didn't talk about, we create
some pretty detailed show notesand a blog for every episode.
So if you, there's somethingelse you want to share, we
didn't, we didn't get to today.
Feel free to share it.
We'll put that in the blog.
And again, I really appreciateyour time today.
Sure.
Thanks for having me on.
Thank you.
If you want to learn how to makethe transition from corporate to
(36:31):
owning your franchise, joinGiuseppe on the next episode.
You can also follow on allsocial media platforms and
achieve financial and timefreedom today.
I get a tremendous amount ofsatisfaction out of helping
(00:03):
people find their piece of theAmerican dream.
Normally, the economy goes upand down, and one of the
questions I'm always askingmyself when I look at
opportunities is, Is this abusiness that's going to do well
if times tighten up?
Because sooner or later, we'regoing to have another recession.
I'll tell you that the biggestmistake that most people make,
and it was true of me when, whenI first became a franchisee is
(00:26):
they focus on the widget.
They focus on the product orservice that the business is
delivering to customers.
And, and that's the last thingyou should be looking at.
Welcome to the Franchise FreedomPodcast, where you can escape
the corporate trap throughfranchise ownership.
Here's your host, GiuseppeGrammatico, The Franchise Guide.
(00:52):
Welcome to the franchise freedompodcast.
I'm your host, GiuseppeGrammatico, your franchise
guide, the show where we helpcorporate executives experience
time and financial freedom.
Really excited for today'sepisode.
we have Jeff Elgin fromFranChoice, super excited.
Jeff has been a, a mentor to me,learned a lot from Jeff over the
years.
I think I jokingly say, I thinkhe created franchising.
(01:12):
He's been in the business solong.
But before we bring them onstage and again, super excited
to have them on, you've beenAsking for more and more guests.
That's what we're bringing tothe table.
Lots of guests, lots ofknowledge lots of different
perspectives, which is the wholepoint of the show is educating
where we can.
But wanted to encourage you.
We've been getting a lot ofrequests.
If you're ready to chat or learna little bit more about
franchising, you could reach outto us directly right on the
(01:35):
website, ggthefranchiseguide.compeople always ask me am I a good
fit for franchising?
We included a survey right onthe website.
Gives you some quick questions,some things to think about if
franchising may be a good fit.
So check it out again,ggthefranchiseguide.com.
You can book a call, you canlisten to previous shows and
we'll have this show with Jeffpretty soon here in the next
(01:56):
couple of weeks.
So let me bring Jeff on stagehere.
Jeff, welcome to the show.
We really appreciate you.
You coming on today.
Thank you.
And I did not invent franchisinga long way, but not quite that
far.
I see that jokingly.
So we'll, we'll get some jokesin, but now it's, it's been a,
it's been an honor having youon.
If you could give.
(02:16):
Audience, maybe a little bit ofa, of a bio, kind of how you got
into franchising and what you'reup to now.
I actually started infranchising as a multiunit
franchisee in 1983.
83 is, you probably weren't evenborn yet at that point in time,
but and I have the distinctionof being the absolute worst
franchisee in the history offranchising.
(02:37):
That's funny.
I I got in the video rentalbusiness when it was red hot.
In those days, every, everyvideo would rent on Saturday
night, the store's shelves wouldbe bare.
And I thought, boy, this is agreat way to make money.
It never occurred to me thatabout every third person in
America would go into the videorental business at the same time
I did.
And very quickly it wasoverbuilt.
(02:57):
And and then I got to learn anew term called shakeout.
And which is what happens when,when you get too much supply in
a retail environment.
Some people have to go bye bye.
I got very lucky becausesomebody came along even dumber
than me and bought the businessfrom me.
So I got out from under it.
And, and and the franchise orasked me to get involved in
(03:18):
franchise development and intalking to people who wanted to
become franchisees since I'd hadthat experience and, and maybe
provide a few warnings aboutwho's appropriate and what are
appropriate concepts for people.
And, and so I did that for awhile and, and spent most of the
nineties with a company calledgreat clips.
the hair cutting franchise andbuilt that up very, very large
(03:38):
and, and then left there andstarted franchise, which is a
service that helps people whowant to find a good franchise,
but they really don't know howto go about doing it.
We have consultants that thatwork with them, that spent a few
hours asking questions andgathering information to try and
figure out.
What the people want toaccomplish, what resources they
have to work with, and and whattheir interests are.
