Real Estate Meets Franchising for Diversified Success with Cliff Nonnenmacher

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Episode Transcript

Ed Mathews (00:00):
Greetings and salutations real estate
undergrounders.
It is Ed Mathews with the RealEstate Underground.
Today is a unique show because,yeah, we're going to be talking
about real estate, but we'realso going to be talking about
other asset classes, somethingthat I used to do back in the
early 2000s like a million yearsago and I happened to meet our
guest, Cliff Nonnenmacher fromFranocity.

(00:22):
And so, Cliff, first off,welcome to the show.

Cliff Nonnenmacher (00:25):
I'm excited to have you on the show.
Thank you so much, Ed.
I'm excited to be here.

Ed Mathews (00:28):
Yeah, man, and so with this conversation we're
going to be talking about acouple of different things.
Obviously, Cliff is a realestate investor.
He's got property in the PalmBeach area, if I'm not mistaken,
down in Florida.

Cliff Nonnenmacher (00:42):
Palm Beach County and Utah

Ed Mathews (00:44):
Palm Beach County and Utah which is where he's
calling me from right now.
Let's start with, for thosefolks who haven't discovered
Franocity or your background,why don't we talk about you
first?
Who are you and what do you dotoday?

Cliff Nonnenmacher (00:56):
Absolutely.
My journey starts at a veryyoung age.
I have been self-employedliterally my entire life.
I did have a job, but I viewedthe job more as being
entrepreneurial.
I was an investment banker withSolomon Smith Barney and spent
several years there, managedaround 250 million.
So I was there from up to 2003and I left getting involved in

(01:20):
franchising.
That's actually how I left thefirm.
It was for no other reason.
I just needed to really go backout on my own.
The firms are managed bylawyers and the drill.
They're putting buy ratings onthings they can't even spell Buy
ratings At the time.
Just to give you anunderstanding of why I left,
think about the buy ratings onEnron and Williams Co, WorldCom,

(01:41):
Bernie Ebbers.
These were crazy stories backthen on top of just boss issues,
branch manager issues on top ofother things.
So it's OK, I need to go backout on my own.
Those are my roots.
So I've done just abouteverything you could possibly do
to be entrepreneurial as ayoung person.
And then I got involved infranchising and that was at that

(02:03):
moment where I started tocreate wealth for myself and my
family.
And it's okay.
I truly, but of course I'mbiased right.
Everyone is that's in anindustry.
I think that franchising is oneof the fastest paths to create
wealth without having to besuper entrepreneurial, that you
need to create an idea.

(02:23):
Super entrepreneurial that youneed to create an idea.
So you have a lot of people onthe show.
Some of these people arefounders and innovators,
disruptors you had Nick Huber on.
These are highlyentrepreneurial people that have
created wealth throughexecution and creation of ideas,
where a franchisee can createinsane wealth.
Never create or invent anything.

(02:45):
Think about it.
All I'm doing is executing offof an idea that someone else
created, and I'm executinghopefully flawlessly in order to
do that and that's why I lovefranchising it can take an
average middle manager, anaverage person with a desire to
be self-employed, buy a modelthat aligns with their
investment objectives, executeit, create wealth and scale it.

(03:07):
That's what I love about it.

Ed Mathews (03:09):
Yeah, quite frankly, one of, if not the wealthiest
person I know I'm not sure hemay actually be the wealthiest
person was a Subway franchisee,and I know they're struggling
these days, but he owns, I don'tknow, 40 or 50 of them and he's
done very well for himself overthe years.
And it used to be when I was inmy teens and 20s.
One of the things that theywould talk about is do you want

(03:30):
to be an instant millionaire?
Great, go buy a McDonald'sfranchise and you're instantly a
millionaire.
And it's not that simple, butit is that straightforward.

Cliff Nonnenmacher (03:40):
That's right .
Yeah, I'm not a huge fan of,let's say, the McDonald's model,
but I hear you right thatthere's a business where just
follow the model.
It's a license to print money.
Just follow the model.
Do not go in there and startmaking unnecessary changes.
No one wants to add hot dogs tothe menu.
For those who do, you are not afit for franchising.

(04:02):
Anyone that wants to take abusiness model like Chick-fil-A
or McDonald's or any license toprint money model and
immediately implement changes,that's when you know you're not
a fit for franchising.
When you start thinking likethat, definitely.

Ed Mathews (04:14):
And you made a point .
I had Nick Huber on the showand one of the things that I
admire about Nick and the folksthat he hangs with, he's always
talking about boring businessesand service-oriented businesses
that look at his portfolio.
He's in storage, he's instaffing, he's in search engine
optimization.
These are all boring businesses.
There are no laser light showsand I think franchising, when

(04:38):
done right, it fits that modelin that you know you're not
there to think outside the box,you're not there to have to
create a brand or a product.
You just have to get theplaybook, understand the
playbook and then execute.
That's it.
It's so true.

Cliff Nonnenmacher (04:56):
And there's a lot to be said for tried and
true.
Everyone wants to do somethingunique and different and
something that's not in themarket.
I love when I'm speaking toinvestors like I want to own a
sushi restaurant in my area andthen we have a conversation
about the competitive landscapeand they're like, oh, no one's
doing it here.

(05:16):
There is a group of people whoget excited about that and
there's another camp of peoplewho are terrified of that
statement.
What do you mean?
No one is eating sushi.
That means you have zero pentup demand.
You're excited about amarketplace with zero pent up
demand.
I'm more excited about a marketwhere it's like there's a lot

(05:37):
of sushi consuming.
There's a lot of this.
There's a lot of people havingtheir windows clean.
There's a lot of discretionaryspending and income.
Like that's when we have, let'ssay, proof of concept.
But it is amazing to me howmany people will get excited
about ideas that don't evenexist in their marketplace.
But yeah, there's a lot to besaid for that.

