We Bought A Franchise!

How Low-Cost Franchises Scale with Thomas Scott

• Jack Johnson • Season 2 • Episode 20

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Want a business that doesn’t just pay you—but can be sold for a multiple? We dive with Thomas Scott into the playbook behind low-investment, high-potential franchises and why home services are the quiet engine of real, sellable equity. From custom closets to dryer vents, Thomas breaks down how to “build the box”: modern marketing, a tight CRM stack, accessible SBA financing, and a category with durable demand. We talk strategy, not hype—how to win in crowded markets by studying the customer journey, undercutting legacy pricing, and delivering faster, cleaner experiences that today’s buyers expect.

We explore why closets deliver some of the highest ROI in home improvement, how Millennials and Gen Z are driving 24% industry growth, and what makes the business model so satisfying: one-hour design consults, clear proposals, and single-day installs that compound into referrals. Thomas opens the hood on support that actually moves the needle—intense onboarding, weekly group coaching, and specialist access with staff-to-owner ratios around 1:5 to 1:8. The message is simple: stop being the technician; step up as a small-business CEO. Track the right metrics, hire deliberately, and run the proven play.

We also map the path to liquidity. A top salary can’t be sold; a well-run franchise can. Learn how to structure territories around an EBITDA target, why month 18 is the turning point, and how resales move quickly—often inside the system—using creative structures like partial seller financing. You’ll hear the traits that define top performers (hint: they follow the system), why coachable Gen Z owners are surging, and the exact inputs for predictable growth: reps, consults, and disciplined marketing spend.

If you’re ready to trade rented income for real equity, press play, take notes, and choose one metric to own this week. Subscribe, share with a friend who needs this roadmap, and leave a review to help more builders find the show.

Visit www.weboughtafranchise.com to subscribe.
Send us your questions for an upcoming episode at 305-710-0050.
From your pals in franchise ownership, Jack and Jill Johnson.

SPEAKER_03:

Hi everyone, welcome back to the We Bought a Franchise Podcast. I'm Jack Johnson.

SPEAKER_00:

I'm Jill Johnson.

SPEAKER_03:

And we've got an incredible podcast for you today. We've got, of course, our our great group of franchise consultant, franchise owner experts, Catherine Allen, Morgan Noller, Brian Gross, David Sam Juan, and we have a special guest, Thomas Scott. Now, Thomas, I've got to read this because your background here. You're a multi-brand operator, founder of Clausitivity, Dryer Vent Squad, Frost Shades, and now home run franchises. You've got 20 years of building, operating, and marketing franchises across food, retail, and home services. Thomas, thank you for joining us.

SPEAKER_04:

Yeah, thank you so much. Um I've franchised nine different brands, starting with a company called Show Homes, the one of the original home staging brands, and on up through up closets, dryer vents, superheroes, and lighting squad today. And um I've been a multi-unit franchisee in five systems and a supplier, and I'm all in on the franchise model. I love this model. I like what it can do to help people change their lives for sure.

SPEAKER_03:

I mean, it's like once you stop, you can't you can't stop.

SPEAKER_04:

Yeah, I have six kids and three of them are franchise executives. I've like, I made my own franchise executives. Like that's what the joke is in our family. We were generational franchise lawyers at this house.

SPEAKER_03:

Isn't that awesome? You know, I wonder how many kids who are, you know, kids of entrepreneurs, both Jill and I are kids of entrepreneurs. How many end up becoming entrepreneurs? I don't know if there's a stat on that, but I'd be very curious. I bet it's a high percentage.

SPEAKER_04:

It's a really it's like in the 70, 80 percent. It's a higher than normal. You know, and you have some generational stuff going on in the market now that makes it even better. But like, you know, I think I had somebody in yesterday who's buying a dryer vent superhero for us in Atlanta, and he his dad was a restaurant owned a restoration business. Dad was a restoration franchisee, I think was Serve Pro or something, and he is getting into service brands. He played SEC football and was a pro football player for a year, and that didn't work out the way he wanted. And he's been doing you know, medical device sales, very successful at it, has a half million dollar a year income. And he's wanting to get back into business ownership because he there's some things about owning a business that you just don't get when you're an employee of somebody else. And no matter how much money you make, uh you can't replace that kind of joy and feeling you get of having some control over you know what you're worth and what your time's worth.

SPEAKER_02:

I've always wanted to do my own thing, and my dad owns his own business. He's a builder, and he modeled that from a very young age. Uh, you know, he's worked, he still works seven days a week, which there's some unhealthy habits maybe there. But that's why that's why I hustle so hard because I think that's just what was modeled to me, and that's very important for me to model for my children. And I tend to work a little more on the work-life balance that I don't know if I saw growing up. So that's where I'm getting better, but I absolutely think that's true. And and I love that about business ownership.