(04:00):
And, and based on that, we canusually narrow down to a few
franchise businesses that have ahigh likelihood of giving the
people what they want in, interms of their goals for a
business.
And, and it's been verygratifying.
We've now, 25th year in businessand franchise, and I've enjoyed
every moment of it.
That's great.
And, and as the audience now, Iam also a consultant with
(04:23):
franchise.
It's been great.
It is the premier agency outthere, a premier company, excuse
me, out there.
And just absolutely loveeverything about it.
What obviously, it sounds like acrazy topic as you mentioned how
we help individuals, but it'salmost reverse engineering it,
as opposed to looking at listsand lists and lists and trying
to figure out what the heck is agood match.
Yeah.
(04:43):
We're figuring out what's,what's more, most important to
you.
Can you, can you talk a littlebit more about, what, maybe a
little bit more of what'sinvolved in that process and
maybe some things to thinkabout, I can indeed, I, I, if
you go back to my ownexperience, I got in a business
that I thought I was going intomovie business, I'm thinking in
a couple of months, I'll be downin Hollywood having lunch with
(05:03):
Jane Fonda or something.
But the reality was I, thebusiness I selected was just a
standard retail business.
It could have been a shoe shopor a bookstore or anything else.
It was just plain retail.
And, and that did not suit mybackground or my interests at
all.
And frankly, was excruciating.
Now, what we do with people issit down and the very first
(05:26):
thing we we just start askingquestions.
Tell me a little bit aboutyourself.
Tell me what you hope toaccomplish.
What motivates you to getinvolved in a in a business
entity?
Because it's it's difficult tobuild a business.
It's not an easy fall off a logthing.
So you've got to have somethingdriving you something you want
to accomplish that makes itworthwhile to to hit a few
(05:47):
potholes in the road and takesome risk and then and then
become a business owner.
And so we asked about that.
We asked about their tolerancefor risk.
And we, we talked about whatresources they have available
and what skill sets they have.
And, and, and then a lot of veryspecific question.
How do you feel about employeesand what type of employees do
(06:07):
you most like to work with?
And how do you feel aboutselling?
Are you a good advocate?
Are you, is that somethingthat's a strong suit for you?
And just lots and lots ofquestions like that.
And at the end of that process,we build a model that talks
about what the person that we'reworking with wants to accomplish
and, and, and, and frankly, whatthey have to work with and, and
(06:29):
and how they'll know if they.
at the end of the process havevictory.
What does that look like if itturns out to just be fantastic?
And, and then based on thatmodel, we go out and analyze a
number of different franchiseopportunities and, and try and
narrow down to a small handfulthat, that look like they might
be a great match for thatperson.
(06:50):
And quite often it's not abusiness that the person's ever
thought of.
And a lot of people come to usgoing have you got a good Subway
sandwich?
Or a McDonald's or somethinglike that.
And, and, those businesses are,are, are perhaps not as
attractive when you get involvedin them as they look from, from
perhaps the idea that, thatthere's a long line out the door
(07:10):
at lunchtime you have to, youhave to have a skill of dealing
with a large number of minimumwage employees that turn over on
a very regular basis.
That's a skill that a lot ofpeople have.
But I don't.
And, I would much rather workwith more highly skilled and
educated people.
And, and, and there arefranchises that focus on that
kind of activity.
(07:30):
There are executive franchiseswhere instead of the franchisor
or the franchisee, ratherdealing with the customer
delivering products or services,they usually work with managers
that run the individual unitsand, and they manage the
managers.
Lots of different types offranchises and it just, it boils
down to one thing.
What's the perfect opportunityfor you?
(07:52):
I like that.
I always say, let's check offall the boxes, not just check
some of them off.
And that's extremely importantbecause we're getting super,
super specific.
And that's a perfect example, asyou mentioned with the food
franchise, because people alwayscome to me and say I don't, I
don't want a lot of employees.
But I want a subway.
I want some of these, some ofthese businesses.
And I go, have you ever, haveyou ever worked or actually
(08:12):
just, have you ever eaten at arestaurant?
How many employees have you seenbetween the food runners and the
waiters?
And I grew up in the, I grew upin that space.
We owned an Italian restaurantand we just had dozens and
dozens of employees, lots ofturnover.
Once you kind of lay it out thatway, it really clears things up.
And I think it's a, it's trulyhelpful.
really makes them kind of take astep back to say, yeah, you know
what?
I don't, this is not what Iactually want.
(08:34):
Or if, if I want to be in foodor certain restaurants, I'm
always settling here.