Ed Mathews (05:55):
Absolutely.
And the other thing that I'malways interested in is I pay
attention to brands and how theyplace themselves, and I know
they're not franchises.
Every time I drive by a CVS.
Within a Five Iron, there's aWalgreens, and wherever there is
a Starbucks within a driver,there's either a BMW dealership

(06:18):
or some luxury auto dealership.
And the reason being is thatthese folks are doing market
research.
They understand the trafficpatterns, they understand the
demographics of the human beingsthat are living there, they
understand what those humanbeings are looking for and where
they fit in the economic strataand

Cliff Nonnenmacher (06:31):
We have a ton of companies in franchising
that you can spend an ungodlyamount of money to determine.
is this a sustainablemarketplace for this idea?
Right, define sustainability.
And if sustainability for brandA is, you need to operate in an
area where within a one, three,five mile radius you have

(06:53):
30,000 households making 175,000a year in household income.
Okay, you just define thesustainability for that brand.
That that what I just said,does not work.
Just anywhere in America.
That is a significant householdincome.
So that's a brand where it'sreally challenging to scale and
it must scale only in thosemarkets.
So, yeah, you have to identifythose areas.

(07:13):
Yeah, go ahead.
No, I was just going to sayeveryone always says you go to
the mall and you have 15 jewelrystores and people may.
Or you go down a road and thereare 17 different car
dealerships, or you go on astreet corner intersection and
there's four, as you said,pharmacies.
Right, they want it that way.
It's economies of agglomeration.

(07:34):
Like the guy the jeweler in themall did not say to the
Westfield landlord I want to bethe only jewelry store in this
mall.
I want a use clause.
No, they beg for 15 morejewelry stores.
This needs to be thedestination for the engagement
ring, for jewelry.
I need a piece of jewelry.
Where do I go?
Go to the mall, there's a bunchof places there Go.

(07:55):
It's like where do I go to buya car?
Go to this street, there's 15dealerships.
They love that.
Again, it's an economic turn.
economies of agglomerationdesigned that way yeah exactly
that's right, exactly,

Ed Mathews (08:08):
and that goes for franchises physical franchises
that actually have brick andmortar operations, but there are
also online franchises as well,right home investors in my
world?
That's right Right.

Cliff Nonnenmacher (08:20):
I mean, look ,
we're a huge fan.
Everyone always thinks they'regoing to work with a franchise
consultant, they're going to tryand recommend the most
expensive brands out there.
It's actually quite theopposite.
I'm all about asymmetricalinvesting.
I like low investments, aslittle cash upfront as possible,
as much leverage as I canobtain.
I like businesses that are veryshort ramp to break even.

(08:42):
I like businesses with a highmargin, which now you did one
statement alone.
You just eliminated a hugeswath of brands that are razor
thin margin like food.
Food's out gone, just in thatone statement.
I like as few employees aspossible.
I like highly scalable.
Brick and mortar is not highlyscalable, right?
You want to own one, let's justsay 600 grand.

(09:04):
A second Dunkin dunk in 600grand, a third one.
That's not easy to scale versusnon-brick and mortar.
Which is how do we scale?
Get a tech lease anothervehicle, get a tech lease
another vehicle and continue toscale.
That's why when you drive downthe street in Connecticut you
see a HVAC van and it'll say,like vehicle number 103.
You're like what?

(09:24):
Yeah, it's that really simple.
There's nothing more deceptivethan the obvious.
It is actually simple to scalenon-brick-and-mortar brands
because the cash investment isreally small.
You just need to be a leadmachine, a marketing machine to
keep those vehicles on the roadand to have enough business to
justify, obviously, the spend.

(09:46):
Again, I understand the playbookI love non-brick-and-mortar
brands.

Ed Mathews (09:50):
Yeah, understand the playbook, execute the playbook
right.
And because the royalty thatyou spend on a monthly,
quarterly, annual basis back tothe franchisor is, you know, a
huge portion of that is going totheir branding and their
advertising and helping youelevate your brand.

(10:12):
They're doing it on a regionalor national or worldwide basis,
but rise and tide floats allboats and that's the whole
concept, right.

Cliff Nonnenmacher (10:21):
There a lot of people, that's That's very
you You say that a lot of peoplelook at a brand and they focus
on the brand.
Right, they just focus on can Ido this?
Is this something I want to do?
Does it work in my market?
It's.
Can I make?
Can I replace my income thatI've been accustomed to?
Can I create wealth, whateverthe investment objectives are?
Can I make seven figures?

(10:41):
Can I make six figures?
comes to us from a differentplace.
What they never calculate neveris what you just said.
It's the leveraging ofcollective intelligence.
When you join a brand, no oneever gets on the phone with me
and says this brand has 300units.
Right, that means I could reachout to 300 people wearing the

(11:03):
same logo on their chest and askthem for the answers to the
test.
Everyone focuses on thefranchisor.
They never focus on the factthat right there in your
backyard in Connecticut is oneof the number one operators of a
brand, and I could reach out tothat person for a cup of coffee
and say, hey, we're in the samefamily of brands.
Do you mind if I take you tolunch or a cup of coffee?

