He Owns 36 Auto Repair Shops Doing $50M a Year. He’s Never Fixed a Car.

Brian Beers has never fixed a car.

He owns 36 Midas locations across Philadelphia, New Jersey and Allentown doing more than $50 million a year—with a CEO running the day-to-day, mechanics earning $5,000 in a week, and a business that runs without him.

His dad became a Midas franchisee in the 1970s. Brian joined after college in 2010, writing service tickets, knowing nothing about cars. Six years later he and his brother put in $67,000 each, borrowed the rest, and bought two stores from a retiring owner at roughly 2.5x cash flow.

That snowball became 36 locations—32 of them through acquisition.

Most people who buy a franchise buy themselves a job. I wanted to understand the difference between those people and the franchisees quietly making private-jet money. So I flew Brian to New York to break down exactly how the model works.

We break down:

• How Midas economics actually work: the $15,000 franchise fee, the 10% royalty, and what you actually get for it
• Why buying existing stores at 2.5x cash flow beats building from scratch
• The “hero versus architect” transition, and the stair-step approach of trading income today for freedom later
• Why closing at 5 p.m. and staying closed on Sundays became his best recruiting tool
• What separates a good franchise from a bad one: the Subway problem and the Chick-fil-A trade-off
• How to actually do diligence: Item 19s, FDDs, and calling franchisees at the top, middle and bottom
• Who should not buy a franchise, and why $10,000 is not enough to start
• The liquidated-damages clauses hiding inside franchise agreements
• How his brother used AI to build a business intelligence system that tracks every store, every mechanic and every phone call in real time

My assumption going in was that most franchisees buy themselves a job. Brian did not change my mind. He showed me what the exceptions do differently—and it has almost nothing to do with the brand on the sign.

Transcript

SPEAKER_01 0:00

We do over $50 million a year. I've got a whole C suite of team that now run the business that I've effectively replaced myself. We're in the people business that just happens to fix cars. Like last week, our top mechanic paid $5,000. People that get into franchise work basically buy themselves a job. People who who make like ridiculous money fly private jets that nobody cares about. Great franchise, you should be able to copy and paste. I don't want to be the hero anymore.

SPEAKER_02 0:22

Brian is running a multi-million dollar opportunity that's hidden in plain sight. Brian isn't a genius. He just knows a few critical things. I flew him to New York City to understand this opportunity, catalog everything he's doing right, and ask him the biggest mistakes he sees when people try to copy him.

SPEAKER_01 0:39

I've built a business that, an auto repair, that we do over $50 million a year. I've got a whole C-suite of team that now run the business and that I've effectively replaced myself. And so I spend a lot of time coming on the next level, which is uh on content, on media, to really build uh a holding company that will attract investments, partnerships, and and other deals that go beyond what we can physically do in our shops.

SPEAKER_02 1:03

So how did you get into your business in the first place?

SPEAKER_01 1:08

So it was a family business. My my dad uh became a franchisee in Midas. That's that's the brand that we're in in the 70s when he was in his 20s and did it pretty much his his whole life uh after college. And I graduated in 2010. I I joined the business and you know, I I never knew anything about cars. I never worked on cars and auto mechanics but I have always had a love for business. And so I uh I joined and and just just learned it working in the business six days, seven days a week. So it's auto repair and auto parts, is that the uh just service, yeah, auto repair.

SPEAKER_02 1:39

Yeah, we don't like sell parts, not like auto zone, but like um and so did you did you grow up going to work at all with your with your dad or how did that work?

SPEAKER_01 1:47

A little bit. I think I worked two summers, one in the shop and I was like a like a root like a teenager and one uh in the office doing like paperwork. And other other than that, I had jobs working in other places. And so uh so yeah, after college I joined the business, started working in it, and then um So when you came back from college, what was your first job? What did you do on day one? Yeah, first day was uh you could call it a service writer. So it was like somebody who's like in the shop, uh taking tickets from the the mechanics who say, like, this is what's wrong with the car, and just like you know, writing up the estimate and then talking to the customer and telling them, you know, this is you know, you came in for this issue, this is what you need, this is what it's gonna cost, uh, and you know, trying to get them to say yes.

SPEAKER_02 2:25

So, what was the revenue of the business in 2010 when you started?

SPEAKER_01 2:28

Uh so they were doing probably about five million dollars uh between they're like five or six stores at the time. And so when you say five or six stores, all Midas stores? Yeah, they're all yeah, all the same franchise. And you know how the franchise works, it's like you know, people may know Midas, there's a thousand locations, you know, nationwide, but then every franchisee, you know, independently, you know, owns and runs the store uh kind of along, you know, within the guardrails of the franchise, but it's still uh, you know, it's it's still driven by the owners.

SPEAKER_02 2:54

So is an average Midas store do about a million dollars in revenue? Back then it did. Now it's now it's higher. So what would you say an average Midas store does today?

SPEAKER_01 3:02

Uh today, probably 1.3, 1.4, like nationwide. Ours are a little bit higher than that. We do about 1.5.

SPEAKER_02 3:09

So all five of the locations were Midas locations. And are all of your locations today Midas locations? Uh yep. And that's so you you you so you've basically stuck with the same with the same same franchise.

SPEAKER_01 3:20

Yep. Yeah. And and a lot of our growth has been through through acquisitions, through there's you know, other groups that want to get out. And often it's it's easier to sell to an existing franchisee who's already in the business and knows it and they trust you and uh than selling it to an outsider.

SPEAKER_02 3:34

So walk me through how a franchise, how a MyDish franchise works, like you know, what are the economics, how do you get signed up for it?

SPEAKER_01 3:41

Yeah. So um so startup costs. So it can it can vary significantly depending on if you're gonna be taking over an existing store that's like already a maybe an independent shop or competitor that we can convert. So like, you know, we we just did one uh uh we've done two recently last year that we took it was a competitor that closed uh like a like a Monroe Muffler or a Pet Boys or like a like a good year or something something like that. And so so we go in there, but but it's a great layout, it's a great, it's a great um location. And you know, we we had a pain, we had to put new signage up, we got to maybe up upgrade some of the equipment, but like all in, we might be into it for $150,000, $200,000 uh to get that going. Now, if it like wasn't a shop and we had to like install lifts and punch out bay doors and like convert a non-shop into a shop, I mean we be can it could be $500,000 or more.

SPEAKER_02 4:30

But like from a franchise perspective, like what are the Midas rules that uh say like if you just find a good location, can you just call them up and say, hey, I want to I wanna open here?

SPEAKER_01 4:40

Yeah, I mean they have uh every every brand's a little bit different, but yeah, they'll have like guidelines that they're gonna look for in in specific stores. And in franchising, there's definitely a spectrum of control, you could say, of like for for what they allow. I would say MITIS is is more on the like easier side to deal with, where there's some more flexibility versus some brands are gonna be like extremely strict on it. Uh so yeah, we we we'll send them a site, they'll come back to us with a projection of of revenue and like traffic counts and demographics. And but at the end of the day, it's it's really our decision to say, hey, like we're gonna move forward, whether you guys think this is a good location or not.

SPEAKER_02 5:13

And so, like, what is the economic relationship with MITIS? Like, how does how does that work?

