September 1, 2025 • 53 mins
What does it really take to succeed in the rent-to-own franchise world? Mitchell Lee, Senior Director of Franchise Sales at Buddy's Home Furnishings, pulls back the curtain on this profitable but often misunderstood business model.
The conversation begins with a candid look at current market conditions. "When you see trends in real estate, you typically see trends with franchising too," Mitchell explains, noting how the industry cycle follows a 2-3 year pattern from boom to valley and back again. With rising interest rates and economic uncertainty creating challenges, Mitchell reveals how Buddy's has pivoted to focus on acquisitions alongside new store development.
One fascinating revelation is the financial commitment required – between $500,000 to $800,000 all-in to launch a successful store – and what drives that investment. "We're not like Chick-fil-A where we open the door day one and have lines out the door," Mitchell candidly shares. Instead, the business builds gradually, with mature stores averaging $1 million in annual revenue and an impressive 20% net profit margin. For comparison, Mitchell notes food franchises often operate at just 8% margins.
The most compelling insights come when discussing what separates franchise success from failure. Mitchell reveals that 86% of Buddy's franchisees own multiple units (averaging 8-12 stores each), suggesting the model works extraordinarily well for those who master it. However, the approval process is rigorous – a committee of four executives scrutinizes each candidate's financial position and operational plans before granting franchise rights.
Perhaps most valuable is Mitchell's straightforward assessment of who should consider this business model. "If you want to be the quarterback of one team, go be the quarterback," he advises. "If you want to be the head coach or general manager, that's a different conversation." This distinction between hands-on operators versus multi-unit developers perfectly frames the strategic decision potential owners must make.
Ready to explore franchise opportunities? Connect with Mitchell at BuddysFranchising.com or call 813-321-0401 to learn if this business model might be your path to entrepreneurial success.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Hey everybody, welcome to the RTO Show.
I'm your host, pete Schell, andtoday I have a special guest.
It's the second time, listen.
The first time we crashed andburned, it was a long story,
we're not talking about thatright now.
Mitchell from Buddy's HomeFurnishings.
Who does the corporate?
Speaker 2 (00:25):
no, no, what is it?
So I do work for corporate.
Yes, my name is Mitchell Lee.
I am the senior director offranchise sales.
Speaker 1 (00:32):
Franchise sales.
Speaker 2 (00:34):
For Buddy's Home Furnishings.
Speaker 1 (00:35):
So when we say corporate, that's like a
different word.
Speaker 2 (00:39):
So franchisees will say corporate, obviously.
Or anybody that works for afranchisee of a system will say
corporate, yes.
Am I a W2M employee of Buddy's?
Do I work for corporate?
Yes, I don't see myself ascorporate because I'm not in the
day-to-day of what franchiseesand franchisors go through.
I'm on the front lines offinding people, talk to people,
(01:02):
get them engaged and then getthem to that point Gotcha.
Am I technically part ofcorporate?
Yes, but I'm an extension whereI'm trying to find people and
match them up to our franchise.
Speaker 1 (01:11):
We're not wearing that moniker today.
We're not wearing that moniker.
Mitchell is not wearing thatmoniker today.
So, truth be told, it's roundtwo.
Last year we had some thingsgoing on in the first part of
2024 RTO world was okay, andthen I had some things going on
in the first part of uh, youknow, 2024 rto world was okay
and then, like, I had some thatwere just hard, it was hard to
get through, man, it was justhard to get through.
Speaker 2 (01:29):
I was dropping some knowledge in that.
I remember yeah second round.
Speaker 1 (01:33):
We are at rto world 2025, which means that it's a
whole different year, wholedifferent ball game.
When you're talking aboutfranchising in the world of
franchising, what's going on?
Speaker 2 (01:46):
So it's an interesting year, like I'm sure
we've all seen in Rent to Own,but it's a little bit more
exemplified in the franchisingbusiness.
I always relate it to realestate.
When you see trends of realestate, you typically see trends
with franchising too, becausethe biggest purchase most people
will make, number one is theirhome and then number two is
typically a franchise.
(02:06):
And I live in Texas so I followtrends of real estate, and
recently a DFW poll came outwhere there's 500,000 more
sellers than buyers Ouch yeah.
So just think of thatexemplified into franchising
Right now.
Getting financing, it's alittle bit different than it was
five years ago, even.
(02:26):
Right, yeah, percentage pointsof 3%, 4%, 5% are now 10%, 11%,
12% on some deals, so it'sslowed down a little bit, but I
feel like we are in the valley,so to speak and I feel we are
coming on the other side, butoverall, just probably, like
you've seen some industry trends, it's been a little bit harder,
but I feel that it is on thebounce back.
Speaker 1 (02:48):
So when you're saying that now it's like a buyer's
market and franchising kind offollows suit, how often do those
trends lead right?
It's not like hey, today is abuyer's market, tomorrow is a
seller's market.
How often does that cycle taketo effect Like hey is
transitioning?
Is it six months?
Is it a year?
Speaker 2 (03:07):
I would say typically it's a two to three year
transition of the overall cycle.
But you don't feel it till youfeel it, if you know what I mean
.
Like you know I'm selling,things are good, I'm.
You know we're doing this, thatand the other.
(03:30):
I might be looking for avacation with some success, and
the next thing, you know, ithits you in the face and you're
looking at next quarter like,okay, things have changed, but
overall that cycle typically istwo to three years.
In my role and you can take thisto rent-to-own operators as
well you really have to pivotand figure out what's going to
be that niche thing or somethingthat you can take to elevate
that business.
Right At the start of COVID,most people were renewing their
appliances and washers anddryers right, and you know,
(03:50):
playstations were huge in thattime too.
But then after that you kind ofhad to pivot and push some
other products to help increasethat.
Me personally, when I was, youknow, in the thick of it, we
were all doing new builds, right, new franchisees, new stores.
But, as you know, in the thickof it we were all doing new
builds, right, new franchisees,new stores.
But, as you know, covid hitsupply chain turned some things
around and, you know,construction costs rose as well
(04:11):
with higher interest rates andfinancing.
I needed to look to get alittle bit more creative.
So we were looking to push alittle bit more acquisition
opportunities where I wouldbroker some deals and bring them
to franchisees or new prospectsto look to convert those stores
into buddies as well.
So just looking to continue togrow our brand, continue to grow
our business, whether it'sthrough new build or acquisition
, but was looking to pivot atthe time too to help continue
(04:33):
our business growth.
Speaker 1 (04:34):
So when you say acquisition, we're saying we're
going to go out and somebody hassomething already.
And they're either looking toget out, they want to change
their life, or whatever the caseis, and they're saying,
mitchell, I'm going to change myways today, I'm going to sell
cars or do whatever.
How do they come to you and saythis is what I got to do.
And then how do you turn aroundand tell somebody else you know
this, john, joe, jay is likeyou know, hey, he's coming out.
(04:59):
Because if I'm buying, whywould I want to buy something
that somebody's getting out of?
Speaker 2 (05:03):
right, I mean, that's a thought process.
Speaker 1 (05:05):
It's like you know this guy's getting out of it.
He's been in for a while.
Well, I know I want to put myhat on that.
Speaker 2 (05:09):
Yeah, how does that sell?
Great question, and it's alittle bit of a long answer, but
I will take you that business.
And in some point in time theyhanded off to the sons, no
matter that timeline.
Well, we're now in a thirdcycle where those fathers are
(05:31):
now trying to hand it to theirkids and their kids don't want
any part of it.
Right, and so we.
Speaker 1 (05:36):
You know I did.
I did say on the podcast outthere long ago man, I'm starting
to see a decline of that, thatgenerational.
I have this and come down Nowon the show.
We do have a lot of people thatsay that when you say on the
show, when you talk about theamount of people that are on the
show versus the amount ofpeople outside of the show, I've
heard a lot of people go, yeah,this is not my cup of tea, it's
not what I want to do.
Speaker 2 (05:56):
Listen, it is a very rewarding business, but you got
to put in the work, especiallywhen you open a new store.
Right, when you open a store,you're making zero dollars.
We're not like Chick-fil-Awhere we open the door day one
and we have lines out the door.
No, you got to put in the work,the blood, sweat and tears and
you're going to reap thebenefits on the back end with a
mature store.
But that just doesn't happenone day, one month, one year.
You got to continue to put inthat work, but on the benefits
(06:21):
of selling that business.
And that's why we do tons ofmarketing with both a pro as
well as through some friend.
I say friend of marketing, justfranchise development marketing
, letting people, hey, whetheryou want to sell, convert,
expand, whatever you want to do,buddies, is an Avenue and an
option for you.
We are around 300 locations nowand 80 plus percent of our
stores are franchising.
(06:41):
We're really the only ones inour space that is truly led by
our franchisees, and so I wantpeople to know that, hey, when
you're coming in, you're notcoming into a company that is
more corporate heavy compared tofranchise heavy.
We are franchise heavy and weare led by our franchisees, so
we do tons of marketing that way.
But getting back to that pointI was making is, when people
(07:04):
want to sell, I let them know.
Reach out to me, call me.
I can broker deals for you,either internally or externally.
So the one thing I'll mention,though, is typically, when I get
all the documentation, Ievaluate the business.
That's where we have to havesome hard conversations right oh
okay.
Yeah, I know you're a prettygirl, but you might not be the
(07:27):
prettiest girl in the bar, right.
Speaker 1 (07:29):
And so we got to find out how much it costs to take
you home, and there's got to besome really hard, heavy
conversations where you'reletting somebody know, hey, it
might be nice and dear to you,but it's not nice and dear in a
pocketbook.
And we got to make the rightcall.
Speaker 2 (07:41):
Mr and Mrs Seller, I know you want 1.5 million, but
for me to get this deal acrosswe need to be in the ballpark of
6,800,000.
And when you tell people thatfor something that they have
literally put blood, sweat andtears in and it's might've
tiptoed a little bit off ofwhere it was, that's hard.
But I also have to protect thefuture franchisee coming into
our business as well.
If they overpay for thatbusiness and then they possibly
(08:03):
might get financing on top ofthat, then they're going to be
put in a terrible position tolook to grow and make money for
themselves and turn hurting astore and business for us down
the road.
So okay, okay.
Speaker 1 (08:13):
So what are the top three things that help determine
?
I mean, we don't want to godown that rabbit hole but like
if I'm selling and I have abuddies and I'm like, hey man, I
just need to get out, forwhatever reason, you know, I
broke my leg, don't want to dothis anymore.
What are the top three areasthat you look at?
And of course we got toremember that's not all the
areas, but you know some of theareas and say these are going to
be pretty much the keyindicators.
(08:35):
That says this is the ballparkyou're going to land in
(09:10):
no-transcript.
Speaker 2 (09:16):
all the drywall because it was wet because of
mold, so that is one kind ofextenuating circumstance, but
when it gets down to it, themeat and potatoes.
What are we doing today?
And so I have to evaluate theaccounts where they're at,
percent collected, all of thosethings.
And there's two reallyimportant ways to evaluate
businesses these days.
In rent to own, there's more ofan old school way of monthly
(09:36):
rental revenue and multiplyingout by that, and then you can
add in some inventory, somevehicles and get you a number,
or you can do EBITDA.
That's more the new schoolRight.
But if you're asking me, if I'mon a phone with somebody and
I'm just looking at a quickrange, I'm always going to focus
back on that monthly rentalrevenue, because that's all
about this business, rightAccounts and inventory, and
that's what we're always goingto look at, the core of this
(09:56):
business.
Speaker 1 (09:58):
Accounts, not a customer account.
Speaker 2 (10:00):
It depends, depends on some people.
Let me rephrase Some stores aremore heavily on betting, some
are more focused on appliances.
With our stores we're typically60% 70% mixed with betting
couches the deal.
And some people are a littlebit in smaller markets where
(10:21):
they might push retailmattresses right and so although
they have a business that does700,000, half of their business
is retail.
So how do you evaluate thatright?
So I might bring in a thirdparty company that helps me with
brokering some deals and we'llactually give a true evaluation
outside of that because, again,we're in rent to own, we're not
in retail.
It's a different customer right.
So I have some third partyservices I use to try to get
(10:44):
true evaluations and also helpme market to potentially bring
in some outside people that dowant to get a rent to own as
well.
So it is a conversation and adeal that can happen in two
months, but I will tell you mostdeals from first time I call to
close is over a year, becauseit takes a lot of time to get
you in an understanding processof A wanting to truly do it and
(11:05):
understanding how much it'struly worth and then lining also
up somebody on the back end andessentially a marriage, to take
over that deal, that business,and look to grow it as well too.
Speaker 1 (11:16):
So you know I have a lot of people ask me.
I'm a podcaster and I'm goingto tell you exactly what.
I think I've been here for 20years but that doesn't mean that
I know the intricacies of everypart of this business.
I just know what part of thebusiness right and I have a lot
of people ask me.
You know, like, hey, you everthought about going into
business yourself?
Every day, every day, I thinkabout opening up a location.
(11:37):
Like why wouldn't I?
I've been doing a long time.
I think I got a little bit ofyou know, history and knowledge
and operational skills behind me.
You might be building a littlesomething here right now.
Speaker 2 (11:47):
That's what we're doing.
Speaker 1 (11:48):
But then I turn around and say you know, the big
question is always if you hadthe ability to do it for
yourself, would you do it foryourself or would you go into
franchise?