(11:24):
I have some questions.
What's working on marketing?
How are you compensating yourmanagers?
How are you retaining yourstaff?
What are you experiencingthrough COVID?
What are you experiencing withthe supply chain disruption?
How are you hedging inflation?
Where are you finding people inthe tightest labor market in
history?
I heard a statistic the otherday that was like 1.5 million

(11:47):
women are on OnlyFans and if youthink about that statement
between ages of 18 and, let'ssay, 25, you're talking about
10% of this age group.
Where is the labor market?
What happened to these youngpeople that were supposed to?
It's a challenge.
So to get out there and topress the flesh with people in

(12:09):
your business and to just getthe answer to the test, I think
is super powerful and you justcan't do that hanging your own
shingle.
I'm sorry, you can't do it.
Yeah, and I saw that same, thatsame article, or that news.
It was eye-popping.
The other part of that was evenmore disturbing, which is that
those 1.5 or 1.8 million ladieshave 82 million customers, which

(12:35):
represents about 50% of theAmerican male population between
the ages of 18 and 60, whichis-.
I was blown away by it.

Ed Mathews (12:44):
I was blown away by it.
But then what?

Cliff Nonnenmacher (12:45):
it does, Ed, is it starts to create the
framework for why we're in thelabor market.
We're in.
It really does.
Just think of the mass exodusof workers that are standing in
front of a computer, sellingtheir time, body, whatever
they're doing, to an audience.
And it's yeah, I normally wouldhave worked retail.
I normally would have worked atexpress.

(13:06):
I used to work in the mall.
I've heard people.
I used to be a police officer.
Now I do only think about it.
This is a.
And then you have the men.
These are mainly females, as wehad this conversation.
And then you talk about whereare the guys, where are the 18
year old first-time workers toenter the fast food space or the
quick service restaurant space?
Oh yeah, they're making TikTokvideos, they're making YouTube

(13:29):
videos, they're podcasting andthey're actually happy making 30
grand a year.

Ed Mathews (13:34):
You know man living at home and the breakouts.
This gig economy is real right,and the fact is that there are
also.
So I follow a lot of folks onTwitter that are in this space
and there are a lot of 18 to35-year-olds who are making very
good money six figures plus assolopreneurs selling products.
Right, that's exactly right.

(13:55):
And they're the people outthere saying I use ChatGPT to
create products and I turnaround and sell them.
I don't think they're makingmoney, but the people who are
actually thoughtful the MattGrays, the Dan Coes, the Justin
Welches these guys are A they'rebrilliant and B they're adding
huge value to otherentrepreneurs, and those
entrepreneurs are willing to payfor their products.

(14:15):
That's right, and that's how weknow those names, because I
bought their products right,that's right.

Cliff Nonnenmacher (14:22):
yeah, I'm on some of those newsletters

Ed Mathews (14:24):
and so, franchising, I want to make sure that we're
crystal clear on one point.
I want to make sure that weprovide clarification around.
There's two elements to afranchisor relationship,
primarily, right.
There is the franchisee, who isthe person who owns the
franchise, and then there is thefranchisor or franchisor,
depending on the language youuse who is actually the entity

(14:47):
or the person or group who ownthe brand, own the original
locations or business and arenow in the process of allowing
other entrepreneurs or otherbusiness owners to buy into
their model.
And so, for Franocity, you guysfocus on the former, not the
latter.
Right, you guys are focused onpeople who are interested in

(15:08):
buying into a franchise, notnecessarily the folks that are
looking to franchise theirbusiness, yeah?

Cliff Nonnenmacher (15:15):
Yes, exactly .
I'm focused, I'm laser-focused on who wants to
purchase or investigatefranchising as an investment
vehicle, and I thought it wouldbe a good idea to be on your
show and say, hey, you have thismassive audience that loves
tangibles, they love real estate, they love scaling, growing,

(15:36):
creating wealth.
There's also a lot of realtorsthat are listening into the show
because they have a love andaffinity to real estate.
That I also thought, man,they're touching the homeowners,
they're touching the buyers,they're touching the sellers.
There's a lot of things thatthey could do to diversify their
investments.

(15:56):
And you wouldn't believe howmany realtors I'm speaking to
right now.
It is absolutely insane.
Yeah, because, look, I lovereal estate, I love real estate
investing.
It's a highly cyclical space.
It's no different thancontracting, and a lot of these
folks now are starting to feelsome pain.
lot of the mortgage brokers arejust dead.
They're absolutely dead.
The number of mortgage brokersyou bet and they need to create

(16:17):
that hedge.
It doesn't always rain, it'snot always good times, you're
not always getting a 20%, 30%return on your assets.
It's just not normal.
So I thought that there's a ton, there are a ton of
opportunities and I'll justshare one statement I make with
realtors and I'm like that'sreally thought-provoking.

(16:37):
I tell them I go do you realizethat every home inspection
report, like literally everyhome Home inspection report
that's done in your world,includes drywall repair as a
line item in there, or roofing,which is number one.
Roofing is absolutely number onein home inspection report?
In a handyman business, youcould be in the HVAC business,
you could be in roofing,flooring, siding, junk removal.

(17:12):
Every house that a real istrying to sell, there's air on
it.
It's like you're landscaping.
There's a boat on cinder blocksor a car or we need to clean
this up a little bit.
There are so many opportunitiesfor real estate investors and
realtors in franchising andhere's the key.
This is where a lot of peopleget this disconnect.

(17:32):
No one wants you doing the work.
So don't think I don't want, Idon't know anything about
roofing good, because no onewants you to be a roofer If
you're a realtor and you'resomewhere in America and you
know that in every inspectionreport, roofing is number one
hands down as an issue.
There's always something goingon with a roof in a transaction
of real estate.