SPEAKER_01 5:17

Yeah, so you pay a franchise fee up front. Uh that's not that bad. I want to say we pay, I don't know, fifteen thousand dollars a a store, something like that, as like an upfront fee. Part of it's because we're an existing franchisee and they have like every brand has like different rules, but but ours is relatively inexpensive. And then uh so we pay 10% of our revenue to to MITIS. Half of that money goes into a national ad campaign. So that gets split nationally by DMAs, by regional. So like you know, we'll be on like you know, sports, like during the playoffs, right? There'll be there'll be national TV ads that comes out of that ad fund. And then the other half goes to, you know, the corporate, that's like their their main profit center uh for for the name, for like the community, for all the things that you get for being part of it. So so roughly like the real cost is about five percent of of sales on an ongoing basis.

SPEAKER_02 6:03

And then like do you get a exclusivity for and you don't get any of those.

SPEAKER_01 6:08

Yeah, there's no exclusivity technically. Now they do look at like potential cannibalization between stores. And so when we submit a site, if they think it's it will hurt another franchisee by more than like 10 to 15% of of their revenue, then they could decline it. Now, if it's our own store that we cannibalize, they don't care because it's you know it's up to us.

SPEAKER_02 6:27

Yeah, so um you know what else what else do they give you for that 10%?

SPEAKER_01 6:32

There's a number of things. One, one of the reasons people join is is a brand, right? So you like Midas is a national brand, it's it's one of the most recognizable ones. So like, you know, we can open up a store. Like like we just opened up a store last July that wasn't that was a brand new store from Zero as a competitor, failed there. You know, we have we have customers on day one. We're cash flow positive by the end of 30 days, and like that store will make probably uh a hundred grand this year for us, like net cash flow, and our startup cost was about a hundred grand to get it going. So, like year one, we got all of our money back. And because we have a a recognizable brand that people know. Like if it was Brian's tire and auto and we open up in that same spot, I don't, you know, we don't really have an uh a reputation.

SPEAKER_02 7:12

And you think that's because people drive by and they see Midas and they recognize it, or is it they that helps Google search and it helps?

SPEAKER_01 7:18

It's like a combination of everything, right? Of of trust and familiarity. And then yeah, retail spots. And like we, you know, we paint the buildings, we clean them up, they look really good. Uh, you know, we're in a high trust-based business. And so the more that like we can have a better image, that the more people are gonna trust us.

SPEAKER_02 7:32

Uh you started in 2010, you know, basically writing order tickets. Yep. Um, and how long did it take you to go from that to deciding you were going to grow through acquisition acquisition and and expanding?

SPEAKER_01 7:44

Yeah. So I I started I started to learn the business, you know, know nothing about cars. Like I'd, you know, I'd ask the mechanic, all right, tell me what's wrong. Like they'd teach me what it is so I could like tell it to the customer. And then um over time I took more and more responsibilities in terms of like hiring people, training people. Uh, and then in 2016, so it was like six years later, I had, you know, I wanted to make more money. I was, you know, I was just an employee, you know, in in my my dad's company. And so my my brother had recently joined, and then together we went out and bought um two stores from a guy that was looking to retire in the same way. How how did you swing that? Did you have a lot of money that you were looking to? It was a bank loan. I mean, we I think we each put in sixty-seven thousand dollars from savings. So it was $130,000 down, and then we got a bank loan for the rest, which was like four or something, uh, to buy these two stores for five hundred and fifty, something in that range.

SPEAKER_02 8:33

And uh, you know, they were What gave you the confidence to do it? Like what was the cash flow of the bit of that business?

SPEAKER_01 8:38

Yeah. So they were doing, we think they were doing back then probably about 200, they're probably making about $200,000 between the two stores, about $100K each of like, you know, cash flow after paying, like, you know, having managers and everybody in the store. And so our debt payment, I think, was 60. So like we're like, all right, we'll we'll put in 130,000. We should be able to, you know, we have 200k of cash flow minus our 60k down payments. We had about 150K after after that. So you were basically bought it at like two and a half times cash flow. Yep. Um, knew and was in the market and like confident that, like, hey, worst case scenario, like we can just like maintain because that those stores were doing less volume on average than you know the stores that I was that I was running. So, how did you find that opportunity? Relationships. I think that that's the biggest thing in in in a in a franchise business or or or any any of these ones like the in the trades where a lot of guys know each you start to know each other. And you know, I I put the seeds out that hey, I'm looking to grow and when you want to retire or you want to sell, like I'd love to be the first call. And so uh so those two stores then you know kind of set the the the snowball for for the rest of it.

SPEAKER_02 9:40

And how many stores do you have today? Uh 36. 36. And you did all of that through acquisition? Thirty-two of them. And so like the the other four were just green fields.

SPEAKER_01 9:51

Yeah, we're these new stores, competitors that failed, dark stores that we've uh so we've like never built like built a building from scratch, uh, but yeah, they're conversions.

SPEAKER_02 9:59

And um, are you continuing to grow that business in the same way through acquisition?

SPEAKER_01 10:04

Uh we're reaching somewhat of a like a stalemate now because we've acquired almost all the ones that we can like in our footprint who who want to be acquired. And you know So you say when within your footprint, what what what is keeping you from expanding that footprint? P I so it's a couple things. One is people. Like we're we're we're in the people business that just happens to fix cars. So like we gotta have great people in the stores that you know customers trust that you know that we trust. And uh so that would be that's like the biggest concern to say, hey, we're gonna go to like Baltimore. So right now we're like for context, we're in Philadelphia, New Jersey, and n northern Philadelphia. It's called Allentown. Uh so the 36 stores are kind of in these three three markets. And so we've looked at like, all right, can we go to Harrisburg, like Central PA? We've we've looked at Baltimore, DC, we've we've looked at plane ride markets too, like you know, in Florida and Missouri and and a bunch of others. And it's always been a concern of like uh, well, who I don't know, who who's gonna run them? Like, do we do we send somebody from our team who has to relocate out there? Do we find some random people and like try to get them up on on kind of the culture and the way we do things? I don't know. It's it's like I I think we'll get there eventually, but then you compare that to like if we can grow our same store revenue like but by a certain amount. Like it's it's way more profitable once we hit a certain number. If we can get our stores from, you know, 1.5, 1.5 million to two and a half million, you know, our additional profit on on those incremental sales is significantly more than than adding a new market.

SPEAKER_02 11:30

So you mentioned at the start of the conversation that you have a great management team that you've got that you've put in place and that you're now spending your time doing content marketing and ultimately building a holding company. So why don't you walk me through Brian's goal is 10 years from now? Like what where is this going?

SPEAKER_01 11:47

Yeah. So I think I think I I look at it at uh I guess two different paths. One path is like on the auto repair business, uh, you know, we want to we're gonna keep growing that. We want to keep growing locations and really focus on growing revenue and and cash flow. Because at the end of the day, these are these are like cash flow businesses. Not as much of like, hey, there's gonna be this big like equity payday down the round. Like maybe there will, but like I'm not gonna bank it.

SPEAKER_02 12:08

Well, it sounds to me like you're looking to basically um make that business more and more efficient and grow organically rather than you know trying to use it as an acquisition channel to correct.

