The Franchise Gold Rush: How to Build Wealth, Cash Flow, and Real Estate Through Franzy | Alex Smereczniak

What is up, Entrepreneur DNA family? I am here with a really special guest. This individual is only 33 years old and is a serial entrepreneur. He's had three businesses and already exited two of them. He's on his last, what I think, swan song exit with Franzi.com. We have Alex Smirznack here. Nailed it. Yeah. Nailed it. Thanks for having me. That was going to be a tough one. Thanks for having me. All right, dude. Well, excited to have you here. You're 33, as I was just giving you a little bit of a hard time. You've already built this incredible resume with two exits. You're working on a third. Franzi.com is phenomenal. But let's jump into Franzi to start. What is Franzi? What's your mission? What are you thinking about moving forward in the next three to five years with it? Yeah, so our mission with Franzi is to help enable the next one million entrepreneurs starting in the U.S. And the way that we're going to do that is through democratizing access to ownership in businesses, starting with franchising. So think of Franzi as the Zillow for buying and selling small businesses. So you have all this data, 4,000 brands, investment costs, average revenue. Who's the executive team behind it? What territories are available? Does this match my risk tolerance? All the stuff that you would need to do, just like Zillow has square footage, bedroom, school district. Franzi has that for small business. All at your fingertips. Don't have to talk to a broker unless you want to. Don't have to commit to anything unless you want to. It's all just the data and the information that you need and the support that you need to get lending and finding the right brand. No kidding. So when you think like mergers and acquisitions is such a big topic right now. I've had more than a handful of people here as guests with that. Does this play into that realm of merger and acquisitions? Is this just the franchise model? How are we looking at Franzi.com? Yep. So for now, it's just de novo units or territory. So new net new development of, you know, a Jimmy John's or a gutter brothers franchise, a service business where you don't need retail. You would buy the territory for Fort Lauderdale or for Miami and then go develop that out and start it from scratch. Yeah. We are starting to work towards a resale marketplace where Justin could come on and also buy the existing Jimmy John's franchisee in Miami or the existing gutter brothers territory. Yeah. Depending on, you know, where you want to jump in. Some people like an existing business. other people want to have their stamp on it and build it up from from scratch with the franchisor so we are talking to any and all entrepreneurs here because at the end of the day i today justin colby can go to franzi.com and i can say you know what i want to get into the restaurant business yes you have a list of restaurants let's just use jimmy john's but you'd likely would have more maybe you can name them but like four thousand brands on the pop four thousand brands it's almost every franchise concept that exists in the united states are is on franzi.com yep right now go check out franzi.com uh i mean i was so excited about this because i just think as i'm a serial entrepreneur like i gotta be careful with our conversation right now because next you know i'm gonna be on franzi like what's the next industry i'm going in right and a few times people we've met have bought a business with us yes as us having a conversation like this and three months later they're like well now i own this operating company it's right hey now i gotta go do this thing uh i'm reading a great book big shout out to the road less stupid If you've ever heard or read that one, it just is kind of the fundamentals of business where people just react and make emotional decisions. Like I get all fired up here and I go buy a franchise. Like, is that really the best thing I should be doing right now? So this is exciting because I think, well, let's jump into what I believe is a great industry sector, home services. I'm a real estate guy. We all know that, right? We're listening to me because that platform. But how many of those, I mean, do you have a number of how many, you know, home services type companies roofing? Like you just mentioned gutters, windows, flooring, HVAC. Like I just, I think that's a major play for a lot of individuals. It has been increasingly popular because there's average unit volumes of revenue of these service businesses, you know, well over a million dollars. but the startup costs are $150K, $200K, $250K versus a retail restaurant or health and wellness franchise could run you half a million, a million, two million in some restaurants cases or more for not too dissimilar of revenues. I mean, restaurants, Chick-fil-A, McDonald's will have kind of gold standard revenues. But these home services brands, again, seven-figure revenue for a low six-figures investment. And so there's a lot of money in people moving into home services because, one, it's cheaper. Revenue upside is still there. Plus, AI is likely not to disrupt people washing windows or painting sidewalks or painting houses for a while. I mean, it's probably going to happen at some point. At some point. But these are safer for a little bit longer. Okay. So do you ever get excited about a business or an industry that you get on Fransy? All the time. I mean, I'll see things and like, if I had endless money in time, I would buy one of those, buy one of those. And so I have a podcast too called How I Franchise This, where I'm interviewing people that have gone from everyday corporate America or they were at Tesla or they were, they were born into whatever their story was before franchising and then how they got into it, how they specifically found the right brand, how they financed it. So it's tactical, you know, uh, storytelling, but I've interviewed a few people that started, you know, seven years ago with zero franchise locations and now have a hundred plus across six or seven brands. They've got orange theory, they've got restore hyper wellness. They've got Dave's hot chicken, pop up bagels. And I see that and I hear their stories and exactly how they did it. Yeah. And it, to me, it's like, if you're willing to work hard, if you're willing to go raise some capital and bring on, you know, private equity or private debt partners, anyone can literally go do this it's the american dream if you're willing to go and do it and franchising just provides this platform that i think is unlike anything else the playbooks are there the brand is there the recipes are there the training the marketing it's all there you just need to be willing to go do the work and operate and i've seen this story over and over and over again the same consistent theme across all of them is they're willing to do the hard work they found the right capital partner and then they went all into the franchise model and six seven years in like a diamond you know they put the pressure in and so what i think is the key is most franchises and i don't know a lot about franchises right but you hear the stories of mcdonald's right just the concept of like there's a book they give you the book you run the play they're in some repeat every day it works right and that is in large part i'm the real estate guy right and so i are there real estate people or is there a real estate sector to francy so a lot of these big multi-unit franchisees will also go in and buy the underlying asset that they're developing on. Unless the franchise or McDonald's kind of does a lot of that corporately. They're one of the largest real estate businesses in the world. People don't think about it that way. They're disguised as a burger shop. But some franchise concepts, a lot of them actually aren't thinking about that because they're not at that scale yet. In fact, most franchise brands are considered emerging. 