(17:52):
Even if it's just cracked tilesor some shingles missing or
aging, you don't have to be inthe roofing business.
That's the beauty offranchising.
No one expects you to do thework.
They want you to have yourbusiness acumen.
You hire people that love it.
No one wants you trimming trees, no one wants you fixing
drywall.
So that's why I thought thiswould be a great audience and

(18:13):
I'm happy to be here, because Ithink that's a huge opportunity
for realtors to create a hedgeagainst a light real estate
market, because, even if it's alight buyer seller two-sided
market that the issues withhomes will exist regardless of a
transaction.
Like, you don't need to sell orbuy a house to know that you

(18:34):
have issues within it.
You have to fix them.
Look at water, fire, mold andbiohazard, look at flooding,
look at Servpro, look atServiceMaster, look at Paul
Davis.
This is random acts ofcatastrophe having nothing to do
with a real estate transaction.
So we can unpack a lot ofbrands, whether it's staging or

(18:55):
whether it's everything that Ijust mentioned, where realtors
and real estate investors cancreate a nice hedge and, in
addition to that, they could useresidential property management
services to manage theirexisting portfolios.

Ed Mathews (19:11):
Yeah, the fact is that if you really think about
it and you break it down andthis is actually one of the
really interesting you bring upthis point and it's something
that really resonates with mebecause I'm always looking for
ways to diversify.
It's been slow going as a realestate investor.
I haven't bought anything and Ithink the first property I'm
going to buy in about 18 monthsis in about two weeks, and I've
been selling into this.

(19:31):
I haven't been buying out of it.
And the fact is that one of theways that, like a lot of
flippers that I know, a lot ofrehabbers that I know, a lot of
realtors that I know havediversified and kept the juices
flowing, is invariably, when Igo into a wreck of a house and
we go in, we make it clean andsafe and then we make it

(19:52):
beautiful.
Right, and by the time we makeit beautiful, I get knocked on
the door by at least one of theneighbors that says, hey, I need
a roof, can you do that for me?
And when I'm busy I say no.
When I am not busy, I say sure,let me take a look at it, and
we're more than happy to take alook at it.

(20:13):
Why not create a businessaround that?
I do it opportunistically, justin the interest of keeping my
guys busy and keeping cashflowing.
But we owned a captive rooferor a captive windows and siding
or staging or drywall orflooring or whatever franchise.
You got me thinking here, Cliff.

Cliff Nonnenmacher (20:35):
You look at, look at like when you talk
about barriers to entry, likeroofing is a skill, it's a let's
call it a higher level.
You got to be able to go upthere.
It's a heavy lift, it's a biginvestment.
There's a lot of risk to, let'sjust say, roofing.
So what's?
What's something the oppositeof that, just the lowest barrier
to entry business just pickingup junk.
You look at 800 Got Junk.
They're doing 750 million ayear in revenue at a Canadian
brand yeah, we had him on ourshow.

(20:56):
Brian Scudamore is an absolutebeast, right.
And you look at the averagerevenue of his brand it's like 2
million a year.
And then we have competitors infranchising that we represent.
We represent 600 brands.
So we have a massive supersetof brands and we're working with
a client to introduce them.
Some of my other junk removalbrands, again, low barrier to

(21:16):
entry, de-skilled, just easy,simple, unskilled labor.
A million five a year haulingjunk, solid 15, 20% margin all
day long.
You're like that's simple, it'ssimple, it's highly scalable.
And, of course, we are thenumber one consumers on the
planet.
We buy shit we don't need everysingle day.
And what do we do with it?

(21:37):
We store it in a storage unit.
Like how about that?
And then when we're tired ofall this stuff that's in our
attic, in our basement, in ourstorage unit, we end up calling
someone and pay them a premiumto haul it away that we've just
spent several hundred dollars on.
If you look at this loop, thiscycle that we're in, it's crazy
Consume, never use pay to storeit, forget you stored it, forget

(21:59):
you own it, pay someone to haulit.
So just things like that arejust so simple and make money.

Ed Mathews (22:07):
Absolutely.
o you mentioned your show, soyour podcast tell us a little
bit about that.

Cliff Nonnenmacher (22:12):
Yeah, pursuit of profit is the name of
the show.
It streams on all the normalstreaming services the Spotify,
is right, the Apple.
The show primarily is tointerview founders of brands
only.
So we just want to interviewfounders.
If you're a franchisee and, toyour point, not a franchisor,
right?
So if you're a franchisee youhave to be doing like five plus

(22:35):
X the average operator.
So we had you mentionedstaffing with Nick like we had a
staffing franchisee on zeroindustry experience, doing 70
million a year.
Right, we had a residentialproperty management guy on
recently out of a market thatyou and I would never want to
operate in, a market like Iowa,guy was doing 13 million a year.

(22:56):
The average revenue for theirfranchisees is maybe 700 grand.
So you look at that and go, wow, so if we do bring a franchisee
on, they're just killing it,absolutely killing it.
And again, they're five plus 10, x in what the averages are
doing.
But I would say 90% of theguests on the show are going to
be founders of FranchiseConcepts and we just interview

(23:17):
and take a deep dive into howthey got in this business.
Right, unit economics, how manylocations, how to scale it,
what's the investment, how doyou acquire customers.
What's your cost to acquire acustomer?
Just getting a little moregranular into the conversation
about each business and mostpeople don't like things at
Hello, right, they just don't.