That's like the number onething that comes up every time
we talk about it.
And so you know, I have a lotof people out there and I'm
going to.
When I say a lot, we're rightat a 50% line, right?
They're like man, I don't wantto pay anybody.
I'm going to come up with myown logo, I'm going to come up
(12:10):
with my own graphics, I'm goingto come up with my own way to
run the software.
I'm going to come up with myown because I want to save it.
And the other end you've neverdone that, it's not walking.
Day one and you figure it out,and day two it's there, it's.
I'm going through months oftraining material.
I'm going through months of howdo I do this?
(12:32):
How do I do that?
I don't know if I like thatlogo on the truck.
This truck is it's.
So you know it's either hit theground rolling with a franchise
or hit the ground.
And if you know how to do it,you know how to do it, but if
you don't, you don't, what isthe selling point to tell
somebody that you have theability to go out there and do
it by yourself, but this is thebetter way to do it.
Speaker 2 (12:50):
It's about managing your time right, because when
you are starting your ownbusiness non-buddies,
non-franchise you just wentthrough what a million different
things there and that's goingto take one to two years to
truly iron out and figure out.
You can pay for those mistakesand you can still turn your
store, your one store you'regoing to build into a great
foundational store for whateveryou want to do.
(13:11):
Keep it, build it whatever, butin the same amount of time you
could do that.
You can already strap on to abusiness that's been in 64 years
franchising since 2009.
So what?
15, 16 years?
Now that's done it time andtime and time and time and time
again.
Right, and already has anoperations manual, already has
marketing set up, already hassupply chain and purchasing.
(13:31):
So, in the thick of it, are yougoing to save a couple of
percentage points doing it onyour own?
Yes, but we're talking abouttime.
How much is important to you?
If it's important to you to bethe quarterback, go be the
quarterback.
If you want to lead one teamand be that quarterback, so be
it.
You want to be the head coach?
You want to be the generalmanager?
That's a different conversation.
So it's just about what youwant to do and what you want to
pursue.
If you are all for, I want to doone store, I want to grow one
(13:55):
store, I want to be overseeingeverything.
We might not be the best fitright, because 86% of our
franchisees own multiple units.
Our average units perfranchisee, depending on what
model you're looking at, isbetween 8 to 12 units per
franchisee.
Wow, really yes.
So we're very heavy on themulti-unit side.
If you want to be a one-unitoperator, that's fine, that's
(14:17):
okay.
Because, guess what, you mightgo through all those headaches
and those pain points and gettired of dealing with supply
chain and purchasing andinvoicing and everything else
and say, hey, I want to go tobuddies because they have a
purchasing program.
They handle all of those thingsthe negotiated rates, the
buying power, the invoicing, theuh, the net 60 terms, a rolling
line of credit.
I want to tap into that and I'mtired of doing it on my own.
And so we actually, again, Iturned somebody away three, four
(14:37):
months ago.
I said what you want is youwant to run your own store.
We're not your best fit andthat's okay.
And guess what?
He called me up again the otherday and said hey, I might
actually seriously consider this, because I don't know if I want
to do all those things.
Speaker 1 (14:50):
I mean, in case anybody's Thinking about jumping
into it, that is a lot to gointo.
I mean, there is a lot toreally start thinking about.
Just the operational softwareis it support enough on the back
end?
Are you getting the accountingout of it?
Are you getting the inventoryout of it?
Can you really dial into thereports that you really want?
Is it going to give youeverything that you need?
(15:11):
And man, I've seen everythingout there from and I'm not
trying to say anything about itand Lord knows it's going to
come back and bite me but I'veseen anything as old as R triple
S, all the way up to somethinglike Versa, right when it's.
You know one's with a mouse andone.
You have to figure out the Ffunction.
That's not the same.
They're just not the same.
So you know if somebody comesin because on the other side of
the whole getting off the groundrolling, once it's done, it's
(15:35):
done right, you're open, you'resolid and you're set, whether
you took the long road or theshort road.
But if somebody said, I want totake the short road, I want to
be able to use all the resourcesthat are available to me
through this avenue, but I stillwant to be somewhat individual.
I don't want to just be anotherfold in this army of stores,
because I still want to be ableto look at my customers and go.
(15:58):
There is a unique way to dealwith me, yep.
Speaker 2 (16:04):
How do you answer that?
It's a great question becausewe have franchisees as large as
50, 60 units and some that arejust opening their first store,
right?
What I love about our businessis, because of our buddies
purchasing program, that oneunit franchisee gets the same as
every other person, no matterhow many stores they have, so
they can come in and be a partof the buying power with buddies
immediately and get all ofthose benefits already talked
(16:25):
about.
Number one.
Number two we have, yes, afranchise model that you follow,
right.
We want our stores to beneutral colored, right.
Whites, grays, blues, buddiescolors, et cetera right.
If you want to go in and paintthe walls orange, do you think
we're going to let you do that?
No, because that makes zerosense with buddies branding and
buddies colors Right.
But we give you freedom andflexibility in our business
(16:47):
model in ways that make sense.
We have buddies suggestedpricing Right.
We use in Tampa and Florida andOrlando in our stores.
We recommend, depending onstates, to use that because it
can fit most of America and ourcustomer base.
However, we learned over timeour stores in Washington State,
pennsylvania and other placesthere needs to be a second tier
pricing.
So we came up with a secondtier pricing for those stores to
(17:09):
try to hit same revenues andprofitabilities.
Right, we learned that through afranchise model, right?
Guess what?
Mcdonald's didn't create theFilet-O-Fish, it was a customer
because, you know, couldn't eatcertain meats at certain times
with the religion, right.
And so that's what's abeautiful thing about a
franchise model it continues toevolve and it continues to grow.
We suggest our pricing, butguess what?
(17:29):
You can still set your ownpricing, right, and there's
other things we do in our modelthat makes you have more freedom
, right?
If you have a vendor that youlove, well, we need to vouch for
that vendor to make sure thatthey're a legit vendor, that
they can handle the supply chain, they can handle the demand and
they also have good quality too, because they're going to be in
our customers homes for 12 to24 months, right.
So we also, we will bring onnew vendors, pending that they
(17:51):
meet all of Buddy's brandstandards as well too.
So again, do we have afranchise model?
Yes.
Do we want people to be in thesandbox altogether?
Yes, but we also are looking toexpand and continue to make
that sandbox better so everybodycan reap those benefits safe
(18:19):
bet to say we are shooting forthis.
Speaker 1 (18:21):
You know, everybody's got this model like, hey, what
are you going to do?
I'm going to have 301 next yearand then, after you, have 302.
That's not a great model.
Yeah, well, we're, you know.
So we've gotten to this point,we're at 300 stores, we've been
around the block, there's a lotgoing on at buddies and you say
you know what?
This is where I think we can be, or where we want to be, or we
should be, by 20 to of 2026.
What does a one-year model looklike from now to then?
Speaker 2 (18:40):
That's a great question.
I can never know what's goingto come down the pipeline in
acquisitions that can reallychange things right, and it all
depends on what leadership wantsto do and what our investment
firm wants to do.
But if it was a perfect worldman I'd say give me all the
money, Let me go buy a bunch ofstores and let's get them
(19:01):
internally with our brand.
Fortunately they don't pay meto make those decisions right.
All that's above my pay grade.
What I can look to do is bringon, you know, 20 to 30 new units
a year in opening and then orin sales, and then look
hopefully for those to open inthe next year or two for those
20 or 30 units.
So I would love I think we'reright below 300 right now I love
(19:24):
to cross that 300 unitthreshold first.
And wherever we land in a yearis wherever we land, because
sometimes there's things outsideof our control, right?
A bad real estate deal, alandlord that won't get back to
us to open a new store, Maybe astore has to close, you never
know some situations.
So there might be someattrition and some losses in
that.
(19:44):
But man, if we could be at andlet's see, we're almost through
2025.
If we could be around, you know, 310 and then 320 and anything
in between that are growing morethan that.
I think that would be good.
And that's what I love about ourbrand, too, is we're not going
to.
You know, there's some of theseother food franchises out there
that open 100 and 200 a year.
God bless them.
I don't know how they do it.
(20:05):
I mean, it blows my mind, andmost times you see kind of a
fallback off that too, becausethey're outselling what they can
support, Right.
And that's what I love about ourteam, especially Michael
leading the charges.
We are always going to makesure we have more support.
Michael leading the charges, weare always going to make sure
we have more support.
We talk about it up front andwe're proactive rather than
reactive.
If a franchise consultant isgetting pointed, getting tapped
(20:25):
out, we're already hiring thatnext one before we get to that
breaking point, right, and yousee that on our supply chain and
purchasing side as well too.
So we're always going to bestaffed correctly, but, again,
we're not going to be a front ofour ski, so to speak.
We're always going to bestrategic in when we open and
how we open to hopefullycontinue to just grow a little
bit every single year.
Speaker 1 (20:43):
I'm going to throw in a little something.
You mentioned Michael.
We're talking about MichaelBennett, right?
You know had a greatconversation with Mike before we
got here.
Very much into business.
But you know, one thing Ialways loved about dealing with
Mike is he has like a little bitof a I don't want to say a
comedic streak in there, but youknow he's always he loves his
zingers.
Speaker 2 (21:01):
Right, he loves his zingers.
Speaker 1 (21:03):
But okay.
So, talking about the cyclicaldata because you said that it's
about 12 months rolling good,bad or indifferent I'm going to
throw this question at you nowhow does the forecast look going
into 2026, based on thecyclical data that we've had
coming out of what we just did?
So everybody's going to say thetariffs are coming.
The tariffs are coming.
I feel like somebody should beriding with a red shirt and a
(21:23):
horse Okay, they're not here yet, but they might be.
That might affect somebody fromsaying I want to open up a
franchise, but if I open todayat $20 a unit, now, all of a
sudden now I've got to sellthings at an average of $30 a
unit because things have gone up.
That might not work for me.
Or you've got a situation nowwhere in the last, let's say, 18
(21:43):
, 24 months, you've had kind oflike this wave of what's going
on with our spending ability,our purchasing power.
Inflation has kind of made itso that sometimes our money
works for us and sometimes itdoesn't, and we're trying to
figure it all out Based on allthat.
That's a lot.
How does 2026 look?
Is it look, is it look?
And you know what I'm nottrying to, I'm not trying to put
(22:04):
anybody in a bad spot, but Isee like man, it can be a little
rough out there um, well, firstI'm going to do a michael
bennett hijack.
Speaker 2 (22:10):
Um, and you did mention michael and I didn't get
a chance, so I'm going toactually say um, when I I was.
So I've been in franchise salesand development now for eight,
going on nine years.
I was in food franchising firstCOVID happened.
I took a year working for aconversion brand in automotive
services and our recruiterreached out to me and was like
hey, you ever heard of Buddiesor Rent to Own?
(22:31):
I was like no, I've never heardof this.
I come from a middle-classfamily, just enough to get by.
Speaker 1 (22:35):
But we didn't do that we never had to use that.
Speaker 2 (22:37):
Yeah, just never crossed my mind.
And in one week I talked toMichael Bennett three times and
if you know Michael, thoseconversations turned into two
hours.
Speaker 1 (22:46):
Oh, I do.
And three conversations If hewants to get to know you.
Before you know it, you're 30,45 minutes into a conversation.
Speaker 2 (22:52):
Yeah, so, man, I again didn't know anything was
taking a leap of faith and, man,I've loved every second of
working for Michael.
He is my boss directly and he'sone of my best peers, mentors,
friends and I anybody in thisspace and anywhere else find
somebody that is somebody likethat that you can continue to
look to grow and have fun withas your boss, as your friend,
(23:19):
and I will tell you, he's one ofthe best minds and people I've
ever been around in my shortlife so far in business.
So I just want to give thatshout out to Michael Bennett,
and also, too, you call him Mike, obviously, but there's a
Michael Bennett, a Mike Zagerand a Mitchell Lee.
So we got all the M's coveredon our executive team.
Speaker 1 (23:31):
We're an M&M factory.
Speaker 2 (23:33):
Yeah, so Michael, mike and Mitchell.
But getting back to thequestion, so I'm optimistic.
I know my job is to be salesand glass half full, but, man,
we went through some hard times.
We've been through some hardtimes both in our stores and,
obviously, franchising, and Ialso think we got a little
blessed from 2020, 2021, and2022.
(23:55):
Yes, we got spoiled With a verygood economy, with everybody
buying stuff, and then when weprinted money, what we thought
was good obviously was duct tapeon a boat, right.
So, as I mentioned, for us andI think, the industry and the
economy, we're in the bottom ofthat valley.
From a political side.
I think there's going to bepressure to bring interest rates
down and other things that aregoing to help our business.
I think, again, the real estatemarket's going to come back
(24:16):
even better and I'm starting tosee interest rates not be as
high on financing deals.
So I think all those things areshowing promise for 2026, as
well as pressure for the feds todo those things, Jerome.
Speaker 1 (24:28):
Paul, we're looking at you, we're looking at you,
jerome, I'm telling you rightnow, right here.
Speaker 2 (24:32):
We need a break.
Where are we?
Omaha, nebraska, that's it.
I was about to say that we'regoing to get a snake and hope
that you drop the break.
Speaker 1 (24:37):
So I mean, yeah, it's , it's, it's been, it's been a
year.