I'm constantly saying I don'twant lots of employees.
I'll suck it up on this one.
I'll settle.
I also don't want to work niceand weekends, but I'm settling.
Now we have a complete oppositeof what that ideal model is.
Yeah, you nailed it there.
I couldn't agree more.
Equally, it's important who,who, who is not a good fit for a
(08:56):
franchise.
I get that question all thetime.
And I want to hear from you,what are your thoughts on the
simplest process of figuring outif a franchise is a good fit or
not for an individual?
I think that a lot of peopleprefer.
Certainty to to uncertainty and,and in an employment
environment, it's a very certainenvironment.
(09:18):
You go to work when somebodyelse hires you, they tell you
how much you're going to make,they tell you when to be there
and what to do when you'rethere.
And, and so you don't have tomake a lot of those kinds of
decisions for yourself.
An independent business owner ismaking those kind of decisions
for themselves all day, everyday, right?
And and the, the, the, thebeauty of the role, if you look
at the positives are just oftenunlimited potential in terms of
(09:41):
of long term earnings andlifestyle and lots of other
things.
But there's also, you, you'renot only the CEO, you're the
janitor and everything inbetween in a small business and,
and, and the buck stops here andyou, you might end up making a
lot of money long term, but youare the last person to get paid.
I will vouch for that.
(10:02):
That is absolutely true.
So it's gotta be, it's gotta besomething you really want,
right?
You gotta look big picture andfast forward that, that first
year there's a lot ofreinvesting.
Back in that business the firstyear, there's that learning
curve.
It's finding, the role that youenjoy in the business.
You may have a sales background,but maybe you prefer the
networking aspect and viceversa.
Lots of things to consider.
(10:23):
switching gears a little bitfranchise trends, you've been
in, in, in the business for awhile now you've seen a lot.
And I just found out prior tohitting the record button that
you were at the pre the recentIFA conference.
What were some key takeawayswhen it comes to franchising
things you've learned, maybesome changes would love to,
cause I, I was unable to attend,so I'm really excited to kind of
(10:44):
get your thoughts.
I think two questions there.
As far as the IFA is concerned,this is the trade group for all
of franchising, franchisors,franchisees, suppliers, all
attend this meeting.
And there were over 4, 000people out in Las Vegas in one
of those giant casinos.
And it's so much fun when you'vebeen around a long time because
(11:06):
there are a lot of friends Ihave in the franchise industry
that I only see once a year.
Right at that convention.
So I always try and get outthere and, and and, and see the
folks, there are lots and lotsof new concepts.
There are, there are newfranchisees, new franchisors
starting every year.
And, and so it's just, it's justa fun place to to go see your
(11:27):
peers and get to know thembetter and, and look at, take a
look at what's happening in thebusiness and, and, and Yeah.
And, and make your plansaccordingly.
The, the other question youasked about concepts was one
that I just love because, there,there are certain businesses
that are, they're, they're,they're kind of the new toy in
the toy box.
(11:47):
They're sexy and exciting, butthey don't have a whole lot of
track record.
And there are others that aresort of the steady eddies, and
they may not be quite asexciting, but, but a lot of
times they have a marveloustrack record of success.
Taking people like me who don'tknow their business and giving
them a system to operate and,and to become successful in the
business.
(12:07):
And, and and even though it'sfun sometimes to get involved
and be a pioneer, that, a lot ofthe pioneers didn't make it all
the way to Oregon.
You, you've got to be prettycareful about that as well.
And, and and, and frankly, thereare just so many tremendous
franchises that have been aroundfor a while.
And.
And they're, they're verypredictable in terms of their
outcomes and that, and that,especially for someone that is
(12:30):
concerned about security andmaybe a little more risk
adverse, then you probably wantto go with a concept that is
going to eliminate most of therisk.
Now, there's no such thing aseliminating all of it, right?
Because all business startups,even good franchises contain an
element of risk.
And you just have to recognizethat going in.
A lot of the people that we workwith, as you know from your own
(12:53):
experience, Giuseppe, a lot ofthe people are not appropriate
for franchising when it comesright down to it.
We'll spend some time talkingand, and, and we let people know
right up front that, at the endof the process, you're going to
have to make some decisionsabout individual franchises.
And yes, is wonderful, but no isalso wonderful.
If it's not the right thing foryou, don't do it.
(13:14):
And and, and don't feel anypressure to do it.