75% of them have less than 100 locations open. Over 100 is more mature and that's their 25%. But if you get in with an emerging brand that you like, that has the upside, Dave's Hot Chicken early, pop-up bagels early, you can go develop the real estate yourself and have this owner-operator play where you've got cash-flowing operation on top of an asset that you own. I've heard of some franchisees purposely paying themselves higher than market rent because then they can go borrow against that cash flow on the real estate side to go over in their second and third one. And so there is a whole strategy for those interested in commercial real estate and a real estate play on top of the operating business. That is a really smart angle as a real estate guy. I'm really, that way you just hit like, you buy the, whether it is a current location or maybe even develop one, right? You buy that corner. That's just this rundown thing, tear it down, build your new uh dave's hot chicken right whatever the franchise uh you pay yourself higher market rent the income shows strong finances banks love it banks love it they go give you more money to do it again yep it's almost like that like burr method for residential looking different i love that you know there's a you're not a real estate guy and you're throwing out real estate terms this is good yeah no it is i mean this is where i go as a real estate play we could even be the mcdonald's right we don't i don't have an allegiance to name me three you said um papa bagels uh dave's hot chicken and orange theory besides working out which i do love but i wouldn't have an allegiance to any of those brands as a brand but what i do know and what i do love is the business model of buying the the real estate understanding the economics of that getting higher than market rent understanding bankability yep and now i have real businesses that have real operations there's a formula running a real estate play the bigger play is the mcdonald's real estate play yep and again when you get to 100 units i mean this is real real scale wow that's you get to five that's significant for people i mean there's everywhere in between there's an opportunity to run both of those plays if you have the capital and the desire to go structure it that way the issue i think a lot of people run into is they're not capitalized well enough to be thinking about they have to develop five net new locations plus they're going to buy the real estate which could be you know six figures high seven or mid mid seven figures and so they're trying to navigate how do I finance all this? Franchises are five times more likely to succeed in the first five years than traditional startups. But finding a franchise ownership opportunity can be overwhelming with over 4,000 brands to choose from and brokers with misaligned incentives. That's why my friend, Alex Smearsnik, co-founder and former CEO of 2U Laundry, built Fransy. Whether you're interested in fitness, home services, automotive, or food, Franzi make it simple to find your perfect match. When you visit Franzi.com and answer a few simple questions about your goals, lifestyle, and budget, and get access to hundreds of personalized opportunities, plus free top-of-the-line coaching that will never cost you a dime. Franzi is completely free to use from start to finish. You'll never have to pay them. If you're ready to take the next step towards franchise ownership, visit franzi.com. That is F-R-A-N-Z-Y.com to get started today. So the real estate individuals listening to this right now, they come up with the same challenge, right? They say, okay, I want a single family burr, right? I want to fix and flip. I want an apartment. I want a fourplex, whatever those things are. the secret of raising capital that I found and I've raised tens and tens and tens of millions of dollars. The secret's always this, give the opportunity out there. Someone's going to like that opportunity, right? What I believe for most real estate investors and business owners, if you are in need of capital and you don't actually let anyone know there's an opportunity, it's very hard. Like everyone goes to the bank to let the bank know I'm in need of capital. There's no difference in running a business, being a real estate investor, needing capital and not going outwardly, like posting on Facebook or Instagram, not, Hey, can I get a loan? Everybody it's, Hey, there's an opportunity I have. Would you like to be a capital partner? There's a lot of money out there. I literally had one yesterday and he, I think he owns a Dave cause he talked about this chicken. I swear to God, he was like, I had a buddy who had this operation. He needed some capital. It's a chicken spot. I threw 150 grand at it. And the revenue is incredible it could be one of those which is funny but the point being is that individual i came across because i have apartments and he's thinking about lending on the apartments but he also lends in partners on this operation and so i would tell anyone out there listening to this like this is very real like in my world the upside i have no genuine want to own a uh like a dave's chicken or like but the real employees right but if i could just put it together let the the booklet run itself right but have the upside of the real estate there's a very exciting play for those individuals especially if you do more than one location you start to get these local economies of scale where you can have one general manager one gm run the business for you essentially like you still have to be involved as far as like site selection yeah you build out costs and modeling it out but if you're willing to do that work, find the right capital partner, you know, and operate to some extent you can hire GMs And there a story I tell a lot of a guy that I know met him five six years ago I don want to name his name because he likes to be under the radar but he when I met him owned 43 or so McDonald McDonald's on average do four to five and a half million in revenue. Like an individual. Individual location. And then do 600 to 800K in cash flow. So you do the math on his 43 location. Makes a couple bucks. He's paid almost like an NFL quarterback. and since I last you know I talked to him about a year ago or recently and he's up from 43 to like 90 or so McDonald's now because he's just he's got this cash machine he's just going right buying up three over here Justin's six you know in Greensboro yeah and here yeah and you can just you know the momentum doesn't stop and I asked him I was like how do you manage all this he's like I