Franchise Freedom
Franchise Freedom is for corporate executives who are tired of the rat race, the politics, and the lack of control inside the corporate monster and are ready to break free. Your host, Giuseppe Grammatico is a successful corporate refugee who has worked on every side of franchising, from owning franchises, to working with franchisors, to helping others use franchising to escape the corporate grind. Get more great insights on franchising and entrepreneurship for people looking at career transition at https://ggthefranchiseguide.com
Franchise Freedom
Franchise Warnings & Smart Investing: A Conversation with David C. Barnett
Before you invest in a franchise, you NEED to hear these warnings! 🛑 In this critical episode, Giuseppe Grammatico is joined by business buying/selling expert and author David C. Barnett. They discuss David's newly updated book, "Franchise Warnings," and dive into essential topics for any aspiring owner:
- The "Other Side" of Franchising: What can go wrong and how to protect yourself.
- Due Diligence Deep Dive: Why talking to veteran vs. new franchisees is crucial.
- Franchise vs. Independent: Analyzing the true value and costs.
- The Impact of AI & Technology: How franchisors can provide a competitive edge.
- Ethical Franchising: What to look for in a responsible franchisor.
This conversation is packed with actionable advice to help you analyze opportunities critically and make a smarter, safer investment.
Choose the right path at https://ggthefranchiseguide.com
David's Book "Franchise Warnings" (2nd Ed): https://www.amazon.com/Franchise-Warnings-What-really-before-ebook/dp/B0FD87Z3J9/
David's YouTube Channel: https://www.youtube.com/@DavidCBarnett
Free Book "How to Sell My Own Business": https://www.howtosellmyownbusiness.com/
DISCLAIMER: The information on this podcast is for general information purposes only. Franchising involves risk and careful consideration should be given before making any decisions.
Connect with Franchise Freedom on:
Website: https://ggthefranchiseguide.com/podcast/
LinkedIn: https://www.linkedin.com/in/giuseppe-grammatico/
Facebook: https://www.facebook.com/GGTheFranchiseGuide
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Instagram: https://www.instagram.com/ggthefranchiseguide/
YouTube: https://www.youtube.com/@ggthefranchiseguide
Apple: https://podcasts.apple.com/us/podcast/franchise-freedom/id1499864638
Spotify: https://open.spotify.com/show/13LTN5UzA57w2dTB4iV0fm
The Franchise Freedom: Discover Your New Path to Freedom Through Franchise Ownership, Book by Giuseppe Grammatico https://ggthefranchiseguide.com/book or purchase directly on Amazon.
Someone who's looking at a business for the first time ever, like if they're looking at a laundromat or a dry cleaning business, or a restaurant or, or any kind of business really it may be the first time that they look at that kind of business, but we've looked at dozens or hundreds, and so we can move through the process very quickly. People only pay for what can be demonstrated, and so. Our advice to that guy was, if you can wait two years to sell, make these changes, improve the profitability, you'll ultimately end up with a higher selling price and bonus. You get to enjoy the added earnings over the course of that period of time. at the end of the day, the big litmus test that I always say people should be asking is, what are the different fees I'm gonna pay? And what should I be getting for that money? What will I get for that money?
Welcome to the Franchise Freedom Podcast, where you can escape the corporate trap through franchise ownership. Here's your host, Giuseppe gr, the franchise guide.
Giuseppe Grammatico:Welcome to the Franchise Freedom Podcast. I'm your host, your zepi Grammatical, your franchise guide, the show where we help corporate executives experience time and financial freedom. Very exciting show for you today. You had asked for more guests, for more content and, and different directions, and we, we listened. We got your messages. I have my good good, good friend. We've known each other since I believe, 2020 where we exchanged some podcasts. David C. Barnett. David, welcome to the show.
David C Barnett:Hey Giuseppe, it's good to have be here again. Thanks so much for having me back. I'm happy to talk with you today.
Giuseppe Grammatico:Yep. I actually, I I screwed up and I will admit that in the very beginning here, and I think last time we spoke it was Q3 Q4 of last year, were a, a four timer. This I believe is your fifth time, and I forgot the SNL robe. So that was the the promise I made to you. So we, we owe you a robe. So, I am gonna be traveling, so I may, may have to steal one from the from the hotel when when we're out there. But no, I, I really appreciate it. I'm, I'm really looking forward to the show, and you reached out to me and said you, you know, had had a new book going live. I, I was super excited to have you on, so, thanks again. I, I really appreciate you coming on.
David C Barnett:Yeah, no problem.
Giuseppe Grammatico:So for those that maybe I, you know, I was told once before that when someone sometimes listens to the show, they may only go back a few episodes. we've done some great shows one in particular around exit strategy planning, which was probably our, you know, top five show. On, on that topic number one show. And we've definitely sent that out. If you could give the audience maybe a little bit of background of, of who David is and and who you serve and, and who you help,
David C Barnett:Sure.
Giuseppe Grammatico:helpful.