And when we run into somebodythat just doesn't seem to be
able to fit the pattern verywell, quite often we are really,
we'll have a conversation withthem.
That's pretty frank going.
I'm not completely convincedthis would be a good idea for
you to pursue.
And and, and even if they don'tmove forward with anything,
(13:35):
there's still, we've made a newfriend and that's a, that's a
good outcome too.
Absolutely.
Yeah.
It's it's funny you bring thatup.
Cause I got the one comment,this will make you laugh is this
is someone just out of, out ofcollege and said that he heard
on a podcast that you couldn'tlose money with the franchise.
So that I got a kick out of thatcomment because I said, then why
would, why wouldn't you just ownevery single franchise out
(13:57):
there?
And I think I, I go, I think youmisunderstood what they were
saying in the business, becauseobviously, as you mentioned,
there's going to be risk.
The question that I getsometimes is what is your
success rate?
And this is specifically for,for someone on my end.
Then I go I don't understand thequestion.
How many people you've placed?
If you, if you work with 10people, how many people end up
moving forward with thefranchise?
(14:17):
And I go that, that numbervaries.
I don't really keep, I don'tconsider success that if I work
with 10 people, 10 people buy afranchise, I guarantee one
thing.
You're going to learn somethingfrom the process.
You're going to learn somethingabout yourself.
You're definitely going to learnsomething about a franchising,
but our job is not to place and,and have every single person
move forward with the franchise.
In many cases, I have a, I havea list of people that I follow
(14:40):
up with probably in six monthswhere the fit is there, but
financially they have to work onsome things like credit scores
and getting some liquiditythere.
So the timing wasn't right.
We really are able to helppeople meet them where they're
at.
And then if the timing isn'tright, we figure out if the
timing is ever right, we followup down the road.
But I found that, that, thatquestion interesting because
(15:00):
they were looking for, I guess,a percentage and franchising, as
I mentioned, is not, is not.
The right fit for everyone.
And I always jokingly say, ifyou're going to buy a a burger
franchise and go in with theexpectation of changing the menu
franchise may not be the rightfit for you.
And although, and I'm sure this,the 5 foot long, the the filet
of fish sandwich at McDonald'swere actual ideas from franchise
(15:24):
owners, which is kind of cool,but at the same time, the
expectation is not to changethat, that entire system.
What, what are you.
Excited about in franchising,being in the business, kind of
what's, what's to come in, inthe franchising space.
I, I get a tremendous amount ofsatisfaction out of helping
people find their piece of theAmerican dream.
(15:44):
That's what's driven franchiseall along.
And, and you mentioned a whileago about the success rates.
We, we place about onefranchisee for every five or six
people that we work seriouslywith.
And so most of the time, theanswer is no, not right now.
When, when they do it, but, butthat doesn't mean never.
(16:04):
It just means, as you said,maybe they need to work on
their, on their finances orsomething.
Maybe they just need to to workone more time at a job.
And then two years from now, getlaid off again and go, okay,
I've had enough of thatnonsense, but, and that's okay.
That's, that's, that's whatdrives our business and it makes
(16:25):
it so exciting.
When I see people getting intothat, and the timing is right,
and then the excitement as theygo through their initial
training, and the euphoria, andalso the anxiety, the first day
you open for business, and atleast in my case, I had probably
a little more anxiety than I hadeuphoria, but that's okay, and
(16:48):
then customers start coming in,you start doing business, and
the next thing you know, you'reoff to the races.
And as well.
That's a marvelous thing.
Absolutely marvelous experienceto be involved in.
And, and we get to do that everyday.
It's a, it's a great job.
And yes, anxiety happiness,excitement, y'all feel the same.
You start to sweat theheartbeats a lot faster.
(17:09):
So I remember purchasing myfirst franchise handing,
literally handing the check overa franchise or says, do you have
any questions?
And I asked him how do I, how doI sell this business at some
point?
And looking back, probably,probably not the best time to
have asked that question.
I think he was ready to give meback the the deposit.
So we kind of joked and he said,no, I'm kind of thinking, 20
(17:30):
years down the road, if I everwanted to sell, what is that
process?
It was just a, a question thatnot sure why popped in my mind
the day I'm, I'm investing in myfirst franchise.
But yeah, it's, it's reallyexciting and it's normal.
This is, this is part of theprocess.
Yeah, we, we.
We absolutely change lives andjust absolutely love, love what
we get to do every single day.
Fun fact.
We were talking early, so I hadJason Pfeiffer, who is the
(17:53):
current.
