How Non-Food Franchising Can Be a Better Path to Business Ownership

Transcription – WCI – 267
Intro:
That is the White Coat Investor podcast, the place we assist those that put on the white coat get a good shake on Wall Road. We have been serving to medical doctors and different high-income professionals cease doing dumb issues with their cash since 2011.
Dr. Jim Dahle:
That is White Coat Investor podcast quantity 267 – Non-food franchising.
Dr. Jim Dahle:
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Dr. Jim Dahle:
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Dr. Jim Dahle:
All proper, thanks for what you do on the market. Your job just isn’t simple. You might be listening to this on the best way house from work, perhaps one thing horrible occurred to you at work at present. It does occur in our professions. So, if nobody mentioned thanks at present, let me be the primary. What you do is tough. That is why you receives a commission nicely for it. Generally it does not really feel such as you’re getting paid nicely sufficient for what you are going by way of although. So, thanks a lot for doing it.
Dr. Jim Dahle:
If you’re excited about coming to talk at WCICON 23 in Phoenix, you’ll be able to apply now to do this. We wish you to use throughout June. And also you go to www.wcievents.com to use as a speaker.
Dr. Jim Dahle:
Now, let me inform you the best way to grow to be a speaker. Primary, it helps in case your subject is one thing we wish spoken on on the convention. And you may take a look at previous conferences to see the varieties of topics we converse on. All people desires to offer this common doctor finance discuss. The type of factor that I’d give if I got here out and gave a one hour discuss at a residency program or one thing. However we will not have a convention filled with 40 of these, proper? They should be a little bit bit area of interest down.
Dr. Jim Dahle:
The extra matters you apply for, the extra seemingly you might be to be chosen, as a result of we would such as you as a speaker, however we would have already got three those that need to converse on the primary subject you set in there. Plus, if you happen to apply for extra, we would have the ability to decide you as much as give a couple of discuss on the convention, which clearly helps us with bills, as a result of we solely should fly you out one time and solely should put you up one time for the occasion.
Dr. Jim Dahle:
So, apply for a number of talks and also you’re more likely to be picked up as a speaker. It’s a aggressive course of although. We wish the perfect audio system we will get and to placed on a implausible convention. It’ll be nice. This final yr’s was superior. And loads of that was due to the prime quality of the those that spoke on the convention. So, if you happen to’re excited about being a type of audio system, www.wcievents.com.
Dr. Jim Dahle:
All proper, earlier than we get into our interview at present, we have got an ideal visitor coming. I need to provide the quote of the day. Our quote of the day at present comes from L. Tom Perry who mentioned “A well-managed household doesn’t pay curiosity. It earns it.” And there is loads of fact to that. I have been telling my youngsters that for years and years and years. I ask them in the event that they need to pay curiosity or earn curiosity. And each time they inform me they need to earn curiosity. So, attempt to get your self into that place.
Dr. Jim Dahle:
All proper, let’s get our company on the road. Our visitor at present on the podcast is Jon Ostenson. Jon is a really profitable franchise dealer. He is additionally an investor and creator, a world speaker. He focuses on an space that he calls non-food franchising. You are in all probability aware of loads of franchises on the market however all of them are typically eating places. Properly, he focuses on different franchises. So, we’ll be speaking with him at present concerning the concept of a franchise as an occupation, as a enterprise, as a facet gig, as an funding. So, Jon, welcome to the White Coat Investor podcast.
Jon Ostenson:
Jim, I respect you having me. I like the present and I’m trying ahead to our dialog.
Dr. Jim Dahle:
Let’s begin studying a little bit bit extra about you. Inform us about your upbringing and the way it affected your views on cash.

