Franchise Expert Reveals How Franchising Really Works | Cliff Nonnenmacher

Most people think buying a franchise means buying a business. It doesn't - and the gap between those two things is where most franchisees lose money.

Cliff Nonnenmacher has spent 25 years and owned 12 different franchise brands, and in this episode he pulls back the curtain on how the industry actually operates - from why you can never truly own a Chick-fil-A, to why food franchises carry some of the worst margins in the business, to what really happens when a franchisor decides to take a location back.

Matt and Cliff also dig into where the real money is being made right now - a wave of home services and trades franchises riding a labour shortage most people haven't clocked yet - plus the real numbers behind buying in, financing a franchise with an SBA loan, and why going it alone without an expert is one of the fastest ways to pick the wrong brand.

Chapters
0:00 - Intro
0:47 - Matt's Franchising Backstory
5:21 - Does the Owner Have to Work in the Business?
6:25 - The Big Players: PLCs and Mega-Franchisees
14:03 - How Corporates Decide Which Units They Keep
19:19 - When a Good Operator Still Can't Turn a Profit
23:42 - The Chick-fil-A Model: Operator, Not Owner
28:50 - Cliff's Pick, the Feminisation of Men Thesis
36:04 - The Real Numbers on Buying a Trades Franchise
40:49 - Territory Length, Renewals and Who Actually Buys These
43:43 - Why Use a Consultant
47:41 - Closing Out

Follow Cliff
LinkedIn: https://www.linkedin.com/in/cliffnonnenmacher/
Beyond the Brand Book: https://amzn.eu/d/095Ovio5

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Connect with Matt Haycox, No BS Business Podcast Host & 8-Figure Entrepreneur.

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Transcript

SPEAKER_01 0:00

Guys, Matt Haycox is here. Welcome back to another episode of Nobollocks with me, Matt Haycox. And today we are talking franchising. I don't think I'm actually pretty sure we've never talked franchising on the show before. So I'm looking forward to this. And to do it, we have got none other than Cliff Nonamaka in the house. That is a tongue twister of a of a name, but I think I got it right. And Cliff is a franchise expert, and he is the founder of Franosity. He also hosts a podcast all about franchising where he interviews uh the founders of franchise businesses, so the franchise oars. Uh and he's just released a book as well, which I think is called Beyond the Brand. Is that right, Cliff? That's that's right. Beyond the brand. Thank you, man. What a memory I've got. Listen, thanks a lot for being here, buddy. Like I say, we never taught franchising before. It's something that I'm I am kind of interested in the concept, and my my views as my career has gone on uh have changed dramatically. And I'm sure you'll be pleased to know that I've moved to the end of uh of of liking franchising and appreciating franchising. But when when I when I first started in business and I was always looking for uh for business opportunities for myself, um I'd always see franchises for sale. Uh, but I just always think that they were just such shit opportunities. You know, I'd be looking at like, I don't know, pay 400 grand to buy this, and you know, the the seller discretionary earnings are like 25k and stuff. I'm thinking, well, that that that just makes no sense, you know. Not only is it a terrible return, it's a business I've got no control of, and you know, and I also I think that there was a big big ego thing in play as well, that you think, well, franchises, sorry, franchisees aren't real entrepreneurs, you know, they're they're they're just they're just people who uh can't do it for themselves, so they go and copy someone else's model, and that's why they give all the money away. But then as time has gone on, uh, you know, I've I've well I've come to appreciate two things. One, that not everybody is actually built to be that founder and that and and that complete um well let's say evolutionary, revolutionary entrepreneur to come up with the concept, but you know, they could be a great manager, and there's absolutely nothing wrong with that. Uh, and secondly, uh, you know, the real art of business is not having the idea, but it's executing the idea in a in a in a clean, uh, standardized, profitable manner. Uh, and you know, we can we can defer to the uh what's the book, the emyth, uh, which I think is the uh is is the absolute oracle on this. And something the emyth always talks about is how the best business in the world is McDonald's. Uh and uh you know people always pull a face and well their burgers are fucking disgusting. Uh but that's obviously because they're missing the point that it's not about whether or not the burgers are any good, but it's about the fact that you can walk into any McDonald's anywhere in the world run by 18-year-olds who can barely tie their own shoes and you know what you're gonna get because the operational procedures of that business are so slick. So I'm a franchise convert, doesn't necessarily mean I want to have one myself, but I can maybe Cliff's gonna change and change my opinion. But I definitely definitely see the value for business owners and in the business ecosystem. So uh I feel like I've just done my own podcast there, Cliff, but I almost almost don't need you.

SPEAKER_00 3:17

Well, yeah, well, you gave us the context though, like where you're coming from. And a lot of people come from that place. They're like, I don't want to pay royalties, like that's it. They're just disciplined investors. I don't want to pay royalties, therefore, franchising's out. Let me go look for other alternative business investments, right? Either hang your own shingle, do a licensing deal, you know, do something uh else. I mean, there's a we have a lot of options as investors, as you know, right? You could you could put money in a lot of places. It doesn't always have to be franchising. I personally feel, and I understand where you're coming from, I personally feel that franchising as a business methodology is one of the most brilliant methodologies ever created to create wealth for for maybe ordinary people, just regular people. We're not talking about Elon Musk, we're not talking about Steve Jobs. Maybe we're not talking about you, right? Maybe you're just too visionary, you're too entrepreneurial, right? It's like I don't need a franchise, and that's great, right? You could go do your own thing and create, you know, wealth. Um, but if we're dealing with a middle manager working in the banking system, working in finance, disenfranchised with corporate America, this, you know, they don't have to invent anything. You kind of just said that. You don't have to invent anything. You don't need to be a disruptor, you don't need to be a visionary, you don't need to be a decamillionaire, you need to just have a, you just you have to have a desire to want to be successful, and you have to be able to execute, which is key, a proven business model and not deviate. We were talking about that in the green room, right? Just like I would take the business and do something different with it, right? That's what people want to do. But people want to get involved in franchising, it's show me the blueprint. Where's the roadmap to become successful? How do I break even remarkably fast? And how do I scale and profit, uh, make a profitable business? Key that doesn't rely on my day-to-day involvement. You mentioned the emyth. Franchising is designed to teach people how to build a business that doesn't require their day-to-day involvement. If you bought a subway, they don't want you making sandwiches. You mentioned McDonald's, the owner shouldn't be.