have one COO that I think he pays 350 grand a year so not it's you know not insignificant but also not a crazy amount for that large of a business yeah and that individual runs the whole thing he's like i haven't been in a mcdonald's from from an operations you know operating perspective in a long time and so like you go buy a mcdonald's that's on a huge scale like imagine now you have three of some new concept you can take the same lessons hire a gm pay them well yeah they'll run that business give them some profit sharing yeah and you're you're now you know the one operating two, three steps ahead, you're looking for location four, five, and six, or a group of five that you can bundle up and buy together becomes an acquisition game. As long as you have that operating team that's properly incentivized. And how much, you may not know this answer, but how much would a, what's an average income for the owner operator of a, of a franchise? I'm sure they vary, but like if people are thinking like, I'm tired of my nine to five, I don't want to do this thing. I'm looking for something else. It's like, what could you consider if you go buy a franchise? And again, I'm sure it varies and I'm not going to hold you to it. Neither should they. Don't hold them to it. What are you talking about? Whether it's McDonald's, maybe that's the most known, or Dave's Chicken, or Orange Theory, what would you consider? So I'll give a couple answers because I think the common misconception is like you think McDonald's, you think Subway, when you think of franchising, and immediately one or two things happen. You think, that's too expensive. I could never own that. This franchising isn't for me. But they're wrong because they don't realize there's a franchise that costs $10,000 to get into. It's not going to replace your income, but it can kick off $20,000 to $30,000 a year in cash flow. And that's a great return on investment. Great return. Just depends on how much you have to work for that investment, but great return. So all the way on that end of the spectrum. And Chick-fil-A even is only $10,000 to get into because it's not really like a full franchise. They make you work 40, 50 hours a week. You're more buying a job, and they get 50% of the profits, which is not normal for franchises. So even a Chick-fil-A you can get into if you're the right operator willing to do the work. And then it goes all the way up to some of these swim school franchises where you're building seven pools and you're teaching kids how to swim. It's an expensive investment. The average unit volumes are very high. That's more like three, four million to get into. And there's everything in between. I always, you know, people think I'm joking when I say it, but there really is a franchise for everybody. If you want to go do this. And depending on what your goals are. I think you have to have, I'd say to do this right, 30K minimum in cash and then go borrow. An SBA loan is meant for businesses like this if you're just getting started. So it really is accessible to, you know, you're kind of a middle class working person can go do this if they're wanting to be entrepreneurial and to go take some of that ownership back all the way up to the more sophisticated. Maybe they've got entrepreneurial experience. They got a little bit more capital saved up. there's the opportunity to take bigger swings and do the real estate play or do a multi-unit deal. And so there truly is an answer for everyone and their goals. And there's a certain group that they may be just getting started and they don't have more than five grand saved up. My advice to them is work and save like you would to pay off debt and then go buy the business when you've got a little bit of a nest egg to go invest in a services business that you can start. it's interesting because i i'm just such a serial entrepreneur like the the the other side of this is being make making sure you are in a financial place i think that was a great point like maybe don't push all your chips in if you're going to go quit your job and like every last dollar you have you're going to go start x franchise like maybe give yourself some level of a bridge right yep and i am just more curious for my own interest what is the more expensive level of franchise like what's a mcdonald's franchise um what else would be considered expensive so some of the qsr is a quick service restaurant franchises because there's so much build out there's all this equipment massive refrigerators and freezers that are sure you're already 50 grand a pop yeah um those can be two three in some cases four million dollar developments depending on where it is and then you need a lead to that person to get into it i would guess yeah and so the franchise fee typically is it's not crazy 30 grand to 50 grand to get the rights to a territory or location uh it's really just the build-out cost i mean minding the site developing it getting the right gas line in electrical what do you see is the newest hottest franchise that on the market right now i mean you have 4 000 of them yep so there's a few categories one is golf right now i was just taking off i think it's with you know the netflix effect of them having yeah showing yeah uh tiger woods and rory doing the stadium golf stuff right live even you know creating that kind of more like i don't know entertainment approach or version of golf it's it's kind of like what netflix did to f1 there's just a lot more interest now and so these indoor golf simulator franchises are taking off there it's almost like anytime fitness do you remember that i do you can bob in yeah it was a great franchise model i worked in these really small markets across the united states has no employees ever happened they're crushing it they're doing the low ticket thing is huge you in terms of the clientele so you service the clientele that doesn't need to spend a lot of money for you i would assume that's got to be huge and so this there's no employees there's no inventory it's private golf simulator bays you know room a fourth of the size of this this is why i don't sit as a home station because then the investment cost isn't high that's a it is a good real estate play because you put them in these smaller out parcels, et cetera. They're 200 to 400 K to fully develop. And then they cashflow 100, 150 K a year. No way. But no employees. And it's BYOB. So people can go bring a six pack and play Pebble Beach in an hour when the kids go down. So I'm going to bring this back to real estate. So storage facilities versus apartments. People will always make the argument. And by the way, I own both. I tend to support this argument. No tenants, no headaches versus apartments, which is always something, tenants, et cetera, right? This is the equivalent in the franchise world, right? And I'm sure there's a couple of them, but like, that's exciting. You go put 100, what did you say to start it? It's like 200 to 400K, again, depending on size, how many things you put in. The build out, that's also the franchise fee, like you're somewhere in there. Yep. And you'll spit out 150 grand gross or net? Net. Stop it. That return is insane. Yeah. A lot of these franchises you want to look for should have the ability to generate revenues, you know, at least one