SPEAKER_04:

Yeah, they they say that, you know, entrepreneurs are the only people that'll work 80 hours a week, so they don't have to work 40, which I think is a funny kind of concept, you know, that that's what it works. But you know, the truth is if you're really if you learn to not be a technician and to really be a CEO of a small business or medium business, like you you can work a lot less. You know, it's not nearly like the grind that people make it out to be. You don't if you're grinding that hard, you're doing something wrong, usually. You know, you need to develop business acumen skills.

SPEAKER_03:

Well, I mean it you you know, Catherine, you were just in in Italy for like two weeks, right? Sweet. And then she then she comes back and we're talking the other day, and she's she's showing her her profit margins. What are you in year two soccer stars, Catherine?

SPEAKER_02:

Year three as of July. Um, but yeah, my profit margins are to 28%. Um, so I'm really proud of that. And that's where uh being part of a franchise is so great because I have the hustle, I have the heart. So that's where coming into a franchise gives you that structure and that framework to help you succeed and people to lean on and go to for those, you know, questions. Numbers is something I've had to get better at. Uh, they're so important, you got to look at all the data, but it's going well.

SPEAKER_03:

Sometimes you don't know until you get thrown into the fire. Okay, guys, let's let's kick this off. Can you build a low investment franchise into a big business?

SPEAKER_04:

You can. Um, you can for sure. And when we design all of our home run franchise brands, and this is my advice for any new franchise or is you have to kind of build a box first for the business that you're gonna um target. You know, we build a business that has an investment that's under 150, that has SBA lending, that has good marketing and CRM and technology systems, that has enough competition in the market that there's demand for service and is sustainable and isn't a fickle kind of trendy thing that's gonna come and go. And so I think you can, you know, uh like closets, for instance, the average ticket's around 8,000 bucks. You know, if you look at all the closet FTDs for all the closet franchises, you know, the you know, mature ones after three years are sometimes in the two, three, four million dollar range. Our upper 25%, according to our FTD, or kind of in the million and a half, closing on two. I've got people doing three. So, you know, we we have similar revenue to just about any other closet franchise, just like one-third the investment cost, because we built it to be a modern version of a closet business. And in our industry, most of our competitions stuck in the 1990s, so they just haven't evolved with the technology and the pace and the way people buy things and changing demographics for customer groups. And so, yeah, I think you can do that. Um, I wouldn't start a business if I didn't think there was a path to get somebody to the half million million dollar mark in a year and get to, as Catherine was saying, a 20, 30 percent net when you're matured out and ramped through the ramp up. Like I think if you can't pull that off, why are you franchising it anyway? That's the whole point. That has more to do with the structure and the the design of the franchise offering and how it's supported and trained and kind of what the ongoing support is and less to do with what it cost in the beginning. I think for us, we just find that there's not enough under 150 serious brands that you can do well in. There just there aren't enough of them in the market to satisfy consumer demand.

SPEAKER_01:

Thomas, I'm curious too, you know, you're talking about not even just lower costs, but just this kind of area of home services. Yeah, looking at closets, right? And we hear a lot of people love services, one that lower investment, also being more recession resistant. Yeah. Well, I know when I've brought up closets with clients looking at space, I hear two things all the time. One, hey, that space is really crowded, and there's a ton of players in the closet space. And two, hey, maybe that's actually an area that, you know, if the economy's down, people don't have to do that.

SPEAKER_04:

Question. And I'm a I'm a little bit I I I love competitive spaces and I like down markets. That's for me ideal working conditions to start a business in. Like I'm like I go against the grain on that. We ran franchise coffee shops for a while here in Nashville and have helped a few coffee brands, and we would always put our coffee shops across the street from a Starbucks. Like I wanted to be able to look out the window and see a Starbucks, and we would by just being different than Starbucks and offering the things that they weren't good at, we would take 10 or 15% of their revenue, which isn't a lot to Starbucks. It's a huge amount to a startup coffee shop. But the truth is, if you understand how people buy things, what the customer journey is, and where the competition is strong and where they're not strong, then you design the business around those holes. You can do well, there's always, always room for a better operator, better pricing, better customer service, better offering, all of those things. Up closet sells the exact same closet materials, hardware, and lumber that California Closet sells, but we're 30, 35% less expensive on a retail environment. We just run circles around them. We do 65% of our customers or millennials are younger, like they're much younger than the traditional closet buyer because millennials care a lot about mental health as a demographic group, and you know, having an organized life isn't like a luxury item to them. They think about closets differently. So that's one part of it is that as long as you're going to market and you differentiate yourself and your marketing is different, your sales process is different, your products are priced differently, and you can prove out that you can succeed, and we clearly are succeeding on that front, then you can win. On the other side, closets specifically is a really interesting, and the reason we wanted to be in the closet space, it's a really interesting home improvement. It's the highest ROI of all the home, of anything you could spend dollars on in your house, closets will get 110 to 120% return typically on what you spend. So there is there isn't another investment in a home like a kitchen or a deck or so. You just don't get that kind of ROI on it. And even in the housing bus in the mid 2000s, we didn't see closets diminish down a lot. It was one of the few things that kind of had a steady point. It's obviously slower in a down market than an up market. But what happens is when the market gets rough and you can't sell your house, creating more space in the closets, which is the main reason somebody sells a house in most places, um, becomes more of a priority. So people invest in getting a better quality of life in the house they're kind of stuck in. It's the same in today's market where the interest rates are high and people are stuck in these 2% mortgages, and there's no way they're gonna leave a 2% mortgage and get a 7% mortgage. So they're just gonna spend a lot on investing. When the market's really good, people rip out the closets and put new ones in. There's lots of renovation work and people like join doing the whole house when they move. We see a lot of that in today's market too. You know, it's just uh it's a different mindset. But we'd find that it's I wouldn't go as far as to say it's recession resistant, but it's not as um impacted as say, you know, you know, a three to eight thousand dollar closet purchase isn't the same kind of investment as a hundred thousand dollar kitchen overhaul or you know, even putting a roof on your house or something, you know, really dramatic. And so, and if you've ever had, I don't know if any of you have custom closets, if you ever put them in your house, you will put one in every house you own the rest of your life. You just you won't be able to live comfortably without it. So it's it's a kind of a cool business. We like it. We like that it's an in and out service. Like we, you know, we design it in an hour and you get them a proposal, it comes in four, five, six weeks, and we install it in one day from zero to, you know, we're finished by three in the afternoon. Like that part of it's pretty cool. Like it's just a kind of a cool, fun business. People who operate them really enjoy it a lot. Like it's a satisfying business to run.

SPEAKER_00:

I have a question for you, Thomas. Um, since you have multiple home services brands, when it comes to support for the franchisees, we were talking to one uh must have been Sunday, I think, a different brand, a different service. And they were talking about a five to one ratio for support to franchisee. And I felt like that was pretty good. Do you feel like between the different home services brands, do you need the same support with something like a dryer vent superheroes versus up closets, or does it vary?

SPEAKER_04:

Uh my philosophy, having been a franchise business coach and of a franchisee, I build my brands to treat people the way I like to be treated as an owner. You know, we treat people like adults. So part of it is franchise support is divided for us into two different categories product and technical support. How do I install a closet, how do I design a closet, you know, this the mechanical operational part of this business? Like how do you train the installers, how do you manage the salespeople? The more important part of coaching uh kind of is onboarding coaching. Like when you sign an agreement with us, we start really intense virtual training and onboarding coaching that culminates in a one-week in-person thing. But then we coach our people for four months after they open on a once-a-week and a peer group. We call it a jump start program, and we're looking at every design and every transaction and every consult and every marketing dollar spent. And you're doing this in a group of peers, and so every time somebody makes a mistake, you learn from it. One in five, one in eight for staff to people is about the kind of that's about where we are in our systems. Um, and you know, we have admins, we have marketing managers, we have manufacturing support, you know, we've got sales coaches, you know, we have people that do different things, but at the end of the day, you know, there's you need technical help or there's somebody who's holding you accountable to grow your business. Our whole view is that the best reason to buy a franchise today, and especially for younger buyers, is this a path of professional development, to just to learn how to run a business. Run, spend three years with us, you can run any business the rest of your life. I think that's an awesome gift to give somebody.

SPEAKER_00:

Well, I love that. And I was gonna uh just really quick because I was gonna do my master's degree and I didn't do it. And so I like that you're saying that you're they're teaching people to be that person, be the CEO, because I initially was turned off from home services because I didn't want to be the one doing the work, going into all the houses. And I think I didn't understand that very clearly. So I love that that's what you're teaching.

SPEAKER_04:

So you're building the business that you want to run down the road. We're trying to get people to think three and four years down the road. What is it? What are you what's the ultimate goal you're trying to get to? You're trying to fire yourself, you're trying to build a team that will operate without you so I can do what Catherine does and go to Italy for two weeks. That sounds super awesome. You know, like but her business didn't go underwater when she was there. She probably has good systems and support and structure and technology to help her run those.

SPEAKER_02:

And that's great manager. A great manager.