SPEAKER_01 5:23

Is that true? So I wasn't really aware of that. I mean, I I mean, I assume they maybe don't want you flipping the burgers, but I would have assumed that uh that if you're going to be running, let's say, a one-unit um type franchise, you know, McDonald's or a subway or whatever you want to say, I would have assumed you would be the manager and and and not be paying out for a manager.

SPEAKER_00 5:44

Interesting. Crazy stat with McDonald's, because you brought it up a couple of times. It's not that profitable. I don't know if if we did the research, I'm not sure that we would be able to find very many single unit uh McDonald's franchisees. I'm not sure. That's a great question. And and you're challenging me to get the answer to it, and I'm gonna actually look that up. How many franchisees own one McDonald's? And you're probably like, well, why why would you challenge that? Because it's not that profitable. Like if you spent all that money to buy one, it's like it's not that profitable. When you meet McDonald's franchisees, they usually own five, maybe ten. Now they're skin, now they're EBITDAs over a million.

SPEAKER_01 6:26

So I've just been actually asking ChatGPT in the background to uh to go to go and give us an answer, but it's it's it's not always done it. Here we go. It's no, it's gathering because I always have mine in thinking mode. While it's thinking, I'll I'll I'll ask you a question because it's interesting you say that. Whilst we think of franchising all that, so whilst I and many other people would think of franchising for the um for the one-man business operator for the small investor, when it comes to some of these big brands, say McDonald's, so I used to play poker actually. Uh I used to play poker with a guy who was, let's say, head of corporate development or whatever he was for McDonald's, and he used to look after the 10 the 10 franchisee person, the 15 to 20. And he used to tell me about these guys who who were all who were all incredibly wealthy, you know, from having it. Also, uh, I mean, again, I I knew a guy in the in the UK who was a massive northern KFC franchise or uh sorry franchisee. Uh but ultimately and he sold the business for a lot of money, but he also had made all the properties, he built all the properties that he put the KFCs into, which which he had then retained. But also, particularly in the UK, I guess you have the same in the in the in the US. Uh, I've never seen it with McDonald's, but you know, with like Papa John's and some of these businesses, they have massive plc companies that you know the that own you know 50 Domino's pizza locations, 75 Papa John's locations and stuff. So yeah, to talk talk to me about the bigger scale of that. Why have we got PLCs uh you know, where again the the st not the stereotype, but let's say the generalization would be hang on a minute, plc business with some of the best paid talent available out there, and they've gone and just bought some Papa John's.

SPEAKER_00 8:14

Right. Yeah, I mean when you see some of the largest franchisees, they're going to be in the food space. I mean, if you just yeah, anyone can look this up on like the if you if you look at like the not not entrepreneur, entrepreneur 500 will just list the brands. If you look up like Franchise Times, the multi-unit ownership uh ranking of franchise Times, you'll see people doing four and a half billion dollars in in annual sales, and it's all food. Uh his name is Greg Flynn. He's actually out of Atlanta, he's the largest franchisee. This is somewhat of a myth bust, right? Because if you grabbed a thousand people and started saying, can you create wealth in franchising? You know, a lot of people are like, nah, you know, you replace your income. You can maybe make six figures, you know, you're not going to become big. It's that's not true. There are multiple franchisees that do over a billion in sales. There are franchisees that are bigger than the franchiseor. Do that math. Remember, the franchise or makes their money on royalties. So whatever your gross sales are, they're making five, six percent. Some of these franchisees are bigger than they are.

SPEAKER_01 9:17

So take take Mr. Flynn then, right? You know, using that example. What why is he not out there? Now he's got this particular scale as well. I either one of two things, inventing some of his own concepts, because I mean he's he's obviously clearly able to execute at this point, or also, you know, if if they if the franchisees are bigger than the franchise oars, why are they not buying out the franchise or some have.

SPEAKER_00 9:42

Yeah, Arby's was acquired. There are brands that acquire the parent. That's very true. You know, the food space, especially during COVID. During COVID, you could buy a couple of hundred Burger King. I mean, there's a lot of brands that were fire selling because they thought the world was ending, and you know, a lot of people acquired brands for pennies on the dollar during COVID, and it just made people like Flynn and Dahani Group and all these other groups that are doing, you know, 200, you know, uh TGI Fridays and 100 Panera breads. You know, again, it's not one, like you said. It's it's like you're not creating wealth with one, two, or three. You got to really scale those types of brands. The margins are razor-thin, but it's food. It's an essential service during COVID. So food was open. So everyone said this is why we wanted to invest in food. I'm not a food guy. I happen to not like food. I don't like razor-thin margin businesses. I wouldn't get out of bed for 10% net. It does nothing for me. I need to make 20, 30% to the bottom line. And food doesn't.

SPEAKER_01 10:38

Are they razor thin because food is razor thin? Or are they razor thin because typically these food ones are big brands that people like, the big brands, so so the brand owners just you know rape the franchisees because they can?