David C Barnett:Yeah, so, so I'm a a former business broker, so I had a, I've had several careers in sales and advertising. I've been working with small businesses since the 1990s basically. And I spent a few years as a business broker and, business brokerage is a really tough business because basically you get paid when you sell a business for someone, you get a commission and you can go for months and months between deals. And so there was a lot of ups and downs, sort of a cashflow rollercoaster. I eventually decided it, it wasn't suitable for me because I had two young children at home and I went back into the workforce and, and, and took a job with a bank. A few years later, the bank reorganized and I ended up starting the business that I have today which now we're talking still over 10 years ago. Basically working with business owners and people that wanna buy businesses, doing many of the things that business brokers do, but with a very different kind of business model. So today I work with buyers and sellers as a consultant, and we basically have broken down the process of buying or selling a business into steps and people can work with us for whichever steps that they want. So, for example, with sellers, what we do is we do an evaluation on their business and show them what they likely are gonna be able to sell their business for. For some people, they stop right there because maybe they've already identified a buyer and they just needed something to help guide the conversation with that person. For people that want to talk with new people, we'll then create what we, we'll do what we call the packaging. So we'll create a business profile, or some people call it a sim, which is a buyer facing document. That talks about the business, shows different, you know, financial performance exhibits, that type of thing. And then some people end right there. Others want us to help them find the buyer. So we will run an advertising campaign online, much the same way the business brokers do, and we use the same websites like Biz Buy Sell, for example. And we filter the inquiries that people send in looking for information on the business. We get the, the buyer, the prospective buyer to fill out the NDA, et cetera. We, we help the seller manage the process, but we don't act as a broker in any of this. We just charge for each step along the way. And when the business owner finally does sell the business you know, they sell it on their own with our help. There's no commission or anything like that. So it's a, it's a very different kind of business model. And we do the same sort of thing with buyers where we help them look at businesses and help them analyze deals, et cetera. And and it works very well.
Giuseppe Grammatico:That's awesome. So, so done with you type of system. Right. We're gonna, we're gonna, it's a team approach as opposed to. Here's the listing to the broker. You find the buyers and when you do, you know, we'll we'll sit down and talk with them. And I,
David C Barnett:Yeah, absolutely.
Giuseppe Grammatico:have you seen, and you don't have to give specifics, but is it, is it, is it a package you know, you're doing? Is this hourly? Is this just you charge a flat fee for the step? And have you seen a significant savings, you know, for someone looking to sell? I think a traditional broker maybe charges about 10%.
David C Barnett:Yeah, so, so the way that our pricing works is we charge fixed fees for each of these different steps. And we have slightly different fee structure, depending on the size of the business. So people know that when they, for example, if they want us to do the evaluation, if they're a business owner and they wanna sell one day we tell'em upfront, this is what the cost is. And so then we go through the project and we meet with them. We give them the report, we review it with them, they know what they're paying. You know, for, for people who have never engaged with a consultant before, when they hear an hourly rate, they get a little bit fearful that you know, is this gonna take 10 hours or 30 hours? Like, how many hours am I gonna be billed for? And so, we've, we've tried to adopt the fixed price model so that people know exactly what they're getting into. The buyers especially like it because buyers. You know, really often don't have any experience working with consultants so we can show them, you know, here's what, what, what we charge to do an analysis on the, on this project. Most of our analysis projects for buyers, for example are up to just a couple thousand dollars, and some of them are even under. And, and so it's, it's not a lot of money. And the reason why we're able to do these projects so inexpensively is that we've just, we've done hundreds of them.
Giuseppe Grammatico:Right.
David C Barnett:Someone who's looking at a business for the first time ever, like if they're looking at a laundromat or a dry cleaning business, or a restaurant or, or any kind of business really it may be the first time that they look at that kind of business, but we've looked at dozens or hundreds, and so we can move through the process very quickly. That's what makes us efficient, that's what makes it economical for people to use our service.
Giuseppe Grammatico:I love that. And you're, and you're my go-to. So I've we've sent the show out. We've have referred you over the years because I, I really like that approach. It's a lot cleaner. People know what they're getting into. If, if, if listeners are listening in and whether you're watching or listening just to the audio, you'll notice David has a slight accent and David is out of Canada. So question that comes up is, can you work with anyone? You know, a lot of the audience is, is calling, is listening from the United States. So my understanding is you really can help anyone, right? Canada,
David C Barnett:About three, about three quarters of our clientele is in the States. Yeah. So we work with people all over the place. And my, my training and background is from is, is, was learned from American instructors. So, you know, I got my initial training through a, a big franchise in the business brokerage world. And I got what. Went through a certification program from the IBBA, which is based in the us
Giuseppe Grammatico:Hmm.
David C Barnett:And so that's where my, that's where my training is from. And yeah, I live in Canada, but we work with American clients all the time and people in other countries as well. So it, it, it really, you know, the, we're not giving people. Advice on a clause in a contract. You know, people who are going to do one of these transactions, they're going to need the help of a CPA and an attorney to, to get these deals done. And one of the advantages that we bring is that we've just, we've been through this so many times with different people. The conversations that I will have with someone is not. What needs to be changed in a contract, it will be, here are the things you need to talk about with your attorney to make sure are, are talked about, and they're considered in the final paperwork that your attorney puts together for you. So I, I kind of give people a heads up of what to expect, what kinds of conversations they need to have, what sorts of things they need to look out for, and the final details of that. And, you know, creating a, a document or getting advice on, you know. To how to plan your new entity for the acquisition, for example. I mean, that's gonna come from your cpa, so it doesn't, it doesn't remove the necessity for those other players on, but I would argue, I, I help people get through those conversations more quickly.
Giuseppe Grammatico:I love that. And one, and one experience. I had referred someone to you became a good friend over the years wanting to sell. You know, you, you go to a traditional broker, great. What's it, what's it worth? Let's sell it. You asked a question, why do you wanna sell it? I think in that one particular case. That gentleman was, was working too many hours, and you said, well, why, why are you working those hours? Why are you doing these tasks? And you were able to, give them some, some feedback into maybe. Keeping the business, maybe there wasn't a need to, to really, you know, sell the business, but it was because you, you were making money, they enjoyed the business, just the hours were outta hand and just reworking the team. I think you had changed some roles, how to make an additional hire. So that's the other value you may think you wanna sell, but maybe you just need that, that coach, that, that, I should say, to really kind of, you know, walk you through that process. And that was super helpful. So,
David C Barnett:you, you raised an interesting an interesting point. Like a lot of the times when we work with business sellers one of the questions we ask is about their timeline
Giuseppe Grammatico:Right.