times the cost to put in. And then you want a payback period of, you know, ideally as little as possible at two to three years. You know, ideally is what you're looking for. You're made whole now. Yeah, three can work, five can work, but you start to get into this longer time frame. There's a little bit more risk there and things have to be executed better. But if you can get to three years or so, that's usually a good. something like that could you i mean what's the locale like what is the typical location for like a golf indoor golf simulator type of so it's kind of like middle class upper middle class households dual income families with kids um it's they're busy families they can't go golf for six hours because realistic let's be honest that's right how long it takes i didn't pack look i love to go go i weekend play on back right no it's you can go play pebble beach in an hour you know at 10 p.m when the kids go down or what you know you can do it whenever you want one of the brands that i you know we work with they have an example of they've got these surgeons that play every day at 3 a.m they get off their shift and they go to the location and go play around and then go home well where are these locations like what kind of facility would it look like is it a more like a rural area like is it big like what is that well like in the bourbon areas like by you know near a target in a, in a, um, strip center or, you know, their center development could work. Okay. Um, you're in like class B property. I'd say you're not in like the Barry's bootcamp or the like Primo real estate, which is great. Um, you can be in class B, maybe even class C in some instances, as long as you're backed up to a neighborhood that has a few thousand households that fit that demographic of busy family, you know, enough income to light golf and enjoy it, but don't have the time to go. For all my entrepreneurs are aspiring. Like you got to look at this, right? Even if you're the real estate guy like me, this is something that like, I'm genuinely now you have 4,000 opportunities. Like this one now is intriguing to me because I actually was thinking this weekend. I want to play more golf by more. I mean, any at this point, because I just have two kids in life. Right. This is a big real estate play. Like that one would probably be hard to own the asset. Right. You'd probably have to do a lease. I'm guessing. Yeah. Because if you're in a strip center, unless you take down the whole center and put two or three different concepts, they could put two or three. I mean, I see people. Which you mean, absolutely. They'll buy a strip center and they put three complimentary franchise businesses next to each other. And we have a few hospitality groups that are developing hotels and different mixed use development. I asked them, like, hey, we got six open, you know, spots or bays. What concepts, what franchises can we put in? They're going to own and then operate the franchise. That's phenomenal. like i hadn't heard of i almost feel like there's only a real estate play at this point i just maybe because like i just you go buy a strip mall which is right now like on the cheap relative lending is not perfect but that's why it's on the cheap you now have the businesses you can put into the strip mall everyone's concerned about strip malls because of covet obviously changed the game for a lot of different things but like lending's not great But if you actually occupy the units with your own businesses, you are your own tenant. You increase your rent to pay down the loan and you rinse and repeat. Like, I just feel like now here's the key operations systems. Like I'm on a big push processes, principles, people, um, procedures, right. And then you can profit. Yep. But if you don't have these processes, principles, people, and procedures like dialed, your profit is going to either suck or go the other way. And you won't profit, right? You're going to lose. Are most of these franchises extremely dialed in? So someone like myself that doesn't have a lot of time or maybe someone that doesn't have the business acumen and is going to learn this. Are they pretty dialed in with these books and game plans and processes? Like, can you literally people think about it this way? So I want you to kind of tell me, is this like a plug and play and you just follow the recipe and it'll come out as a beautiful cake? This, the honest answer is it does depend on the stage of the brand. This is where Franzi comes in to help. We do give free coaching from folks at our franchisees themselves. So if you came through and you said, this is kind of my background, this is my operational experience, my risk tolerance, my capital situation, and here are my goals. We go match of the 4,000 specific brands, partially using ai so we've indexed uh 26 000 what are called ftds franchise disclosure documents and we pair it up against justin's unique set of criteria interest goals etc because while there's some different similar flavors to what people are looking for you have very different hobbies passions like that is an important part you don't want to buy a business that in a year you're like i don't really align with that or have time for or agree with it right and so it is important that it's something that you can get excited about five years from now 10 years from now and you're not gonna be like i own the you know gutter cleaning thing and people are complaining all the time i'm just not passionate about it so we help you do that and to answer your question about you know the how plug and play is it it does depend some brands over 50 units especially have full-blown teams training marketing playbooks technology that they've built out for procurement and their crm their point of sale is all just dialed in but these emerging brands are not as dialed in. It's more entrepreneurial. So when we get clients that come through, they're like, I want to do this because I want to be entrepreneurial. I want to have a say in what gets built. We actually tell them to not join like a Chick-fil-A or a mature brand because you're basically buying cashflow and or a job at that stage. They're like, Justin, here's what you do. Don't sneeze this. This is how you sneeze. This is like, they'll probably exactly what you need to do. Totally. And you have to do it. And for some, that's great. Some people love that. Other people are like I don want that I doing this their purpose their why is I want to be an owner I want to be entrepreneurial I want to let my creativity run And we tell those individuals you should take an earlier brand because you not going to get to let that not going to scratch your itch fully You might be your own boss. You might have cash flow coming in. But you're going to be miserable just like you might be now in this nine to five. And so go take the additional risk of joining a brand early. And with that comes the other upside. You get an influence on the franchise or you might get to negotiate. franchise fees royalties because they're earlier um you get the ability to white space territory you add a fourth unit a fifth unit it's six territory etc as you go versus dave's hot chicken mcdonald's they're mostly sold out so now it becomes an acquisition game for that yeah they got to