You know talking about it fromthe operation standpoint, and
can I?
Speaker 2 (24:43):
add one more thing to that, no sure.
So when prospects asked me thatquestion, right of what are you
seeing?
Well, first off, that's why Ilove our purchasing team because
, yes, we do not fully.
You know, we both.
We buy both internally andexternally here in the States
and overseas.
So our team can make a pivot.
If there's rumblings abouttariffs and other things, we can
push more of our in-statevendors to help with that,
(25:07):
alleviate some of that cost.
Additionally, what I tell peopletoo is like hey, when you go to
Walmart you're going to buy aTV for 300 bucks or 350.
They bought it for 300.
They're going to make 50 bucks.
That's the total money theymake, right.
But in rent to own, it'sdifferent right.
Number one, because a customeris paying over 12 to 24 months
on average, right.
And when they're paying thatover time, well, guess what?
(25:27):
You alleviate that cost on yourburden over time to the
customer, so that 15 bucks aweek or a month or whatever it
is, only turns into a little bitmore.
And so I tell a prospect thatis concerned with that that it
shouldn't be an issue because wecan pivot with our vendors
depending on the tariffs.
But also our customer doesn'tfeel that bill right off the bat
(25:47):
.
They feel it over 12 to 24months.
So it's a little bit of a stingcompared to a big jab in the
side, like if you and I go toDomino's and get a pizza now for
$19.99, which is crazy, right?
Remember they used to sell$5.99 pizzas 1999, which is
crazy, right?
Speaker 1 (25:59):
Remember, they used to sell 599 pizzas, man.
I remember when I used to walkto the streets of New York and I
can get a slice of pizza.
Speaker 2 (26:03):
That was like 18 inches long for a buck.
Yeah, there's no more dollarspots, man.
There's two and three dollars.
Now the dollar tree had to comeand turn around.
Speaker 1 (26:08):
Listen, we're not the dollar tree.
Speaker 2 (26:09):
We're the dollar plus tree.
I'll be by the dollar tree,though Put me by a dollar tree
and a dollar general, so $300general you know.
Speaker 1 (26:16):
So when we're talking about, you know the things that
have happened the buying power,the spending power, the, not
the, this, the that.
Has it been harder to qualifypeople for those franchises
because of what's been going onrecently?
Speaker 2 (26:30):
Simple answers.
Yes, I go to a lot offranchising shows.
I think that's something thatI've said to you and I've heard
you say it.
I do listen to some podcasts.
I have a face for radio.
I know I do.
My FranDev marketing teampushes me way too much out there
, but I'm proud of it becausewhen we started what's called
(26:52):
what APRO does for the RTO worldwhich is funny I say that IFA
is to franchising, theInternational Franchise
Association, us R&R, I thinkAaron's and Renison have been
involved in the past I don'tknow if they're actively now,
but we go to these shows andwe're involved and just how for
the RTO world they walk forCapitol Hill.
I do that for IFA too.
So Michael is a little bit moreinvolved, obviously on the RTO
(27:15):
side.
I'm a little bit more involvedon the franchising side.
So I go to a lot of franchisingshows across the board.
Again, food retail, non-retail,service-based brands, whatever
the case may be.
And it's exactly to the pointthat you're making is how do we
get good leads anymore?
And this is a specific forAndev marketing thing, but it
used to be $100 per lead that weused to buy.
(27:36):
Now we're up to 200 bucks forbuying one Good night.
Budgets are going fromliterally in our business from a
hundred thousand to 200,250,000 just on buying leads and
enfranchising.
You only typically sell about1% of the people you talk to.
For me, so I get told no 99times a day and maybe told yes
once, just to take anothermeeting.
Speaker 1 (27:55):
You guys know how difficult it is to get a sale.
Speaker 2 (27:58):
But here's the thing, though, too, is people are
buying $600,000 to $800,000franchises, right.
Right, this is more than theirhome, their car.
This is the biggest purchasethey'll ever make, and I take a
lot of pride and responsibilityin that, making sure that I take
them through a path and aprocess that makes sense.
Right, I'm going to get youwith my executive team.
We're going to probably govisit a store, whether it's in
(28:19):
your neck of the woods or mine.
We're going to get down toOrlando and meet my executive
team in person.
I'm going to have you talk toour franchisees, right, because
you need to talk to the peoplethat have their own stories to
tell as well.
Right, what people callvalidation in this business, you
need to validate the brand.
You need to review all thedocuments I send you.
It's a big, big purchase, and Itake a lot of pride in making
sure that anybody comes in ourbusiness.
(28:40):
Whether they're going to tellme yes or no, at least I know
and have a clear peace of mindthat when they make their
decision, they are fullyinformed, whether they do it or
not.
Speaker 1 (28:48):
I mean God when you say that like that's a lot of
money going into it andinvesting and saying you know
this is what I want to do.
Okay, so then let's talk bucks,let's talk money.
If I want to get into this, anaverage person with an average
store, we're not saying, despitehow many stores they might ever
have, we're going to look at anindividual situation and say,
(29:09):
if I was to meet all therequirements, put this down and
work on the level as everybodyelse does, I'm not going to say
I'm going to be an overachiever,I'm not going to be an
underachiever On the level, whatdoes the money return look like
?
What does a profit percentagelook like if I just own one
store and I did what I wassupposed to do?
Speaker 2 (29:28):
Great question.
So I love that this podcast isin this business.
So when I say these numbers,they can kind of self-validate
it too, because they're doing itevery day For new prospects.
It's a little bit harderbecause, again, a food place
that's doing a million mightonly make $80,000 net right 8%
but they're happy with thatright, which is crazy and
mind-blowing.
That's what I used to sell.
I loved coming over here andseeing this industry and this
(29:51):
business and what it can do.
Again, work hard to get there,but you can reap benefits and
have higher nets.
For four years of data.
What we have is called afranchise disclosure document,
an FDD.
Anybody that sells franchiseshas this, and in one of those
items there's 23 items.
One of them is an item 19.
It's the FPR, the financialperformance representation.
Franchisors can decide to putfinancial data in there and they
(30:15):
have the power to not.
So if you are looking at anyfranchise out there, if they
don't have financial data runbecause it's a red flag, they
are not proud enough to puttheir sales in there to show you
a return.
Speaker 1 (30:26):
Yeah, we know you would make it a lot.
No, no, you can't verify thatNow.
Speaker 2 (30:29):
The only the one caveat is if they're a new
franchise and you're an earlyadapter and they don't have
enough years to put in there,like if it's a new concept to
put in there, like if it's a newconcept, 18 months in they
don't have data that the state'sgoing to allow for these FDDs
to put in there, but in fouryears of data our average stores
do.
Now I can only speakcorporately.
I can't speak for franchises.
Right, we're using the C wordnow.
Speaker 1 (30:50):
Yeah, see, there it is.
There comes the C word Big badcorporate.
Speaker 2 (30:53):
But our stores on the corporate side average around a
million dollars in revenue andit's ranged.
I've seen them average 25% netprofit pre-COVID and in the hard
, hard years two, three yearsago I saw 12% net profit right
Because, again, all about buyinginventory and in those COVID
times the supply chain we boughta lot more inventory right Now
we didn't have to and it showed12% net profit.
(31:15):
But guess what?
Our inventory was higher inthat 25, 30% range because we
were protecting our stores.
But if you're saying, hey, whatare we shooting for?
We're shooting for a milliondollars in revenue, 20% net
profit.
That shows a healthy store onaverage.
Now we could get in the 1.4,1.5 per million top quartile 25%
net profit.
Take home, you can do the mathoff that.
But I always talk averagesbecause my averages in the food
(31:40):
space would typically be topquartile stores and you know I
want to bring more people torent, to own, especially food
franchises of other brands thatare large operators because they
get it right, they're going toplug and play, they're going to
go find people to do that andthey're not going to be in the
day to day.
That's a different conversationthan a 20 year vet that's been
a district manager or regionalmanager at big brands.
And then they want to come anddo only one store because either
(32:01):
a that's what they can afford,or B, that's what they want to
do.
Speaker 1 (32:06):
So so what would you say to somebody who comes in?
Because I would imagine that ifyou can afford to have a
franchise, you're in a certainpart of your life.
Okay, I know that when I was inmy early twenties, that was
never, ever.
I mean, it was like when mynext bowl of ramen noodle for
dinner is going to happen.
Yeah.
But you know, now we're talkinghey, you have the ability to
spend a few hundred thousanddollars to start a one-store
(32:27):
franchise.
We're just saying that rightnow, okay, and I say listen,
mitch, I'm all good about this,but I don't want to work.
I don't want to.
I mean, I don't mind owning it,I don't mind running it from an
outside standpoint, like youknow.
Hey, I, I, I'm going to improvethis amount of inventory
purchase.
I'm going to say we're going todo this marketing and maybe
we'll do, you know, a specialdeal every once in a while or
(32:51):
whatever, but I don't want to bethe guy behind the counter,
cause that's just not me.
I, I love the sound of it.
You know, $1 million revenue20% is average.
I can do better than average.
I think I'm good.
What do you say to the guy who,or gal who is like I want to
have it but I don't want to runthe operations of it?
Is that is?
Speaker 2 (33:10):
it's possible.
I have to.
We're going to have to be in afull trust level that if you're
going to do that and if you'regoing to sign up, I either need
to already know who's going tobe your salary general manager
number one or number two.
You need to have a really goodunderstanding of who's it going
to be, because guess what Ifthat general manager heaven
forbid passes away, moves on,quits, who's going to do it?
(33:31):
Somebody's got to do it,somebody's got to.
If you're going to put theassistant general manager that
isn't ready, what's going tohappen?
They're not going to be able tomanage the inventory and the
customers and the employeeswhat's going to happen, ladies
and gentlemen?
Speaker 1 (33:40):
I mean it's, it's going to be rough, yeah.
Speaker 2 (33:42):
So we you and I need to be in lockstep of saying I'm
cool with you not doing theday-to-day, I'm cool with you
being a thousand feet up and ifyou already have that person, I
might not sign you up because wehave a committee that approves
all of our deals too.
Okay.
So it's a.
It's like when you getpre-approved for a house you
know it's looking good, butwe're not there yet to a close
right.
Same thing in my friend of Markor my friend my franchise
(34:03):
development.
So I get all the documentation,make sure we is financing
locked in.
What are we looking at?
Are they running the store?
If not, who's going to run thestore?
We need to put a full packagetogether to make sure that this
deal is going to work.
Because, listen, over the lastfour or five years, we've
learned to, we've grown, we'veprobably done a couple deals
that we probably shouldn't havedone at the time.
(34:24):
We're learning.
That didn't work so well, yeah,but things were told to me as
well that this was going tohappen, this was going to happen
, this was going to happen, andwe trusted them and it didn't
right.
So we're trying to continue tobetter ourselves too, to make
sure that we don't get in thatsituation again.
Right?
Is your financing good?
Let me see all thedocumentation.
Perfect.
Is your general manager good?
Who is it?
If you don't need to have a yesyet because it's not a business
, but who are you looking at?
(34:44):
Who's going to be option one,two and three?
So we try to do all thatupfront because I listen, I
don't want you to be in thestore screwed over in any way.
Right, if you want to go in thestore, go check on the store,
but be in lockstep with thegeneral manager.
Talk every day, every other day, whatever.
Have a weekly call with yourfranchise consultant.
Just do the things that youneed to do to have a successful
(35:07):
business.
And guess what, if somethinghappens at general manager, you
better have a backup planbecause, if not, we're going to
be having harsh conversationsbecause that million dollar
store is probably an $800,000store, right?
Speaker 1 (35:17):
And it typically doesn't go back up before it
goes back down.
You know what I mean 20%.
Speaker 2 (35:21):
So you just have to have those hard conversations.
Speaker 1 (35:24):
So this is new, and if you told me before, I
apologize, but there's acommittee that says so.
After you get the 1% of the 99that you've gone, and then 100th
one, you finally got it, youget all your dominoes in a row
and now you're going to get anapproval, yep, Okay.
So now we're in a step processhere.
How many people are on thecommittee?
Speaker 2 (35:45):
I don't tell a lot of people this, but I'll tell you
and the world.
So it's a committee of, it's acommittee of four.
Okay, so that doesn't add upsometimes.
I was just about to say that'skind of like I'm the fifth on
the committee and I'm alwaysgetting an automatic yes
technically.
Speaker 1 (36:03):
So I I was going to say usually it's an odd number,
just so that you don't getlocked in.
Speaker 2 (36:07):
Well, we're a lean and mean operating machine team
over here.
But perfect example.
I'm working a deal right now.
We have a gentleman that'slooking to retire move on has a
couple stores, got a deal linedup.
He's looking to buy the stores.
(36:29):
He's doing a great deal withthe seller.
But the deal came to us.
I presented the deal to mycommittee and that deal upfront
got rejected because they wantto see that prospect bring in
$300,000 of additional capitalto make sure that they can
support the long-term of thebusiness.
Right, these people know this.
You burn cash buying inventoryand getting a business and
growing it.
Right, you know it, you know itand they know it too.
Speaker 1 (36:49):
Well, I'm just letting you guys know.
Now you know it, Listen, and ifanybody doesn't know, I mean
rent-to-own is kind of like acash-intensive business.