SPEAKER_04:

A great manager. You know, you know, it's kind of like that cake box analogy. You could bake a cake from scratch and you can figure out all the ingredients, and you can make an amazing cake, and you probably make a lot of errors. Or you could buy a box cake mix and put water in it, and your cake's gonna be there a lot faster with a lot less waste. I personally love cheap cake.

SPEAKER_03:

Give me that, give me that good grocery store cheap frosting. Give it to me all day long over any fancy case.

SPEAKER_04:

You don't look like you eat a lot of cake. I on the other hand look like I eat all the cakes in the room, you know.

SPEAKER_03:

Don't be fooled. I eat a lot of cake. But hey, okay, here's a couple quick things. This is something I've been thinking a lot about. Um like most normal people don't get to get equity in a company, right? You always hear about these smart people that got some equity in Silicon Valley and but but mainly that's not gonna be me and it's not gonna be you. And and the thing is, is that and anyone that follows, you know, any of us on social media, um, we we really try and tell it how it is, and that the the first 12, 18 months, look, you're gonna pay your dues. And people will say to me, Well, gosh, why? Why would I do that? Why would I take a step back from my 150K a year job and go do that? Because you can't flip that 150K job for you know a million bucks. You can build such equity with a franchise, and it's actually it's not as hard as you think. It's like right now we've got a client who's moving forward with a recurring revenue home services franchise, and they are in a great market for it. They're looking at a uh pool services franchise and they're in in Arizona. And the debate they're currently having is between two and three territories. And so they came to me as the franchise consultant and said, Look, what do you think? One of them wants to do two, one of them wants to do three. And so basically, I said, Look, let's let's talk about what does it do to your working capital? Because if it if it's gonna kill your working capital, don't do it. But if we're trying to build a million-dollar exit, then we've got this tool called our exit path calculator, where basically you can take a service franchise, a retail franchise, home care franchise, what have you, and you can aim towards, hey, I want to get to a million dollars EBITDA. How many units should I have? And so the calculator said he needed four. So I said, to me, it's an easy question now. You've got the capital, you can start with three, and I'll bet you in 18 months, if you guys are really doing well with this, we can find another franchisee who's close by and you can buy their location and get to four. So I think building towards an exit, and Catherine, this goes back to the point that you made, being on top your numbers from day one, building your business. Just to me, every day, I want to make sure if anyone were to ever call me and say, we've got a fund, we want to buy the franchise insiders, that I could send them my PL and everything is dialed. You could ask me in the middle of the night and I can send you a PL and it's all up to date. So build your business, even though you may never want to sell, build your business to sell from day one.

SPEAKER_04:

That's great advice. Yeah, I I like that. You know, we we don't I don't love selling people huge numbers of units because you don't know, you know, and and it's a it's a quirky counterintuitive thing, but some of the people with the most capital fail at the highest rates in my franchising experience. Like it's kind of because they don't want to do the work. Like they they think, oh, I just got all the capital. That's a substitute for putting the hard work in. And sometimes you got to kind of find a mix. So it gets, you know, we like to get people two or three units and then see how they can perform and get them to some level and then let them expand. But yeah, I think it's true. That's a really cool calculator. I'd love to see that.

SPEAKER_03:

So sure, happy to send it to you. Yeah, for anyone, by the way, who's interested in that calculator, feel free to text 305-710-0050.

SPEAKER_04:

Yeah, in the first 12 to 18 months, is the hardest part. You're making investments in the business and you haven't really gotten to where it's smooth and you haven't gotten to where you're even if it's profitable, you haven't maximized your profit. You know, it's it's not until the second, third year, typically, that it gets really nice and calm waters and you can really scale. The appetite for resale service businesses in the US is is really insane right now. Like there's just so much of a market for resale stuff. Like when we have resales, they sell quickly. You know, it's not hard to find buyers even in today's market.

SPEAKER_03:

Brian, wouldn't you say? I mean, that's that's where we're seeing so many people who just scour biz by sell every single day looking for that perfect business.

SPEAKER_01:

They are. You know, it's it's always interesting because you're looking for that perfect business one doesn't exist. But when you talk about this bringing criteria, when you ask people, hey, what are you looking for? And what you know, what meets that that list? It's all the same criteria. Everyone's looking for the same operating history, you know, the same length that's been opened. They're looking for the same SDE, you know, they're trying to buy at the same multiple. So it's just a really crowded market. But you know, Thomas, you just said something that's really interesting, you know, and we brought this up before. A lot of times these best businesses they don't hit biz by sell. Right? They're not being listed online, but they're going to other people in the system, right? So you know, one of the things I always find interesting, I always ask people when I meet someone new, how long have you been looking for a business? And I'd say 18 to 36 months is probably the average answer. So when you start thinking about that amount of time out you know, kicking tires and looking at listings and and you know, trying to get more information, think about these home service brands, what you could build in two years time frame and then have the inside edge to get listings of your neighbors and other you know, other businesses that aren't even hitting the market. So the opportunity is just being missed by you know, really looking for something that's that's not hitting Biz by sell.

