Where I saw a franchise owners fall down when I was on the franchiser side, and again, these were few and far between by and large franchise owners were doing very well, but the ones that did struggle were the ones that maybe came from a middle management, corporate America role and they never had the responsibility for hiring and local loans firing,, and making those tough calls, and not hanging on to someone for a little bit too long and putting up with excuses. They can provide the supply chain management and tell you how to get inventory, they can tell you how to turn inventory into product.
They can cash advances tell you how to deal with sales and cash registers and all the accounting stuff. Jon, I would love to know even more about this whole concept you mentioned earlier, that often when we think of franchises, we just automatically default to fast food. And what I found is those that I work with and those that I speak to and interact with, very much are aligned with that thinking. Your simple retail, some of the characteristics there cash advances would be, like the fast food concepts. Complex retail, and that second quadrant would be very similar in a lot of ways, a lot of similar attributes. I would say the differentiator there is maybe your labor force has a little more skill coming in or a license or some background. Oftentimes, these are van based or home-based businesses where you can run remote thinking about the property services market.
And home senior care, the silver tsunami is happening. Typically, these businesses are less expensive to get into than your brick and mortar retail businesses. And that could be everything from cleaning and corporate maintenance to payroll and accounting type firms. So you do have some hybrids out there, but by and large, most businesses tend to fall into one of those four quadrants.
And given that much of our audience is real estate investors who are looking for either a primary or secondary stream of income and cash advances maybe considering franchising, you touched on a number of things that would actually make a lot of sense in this business.
You mentioned roll-off dumpsters and roofing companies, and I imagine HVAC companies.
What should we be asking ourselves when trying to decide which of those four quadrants we want to lean towards? A lot of people did not… This little kids say, "I want to own a mold remediation company someday. So there are a lot of different sectors out there that could be a great compliment to real estate. So one, what does that income stream that you can generate? But the ones that I do see are going for four times EBITDA, six times EBITDA, which could be a really nice payday payday loans no teletrack check down the road. Jon, who are you seeing with all these different aspects of the franchise, the franchise opportunities? Are there certain demographics that seem to be fairing the best, certain types of people that seem to be gravitating toward this direction? From an investment standpoint, oftentimes they can put in 10 to 15, 20 hours a week, build up over time and then eventually make that entrepreneurial leap into the business. Maybe I do want to make a shift or as we would call it in 2020, a pivot and go a new direction. Now people are getting a little more comfortable about the vaccine and everything else going on. I want to set expectations because I know a lot of people that I talk to talk about starting a business, or buying a business. We talk a lot about buying businesses on the show, which is somewhat similar to buying into a franchise and is probably a little bit further removed from starting your own business.
One of the big questions we always get is, what are the opportunities for passive business ownership?
Can I still make decent margins and a decent profit if I want to run a business, a franchise passively? And so that is a misnomer that I think some people have out there, and so I always want to clarify that it takes work. It is a semi absentee opportunity, which does exist with a lot of businesses. It really is how comfortable are you with bringing someone on staff to run that business for you, and at what juncture.
So people oftentimes are shying away from that if they can, but that is definitely still an avenue. Another one that is very, very popular is the 401(k) or IRA rollovers. So we call them ROBS plan, Benetrends runs them, Guidant Financial, FranFund, Tenet Financial. A lot of large institutions run this program that allows you to receive tax benefits by not being penalized and rolling over your 401(k) or IRA to fund the business.
Can you talk a little bit about the other side of things and what you do there? Like I said, FranBridge Consulting is our core business, the consulting side where we play matchmaker on the business to the entrepreneur. We ourselves have brought in some outside investors to participate in the franchises that we are franchisees of. So looking to diversify some of that capital on the sidelines, put it behind. There are so many amazing facets to this, and every time you answer a question, you keep dropping all these awesome new, just knowledge bombs.
There are so many things to take into consideration. And in the spirit of franchising, we do have a playbook around this process as well. And what that looks, and there are others out there certainly that do what we do, but the way that we go about it is we have an intro call, get to know the individual and cash advances help them understand, is franchising viable for them?
Make that decision, do you want to be where you are? What are exit strategies look like in the franchise world? What a typical people who have cash advances been in a franchise for some period of time and decide now is the time for me to move on, what are the options for those people? Is there a lot of equipment that comes with the businesses?
Is there any intellectual property that would keep competition out of that territory? What are the sectors that are going to be doing in your opinion, the best in the world of franchising moving forward? Jon:Yeah, since we all know exactly how 2021 is going to play out.
I do think property services and home services will continue booming, it was doing well prior to COVID.
The focus on health and wellness is only growing exponentially.
So what are those concepts that have a unique that can go into that niche and really exploit it? I personally still like a lot of businesses, I mentioned it once or twice now, the roll-off dumpsters. Those kinds of businesses that are non-sexy, that are attracting people right and left. So those are a few, I think fitness will start coming back, everyone wanted to be the next Orangetheory.
Boutique fitness was growing exponentially in 2019 heading into the first part of 2020, obviously they faced some road bumps, created a lot of concern around who will be the strong ones, the ones that survive.
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