At first it's not somethingthat you're just going to start
throwing pennies at andhopefully it'll turn into
nickels and then quarters.
It's more like you're throwingdollars and then quarters and
then nickels and it reallydepends because you have your
cycles where sometimes you'reflush with inventory because
it's summertime, you get somereturns, something like that,
(37:11):
and then you've got thewintertime where I sold
everything.
Damn, I've got to get a coupleof loads of furniture come in,
not only to fill the showroombut to fill the homes of whoever
.
Speaker 2 (37:19):
I'm sending it to Pete, if you and I start a car
dealership, what do we have tobuy?
We got to buy a lot of cars.
And guess what, if we have a,can we cuss on this?
We don't.
Generally, I was going to saywe have a whole load of cars, do
we have to go?
Do we got to go buy more cars?
Right, and so this is somethingwe learned over time too.
(37:40):
As I brought in some financebrokers to work with us, it was
hard to finance the deals atfirst, because we were trying to
finance a loan and then a lot,you know, a line of credit all
into one, and it got harder.
But I worked with a bank thatsaid hey, we're going to do the
baseline of the development, ofthe construction of everything,
and then do a line of credit ontop, a revolving line of credit
for that inventory too, and italleviated some of a all-in cost
(38:03):
to our franchisees.
So we've learned over timeright, in your store, you're
going to have $100,000 ofinventory when you start.
Right, if you have a reallygood grand opening, you got to
buy another $100,000 ofinventory.
So you're going to buy between$200,000 and $400,000 of
inventory for that store in thefirst three to six months right.
Wow, yeah, yeah, and so you needto be set up for that.
(38:24):
And that's why my committeecame back and saying, no, we
need to see him have 300K moreof additional capital so he's
going to be able to be in it forthe long run, because we don't
want to be in the same positiontwo years from now, having to
sell the store again becauseeither A he ran out of cash or,
b he's just so strapped amongsthis means because he never got
set up the right way.
So it's hard conversations withthe committee because again, I
did everything I could to bringthis deal to get to close and
they're telling me, no, go dothis back.
(38:44):
Right, but I know where it'scoming from is good intentions.
It still pisses me off sometimesbut I know that it comes back
and I have to go back to thatprospect and say, hey, we're so
close, we're round in third.
Third, let's get this and let'sknock it out.
Speaker 1 (38:56):
So so do they take your file and have this big red
stamp that they just no get no,for camera purposes and dramatic
purposes absolutely and itsounds like.
It sounds like a big gavel,just what no?
it's just an email with thecommittee and back and forth an
email, so it quieted down sowhen we have these people who
are doing all this right andyou're setting it up, you're
(39:18):
letting them know hey, this is astraight conversation.
You might have this, you mightnot have that.
We don't need to talk aboutthis.
We have to talk about what'sthe fall off rate of somebody
going.
You know what?
I started it.
It looked good.
We came back from the committee.
I tried again.
The committee said, hey,there's something else.
And look, don't know if I cando this, great question.
Speaker 2 (39:38):
Most deals I take to committee get closed.
He's going to say that I takethe good deals, no.
So here's why I say what I saidis, you know, in my early years
of franchising, especially inthe food side of it, man, we
were just I hate to say it, butwe were signing anybody up, we
could right.
It was literally up until five,six years ago.
It was wild, wild west offranchising.
(39:59):
There's been some more laws andregulations and the company I
used to work for is goingthrough some things.
But, all that to be said, Iknew that no matter where I went
to next, I'm going to make surethat I do everything in my
power to set them up for success.
Because if I'm putting my nameon this deal, this deal is going
(40:20):
to be, you know it's got.
I'm either going to.
You know, I'm the one thatbrought them in.
I'm so I carry a lot of pridewith that.
And so if I take a deal tocommittee, I've I've tried to
think of everything possiblethat's going to come up now
again, an acquisition is alwaysa little bit different than a
new store, right?
Because new store it's a dreamand a vision and everybody's
happy.
But when you're selling stores,it's typically some pros and
(40:41):
cons, some good things, someheadaches and other things.
So when you're selling existingstores, there's always a
million different, more thingscompared to just a new store,
which is a dream and a vision atthat point.
So new stores again, I'mbatting 100% on.
I'm confident because if I takea new store to a committee, I'm
not going to over leverage thatperson.
They can afford two stores orrun into two stores.
I'm not going to sell them fourstores because they need that
capital for that, for thatinventory right and everything
(41:03):
else.
But typically they will comeback on existing stores because
it's already a store in oursystem.
It's already been a franchiseethat's leaving and somebody new
that's coming in and we don'twant to be dealt with.
We don't want to put that buyerin a bad hand right off the bat
or the seller being pissed offas they go out.
Oh God, you don't want that.
You don't want that.
We're not trying to divorce,we're trying to start a new
(41:23):
marriage that everybody's goingto be happy.
Speaker 1 (41:25):
Not like one of these 2025 divorces where you get
married and then divorce inthree months.
But how much?
Because the pricing hasdefinitely gone up.
How much does it cost to have abuild out?
I don't have what's a typicalstore size right now 6,000
square feet.
7,000 square feet.
Speaker 2 (41:40):
Four to six.
Four to six, that's 80% of ourstores.
We do have stores as small as3,000 and some as large as
12,000 plus, but, if you'reasking me, a core between four
and 6,000.
Okay.
Speaker 1 (41:47):
So we got a four.
So let's say five, right?
So we got a 5, 500 square footof office space.
How much does a build-out costnowadays?
To say, I don't have a locationthat looks anything like it's
supposed to and I'm not sayingwe're turning a restaurant into
it, but it's just a store thatwe've got to make right.
(42:09):
I've got to get the right paint, I've got to get my signage up.
And, guys, when I ask this, itdoesn't matter what sign you put
up it could be a buddy sign, itcould be your own sign you
still got to put a sign up.
You still got to put somestickers on the window.
You're still going to have toput the overhead.
You're still going to have towrap at least one vehicle.
You're going to have to do sometype of paint.
Whether it is the orange youtalked about or it's not,
somebody's going to roll a newcarpet.
Speaker 2 (42:32):
It's a great question and every time I tell this
number to people that are in thebusiness they get shocked.
But when I break it downthey're like, oh, that actually
makes sense.
Because when we talk all incost again, a sales guy at
another brand might just tellyou the startup cost to open
here at Buddies.
We talk about from the time youpay us a franchise fee of
$40,000 to the time of threemonths of being in business
(42:53):
because we want to make sure youunderstand that there's
additional rounds of inventory.
And also, guess what?
We're not the Chick-fil-A thatopen our doors that day and make
money.
No, right, we're a littlesnowball at the top of the
mountain that's going to go downand compound and get bigger,
right, and we want to all get wewant to get to that mailbox
money and have all those.
I have a number in my head.
Right now you sign a lease andit's a former retail store, then
(43:20):
that's going to be 20, $30,000compared to if we go into a
really awesome location that, uh, is a former restaurant and we
have to do 50 K and demo loanand get permitting and other
things.
So that's why it's such a bigranges because I don't know what
your real estate looks like.
I don't know if you're going tobuy the vehicles or lease them
right.
You can save a hundred thousanddollars that way.
Instead of buying a new boxtruck and a van, right, we have
(43:42):
a buddies program internally,rather than buying a pile on
sign and an external sign, whichcould be anywhere from 20 to
$40,000.
You can lease it throughbuddies over 60 months on 10%
simple interest too.
So there's some things we can doto save on vehicle and signage
cost.
But again, another $200,000,$400,000 in inventory, another
$100,000, $150,000.
(44:02):
You need for cash on the sideto support the business as it
gets its boots off the ground.
So I can see a range fromanywhere from $500,000 to
$800,000.
To $500,000 to $800,000.
Okay, typically, all right.
So I always try to be worst,worst case on the other side
because, again, if we're goingto get a financing package, I'd
rather you get more than getless.
Getting a finance loan and thentrying to get more money three
months from now is very hard todo, so I'd rather you have more
(44:25):
cash save and then use it as youso choose, or use it to pay off
your loan.
So we try to get it more on theworst case scenario.
Speaker 1 (44:32):
I'm going to ask you a really weird question.
We'll see if you can answerthis question.
So let's say you got someperson, because I kind of
remember that there are ladiesout there who are just as good
as and I don't want to say anyguys, but y'all know some of our
best general managers are women, right?
Speaker 2 (44:45):
so for some reason the guys sometimes pick up the
phone more.
For the women I'm going to tellyou.
Speaker 1 (44:49):
I'm going to tell you right now, like when, when I
saw the people who are walkingthe stage last year, I even
looked at some of my guys andI'm like do you see how many
ladies are up there?
We got work to do, guys.
So if you ever had somebodycome in and they're you're
having that conversation youreally got to think in your head
.
You really probably don't needme to be here.
You've kind of got it all setout.
(45:10):
Why are you here?
Or?
Or is it one of those?
Nope, they always come to youbecause they have 100% need.
It's not somebody who's likereally established.
Speaker 2 (45:19):
So are you talking like a mom and pop owner?
That comes to me.
Speaker 1 (45:23):
Like is there, yeah Well, whether it might be on pop
or whatever, and like they kindof have the whereabouts to get
it done themselves and you justkind of like is that why you
want to like?
Why do you want to be here?
Speaker 2 (45:31):
versus yes.
So when, especially, we havesome veterans in this rent to
own business that have maybesold 10 to 15 years ago and of
course they're in a non-competebut then they retire, maybe get
into real estate storage units,maybe go to another brand like
r&r tire, right?
Speaker 1 (45:47):
or move out of state or whatever shouts more on our
tire.
Speaker 2 (45:49):
People love y'all um, but you know, there's people
that come back and I, as much asI want to be excited that, hey,
this is going to be an awesomeslam dunk deal, there's always
something pulling me back of.
Are they trying to pullinformation from me so they can
do it on their own?
And I hate to think like that,but when you've been burned once
(46:10):
, it sometimes hurts a littlebit, right, I believe.
And so, yes, I've hadconversations with people
recently of saying, man, you'vedone this before, 15 years ago
you did all these things.
You still know these people inthis space.
You could go open two or threeright now, adding on to the
other businesses you do.
Why do you need me?
And it actually goes back tosomething we already talked
about because I don't want tobuild my own brand again.
Speaker 1 (46:35):
You know that makes sense though, because mind you,
we pay.
Speaker 2 (46:41):
You know we have a 6% royalty right Now.
First six months is 0%,remember that.
But month seven is a 6% royalty.
How much of time matters to you?
Is it really matter?
6% Now, again, we have apurchasing program and other
things.
So, given our buying power andsome of the things we do, we're
going to save you a couplepercentage points anyways.
So I don't know if that's goingto be.
You know the difference of one,two, three, 4%.
(47:01):
I don't know what it's going tobe compared to, again, money
you're saving using the buddy'spurchasing program, again doing
it on your own.
But all that to be said, atthat point in their life, most
of the time they care most abouttheir time and what they do, do
they want to go start their ownABC, rent to own and spend
(47:22):
millions of dollars of trainingand operations and marketing and
supply chain and building thesevendors and talking to these
teams and going to all theseshows?
Or they just want to bootstraponto something else that they
don't have to do any of thathire a general manager, be a
thousand feet up and hopefullykick their feedback.
Speaker 1 (47:35):
Hopefully, hopefully, I've never seen that happen.
Hope's not a plan, but that'swhy.
Speaker 2 (47:39):
I said hire a general manager right Off the bat.
So again that goes exactly backto what we were talking about,
is, I have to be curious andcautious, but also when they
kind of answer those questionsto me, it gives me more
confident in selling to themthrough the process.
Speaker 1 (47:58):
Well, that's a question I think you guys need
to answer.
If you guys want to open up afranchise, reach out to Mitchell
Lee Now.
Buddy's Home Furnishings is oneof many, but I can tell you
right now they do have thisbooth set up by 2025 that it
looks pretty good at RTO Worldand it seems like he understands
what he's talking about.
And if you have any questionsabout that, reach out Mitchell.
How can they reach out to you?
How can they reach your?
Speaker 2 (48:13):
team, absolutely.
So feel free to go onto ourBuddy's Franchising website.
You can enter your information.
It's very simpleBuddy'sFranchisingcom.
My direct line is 813-321-0401,or shoot me an email.
It's mynamelee at BuddyRentscom.
That's M-I-T-C-H-E-L-L, dotL-E-E at B-U-D-D-Y-R-E-N-T-Scom
(48:37):
and Pete.
I do want to say one more thing.
I love the rent-to-own industrynow after the last four or five
years, and I love franchising.
So again I get told no, a lotmore than I get told yes, and
I've been told things on thephone that should never anybody
ever hear.
When I cold call people I loveto just talk franchising and
rent-to-own and again I haveenough wherewithal.
(48:59):
I love that word.
It's such a hard word to knowif you're going to be a good fit
for us or not, and I thinkthat's what leadership brings
down to me is I don't have tosell every single deal, I have
to make sure we're a right fit.
So I have some of my franchiseesask me about other concepts
they might be interested in.
Most people wouldn't talk aboutthat.
I reviewed one for one of myfranchisees.
I read through the FDD, readall their website material.
I took two to three hours outof my day or out of my night,
(49:19):
not day night to review allthose things and give free
consultation advice.
So feel free to reach out to me.
