Why the Businesses Nobody Wants Are Where the Money Is | 328

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Transcript

SPEAKER_01 0:00

Welcome back to the Business of Beers Podcast, your daily dose of strategies, tools, and tips to help you build an eight-figure business. Today's episode is a clip from one of my YouTube lives. If you'd like to hear the whole thing, there's a link below in the description.

SPEAKER_00 0:14

Cheers. You want to find a brand that uh you can dominate right now. This is the hardest part because everyone asks me, well, what's the best brand? Uh what should I buy? And the truth is, there's no magic bullet, and a lot of it is what makes you a great owner. You want to look for areas that have some sort of distress to them. Now, once again, we're looking where other people aren't looking. Right? Like, the initial pain is like, why would you get into that business? It is extremely hard to hire people, which is exactly why I'm excelling it. That's exactly why we have 35 stores. It's because it's really hard to hire great mechanics and keep them because less and less people are going to trade school, right? Less and less people want to fix cars these days. And yes, it is harder to fire them. And so if the unfair advantage becomes I am able to find and retain these guys and treat them really well and pay them very well and create a clean, modern environment that they want to work in, then yeah, like I'm able to buy all these stores from these other people who aren't doing that. Right? And to them, if they lose their number one mechanic, they lose maybe their number two guy, and they have a bunch of like entry-level people, it's gonna be really hard to make money in this business. Right? That's a distressed we're we operate in a just in a in a distressed business from that perspective. You want to look for that. You also want to look at distress of could it be a brand that's on decline. Even Midas. Like Midas is doing really well now, it's the best that it's ever been. But like when I was buying, like even a number of years ago, when I was buying all these things, that that necessarily wasn't the case. And the the most recent team has done an amazing job getting it back to that standard. You know what they did to get us back to that standard? Was they had a program that said we are going to eliminate um basically the detractors, the people who bring this brand down, the the one where you drive by that has a terrible reputation because they rip people off, they accept cash, they like their store looks like shit. There was literally a store that had dirt floors like in the shop, like no joke, in like Alabama or somewhere. And so, and it's because the previously they let too many people get away with too many things. And in a franchise brand, that destroys it, right? When you have too much of that. And so they say, we're not gonna tolerate that anymore. We are gonna get the pe these people are either gonna invest in their business and get it to the standard or they're gonna get out. And a lot of those people choose to get out. And guess who bought them? Right? Guys like me who could look at a distressed situation, who could take over a store that has a terrible reputation, that is losing money, that needs $150,000 of renovations just to get it up to the standard. And I can make that bet on myself because I know that we are gonna have success with it. And so you have to look for distress. If you are looking for like, I'm gonna find this perfect brand that everybody loves and has this, like, you know, there's no tarnish, then it's very easy to hire, it's very easy to make money. Well, guess what? Like, none of them are gonna be for sale because all the best franchisees like me are gonna be buying them if I was in that system. It's gonna be really hard for you as an outsider to break in when it's that good on the inside. And so you have to find distress. And it it's just different types that you're looking for. You don't need experience. A lot of people say, like, oh, follow your passion and all this stuff. I don't give a shit about cars. I drive a car, a 2019 car that's paid off, and like I could care less about cars. What I'm passionate about is making money, is building teams, is building a business that I'm proud of. I'm passionate about that stuff, but like I just as well could be in any other business and I would be the same person. We'd be doing the same things, just to a different industry. So don't follow your passion. And finally, a lot of people diss fast food, right? They say, I don't want to get in anything but fast food. And honestly, I thought that for a while. I passed up on what I thought would probably have been a good opportunity if if I pursued it. Um, this guy's named Chris, um, lives in Philly, he's 31 years old. Uh he just did this deal with Papa John's two months ago. That I mean, basically, Papa John's had their largest franchisee who is down in Baltimore, Maryland, and Papa John's basically did a joint venture with him where he now controls 85 stores. So a single deal, he got 85 locations that the franchise or helped facilitate. I'm sure they've helped line up financing to make this all happen. I'm sure he's got some partners. He now has 150 locations. He's one of the largest franchisees in the country. You know, his goal is to get to 250 by 2030. He's committed to 52 more locations. Think about this for a second, right? Guy's 31, 31 years old. I'm I'm 38, by the way. 31 years old, and he's clearly figured out that he has an unfair advantage in operating Papa John's restaurants, right? That he has been able to get into this thing and like be the guy to operate them very well to prove that he could take over distressed locations and make them better. He is a guy that has really good relationships with the franchise, or if they basically help