SPEAKER_01 12:20

Like I don't want to take on like we don't have that much debt. We probably have six million in debt, something in that range. So we've thought like, all right, do we take on a a ton of debt and you know try and double or triple and pay these big multiples? But then it's like, I don't know, is that is that worth it? So have you seen the multiples expand in in this? They're growing, yeah. Yeah, and there's like private equity backed guys that are that are getting into it or extreme, extremely wealthy, you know, families and uh for I mean for good reason. But so so that business that's like you know, focused on on cash flow and and just a continuous strength unit economics, we have a great team. And then on the other side, I mean I I love uh I love the the challenge of of building something new, right? Uh and I think uh I I love the the partnerships, like working with other people and helping them grow. And so yeah, 10 10 years from now, I mean it's a good question. I guess that's part of my uh what I'm working to get more clarity on. But I I really enjoy helping people and and seeing others succeed. And so we're doing that now through through partnerships and investments and and one's kind of all in the franchise space, uh, where I you know have have a lot of knowledge and connections and and and friends to help these guys grow. So what does that actually look like? Yeah, so there's a couple ones. So, like one, for example, I'm uh I'm an investor in a partner and a franchisee in a uh artificial turf company. So they install you know artificial grass in uh in primarily residential, but but in commercial now. So like I have a partnership in in Texas, so we own Houston, and I got a I got a guy down there and we're we're crushing it. And so that's one that I'm like a franchisee and I'm also like an investor in the brand. And so the So how did you how did that opportunity some of its content, some of it's like the people that know me and you know they're looking to start this thing from scratch and you know want my want my insight. So it's like so it's not an existing franchise, it's something that you're starting from scratch. Uh yeah, they started it from scratch. Now they've got, I don't know, 50 plus franchisees around the country, and it's you know, it's like just two years old. Uh so it's growing really fast.

SPEAKER_02 14:14

So you're working, you're like the equivalent of MITIS in your original business in this turf business is like you're the franchise.

SPEAKER_01 14:20

Yeah, I'm invested into the franchise or an advisor to them. And then we're also I'm also a franchisee. Well, with a partner, right? So like I'm not I'm not running day-to-day. He's he's the one busting his butt every day. And um but it but it's like deals, I'm doing more deals like that where I can I can help through the kind of the knowledge and the strategy that we've got in terms of of how we scaled a business and and what we look for in talent and uh help these both franchisees do it, but then also the brands. And there's a you know, there's the economics on both sides are good.

SPEAKER_02 14:49

Yeah. So what would you say your focus is today?

SPEAKER_01 14:52

Uh I'd say most of it is, I mean, I there's there's three a lot of it's content, right? Creating creating a lot more content, but really with three outcomes. One is is people. So through through content and YouTube videos and and all the stuff we're doing, uh we we get a lot of inbound requests that people that want to come and work for us, uh primarily in the auto repair business. So we've got multiple guys that are looking at relocating like across the country to to come and work. Like mechanics. Yeah, mechanics, managers, district managers, uh, you know, like higher level, higher level guys. Like, why do you think they watch your YouTube video and they say, hey, I want to come work for Brown? We make fun content. But but like we we talk about where like we're in the people business and like people in specifically automotive at least, like there's a lot of there's a lot of like companies that aren't good. There's a lot of ones that like they go to work and they feel like unappreciative or the the the money's not good, but they know they have the raw talent and the skills. You know, we've we have performance-based compensation plans. I mean, our best like last week our top mechanic made five thousand dollars, like last week, and the number two made four thousand, number three made three thousand, the other guy made yeah, thirty two hundred. So we have multiple guys that are making really good numbers because they're I mean, they literally can do the work of two or three people. So, how does that differ from how a normal Midas franchise is run? I did I mean so there are a number of shops that that do very well, better, better than me on average. Uh, I mean, I'm more public about it, but like they also run really good organizations. So like I'm not I don't I'm not like special in that way. But this the top tier guys, yeah, they all believe in what I believe, which is like creating this culture where we can attract really good people and then we we create we create systems that want people to stay. Like we close, close at five o'clock so that people can have dinner, their families instead of we have competitors that are open to like seven, eight o'clock at night, and we are close on Sundays and they aren't like and so there's all these things that that we do to run our company in a way that uh attracts and retains talent of people. So then we share that stuff online, and then there's other people that are like, wow, I would I would love to be be part of that because I'm here stuck, you know, grinding it out on a Sunday afternoon, and like my boss doesn't care, and nobody, you know, it's a corporate structure. But in the franchise, you know, we're like, you know, my brother and I are the owners, and like, you know, this we have we have Collins, our CEO, he he runs, you know, everything. It's like there's like the three of us, like there's no corporate structure. Like we have like labels and stuff, but at the end of the day, uh, we're we're very accessible and like we're just trying to run a good organization. And so sharing those stories is what um what what attracts people to organization.

SPEAKER_02 17:17

So what differentiates a good franchise from a bad franchise?

SPEAKER_01 17:21

The franchisees can reliably make money, uh, I think is the the the number one thing. There's tons of franchises out there. I also one of the one of the other things through online content is I have a I have another team that helps people buy franchises. And so that's a lot of the way that we so we kind of like broker them in a way. So people would come to us and say, hey, you know, help me find one. We'd have a team that will help them like play matchmaker.

SPEAKER_02 17:41

And and so like walk me through like you're you're kind of making my head spin a little bit. You've got a lot of you've got a lot of different business models, it sounds to me. Um so that's why I'm just trying to kind of get a little clarity on like when you say they come to you, they're coming to like a a specific website that funnels them through all of this.

SPEAKER_01 17:58

Yeah, like so it's all content, right? So that's why most of my fun most of my focus is is creating content around how do we make money in franchising, right? So it's how I make money through our business, and here's how other people make money. Uh and then depending on what the what the insight is, you know, it's it's I have the funnel, right? So the one funnels to like the team of uh people who can help them find it. And then, you know, if it's like, hey, I want to work for you guys, then it goes to my team uh internally in the in the daughter of the thing.

SPEAKER_02 18:22

So so I come to you and I say, okay, I'm a young entrepreneur and I want to do what you've done and make money in franchising. Yeah. How do you help me?

SPEAKER_01 18:31

Yeah. So we'd walk through uh to try to understand a number of things. And I what a, what are your uh what are your what are your goals? Like so what are you looking to do? I want to make a lot of money.

SPEAKER_00 18:40

Yeah.

SPEAKER_02 18:40

What are your like Yeah? So I want you, I want so so I want to make a lot of money. What do I do? Uh can you sell? I think I can I think I can sell, sure.

SPEAKER_01 18:47

Yeah, so I'd recommend we you get you look at some some brands that are they're high ticket and sales driven. So for example, like what? So so like so like what? Turf business. Turf business. The average ticket's ten thousand dollars. I mean, we're we have quotes out there for a hundred thousand, one hundred and fifty thousand. Okay.

SPEAKER_02 19:01

I live in I I I I live in in Florida in um West Palm Beach. I want to go on the turf business. What's my next step? That's a that's a perfect market.