Anything about franchising,anything about what's going on
in rent to own franchisedevelopment, and I'd love to be
a resource for anybody out there.
Speaker 1 (49:31):
Well, there you go, you can reach out to him and
make sure that you ask thehonest questions, because he's
going to give you an honestanswer, and isn't that what
we're really looking for?
So, guys, we appreciate youstaying over here with us and
watching out what happens in thefranchising world, because it's
something we really haven'ttalked about, except we did last
year.
We couldn't get it out.
So you know we've done that.
(49:52):
But listen, if you have anyquestions and you want to ask me
directly, ask me at Pete atTheRTOShowPodcastcom.
I'd love to talk to you.
Also, dm me at Facebook,instagram, linkedin and YouTube
where you're going to see this,and I will tell you guys.
As always, mitchell, great tohave you on the show.
You kind of shed a whole lot oflight on a whole lot of
subjects.
I'm glad that we can finallyget this through one more time
and I will tell you guys, as
Hey everybody, welcome to the RTO Show.
I'm your host, pete Schell, andtoday I have a special guest.
It's the second time, listen.
The first time we crashed andburned, it was a long story,
we're not talking about thatright now.
Mitchell from Buddy's HomeFurnishings.
Who does the corporate?
Speaker 2 (00:25):
no, no, what is it?
So I do work for corporate.
Yes, my name is Mitchell Lee.
I am the senior director offranchise sales.
Speaker 1 (00:32):
Franchise sales.
Speaker 2 (00:34):
For Buddy's Home Furnishings.
Speaker 1 (00:35):
So when we say corporate, that's like a
different word.
Speaker 2 (00:39):
So franchisees will say corporate, obviously.
Or anybody that works for afranchisee of a system will say
corporate, yes.
Am I a W2M employee of Buddy's?
Do I work for corporate?
Yes, I don't see myself ascorporate because I'm not in the
day-to-day of what franchiseesand franchisors go through.
I'm on the front lines offinding people, talk to people,
(01:02):
get them engaged and then getthem to that point Gotcha.
Am I technically part ofcorporate?
Yes, but I'm an extension whereI'm trying to find people and
match them up to our franchise.
Speaker 1 (01:11):
We're not wearing that moniker today.
We're not wearing that moniker.
Mitchell is not wearing thatmoniker today.
So, truth be told, it's roundtwo.
Last year we had some thingsgoing on in the first part of
2024 RTO world was okay, andthen I had some things going on
in the first part of uh, youknow, 2024 rto world was okay
and then, like, I had some thatwere just hard, it was hard to
get through, man, it was justhard to get through.
Speaker 2 (01:29):
I was dropping some knowledge in that.
I remember yeah second round.
Speaker 1 (01:33):
We are at rto world 2025, which means that it's a
whole different year, wholedifferent ball game.
When you're talking aboutfranchising in the world of
franchising, what's going on?
Speaker 2 (01:46):
So it's an interesting year, like I'm sure
we've all seen in Rent to Own,but it's a little bit more
exemplified in the franchisingbusiness.
I always relate it to realestate.
When you see trends of realestate, you typically see trends
with franchising too, becausethe biggest purchase most people
will make, number one is theirhome and then number two is
typically a franchise.
(02:06):
And I live in Texas so I followtrends of real estate, and
recently a DFW poll came outwhere there's 500,000 more
sellers than buyers Ouch yeah.
So just think of thatexemplified into franchising
Right now.
Getting financing, it's alittle bit different than it was
five years ago, even.
(02:26):
Right, yeah, percentage pointsof 3%, 4%, 5% are now 10%, 11%,
12% on some deals, so it'sslowed down a little bit, but I
feel like we are in the valley,so to speak and I feel we are
coming on the other side, butoverall, just probably, like
you've seen some industry trends, it's been a little bit harder,
but I feel that it is on thebounce back.
Speaker 1 (02:48):
So when you're saying that now it's like a buyer's
market and franchising kind offollows suit, how often do those
trends lead right?
It's not like hey, today is abuyer's market, tomorrow is a
seller's market.
How often does that cycle taketo effect Like hey is
transitioning?
Is it six months?
Is it a year?
Speaker 2 (03:07):
I would say typically it's a two to three year
transition of the overall cycle.
But you don't feel it till youfeel it, if you know what I mean
.
Like you know I'm selling,things are good, I'm.
You know we're doing this, thatand the other.
(03:30):
I might be looking for avacation with some success, and
the next thing, you know, ithits you in the face and you're
looking at next quarter like,okay, things have changed, but
overall that cycle typically istwo to three years.
In my role and you can take thisto rent-to-own operators as
well you really have to pivotand figure out what's going to
be that niche thing or somethingthat you can take to elevate
that business.
Right At the start of COVID,most people were renewing their
appliances and washers anddryers right, and you know,
(03:50):
playstations were huge in thattime too.
But then after that you kind ofhad to pivot and push some
other products to help increasethat.
Me personally, when I was, youknow, in the thick of it, we
were all doing new builds, right, new franchisees, new stores.
But, as you know, in the thickof it we were all doing new
builds, right, new franchisees,new stores.
But, as you know, covid hitsupply chain turned some things
around and, you know,construction costs rose as well
(04:11):
with higher interest rates andfinancing.
I needed to look to get alittle bit more creative.
So we were looking to push alittle bit more acquisition
opportunities where I wouldbroker some deals and bring them
to franchisees or new prospectsto look to convert those stores
into buddies as well.
So just looking to continue togrow our brand, continue to grow
our business, whether it'sthrough new build or acquisition
, but was looking to pivot atthe time too to help continue
(04:33):
our business growth.
Speaker 1 (04:34):
So when you say acquisition, we're saying we're
going to go out and somebody hassomething already.
And they're either looking toget out, they want to change
their life, or whatever the caseis, and they're saying,
mitchell, I'm going to change myways today, I'm going to sell
cars or do whatever.
How do they come to you and saythis is what I got to do.
And then how do you turn aroundand tell somebody else you know
this, john, joe, jay is likeyou know, hey, he's coming out.
(04:59):
Because if I'm buying, whywould I want to buy something
that somebody's getting out of?
Speaker 2 (05:03):
right, I mean, that's a thought process.
Speaker 1 (05:05):
It's like you know this guy's getting out of it.
He's been in for a while.
Well, I know I want to put myhat on that.
Speaker 2 (05:09):
Yeah, how does that sell?
Great question, and it's alittle bit of a long answer, but
I will take you that business.
And in some point in time theyhanded off to the sons, no
matter that timeline.
Well, we're now in a thirdcycle where those fathers are
(05:31):
now trying to hand it to theirkids and their kids don't want
any part of it.
Right, and so we.
Speaker 1 (05:36):
You know I did.
I did say on the podcast outthere long ago man, I'm starting
to see a decline of that, thatgenerational.
I have this and come down Nowon the show.
We do have a lot of people thatsay that when you say on the
show, when you talk about theamount of people that are on the
show versus the amount ofpeople outside of the show, I've
heard a lot of people go, yeah,this is not my cup of tea, it's
not what I want to do.
Speaker 2 (05:56):
Listen, it is a very rewarding business, but you got
to put in the work, especiallywhen you open a new store.
Right, when you open a store,you're making zero dollars.
We're not like Chick-fil-Awhere we open the door day one
and we have lines out the door.
No, you got to put in the work,the blood, sweat and tears and
you're going to reap thebenefits on the back end with a
mature store.
But that just doesn't happenone day, one month, one year.
You got to continue to put inthat work, but on the benefits
(06:21):
of selling that business.
And that's why we do tons ofmarketing with both a pro as
well as through some friend.
I say friend of marketing, justfranchise development marketing
, letting people, hey, whetheryou want to sell, convert,
expand, whatever you want to do,buddies, is an Avenue and an
option for you.
We are around 300 locations nowand 80 plus percent of our
stores are franchising.
(06:41):
We're really the only ones inour space that is truly led by
our franchisees, and so I wantpeople to know that, hey, when
you're coming in, you're notcoming into a company that is
more corporate heavy compared tofranchise heavy.
We are franchise heavy and weare led by our franchisees, so
we do tons of marketing that way.
But getting back to that pointI was making is, when people
(07:04):
want to sell, I let them know.
Reach out to me, call me.
I can broker deals for you,either internally or externally.
So the one thing I'll mention,though, is typically, when I get
all the documentation, Ievaluate the business.
That's where we have to havesome hard conversations right oh
okay.
Yeah, I know you're a prettygirl, but you might not be the
(07:27):
prettiest girl in the bar, right.
Speaker 1 (07:29):
And so we got to find out how much it costs to take
you home, and there's got to besome really hard, heavy
conversations where you'reletting somebody know, hey, it
might be nice and dear to you,but it's not nice and dear in a
pocketbook.
And we got to make the rightcall.
Speaker 2 (07:41):
Mr and Mrs Seller, I know you want 1.5 million, but
for me to get this deal acrosswe need to be in the ballpark of
6,800,000.
And when you tell people thatfor something that they have
literally put blood, sweat andtears in and it's might've
tiptoed a little bit off ofwhere it was, that's hard.
But I also have to protect thefuture franchisee coming into
our business as well.
If they overpay for thatbusiness and then they possibly
(08:03):
might get financing on top ofthat, then they're going to be
put in a terrible position tolook to grow and make money for
themselves and turn hurting astore and business for us down
the road.
So okay, okay.
Speaker 1 (08:13):
So what are the top three things that help determine
?
I mean, we don't want to godown that rabbit hole but like
if I'm selling and I have abuddies and I'm like, hey man, I
just need to get out, forwhatever reason, you know, I
broke my leg, don't want to dothis anymore.
What are the top three areasthat you look at?
And of course we got toremember that's not all the
areas, but you know some of theareas and say these are going to
be pretty much the keyindicators.
(08:35):
That says this is the ballparkyou're going to land in
(09:10):
no-transcript.
Speaker 2 (09:16):
all the drywall because it was wet because of
mold, so that is one kind ofextenuating circumstance, but
when it gets down to it, themeat and potatoes.
What are we doing today?
And so I have to evaluate theaccounts where they're at,
percent collected, all of thosethings.
And there's two reallyimportant ways to evaluate
businesses these days.
In rent to own, there's more ofan old school way of monthly
(09:36):
rental revenue and multiplyingout by that, and then you can
add in some inventory, somevehicles and get you a number,
or you can do EBITDA.
That's more the new schoolRight.
But if you're asking me, if I'mon a phone with somebody and
I'm just looking at a quickrange, I'm always going to focus
back on that monthly rentalrevenue, because that's all
about this business, rightAccounts and inventory, and
that's what we're always goingto look at, the core of this
(09:56):
business.
Speaker 1 (09:58):
Accounts, not a customer account.
Speaker 2 (10:00):
It depends, depends on some people.
Let me rephrase Some stores aremore heavily on betting, some
are more focused on appliances.
With our stores we're typically60% 70% mixed with betting
couches the deal.
And some people are a littlebit in smaller markets where
(10:21):
they might push retailmattresses right and so although
they have a business that does700,000, half of their business
is retail.
So how do you evaluate thatright?
So I might bring in a thirdparty company that helps me with
brokering some deals and we'llactually give a true evaluation
outside of that because, again,we're in rent to own, we're not
in retail.
It's a different customer right.
So I have some third partyservices I use to try to get
(10:44):
true evaluations and also helpme market to potentially bring
in some outside people that dowant to get a rent to own as
well.
So it is a conversation and adeal that can happen in two
months, but I will tell you mostdeals from first time I call to
close is over a year, becauseit takes a lot of time to get
you in an understanding processof A wanting to truly do it and
(11:05):
understanding how much it'struly worth and then lining also
up somebody on the back end andessentially a marriage, to take
over that deal, that business,and look to grow it as well too.
Speaker 1 (11:16):
So you know I have a lot of people ask me.
I'm a podcaster and I'm goingto tell you exactly what.
I think I've been here for 20years but that doesn't mean that
I know the intricacies of everypart of this business.
I just know what part of thebusiness right and I have a lot
of people ask me.
You know, like, hey, you everthought about going into
business yourself?
Every day, every day, I thinkabout opening up a location.
(11:37):
Like why wouldn't I?
I've been doing a long time.
I think I got a little bit ofyou know, history and knowledge
and operational skills behind me.
You might be building a littlesomething here right now.
Speaker 2 (11:47):
That's what we're doing.
Speaker 1 (11:48):
But then I turn around and say you know, the big
question is always if you hadthe ability to do it for
yourself, would you do it foryourself or would you go into
franchise?
That's like the number onething that comes up every time
we talk about it.
And so you know, I have a lotof people out there and I'm
going to.
When I say a lot, we're rightat a 50% line, right?
They're like man, I don't wantto pay anybody.
I'm going to come up with myown logo, I'm going to come up
(12:10):
with my own graphics, I'm goingto come up with my own way to
run the software.
I'm going to come up with myown because I want to save it.
And the other end you've neverdone that, it's not walking.
Day one and you figure it out,and day two it's there, it's.
I'm going through months oftraining material.
I'm going through months of howdo I do this?
(12:32):
How do I do that?
I don't know if I like thatlogo on the truck.
This truck is it's.
So you know it's either hit theground rolling with a franchise
or hit the ground.
And if you know how to do it,you know how to do it, but if
you don't, you don't, what isthe selling point to tell
somebody that you have theability to go out there and do
it by yourself, but this is thebetter way to do it.