Editor in chief of entrepreneurmagazine.
We had them back on in December.
We had them on in the beginningof December.
It was before the top 500 listcame out.
So we got the chat and what ittakes to get on the list and
things like that.
But you had mentioned you, youwere you were with entrepreneur
magazine at some point.
Can you, can you share your,your experience there?
I was the franchise writer forentrepreneur for about 10 years
(18:17):
back in the in the early part ofthis century I think from 2000
until about 2012 or somethingright in that period.
So if you go to entrepreneur.
com and Google Jeff Elgin,you'll see a few hundred
articles that I wrote at onetime or another that nobody ever
throws anything away on theInternet.
So they're, they're archived inthere someplace, but the owner
(18:37):
in those days was a guy by thename of Pete Shea.
Absolutely wonderful, wonderfulhuman being and great business
partner.
And we did a lot of, a lot ofwork together and, and have a
lot of fun.
And Pete's now aged out of thebusiness as I'm in the process
of doing.
He's, other people have takenover the magazine and, and keep
driving it forward, but it wasjust a marvelous time.
(19:00):
And when you mentioned, the headof entrepreneur.
com, I thought, okay, I go backa little ways with them too.
It's yeah, it's crazy.
It's crazy how I wish I knewthat I have my, I shared my 2005
copy on the show.
It's much yellower.
It's it was a, it was a whitecover.
It's now yellow.
I've had it so long.
But that was actually the, thefirst time I actually really
(19:20):
started looking intofranchising, starting going down
the list and making everymistake I think a lot of other
people make and started lookingat.
The, the subways and nothingagainst subway, but that was the
number one selling franchise atthe time.
And it was making a lot of themistakes that I try to help
other people avoid just lookingat kind of what was hot out
there and not considering what Iwanted.
(19:41):
And the funny part to that waswe owned an Italian restaurant.
I knew I didn't want arestaurant.
I didn't want all the staff, butI was looking at subway.
And my wife looked at me and shesaid, are you, are you crazy?
Like you work, I mean, love,love the, the the restaurant
business.
I definitely miss certainaspects of it.
It just was the holidays andweekends that we had to work.
So it's the little things youget overly excited and you start
(20:02):
to kind of forget, what is trulyimportant or what you're trying
to do.
And most people, when they thinkof franchising I'm sure you'll,
you'll agree with this is theythink fast food, they see the
signs on the way home.
On the way to work and they justget super excited.
They don't realize there are, Ibelieve, last, last number,
close to just say 4, 000franchises.
(20:22):
And we'll just say in just aboutevery single industry.
So if you can think of abusiness, there's pretty much a
franchise.
Am I, am I correct by sayingthat?
Yes.
And I'll tell you that thebiggest mistake that most people
make, and it was true of mewhen, when I first became a
franchisee is they focus on thewidget.
They focus on the product orservice that the business is
(20:43):
delivering to customers.
And, and that's the last thingyou should be looking at.
What you need to be looking atis what is the franchisees role?
And what am I going to be doingif I become a franchisee in this
business?
And because in a lot offranchise businesses, you're not
the one delivering the productor the service.
So what difference does it make?
(21:04):
What that product or service is.
But, but on the other hand, ifyou, if you say I don't want to
supervise a whole bunch ofminimum wage employees that turn
over all the time, can thateliminates about 70 percent of
all franchise businesses rightthere.
If you say, I don't want to workany nights or weekends.
perfectly reasonable requestthat eliminates a whole lot of
other ones.
(21:25):
And and that's what we really dowith people.
We ask questions that allow usto narrow down very rapidly.
And, and, I, I spent eight yearsbuilding a company called Great
Clips, the haircutting place.
And And I'll tell you, therewasn't a single franchisee in
that entire eight years thatwoke up one morning thinking,
gee, I ought to get in thehaircut business.
Yeah.
(21:45):
It wasn't that way at all.
What would attract them was thelifestyle of the franchisees who
had been in that business, saythree years or longer.
They were all multi-unit owners.
They all had managers.
They were supervising themanagers.
They weren't cutting hair.
They weren't in the salons on aregular basis.
It was an executive franchise.
And when people understood that,then all of a sudden a business
(22:07):
that maybe was completelyunattractive to them initially
becomes very attractive whenthey look carefully at the
franchisee role.
And that's true of so manybusinesses that, that I think
you just, you need to be focusedon, okay, what does a successful
franchisee do?
basis and am I suited for thatrole?