SPEAKER_00 10:52

Yeah, it's a good question. I mean, we saw that with Quisnos, right? It's like, well, Quisnos was a superior brand to every competitor in the subspace, including Subway, uh, that was the reigning king for decades. And then Subway, uh, excuse me, Quiznos comes around and it's like way better bread, uh toasted, no less, warm, just an amazing experience. Greed killed that brand, right? But when you look at a brands like Arby's or Chick-fil-A or these other companies, um, I don't I think that the razor-thin margin part is the consumer has an appetite for a price point. And one of the one of the biggest problems with marketing was the fact that they were pushing five dollar footlongs for many, many, many years. When when you when you tell the world that your product is worth $5, you can't charge seven. Like you just told the whole world it's a $5 footlong. Not to mention it's not even a footlong, which is another issue in a class action lawsuit. Not to mention that the product you're buying wasn't even tuna fish. I mean, there's a whole bunch of issues to unpack with some of these brands, right? No one really knows what they're eating is you know, what percentage of chicken is in the word chicken. So there's a lot going on there. So price is only an issue in the absence of value. These brands cannot charge a premium for their product because their product is just marginal at best. And there's a market for that. The the cost of food, the cost of labor, the cost of insurance, the costs in the food space, throwing product out that doesn't sell, the shrinkage, the spoilage, the theft, the issues. It's just an industry that used to have an impressive margin that today, when I say today, in 2025, entering 26, I think food is negatively symmetrical. And I like asymmetrical investing. I don't want to spend a million dollars to make 150 grand. It makes absolutely no sense to me. And you know, even Flynn, by the way, is investing in non-food right now. So the for the $4 billion guy, if you look at his most recent acquisitions, they're non-food dry goods.

SPEAKER_01 13:02

Let me hit you with a mad stat. You are probably not subscribed. Seriously, 58% of the people who listen to this podcast every single week do not hit that subscribe button. That is more than half of you. So let's fix this right now. The goal here is super simple. We grow the podcast, we bring in bigger guests, and we give you even more no bullshit, actionable insights to level up your business and to level up your life. Now, in business, you set smart goals that's specific, measurable, achievable, relevant, and time-bound. Well, here's one for you. Let's get that 58% down to well below 50% in the next three months. So please do me a quick favor. If this podcast has ever given you one good idea, one piece of advice that's helped you or helped your business, then hit that subscribe button. It takes a second, it costs nothing, and it means that I can keep bringing you even bigger and better guests, giving you even bigger and better insights. Go on, do it now. I'll wait. Done? Perfect. Great choice. Let's grow this together. And how are the how do the corporates decide? Because a lot of these big corporates, uh, particularly in food, they have they have corporate owned uh owned units and they have and they have franchise franchise units. I know some of the different kinds of franchise brands may set up purely as as franchise or operator and not actually do anything themselves, but a lot, a lot of the corporate food brands operate their own units. How do they decide that? I mean, do they do they kind of steal the cream again? Is it like, ah, this is this is a a McDonald's on the Las Vegas strip in the busiest hotel in the world. We're gonna have this one for ourselves, and this is some piece of shit in the out back of Arkansas or something, you know, we're gonna give that to some local idiots.

SPEAKER_00 14:43

Yeah, you I mean, I don't really know the methodology. Uh I could tell you that they carve out, they already know what what their distribution channel should look like. They know where they want to be corporately. Some of these corporate locations are nothing more than saving attrition, right? Instead of owning, instead of actually building a location somewhere, right, wait for attrition to rear its head and just take it. And that's a lot of times how brands protect their brand identity is that when failure occurs in a market, I mean, Dunk Burger King is a perfect example of this. It's not Burger King is not McDonald's. McDonald's is way more stable in terms of when they open and when they operate, they typically stay in operation. Brands like Burger King and other brands that compete, they'll close, even Wendy's, they'll close locations. I was about to say Wendy's, Wendy's is always closing, isn't it? I mean, Wendy's closed an iconic flagship location in near their corporate headquarters. I mean, that that's embarrassing. Like they should have fought like hell to keep that thing open. I don't know why they didn't, but there's a lot, you you know, you look at like Chick-fil-A, their original location is still operating. You know, it's just a superior brand. Uh so when you look at how corporations end up owning locations, what I have learned over 25 years of doing this, in many cases, attrition presented itself in Miami, in Houston, in Arizona, in Las Vegas. You know, what why was there attrition? It's not always because the brand is not performing well. People have a lot of issues, right? There's divorce, there's gambling, there's drugs, there's health issues, there's all sorts of issues that would make an operator become a poor operator and why corporate needs to intervene and take that location over. So it's a multitude of things. They've got locations on their target list. We want to expand in that area, we want to put up a barrier to entry, they're getting money for redevelopment, right? A lot of these communities that are crappy are putting a ton of money in there, trying to bring business owners in with tax incentives. It happens to Elon. It happens to businesses all the time. Uh so there's a multitude of answers to that. But one of the things that I've learned is attrition. Attrition is a great way to gobble up a location for really uh pennies and the dollar.

SPEAKER_01 16:57

So, how how much can a corporate get involved? I mean, obviously, you know, you you've got your franchise rules, like, you know, you must buy the I mean, we're still talking, let's talk food here because it's something people understand. So, you know, you've got to buy your burgers, I assume, from the McDonald's supplier, you've got to buy your potatoes from from the person. So they can't start substituting and that kind of stuff. But let's just say whilst they might be running to the blueprint, they're not they're just not doing a very good job of the blueprint. You know, they they hire real morons for staff, you know, they they let the staff come in in dirty uniforms and don't wash their fingers and stuff. So the the unit's just not trading well. They're not, let's say they're not doing anything illegal, they're not doing anything wrong, wrong. But you know, but but but Ronald comes in for an inspection and he and he and he and he looks around and he's like, Well, these guys have done nothing illegal, but I could get 10x out of this store because you know, just because the the the franchise owner is a is a total simpleton. You know, what what what what are the rules? What what can they do to get this brand? Because ultimately they want to protect their brand, right?