Speaker 2 (12:50):
It's about managing your time right, because when
you are starting your ownbusiness non-buddies,
non-franchise you just wentthrough what a million different
things there and that's goingto take one to two years to
truly iron out and figure out.
You can pay for those mistakesand you can still turn your
store, your one store you'regoing to build into a great
foundational store for whateveryou want to do.
(13:11):
Keep it, build it whatever, butin the same amount of time you
could do that.
You can already strap on to abusiness that's been in 64 years
franchising since 2009.
So what?
15, 16 years?
Now that's done it time andtime and time and time and time
again.
Right, and already has anoperations manual, already has
marketing set up, already hassupply chain and purchasing.
(13:31):
So, in the thick of it, are yougoing to save a couple of
percentage points doing it onyour own?
Yes, but we're talking abouttime.
How much is important to you?
If it's important to you to bethe quarterback, go be the
quarterback.
If you want to lead one teamand be that quarterback, so be
it.
You want to be the head coach?
You want to be the generalmanager?
That's a different conversation.
So it's just about what youwant to do and what you want to
pursue.
If you are all for, I want to doone store, I want to grow one
(13:55):
store, I want to be overseeingeverything.
We might not be the best fitright, because 86% of our
franchisees own multiple units.
Our average units perfranchisee, depending on what
model you're looking at, isbetween 8 to 12 units per
franchisee.
Wow, really yes.
So we're very heavy on themulti-unit side.
If you want to be a one-unitoperator, that's fine, that's
(14:17):
okay.
Because, guess what, you mightgo through all those headaches
and those pain points and gettired of dealing with supply
chain and purchasing andinvoicing and everything else
and say, hey, I want to go tobuddies because they have a
purchasing program.
They handle all of those thingsthe negotiated rates, the
buying power, the invoicing, theuh, the net 60 terms, a rolling
line of credit.
I want to tap into that and I'mtired of doing it on my own.
And so we actually, again, Iturned somebody away three, four
(14:37):
months ago.
I said what you want is youwant to run your own store.
We're not your best fit andthat's okay.
And guess what?
He called me up again the otherday and said hey, I might
actually seriously consider this, because I don't know if I want
to do all those things.
Speaker 1 (14:50):
I mean, in case anybody's Thinking about jumping
into it, that is a lot to gointo.
I mean, there is a lot toreally start thinking about.
Just the operational softwareis it support enough on the back
end?
Are you getting the accountingout of it?
Are you getting the inventoryout of it?
Can you really dial into thereports that you really want?
Is it going to give youeverything that you need?
(15:11):
And man, I've seen everythingout there from and I'm not
trying to say anything about itand Lord knows it's going to
come back and bite me but I'veseen anything as old as R triple
S, all the way up to somethinglike Versa, right when it's.
You know one's with a mouse andone.
You have to figure out the Ffunction.
That's not the same.
They're just not the same.
So you know if somebody comesin because on the other side of
the whole getting off the groundrolling, once it's done, it's
(15:35):
done right, you're open, you'resolid and you're set, whether
you took the long road or theshort road.
But if somebody said, I want totake the short road, I want to
be able to use all the resourcesthat are available to me
through this avenue, but I stillwant to be somewhat individual.
I don't want to just be anotherfold in this army of stores,
because I still want to be ableto look at my customers and go.
(15:58):
There is a unique way to dealwith me, yep.
Speaker 2 (16:04):
How do you answer that?
It's a great question becausewe have franchisees as large as
50, 60 units and some that arejust opening their first store,
right?
What I love about our businessis, because of our buddies
purchasing program, that oneunit franchisee gets the same as
every other person, no matterhow many stores they have, so
they can come in and be a partof the buying power with buddies
immediately and get all ofthose benefits already talked
(16:25):
about.
Number one.
Number two we have, yes, afranchise model that you follow,
right.
We want our stores to beneutral colored, right.
Whites, grays, blues, buddiescolors, et cetera right.
If you want to go in and paintthe walls orange, do you think
we're going to let you do that?
No, because that makes zerosense with buddies branding and
buddies colors Right.
But we give you freedom andflexibility in our business
(16:47):
model in ways that make sense.
We have buddies suggestedpricing Right.
We use in Tampa and Florida andOrlando in our stores.
We recommend, depending onstates, to use that because it
can fit most of America and ourcustomer base.
However, we learned over timeour stores in Washington State,
pennsylvania and other placesthere needs to be a second tier
pricing.
So we came up with a secondtier pricing for those stores to
(17:09):
try to hit same revenues andprofitabilities.
Right, we learned that through afranchise model, right?
Guess what?
Mcdonald's didn't create theFilet-O-Fish, it was a customer
because, you know, couldn't eatcertain meats at certain times
with the religion, right.
And so that's what's abeautiful thing about a
franchise model it continues toevolve and it continues to grow.
We suggest our pricing, butguess what?
(17:29):
You can still set your ownpricing, right, and there's
other things we do in our modelthat makes you have more freedom
, right?
If you have a vendor that youlove, well, we need to vouch for
that vendor to make sure thatthey're a legit vendor, that
they can handle the supply chain, they can handle the demand and
they also have good quality too, because they're going to be in
our customers homes for 12 to24 months, right.
So we also, we will bring onnew vendors, pending that they
(17:51):
meet all of Buddy's brandstandards as well too.
So again, do we have afranchise model?
Yes.
Do we want people to be in thesandbox altogether?
Yes, but we also are looking toexpand and continue to make
that sandbox better so everybodycan reap those benefits safe
(18:19):
bet to say we are shooting forthis.
Speaker 1 (18:21):
You know, everybody's got this model like, hey, what
are you going to do?
I'm going to have 301 next yearand then, after you, have 302.
That's not a great model.
Yeah, well, we're, you know.
So we've gotten to this point,we're at 300 stores, we've been
around the block, there's a lotgoing on at buddies and you say
you know what?
This is where I think we can be, or where we want to be, or we
should be, by 20 to of 2026.
What does a one-year model looklike from now to then?
Speaker 2 (18:40):
That's a great question.
I can never know what's goingto come down the pipeline in
acquisitions that can reallychange things right, and it all
depends on what leadership wantsto do and what our investment
firm wants to do.
But if it was a perfect worldman I'd say give me all the
money, Let me go buy a bunch ofstores and let's get them
(19:01):
internally with our brand.
Fortunately they don't pay meto make those decisions right.
All that's above my pay grade.
What I can look to do is bringon, you know, 20 to 30 new units
a year in opening and then orin sales, and then look
hopefully for those to open inthe next year or two for those
20 or 30 units.
So I would love I think we'reright below 300 right now I love
(19:24):
to cross that 300 unitthreshold first.
And wherever we land in a yearis wherever we land, because
sometimes there's things outsideof our control, right?
A bad real estate deal, alandlord that won't get back to
us to open a new store, Maybe astore has to close, you never
know some situations.
So there might be someattrition and some losses in
that.
(19:44):
But man, if we could be at andlet's see, we're almost through
2025.
If we could be around, you know, 310 and then 320 and anything
in between that are growing morethan that.
I think that would be good.
And that's what I love about ourbrand, too, is we're not going
to.
You know, there's some of theseother food franchises out there
that open 100 and 200 a year.
God bless them.
I don't know how they do it.
(20:05):
I mean, it blows my mind, andmost times you see kind of a
fallback off that too, becausethey're outselling what they can
support, Right.
And that's what I love about ourteam, especially Michael
leading the charges.
We are always going to makesure we have more support.
Michael leading the charges, weare always going to make sure
we have more support.
We talk about it up front andwe're proactive rather than
reactive.
If a franchise consultant isgetting pointed, getting tapped
(20:25):
out, we're already hiring thatnext one before we get to that
breaking point, right, and yousee that on our supply chain and
purchasing side as well too.
So we're always going to bestaffed correctly, but, again,
we're not going to be a front ofour ski, so to speak.
We're always going to bestrategic in when we open and
how we open to hopefullycontinue to just grow a little
bit every single year.
Speaker 1 (20:43):
I'm going to throw in a little something.
You mentioned Michael.
We're talking about MichaelBennett, right?
You know had a greatconversation with Mike before we
got here.
Very much into business.
But you know, one thing Ialways loved about dealing with
Mike is he has like a little bitof a I don't want to say a
comedic streak in there, but youknow he's always he loves his
zingers.
Speaker 2 (21:01):
Right, he loves his zingers.
Speaker 1 (21:03):
But okay.
So, talking about the cyclicaldata because you said that it's
about 12 months rolling good,bad or indifferent I'm going to
throw this question at you nowhow does the forecast look going
into 2026, based on thecyclical data that we've had
coming out of what we just did?
So everybody's going to say thetariffs are coming.
The tariffs are coming.
I feel like somebody should beriding with a red shirt and a
(21:23):
horse Okay, they're not here yet, but they might be.
That might affect somebody fromsaying I want to open up a
franchise, but if I open todayat $20 a unit, now, all of a
sudden now I've got to sellthings at an average of $30 a
unit because things have gone up.
That might not work for me.
Or you've got a situation nowwhere in the last, let's say, 18
(21:43):
, 24 months, you've had kind oflike this wave of what's going
on with our spending ability,our purchasing power.
Inflation has kind of made itso that sometimes our money
works for us and sometimes itdoesn't, and we're trying to
figure it all out Based on allthat.
That's a lot.
How does 2026 look?
Is it look, is it look?
And you know what I'm nottrying to, I'm not trying to put
(22:04):
anybody in a bad spot, but Isee like man, it can be a little
rough out there um, well, firstI'm going to do a michael
bennett hijack.
Speaker 2 (22:10):
Um, and you did mention michael and I didn't get
a chance, so I'm going toactually say um, when I I was.
So I've been in franchise salesand development now for eight,
going on nine years.
I was in food franchising firstCOVID happened.
I took a year working for aconversion brand in automotive
services and our recruiterreached out to me and was like
hey, you ever heard of Buddiesor Rent to Own?
(22:31):
I was like no, I've never heardof this.
I come from a middle-classfamily, just enough to get by.
Speaker 1 (22:35):
But we didn't do that we never had to use that.
Speaker 2 (22:37):
Yeah, just never crossed my mind.
And in one week I talked toMichael Bennett three times and
if you know Michael, thoseconversations turned into two
hours.
Speaker 1 (22:46):
Oh, I do.
And three conversations If hewants to get to know you.
Before you know it, you're 30,45 minutes into a conversation.
Speaker 2 (22:52):
Yeah, so, man, I again didn't know anything was
taking a leap of faith and, man,I've loved every second of
working for Michael.
He is my boss directly and he'sone of my best peers, mentors,
friends and I anybody in thisspace and anywhere else find
somebody that is somebody likethat that you can continue to
look to grow and have fun withas your boss, as your friend,
(23:19):
and I will tell you, he's one ofthe best minds and people I've
ever been around in my shortlife so far in business.
So I just want to give thatshout out to Michael Bennett,
and also, too, you call him Mike, obviously, but there's a
Michael Bennett, a Mike Zagerand a Mitchell Lee.
So we got all the M's coveredon our executive team.
Speaker 1 (23:31):
We're an M&M factory.
Speaker 2 (23:33):
Yeah, so Michael, mike and Mitchell.
But getting back to thequestion, so I'm optimistic.
I know my job is to be salesand glass half full, but, man,
we went through some hard times.
We've been through some hardtimes both in our stores and,
obviously, franchising, and Ialso think we got a little
blessed from 2020, 2021, and2022.
(23:55):
Yes, we got spoiled With a verygood economy, with everybody
buying stuff, and then when weprinted money, what we thought
was good obviously was duct tapeon a boat, right.
So, as I mentioned, for us andI think, the industry and the
economy, we're in the bottom ofthat valley.
From a political side.
I think there's going to bepressure to bring interest rates
down and other things that aregoing to help our business.
I think, again, the real estatemarket's going to come back
(24:16):
even better and I'm starting tosee interest rates not be as
high on financing deals.
So I think all those things areshowing promise for 2026, as
well as pressure for the feds todo those things, Jerome.
Speaker 1 (24:28):
Paul, we're looking at you, we're looking at you,
jerome, I'm telling you rightnow, right here.
Speaker 2 (24:32):
We need a break.
Where are we?
Omaha, nebraska, that's it.
I was about to say that we'regoing to get a snake and hope
that you drop the break.
Speaker 1 (24:37):
So I mean, yeah, it's , it's, it's been, it's been a
year.
You know talking about it fromthe operation standpoint, and
can I?
Speaker 2 (24:43):
add one more thing to that, no sure.
So when prospects asked me thatquestion, right of what are you
seeing?
Well, first off, that's why Ilove our purchasing team because
, yes, we do not fully.
You know, we both.
We buy both internally andexternally here in the States
and overseas.
So our team can make a pivot.
If there's rumblings abouttariffs and other things, we can
push more of our in-statevendors to help with that,
(25:07):
alleviate some of that cost.
Additionally, what I tell peopletoo is like hey, when you go to
Walmart you're going to buy aTV for 300 bucks or 350.
They bought it for 300.
They're going to make 50 bucks.
That's the total money theymake, right.
But in rent to own, it'sdifferent right.
Number one, because a customeris paying over 12 to 24 months
on average, right.
And when they're paying thatover time, well, guess what?