(22:29):
Does that sound attractive to merather than focusing on the, the
actual product or service of thebusiness?
Yeah.
And I think, I think most of usdid that, as you mentioned, you
were, you in the same, you werein the same boat and I'm looking
at the exact same thing and youjust get super excited.
And I always, I always tellsomeone if you want to be in
the, sandwich business.
You can, you can run yourbusiness and buy all the
(22:50):
sandwiches you want if you'retruly passionate about
sandwiches.
I I'm in Jersey Mike's land.
I live in the same town, thefirst Jersey Mike.
Got to meet family and friendsthat.
That grew up with the founderand it was really interesting
to, to hear his story.
And going back to the, to thewidget, you'll notice that a lot
of brands, your role is going tobe very similar.
You're not actually installingthe roof or cleaning the porta
(23:12):
potty or painting anything in apainting franchise, start to
look, but, but, but look at, Ikind of do it in two, two
different levels or layers.
We'll call it the first layer isgetting the business up and
running.
You may be wearing all hats tolearn the business, get it up
and running, but really figuringout six to 12 months out.
What is that role in thebusiness?
The team's in place.
(23:33):
You've, that learning curve, youlearn the business, you
understand, especially if you,if you've never owned the
franchise or any businessbefore, what does that role look
like?
Six to 12 months out and that'llreally help.
Validation, getting to speakwith franchisees and hearing
directly from the franchiseowner exactly what's an average
day in a life, maybe when youstarted to where you are today,
(23:54):
and that's and that's superhelpful.
So not only hearing it from afriend, the franchise or, but
you're getting to hear it fromthe franchisee.
So a very important part pointabout the widget, because that
is that is an area.
A lot of people just kind of,they get super excited and then
they go, okay what do you havein this specific space?
Or maybe it's.
Maybe it's a misconception,right?
Maybe they, you think you haveto have experience.
(24:16):
You do have to have experiencein a, in a, in the franchise
itself.
Or is it, is it something else?
It depends on the franchise, butfor the most part, the answer is
no.
What, what franchisors are doingis that they've got a business
model that they know if peopleexecute that business model
effectively, they will besuccessful.
That's the foundational approachof franchising and what they've
(24:39):
also developed then is amethodology to take someone who
doesn't know that business andbring them in and in a
relatively short period of time,train them in how to set up and
run that business effectively sothat if the people just follow
the system, do what thefranchisor tells them, they will
be successful most all the time.
And and, and that's, that's twodifferent skills.
(25:01):
First, you have to have theskill to operate the business
effectively.
And this is the path that mostfranchisors follow.
They, maybe they open the firstfour or five, six units of
whatever their business isthemselves.
They run it very successfullyand it's doing well.
But then at that point theyrealize they need somebody
else's money or.
Or management experience orsomething to help grow the
(25:21):
business further.
So they turned to franchising todo that.
Then they have to develop asecond skill that's, that's even
more important than being ableto operate the business
effectively.
They have to develop a skill totake somebody who doesn't know
beans about that business and,and train them in a fairly short
period of time to be able toeffectively run it.
And those are two differentthings.
(25:42):
Quite often you'll see peoplewho are very successful
operators who are not verysuccessful franchisors because
of that.
And that's another reason thatthere's a lot less risk in a
franchise if they've got a trackrecord and they've proven that
they can take people like meand, and, and put them in
business and make themsuccessful.
I like that.
We call it a business ontraining wheels.
(26:03):
That's something I you know,when someone, they want a
comparison, I go, that's reallyone of the best compare it's you
have that support and that'swhat you're really getting in.
You want that support that.
That anything, you, you have anyquestions, have any issues that
you have that go to someone to,to contact to help you out.
One last question on that.
So what would you, what do youthink, and not every franchisee
(26:24):
is going to be successful, sowhat do you think is the main
cause for people maybe not to doso well in their, in their
franchise?
This is the, from the franchiseestandpoint.
I, if you investigate.
The franchise opportunitiescarefully and, and, and, and
ensure that they do have a trackrecord of success of being able
to help people.
(26:44):
Then if you don't succeed, it'salmost always because you
decided not to follow the systemthat the franchise or laid out
for you.
And you, you decided to improveit.
That's the term I used when Iimproved the system that I had
been taught.
And mind you, there were a fewhundred people that were very
successful in that business.
A lot more successful than me,but you know, the franchisor
(27:07):
would say something like, makesure your location is on the
going home side of the street.