SPEAKER_04:

Oh, for sure. Yeah, I would I had the um honor of being on the advisory council for biz by sell for several years. And last year their amount of traffic they have on that site was up three or four hundred percent, like a really significant increase. And it's all people looking for this, you know, unicorn boomer selling a service business to your point. Like those don't really exist in any kind of mass quantity. If there's anything good, I mean I've used Biz by Sell to sell my personal businesses, and I've sold every one I put on there in 48 hours. Like it's just like if it's we're if it's really a legit business, like Jack says, and you have a PL and it's the real deal, it'll sell super, super fast. And so, like, you know, I think one of the probably 60% of our placements are people that were in that 18 to 24, like they were coming up, they found us on Business by Sell or thought about us because they saw a similar business or something and kind of did their research. But I think it's fascinating to see that people are going for that. And I think a good strategy today is like maybe look to buy out underperforming franchise operators because there are some. Like I'd love for people to take a stab at running a business, but it doesn't mean that it's for everybody. Not everybody has really takes to run a business, like it takes a little bit of a larger.

SPEAKER_03:

That's the advantage of franchise over mom and pop, is you have built-in acquisition and exit partners from day one. If you go buy a mom and pop and mom and pop go retire, is everyone likes to paint the picture, right? Mom and pop's got the million-dollar business and they're gonna sell it to you for zero-down seller financing. When mom and pop leave and they retire, they don't want to take your phone call. So that's a big thing to think about is that built-in support. And when you buy a franchise, I mean, you know, David, look at Pinks. I mean, there's people who are adding up Pink's locations like yourselves, and there's people who are divesting pink's locations because that's just how a franchise system goes. I would be willing to bet that if you're and franchise owners tend to sell to franchise owners, but on any given day, five to 10% of every single franchise system is for sale. And you can get great deals just by asking your franchise or hey, who is within driving distance of me that I could acquire? Um, and in many cases, seller financing, if you really position it right to a seller, hey, look, we could we could buy you for a couple hundred grand today, or we could pay you out over the next 24 months with a promissory note, and your tax burden is going to be so much less. And now you're getting that real mailbox money that you were looking for. I mean, that's the beauty of franchising.

SPEAKER_04:

Yeah, for sure. It's even with good franchise systems like us, we'll have three or four or five at any time. Like if you came to me and said, Hey, do you have any resales? I said, I got three or four that are good businesses that for whatever reason the owner wants to do something else. Life happens to people and it puts them in situations where they need to make a soft exit. You know, I my advice is always like if you're a franchisee, um, try to sell it for you know, twice, you know, if you got profitable, try to get it to twice what you invested in it and owner finance half, like get a 50% down and carry a note for the remainder. You you can't really lose. Like I it's really hard to do that with a startup business, right? Impossible in most cases, but super common in franchise systems. You know, those are some of the people that you meet really smart people in franchising and the multi-unit guys that mop up all the underunites like in food concepts, they'll buy all the underperforming stores and turn them into mega performing, profitable. You know, it's so much cheaper to do that than to build one yourself. It's a smart move.

SPEAKER_02:

I love to hear, you know, you've been doing this a long time across many, many brands. When you think of your top performers, right, that you've worked with over the years, what traits do they have the the top performers follow the system?

SPEAKER_04:

Like at my top performing up closets, people will say, look, I want to hit, you know, 200,000 a month or 100,000 a month, whatever the number is that they're trying to hit. What do I need to do to get there? And it's a math equation for us. You need this many sales consultants, you need this many consultation appointments, you know, marking budget of X, do this, this, and this. And the people that just do it generally hit if that's the whole point of having proven kind of track record, is they they hit it. The people that really struggle on the other end um will come in and want to reinvent the wheel. Like they'll want to redesign everything. It's much more about how you feel versus what actually works. Like, I don't like that ad. I don't like that vendor, I don't like that account manager, I don't like this CRM. That doesn't work the way my other CRM worked. And but like everybody in the top performer list uses these systems and they use them without any trouble. Like, you got to ask yourself, like, why are you is it really that do you want to lose 200,000 over your feeling, or do you want to just make 200,000 and then hire someone to deal with that? Well, I mean, if you're a franchise or you'll have a lot of people that become millionaires, you'll have a lot of people that go out of business. And the difference is the people that go out of business maybe will listen to 10 or 15% of what you try to get them to have their help that you try to give them the advice and they'll reinvent stuff. And the top performers generally will listen to about 40%. I think nobody listens to more than 50% of what a franchise or says, just it's just human nature. To be an entrepreneur means you're wired to some level of innovation, and that's normal, but you have to kind of tamp it down in a franchise system a little bit to get to the result.