SPEAKER_00 18:02

100%. And they have every right to do that, and the legal document that was signed has the teeth to enforce that and even default the franchisee and take it. And that happens all the time. That happens a lot where a franchisee goes rogue, uh like you just everything you just described, which violates every brand standard, maybe even health inspections. You know, like you said, they're not doing anything illegal, and it's like, you know what, maybe maybe if you actually peeled back that onion of everything you said, it actually does equal a uh a food violation, you know, a law-breaking violation as it comes to the temperature of the cooler, you know, the cleanliness of the restrooms and so on and so forth. You said the dirty fingernails, you know, you're violating the hand washing policies and keeping your hands clean and all those things and hygiene. Yeah, a brand can obviously, obviously, every infraction you have an opportunity to cure the default. A cure in many cases is 30 days. You have 30 days to cure. There are certain uncurable events like insolvency, bankruptcy, you know, being in prison, things like that, where there's no option to cure, and that's it, you're in default, and we'll proceed to take over the location or force a sale, right? Force the person, it's like you need to sell it and get out, exit our system.

SPEAKER_01 19:19

Well, what what what about just let's say simple economic problems? So let's let's turn this the exact opposite way around. You've got you know, I I'm I'm in there running it, and I am doing an absolute stellar job, right? You know, no one can fault me in any way. They accept that I am doing everything possible to trade and market the best that I can on that unit. However, it still, let's just say, loses $100,000 a year because um because by the time I paid my royalty fees and my this fee and my that fee, it's impossible it's impossible for anyone to make any money. Um, I mean, if that was in a non- I mean I have this closing because I operate bars quite a lot, you know, and and and particularly we've got some units with you know with big overrents now. And I ultimately, in that situation, sit down with my landlord and go, listen, mate, you might like getting 500 grand a year, but I can't pay it. So you've got two choices. You know that no one's gonna trade the unit any better than me. If you want it, take the keys. If you don't want it, I'll pay you 300 grand. And and that's it, take you know, t tak take take it or leave it. So, you know, take taking taking that to the McDonald's concept, it's like, well, hang on a minute, right, right, Mr. McDonald's, I'm doing the best possible to pay you four hundred grand a year and lose myself a hundred grand a year. Where is the sustainability and equity in that I I need a discount to you know to be able to be able to give you a unit that that still exists? Do they do they play on that or do they just go, well, fuck you, we can't shut it down, mate?

SPEAKER_00 20:46

Yeah, if you're paying 400 grand in royalties and you're losing 100,000, there's something operationally inefficient that needs to be looked at. And that example, um something went terribly wrong, and they would send a team in and figure it out, do a forensic accounting, and determine here it is. You are grossly overpaying your labor. You are you know doing this wrong.

SPEAKER_01 21:08

So so so so so maybe maybe I I think I made my example too complicated. I guess what I'm saying is I'm doing the best possible, but but but but the reality is that geography just does not have enough customers, and there's never going to be enough customers, and there, and therefore I can't make any money. But but the franchise or is making some money because they earn money on every piece of chicken that I buy off them. Uh, but it's just impossible to make any money because there is not enough footfall. Um what happens in that situation?

SPEAKER_00 21:35

It it ha it happens, it's a kind of a one-off situation. You know, will a brand like reduce royalties? Rarely will a brand mess with royalty collection. You don't want to set a dangerous precedent like that that you're willing to just negotiate, especially, you know, they don't even negotiate pre contract, let alone post. Like this is the contract, this is the deal, these are the demographics. This is the area. We told you you were early. You wanted to go there and skate to where the puck was going instead of where it's been. Like you wanted to be in Floramount, Texas. Everyone's moving in there, right? You had to be in that area, Katie, whatever. And you're early. It happens all the time. People are early. People fail. And then someone comes in, takes it over. They have a longer run way of operating capital and they make it a huge success. So there's risks of being early, and you're you have a lot of good examples, right? And that that's real world. It's like, listen, people are moving to this area. I want to get that prime real estate. I want to open up this particular business there. In many cases, people are really, really early. Um, and I've seen this with strip malls. Strip malls, it's like constant turnover in the strip mall. It's gonna, it's going to be a rock star class A space. You're just early. And if you're early, for anyone listening, you need to have a ton of operating capital to extend your runway. And people do it marginally finance, and it's like, no, this is gonna be great. No, it's not. The customers aren't there yet. It's a brand new strip mall that has zero history of one car ever pulling in that driveway. Think about that. Versus a strip mall that's been around for 20 years that actually has data from placer.ai that says 10,000 cars a week pull into that strip mall. It's a very different situation. So big brands, they spend ungodly amounts of money on demos. They're tracking cell phones. I mean, they've got a ton of data to tell you to the right of a decimal point how many cell phones, how many cars, what's the foot traffic in that location. It will either win or not. If it's a not, they're not gonna do the deal. They will not do the deal if the demos do not show sustainability to the brand. They won't do the deal.

SPEAKER_01 23:42

So we know we don't like food. We're gonna talk about some stuff we do like, but just before we stop that, I'm gonna tell you that ChatGPT can't really give us an answer about McDonald's because it's told us that they they don't publish the figures. Um they say what we can say is the vast majority of McDonald's restaurants are run by multi-unit operators, single-unit operators are the minority in mature markets like US McDonald's. Uh McDonald's itself does confirm that 95% of restaurants are franchise run, but they give no split per unit per owner.