Because people stop and rentmovies on the way home, right?
You need to be convenient forthat half the stores I opened
were not on the going home sideof the street because I thought
What difference does that makeif they've got to make a left
turn across a lot of traffic?
I learned the hard way it makesquite a difference and and and
(27:27):
so and and you know It's justthere's so many little things
like that.
But basically If a franchiseedoes not succeed, it's either
because they weren't careful inthe investigation process.
So they ended up with afranchise that did not have a
track record of success.
And then it's more of acrapshoot, right?
If you want to start anindependent business where you
(27:48):
get to try and invent theairplane while you're flying
through the air.
Then don't get a franchise ifyou if you need that extra level
of excitement But if you reallydon't want that extra level of
excitement and risk Then get afranchise that has a proven
track record and for crying outloud.
Don't be like me follow thesystem Yes, so two two pieces
there first off Yes, you have topick the right franchise and do
(28:10):
the due diligence and follow thesystem sounds pretty basic.
But following the system.
There's lots, lots there.
I talked to people all the timeand they I have a marketing
background.
I'm going to just do themarketing myself.
That's part of the system.
The marketing that they'redoing.
We're not saying it's perfect,but they're catering the
marketing for your specificarea.
They've been doing this before.
(28:31):
They're leveraging Nationalaccounts.
And I hear it all the time whileI have a marketing background or
I have someone that does pay perlead, pay per click, excuse me.
I'm going to, I'm going to justdo it on my own.
Really if the intention is notto follow, then a franchise may
not be a good fit.
So we keep going back to fit andno fit not, not a good fit.
What did what is the, I guess,best advice?
(28:51):
It could be one piece or acouple of pieces of advice.
That you can give to anyonelistening as we mentioned the
beginning of the episode A lotof people first time business
owners whether it's a franchiseor not.
They're exploring side hustles.
They're exploring their firsttime business So what are some
some best pieces of advice youcan give to anyone that's at
this stage?
Researching, maybe they hatetheir job.
(29:13):
Maybe they're just looking forthat, that side income or side
hustle.
What would you recommend or whatwas the best piece of advice you
can give to them?
Be careful, be cautious andtrust your instincts.
There's times when you'veprobably made decisions in your
life.
I have, everybody has thatdidn't work out very well.
And when you look back inhindsight and ask yourself, what
(29:33):
can I learn from that?
From making a mistake, at leastin my experience, I almost
always realized that, okay, Ihad some unease.
I, I, there was, there wasdefinitely a lot of doubt inside
of me, but I, I just pulled myway through it and said, go for
it anyway.
Okay.
Trust your instincts a littlebit.
If something.
Is, is the right thing for you,then you're going to feel it in
(29:56):
your gut.
You're going to know that it'sthe right thing for you and
trust, trust your instinct,trust your gut on that.
I think get to know the peoplevery well.
Don't short circuit theinvestigation process on any
business, because, becauseyou're going to, it'd be like
meeting somebody and decided toget married in a day or two.
Maybe it might work out.
(30:16):
But there's an awful lot ofthings that you don't know.
There's an awful lot ofuncertain facts if you haven't
spent more time together.
And so I think with a franchiseor, often prospective
franchisees will go visit thecompany and, and get to know
some of the executives.
They will certainly, as yourecommended, get on the phone to
existing franchisees.
It's been a lot of time talkingto them and existing franchisees
(30:40):
in my experience are usuallypretty darn.
Frank about telling you not onlythe glory stuff that the good
news, but also, what did yourworst day look like and what did
you have to do and things likethat?
And if they don't volunteer, askhim those kind of questions
because, because you want toknow, I mean, you want to get a
good picture that theinvestigation process for a
(31:01):
franchise opportunity is reallylike creating a window that
allows you to look.
Through the window and see whatyour life is going to look like.
If you decide to pursue thisfranchise opportunity and the
better and clearer the view isthe better decision you're going
to make.
And so take the time to build agreat big, clear window and take
(31:25):
a good hard look through it.
And I think you can avoid a lotof potential trouble.
I think also be real careful ofany business that you think
might be a fad.
Because the beauty of a fad isif you get into it early enough.
You can make a lot of moneyreally quickly.
(31:46):
And then if you're smart, you'llsell before that fad peaks,
because the problem is thesethings come and go very quickly.
And, and a lot of my favoritefranchises out there are,
they're like Mike Rowe, dirtyjobs.