SPEAKER_05:

Yeah, I think you nailed it there, Thomas, is not having any business background and coming from blue collar for being a police officer. I just came into the system with Pinks and just followed the playbook. And like we say at Pinks, just run the damn ball. And right now I'm a top five franchisee within the system. Within the system, the people that are struggling are those that think they know better. They had a business before and they want to use their their way, and it's not working quite as bad.

SPEAKER_04:

Uh my biggest group of top performers and all three of the brands we have are Gen Z owners, people that are under 25. Uh, they make up 60% of my top performer group. And I think it's they're just they're raised on tales of entrepreneurship. Like they are very self-learning, they're very coachable, they don't have bad habits. You know, you I tell them, like, look, you can take a lot of risk when you're 22 or 24 or 25. Like, you're not even gonna remember what you were doing in your 20s when you're my age. So you might as well go for it, and they're not afraid to fail. In fact, they not that they fail, but they the idea that you fail means you're doing stuff right, that you're learning. Franchising needs a lot more of those people.

SPEAKER_03:

And we actually saw it play out with a client of ours who he invested in a roofing franchise. He was 29 years old, he just came in into an inheritance. In under two years, he flipped it and sold it for six million dollars. That's awesome. I won't name the concept because we don't want to break any FTC rules, but you imagine he bought two units, his all investment was$300,000, he had multiple offers, and he flipped it and sold it for six million dollars at you know, 31 years old. Um, and I would agree with you that it's much better to do it than 25, 30, 35 than the 60-year-old that wakes up one day and says, Oh, shoot, um, I don't have anything for retirement, and I probably have at max 15 good working years, assuming all goes well, but probably 10. And now I got to go build up and what do you think an average person needs to retire these days? At least$2 million. Um, so now they come to us and we're in the fourth quarter, and we really so then it's like, okay, well, we can we can do that, but you're gonna have to focus on low investment, high return, like senior care, things like that, home services. Whereas if you could start younger, if you could start at 25 with a with an up closet and you get good at it and you start stacking units, and then you're 35 years old and you've got 10 units, I mean, then you could be living the lifestyle that Catherine is, like going off to Italy for a couple of days. Right.

SPEAKER_02:

Well, I had a client the other day, and one of the concepts he really liked, and he's like, if this had been me 10 years ago, I would have done it. But now that I'm a little older, I just am not I don't have that hustle, you know, of that level for that specific concept. So I love that.

SPEAKER_04:

Your job isn't to do the work, your job is to become an executive, develop leadership skills, learn how to delegate, have systems, follow the system, you know, run a business that will run without you in as short a period of time as you possibly can, that one to two year period. You're gonna have to have three salespeople. Each salesperson needs 26 consults a month, and it should spend between two and three hundred dollars of marketing for consults. You know, that's that's what your PL is gonna look like. You're gonna have to have that kind of a marketing expense and staff overhead for you to hit the number you want to hit. Back to closets, real quick.

SPEAKER_03:

Yeah, you know, Jill, there was Jill upgraded her closet and it was not cheap. Um and but as I thought about it, I almost, you know, thought of it as a defensive strategy in that if the shit ever hit the fan, that, and then we needed to sell our house and we wanted to make it different than the other ones in our neighborhood, if we could point to, hey, we've got the the biggest closet in the neighborhood, that gives us something to kind of hang our hat on. And and so to me, and and I don't know that that statement's true, I'm just you know exaggerating, but to me, I'm like, it's exactly what you said. When we go into houses, we look at we want the kitchen, right? And you need to have that closet because, you know, I don't know, you know, Catherine Morgan, this was when Jill and I first got serious and we would start looking at houses. I didn't give a I didn't give a you know anything about the closets, right? I'm like, okay, there's a view, there's this, and Jill would like shoot these houses down, say there's no way in heck that closet's too small. Now I understand it, and I actually think you could make an argument that a closet like up closets could be pretty darn recession um resistant because I look at where I'm gonna spend my money, investing in something like that's a really good move to add value to your long-term value to your house.