SPEAKER_00 24:17

Right. But see, isn't that crazy? So think about that. So like I find that fascinating. I know and it's not the exact answer you want, but think about this. You go to McDonald's and you want to buy one, and it's like, look, man, you're gonna have to own multiple McDonald's to make a good living, and then you go to Chick-fil-A, and they go, here's the deal. You're gonna own one and you're gonna make a shit ton of money. One. And it's like, well, wait, do I own it? Nope. You will never own the Chick-fil-A that I'm gonna award to you. You will only be an operator, and I will share in profitability with you. But you'll end up making several hundred thousand dollars a year.

SPEAKER_01 24:58

Just explain that to me then. So what so what they don't know? Nobody knows this.

SPEAKER_00 25:01

So it's a good conversation because nobody knows this. Everybody thinks you could buy a Chick-fil-A. You cannot buy one. They're all corporate owned, all of them. It's a multi-billion dollar company, they're all corporate owned, and they have destroyed everyone at their own game. Everyone. Think about what they've accomplished, and they're closed on Sundays. They leave a billion plus on the table closed on Sundays.

SPEAKER_01 25:22

But so when you say then that you can never own, but what do they do? Do they take operating partners on the city?

SPEAKER_00 25:27

So this is it, this is what you do. So Matt would say, Matt became obsessed with with Chick-fil-A. You became obsessed with it. Right. Like you have to own that model. You're obsessed with it. So you then apply. They like you. You're like, what's the terms of this deal? Where Matt, today's your lucky day, we're expanding it to Dubai. You gotta be kidding me. What a dream. Okay, I always wanted to own one. Well, Matt, you're not gonna actually own one, but you can operate one. And if you give me 10 grand, I'll make you an operator and we'll teach you how to successfully operate a Chick-fil-A in your market. Well, what are the terms of the deal? Well, we're gonna charge you fair market rent because we own the building. We we own the dirt, and we own the brick and mortar. McDonald's owns the dirt, you own the brick and mortar. It's flipped, right? So then you continue with this logic. Uh, we're gonna take the the leasing of the equipment out, we're gonna take, you know, the property tax, the insurance, the rent, everything is gonna be modeled out, all these costs that we it cost us to get you up and running, because you're out of pocket 10 grand. That's it. On a what, four plus million dollar, five million dollar operation, you're out of pocket 10,000. You in the end of them, let's call it scraping all their fees out of the deal, you will split 50% of the profit. They are way more profitable than probably any QSR in this industry in terms of net profitability.

SPEAKER_01 26:55

And do you get multiple operators of those, or do they only let one person take each one?

SPEAKER_00 27:00

It's it's it's interesting, and you can look that up too on chat. You would have to be the single percentage operator for them to award you the ability to operate a second location. The language in their agreement is, and I have their FDDs, the it's like you you will be fully committed to operating your Chick-fil-A, you will have no other business interests. You will be required to be there day to day. It's an interesting business bottle, but you will make several hundred thousand dollars a year. I mean, there's no doubt about it. The average location does nine million, the peak performer does nineteen million. $19 million a top yeah. Chick-fil-A is a it's literally a license to print money. And the fact that they're closed on Sundays, the fact that they've created their number one seller is a piece of is a piece of bread with a slice of chicken and two pickles is just genius. Think about that. Your cost of goods is peanuts. Where's the lettuce? There's no lettuce. Well, where's all the other topping? There's no other toppings. This is the lowest cost of goods product, and they're number one seller. No other concept has been able to compete with the brilliance and the simplicity of that model. People really should study that. You know how people used to study UPS, like they were just amazing, and everyone wants to study FedEx, and then everybody wanted to study, you know, Disney. They should be studying Chick-fil-A. How do you balance like the quality of life that they have? Closed on Sundays, six days a week, a phenomenon. They went from one million, two million, three million to nine million. And I mean, they destroyed they destroyed Kentucky Fried Chicken at their own game. They literally took their entire market. It's remarkable.

SPEAKER_01 28:42

Well, I'm gonna I'm gonna I'm gonna study it and I'm gonna make a YouTube video on it, and I'm gonna send send you it to uh to approve first. You're a good man. Right. We've talked about what we don't like, which is food. We've talked about what we can't have, which is Chick-fil-A. Let's talk about what we do like and what we can have if I come to you for one of the 600 franchise ores that you represent.

SPEAKER_00 29:09

Right on. Yeah. What I like now, and it's in the book, it's in Beyond the Brand. Okay, it's on Amazon. It's actually top, it was a bestseller, and it's currently right now uh a top new release, so it's in the top ten new releases in my category, franchising entrepreneurship. We focus on five categories, especially with AI, right? So, and you're using it like in real time. We focus on what we refer to as the feminization of men. And let me just explain what it means. It means that we've destroyed sperm count by 50% the last decade in America, we've destroyed testosterone levels, right? We've also told men in America for the last two decades, don't you dare become an electrician, don't you dare become a plumber, you need to go to college, get a degree, and I don't even care what degree it is. And with all that being said, it has created a massive void in home services, anything requiring tools, anything involving men's health. You could own last year, 2024, one of the fastest growing brands in franchising was a testosterone clinic. Fast sold over 400 locations in a year. A feat most brands will never accomplish in a lifetime. If you don't know this, like when I say 400, you may be like, that doesn't sound like a big deal. Most brands will never hit 100 locations in their lifetime. The same way most brands will never do a million dollars in revenue in their lifetime. Less than 6% of companies in the United States will ever hit a million in revenue. That's crazy, right? So you look at a testosterone clinic, their affiliate locations were doing $2.5 million. Their non-affiliate locations were doing an average of $1.5 million. So I love all things in the category of feminization of men, which includes anything requiring tools, plumbing, electrical, roofing, HVAC, basement, waterproofing. I don't care. Painting. Soda Pro Painter does $2 million a year. $1800 got junk does two million a year.