SPEAKER_01 19:09

Yeah. So if you're interested, so so then what what our team does does is just connects you to the brand, right? And so the the brands then walk you through their sales process to talk about um you know background and stories and goals and all this stuff. Then they kind of get into the economics. I mean, really, then you want to vet them, right? And so what what we do is give you questions to ask, right? To to understand um, is this the right business for you? A lot of it's gonna be, you know, the emerging brands, so like brand new stuff like this one, they're two years old. Like they're a startup in a lot of ways too. And you're kind of like a startup. And so that culture is gonna be like dynamic, right? Things are gonna be changing, technology is gonna be changing. Like if you want everything to be completely set and like rigid, like probably not a good fit. You get into like like Midas or a brand that's SurfPro or something that's been around for forever, they're gonna be like like elephants where it's gonna be like slow moving, everything's gonna be slow moving, right? In terms of their adoption of technology, the like uh just just the way they do things. So how much money do I need to get started on my turf business?

SPEAKER_02 20:11

$150,000, $200,000. So that's that's a lot of money. How am I supposed like if I don't have that money, what am I supposed to do?

SPEAKER_01 20:17

Uh so SBA funds up to 80%. And uh even for a new franchise. Yeah, they love franchises. So you got thirty thousand?

SPEAKER_02 20:23

I could probably I I could I could I could maybe maybe maybe make it happen. But you got out of money, right? So I think so let's let's say I don't have any money. What are my options? You have no money? I've got no money to do a franchise. Okay, I have ten thousand dollars. Nah, not enough. Not enough. How much minimum do I need? 50. 50 for for basically any franchise you think.

SPEAKER_01 20:42

Not any, but like that can get you started.

SPEAKER_02 20:43

Yeah. So I actually have a one of my brothers actually invested in a franchise. Disaster cleanup. So so like of like let's say you have a hoarder house or um somebody passes away. Um what do you think about that that kind of business?

SPEAKER_01 21:00

Aaron Powell I think it's okay. I I don't know if it would be one I would I would do. Why not? I like the ability to go out and get customers. So this is a preference thing. So you ask like what kind of business model you want. I like I like a business where we can go out and like we can put effort in to generate activity to create business, right? So for example, like if in the auto repair business, if we want to generate customers, we could just like pick up the phone and dial customers who haven't been in a while, right? And we could like do more direct mail. We could do a bunch of things to generate activity to get us leads. So you have you have a you have the opportunity for repeat business. Yeah, and like the ability to just like we could go and generate business on our own. There are some that are more like not I don't say they're not passive, but like if you're in a disaster recovery business, you're just kind of waiting until there's a disaster of some sort, right? Yeah. Uh or if you're waiting to find a hoarder, or like, yeah, you could do ads to like, you know, are you a hoarder? Come in, like, give us a call, right? Or it's probably like a landlord that needs to be. Yeah, landlord something. Usually it's like somebody dies and they go to their like parents' house and it's a mess, and then they're like, you know, cleaning it up. Yeah, so then their insurance, it's it's generally insurance driven business. Insurance-driven is going to be like highly competitive because of like you know guaranteed money. And so it's just going to be it's it's going to be hyper competitive in that space. You've got to be really good with your like your margins and your cost control because generally you can't adjust like the prices kind of are what they are set by the insurance companies for any of that like disaster recovery. Even like roofing roofing to a degree if it's like storm chasers. And so all that just like it creates it creates like this hyper competitive side that that then become relationships. So a lot of the guys that succeed in those businesses have relationships with the like uh insurance agents or insurance guy because like they call the insurance agent, the insurance agent, hey, say call these guys first uh or the insurance companies, these adjusters. So there's just this like whole world that like already exists where like all these guys are are you know printing money or doing really well and then like you're the newcomer and you're trying to break in through these relationships and it can be really hard. But then you can't really do marketing or it's just harder to do marketing as well as it is in you know I don't know another type of business. Yeah.

SPEAKER_02 23:01

So make make how do you deal with it? Very bad very poorly. I think they actually they actually shut it down. That's what I but but it was actually you know what what you said and I it was my first thought when I first heard about it, but like um how do you actually sell this business? How do you I mean meaning how do you advertise it? How do you find customers? It's not like you really can run Google ads and get a you know sustainable um you know lead flow in my opinion.

SPEAKER_01 23:28

There's a lot of bad franchises.

SPEAKER_02 23:31

Yeah well and that's kind of why but but but my point was it's like how do you how does someone differentiate between a good franchise and a bad franchise.

SPEAKER_01 23:40

Yeah. So I mean t tons of due diligence in in talking to other franchisees. So you should your goal should be to talk to as many of them as you can to understand like you know what's their experience like compared to their experience.

SPEAKER_02 23:54

Let's talk about how somebody actually does that though. So like my guess is if I call up a franchise and say hey I want to talk to your franchisees, they're going to set me up with people that you know basically so like like how do I how do I actually approach this?

SPEAKER_01 24:08

Yeah so you would I mean all their con name and contact information are in the back of the franchise agreements that you're going to get so you would you would have all the information. So you you can reach out blankly and just say hey I'm looking you know I'm I'm looking into buying I have a few questions you have a few minutes. And like the brands do I mean if you ask the brands yeah they'll they'll direct you to to people that they want you to talk to uh and so it's kind of both ends though like when you're going into it you you do want to talk to the best people because you're gonna say like hey I I want to like this is the level that I plan to operate. So you would want to talk to like other high performers to understand the way they see it. But then yeah you're gonna want to talk to the guys in the middle like the average people and then yeah you probably want to talk to some at the bottom and try to understand why do they think they're not doing well and and to get perspective on is it like is it them to say hey I'm not putting the right effort in or I have another job and this is like a side thing for me. Or is it you know the the marketing's not effective these systems don't work like blah blah blah like if if you hear the same stories throughout all the levels then you know it's it's probably there there's probably truth to that.

SPEAKER_02 25:08

Yeah. You know, use my sales skills to come up with 200 grand to go into the turf business in West Palm Beach. Um how much money can I expect to make this year?

SPEAKER_01 25:18

So in in all the in all the agreements that there's uh what's called an item 19. So it's like every brand discloses some sort of financial information based off of current franchisees on corporate on all these different factors. For them and part of this is because like because like I'm I'm an investor like I can't tell you you're gonna make some but but like we can pick it we it didn't have to be the turf business. I was just using that but you gave me that so that would be one that would be one way you'd look is like in the five you would go to their FDDs, they have financial performance. Some of the brands do a really good job in disclosing tons and tons of financial information. They'll say you know like the the best ones will will give you um year by year like ramp up periods of franchisees. So like to say in in month like by month say in month one this franchisee did X amount month two, month three month four. So this whole grid those those are like the best where they give you tons and tons of data that you can go on. Some of them just give you one thing say hey this brand's been around for 30 years or the founding location.

SPEAKER_02 26:11

And so like in a good franch like let's say not in the turf business because you can't talk about that. But let's say in a well run franchise um you know in you know whatever whatever industry you want to talk about a burger joint um you know let's say I put a $200,000 investment to like what kind of return can I actually expect um if it goes well?