SPEAKER_04:

Oh yeah, and you know, we and my wife runs the Nashville kind of Franklin up closet, she's a franchisee herself. So we're you know, we run company stores of our operations in several markets. So I'm just a big believer in that. But we were out on a weekend and she has some tools in her, she's got like a little BMW M4. It's not, doesn't look like a tradescar, but she's what she does her consults in. She had some tools and some rods in the back. She got a call from a customer who said, Hey, I just bought this house. I think you have it's one of your closets because there was a label somewhere on a drawer that he figured out it was something that she installed two or three years prior. And I want to move a rod around. Like, can you help me with that? She goes, Well, I'm not coming in that part of town, I'll just drop by. And so we went by and it was a$75 repair. And he'd already had a pantry and a closet. It didn't really need much more. But you just, I think that's an important customer service thing. But he said, I just want to tell you this is a uh like an over 55 kind of neighborhood, one of those sale web kind of things. Because there were seven houses for sale on this street. This one wasn't the best deal, but I bought it because the pantry and the closet were amazing. And my wife, that's the only one she would let us put an offer in on. We paid more, I mean, I probably paid more than the closet's cost, which you did, you know. And so I I see that story over and over and over again. Your wife probably had an amazing closet in another house. Like she's probably used to that, and you don't want to lower your lifestyle down, and it's a funny, it's a need, not a luxury thing. Like it's something you have to have versus something you just want to have, and it's a pretty cool psychology thing. If you understand how that all works, it makes marketing and sales pretty easy to kind of get to clients. And it's the reason you know the closet industry was up 24% last year. Like it's just it's gone through some like crazy levels of growth, driven mostly by millennials and Gen Zs who are buying closets. Like they may not buy a fifty thousand dollar closet, but they get in and they have wire shelves, and we call it the closet of shame. You know, friends don't let friends have closets of shame. You know, you know, nobody likes wire shelves. They're awful, they're hard to live with, they waste space. And you know, they might spend two or three thousand dollars on a basic custom closet, but you know, that's an entry point into the rest of their lives, they'll be a closet customer in every house that they owe.

SPEAKER_02:

Yeah, we do our closets. My gosh, you're selling me.

SPEAKER_01:

My first franchise was action home services, and we did kitchen, bathroom, organization, accessibility. And we would mention Dell Webb, 55 plus communities is in the state of Florida. So a lot of these big new construction neighborhoods would be in as people are moving in, or even the week or two before they move in, and would always be in with closet companies. Yeah. But it'd be new construction homes with the white wire racks and closets and pantries. And that was first order before people moved in, and a new construction home was replacing and putting in a custom closet, right? Because these just they weren't part of even you know pretty custom homes, high-end homes still had very basic closets that million-dollar house sometimes will have wire shelves.

SPEAKER_04:

A million-dollar house isn't a million-dollar house anymore. It's really a$350,000 house by what your standards are. But uh, it just you know, a lot of younger buyers, millennials in particular, will stretch to buy the maximum amount of house they can buy, and that's where that's where they skimp is it'll have builder grade closets. And so, yeah, the market for closets is great. I think it's just a testament, you know, when you see 15 or 20 brands in a competitive space, that just means there's that much customer demand for what it does. You know, I think that that's always a good thing to be. As long as your franchise or is committed to franchisee's success and is innovative and can articulate here's how we're different, here's where we win. You know, these are the this is who our sweet spot customer is, and this is why we delight them and how we price our things. You just you have to have a clear roadmap. You know, if they can't do that, don't buy it. You know, like if you're gonna buy window cleaning, Pinks is a really slick brand. I love all the branding. I'm envious of some of their branding for our drivenet brand, but they're uh we know those guys really well. But you know, like like there's a bunch of window cleaners. Like uh there's a Pinx here in Franklin that you know that uh Brentwood Franklin that he's super I think Vin Kidney is his name, super nice guy. But they're you know, I like that one better than all the other ones. And maybe it's branding, maybe it's customer service, maybe it's pricing. You know, like there's you know, just because there's a lot of people in a space, that generally means it's a good business to be in.

SPEAKER_03:

We believe validation is the key to all of this, and that's why we we created a um uh franchisee interview that anyone can get if they go to our website, thefranchiseinsiders.com. Um, you can get questions to ask franchisees, which we recommend talk to five to ten. And we actually have a client who's moving forward with enough closets tomorrow. And I know she talked to, I think right around there about 10 different franchisees. At least 10. She's analytical. It's it's yeah, she's great. We're we're super excited. We make sure everyone does that. We also have a um uh 27 red flags you should know about. So again, go to the franchiseinsiders.com. All those resources are free, including the valuation calculator. Um, our aim for Thomas is to provide everyone with as much information as possible, and but thinking about it as franchise owners. And that's why our whole mission here is franchise owners, helping future franchise owners is we want to help people who are thinking about business ownership think about it the way that an owner should think about it. So, with that said, let's do a quick kind of like closing thoughts, kind of going David. I know you've got a hard stop, so let's start with you.