David C Barnett:because when we do the evaluation, we often are able to identify sort of low hanging fruit or problems with the business that could be addressed that would really enhance the value.
Giuseppe Grammatico:Hmm.
David C Barnett:So it's, it is pretty normal for us to have a meeting with someone. This happened just the other day. We were reviewing an analysis of what we call an MPSP, most probable selling price analysis with a, with a client. And we showed them that the industry average gross margin for their business was a a certain amount, like 43%, and theirs was only 37. And we said, this means either your inputs are too expensive, you're paying too much for your stuff that goes into each project, or your pricing is off. One of the two. And, and then he kind of, you know, developed a little smirk on his face, and I said, if your pricing was in line with industry, or your costs were in line with industry and you were getting the proper gross margin, this extra six points would be on the bottom line.
Giuseppe Grammatico:Wow.
David C Barnett:That would mean that your profit would be this amount and this would have this impact on your, on your business profitability. He knew he was underpricing. He knew that he wasn't as aggressive as he should have been. He knew that other people were charging more, and I don't think he really understood what it was costing him
Giuseppe Grammatico:Hmm
David C Barnett:because when it comes to selling a business, it's, it's. What results can you demonstrate to someone? You, you can't sell a business to someone saying, Hey, if you own this business, you can make more money because I don't charge enough. Everyone's gonna be like, yeah, sure, buddy. You know, if, if you could have been making more money, you would've been making more money. People only pay for what can be demonstrated, and so. Our advice to that guy was, if you can wait two years to sell, make these changes, improve the profitability, you'll ultimately end up with a higher selling price and bonus. You get to enjoy the added earnings over the course of that period of time.
Giuseppe Grammatico:Right.
David C Barnett:So, you know, to be able to give someone some real input into exactly what the problem may be with what the way they're running their business is something that we really look forward to when we can do it. It requires a time horizon though. We, we have to have people reach out to us and start working with us well before they get to the point where they need to sell tomorrow. You know, because when, when you're at that point. Then, you know, your options are far more limited.
Giuseppe Grammatico:Yeah. The, the the story I always tell, the very short story I always tell is when I sign my first franchise cut the check, shook the hand of the franchisor, and he asked me point blank, what questions do you have? And I said, how do I sell this thing? So that was my exit strategy, right? It was within one minute of signing the agreement. You're always thinking of that because is it the, is it the scale and. Sell in five years, you're building a legacy, maybe passing it down to the kids. Things change, right? The kids may not want the business, they may not want to be involved, or as you mentioned before, you wanna sell. You, you need to start preparing. And now is the time, not, you know, when you're ready to sell. So that's a very, very good point. last, last piece, and I, I wanted to switch gears here a little bit and, and talk about the new book. Where, where does someone start? So they're, they're not sure. Kind of, I wanna sell, maybe they're listening to the show. Maybe I don't wanna sell, I, I need some coaching and consulting, and they don't know what, what service. So where, where is the, the website they should go to. And what do you recommend as kind of a first step?
David C Barnett:So, in fact one of the, you know, we're gonna talk today about the book that I wrote 10 years ago that I've recently updated. There's a, there's another one actually, how to Sell My Own business.com, which has also been recently updated. You can find that on Kindle or Paper Book. Paperback from Amazon, but if you go to the website, how to Sell My Own business.com, you'll be able to download a free copy of that as a PDF. And it's been completely updated for 2025. And it explains the whole process of what is going to happen, what the different steps are, and then there's an another, sort of book within that new edition, which also gives you a bunch of considerations to apply to your own business, to prepare you to actually do a transaction. So kind of a to-do list to make sure that you're, you're in fact ready to sell. So I would recommend people get that. You know, there's also my YouTube channel now. I've got hundreds of videos out there about deal making. So if somebody just has a, an interest in this idea of buying or selling businesses and they wanna learn more about it, just look up David Barnett. YouTube or any of the podcasting platforms, you'll find me right away. David Barnett's Small Business maybe would be your search. And you can start to absorb some of that content. But if someone wants to learn about selling a business, go to How to Sell My own business.com. Download the book or, or if you prefer paperback and get it on Amazon, also available in the second edition. That's just been updated.
Giuseppe Grammatico:Awesome. And we'll
David C Barnett:Awesome.
Giuseppe Grammatico:in the in the show notes. That's a great first starting place. And and I get that question all the time. Where, where do I start? Or what, what should I think about? And that's what I, what I tell everyone, why do you wanna sell the business? Where are the issues? And then obviously go down that, go down that the, review the book and go down the checklist. So cool. So, wanted to switch gears a little bit. So we met, you know, going back probably about five years or so and when I had launched my podcast, and I'll remember right before I'm, I'm looking at, you know, the, the book and franchise warnings and I'm like, wait a second. What, what, what are we talking about today? This, this crazy guy David Barnett.
David C Barnett:I think you reached out for an interview with me and then, and then I told you, Hey, but do you know I have this book out franchise warnings, right? With the yellow cover?
Giuseppe Grammatico:It was our, our agency at the time. That's right. The, the agency reached out. I remember them great agency. They helped me launch the, the show back in Fe. It was February of 2020. We officially launched right before COVID. So it was kind of actually the perfect time because it was a great way to, to network with the, with the show. And I'm like, what am I, what am I getting myself into? So, you know, we laugh about it ever, ever since, but. Great book. It was recently updated. You had, you had reached out.
David C Barnett:Yep.
Giuseppe Grammatico:Tell us about what, what the book is about and, and what updates have you included in the new version.