SPEAKER_01 26:33

There's no set rules, right? So this is like it's like you're buying a business right and I think this is like the this is this is the hardest part is like how much money can it make? I mean I've put you know I've put $50,000 down to buy a store that's made you know mil millions of dollars up to this point. Right. And I've put $200,000 down in a store that you know barely makes money. So like it's like you're it's like you're running a business and so it's it's there there's not the the hard and fast rules. What what people really care about is or not I don't know if the is is how quickly can I can I make my money back. And then what do I expect like over time this thing to be able to to produce. For for most people yeah if if they're gonna put $2000 into it I think most people are going to expect to be able to make like $200 grand a year on it like 100% roughly of of whatever their like capital outlay is. Yeah.

SPEAKER_02 27:19

So I want to come back to this but like one example that I've seen when I've like in the YouTube world of franchises like I believe there's a whole group of people that own subway franchises and will disclose the amount of money that they can make which which um which is not not not very much yet people somehow do it. Why why don't you walk me through that why is does Subway get such a bad rap from their franchisees?

SPEAKER_01 27:44

Uh the fees are really high. I want to say they're like 15 ish percent of of their revenue that they're they're paying up to corporate and food's already like a low margin business. And so they've got they've got low revenue and then they've got high fees and then they've got you know the on the in the food businesses usually the the franchisor is controlling the supply chain so they have to buy from their vendors and normally the supply chain also becomes like a profit center for them. And so then they have inflated supply costs, low sales, high you know high and and then their their rent's still the same the insurance is still the same the payroll costs are the same. Have you come across anybody who's super successful as a subway franchise I have one friend but he's he's selling them all. He had like 20 or 30 and he's uh he's selling them all. You know what actually I got another guy I know who who's got a number he's probably out 50 or so. So what do they do well that these people I see on YouTube don't I would say they have extremely tight cost control. Like they they are extremely tight on on all these big payroll is going to be the it's payroll and cost kids right it's like any business but especially in food. So extremely tight and and then maybe their goal isn't to make a ton of money per location like if some of these guys if they can make you know five to eight grand a month something that range like single single digits they're happy but but because it's like very predictable. And then if they can have you know 20 of them making 5k a month they got 100 grand a month and they've got like a team and a system and they're not like in the weeds every day. But the the challenge becomes like if you could take that same like it takes a lot of skill sets to be able to to run the retail and sign leases and hire people like you have all these like raw skills then like if you applied that to a business that instead of making $5000 a month could make you know $15 or 2000 a month like it's the same amount of like input but your your leverage would be much greater in output. So I think that's what a lot of the guys end up like getting out of the business is because they realize they like it's really good for like learning all these skills. Like they learn it in a really hard business but then now let's go apply it to like a a better business.

SPEAKER_02 29:33

If I were going to critique the average franchise model I know I'm I'm certainly no expert in in in franchise franchising at all. Sure. But um I think that most people that get into um franchise work basically um buy themselves a job correct um and you seem to have successfully um figured out how to build a system that allowed you to step away but but that came with in order to do that it requires um lots of locations like it's it's probab it's it I would guess it'd be pretty difficult to do that if you only had one Midas location for instance. Walk me through how somebody um makes that transition.

SPEAKER_01 30:14

Yeah so ultimately it it all comes down to like you you need you need extremely high level people to be able to to to run the organization right so that starts as the owner so you know I have this thing it's called the the hero versus the architect and so when you start a business like you're gonna be the hero like you're gonna show up every day you're gonna like solve any problem that comes after after you you wear the cape you go home you know like a like a job well done right and then that works right and and you then you you start to make more money you you then use that money to buy a second location maybe a third maybe a fourth but you're you're continued to be the hero you solve everybody's problems and now your whole team is used to that if you got a problem just go to David he'll he'll take care of it. And then they get in this trap where it's really hard because then they feel like they're surrounded I don't say by a bunch of idiots but a bunch of people who have like low accountability and won't get things done. But then there's just like shift that happens that that to really grow and that at least I've figured out is like I don't want to be the hero anymore. And that that was me for a while. But but then you realize like the only way that I could get out of it is I need somebody else who could I could like you know hand the cape to and they could be the hero. But to hire that person, you know, it's like at least $100,000 or if not you know more. And so that that's the first step, right? Is you you have to be able to hire somebody hand them the cape be okay that like things aren't going to be as good as if you were going to do it and that immediately you have a you have more than a hundred thousand dollar drop in your income. And that that step right there is is really hard.

SPEAKER_02 31:37

It's like in my turf business, I put in 200 grand, you know, I'm probably let's say let's say I'm targeting to make 200 grand next year 100% return well then now I got to hire a manager then my my profitability just got cut in half.

SPEAKER_01 31:51

So it's just like stair step approach and this is this is what I've so we we hire the next guy to take off a bunch of stuff off my plate. So now instead of me spending all my time like putting out fires and hiring people and like dealing all the stuff this guy now does it um and then I have like you know 30 hours or whatever of free time because he's taken over my job. And so I have to invest that time in going and and finding more locations to say all right can I get another you know four or five locations that could then make me another whatever $500,000. Right. And so it's like this stair step approach. And so then you reach that next level and it's the same thing all over again of like all right now I get another 100K guy to take over and run this this other group of five stores. And now my main job is I've got this like I've got these two guys that report to me and then we've got to build an office because of like you know things fall through the cracks. And so it's been this it's kind of this constant this game of like this stair step approach and at each level working to get more things like operationally things off my plate or you know the the owner's plate to be able to continue to focus on like the growth in the bigger picture. Yeah.

SPEAKER_02 32:51

Would it be fair if I said that in order the most successful franchises are ones that you can create a good enough system that you're able to expand by um growing locations of that franchise.

SPEAKER_01 33:05

Yeah you have to be able to reliably grow and and multiply and just like like a great franchise you should be able to copy and paste. You know, just like there's franchisees all over the country, you as like the the owner of of it should be able to to copy and paste.

SPEAKER_02 33:17

Given all of that, which makes perfect sense to me, why do you think it's not the highest and best use of your time to continue to do that versus going out and building this holding company as you describe it.

SPEAKER_01 33:30

Yeah um I guess part of it is is the I I enjoy it. I I enjoy working with people, I enjoy the content, I enjoy coaching you know other owners right to solve the same problem. Does that mean you do not enjoy the day to day of of running over time I felt like I don't know to me it's kind of like a kind of like a game and at a certain point not to say I won the game but at a certain point it's like yeah I could keep doing this the same thing but uh I got like less joy out of that than uh because I'm like the visionary I'm not the integrator. I'm not the guy like who can who can using a lot of traction terms. Is traction a a formative um um book for you? We've read it we've tried some of it uh a lot of people get it so like the language we use but yeah yeah so I'm uh I'm not the one to be like grinding it away day after day work working to solve the the problems uh versus I'm like the you know I I have more enjoyment from the other side of it which is which is like what's the new challenge? What's the new thing I can learn? And then you know finding people who are really really good at the operations to let them do the stuff that you know like I don't really like but they're like rock stars in it.

SPEAKER_02 34:36

Why like why would you make the decision of just of just you know playing a little devil's advocate with you or kind of going through the this I'm it's interesting to me the thought process. But you know why would you not like you mentioned multiples are going up for for Midas a lot of people or for you know for well run franchises um and there are a lot of people that you know are looking to buy them you know if you want to make the change why would you not just sell your business and they go all in on on something else?