I mean, they're just fundamentalservices, but.
They're fundamental servicesthat have a need and, and, and
(32:06):
quite often they are very highmargin businesses.
There's, there's nothingexciting or appealing about when
a pipe burst in your basementand floods the whole basement
with sewage.
But you know, when that happensto you, you have no choice.
You're going to call yourinsurance agent and say, who's a
good restoration company?
And then you're going to getahold of restoration company,
haven't come out and clean thatmess up.
(32:27):
They, they put a fan down inyour basement and, and, and
probably charged the cost ofthat fan every day while it
burns up your electricity,drying things out, they, they
can be very, very successfulbusinesses.
And keep in mind, it's not thefranchisee that's out there at
1130 at night.
Right.
Getting busy cleaning up thatmess the franchisees the one who
hires all the people that go outand do that work And you know
(32:49):
just just make sure you focus onthat kind of thing and and don't
worry if a business is a littlebit unsexy because frankly You
know, I I was on Fox News onetime and they said what's the
most sexy business out there?
I said I'll tell you it dependson how you spell the word sexy
Cause I spell it M O N E Yeverybody got a good laugh out
(33:12):
of that, but that's true.
If, if, if the object of gettinginto business is to succeed
financially, then let's focus onthe money and a lot more than
the product or service, themoney, and then the lifestyle of
the franchisee.
I like that.
Yeah, that's very, very wellsaid.
I mean, I really can't add toomuch to that.
very well said what are any,anything else we didn't discuss?
(33:34):
I know I want to be respectfulof your time and.
I really appreciate it's been anhonor having you on the meeting
to ask you for a while We justhad our conference back in
january.
So I really appreciate your timeand wisdom anything else that
that we didn't talk about in inthe area of franchising or
things to think about I thinkone other thing i'd be thinking
of if I was looking atfranchises right now, we haven't
(33:57):
Had a recession since the GreatRecession, and that's not normal
in this country.
Normally, the economy goes upand down, and one of the
questions I'm always askingmyself when I look at
opportunities is, Is this abusiness that's going to do well
if times tighten up?
Because sooner or later, we'regoing to have another recession.
(34:18):
And you need to make sure you'regetting involved in something
that is going to stand the testof time.
And be strong kind of no matterwhere the economy goes.
And and I think I'd also beasking the same question about
inflation.
Because we are sort of in aninflationary economy.
It's not out of control, butit's there.
And we need something that hassome pricing elasticity, if you
(34:41):
will, when you get in there.
So that if the cost of eggs,what has doubled in the last
year, if something like thathappens, are you going to be
able to protect your business?
Against that kind of a factorand and stay good.
Waffle house now charges 50cents extra per egg.
Is there anybody who goesthrough more eggs than waffle
house?
They had to make an adaptionthere and they were able to.
(35:05):
That's very interesting.
What would you agree?
We, we almost had a test of it.
I'm not saying this was, we werein a recession, but with COVID,
I always say, look, look at whathappened during COVID everything
shut down.
What were the essentialbusinesses?
What were the businesses that.
There was always that demand,like, as you mentioned,
restoration, regardless of whatwas going on, there were still
fires and floods and naturaldisasters.
(35:26):
Wouldn't you agree that was alittle bit of a test?
Or, or Very much you candisagree.
Oh no, very much I think, youcan't anticipate something like
a pandemic.
But you can ask yourself thequestion that you know, what are
the vulnerabilities of thisbusiness opportunity?
I'm looking at what, what, whatimpact like an economic surge
or, or recession, what impactwould that have on the business?
(35:49):
And just ask yourself those kindof questions.
And, and and, and, if you're,especially if you're looking at
multiple businesses that allseem pretty good, that might
help you really narrow down in away that gets the best possible
choice for yourself.
Love that.
Jeff, again, I really appreciateit.
We'll we'll give you, we'll sendyou an email once the the show
is live here in a couple ofweeks, but always a pleasure.
(36:10):
If there's anything we didn't,we didn't talk about, we create
some pretty detailed show notesand a blog for every episode.
So if you, there's somethingelse you want to share, we
didn't, we didn't get to today.
Feel free to share it.
We'll put that in the blog.
And again, I really appreciateyour time today.
Sure.
Thanks for having me on.
Thank you.
If you want to learn how to makethe transition from corporate to
(36:31):
owning your franchise, joinGiuseppe on the next episode.
You can also follow on allsocial media platforms and
achieve financial and timefreedom today.
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