SPEAKER_01 31:08

But tell me though, because obviously I I get I get the concept of the feminization of men and that that we're running out of guys who can use tools and that we we all need testosterone because I'm there. I I I have my jab in my boss and once a week. Uh but I mean what less the testosterone clinics and more the more the the the HVAC and the and the men with the tools. Surely you still need men with tools to do the job. I mean, you know, you could you could give me a good blueprint of of how to operate the business, how to market, how to get people to the doors, but I still need the men with the tools to be able to do the business, right?

SPEAKER_00 31:46

That's right. And we recruit them, right? So yes, there's a shortage, but when you're a franchise and you're a name brand and you have average revenues, let's say over a million or two million, that's what tradesmen want. They want consistency and continuity and work. That industry is known. Like, what why are you on the couch at three in the afternoon? I don't have any work. I'm waiting for my boss to do a bit. I'm waiting for this. You got to keep these guys busy year-round. And if you can do that, you can create consistency and take this the cycles out of that industry, the home building cycles, their vicious cycles. I mean, some of these guys are you know union workers. I have union workers in my family. Some of these guys are out of work for a while. The union protects them, gets them back on their feet, and gets them into other jobs. So if a franchisor can pull into town and be like, look, you know, we're a roofing brand. We average three, four million in revenue. We're gonna keep you busy. It's easy to recruit. Look, look, revenue solves a lot of problems, right? It just does. Everybody says, you know, money can't buy you everything. Okay, well, being poor can buy you nothing. So I would rather be in a business where I have the revenue, I have the customers, I have the work, and I can recruit the people. To your point, Matt, we had a guy on my podcast. His name was Troy Rainsberg. He bought a $4 million HVAC company. Everyone in his circle told him, Don't do it. Why? You're never gonna find the tax. You will never find the tax. This guy, $4 million HVAC, it was multiple locations in three states. So each location was probably doing a million.

SPEAKER_01 33:17

This guy said he was buying it, he was buying it.

SPEAKER_00 33:19

A recall from a corporate corporate perspective to then become a franchiser. That's right. Yeah. Well, no, he maintained no, he was an independent business owner. This actually conversation has nothing to do with franchising. This is just a business story and a remarkable one. Let like let wait till you hear the rest of it. So he's now an independent business owner. He wants to be in the HVC space. He buys a four or five unit uh HVC company scattered about uh for four million dollars. Again, everyone told him, Don't do it. You're never gonna find the staff. Like men don't use tools. It's an aging out industry, nobody's backfilling that talent. He ends up going to the schools. He goes to the schools, he creates a training program, he asks the guidance counselors, the principals, the dean, who in here is not going to college, who in here needs a trade, a skill, a gift, the ability to make money landing their feet. They gave him the names. He recruited those kids, took them into his training program. This guy, this is all on my podcast recorded, this guy scaled to $300 million, sold it to a private equity firm. His business today does over $800 million a year in sales. There's nothing more deceptive than the obvious. Everybody likes to analyze reasons for failure and reasons why they shouldn't do shit. Just fucking make it happen. Like just get out there and fight like hell to win. It's not that there are so many young men that just want to be told it's okay to be manly. It's okay to hold a tool in your hand. It's okay to be HVAC. It's an admirable job. We need you. We need the bridge workers. We need the welders. We need these guys. We've been shitting on these men for 20 years. It's crazy. That pendulum's gonna switch violently in the other direction. Believe me. These Ivy League universities destroyed themselves and their reputations in the last several years. So you're starting to see people talking about this now. Mike Rowe, dirty jobs, he's out there, right? Adam Corolla, he's out there. So people are now getting out there and saying what we're talking about right now.

SPEAKER_01 35:20

Most business advice, it's motivational fluff. It's empty promises and it's untested ideas by people who have never even tried to apply them. It's bollocks. But you're not gonna get that here. And that is why I call it no bollocks. The no bollocks newsletter is straight talking, high impact, zero time wasting, tried, tested, and immediately actionable. Two emails a week. Insider strategies, brutally honest insights, and the answers to the questions that you're asking or you should be asking. And the best part, you're gonna learn more in 10 minutes than most people learn in a three-year MBA. Over 20,000 people a week are already in. So don't be the one that's missing out. Hit the link in the show notes because you just need one email that could be the one that changes everything. So talk to me about the economics of one of these. And I mean, look, I I'm I'm not in the US, so I don't know the brands, but p pick pick me pick me a an HVAC business or a roofing business that uh that that does a franchise and talk to me about. So I'm I'm coming in there, you're recommending it to me. I want to know what the buy-in is, what what job I'm expected to do, and how much I'm gonna make.

SPEAKER_00 36:25

Yeah, I mean you look like a a plumbing brand, you know, Ben Franklin Plumbing. Does they average 1.5 million a year in revenue? You know, what what are they netting? They're netting what what should they net in a business like that? They should be netting 20% to the bottom line. It's a non-brick and mortar brand. You're not paying class A real estate space, you're renting the cheapest, crappiest real estate in an industrial park. It's cheap. It's not too big of it, right? You have vehicles that you lease, you've got your techs, you you have your pricing methodologies, you should be netting 20 points to the bottom line minimum.

SPEAKER_01 36:59

So I should I should be making 300 grand a year. Uh how how how much time how much time am I working at? Am I operating that? I mean, I'm not on the tools, but am I, you know, I'm actually going to be the operator?