SPEAKER_01 35:03

Yeah so great great question. Uh I mean one I mean I've I've I'm completely out of the the day to day so like my phone doesn't ring at all except unless we're like talking about deal. Like I mainly focus on on new stores. But even that like even last year our CEO f totally found negotiated closed two acquisitions. So like I have I have no involvement it in the day-to-day running and so it is it is somewhat like you know passive for for me at up to this point. And so I would I would so I think through like all right if I were to sell it and I've you know thought about it it's like I'd I'd pay pay a bunch of taxes and then you know I have like a bunch of money but but then what would I do? I'd want to go out like I do the content but part of the part of the like the goal is to show people like what are we doing. Right. And so I it's it's nice to be able to show to show and tell and I so I I like that component but then it's like what would I do? I I probably eventually still get the itch of like wanting to do something again. And so then I'm like that's like and I've got an amazing team and I wouldn't want to like I wouldn't want to lose them.

SPEAKER_02 36:03

So so let's go back to your 10 year vision. You say you're you're still kind of figuring that out. Is that is that true? Yeah walk me through what figuring it out means like like what is it that you are looking to kind of achieve at this point in your life that you haven't gotten yet.

SPEAKER_01 36:20

Aaron Ross Powell a lot if it's an imp impact, right? Helping like you said, there's a lot of people who even in the franchise world they they buy and they buy themselves a job. And uh I've I think that's probably most franchises.

SPEAKER_02 36:34

I agree. And like I've I think And that's if they're lucky like probably a lot of them fail. So I mean I think it's it's not a I don't know the stats, but I would imagine it's a pretty low um success rate on apparel across the whole cat across the whole category.

SPEAKER_01 36:47

Yeah there's like this clear divide there's like people who who make like ridiculous money and fly private jets that nobody hears about because a lot of them aren't public about it at all. And so so that's like the world that nobody nobody sees. And then there's this then there's like the lower half which are generally not as great brands that that people get into following the like marketing and whatever not really not doing the right not following maybe the right the best path.

SPEAKER_02 37:09

I want to push back on that a little bit just because I'm curious like how many of those people that have really done well in franchises um have started in the last 15 years do you think?

SPEAKER_01 37:19

I don't know. I mean I've been in it for 10 but I mean I have a number of friends across industry.

SPEAKER_02 37:24

But but but you're you you've really I mean you're like you've you've your family's been in it for a long time. So um I mean the reason I push back is I know I know a few people that have been really successful in franchise um franchising um the biggest actually being um Wendy's franchisers um and but I know that the way that they are able to do that is because of like legacy like the best franchises that I know about are very protective in who they allow to actually to actually um be a part of that. And so everybody that I know that's been super successful has done it because of kind of legacy relationships versus like going in and building it today. So that's what I that's what I want to be honest with people about Yeah I know 100%.

SPEAKER_01 38:05

And I I yeah and yeah that is true. And then there's also ones I mean I've got I've got a buddy who's three years in I mean he made a half a million bucks last year he'll probably make 750 this year.

SPEAKER_02 38:14

And like he's not flying on a private jet at that he might he might say if you thought about private jet money like I want to show up out that's like what is the what is the pathway to that? Like I that's what I'm genuinely curious about.

SPEAKER_01 38:24

Like like if somebody wants it has that kind of aspiration how do you think usually it's like a trade ups scenario right where they they might get into something that is like a lower cost thing that then allows them to to be able to yeah maybe trade up into a brand like a like a a Wendy's or a Taco Bell or a fitness concept or something that that can be big. But there's other ones I know that are like I think I think one of them is a staffing agency. I I know a guy that does extremely private private jet money well. So like there there are a number out there but yeah it is it is not the norm. It is it is more but but it's a pathway right I think that the big thing with like in franchising it's a vehicle to make money it's like it's like real estate. It's like can you make money in real estate? Well you can lose a lot of money or yeah you can make a lot of money and there's like a million different paths you can do it of experience.

SPEAKER_02 39:06

It's it's so let's say I'm a young entrepreneur um you know I get out of college I want to start I want to I want to do something entrepreneurial you know and I'm looking at my my set of options do I go franchise or not franchise and why? Somebody young and that doesn't have a lot of money?

SPEAKER_01 39:24

Probably not I don't like why so why so why not people being you've been successful. Yeah people undercapitalize is a huge thing where they they they start the business.

SPEAKER_02 39:32

They have that's true in any business right so like if I I'm starting a business as either a business or a franchise like which route do I pick? Which has which has the highest probability of success for me?

SPEAKER_01 39:42

It would all depend on what it is, right? I think I think there is no hard and fast on on the franchise side. I think it really depends on what franchise there's 3,000 of them. And I I don't I think it would be I think someone could two different people could go in the same brand with the same capitalization side like they both have 50,000 or whatever invest. And and those two people are going to have extremely different outcomes based on their individual efforts and skills and all these other things, just like any other business. And I think that's that is the problem that is the problem from like a sales perspective when people when people look at investing franchise they've they look at the McDonald's and they think oh it it's like this it's like an it's like a it's like an asset that I buy that I'm gonna get this like some sort of like pro forma guaranteed return. And it it is ext it is extremely driven based off of that individual person's ability to go and execute. And so like even our store like we've bought multiple stores that when we buy them they are losing money. So like it's Midas it's literally the same exact building and and sometimes even staff and then we go in there and like Brian's flavor of operating it doing the things that we do we can turn that store from making maybe maybe no money into 100K, 200k, three, four, five hundred K a year. We're literally the exact same building and business and you know what we do though like we have our way of doing it. And so that's like the big challenge and why I don't be a cagey with like answers and stuff. But it's not like it's not like oh I put money in and I'm like you know I have this like guaranteed to get money out of it. And and that's like a lot of the lie lies that's like are sold. Yeah.

SPEAKER_02 41:02

Yeah I mean I think that if I were answering the the question and I think you would agree with this that you know ultimately going and getting experience in a business and really understanding that business preferably you know working in it perhaps for somebody else first is probably a better way to get to get started whether you're going into a franchise or not. Like if you were like wanted to open a Brian's HVAC service company you'd probably be better off working in an HVAC service company for a while, watching how it's run, under like understanding how you can and improve it and you know doing that before you commit to something is probably like you're signing a franchise agreement that could be 10 years, it could be 15 or 20 years.

SPEAKER_01 41:44

Many of them have clauses that say like if you you know quit like you just try and close it up prior to the franchise agreement they can sue you for liquidated damages. So like whatever times left times the multiple like how many how much royalties you've been paying. So like there's a downside too on on some of these.

SPEAKER_02 42:00

That's interesting that that that's that's a common practice it is in a lot of agreements.