Jon Ostenson:
Yeah. My father was an legal professional however we lived paycheck to paycheck. He paid for all 4 youngsters to undergo non-public college and invested in property. I see my siblings as fellow property. They’re now hopefully paying dividends supporting them in some methods. However residing paycheck to paycheck, cash was all the time talked about in a vein that I selected to not need to speak about down the street.
Jon Ostenson:
I used to be lucky to undergo faculty, paid my manner by way of college and labored in consulting throughout a wide range of industries and did the entire company run for quite a lot of years. Verify the field on getting the MBA again within the day, I wished it for additional training.
Jon Ostenson:
I might have stayed within the company world without end however like so many I had that entrepreneurial itch and I wasn’t positive the place to scratch it. However I sort of stumbled into franchising. And like so many others, I all the time considered franchising as being quick meals, being synonymous and had the chance once I left a big public firm to step in and function a president of the ShelfGenie franchise system. It is a big nationwide franchise system throughout North America. I got here in and supported all these small enterprise house owners, our franchisees everyday and actually noticed how franchising could be a higher path to enterprise possession for fairly a number of. And it opened up my eyes to the varieties of industries that existed on the market.
Jon Ostenson:
Quick ahead, I ended up partnering with the founding father of ShelfGenie. We spun off, we have grow to be franchisees ourselves, investing in numerous franchises alongside the best way. I’ve had different companions we have invested in franchises. So, we have had the alternatives on each side of the franchise desk, however for essentially the most half, we now have good individuals operating our companies and permits me to spend 90% of my time serving to others get into enterprise possession and discover this world as nicely.
Dr. Jim Dahle:
All proper, earlier than we get too far into this, let’s step again and let’s assume a listener has no concept what you are speaking about with a franchise. Are you able to give us a fast fundamental definition of what a franchise is and perhaps clarify a little bit bit the way it works?

Jon Ostenson:
Yeah. A franchise by definition could be a enterprise that’s offering assist to others which are operating an identical operation that share the title. So, they’re offering ongoing assist after which they’re receiving some type of royalty stream or upward fee for that assist. That is franchising by definition.

Jon Ostenson:
Franchising is regulated by the Federal Commerce Fee. You must cross your t’s and dot your i’s. Each franchise system has what’s known as an FDD or franchise disclosure doc to listing out all the pieces you would ever need to find out about a franchise.
Jon Ostenson:
Franchising just isn’t proper for everybody. There are some shoppers of mine which have to clarify you might be too entrepreneurial. You need to put your thumbprints throughout. Nonetheless, for the overwhelming majority, it’s a higher path to enterprise possession as a result of by stepping in on day one, you are beginning on third base, not first base, in that you have a playbook and you are not testing product market match such as you would with a startup. As an alternative, you are stepping right into a system that is been confirmed out in different markets. And now it is all about executing.
Jon Ostenson:
You have bought a coach on the sidelines and that franchisor that is offering ongoing assist. The higher you do, the higher they do. So, your incentives are aligned. And it oftentimes goes ignored, however you have bought different franchisees and different markets and also you’re sharing finest practices on an ongoing foundation. And so, perhaps testing new advertising and marketing automobiles or discovering out the place the pool of expertise is to rent from. So, you are exchanging finest follow in addition to learnings.
Jon Ostenson:
Then lastly, you are constructing a enterprise, that like a standard enterprise, you might have the potential to exit at some point. So, you are constructing an asset that down the street ought to have a rise in worth that you’ll promote, and have a pleasant payday down the street.
Jon Ostenson:
For all intents and functions, it is a small enterprise, but it surely’s working inside a system the place there’s assist, the place you are in enterprise for your self, however you are not by your self.
Jon Ostenson:
And Jim frankly, popping out of COVID, we have seen an increasing number of curiosity throughout the nation in entrepreneurship and lots of are opening up their eyes to the truth that this can be a higher path.

Dr. Jim Dahle:
Now I believe you have defined nicely the advantages of franchising. You get to start out with a playbook. You get began with a mannequin that is labored. You have bought perhaps a mentor there that can assist you. Let’s discuss concerning the downsides of franchising. You talked about one which perhaps you’ll be able to’t make all of the adjustments you need as a result of the franchise does not let you do this. What are different prices? Presumably you have to pay a share of your income to the overarching firm. What’s typical there? How a lot do you usually pay? Is it 3% or is it 30%?
Jon Ostenson:
Yeah. First off, you are paying a franchise charge to get entry into the franchise system. And that tends to be, name it $50,000 for the primary location or territory. After which usually it is $40,000 for the following, $30,000 for the following. Individuals construct these little empires by way of extra areas.
Jon Ostenson:
I might say the vast majority of the offers that we do with our shoppers are between $125,000 and $300,000. That is in all probability the place 75% of our deal stream falls. And that may be all in funding, together with working capital. We’ll piece that because the franchise charge.
Jon Ostenson:
So, if you happen to have been to only begin a enterprise by yourself exterior of franchising, you are not paying the franchise charge, however that is basically the place you are paying to get entry to the model and the methods. And basically getting a operating begin on day one after which ongoing, which you are referring to is known as a royalty most frequently. And that tends to be 5% to 7% of income of prime line income. In order that will get baked into the P&L, your profiting loss assertion. And that is the price of doing the enterprise.
Jon Ostenson:
Now, the query you all the time need to ask is “What sort of assist am I receiving for that? As a franchisor, am I going to be innovating? What are they doing for me?” In loads of circumstances, they’re offering companies that you’d’ve needed to pay for by yourself, if you did not have that. So, it’s a little little bit of a commerce off, however in fact, that is one thing you all the time need to actually examine earlier than you join, is to just be sure you’re getting what you are paying for.