SPEAKER_05:

Amazing podcast. And coming, like I said, coming from blue-collar police officer to now owning my business. You know, if you want to reach out to me and just hear my story and just talk all things franchising, you know, I'll go ahead and reach out. My telephone number is 305-496-4883, 305-496-4883. But again, thanks for being here, Thomas. Really appreciate all the insight. Thank you.

SPEAKER_01:

Cool. You know, Thomas, it's it's always fun talking to people like yourself who you've owned multiple franchises, you're for a franchise or so you've seen all sides of this business. And one of the things that you mentioned a couple of times today was along the lines of, hey, I'll take a business with a lot of competition, right? There's always room to do things better, to have stronger marketing, and really scale a business when there's consumer demand. You know, and I think we're seeing that right now with with your service businesses. I think that's just a key takeaway that anyone listening should always keep in mind is that don't shy away from competition. Competition just proves that there's there's enough uh space out there for another player. Yeah. Morgan.

SPEAKER_00:

Yeah, thank you, Thomas. I I just my big takeaway was just being your own CEO with home services. I think I I shied away too quickly. So I hope people listening take it seriously and go dive into what's out there and understand that it's a low buy-in and there's huge success. So I hope it I hope it helps someone.

SPEAKER_03:

Awesome. Thank you. Thomas, your closing thoughts.

SPEAKER_04:

Yeah, I I think, you know, thank you guys for having me. This is an awesome group. We're excited to have a placement with you guys. And I really appreciate the work you guys are doing to educate people. I think in all of your materials, you're thoughtful. Like I think that this idea that you can run an inexpensive franchise that can get to really large kind of multiples. Like it's you know, you don't have to have millions of dollars to to build a business that's worth potentially millions of dollars. I think the market is full of people that you could help, and I'm excited to kind of be part of that growth for sure. You know, I just I think you know, home services are where the action's at today. It's the smart money in a franchise purchase.

SPEAKER_03:

Catherine.

SPEAKER_02:

Yep. Uh two thoughts. One, you've sold me Thomas. I need to get custom closets. It's it's a done deal. I'm talking to my husband after this. Two, I love the just the Gen Z hearing you guys have kind of figured that out and that you have a cohort in your company that's driving 60% of the revenue.

SPEAKER_04:

You know, they're just they're just like they're right out of business school or right out of college, and their parents help them with an SBA loan, and that's really all it takes. Like that's that easy of a deal to put together. Yeah, maybe you only buy one or two units, but it's the first one I would say that.

SPEAKER_02:

So I think that that's really for anyone listening in that age group, um up closets would be a great, a great concept for any of them.

SPEAKER_04:

Behind every 22-year-old Gen Z is a 55-year-old Gen X who wants their kid to be entrepreneurial and not follow the path that they followed. So you'll find that generationally those two generations are pretty entrepreneurial and very pro-risk oriented. So they'll take chances on things. So I think if you're recruiting people, like that's not a missed opportunity for a lot of franchise consultants. They just they just assume that somebody young isn't gonna have the drive or the capital, and it's a mistake. You know, like they're some of our best owners. We'll take everyone you want to send our way.

SPEAKER_02:

I'm gonna go find them. We'll do that.

SPEAKER_03:

You're gonna see. I I think now with the news that open AI, ChatGPT soon is gonna have you know an advertising platform.

SPEAKER_04:

Oh, so excited about that.

SPEAKER_03:

Isn't that great? I I think we are going to be able to find the right kind of people. I think this type of message, first of all, you know, it's great, you know, for us. I mean, I I I think the most important thing is this for for everyone, which is starts with one and have patience, right? You you don't have to be a rock star entrepreneur from day one. You gotta get to month 18. Get to month 18 and see where you are. And that that really will tell the story. And then from there, if then if you're working with a franchise consultant like anyone on our team here, um, we build that into our process. That at month 18, we're gonna check in and we're gonna just discuss are we now going into acquisition mode? Um, or are we going into selling mode? What are we doing? Or are we staying put? But it it really is the advantage of franchise versus going out there and doing the MA stuff is that you've got this built-in network, built-in franchisees, acquisition, exit, it's all built in. You just have to go take the systems and execute. So this has been great, Thomas. Uh, we appreciate you being on the podcast and and thank you for joining us today. All of you listening, if you want help with your franchise search, I recommend you go to our team page where you can learn about Catherine, Morgan, Brian, David, and uh determine, you know, who it makes sense for you to work with. We'd love to help you in any way that we can. And we thank you for listening to our podcast. We'll see you next time.