SPEAKER_00 37:11

If you're the owner of that business, you you mentioned it best in the beginning. You should be following Michael Gerber's advice. You work on the business, not in the business. You're maybe randomly hitting jobs, doing inspections, you're doing your online reputation management, you're getting those reviews, you're acquiring new customers. You should be doing well, I a business owner should be doing three things at all times and obsessing over it. Acquiring new customers, right? Increasing the average ticket, increasing the frequency of purchase. How could we get more ancillary business from these customers? Right? They should be obsessing over this stuff. And that's what franchising wants. Nobody wants a plumber being a plumber. I'm just telling you.

SPEAKER_01 37:52

And what's the what's the buy-in then? I want one of these Ben Franklin units.

SPEAKER_00 37:56

These these non-brick and mortar brands are usually under 200 grand, all in. That's the that's the asymmetrical part that I'm referring to. It's like, so I could buy a brick and mortar food concept for how much? Half a million and more. It'll escalate quickly. But let's just say I could get into one acid, juicing, smoothies, right? Sub shops, let's just say half a million, all in. You could get into these trades for under $200,000 and scale way faster than food.

SPEAKER_01 38:27

And what am I getting for my $200,000? I'm getting the playbook. I'm getting the territory. I'm getting a lot of handholding.

SPEAKER_00 38:33

You're getting a probably a very large territory, right? It delineated by zip code. You're getting vehicles, you're getting equipment, you've paid your initial license fee, you're getting trained, you're being supported for the life of the contract, you're getting whatever the corporate website can pull off, SEO, S E M, teaching you how to acquire new customers. You're probably buying product uh through the franchiseor at a discount because they have purchasing power. They're buying way more plumbing supplies than your neighboring, I hung my own shingle, ABC Plumbing. That guy can't compete. He's paying full boat premium pricing on all his supplies. He's nothing. He's not a meaningful customer to any vendor. It's like you're just a regular guy driving a van doing plumbing. We call him Chuck in a truck, just a regular guy driving around doing plumbing. Franchising's different. You know, you gave you have the scale of economy.

SPEAKER_01 39:24

Can I finance that 200k? Yeah.

SPEAKER_00 39:27

Are you going to help me out with it? Yeah, we do it. We do well, not all of it. Not all of it. I tell every client the same thing. You put up 30, the bank puts up 70. So if the deal is 200 grand, you're putting up 60, the bank is putting up the balance. We usually tell them to get an SBA express loan, maybe one other 150, uh, to to kind of close the loop on that deal and get it across the finish line.

SPEAKER_01 39:50

And the and the and the SBA loans, I mean, I I guess it's a very Americanized concept that, but the SBA loans are I mean, they're they're government government-backed loans where the government guarantee it to the bank to make the bank incentivized to do it. I mean, all the countries, I guess, have their own their own equivalents, but they but the banks and the SBA people, they like franchising more as a concept to lend to, do they? Because it's more proven.

SPEAKER_00 40:12

They love it. Because now they understand it's a known quantity. What do you want to do? I want to open up a gym. Okay, are you doing this on your own? Yes. Uh I I have a degree in kinesiology. Okay, there's a ton of risk there. Versus I'm opening up a gym. Which gym? Orange Theory Fitness. Okay. They know exactly how many Orange Theory Fitnesses have defaulted on SBA loans. Like they know that number. They know their risk. It's crazy. Like LA Fit, like whatever brand you're talking about, if it's a franchise, they know the failure rate. They know the default rate of anyone who has ever taken an SBA loan and didn't repay it.

SPEAKER_01 40:49

What about when I want to sell a business? I mean, I well, how how how long do I get that territory for?

SPEAKER_00 40:53

It's like 20 years, I guess it's not for life, right? Technically, well, contracts, as you know, have to have an end date, but they're technically built in perpetuity, meaning you'll have a contract, it'll be for 10 years, but you'll have a five or 10-year renewal. You sign your renewal, you have another baked-in renewal. So you constantly have a term, which is usually a 10-year term, and it'll either renew in five-year or 10-year increments thereafter. So you could continue literally paying for those renewals or check the bags on the market. It's a small fee relative to the initial fee. So it'll say something like, your renewal fee is going to be, you know, 10%, 20%, 50% of the then current franchise fee. So if the franchise sees $50,000, you know, maybe you're paying five. No one wants to, you know, disincentivize someone from renewing. You want them to renew. It's they're anyone renewing after 10 years, they're not a burden on corporate. They're not taxing the corporate office, right? Like they're they're they're like children. You they're you've kicked them out of the nest. They're on their own, they're fully self-sufficient, they know what they're doing. So it's solid to renew. And brands should renew. And if they don't, you have now po post-termination restrictive covenants, non-compete restrictions, and so on.

SPEAKER_01 42:07

But what's a typical person walking in to see you? It's it's someone who's just retired and got a bit of they want to invest the pension money better. It's you know, it's a 35-year-old hungry guy, it's a bit of everything.

SPEAKER_00 42:19

Good question. Exactly. The sweet spot is gonna be 40s, you know, probably 40s to 50s, has some has has some money, money that they're willing to put up, has some liquidity, net worth is now way better than it was when they're in their 20s and 30s, right? Maybe the kids are a little bit older. They also have a lot of knowledge working in corporate America, they've been groomed, they uh they have PL responsibility, they feel like they're making someone else rich, and they're like, wait a minute, I just brought in a you know a seven-figure account, an eight-figure account. Like, I I could do this. Start to build confidence. Then they come to us. It's like, listen, I gotta leave corporate America, I gotta get out of here. I travel too much, my you know, I don't like my boss. There's always a slew of reasons. Most people do come to me from a negative place, they're not happy, and they want to get happy, and they feel that happiness is going to be financial freedom, just freedom over owning their own business and and creating wealth for themselves instead of for others. As Kevin O'Leary says, the paycheck is the drug that takes your dreams away. It's true, it's just a false sense of security getting paid, and then in the end, there's no pensions. Pensions are dead in America. I mean, they're dead. You could work 30, 40 years for a company and get a goose egg at the end. Not even a gold watch, nothing. It's like a party with a cake. Goodbye. Thank you for your service. It's crazy. It wasn't like that, obviously, but it is now.