David C Barnett:Sure. Well, I, I first wrote the book in 2015 and I, I think it's a, it's probably I think the third of the, of the different books that I've written and, you know, I was struck by. Just the fact that there are a lot of books Giuseppe about how to pick the right franchise. And I had over the course of my career as a business broker and just in life in general, you know, meeting other people, doing business i'd, I'd run into people who've had difficulties before in the world of franchising. And I asked myself, you know, where is the book talking about the other side of the coin because we've got all of these books. How to pick a franchise or why you want to have a franchise and all these types of things, but who's telling people about what can go wrong and what kinds of conversations need to be had with franchisors and with other franchisees when you're exploring these opportunities? And so I thought. Maybe I can make some kind of quick download ebook kind of thing. Well, it quickly, quickly grew as I thought about the different, situations I'd helped people through. I, you know, all the times I helped people try to resell a franchise and had franchisors do things that weren't really in the interest of the franchisee. And, and the stories just started to pile up. I, you know, started writing and eventually ended up with a book. And so just like the, the title says Franchise warnings. I take people through what can go wrong with the franchise business model and what kinds of things need to be looked out for, what sort of conversations you need to have. Because people that are in the promotional space for franchisees you know, obviously tend to talk about what's great about a franchise and they're not talking so much about what. May go wrong for someone. So that's the whole purpose of the book. You, you read through it. I mean, of the different things that I talk about in the book how many of them have, have you run into that have actually been things that that you've seen people have difficulty with?
Giuseppe Grammatico:Yeah, it, it, well, it's, it's amazing how, how, what. What I feel is common sense. Yes. I'm a, I'm a franchise coach and consultant, and I, and I'm like, well, this should be kind of standard. But I've talked to people and over the years and like, yeah, I bought a franchise. I don't know, it's, if it's for me, I, I lost money at, you know, blah, blah, blah. And they kind of gave me the reasons. So I, I asked them, did you find it on your own? Yes. How many Fran, you know, so for the example validation, how many franchisees did you speak with? I didn't speak with any. I'm like, you didn't, you know, the franchisor is putting, obviously they're, they're gonna put their best foot forward, but also understanding this is a five to 20 year, typically 10 year, five to 20 year relationship. This is a marriage. But they didn't introduce you to any franchisees? You didn't ask to speak? No, I just, I just decided, yeah, I'm gonna make that decision and move forward that those franchisees are gonna give you the good, the bad, and everything in between. You need to dive deeper. You know, you need to ask them if it was bad, did it get fixed? If it didn't get fixed? It's continue. It's a continuing issue. You should bring that up to the franchisor, but you nailed it. The book, the book is 100% accurate. The book really is not about, is franchising good or bad? Every franchise is completely different in how they run their business. Some, some their sales cycle is much faster. Others will really have these. in place to, to help you do your due diligence. But yeah, it's very, very accurate. It's, it's dead on. And know, when you're doing your due diligence, don't rush the process. And that's where, where I help also people is walking them through, Hey, we know, we know, we told you to do your validation call. Did you do them? And how many did you do? Why did one? Well, you may wanna line up another four or five. You want to get, talk to the new guys, you want to talk to the guys that were in business for five or 10 years and everyone else in between.
David C Barnett:I, I think that that point you just made is really important because people, you know, if, if you talk to someone who's just been in the system for a year, they might be in a little bit of a honeymoon phase.
Giuseppe Grammatico:Right,
David C Barnett:But if you talk to somebody who's been in the system for five years, for example, then you're gonna get a different. Perspective because maybe that person has had an opportunity to come up with some problems or difficulties that they've had to work through with the system and, and so what they're gonna share about their experience is gonna be a little bit different. I also think there's real value in face-to-face conversations versus sort of electronic or telephone conversations. I think that when we are standing in front of each other, we are more. Apt to be open up and, and transparent and share things that we may not necessarily wanna share, you know, in an email, for example. Right. And, you know, especially if the franchisee you're talking to is worried that something that they, you know, disclose might end up being shared with somebody else, that, that could make them look bad.
Giuseppe Grammatico:A hundred percent.
David C Barnett:yeah. The, the, you know, in the recent updates to the book, I added some new sections. One of the sections was on ethical franchising, which is a conversation that you came and had over on my YouTube channel. And but one of the other things that that I wanted to point out is, is in the book I also talk about, you know, the, the, the different ways that you can compare a franchise opportunity with other kinds of business. So there's an example in there, for example, of a pizzeria as a franchise resale versus an independent Fran pizzeria. And how you know, the two different businesses are gonna have very different values, how the sort of franchise fees and everything plays into the valuation. Formula And, and these are things that I think are just important for people to understand because you are making an investment when you get into one of these things. And at the end of the day, the big litmus test that I always say people should be asking is, what are the different fees I'm gonna pay? And what should I be getting for that money? What will I get for that money? And in some franchise systems, there is tremendous value in that exchange.
Giuseppe Grammatico:Agreed.
David C Barnett:I'll give you an example, and this is again from an update that we've done to the book, my own franchise experience because when I was a business broker, I was part of a franchise system. And the way that the franchise was set up is it had a a flat monthly licensing fee. And with that membership in the organization, I got access to a whole bunch of. Services, like basically to these online websites. One of them I mentioned earlier, you know, biz Buy sell, but there were a few others as well and we got access to those websites and we also got access to a really fantastic CRM
Giuseppe Grammatico:Hmm.
David C Barnett:if I was an independent business broker and I was paying for all those things individually. They would've added up to more than the licensing fee. So, so I actually saved money by being a franchisee versus being an independent business. And, and so the point of the book is not to say, like you said, that all franchises are bad. It's to get people to think about. In a critical way, how do I analyze this? How do I figure out if this is a good deal for me? You know, I, I like to point to sort of the large franchisors that are in markets where there's a continuous need for innovation and promotion and things like that.