buy up the resellers and all that and you guys are getting into that space at some point here so we've started building a prototype of the resale marketplace the reason we didn't start there is with de novo or new territories, we have structured financials. That FDD, that Franchise Disclosure Document I mentioned is a standard document that the Federal Trade Commission regulates across all franchises. It's easily indexable, scrapable, and so we can give you accurate, clean data. As soon as we get into resales, Justin's books look different than Alex's books, even though both owned a Jimmy John's. And your definition of seller discretionary earnings is different than mine, and Florida's different than North Carolina. And there's all these things that come into play. And so AI allows us to get, you know, kind of more apples to apples faster and not needing as much human underwriting and modeling. But that's the interesting problem we're trying to solve with technology is how do we build a resale marketplace that has clean, accurate data and is still mindful of people's sensitivity around their financials? And when do we show Justin's book to a seller? How much do we verify the seller? What much friction do we have? And all this goes through franzing. Yep. So let's talk a little bit more in franzy because I just geeked out on this opportunity. Describe franzy for everyone and the understanding of what it is and then what the trajectory is. Yeah. So I know I use this almost maybe too much, but the way I describe it just to get it clear quickly as possible is honestly what Zillow did for real estate buying for a franchise. It's a platform that has and houses every brand you can imagine with all this data and information on them. the revenue, the cost to get in, what the royalties you're going to pay are, who the executive team is. Has there been any bankruptcy or litigation so that you can see those red flags? And we're starting to pull in more third-party data. What are consumers of this brand, the customer going to go buy the Dave's Hot Chicken sandwich, what do they think about it in each region in the country? What are commercial rents and leases? So we start pulling in just more and more so that you have the information you need to make a smart, thoughtful, diligent decision. So that's all the data piece. There's also this very emotional part of this. Some people aren't doing it purely as an investment. So I had one guy come through. He's like, just show me the business that makes the most money. Like some people, that's what they want. They don't care what it is. There's a franchise called Bio One. It's Bio One. They clean up crime scenes and like dead bodies and like, that could make the most money. And the guy, all right, guy, this one's for you. But other people are like, I want to build a business with my kids. And it's a legacy. We're probably not going to send you to Bio One. We're going to send you to a milkshake or a dessert concert. Still can cash flow, but it's something your kids could work at in high school and could be a part of, you know, as you build. And some people come, they've made more money than, you know, they need. And they're doing this because it's intellectually stimulating. They want to show their kids entrepreneurship. There really is all these different reasons people do it. And think of Franzie as the, again, database and diligence information with that kind of softer coaching where we talk you through what is Justin's why? What can you afford? How do we think about all these different brands? Does it actually solve your goals, your financial picture, and what you're operationally good at? Yeah. And that's the nuanced piece that I think a human does need to stay involved in because people buy from people. That's right. And give you all the data in the world. But after a while, you're like, now what do I do? I like these three, I think, but I'm not really sure what to do next. Right. And the answer is that question, too. If human interaction, we'll meet you in person. We'll jump on Zoom calls. As much as you want to use it, it's free for you. We get paid by the brands a flat dollar. success fee so that we have no incentive to promote one grand over another. And we're going to keep it that way from here on out because this is such a critical life decision. It would be, I think, morally and ethically wrong to allow brands, oh, I'll pay you triple the amount. And now we're showing Justin brands that might not actually be the best fit. And that's what's happening today in the kind of franchise brokerage world is they're making a 60% commission on the franchise fee, six zero. So if one brand's franchise fee is 60 grand and the others is 30, it's, you just have the wrong incentives. It'd be hard for a lot of individuals to say, I'm going to show you the 30 K one, even, even though this one would be double if, if you buy that. Right. Right. Um, so we're just trying to flip that on its head, make it fully transparent about how this whole world has worked and why. How long has the brand been around for? So we started last summer, took about six months to really get all the data. Last summer. last summer and you were able to onboard and basically sell all these franchises to be able to use you as a platform to go that is how big of a pain point this is for the brands because there's so much of the franchise fee they're hemorrhaging out to all these different middlemen and commissions right you know fees so they're desperate for another solution to get high quality you know potential franchisees for a much lower cost and that's our goal of franzies how do we and democratize this whole process, empower the brand. If we do that, they're going to reinvest into the franchisee. You as the franchisee have a higher chance of success because you're getting more and more capabilities, resources, support being invested in versus 60% going out to a broker to do this later. So that's one of the end goals here is how do we enable and support, again, the next million entrepreneurs? So I'm going to have two questions. One, how did you come up with this concept? Like just no one wakes up one day as like, man, I need to solve for this problem about franchising. That doesn't happen. Right. Um, but then too, like, how did, I want to get the origin story of like, how did you push into it? Cause that's what a lot of entrepreneurs struggle with. Right. They found the pain point. They found the solution. They realize they have some gold and they go now. Right. And then, and I guess let's even take one step before that. And then we'll get to the other two. you've already done two businesses you've exited two business let's talk about those what what vertical were they in um why did you exit and then why are we here now with franzi yeah so i'll give you the the origin story because the first one for me started uh my freshman year of college so i went to wake forest and from minnesota originally and i grew up with a dad that was you know 100% sales 100% commission eat what you kill so entrepreneurial you know in a big way i remember you know in the summer he'd golf all summer long and then fall winter spring especially in minnesota was busting his ass and i was like how are you able to do this all my