SPEAKER_01 42:04

Can it be enforced? Do they want the publicity and the lawsuits disclosed and like a lot of times it's not enforced, but there are some that it is uh so yeah so like when you say like should some a young person with no experience get into it, they're not just like paying the money for the franchise fee. They're also signing like a 10-year commitment essentially now you can sell it if it's but if it's not making any money or losing money it's really hard to get out of. And so that that all becomes like it's more so it is more complicated, right? There's all these different factors. And so that's why for people that like me who are in it and we get it, like we we have kind of this like unfair advantage of doing these acquisitions and and creating a lot of value because there are other people in the same brand losing money or not executing the model or whatever we can see that we can go in immediately literally the next day and fix a bunch of things that that's even if you're in a franchise that has a you know existing business model, um, you still have to operate a business you're still a business owner. You just like you have guardrails that you have to play by right in terms of like with m with Midas like there's certain services like we're not gonna do like paint and like stereo systems and all this stuff, right? We're gonna like do brakes and tires and exhaust and steering suspension and like whatever. We do nothing inside the car. It's all like under it. But like that's the guardrail we can't advertise like our marketing has to be within brand standards. Like we can't do purple and green like alligators on a Midas thing like it's got to be our you know gold and gold and red. So like we have guardrails but at the end of the day like we're independent business owners that just happen to be in the Midas Midas name but the way we hire the way we create culture the you know the way we we price things sell things treat customers like like totally up to us right and and that's why you have these variants of success. That's like I talk about there's like the spectrum. If you're like I mean the the extreme is like a Chick fil A where technically you're a franchisee, but really you're like a managing partner where you know you can't even sell the business. So when you want to get out it just gets transferred to somebody else like there's no you have zero equity value and you know it's like a profit sharing agreement. It's not even royalties.

SPEAKER_02 44:00

And you're limited to one location as well.

SPEAKER_01 44:01

Pretty much most have one, some have two or three, like the most have three. But you're essentially a managing partner wrapped in a franchise agreement. But for those people, it's $10,000 to get in. And they can make, you know, four, four hundred thousand dollars a year managing a restaurant. So like if you already are restaurant manager working for a competitor, yeah, great, great opportunity. Right. And then maybe you could take those skills that you learn to then go and open up whatever, a chicken salad chick or some sort of like other restaurant. And so they have extremely strict ones. If you're a McDonald's or any any of the food is gonna have extremely, extremely strict like rules and and you you're definitely more you know operating the model. But even in those, there's there's value creation in the experience that you have at a at a wing stop, right? That is gonna make you either do really well or you do really bad.

SPEAKER_02 44:44

So make it the case for why someone should choose to go into a franchise.

SPEAKER_01 44:50

I I guess uh there's a couple of reasons that I enjoy. Like why am I in it, right? Because I could I could sell it and I have a bunch of skills, I could go and like get out of it and do something else. You could go ahead and run a regular business. I could yeah, I could do whatever, right? And so it's like A, you like you want to focus primarily on execution and in operation. So like I don't really think about marketing in that business. I don't think about the website, I don't think about like I mean, we we've built our own tech, but for the most part, like as it is, my job is to like hire great people and then make sure like they have a good experience in the store. So I've I have a more narrowed focus. And the more narrow the focus, the you know, I can put 100% of my energy into that and not have the distractions of these other things. Yep. Right. So that's like first. A second one that we haven't talked about is like the community. So franchisees in in in great brands are become like family. And so I could call up any of my buddies right now and ask them, you know, how much money did you make last month? What was your payroll percentage? What was your cost of goods? What are you doing differently now? And like you're immediately part of this like network of other owners who are going to share ideas and best practices and challenges.

SPEAKER_02 45:48

And so that's how you can benchmark yourself too.

SPEAKER_01 45:51

So you know if you're doing it. Yeah, we can benchmark ourselves. And we'll like like we can see like there's a guy up in up in the northeast who's um just as many sores as me, and he's uh he's like crushing our numbers. He's uh uh to a degree. We're catching up with him. So we're at we're talking to him, be like, man, what are you doing? Because there's not many guys like at scale who are doing really well. And so he's he's laying out his exact plan, which is you know, we call it stacking talent. But basically stacking.

SPEAKER_02 46:15

Because you're doing better, if anything, just helps his helps the my the brand, so it helps everybody. It's not going to detract from it, you're not going to take his business.

SPEAKER_01 46:23

Yeah, because we're in different markets and like so you've got this like you have this like network effect of in good brands. Some brands don't want this happening. So like good brands. Uh you have this network of friend effect of a bunch of franchisees who want to help each other grow outside of corporate. So then there's some brands have this like us versus you mentality. And might as used to be like this years ago, but like it's good now, where like, you know, it was kind of like, hey, you guys are gonna be gone in a few years because it's like corporate turnover, but we're gonna be here. And so then you've you've got this like, you know, bond and and relationships that that alone creates enough value to more than pay for the royalty, the the 5% that we pay, because of the the like brain trust. And so for for me, it's like people who like that idea of like they want to be part of a community, they want to focus on operations, they don't want to have to like reinvent the wheel or like come up with all this stuff from scratch. But you're right, like the the challenge is how do you, as an outsider, how do you figure that out? And that that is really hard.

SPEAKER_02 47:17

So let's say that I'm an entrepreneur and I come up with a very good local concept. How should I think about whether or not to grow that concept by creating a franchise versus going out and just expanding on my own?

unknown 47:33

Yeah.

SPEAKER_02 47:33

So there's there's a number of officials. And so just to be clear, we're talking about if you're gonna be a franchise or yeah.

SPEAKER_01 47:39

So um, yeah, I guess one of them's capital. So like it is, you know, when you become a franchise or you shift the capital requirements to the franchisees. The franchisees are paying for it. So some guys, they just they just don't have the capital, or they can't raise it, or they don't want to take on a bunch of debt. That's one of the reasons. The the big shift though is like when they become a franchise or they shift from being in whatever business you're in. So say you're in the like, you have a coffee concept or whatever, you're not in the coffee business anymore. You're in like the sales, marketing, and training business. So you have to like market to franchisees, you have to train franchisees, you have to like create the community and like they're the ones that have to do the thing. Where some of them fail is they they have a good concept, they they franchise it, but then they don't build any of that arm, right? Of like how to support the franchisees and give them all the things that they need. And so you have to like go into it knowing that like I'm not in this business anymore, I'm in this this new business. If if that's really what what you want, right? And so that's a big one. Then it's like, yeah, is it gonna work in in other markets? Isn't is it is it a New York City based thing, or is this something that like, yeah, this would work in Florida, this would work here, this would work there. I think there's gotta be, I mean, there's gotta be demand that economics need to work with a franchisee paying a 5% royalty. So if you if you have a 10% net margin without royalties, like it's not a good franchise because they're gonna be at five, right? If you're at 20% and they can the franchisee can make 15, yeah, like that that could possibly work. Can you reliably market to get customers, at least in a retail-facing business, is is a big one. So if it's all based on like B2B relationships that you have to like whatever, get whatever thing.

SPEAKER_02 49:06

And then in the marketing, like let's say the the whose responsibility is the marketing at that point.

SPEAKER_01 49:11

Yeah. I mean, it it switches, it it changes by brand. It really depends if it's national or not. But like how a lot of the earlier stage brands, even like the turf business, is franchise, they'll pick uh agencies, like like digital agencies to do that. Franchisees could they could be like, hey, pick from any one of these guys. The the challenge is some of these agencies, like a lot of them suck, or they'll they'll do good in like one or two markets, like maybe they do good in Dallas and Houston or or or Houston and Atlanta, but then they like for whatever reason they can't make it work in Philadelphia. They can't work it here. And so then the franchisees are are sometimes up to like having to go find other agencies to be able to like cause because it's just like this is not working.