Giuseppe Grammatico:Hmm.
David C Barnett:And when you get into those franchise networks. Basically you've got those people at head office who are creating all that stuff. They're thinking, you know, months down the road of what the promotions are gonna be. They're creating the advertising and marketing collateral. They're probably preparing the online campaigns. They're, you know, taking care of maybe of the Google AdWords for you locally. They're doing a whole bunch of stuff that independent business owners have to try to curve time out to handle. And when people are busy. People don't, and this is, and, and this is, you know, where a lot of people fall down in independent businesses is they, they're always busy in their business and they don't have time to quote unquote work on the business doing these sorts of things. But in a lot of these franchise networks, yeah, there were people that had office doing that sort of thing.
Giuseppe Grammatico:And that's, and that's a, and that's part of, you know, asking, I always call it a speak with the captain steering the ship. I call it a. third stage in due diligence, the, the discovery day. Confirmation day, talk to the captain. Where the hell is this ship going? If they don't give you a clear understanding of where this ship is going, what they're working on, you know, it could be simply nothing. We have everything nailed down and we are focusing on national accounts. Great. Spoke with another brand the other day. You know, we're embracing ai, we're not renting it, we're owning it. So we've invested a million dollars in ai. Speaking of which. The transcript from this episode is gonna get dumped into our system, which is gonna create not just marketing content, but it's gonna create content for our technicians when they're out in the field. It's gonna be content to, to respond to customers. So I think you have to be innovative people that are constantly fighting it. Now, I'm gonna be old school. I'm not gonna embrace ai. That's fine, but there's gonna be a big, I think, a massive shift. I'm, I'm not saying, you know, there may be some jobs going away, but what are the brands like, especially these, home service brands where you really can't outsource cleaning or mosquito spraying or roofing. But what, what can they do differently? And if AI can help with automating things and, you know, hopefully cutting back your ex your expenses, then, then you, you really embrace it. But yeah, you want, you wanna know what's, what's going on and if they can't give you that answer. And that's really, you know, a lot of brands I'm, I'm finding are, are the founders are, are more involved as opposed to waiting until the end. Because this is all about the match. So in my opinion, if the founder's on, we have founders that, that sometimes do all the calls, sometimes, you know, they get in, in the middle. But if the match isn't there, why drag this on until the end, the this confirmation, discovery day to find out maybe the match isn't there. Let, let's find out sooner than later. Or if there is a concern like, Hey, you really need to be a, you know, an extrovert in sales, but you know, maybe that's someone you, you hire. Are you open to that? Great. Then we can, you know, we can move forward. So. Yeah, it's very, very important. There's a difference in telling people what to do. You know, they've, you know, read the book. I, I send videos. I feel like in my years of doing this, there's this enforcement. So, did you talk to franchisees? Yes, I talked to one, talk to another. I feel like there's this constant, like, you have the guide, but let's, let's, let's stay on top of it. Did you talk to enough people? So I think there's a combination. Play there, get the book, and then you need that person to con, constantly remind you, but. know, ask the questions. Don't, don't feel bad. Don't hold back. If a concern comes up, speaking with the franchisee, bring it up. If you don't like the answer you don't like the direction, no one's tying your hands. No one's telling you you have to sign a franchise agreement. You can say, I respectfully walk away. Maybe this isn't the right match for me. And that's okay. It's you, you, you made that decision, you did that due diligence. You realize the fit wasn't there for that brand. But maybe you wanna look at. different brand in that same industry. So, that choice at the end of the day is always yours to make. No one is gonna ever force you to sign that agreement, but just get educated, get comfortable before, before signing. So that's my rent
David C Barnett:Well,
Giuseppe Grammatico:and.
David C Barnett:I, I've got a question for you, Giuseppe. The, the whole AI and technology adoption and everything like that, I mean, you mentioned just a moment ago, roofing. Right. And I know that there are roofing franchises out there. I someone on Twitter the other day posted a picture of a, like, clearly an AI generated photo of like a mechanical man installing shingles.
Giuseppe Grammatico:Oh,
David C Barnett:And he, the, the, the, the co the comment was. You know, this gonna be a long time before we see this. I think the roofing industry is safe from ai. And then some other people started to respond with images of these like shingle installing robots that looked like little crawling, sort of, like little John Deere crawling tractor things, but miniature that are rolling along a roof, nailing down shingles.
Giuseppe Grammatico:Hmm.
David C Barnett:And I thought, you know what? It's. It's gonna happen sooner than we think. I would imagine that if there's a roofing franchise system, you know, they, people at head office are going to be better able to coach and guide their franchisees about whether or not a certain machine is a good investment or not. You know, I, I had in with, you know, and be a little bit ahead of the curve than than just individual roofers. Maybe being. Maybe calling upon manufacturers or trying things out on their own.
Giuseppe Grammatico:That's a good
David C Barnett:Do you know anyone who's experimenting with.
Giuseppe Grammatico:I know we have, power washing company. So, so on the roofing side, that, that, that's actually new to me. So I, I do not what I've, what I've seen is, and this is still new power washing, you know, using drone operators to power wash and then automate where they're cleaning water towers, they're cleaning the roof of a stadium, you know, all the different sports stadiums and getting ready for the World Cup and the FIFA cup that we're going, you know, we're having right now. So we've seen them use technology utilizing drone tech, so. We have there, there are roofing companies that will scan if they know a hail store storm is coming a, a tornado, well, tornado's hard to figure, but on the east coast we have our hurricanes they know that a certain zip code will be affected or zip codes being affected, they have drones that will scan all the roofs before and after, which is nice. Saves you the time of
David C Barnett:Oh.