friends parents are constantly working nine to five and you have it seems all this kind of flexibility and freedom to work when you want and his advice that has always stuck with me is there's three kinds of career you know careers you can have alex you can work for someone else you can work for yourself you're gonna have people working for you he's like i'm in the second bucket i work for myself i can you know i some months i make zero commission all our months that's you know half of someone someone's annual salary right and he's like but it gives me it affords me that that time and that flexibility and so it's just always stuck with me as i know i need to go do something either sales working for myself or you know some sort of um like subject matter expert or working or having people you know working for me and so when i got to college i was looking for entrepreneurial things to do and i worked for this laundry and dry cleaning pickup and delivery oh man business in college yeah this is fascinating This could work at Duke and Chapel Hill and Vanderbilt. I want to buy this thing. And so they were selling it for $30,000. My jaw hit the floor. I'm 18. This is the most money in the world. Yeah, and I'm thinking, how cheap? Oh, my God. How can we get 20 of those now? Well, so I had 18. I thought, this is, I have two grand maybe saved. Yeah, maybe. And so I found two other partners. We got to like 11 grand, still not enough. So then I'm going to the business school. Before I'm in the business school at Wake, asking finance professor professors i want to buy this business how do i structure it so they're teaching me about seller financing or out really and like they're like 18 year old is like trying to sure i'll help them so like professors you know from wake thank you like i they didn't have to do any of that they started breakfast hours before i was even in the business school helping me figure out this deal so we figured out the deal we did seller financing um and paid them a percent of revenue over the course of a few years you mean the owners or the people that we bought it from okay no not the professor not the professor not the professor oh my god i was like good for you professor so we bought the business we immediately went to the university and said this needs to be a checkbox option for your incoming freshmen parents etc we took the business from like it was like 26 000 in revenue it was doing but high margin 80 margin or so and we 10x the revenue our first year it was like 250k because they gave us a booth at orientation week so all the parents coming through like get your meal plan get your food uh get your parking yeah oh yeah get the laundry service too brilliant bro um and so we sold that business when we graduated and sold it for about 10 times what we bought it for good for you i was like we can retire after yeah yeah right oh very many um but then i went and worked for ernst and young doing consulting for a year and a half and i i really wanted to keep growing to other colleges but my partners at the time wanted to go do investment banking marketing for pepsi yeah i didn't want to be the laundry guy even though that was probably the best time in our life to go do it i still give it a crap so like we could be here right now i'm like bro you should have leaned in you should i kind of did i kind of came back i went to ey for a year and a half okay and i hated it i was like this is not as entrepreneurial as i thought i love the people i mean very smart people i learned a lot but it just wasn't it was not fulfilling like going into wells fargo and how do we squeak out a tenth of a percent of efficiency and things move slower and i was just hooked from that college laundry thing i just i would obsess over it it was this game almost yeah and i saw all these uber for x businesses pop up this was 2014 2015 so you're seeing instacart shipped wag rover postmates doordash um uber for anything And I thought someone's going to do this for laundry and dry cleaning. It's not just college kids. Like there's busy families. No one likes doing laundry. It's time consuming. People outsource lawn maintenance all the time. Why wouldn't they pay us to do their laundry? Let's take what we learned in college and do this on a larger scale. So we started in Charlotte and over the course of eight years, we ended up raising 33 million in venture capital, scaled to a dozen markets or so. and then realized unlike door dash and you know ride sharing which is point a to point b you need you go to the airport you need it now oh justin's we're going now we're going a to b to yes split it up into dry cleaning and laundry then bat you know run a process and so way more logistically complex sure um and so we did route based instead of on demand so we'd go into your neighborhood and pick up 30 orders um we started vertically integrating and building physical laundromats to support all the volume. And it was through that process that, you know, eventually we got to the franchise piece was these stores aren't cheap. They're a million dollars with all the equipment. They're very profitable because we have a delivery business coming in as well as a walk-in customer base now using the same asset base. And we needed to scale more vacations. And so we thought, well, why don't we franchise the brick and mortar, layer the technology platform on the delivery piece on top. And that's how we got into franchising. in 2021, started franchising a subsidiary called Laundra Lab. And we sold 118 locations in 14, 16 months. Franzi did. Maybe it wasn't- It wasn't Franzi. I thought it was the name of the con. As the franchisor, like we were the, we were the Dave's hot chicken. We were the company selling franchise licenses. And part of that was we worked with franchise brokers and we worked with what's called an FSO, a franchise sales organization. And that's where this idea for Franzi was born. We were the brand paying out 60% commission, that's 80% tuition. They're like, we need this money to invest in site selection support and construction support and marketing. We're just like hemorrhaging out cash. And we'd also raised venture. So we had this unique advantage that most brands never have. You and I franchise this podcast studio or we franchise, you know, a run club or whatever the concept is. We don't have venture capital behind us typically. And so even more so these brands need that franchise fee to invest in themselves and their capabilities and support of their franchisees. And that's when the light bulb went off. I was like if we having a hard time you know scaling the team appropriately with the amount of stores we have to open how does anyone else ever do this and the answer is they end up giving up way more equity to like friends and family or like maybe more not predatory you know vc or private equity but really get good valuations or they take 30 years and they go very very slow or they just they don't scale they don't they yeah you and i stock cap it at three or four corporate stores and like i say i want to go down this path right so i think there's a lot of really good brands that should be national and don't because they you know there's not the right resources and tools out there and i think there's some brands conversely that