SPEAKER_02 49:46

And so I when you say like if you're saying, okay, um you use this agency to um grow here, like who's actually paying for that agency?

SPEAKER_01 49:55

Like is it is it the franchisee direct usually it's usually the franchisee where the new model like the in the older models, like the legacy brands, you pay into a national fund. Right. The fun then out of that fund get split all the agency fees, you know, create a fee management.

SPEAKER_02 50:08

So like in the Midas example, do you pay for any advertising at the at the store level or is it all at the We pay for incremental.

SPEAKER_01 50:15

So like we do we're big into direct mail. I spend like 800 grand a year on direct mail that I directly control and target and like have like a great return on. And so so I do that, but then everything else, like all the digital and Google and PayPal click and LSA and all the crap, they handle it all. And like we we'll vote on campaigns to say like what are the the coupons we're gonna honor, essentially. So that's all from the five percent basically fees. But even that, like we don't know of that like five percent how much of that that is getting spent in Philadelphia versus like Richmond versus like Florida, like it's just one big slush fund and they they choose how they're gonna spend all that money. So yeah, bigger markets get a like bigger pro rata share because media is more expensive. In some ways it's not as good because you don't have as much direct control versus, you know, in like the turf example, like my guy, like he works with an agency and like he spends, he just decides how much he's gonna spend to say, hey, we're gonna we're gonna spend $2,200 on PPC, we're gonna spend like two grand on Meta and this and that. We just have like a minimum we have to hit. Uh the brand requires like a minimum because people have to advertise, you know.

SPEAKER_02 51:16

Yeah. So basic, basically, as part of their franchise agreement, they're like, okay, you have to spend X percent of your revenue on advertising.

SPEAKER_01 51:22

If it's a yeah, if it's a retail based. So it's like all those things that that that people have to like consider if they're going to get into this. It's like you get into a brand like that, like, yeah, you are gonna have to make more decisions. You have like agency partners that help you. But like some people like that idea. Say, yeah, I want to have I'm like a little bit more of a control freak and want to like be able to do this. And other people are like, nah, just take my money and like I don't I don't want any involvement.

SPEAKER_02 51:40

So what kind of net margin do you think somebody should be looking to target if they want to go into a franchise?

SPEAKER_01 51:46

In a retail concept, like our target's 15, like after after interest and depreciation stuff. We're not we're at like 13. Our our goal is 15 all in. And in mobile concepts, so that so they don't have retail, they should 20, 20 percent.

SPEAKER_02 51:59

And yeah, so like and this is where I think the problem of like job versus scale comes in, because like if you have a million dollar a year revenue, which is would be big for some of these franchises, if you're at 1500 150 grand, that you probably are not don't have the money for a manager. But if you have 10 of those, then you can pay a manager 200 grand a year and it's it's a much lower percentage of your profitability. So I think when people talk about scale, like that's what that's what people really have to understand about franchise.

SPEAKER_01 52:25

They start with one, but then they got, yeah, they got the 150, but then they got to hire the guy. Maybe like they're running the day to day, right? And so then it's like, all right, I don't, I'm gonna have somebody else do this. I gotta pay him like a hundred. So now I'm making 50, but I got to then go launch a second location, I got to get that one up to 150, and then it's the third. So it's you know, it's back to that like that stair step approach. But at every level, you're usually giving up income to hire somebody to then bet on yourself to go and do another one. And so if you can do an acquisition where it's like it's just easier because you're buying the cash flow and you have like confidence that, hey, I I see they're not doing a bunch of these things, my number's better. Like, boom, I got this, I'm gonna make it better. Or the startup. I got buddies that do that, but they're but they're spinning up these locations you know from zero, but but they've done it a bunch of times. So to them, it's like it's not a big deal.

SPEAKER_02 53:07

Yeah. So you look at everything that you're doing. You obviously have your you're you're you're folks, you're doing a lot of different things. What are you most excited about at the moment?

SPEAKER_01 53:15

Yeah. So like it's really so it's it's working with other franchisees to help them do everything we just talked about, right? Which is like there's a lot of people who buy themselves a job. You know, I've I've not, or I've I've figured out how to replace myself from it, right? And a lot of it is through through how do we build a great team that can run without us, how do we strengthen the unit economics so we can have strong monthly cash flow? And then how can we grow locations without growing stress? Like those are like the three, three pain points that that people have. And so it's like I don't know, I think I've got a bunch of really good systems that that I've used. And so I am working with uh you know franchisees who who want to be able to do the same thing. And so I'm uh I'm pouring a lot of my time and effort in you know into systematizing these things and then and then uh helping others do it. Has AI changed how you think about systems at all? Use it a lot to figure out what can I do to create and shorten up and just hopefully find like a different way to look at it. We don't use it necessarily to like do things. You know, it's more of like a I would say a thought partner slash like organizational tool. Aaron Powell What type of software do you use to run your business? So we've built so I guess this is maybe the AI thing. So so we've got like the core point of sale, which is like an automotive thing that people would know. Uh and then you know, we have Slack as like our communication channel. And then mm, so my brother, who's my my my my partner, his using AI, Claude Code, built like this this business intelligence app that is ridiculous where you know I I can pull it up. We got we have real-time sales on every store. We've got real-time pay, so our mechanics are paid based on performance. I was telling you about that. Every mechanic can log in and see like how much money they've made. Uh, we've got real-time Google reviews. Every single call that comes into our shops gets recorded and AI transcribed and graded to tell you like, was it a good call or not? And so we have like all these like business insights that we've used. But then we still need to like, you know, the insights are great, but like, are you gonna do something with them is what really matters.

SPEAKER_02 55:13

And so uh, it's interesting to me though, because I I very much I have this thesis that the place that AI is making the biggest difference is actually on um business intelligence and just like um analyzing data. Um, and I think I mean that's certainly how we use it the most. It's basically, and I want to be very clear on this, it's not using AI to analyze the data, it's using AI to create code that allows you to analyze the data, um, which is the it's a nuance of a difference, but it's something that I think a lot of people misunderstand because like just feeding your data to AI, you're gonna get junk a lot of times. It's gonna hallucinate, it's gonna tell you things that are not true. Um, but using it um to organize your data to to create code that gives you access to organize your data and visibility into that data shortens the time from when you can get an insight and take action against that insight to make your business more efficient.

SPEAKER_01 56:05

Yep. Yeah. So that's a we've done that internally and it's been it's been awesome.

SPEAKER_02 56:09

Yeah. But um, and that that that's the biggest change that we've seen. And most entrepreneurs that I talk to, um, that's how people are actually using it in a practical way. So I just I just find that I find that interesting. Anything else you want to talk about or you want to to um get off your chest? Um, no, I'm good. Well, Brian, thank you for joining me on Boring Money. I really appreciate it.

SPEAKER_01 56:28

Yeah, thanks for having me.

SPEAKER_02 56:28

Yeah.