(23:37):
Most people.
If you said to someone like weused to be really big into dry
cleaning back in the day and nowI have no interest in that,
take a closer look at it andthen all of a sudden they're
starting to see the millionairenext door.
I don't know if you read thatbook by Tom Stanley, right, it's
open up your checkbook.
That's where all your money'sgoing.
Look at your.
What was one of the famousquotes in that book.
Today's millionaire doesn'tknow a Rembrandt from a

(24:00):
Rembrandt, but they know allabout the cost of dry cleaning
fluid.
It's like those, as you said,sweaty startups, the tried and
trues, the businesses that arelocal with feet on the street.
And, by the way, Ed, I trulybelieve this with AI and now
quantum computing coming out now, there's a lot being thrown at
us in a very short period oftime.
I really believe, for the firsttime in history, you have AI

(24:22):
going to annihilate white collarjobs, going to annihilate white
collar jobs and I think theplumbers, I think the tradesmen
the pendulum is going to swingviolently in the opposite
direction, where you're going tosee the blue collar guys making
an ungodly amount of money.
I think your average plumber isgoing to start making two to 50
.
I think your average HVAC guyis going to kill it.

(24:42):
I think that we have shit onthe trades in this country.
For two decades and we told ourchildren to go to college that
come out and can't even spell.
They can't write a paragraph.
I mean, I'm blown away by someof the letters I get from
college grads and they'resitting in debt for $150,000,
$200,000.
It's insane.
And now you're starting to seethat pendulum swing the other

(25:05):
way.
Where it's?
I'm going to vocational school,I'm going to trade school.
I'm going to learn how to usemy hands.
I'm going to learn how tocapitalize with my feet on the
street zero risk of AI, zerorisk of Amazon, and I'm going to
create wealth for my family andI think you're going to see
that big time.
And franchising fits perfectlyin that trend of be careful,

(25:25):
because AI is going to take yourjob.
I told my son to become alawyer.
I told him pivot, unless you'regoing to be a trial attorney
with your feet in a courtroom,don't do it.
I use chat GPT to evict a tenant.
Come on, it gave me the Floridalaw, step-by-step and strides.
I told it you're a Floridaattorney and you're an eviction

(25:46):
attorney.
Give me the step-by-stepinstructions on how to evict a
tenant under the laws of thestate of Florida, step-by-step,
come on.
Yeah, be terrible.
Accounting dead, law dead.
A lot's going to change.

Ed Mathews (25:58):
Shop for sales , consulting, marketing, right,
and the fact is that you look atmy old jobs in sales and
marketing in the tech world.
Those shops they used to bemultiple hundreds of thousands
of dollars a year jobs.
They're all going away and I'vehad more than one founder that
I've known over the years cuttheir marketing staff from 10,

(26:19):
12, 15, 20 people down to threeor four, like that, like
literally overnight because ofAI.
And we're at the dawn of it.
We haven't even started yet.

Cliff Nonnenmacher (26:30):
I totally agree with you.
Ed, I feel like I'm at the tipof the spear for this
conversation because I am theguy getting the phone call and
the lead and I'm saying whatbrings you to us?
What?
What made you go on theinternet at one and I'm looking
at it, right, it's 1am, 3am Like.
What made you do that?
Nate?
There's, the stories are allthe same.
I fear for my position.

(26:51):
I'm seeing people in mydepartment being terminated.
They're being terminatedbecause of ai, like being a
wordsmith.
I always admired a wordsmithbecause I'm not a wordsmith,
right, and it's man, I love that.
Look how well, well-writtenthat is, right.
Look at that marketing brochure.
Look at the content, look atthe creative, look at the copy.

(27:12):
I don't need those peopleanymore.
I go and I use AI for all thatstuff.

Ed Mathews (27:16):
Now you don't need five of those people.
You need one.
You need one.
You've got.
You've transitioned, like copyediting, right.
You've transitioned from fivepeople banging out content for
social media and whatever elseto one person who's just editing
and making it human as opposedto creating, and I think that's

(27:37):
only going to get better.
All right, so thank you forthat and I'm grateful.
We're going way long, but Idon't care, because this is a
good conversation.
So I'd love to get into thefinal five and because I'm
always interested in businessleaders and entrepreneurs and
what makes them tick and howtheir brains work, so I'd like
to ask you to finish thissentence.
My purpose is what's that meanto you?

Cliff Nonnenmacher (28:01):
My purpose is.
My purpose has always been tocreate wealth, but not for the
reasons that people createwealth.
It's to me, wealth is freedom,and it's freedom from a broken
system, right, it's freedom ofhealth.
It's just.
It gives me the ability to livemy life my way, and I just I've
always been that way.

(28:21):
When I say always, I'm talkinglike eight, nine, 10.
I've always wanted to beself-employed.
My purpose is literally to justlive my life my own way.
I do not like to live withinthese rules or within a box.
That's just.
I just I view wealth asabsolute freedom and I like to
give, I like to mentor and helpother people, like our podcast

(28:44):
and like attending shows likeyours.
I want to empower other peopleto live freely as well and to
and to be able to enjoy just thefruits of the efforts of being
an entrepreneur.

Ed Mathews (28:56):
Yeah, time freedom is one of the most valuable
things you can have.

Cliff Nonnenmacher (29:00):
Time is the only commodity you cannot
recycle.
It's gone, that's it.
You're never getting it back.
And I'm amazed at how manypeople really just don't value
their time and binge watchNetflix and just lose 7,000
brain cells.
Like I just don't get it.
There's so much and that's oneof the best quotes I ever read
in my life.
If you think becoming amillionaire in America is

(29:20):
difficult, you haven't tried,and that is the reality for a
lot of people.
They want what you have.
That is the reality for a lotof people.
They want what you have.
They want what others have.
They're just not willing toexert the energy to do it and
use their time wisely.

Ed Mathews (29:38):
Yeah, there's an exercise I take the folks that I
mentor through in terms of timemanagement.
We talk about 60 hours a weekworking.
You go out every night afterwork for an hour or two.
You go out and you gotailgating on Saturdays and
tailgating on Sundays.
You watch your football games,go out to dinner on Saturday
night and Friday night, and allthat and you sleep eight hours a
night.
And here's the thing 168 hoursin a week you do all those

(30:01):
things, which is a full life.
You still have about 25 hours aweek to do something with right
and most people binge, watchNetflix and video games and
whatever else they're doing.