get propped up by the broker networks that have no business being as big as you know as they were because the underlying financials aren't sound or proven out but you know the networks are just pushing these concepts down everyone's you know throat essentially and so long answer short franzi was you know born from this idea of how do we put the control and the cash back into the brand's you know pockets so that they can reinvest in the franchisee ultimately creating this more kind of positive self-fulfilling loop versus today which i think is kind of the wild west unregulated so you have what was that original dry cleaning laundry brand uh so it's called to you laundry was the delivery piece and then laundry lab is the physical brick and you own them and then you franchised them yep right so you went through the whole process of franchising then you were the company paying all these brokers 40 60 commissions 80 commissions at times yep found the pain of like this sucks yep we're not capitalizing the way to grow that we need because we pay it all out yep and then he said i could help other brands technology can do a lot of what the brokers are doing it's top of funnel lead gen it's light matchmaking and it's light qualifying you buy you buy a house this way you know through bank rate and more ash companies you buy a car in carvana we're not saying society's ready to go buy a half a million dollar business just online. Sure, right. But if you think about franchising, it's not as pure of a brokerage play as you buying a car wash or a house. There's a buyer and a seller. You kind of need someone in the middle to help negotiate and play nice. And then you transact and you're probably done interacting with each other. Yeah. In franchising, if you think about it, you're like, hey, maybe a golf thing, maybe a restaurant. You need some advising and coaching. And then the relationship you're building with that brand is going to be a five to 10 year relationship. So it's not this transactional. I found the one. Right. I'm done. Right. It's dating. It's matchmaking more than anything. And so traditional business brokering doesn't make as much sense because the relationship and the situation is very different. We're more of a matchmaker. Yeah. Franzi should be a matchmaker, not a broker. Yeah. Like a true. So like you're not a dating site that's very transactional where you're swiping left and hit it and quit it. You're more like one of those matchmakers come sit down. Yep. 100 people in a room, get to know each other, spend some time with you. That's the difference. One credit re-transactional one. Anything else for a five to 10-year commitment with that brand? So you better like the team you're working with. You better like the brand. You better like what their mission and their core values are because it's going to be a part of your life, whether you're the hands-on operator or just the investor type. It's still a big part of your life, and you need to believe in the team behind it and who you're going to be working with. So you have a team that can hold someone's hand and help them understand all this. I mean, that's the brilliance. So that's what led to Franzy. Yep. Right. So you actually exited your first franchise. So I'm still on the board of that business. I sold some of my equity. Yeah. Rolled the rest and had a, you know, a decent liquidity. But now you have a startup and he's going in. Yeah. Yeah. Now I'm back to square one again. You're growing. I love that stage. Zero to one, zero to 10 million. Yeah. And I love the scalability of this, but also the mission behind it is entrepreneurship has drastically changed my life. It's the most fulfilling thing I've ever done. I work most weekends because I want to I and I have a four and a half month old at home so I'm trying to balance you know family time but I you know this is my hobby like people what do you do outside of work work because I this it's fun to me I genuinely love doing it and I think a lot of people go throughout life not having found that kind of purpose or that thing that you know lights them up fills them up every morning and so if we help even a hundred people ten people find that through franzi like that's the that's the goals like show someone who's been this has been tugging at them their whole life it's been eating at them they've been successful in their own right but it's been for someone else it hasn't been for them how do we champion that person de-risk it for them find the right fit find the right financing program and structure and like really give them the tools they need to go take that risk that they're more than capable of doing operationally and and you intelligence wise so your avatar does come see franzi.com you would like them to have some level financial means they don't need to be affluent 50k in cash is ideal because then you can bar you can basically get into most franchise concepts 250k 50k in cash yeah 150k net worth 150k net worth some level like above 700 credit or is credit not credit yeah i think above love 700 is good Yeah, above 650 can still work. And you are, do you have a way for, can people from this episode or wherever they're seeing this, can they get a hold of you in the sense of like, book a call or find out more? What's the path to do that? Yeah, if you email me at alexatfranzy.com, it's my direct email. We can set up time with me or other franchisees, you know, other franchise experts on our team. Otherwise, we're all over social media. So Alex from Franzy on Twitter, X, Instagram, TikTok, LinkedIn, And there's all sorts of ways for us to engage. We have a newsletter or a podcast. We're pushing a ton of educational information out there because, again, I think most people are capable of doing this if they want to. The issue is most people just don't know where to start. That's it. They don't have someone to help them. They don't have resources. And so our goal, again, is let's give you that so you can take that push to jump and start building. And there are so many people knowing what I – so I have the Science Flipping podcast. I have the Entrepreneur DNA podcast. out of these podcasts that I know there's a lot of people hungry to be entrepreneurs, right? Some like the real estate play. Like to me, this is a real estate play. This is a business play. This is a lifestyle play, right? Like you were going to solve for a lot of it. I obviously lean into this real estate play because then you have multiple exits. Not only you have your income on the way in and through, you have an exit on the franchise if you want, and you can resell it through franzi.com if you want. You have an exit on the actual property, or maybe that's the legacy play that you gift to your kids and you exit the business ownership and you just allow someone else to lease that property i mean i just genuinely i'm should not be doing this podcast because now i'm gonna be now i'm gonna be eyeballing my neck hole unlocked that's right um the other thing to make it even more exciting someone like you especially is gonna love this i it's one of the reasons i like franchising now is if you get into the right system the right brand and you do scale three four or five locations i mentioned these bigger fish are constantly looking to buy