facilitate it, because there's some other really big operators in in Papa John's, he is there are much bigger operators than him, right? And they easily could have blocked him and gave it to somebody else. But they didn't. They chose him because I mean, geographically, he's not that far. So obviously, like you have systems, you have support, like if you if uh geographic definitely plays it makes you know is a part of it, but they also believed in him. They also and he because he proved it to him that he could do it. And so the average Papa John's is like, I don't know, 1.2 million. Uh I I want to say it it nets probably at least 10 10% if I'm if I'm ballparking it. So he runs a company that today does probably 150 million, maybe 175 million, making 10, 15 million dollars. You still think fast food's not the way to go? And I I I bet never hasn't made a pizza in many years. And if someone tried to get into Midas back then, there's lots of opportunity because there's lots of different fragmented ownership. You could go, as I did, to start with these stores, and then you buy this store. Um, you start with here, and then you buy this store, and then you buy that store, and you open up this one, and you buy this one, and then you get a group, and then you buy these two, and then like you when it when it's highly fragmented business that you can get in, highly fragmented market, lots and lots of different owners, you can get in there and you can pick them off one by one by one, and you and you and you learn the system and you build momentum, that is what I would do if I was starting again. I would find a brand that's just that's distressed, that's highly fragmented in the market that you want to operate in. Because the challenge is like I own all the stores today. If someone else tried to run that same play in Midas in Philly, New Jersey, like there's no A, you're competing with me, I'm not gonna let you win. Like, if there's an opportunity to buy a store, I am going to overpay for that store because I have synergies in all this. Like, I am not gonna let one slip through. Like, it would have to be a absolutely ridiculous deal for me to not do it. Because I have that unfair advantage of I can pay more because I've got systems. I also have relationships with these guys so they know they know me and they know I'm gonna get a deal done. They know how I treat their employees, that we give everyone jobs, we give everyone a chance, and I am gonna have that unfair advantage. What you need to do if you want to run this playbook is you need to find a brand and a system that you have that unfair advantage, that you are the guy or gal who everyone else goes to because you get the sh you get the deals done. And so don't look for the magic bullet because it's not gonna happen. What you want to do is look in your market. You want to see in my market, what is ownership look like? And that even Midas, like maybe you missed the boat on Midas Philly. Sorry guys, not gonna happen. But other cities could work. Maybe Dallas works, Chicago could work. There's other cities around the country that are highly fragmented in Midas. But maybe maybe auto's not your thing. Mineikey could work. Mineike, I if anybody wanted to do auto, I would look at Minickey. There uh I see news stories every day about these guys buying 15, 25, like working the consolidation. They they were kind of like MITIS was, I would say, 10 years ago. Lots of small, lots, you know, single unit operators could could be could be a roll-up opportunity there. But it's not just that. Like I I have friends in all these industries. Senior care. I'm a partner in a senior care franchise here in Philly, and he is absolutely crushing it. I know guys in fencing who are who are building these massive fencing franchises. Uh, and some of them started from zero too. Some of these guys started and grew the business, and then they started acquisitions later, too. Painting. I have a friend who's buying multiple cities in a painting franchise. Building systems, his VA runs a lot of it. He he he he's getting some great deals. Roofing, youth enrichment, multiple guys in the youth enrichment space that um can make this happen. Mosquito control, garage doors. There are some massive franchisees in garage doors. I think it's pers I think it's precision garage. Uh these guys own entire multiple cities, entire markets backed by now private equity companies who are going and basically giving the money to help the franchisees do roll-ups in garage door repair and replacement. And so the opportunity that that exists, it's every industry. It is not just one thing. It is not just, it has to be automotive, it has to be garage doors. It's it's every industry. Because the theme is the same, right? These principles that I'm talking about are universal in that these are all things that people need every day, right? People eat pizza, people get their garage doors fixed, they paint their house, they fix their roof, their kids go to camps, they get their cars fixed. Like we are in that's the thing about franchising, right? Like we're in industries where people are already buying this stuff every single day, and they're they're they're we're not trying to reinvent the wheel. We're not trying to train them on some new thing that like we have to teach them what it means or what it does. Like in some cases, the goal is just to be a little bit better than everyone else, and and you can win that way, even in automotive. Like, like we call our competitors, they're terrible on the phones. So for me to win, I just have to not be terrible on the phones, and I can win customers. Like, it's as silly as that. But like that opportunity, because the bar is so low, exists in all these different industries. And the key is and the heart, this is the hardest part though, is you finding one that that you can excel in.