Giuseppe Grammatico:up on a roof. So it'll do imagery, it'll show, and it's simple. Right. This is the before. This is the after obviously. This was due to storm damage. Easy to submit pictures. They can even do there's infrared cameras on there. So they, they, maybe the roof looks good, but they can show heat escaping from the roof in, in certain spots. So, yeah, we've seen that technology and we've seen it with power washing. I've seen that, that tech there. So it is it, it's, it's pretty amazing where we've seen a lot of it is. know, we can have a call center where AI is the first line of defense and AI can answer 1000 calls for example, or make a thousand calls all at the same time. I've heard, you know, crazy numbers like that cutting down on, on those payrolls, right? Because it, it's expensive, right? It's not, it's not a, it's not cheap. Manpower is hard to find. So, you know, and, and, and good quality staff. So, AI is it's consolidate unfortunately, I guess unfortunately, unfortunately, depending on how you look at it. is is definitely a taking away some jobs. It's making the franchise owner, the business owner more efficient. I mean, I utilize AI in my business and full transparency, we've cut our costs in half. We've automated just the intro process of getting an intro call and after that I kill off the the ai. I want, I want complete communication between myself and, and that person. But that's interesting. With the roof, I've seen it with cleaning, cleaning robots, self-cleaning. Restrooms that was pretty interesting. What I will say is the technology is expensive. I guess it's gonna be here sooner than we think, but where I, this is still new, but where I anticipate the value a franchisor will bring is that they will, number one, know about the technology before anyone else because they have a team that's just deal dealing with those areas of the business and the economies of scale. if you're a roofer buying one of these machines, it may cost you a hundred K, but if you're saying, well, I have 500 franchisees nationally, we're all gonna buy one. What can you do
David C Barnett:Yeah.
Giuseppe Grammatico:Not only can we cut the expense, but we're gonna give you some, some great fin funding and financing options. So that's what I envision. But again, I, I could be wrong, but that's what I envision with with that technology. Interesting stuff though. See I'm learn learning, learning every day. And that's actually while we're on that topic, that that's part of our, our trip to Cincinnati on, on July 14th. We have a hundred twenty, a hundred twenty five companies coming out and not just telling us why we're great, but going into how AI is affecting the industry and not just the business, but the industry of water and smoke mitigation and things like that. So, you know, technology is good. One of your fellow neighbor a Canadian franchise franchisors you know, they utilize ai and what they've done is they actually came up with a liquid roof, so maybe not a machine installing it, but they're able, assuming your roof is
David C Barnett:Oh, and they give a coating to the old shingles.
Giuseppe Grammatico:they go in with a they can, a spray on coat to match the color and texture of the roof, depending if you have a, you know, a a, depending on the type of shingle, and then a clear coat finish and giving you. A really nice discount compared to ripping off the roof. And again, it has to be in a state that it could be repaired. Sometimes a few shingles need to be replaced, and that's it. But as, as long as it's in decent standing, you can extend the life. And we've seen technology come into play where, you know, you may, you, you may be able to do three or four liquid roofs for the price of one completely brand new installation. So there's a lot of cool stuff out there. Really popular with property managers. So I thought that was interesting.
David C Barnett:Yeah, makes sense.
Giuseppe Grammatico:So what el what else? In, in the, in, in the book any other things kind of stand outs that you would recommend? Someone thinking about buying the book, maybe they never read the the, the first version.
David C Barnett:Yeah, just some updates to case studies. There is new content in there. Like I said you know, things about my own experience as a franchisee. The, we do have the new section on ethical franchising as well as, you know, some, some content relates to FTC inquiries and cases that have happened. You know, basically highlighting where the problems creep in. You know, what are the things that that happen that cause franchisees to wanna complain? And again, you know, not all franchises are bad. Not all franchises are good. I think it's important for someone who's gonna make an investment decision where they could potentially be taking their retirement funds or their home equity or something and putting it into a business. They are informed as to what sorts of things they need to be watching out for or have conversations about.
Giuseppe Grammatico:Right.
David C Barnett:And I think that the FTC data was really informative because it kind of shows these are the, you know, the topics that people are complaining about. And so I was sure to include some of that stuff with the update as well.
Giuseppe Grammatico:Awesome. Yeah, I, I will say, you know, responsible, ethical franchising has been coming up quite a bit and I, and, and I like to, when I, when I work with families, I'll, I'll tell them, listen, you know, the franchisor can't tell you this is. The mindset has to be a little bit different. This isn't an ROI, you're looking at investing in Microsoft and it's gonna yield me so much, or the s and p 500. This is a business, you know, they're gonna give you data on the investment range, but could that invest, could that number be less or could it be more? Absolutely. You know, there were, during COVID we saw some certain costs skyrocket. So you're using that previous year's data, you know, understanding where the data ends and, and where it's renewed. So every year. agreements are being updated. So franchisor can't tell you, Hey, you're gonna invest in this business. You're gonna make a hundred K. They're gonna give you audited financials. They're gonna give you some, in some cases, averages. In some cases. I've seen a, a franchisor, which is really cool list every profit and loss for every single franchisee. I mean, the FDD was literally twice the, the thickness or length of any other FDV I've seen. But that data is all great. It doesn't guarantee you that you're gonna obviously make that so. When you're starting any business, I always say, you know, you know, side of caution, you wanna make sure you have that buffer, that business may take a little bit longer. Life gets in, in, in the way, maybe a, a life event delays the process. But if you're gonna buy a franchise, I think the intention there is, you know, go in with, with an open mind that you're gonna follow that system. if you're gonna util utilize the marketing, it takes a little bit of time. There's, there's gonna be a ramp up phase, but stay close to the franchisor assuming you move forward. You know, ask for advice, ask for help. Some people don't ask for help right away. You know, you're paying a royalty. That's, that's the support you're getting. And I'm not saying call and get a, get an instant answer, but, you know, stay on top of your main point of contact. They're in it together. You know, they're not, they're making money when you're making money. Yes, typically it's a royalty on gross revenue, but they want you to succeed. The worst thing any franchisor wants is a closure or
David C Barnett:Yeah.