up oh yeah those those those three to five pack people there's exits the multiples are higher in franchising because it's almost like a triple a rated bond it's like you've got it's not just justin and alex's coffee shop it's starbucks or it's ziggy's coffee or it's this thing that has a brand behind it a franchisor behind it the stop gap so the risk is less so we can actually sell for instead of a you know two to three x multiple four to six sometimes seven eight nine ten x multiples on you but uh so you're talking two to three x on your exit than you would have had if it was independent and so just like the exit opportunities are bigger um so all these there's all these it goes back to the principles tailwinds processes principles practices these are the p's i talk about like that's a business principle go into a business that you can have an exit with like no one wants to work forever so what is your exit go into it thinking what your exit is This is phenomenal. So franzi.com is where they want to go. And by the way, if you follow me, I'm going to be tagging him all over everywhere, right? So you're going to be seeing that everywhere. What would be one of the bigger misconceptions regarding franchises? Either outright lies, like people just don't know that that is an outright incorrect fact, like it's not a fact, or a misconception of a franchise? Yeah, I think the number one is that franchising is just these big brands, McDonald's, Subway. There is truly a franchise for just about any concept you can imagine. Gutter cleaning, window cleaning, health and wellness. Most people don't realize hotels, most of them are franchises. Hilton Marriott, a lot of them are owned by individuals. Areas are individuals, yeah. It's not just food. So there are franchises truly. Could be franchises, podcasts. I think there is a franchise podcast studio that's starting to expand. And look at this. Like there is, I mean, the crime scene cleanup. There is franchising for everything. And within that, there's also franchising, I think, for just about everyone. Again, it's not for those that are just starting to get started in their career or just starting to squirrel money away. Like you do take a risk, but very, very calculated. But for most people that have 30K even saved up, you can get into a franchise business. And I think that's the other misconception is you think, oh, the rich is going to get richer. It's going to be wealthy people buying another McDonald's. Like there definitely is some of that. But there's also the guy who I talked about on our podcast. He had zero seven years ago and he's up to 120. And he just went one at a time. And then those started cash flowing and he built onto those. Then he got connected with family offices and some private lenders and brought partners on. And then went to 30, went to 50. And it's the American dream. You can do it and go after it if you're willing to take that risk, surround yourself with the right people and be thoughtful about the brands you get into. So, yeah, that'd be my answer is franchising is way bigger, more encompassing than way broader. And people are restrictive than people realize is not just Starbucks or McDonald's. It's not these big brands. There's also and maybe you want to franchise. Maybe you reach out and say, hey, I have an idea that I want to franchise. Yes. How did you like 4000 franchise? Like, is that just call by call? Was it once the word got out, they started coming to you? How did you build that out? That is really impressive. So very similar. We took the playbook from Zillow. Zillow immediately had all the inventory because they pulled it from the MLS. I don't even know what MLS stands for, but it was essentially. Multiple listing services. Okay, multiple listing services. I don't even know how MLS allowed them to do this or if they did allow them to do it. But Zillow, day one, had every house, all this price data. And so they wrote a New York, there was a Wall Street Journal article about new site Zillow. you can they'll tell you what your house is worth and so all of us are curious right like it's probably the biggest investment a lot of people are making of course and so of course they want to see well what is this thing worth and so all this traffic was coming in claiming their houses we took a similar tact where we have all the data just like the mls and these fdds so we scraped and took us six months to build this whole data set and platform up so get all this information we now have all the brands on the platform and similar tactic we went to the brands and hey we have your brands on here all this traffic is coming to look at it they're wanting to buy it but we're only sending the leads to people that have become verified so you know we have all these people looking at you so you're verifying them not the franchise we're yeah we as the platform are verifying dunkin donuts like make sure it's someone that actually works at the company they get on board they sign a legal agreement with us to basically take ownership of that page just like you and i can claim our house on zillow yeah or are you verifying the potential uh franchisee both but to get all the brands verified on the platform we propped it up on the you know went live with all those brands all this traffic started coming in looking at sites and then we go back to the brand say hey we have all these people that have favorited your page should want to connect with you yeah we want to pass them on but we can't connect you with them until you've claimed and verified your profile and so they then all started signing the agreements and wow take it on 4 000 of them yep wait is it 4 000 different franchises or are you just talking about locations and different brands wow yeah so within those brands some of them have thousands of locations you know now getting tacoo etc then there's the newer brands that might just have five and so again i keep saying it and i don't you know mean to be cliche but there really is something for everyone if you want more mature we've got if you want emerging and you know more entrepreneurial we've got it if you want four million dollar investment we've got if you want 20k investment we've got it. Wow. Service versus retail versus 15 employees versus two employees. And you can really filter on every bit of criteria you want. This is incredible. Franzi.com. Who would have thought I should not have found this episode. This is going to dry. I'm going to go into a wormhole because of you and call you all night. Bro, what about this one? Should we do this one? Who should I be talking to? This is going to be great. Guys, this is Alex. I am Justin. This has been the entrepreneur dna make sure you look up franzi.com make sure you look up alex uh is alex franzi or is alex from franzi alex from franzi all over all platforms this has been incredible dude this is a real estate play it's an entrepreneur play it's a young person old person a legacy play i mean this is i'm genuinely excited about this because i just think this way right this is why people become entrepreneurs appreciate you being here yeah thanks for having together guys i am justin this is alex this has been entrepreneur dna if this was pretty cool share it with two friends see you on the next episode