SPEAKER_01 43:44

Why do people come to see you? Why not just slog it out on their own?

SPEAKER_00 43:48

Yeah. One, don't don't do this on your own if you're considering if you're considering buying a franchise, do not do this on your own. The perfect example is one of my videos on my YouTube channel, you know, 90,000 views. And what was About. I've been telling people for the last five years, do not buy Dicky's barbecue. Like, don't buy it. I'm hearing rumblings. There's a lot of problems. Like, don't that the failure rate seems to be creeping in. There's just a lot going on with that brand. Nothing I knew definitively, just very uncomfortable what I was hearing being in the industry. Well, guess what? That brand is in a death spiral. Class action lawsuits, tons of problems. Even the New York Times investigated what the hell is going on over at Dickies. So you never know what like what brand. There's 4,000 brands in the United States. We help people with discipline navigate the process. We help them secure funding. We help them write and create an investment discipline and investment objectives. Like, stop talking about brands. What do you want? Why are you here? I I want to be a better dad. I'm never around. I fly 180 days on the road. I want to be with my kids. Okay, now we got you home. Next, I have to replace my income. I'm making 200. That's very specific investment objective. Next, what's your risk tolerance? I really don't have much of an appetite for risk. I'm a CPA. I need something tried, true, proven, no shiny new pennies. Next, where do you live? Oh, I live in an area where the average income is 30 grand. Timeout. Nothing works there. Check caching, laundromats, crappy businesses, right? Like nothing's gonna work in an area with average household income of 30 grand versus, well, where is a neighboring market? Well, if I drive 30 minutes, the average household income is 150. Now we're talking. We continue, right? So we just keep doing that and keep calibrating and keep understanding them, what they like, what they dislike, their skill sets. Are you writing code in a cubicle afraid to speak to people? Or are you like an ex-farmer rep selling to doctors? You know, who are you? Where are you comfortable? Do you like managing people? No, I really don't want any employees. Okay. There's a place for that guy. We just said it, chuck in a truck. There's a place for a person that wants no employees. I don't insult it. It's just, it's whatever the client wants. So if they're considering franchising, do not do this alone. Align yourself with an expert. I've been doing this 25 years. I've owned 12 brands. I wrote a book on it. I host the podcast. I add as much value as I possibly can. And the best part of working with us is the client, your listener, has no risk. We do this for free. We're paid like realtors, realtors in America. We're paid by the seller at the seller's expense. So that's that's how I feel. And I'm I think we do a great job by our clients. They could look at our reviews. They could even look at our book reviews on Amazon. I'm super proud of what we've done with this book because it's not a bullshit cliche book that just tells people, you know, fight fear. You got to overcome your fear and just do it. That's not helpful. We have a whole chapter in our book, chapter 14, addressing fear, why people are paralyzed and feel, why fear has killed more dreams than failure ever has. How to retain employees. Nobody talks about this stuff to just say you gotta treat them right, you gotta pay them good. That's not advice. That doesn't work. Like some of the things that people say, it's like it's just total nonsense. It's like a bumper sticker of advice. Like you have to give people granular, executionable ideas to implement, to just like like like James Clear in Atomic Habits. It's just like, you gotta, you gotta have better habits. Thanks, James. Like that's your book. Have better habits. Like it gets granular in you know, to that one degree of change and how to do things. And I feel that our book, it's not, I'm not comparing a book to James Clear. I think he's brilliant. I'm just saying that our book and our cottage industry is a value add, and our our clients will get a lot out of working with us, and they'll be working with me and my business partner, Justin.

SPEAKER_01 47:41

Well, listen, Cliff, it's been an absolute pleasure talking to you, mate. I've got no doubt from the 45 minutes that we've spoken that your book's gonna be mega and that people should be subscribing to your YouTube channel and following you on that journey. How do they find you other than go to Amazon and buying a book?

SPEAKER_00 47:57

Yeah, no, go to Frosity.com. Yeah, if they don't want it, they don't like the book, that's fine. They could go to Fronosity F-R-A-N-O-C-I-T-Y.com and just enter your name and address and uh I'll I'll deal you deal with me, unlike you know, people go on shows and you're gonna deal with a third party unknown quantity, you'll be working with me. I will be the one taking the call.

SPEAKER_01 48:16

Awesome. Well, listen, we're gonna pull all that stuff on the show notes. Uh we're gonna do some nice blogs and we're gonna make sure everyone who wants to learn about franchising comes to do it from your good self. Uh, thank you very much, mate. I'm gonna jump on my Amazon Prime and uh and get a copy of your book shipped over to me as well to stick on my ever-expanding reading list. And uh I'd look forward to keeping in touch with the future. Absolutely. Thank you for having me. Thanks a lot for being here. Thanks for tuning in to No Bollocks with Matt Haycox. Today's conversation was packed with actionable insights, and I'm super, super grateful that you joined us. My community now boasts 160,000 downloads a month of this podcast, and that is a testament to entrepreneurs just like you who refuse to settle for mediocrity. So don't miss out. Subscribe now and gain exclusive access to the conversations that can transform your business and transform your life. Also, while you're at it, if you could visit www.mathyphenhaycocks.com or click the link in the show notes below and please sign up to the no bollocks newsletter. That's like the sister newsletter that lives with this podcast. Every week I send two emails, and in just 10 minutes, you're gonna gain more knowledge than most people doing a three year MBA. So please subscribe, rate, share this episode with someone who needs a no bollocks boost. And until next time, keep hustling and keep winning.