Giuseppe Grammatico:Does it happen? Absolutely. Some franchisors don't follow through and other franchisees sometimes don't, you know, give it a hundred percent of their efforts. So, you know, definitely do your due diligence, but also give it all you got. You know, you're, I I always say don't go in if this is gonna work. Go and saying, this is gonna work and I'm gonna do everything I, you know, it takes, whether it's a franchise or a non-franchise business. What, what would you like to add? Because I, I, I'd be curious, you know, I keep saying the same
David C Barnett:I, I'd like to, I, well, I, I'd like to reiterate the point you just made about the last thing that a franchisor wants is for a location to close. I'm, I'm actually my ARC firm's name has given out to people in Fran in three specific franchise systems. I've worked with them extensively over the years. When people call head office and they say, you know, I think I'm gonna get out. I want to sell, or I wanna close or something, they, they give our name out and it's because they want. To get that person help to be able to sell or understand, you know, what their location may really be worth if it hasn't been performing well. They want someone who's gonna show the person, you know, here's exactly what can be expected if you do try to sell, because to your point. They do not want the number of locations to go down. This is one of the key things that's in the FDD is they get to show how many locations they have active. And obviously a franchise network that is constantly growing
Giuseppe Grammatico:Right.
David C Barnett:is going to be you know, a better story for them to be able to share with people than one that is seeing an attrition in the number of locations. And so. It's absolutely true that the franchisor wants people to be successful. They want them to be operating for the long haul. That's what is most lucrative for the franchisor, and it's what makes it easier for the franchisor to then expand and recruit new people. So I, I don't think any franchisor out there signs people up with an intention of having them fail the, when you are starting a new location, though, you, you are starting a new business. Like you've gotta get customers who presumably are operating or buying something from other people. And so, buying a franchise certainly does make it easier because you're, you're given all the tools, the systems, the processes, the branding, all that kind of thing upfront. But it's not without its risks. You still have to get the customers, you still have to reach that break even point. I think that looking at the experience of other franchisees is very instructive. It, it is helpful. I, I kinda like the idea of the, the franchisor that included everyone's p and l because I think the one big takeaway people would get from going through that if they, if they looked at it carefully, is just the very ability that's possible
Giuseppe Grammatico:Right.
David C Barnett:that, you know, you can end up with a really spectacular location or one that is struggling. We just don't know. And that. To me that that's really responsible because it's highlighting the fact that small business is a risky endeavor. It is not, definitely not a risk-free thing to get into.
Giuseppe Grammatico:Absolutely. Yeah. I, I didn't, I did not realize that with the franchise companies that, that is interesting. And I, and I think that's great. You know, you know, they want, they want you to succeed. And I think it starts with that in it, it starts with, before even making that decision going back to responsible and ethical franchising that conversation's between you and the franchisor. And to your point, you know, they, they wanna set everyone up for success. So on the franchisor side, if they don't feel the, you know, the fit's there or they feel it's, it's there, but they're like, man, you really gotta be selling and you never sold a thing in your life. This is gonna be a struggle. These are our thoughts. We can make it work, but you're gonna need some assistance with maybe a seasoned sales person. Are you okay with that? Can the franchisor approve you and then you decide not to hire that sales person? Absolutely. Will you struggle more than likely? But ultimately it's a business. You're not an employee. They can't force your hand, obviously, in, in hiring that individual. In some cases they may say, well, in order to come to training, you know, you need to bring a, a gen, the general manager running the business with you. So, that will be some requirements. These are not surprises. These are things that will be discussed well ahead of time, ultimately it's up to you to execute on, on that blueprint. I did, I do get some very disturbing questions. you know, I, I had a, a call the other day that said I heard I heard on, on a show or somewhere, maybe it was on YouTube, that you can't lose money with a franchise. And I go, really, I mean, what is, what is a franchise? It's a business. And I go, honestly, if that were the case. We wouldn't be talking. Right. Right now I would buy every damn franchise out there. And I said that jokingly. It was a younger guy,
David C Barnett:Listen, Giuseppe, if that were the case, the the banks would open all the franchises.
Giuseppe Grammatico:Right,
David C Barnett:because they already have the money, and if you, and if they were convinced it was risk free, that's what they would do with their money. Yeah, there, there certainly is risk in, in the new edition of the book, there's actually a chapter there. I don't know if you took a look at it. It's my advice to franchisors where, where I give some feedback and advice to people that run franchise systems and I say like, here are some of the things that you should be looking at in, You know, in, in, in functioning better or being better able to, to show people that you are one of the people that is, that is actually taking these concerns into a consideration and you're, and you're trying to do the best you can at, at i, I don't know if it's, it's really, it's doing the best at. Creating a good opportunity for people, but, but doing the best at finding the right people for the opportunity. As you know, the fit between the individual and the business is really important. And if, if you know, the, the difference between success and failure is a sales effort and the sales. Skills of a, of a, an owner. And in all likelihood, at the beginning, when you're starting off, the owner will be the only salesperson. And for example, that skillset, those traits have got to be at the top of the list of who's gonna get into that opportunity. I, so to me the, the fit is gotta be the number one thing and then the other stuff, you know, you just have to make sure it makes sense, right? Like, you know, are there other people already in that. You know, segment in that community, how many other people are in that community doing the same kind of business. It's the same sort of analysis you do when you're thinking about starting any kind of business.