Cliff Nonnenmacher (30:13):
Do doom scroll on social media and just
don't get angry, you don't havetime, right, that's.
I completely agree with you.
Like I just kill all that stuff.
I can't stand social media.
Yeah, right, okay.

Ed Mathews (30:25):
So awesome.
Let me ask you about mentors.
Guys like you don't get whereyou are without having people
who've been very generous withtheir time and expertise.
So what's the best advice youever got and who gave it to you?

Cliff Nonnenmacher (30:37):
I've had quite a few mentors I had.
My main mentors were when Ientered excuse me, I grew up
next to what I refer to as theBrady bunch.
They were pioneers in theplastics industry.
Their father, they were wealthypeople.
Every single child in thathouse next door had really
empowered me to be anentrepreneur because they were
entrepreneurial.

(30:58):
Their parents did not pay forthem to go to college.
They clammed on the Great SouthBay and Long Island to put
themselves through college andwere just entrepreneurial.
So they inspired my journey.
My father as well.
He always tried to do somethingentrepreneurially.
I don't know where I got thisadvice from, but, boy, I live by
it.
Never take advice from peoplethat aren't where you want to be

(31:19):
.
And people people are veryinteresting.
When I wanted to becomeself-employed and do something,
most people spend their timeanalyzing reasons for failure
instead of spending their energyon how to achieve results.
So I have learned really young,I wanted to buy a subway in the

(31:39):
early 90s which they didn'teven have 4,000 locations at the
time and no one.
You probably wouldn't evenknown about.
You're in Connecticut.
You would have known about itbecause they're out of Milford.
But you get my point.
They were small.
They weren't what they aretoday.
I thought it was a great brand,I thought it was something that
I could get behind and myaccountant gave me horrible
advice and said don't do it.
And he gave me a slew ofreasons why.

(32:00):
I don't even think I was 18 atthe time and I wanted to do this
deal in Marklewell in Florida,and I realized at that moment
fast forward, that when I go toan accountant, I don't really
want your opinion, I just wantempirical information from you
and I'll tell you why.
Most accountants aren't wealthybecause they're risk adverse.
So why am I taking advice fromsomeone that doesn't even

(32:22):
embrace risk?
They don't embrace chaos.
They don't embrace thisentrepreneurial world that we
live in Like they just want to.
They want slow and steadyreduce risk.
I don't really like takingbusiness advice from lawyers or
accountants.
I just want to know how is thiscontract written?
Are we managing risk properly?
Contractually?

(32:42):
Is the language right?
Don't do not give me youradvice on whether this is a good
or bad investment.
Leave that to me.
You do the other thing.
So, thankfully, as a teenager,I learned really quickly how to
use the accountants and how touse the lawyers and how to get
what I need from them, the skillsets that I don't have.

(33:02):
But if anyone's listening tothis, because you will feel
compelled to ask family membersand friends and the uncles and
the aunts do not take advicefrom people that are not where
you want to be.
That's my advice, yeah.

Ed Mathews (33:17):
The only thing I'll add to that is that I work with
accountants.
First off, you have to speakreal estate in order to be an
accountant for my company, right?
But the other part of it isthat I'm always looking at.
I'm always wary of being anentrepreneur, being somebody
who's on the creative side ofthe operator, creative spectrum,
right.
I'm always worried aboutconfirmation bias and I leverage

(33:39):
the expertise and the riskaversion of underwriters and
accountants and lawyers to giveme the 97 reasons why I'm about
to screw up.
But the next set of questionsare okay, how do I avoid that?
How do I fix that?
And if I can get over that, ifmy accountant, dave Lake, says,
okay, here are the 19 reasonswhy you should not do this deal,

(34:00):
okay, let's talk about each oneof those and work through them.
How would you overcome the riskin all those?
And if I get to the point in myheadspace where I go, okay, of
these 19, 12 of them are no bigdeal.
I've already thought throughthose.
And these last seven?
Let's talk through them.
Okay, we have a plan for eachone of those If they happen now.
Now the risk is managed andlet's get the deal done.

(34:21):
Absolutely Love it, yeah, andI've never been fired by an
accountant for doing a deal theyrecommended against, although
every once in a while I get.
I told you this would happenand yeah, you did.
That's fine and it is what itis.
So, speaking of mistakes, whatis a mistake that you would love
ba ck and how did you recoverfrom it?

Cliff Nonnenmacher (34:54):
I don't do well managing, let's say,
entry-level employees.
I don't do well managing hourlyemployees.
I don't.
I do way better managing sixfigure employees, let's say
executives, middle managers, andit was a.
And let me tell you somethingfor people that get into
franchising listen to what I'msaying.

(35:14):
Do that internally.
I have people come to me to buyfranchises all the time and I
have to ask them when's the lasttime you managed a minimum wage
employee?
And they're like never.
You have how many directreports?
Do you have?
15, 15.
What are they making?
Oh, they're all making sixfigures Exactly.
And now you want to buy afranchise managing 10, 15, $20
an hour people.

(35:34):
You don't.
You don't know what that's andyou may not actually enjoy it.
You may not be good at it.
I suck at it and I was bad atit to the point that I had to
shutter this business.
And how did I recover from it?
Thankfully, we have taxbenefits as entrepreneurs, so I
recovered from it by keepingthat entity open, using that

(35:57):
entity with these capital lossesand then purchase another
investment that was highlyprofitable, and I use all those
losses to offset my gains.
So it was a massive turnaroundin terms of using tax
efficiencies and tax code tomake up for my mistake, but that
would be the financial makeup.
How did I make up for it?