(25:27):
You alleviate that cost on yourburden over time to the
customer, so that 15 bucks aweek or a month or whatever it
is, only turns into a little bitmore.
And so I tell a prospect thatis concerned with that that it
shouldn't be an issue because wecan pivot with our vendors
depending on the tariffs.
But also our customer doesn'tfeel that bill right off the bat
(25:47):
.
They feel it over 12 to 24months.
So it's a little bit of a stingcompared to a big jab in the
side, like if you and I go toDomino's and get a pizza now for
$19.99, which is crazy, right?
Remember they used to sell$5.99 pizzas 1999, which is
crazy, right?
Speaker 1 (25:59):
Remember, they used to sell 599 pizzas, man.
I remember when I used to walkto the streets of New York and I
can get a slice of pizza.
Speaker 2 (26:03):
That was like 18 inches long for a buck.
Yeah, there's no more dollarspots, man.
There's two and three dollars.
Now the dollar tree had to comeand turn around.
Speaker 1 (26:08):
Listen, we're not the dollar tree.
Speaker 2 (26:09):
We're the dollar plus tree.
I'll be by the dollar tree,though Put me by a dollar tree
and a dollar general, so $300general you know.
Speaker 1 (26:16):
So when we're talking about, you know the things that
have happened the buying power,the spending power, the, not
the, this, the that.
Has it been harder to qualifypeople for those franchises
because of what's been going onrecently?
Speaker 2 (26:30):
Simple answers.
Yes, I go to a lot offranchising shows.
I think that's something thatI've said to you and I've heard
you say it.
I do listen to some podcasts.
I have a face for radio.
I know I do.
My FranDev marketing teampushes me way too much out there
, but I'm proud of it becausewhen we started what's called
(26:52):
what APRO does for the RTO worldwhich is funny I say that IFA
is to franchising, theInternational Franchise
Association, us R&R, I thinkAaron's and Renison have been
involved in the past I don'tknow if they're actively now,
but we go to these shows andwe're involved and just how for
the RTO world they walk forCapitol Hill.
I do that for IFA too.
So Michael is a little bit moreinvolved, obviously on the RTO
(27:15):
side.
I'm a little bit more involvedon the franchising side.
So I go to a lot of franchisingshows across the board.
Again, food retail, non-retail,service-based brands, whatever
the case may be.
And it's exactly to the pointthat you're making is how do we
get good leads anymore?
And this is a specific forAndev marketing thing, but it
used to be $100 per lead that weused to buy.
(27:36):
Now we're up to 200 bucks forbuying one Good night.
Budgets are going fromliterally in our business from a
hundred thousand to 200,250,000 just on buying leads and
enfranchising.
You only typically sell about1% of the people you talk to.
For me, so I get told no 99times a day and maybe told yes
once, just to take anothermeeting.
Speaker 1 (27:55):
You guys know how difficult it is to get a sale.
Speaker 2 (27:58):
But here's the thing, though, too, is people are
buying $600,000 to $800,000franchises, right.
Right, this is more than theirhome, their car.
This is the biggest purchasethey'll ever make, and I take a
lot of pride and responsibilityin that, making sure that I take
them through a path and aprocess that makes sense.
Right, I'm going to get youwith my executive team.
We're going to probably govisit a store, whether it's in
(28:19):
your neck of the woods or mine.
We're going to get down toOrlando and meet my executive
team in person.
I'm going to have you talk toour franchisees, right, because
you need to talk to the peoplethat have their own stories to
tell as well.
Right, what people callvalidation in this business, you
need to validate the brand.
You need to review all thedocuments I send you.
It's a big, big purchase, and Itake a lot of pride in making
sure that anybody comes in ourbusiness.
(28:40):
Whether they're going to tellme yes or no, at least I know
and have a clear peace of mindthat when they make their
decision, they are fullyinformed, whether they do it or
not.
Speaker 1 (28:48):
I mean God when you say that like that's a lot of
money going into it andinvesting and saying you know
this is what I want to do.
Okay, so then let's talk bucks,let's talk money.
If I want to get into this, anaverage person with an average
store, we're not saying, despitehow many stores they might ever
have, we're going to look at anindividual situation and say,
(29:09):
if I was to meet all therequirements, put this down and
work on the level as everybodyelse does, I'm not going to say
I'm going to be an overachiever,I'm not going to be an
underachiever On the level, whatdoes the money return look like
?
What does a profit percentagelook like if I just own one
store and I did what I wassupposed to do?
Speaker 2 (29:28):
Great question.
So I love that this podcast isin this business.
So when I say these numbers,they can kind of self-validate
it too, because they're doing itevery day For new prospects.
It's a little bit harderbecause, again, a food place
that's doing a million mightonly make $80,000 net right 8%
but they're happy with thatright, which is crazy and
mind-blowing.
That's what I used to sell.
I loved coming over here andseeing this industry and this
(29:51):
business and what it can do.
Again, work hard to get there,but you can reap benefits and
have higher nets.
For four years of data.
What we have is called afranchise disclosure document,
an FDD.
Anybody that sells franchiseshas this, and in one of those
items there's 23 items.
One of them is an item 19.
It's the FPR, the financialperformance representation.
Franchisors can decide to putfinancial data in there and they
(30:15):
have the power to not.
So if you are looking at anyfranchise out there, if they
don't have financial data runbecause it's a red flag, they
are not proud enough to puttheir sales in there to show you
a return.
Speaker 1 (30:26):
Yeah, we know you would make it a lot.
No, no, you can't verify thatNow.
Speaker 2 (30:29):
The only the one caveat is if they're a new
franchise and you're an earlyadapter and they don't have
enough years to put in there,like if it's a new concept to
put in there, like if it's a newconcept, 18 months in they
don't have data that the state'sgoing to allow for these FDDs
to put in there, but in fouryears of data our average stores
do.
Now I can only speakcorporately.
I can't speak for franchises.
Right, we're using the C wordnow.
Speaker 1 (30:50):
Yeah, see, there it is.
There comes the C word Big badcorporate.
Speaker 2 (30:53):
But our stores on the corporate side average around a
million dollars in revenue andit's ranged.
I've seen them average 25% netprofit pre-COVID and in the hard
, hard years two, three yearsago I saw 12% net profit right
Because, again, all about buyinginventory and in those COVID
times the supply chain we boughta lot more inventory right Now
we didn't have to and it showed12% net profit.
(31:15):
But guess what?
Our inventory was higher inthat 25, 30% range because we
were protecting our stores.
But if you're saying, hey, whatare we shooting for?
We're shooting for a milliondollars in revenue, 20% net
profit.
That shows a healthy store onaverage.
Now we could get in the 1.4,1.5 per million top quartile 25%
net profit.
Take home, you can do the mathoff that.
But I always talk averagesbecause my averages in the food
(31:40):
space would typically be topquartile stores and you know I
want to bring more people torent, to own, especially food
franchises of other brands thatare large operators because they
get it right, they're going toplug and play, they're going to
go find people to do that andthey're not going to be in the
day to day.
That's a different conversationthan a 20 year vet that's been
a district manager or regionalmanager at big brands.
And then they want to come anddo only one store because either
(32:01):
a that's what they can afford,or B, that's what they want to
do.
Speaker 1 (32:06):
So so what would you say to somebody who comes in?
Because I would imagine that ifyou can afford to have a
franchise, you're in a certainpart of your life.
Okay, I know that when I was inmy early twenties, that was
never, ever.
I mean, it was like when mynext bowl of ramen noodle for
dinner is going to happen.
Yeah.
But you know, now we're talkinghey, you have the ability to
spend a few hundred thousanddollars to start a one-store
(32:27):
franchise.
We're just saying that rightnow, okay, and I say listen,
mitch, I'm all good about this,but I don't want to work.
I don't want to.
I mean, I don't mind owning it,I don't mind running it from an
outside standpoint, like youknow.
Hey, I, I, I'm going to improvethis amount of inventory
purchase.
I'm going to say we're going todo this marketing and maybe
we'll do, you know, a specialdeal every once in a while or
(32:51):
whatever, but I don't want to bethe guy behind the counter,
cause that's just not me.
I, I love the sound of it.
You know, $1 million revenue20% is average.
I can do better than average.
I think I'm good.
What do you say to the guy who,or gal who is like I want to
have it but I don't want to runthe operations of it?
Is that is?
Speaker 2 (33:10):
it's possible.
I have to.
We're going to have to be in afull trust level that if you're
going to do that and if you'regoing to sign up, I either need
to already know who's going tobe your salary general manager
number one or number two.
You need to have a really goodunderstanding of who's it going
to be, because guess what Ifthat general manager heaven
forbid passes away, moves on,quits, who's going to do it?
(33:31):
Somebody's got to do it,somebody's got to.
If you're going to put theassistant general manager that
isn't ready, what's going tohappen?
They're not going to be able tomanage the inventory and the
customers and the employeeswhat's going to happen, ladies
and gentlemen?
Speaker 1 (33:40):
I mean it's, it's going to be rough, yeah.
Speaker 2 (33:42):
So we you and I need to be in lockstep of saying I'm
cool with you not doing theday-to-day, I'm cool with you
being a thousand feet up and ifyou already have that person, I
might not sign you up because wehave a committee that approves
all of our deals too.
Okay.
So it's a.
It's like when you getpre-approved for a house you
know it's looking good, butwe're not there yet to a close
right.
Same thing in my friend of Markor my friend my franchise
(34:03):
development.
So I get all the documentation,make sure we is financing
locked in.
What are we looking at?
Are they running the store?
If not, who's going to run thestore?
We need to put a full packagetogether to make sure that this
deal is going to work.
Because, listen, over the lastfour or five years, we've
learned to, we've grown, we'veprobably done a couple deals
that we probably shouldn't havedone at the time.
(34:24):
We're learning.
That didn't work so well, yeah,but things were told to me as
well that this was going tohappen, this was going to happen
, this was going to happen, andwe trusted them and it didn't
right.
So we're trying to continue tobetter ourselves too, to make
sure that we don't get in thatsituation again.
Right?
Is your financing good?
Let me see all thedocumentation.
Perfect.
Is your general manager good?
Who is it?
If you don't need to have a yesyet because it's not a business
, but who are you looking at?
(34:44):
Who's going to be option one,two and three?
So we try to do all thatupfront because I listen, I
don't want you to be in thestore screwed over in any way.
Right, if you want to go in thestore, go check on the store,
but be in lockstep with thegeneral manager.
Talk every day, every other day, whatever.
Have a weekly call with yourfranchise consultant.
Just do the things that youneed to do to have a successful
(35:07):
business.
And guess what, if somethinghappens at general manager, you
better have a backup planbecause, if not, we're going to
be having harsh conversationsbecause that million dollar
store is probably an $800,000store, right?
Speaker 1 (35:17):
And it typically doesn't go back up before it
goes back down.
You know what I mean 20%.
Speaker 2 (35:21):
So you just have to have those hard conversations.
Speaker 1 (35:24):
So this is new, and if you told me before, I
apologize, but there's acommittee that says so.
After you get the 1% of the 99that you've gone, and then 100th
one, you finally got it, youget all your dominoes in a row
and now you're going to get anapproval, yep, Okay.
So now we're in a step processhere.
How many people are on thecommittee?
Speaker 2 (35:45):
I don't tell a lot of people this, but I'll tell you
and the world.
So it's a committee of, it's acommittee of four.
Okay, so that doesn't add upsometimes.
I was just about to say that'skind of like I'm the fifth on
the committee and I'm alwaysgetting an automatic yes
technically.
Speaker 1 (36:03):
So I I was going to say usually it's an odd number,
just so that you don't getlocked in.
Speaker 2 (36:07):
Well, we're a lean and mean operating machine team
over here.
But perfect example.
I'm working a deal right now.
We have a gentleman that'slooking to retire move on has a
couple stores, got a deal linedup.
He's looking to buy the stores.
(36:29):
He's doing a great deal withthe seller.
But the deal came to us.
I presented the deal to mycommittee and that deal upfront
got rejected because they wantto see that prospect bring in
$300,000 of additional capitalto make sure that they can
support the long-term of thebusiness.
Right, these people know this.
You burn cash buying inventoryand getting a business and
growing it.
Right, you know it, you know itand they know it too.
Speaker 1 (36:49):
Well, I'm just letting you guys know.
Now you know it, Listen, and ifanybody doesn't know, I mean
rent-to-own is kind of like acash-intensive business.
At first it's not somethingthat you're just going to start
throwing pennies at andhopefully it'll turn into
nickels and then quarters.
It's more like you're throwingdollars and then quarters and
then nickels and it reallydepends because you have your
cycles where sometimes you'reflush with inventory because
it's summertime, you get somereturns, something like that,
(37:11):
and then you've got thewintertime where I sold
everything.
Damn, I've got to get a coupleof loads of furniture come in,
not only to fill the showroombut to fill the homes of whoever
.
Speaker 2 (37:19):
I'm sending it to Pete, if you and I start a car
dealership, what do we have tobuy?
We got to buy a lot of cars.
And guess what, if we have a,can we cuss on this?
We don't.
Generally, I was going to saywe have a whole load of cars, do
we have to go?
Do we got to go buy more cars?
Right, and so this is somethingwe learned over time too.
(37:40):
As I brought in some financebrokers to work with us, it was
hard to finance the deals atfirst, because we were trying to
finance a loan and then a lot,you know, a line of credit all
into one, and it got harder.