Giuseppe Grammatico:Yeah. You, you have to, you know, you should contact your competitors one, one a term if you want to use this, if you're researching on your own. outta cur, if you're just calling cold, right? You're just calling contacting a brand who is your franchise avatar. They know nothing about you. Maybe you're just calling, you got an intro. Who's your franchise? Who? Who's the ideal fit for this type of business? You may fit check off every box, but they'll come back and say, and also you need a hundred liquid in 250 net worth. Well, that may be a stretch. Well, that alone could really suffocate your business. You know? Could you fudge the numbers Technically, yes. But where,
David C Barnett:Yes.
Giuseppe Grammatico:that gonna end up? When you know you're up and running in the business and you run out of funds? Was it the FraNChiS or did you run out of funding? So they're gonna have certain requirements. We, we get those requirements, we're crystal clear. But if you're calling cold and you're just say, Hey, I, I want more information. Who's your, who's your ideal franchisee or avatar? They're gonna list financial requirements and role requirements. That alone, is that a good starting point? If you should have that, that second conversation or not? Or maybe revisit later on when maybe you have sufficient funds. So, as we're, this is, this is a, a, a great conversation and I encourage everyone to pick up the book. And if you're a franchisor, you know, hit up David, you have the website. We're gonna put all that the web, in the in the show notes. So
David C Barnett:If you buy it on Amazon, make sure it's the 2025 release because there, there are some copies of the, you know, 20 15 1 that people are trying to resell. So it's still up there. Just make sure it's the new, it's got, the new one has a big crest on it. This as second edition. And yeah, it's available now in paperback and Kindle.
Giuseppe Grammatico:Awesome. Any as we're, as we're finalizing the show any last piece of advice to. You know, we've got a lot of corporate executives, a lot of individuals looking to invest in their first business, whatever. It's a, a resale, a startup or a franchise. Any last parting piece of advice that maybe we didn't discuss?
David C Barnett:Yeah, you can consume all kinds of content about small business and you can convince yourself with enough. Content that one thing is better than the other. What I would say is that in any business, any small business the owner is at the center of everything. And so what is really important is to do an analysis of your own skills, knowledge, and expertise, and figure out what you are good at and what things you can do to improve a business. And I think whether you start a business, buy a business, or engage in a franchise, there's gotta be a fit between what that business is and the, the way that it helps. Clients and cu you know, customers and the skillset and knowledge that you have because you can, you can either get into something you know nothing about and then you are gonna be a student and you're gonna be learning and you're always, you know, gonna be sort of a little bit behind the curve. Or you can get involved with something where you already know that you can bring potentially a competitive advantage to your business because of your background and expertise.
Giuseppe Grammatico:Hm.
David C Barnett:Experience and what you've been doing and what you know, and try to figure out a way to leverage your own personal experience into whatever business, you know, endeavor that you try to get into.
Giuseppe Grammatico:Perfect. That's exactly it. Do, do, do the self-audit. If I were to add one thing, which I see is a consistent issue, get your finances in order. Just, we're not saying, I'm not saying you know, double your savings, but just get them in order. the value of your home? What's the mortgage? Where are your investments? Are they in I retirement or not? I see so many people have no idea, you know, what, what their finances look like. So get that in order along with what are your monthly expenses? If I were to leave my job who's paying my mortgage and my student loans and everything else, does my spouse or partner, you know, are, are they working? Are they bringing in income? your expenses, get your net, you know, what you're bringing, bringing home, what are your investments, house and other real estate properties look like. That alone is a, is a great exercise, which I update on a monthly basis. Personally, I have an Excel spreadsheet, so, I encourage everyone to, to start there and, and maybe you don't know if the timing isn't right, you can, you know, work with someone like David, work with someone like myself. We can put you in front, front of a funding company. They'll do a, a free analysis for you. Just giving you high level what's. What's available. They may come back and say, you know, we may agree franchising is great. Owning a a resale or, or, or a non franchise business is perfect, but gotta get that credit score up a little bit and maybe a little bit more in savings. Why don't we, why don't we talk in six to 12 months? Get those numbers back up. That's okay. That's, that's progress. Sometimes you're mentally there, but financially not. Or maybe it's a startup and it has much lower investment. Keeping in mind, maybe it'll take a little bit more time to ramp up and you're okay with it. you have something to compare it to. So de definitely do that self-audit, get the financials. We can definitely spend a whole a whole show on that. But that's, I think that that's the basics. Don't look for the, the sexy businesses on biz Buy, sell or the franchises. Just do an internal audit and let the family know and make sure everyone's on the same page. A lot less family drama. That's the most important stuff, family. Let the family know. Don't buy a business and let your spouse know after the fact. You know, that's that that'll save that'll save a few marriages right there alone. So, but David, it was a pleasure. I we could definitely be talking for hours looking forward. I, I think you know, this is I, I believe number five. So we'll do an annual show. You have quite a few books out there and topics that we can discuss. So I think, we'll, we'll keep this we'll keep this to an annual thing, if that's cool. I really really enjoy. conversations, I learn a lot. And we'll even link some of the previous episodes, especially the exit strategy planning that we talked about. You know, it was only, I think that was about, I think two or three years ago if I'm, if I'm not mistaken. But we'll link that to the show and anything you need, da David's your guy. Highly, highly recommend'em, and apparently other franchise companies do as well. I appreciate you coming on and we'll we'll definitely talk soon.
David C Barnett:Awesome. And don't forget, if you own a business how to sell my own business.com, you can download this one for free give you an idea of what you're, what you're gonna be involved with if if you decide to sell one day.
Giuseppe Grammatico:I wish I had that book when I sold last, but hey, next one. Thanks again.
David C Barnett:Thank you.
Thanks for tuning in if you want to learn how to make the transition from corporate to owning your franchise. Join Giuseppe on the next episode. You can also follow on all social media platforms and achieve financial and time freedom today.