(36:18):
Going forward, know yourself,know your limitations, know what
you're capable of right, hirethe skill sets you don't have.
And that was a major wake-upcall for me and my business
partner, Justin, who Ico-founded the firm with
Franocity.
We vowed that day we're notdoing that again.

Ed Mathews (36:36):
Smart.
Yeah, know thyself is realimportant, right?
One of the things that I had Ilearned from a book really was
eos there's that I mentionedearlier, the creative versus the
operator, and I alwaysenvisioned myself being good at
everything and turns out yeah,can I do bookkeeping?
Sure I can.
Am I good at it?
Yeah, I'm good enough at it,but hate it.

(36:59):
I hate it with the whitepassion of a thousand burning
suns.
I just so why not bring inpeople to do that for me?
You got to know what you'regood at.
You got to know what you enjoy.
You got to know what you'regoing to excel at, because the
things you don't human nature isthings you don't excel at.
The things you don't enjoy, youwill procrastinate and not do,

(37:21):
and that's a problem, right?

Cliff Nonnenmacher (37:24):
I completely agree with you and I think that
the worst advice that we haveall been given I think everyone
listening, including yourself,can say I have been given that
advice if you want somethingdone right, you have to do it
yourself is the absolute worstadvice you could ever be given
as a human being, unless youwant to be poor.

Ed Mathews (37:44):
Amen, yeah, it's a recipe for disaster and totally,
totally I think it was actuallydesigned?

Cliff Nonnenmacher (37:53):
I think it was designed actually to keep
the 1% and the 99% in check.
I think that advice was given.
It's just no different thandon't count your chickens before
they hatch.
Law of attraction thoughtsbecome things right.
That was all meant to suppress.
I think it's the mostsuppressive advice you could
ever give another human being.
Are those two things?

Ed Mathews (38:12):
Or it was created by an accountant or an attorney,
right?
So I'm always curious about howexecs like yourself, leaders
like yourself, sharpen that saw,and so I'm curious about the
books you're reading these dayswhat's on your nightstand,
virtual or otherwise, and whoare you paying attention to?

Cliff Nonnenmacher (38:34):
So, right now, because we're writing a
book.
So we're working with Forbes.
Right now we're writing a book.
Our book is going to bereleased, maybe first, second
quarter of next year.
Its title is Beyond the Brand.
So we're going to have adiscussion beyond the franchise
brand.
So lately I've been reading alot of franchise wealth created
books.
I don't even want to plug them.
I honestly believe that they'rejust poorly written.

(38:56):
They're really not thatvaluable written.
They're really not thatvaluable.
However, as books that I now I'mstarting to read because of a
Delta flight, James Clear AtomicHabits I don't know this guy to
me right, I think he's one ofthe best communicators.
He's one of the most masterfulpeople to take complex issues

(39:18):
and just simplify them in littlesound bites and short clips.
So this Atomic Habits and, ofcourse, I want to read the
four-hour work week, which Iknow is an older book.
But speaking of time, I want mytime back and I think that I'm
more productive than the averagehuman being.
I think I do more in a day thanan average person will do in,
let's say, two or three.

(39:39):
I'm highly productive.
I'm laser focused.
I have very few distractions.
I don't deal, like you said,doom scrolling on social media.
All of my time goes intoproductivity, so I really want
to embrace something like thatand spend more time on the
things that I love, whether itbe my family or just my passions
or my ability to just rechargeand regroup and maintain thought

(40:01):
clarity and just maintain goodhealth and that takes time as
well.

Ed Mathews (40:06):
Yeah yeah, a buddy of mine actually a guy who was
on this show, Andrew Freed thatput me on to a similar book
called the buy your time back,Dan Martell.
And if you're looking at thosetypes of books that I just
started it literally two daysago we're recording on January
2nd here, so this is a holidayreading time, and so once I got
through the New Year's, I pickedup a book and this is the first

(40:28):
one that I'm reading and I'mabout five chapters into it.
It's opened my eyes on severallevels.
So good book.
So let's talk about success.
What does success mean to you?

Cliff Nonnenmacher (40:37):
What does success mean to you?
Yeah, I think it would be mysame answer.
Just success to me is justliving your life under your own
terms.
And I go into when I say that,just like modern medicine which
I'm not for, I think that modernmedicine does not really help
people.
I think it keeps you sick.
So, just the ability to havecapital to say I'm going to hire

(40:59):
experts Look at Huberman, lookat Asprey, look at Ramsey, look
at all these guys, atiyah, thathave done just amazing things,
their podcasts and theirinformation flow and what you
can learn from them and then tobe able to hire them and say,
okay, this is me and my body, myblood panel, right, my workup,

(41:20):
what would you do?
Where are my deficiencies?
How could I be healthier?
And that's what I'm doing rightnow, and I think it takes
capital to do that.
The average person can't do it.
I'm sorry.
They're stuck in that systemthat I refer to as broken, where
it's look, what's the matter?
Oh, what's the matter?
I have low, this high, thatit's all prescriptions, that's
all they give a shit about.
So when you talk about what's mydefinition of success, it's

(41:43):
literally defined as the abilityto live my life my way.
And if I don't like what I'mseeing or I don't like the way
the system is designed, I wannabe able to have the means to say
I'm flipping the script on thisand I'm gonna live my life my
way, like I'm not on any meds.
But had I listened to modernmedicine, they probably would
have put me on three, fourprescriptions.