But I worked with a bank thatsaid hey, we're going to do the
baseline of the development, ofthe construction of everything,
and then do a line of credit ontop, a revolving line of credit
for that inventory too, and italleviated some of a all-in cost
(38:03):
to our franchisees.
So we've learned over timeright, in your store, you're
going to have $100,000 ofinventory when you start.
Right, if you have a reallygood grand opening, you got to
buy another $100,000 ofinventory.
So you're going to buy between$200,000 and $400,000 of
inventory for that store in thefirst three to six months right.
Wow, yeah, yeah, and so you needto be set up for that.
(38:24):
And that's why my committeecame back and saying, no, we
need to see him have 300K moreof additional capital so he's
going to be able to be in it forthe long run, because we don't
want to be in the same positiontwo years from now, having to
sell the store again becauseeither A he ran out of cash or,
b he's just so strapped amongsthis means because he never got
set up the right way.
So it's hard conversations withthe committee because again, I
did everything I could to bringthis deal to get to close and
they're telling me, no, go dothis back.
(38:44):
Right, but I know where it'scoming from is good intentions.
It still pisses me off sometimesbut I know that it comes back
and I have to go back to thatprospect and say, hey, we're so
close, we're round in third.
Third, let's get this and let'sknock it out.
Speaker 1 (38:56):
So so do they take your file and have this big red
stamp that they just no get no,for camera purposes and dramatic
purposes absolutely and itsounds like.
It sounds like a big gavel,just what no?
it's just an email with thecommittee and back and forth an
email, so it quieted down sowhen we have these people who
are doing all this right andyou're setting it up, you're
(39:18):
letting them know hey, this is astraight conversation.
You might have this, you mightnot have that.
We don't need to talk aboutthis.
We have to talk about what'sthe fall off rate of somebody
going.
You know what?
I started it.
It looked good.
We came back from the committee.
I tried again.
The committee said, hey,there's something else.
And look, don't know if I cando this, great question.
Speaker 2 (39:38):
Most deals I take to committee get closed.
He's going to say that I takethe good deals, no.
So here's why I say what I saidis, you know, in my early years
of franchising, especially inthe food side of it, man, we
were just I hate to say it, butwe were signing anybody up, we
could right.
It was literally up until five,six years ago.
It was wild, wild west offranchising.
(39:59):
There's been some more laws andregulations and the company I
used to work for is goingthrough some things.
But, all that to be said, Iknew that no matter where I went
to next, I'm going to make surethat I do everything in my
power to set them up for success.
Because if I'm putting my nameon this deal, this deal is going
(40:20):
to be, you know it's got.
I'm either going to.
You know, I'm the one thatbrought them in.
I'm so I carry a lot of pridewith that.
And so if I take a deal tocommittee, I've I've tried to
think of everything possiblethat's going to come up now
again, an acquisition is alwaysa little bit different than a
new store, right?
Because new store it's a dreamand a vision and everybody's
happy.
But when you're selling stores,it's typically some pros and
(40:41):
cons, some good things, someheadaches and other things.
So when you're selling existingstores, there's always a
million different, more thingscompared to just a new store,
which is a dream and a vision atthat point.
So new stores again, I'mbatting 100% on.
I'm confident because if I takea new store to a committee, I'm
not going to over leverage thatperson.
They can afford two stores orrun into two stores.
I'm not going to sell them fourstores because they need that
capital for that, for thatinventory right and everything
(41:03):
else.
But typically they will comeback on existing stores because
it's already a store in oursystem.
It's already been a franchiseethat's leaving and somebody new
that's coming in and we don'twant to be dealt with.
We don't want to put that buyerin a bad hand right off the bat
or the seller being pissed offas they go out.
Oh God, you don't want that.
You don't want that.
We're not trying to divorce,we're trying to start a new
(41:23):
marriage that everybody's goingto be happy.
Speaker 1 (41:25):
Not like one of these 2025 divorces where you get
married and then divorce inthree months.
But how much?
Because the pricing hasdefinitely gone up.
How much does it cost to have abuild out?
I don't have what's a typicalstore size right now 6,000
square feet.
7,000 square feet.
Speaker 2 (41:40):
Four to six.
Four to six, that's 80% of ourstores.
We do have stores as small as3,000 and some as large as
12,000 plus, but, if you'reasking me, a core between four
and 6,000.
Okay.
Speaker 1 (41:47):
So we got a four.
So let's say five, right?
So we got a 5, 500 square footof office space.
How much does a build-out costnowadays?
To say, I don't have a locationthat looks anything like it's
supposed to and I'm not sayingwe're turning a restaurant into
it, but it's just a store thatwe've got to make right.
(42:09):
I've got to get the right paint, I've got to get my signage up.
And, guys, when I ask this, itdoesn't matter what sign you put
up it could be a buddy sign, itcould be your own sign you
still got to put a sign up.
You still got to put somestickers on the window.
You're still going to have toput the overhead.
You're still going to have towrap at least one vehicle.
You're going to have to do sometype of paint.
Whether it is the orange youtalked about or it's not,
somebody's going to roll a newcarpet.
Speaker 2 (42:32):
It's a great question and every time I tell this
number to people that are in thebusiness they get shocked.
But when I break it downthey're like, oh, that actually
makes sense.
Because when we talk all incost again, a sales guy at
another brand might just tellyou the startup cost to open
here at Buddies.
We talk about from the time youpay us a franchise fee of
$40,000 to the time of threemonths of being in business
(42:53):
because we want to make sure youunderstand that there's
additional rounds of inventory.
And also, guess what?
We're not the Chick-fil-A thatopen our doors that day and make
money.
No, right, we're a littlesnowball at the top of the
mountain that's going to go downand compound and get bigger,
right, and we want to all get wewant to get to that mailbox
money and have all those.
I have a number in my head.
Right now you sign a lease andit's a former retail store, then
(43:20):
that's going to be 20, $30,000compared to if we go into a
really awesome location that, uh, is a former restaurant and we
have to do 50 K and demo loanand get permitting and other
things.
So that's why it's such a bigranges because I don't know what
your real estate looks like.
I don't know if you're going tobuy the vehicles or lease them
right.
You can save a hundred thousanddollars that way.
Instead of buying a new boxtruck and a van, right, we have
(43:42):
a buddies program internally,rather than buying a pile on
sign and an external sign, whichcould be anywhere from 20 to
$40,000.
You can lease it throughbuddies over 60 months on 10%
simple interest too.
So there's some things we can doto save on vehicle and signage
cost.
But again, another $200,000,$400,000 in inventory, another
$100,000, $150,000.
(44:02):
You need for cash on the sideto support the business as it
gets its boots off the ground.
So I can see a range fromanywhere from $500,000 to
$800,000.
To $500,000 to $800,000.
Okay, typically, all right.
So I always try to be worst,worst case on the other side
because, again, if we're goingto get a financing package, I'd
rather you get more than getless.
Getting a finance loan and thentrying to get more money three
months from now is very hard todo, so I'd rather you have more
(44:25):
cash save and then use it as youso choose, or use it to pay off
your loan.
So we try to get it more on theworst case scenario.
Speaker 1 (44:32):
I'm going to ask you a really weird question.
We'll see if you can answerthis question.
So let's say you got someperson, because I kind of
remember that there are ladiesout there who are just as good
as and I don't want to say anyguys, but y'all know some of our
best general managers are women, right?
Speaker 2 (44:45):
so for some reason the guys sometimes pick up the
phone more.
For the women I'm going to tellyou.
Speaker 1 (44:49):
I'm going to tell you right now, like when, when I
saw the people who are walkingthe stage last year, I even
looked at some of my guys andI'm like do you see how many
ladies are up there?
We got work to do, guys.
So if you ever had somebodycome in and they're you're
having that conversation youreally got to think in your head
.
You really probably don't needme to be here.
You've kind of got it all setout.
(45:10):
Why are you here?
Or?
Or is it one of those?
Nope, they always come to youbecause they have 100% need.
It's not somebody who's likereally established.
Speaker 2 (45:19):
So are you talking like a mom and pop owner?
That comes to me.
Speaker 1 (45:23):
Like is there, yeah Well, whether it might be on pop
or whatever, and like they kindof have the whereabouts to get
it done themselves and you justkind of like is that why you
want to like?
Why do you want to be here?
Speaker 2 (45:31):
versus yes.
So when, especially, we havesome veterans in this rent to
own business that have maybesold 10 to 15 years ago and of
course they're in a non-competebut then they retire, maybe get
into real estate storage units,maybe go to another brand like
r&r tire, right?
Speaker 1 (45:47):
or move out of state or whatever shouts more on our
tire.
Speaker 2 (45:49):
People love y'all um, but you know, there's people
that come back and I, as much asI want to be excited that, hey,
this is going to be an awesomeslam dunk deal, there's always
something pulling me back of.
Are they trying to pullinformation from me so they can
do it on their own?
And I hate to think like that,but when you've been burned once
(46:10):
, it sometimes hurts a littlebit, right, I believe.
And so, yes, I've hadconversations with people
recently of saying, man, you'vedone this before, 15 years ago
you did all these things.
You still know these people inthis space.
You could go open two or threeright now, adding on to the
other businesses you do.
Why do you need me?
And it actually goes back tosomething we already talked
about because I don't want tobuild my own brand again.
Speaker 1 (46:35):
You know that makes sense though, because mind you,
we pay.
Speaker 2 (46:41):
You know we have a 6% royalty right Now.
First six months is 0%,remember that.
But month seven is a 6% royalty.
How much of time matters to you?
Is it really matter?
6% Now, again, we have apurchasing program and other
things.
So, given our buying power andsome of the things we do, we're
going to save you a couplepercentage points anyways.
So I don't know if that's goingto be.
You know the difference of one,two, three, 4%.
(47:01):
I don't know what it's going tobe compared to, again, money
you're saving using the buddy'spurchasing program, again doing
it on your own.
But all that to be said, atthat point in their life, most
of the time they care most abouttheir time and what they do, do
they want to go start their ownABC, rent to own and spend
(47:22):
millions of dollars of trainingand operations and marketing and
supply chain and building thesevendors and talking to these
teams and going to all theseshows?
Or they just want to bootstraponto something else that they
don't have to do any of thathire a general manager, be a
thousand feet up and hopefullykick their feedback.
Speaker 1 (47:35):
Hopefully, hopefully, I've never seen that happen.
Hope's not a plan, but that'swhy.
Speaker 2 (47:39):
I said hire a general manager right Off the bat.
So again that goes exactly backto what we were talking about,
is, I have to be curious andcautious, but also when they
kind of answer those questionsto me, it gives me more
confident in selling to themthrough the process.
Speaker 1 (47:58):
Well, that's a question I think you guys need
to answer.
If you guys want to open up afranchise, reach out to Mitchell
Lee Now.
Buddy's Home Furnishings is oneof many, but I can tell you
right now they do have thisbooth set up by 2025 that it
looks pretty good at RTO Worldand it seems like he understands
what he's talking about.
And if you have any questionsabout that, reach out Mitchell.
How can they reach out to you?
How can they reach your?
Speaker 2 (48:13):
team, absolutely.
So feel free to go onto ourBuddy's Franchising website.
You can enter your information.
It's very simpleBuddy'sFranchisingcom.
My direct line is 813-321-0401,or shoot me an email.
It's mynamelee at BuddyRentscom.
That's M-I-T-C-H-E-L-L, dotL-E-E at B-U-D-D-Y-R-E-N-T-Scom
(48:37):
and Pete.
I do want to say one more thing.
I love the rent-to-own industrynow after the last four or five
years, and I love franchising.
So again I get told no, a lotmore than I get told yes, and
I've been told things on thephone that should never anybody
ever hear.
When I cold call people I loveto just talk franchising and
rent-to-own and again I haveenough wherewithal.
(48:59):
I love that word.
It's such a hard word to knowif you're going to be a good fit
for us or not, and I thinkthat's what leadership brings
down to me is I don't have tosell every single deal, I have
to make sure we're a right fit.
So I have some of my franchiseesask me about other concepts
they might be interested in.
Most people wouldn't talk aboutthat.
I reviewed one for one of myfranchisees.
I read through the FDD, readall their website material.
I took two to three hours outof my day or out of my night,
(49:19):
not day night to review allthose things and give free
consultation advice.
So feel free to reach out to me.
Anything about franchising,anything about what's going on
in rent to own franchisedevelopment, and I'd love to be
a resource for anybody out there.
Speaker 1 (49:31):
Well, there you go, you can reach out to him and
make sure that you ask thehonest questions, because he's
going to give you an honestanswer, and isn't that what
we're really looking for?
So, guys, we appreciate youstaying over here with us and
watching out what happens in thefranchising world, because it's
something we really haven'ttalked about, except we did last
year.
We couldn't get it out.
So you know we've done that.
(49:52):
But listen, if you have anyquestions and you want to ask me
directly, ask me at Pete atTheRTOShowPodcastcom.
I'd love to talk to you.
Also, dm me at Facebook,instagram, linkedin and YouTube
where you're going to see this,and I will tell you guys.
As always, mitchell, great tohave you on the show.
You kind of shed a whole lot oflight on a whole lot of
subjects.
I'm glad that we can finallyget this through one more time
and I will tell you guys, as
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