(42:03):
I'm 53 years old, not zero.
Do I have deficiencies?
Yeah, but we identify them.
I actually just have my bloodpanel done from last year.
I was B12 deficient, I was Ddeficient.
Right, I needed this.
I needed that resolved underalternative means.

Ed Mathews (42:20):
If you will Good for you.
That's great.
So when you're not talkingabout real estate and
franchising, what do you like todo for fun?

Cliff Nonnenmacher (42:29):
Right now I happen to be in one of our
properties out in Park City,Utah, which I love the skiing
out here, so I love skiing.
I also reside in southeastFlorida, Boca Del Rey.
I'm a huge boater, I suck atgolf and I really golf is a huge
time commitment.
I just don't have it.
But I think my greatestpassions right now are just the

(42:50):
winter sports and investing.
I have a 16-year-old who, at avery young age, became
interested in investing, so wespend a lot of time together
looking at charts and graphsbecause I like that kind of
technician component ofinvesting Because he's so young.
We're really into crypto, so wedo a ton of analysis on

(43:14):
cryptocurrency and have a niceportfolio there.
We're huge on uranium andenergy.
Due to everything that's goingon in the world today, the grid
isn't designed for all theseideas.
I'm sorry, I didn't want tolisten.
If you want to make aninvestment in energy and it
better not be fossil fuel,because that is not the future,
and I don't have a problem withfossil fuel, it's just you can't

(43:34):
take every car and just plug itinto an outlet.
It's just not going to work.
So I love, I'm very passionateabout investing as a former
investment banker, but I lovedoing it on my own.
So those are the things I loveto do.
I love my family.
I'm very close to them.
We spend a lot of time witheach other.
Those are my passions.

Ed Mathews (43:52):
Yeah, good passions to have.
Yeah, the Hubbard and Peake isreal right.
At some point we're going todip a straw into the earth and
come up empty and figuring outwhat that next stage is.
There's a reason why ExxonMobiland all those other BP are all
investing in alternativeenergies fusion, fission, wind
solar.
It's.
There's a reason for that, andthat is that we're.

(44:14):
Everybody knows that the gravytrain, the oil petroleum gravy
train, is at some point going tocome to an end and it's
probably maybe not in ourlifetime, but good chance it's
in our kids' lifetime.

Cliff Nonnenmacher (44:26):
I agree with you.
By then the technology will bethere, I think.
Quantum computing I'm stillwrapping my head around.
I didn't even really fullycomprehend a semi-processor from
intel or nvidia.
Now I'm supposed to digestquantum computing at the atom
level and the ability to processinformation.

(44:47):
This is going to be interestingand it will solve a lot of
future and modern day problems.

Ed Mathews (44:53):
So it's going to add a ton of complexities right,
yeah, without a doubt, right.
I saw an explanation that made alot of sense to me.
It was basically think aboutcomputers that we grew up with.
If you ask them to solve a maze, they will try each path, one
at a time, serially, and untilthey find the solution.

(45:13):
Quantum physics, in an instanttries all paths and solves that
puzzle in a matter a matter of,in this case, nanoseconds.
Now make that.
That, then place that in highlycomplex areas medical research,
energy research, like you weretalking about earlier.

(45:34):
It's, it's a, it's a hugeopportunity and it's it's
equally terrifying and equallyexciting.
In my and mainly because I sawthe terminator movies and so,
had I not, I'd probably be goingheadfirst into it, but I know
it.
I know that Schwarzenegger andthe unbeatable terminator is a
possibility, so tread lightlyout there.

(45:54):
OpenAI and all those other.
Yeah, obviously you have a bookcoming out.
Congratulations on that.
I can't wait to read it.
Uh, you have your podcast.
If folks want to learn moreabout you, or Franocity or any
of the other things you'reworking on, what's the best way
to do that?

Cliff Nonnenmacher (46:15):
Pursuit of Profit.
That's the name of our podcast.
They can reach out to meimmediately, just hide behind
the computer a little bit anddip their toe.
If they wanted to just go to awebsite and request information,
it's franocity.
com, f-r-a-n-o-c-i-t-y.
com, and they can request someinformation.
They can reach out to medirectly.
And, yeah, next year we'll haveour book coming out called
Beyond the Brand.

(46:35):
Takes a deep dive intofranchising and risk, which
plays a huge role.
Most people don't makedecisions because they have no
confidence in themselves.
They're literally paralyzed infear, and we have a culture
right now that is afraid ofmaking big decisions and risk.
Everyone's taken this safe way.
It's really frightening.
If you really think about it.
We have done something tosociety where they just don't

(46:58):
want to take risks.
I think those are the best waysto reach out to us.
Visit our website.
We love to chat with you.
By the way, I didn't mentionthis.
What we do is free.
I always refer to ourselves asbeing compensated like realtors.
It's the best analogy I couldgive someone.
We're paid by the seller, whichmeans we're paid by the
franchisor, so we work for theinvestor, the buyer, your
listener, literally 100% forfree.

(47:19):
There's never a time that weask for money.
It's not a sales funnel.
This is a due diligence cyclewhen they work with us that
takes three, four months tocomplete.
So there's a ton of duediligence involved in evaluating
brands when they're workingwith us.
But I just want everyone toknow that we do work for you for
free.
We're paid by the seller at theseller's expense.
You're not paying directly,you're not paying indirectly.

(47:41):
You are not paying for us atall.
Nobody believes free in anysong.

Ed Mathews (47:44):
You got to go on and on about it.
Excellent, I'm glad youmentioned that.
Cliff, thank you so much forjoining us today.
It's honestly, man, I learnedsomething every time we talk and
I'm grateful for your timetoday.
And hey, when the book comesout, I want to have you back on
the show.