Dr. Jim Dahle:
All proper. So, your focus is on non-food franchising. Are you able to examine and distinction meals and non-food franchising and clarify why you concentrate on non-food?
Jon Ostenson:
Yeah. There are roughly 4,000 franchise manufacturers within the US at present, and you’ve got new companies franchising on a regular basis. Roughly half of these are within the meals area, oftentimes at quick meals. And my private opinion is that they are simpler methods to earn a living. That could be much less capital intensive on the entrance finish that will require much less 24/7 sort operations, perhaps smaller workers. So, I simply really feel they might not require perishable inventories.
Jon Ostenson:
My private view is that there are simpler methods to earn a living. And what I discovered is that about 95% of my shoppers would agree with me. Now, 5% are captivated with meals. I might say 95% are excited about alternatives exterior of the meals area. And yeah, these can embrace areas like auto or house and property companies.
Jon Ostenson:
I all the time say that individuals are keen to spend on something associated to issues they care about. Children, pets, well being, well being and wellness is a big space, their properties, B2B companies. There are loads of completely different trade niches which have nice returns off occasions higher than meals with perhaps much less capital upfront, much less threat as nicely, perhaps rather less stylish. So yeah, that is the place I focus. As an alternative of making an attempt to unfold myself too skinny, I actually concentrate on all these companies in these different classes.
Dr. Jim Dahle:
Now, are you able to title a few of these franchise manufacturers that we have heard of simply so we will get a concrete image in our minds of what sort of companies we’re speaking about?
Jon Ostenson:
Yeah. And oftentimes if it is a model that you’ve got heard of, then they’re in all probability offered out in your market, simply because we’re seeing loads of demand on the market. However we work with loads of improvement firms throughout the nation that signify rising manufacturers. And so, they match our standards for an ideal management staff, sturdy revenue mannequin. They function in distinctive area of interest, aggressive benefits.
Jon Ostenson:
And so, it’s possible you’ll or will not be conscious of at present, that you may be fairly quickly. I believe like Price of Oil or Brothers Gutters, the Gutter Area. We simply had a Wall Road legal professional purchase into Gutter Area. No background in that, however he cherished the monetary mannequin, and cherished the completely different advantages of the enterprise.
Jon Ostenson:
We simply had a pharmacist purchase right into a storage reworking enterprise, Good day Storage. And residential and property companies have been in all probability the most well-liked space of any popping out of COVID previously couple of years. A lot of curiosity there, tons of demand out there from a client standpoint.
Jon Ostenson:
Koala Insulation could be one other instance there. Two years in the past, they’d 5 areas. Immediately they’ve 250 areas. It is a 52 billion market, no different nationwide participant in that area.
Jon Ostenson:
We work with companies. We simply had a PhD from the College of Arkansas purchase a enterprise known as The Train Coach. It is a health enterprise, but it surely caters to these 50 and above who’re largely underserved within the health area at present. And but they’ve disposable revenue. They actually care about their well being.
Jon Ostenson:
Foot Options could be one other one which we have seen some with a medical background taking curiosity in. And that is buyer orthotics and insoles utilizing 3D printing. They do loads of enterprise with Medicare, however actually, it is for any foot ailment. And so, loads of our shoppers like the concept of getting a bodily location and brick and mortar retail fashion presence. Others say, hey, we like the concept of not having a bodily location. We would a lot fairly run a companies enterprise the place we will function remotely, scale up at our personal tempo, if you’ll.
Jon Ostenson:
That is just a bit little bit of colour, however the enjoyable factor, Jim, is that over 90% of our shoppers find yourself in an trade, in a enterprise that oftentimes was not even on their radar. It is actually not one they severely thought-about, however as soon as we begin peeling again the onion and understanding their setup and their monetary scenario and the way a lot of a task they need to play within the enterprise, we’re in a position to take that suggestions, plus what we see resonating with others, with related backgrounds and actually performed matchmaker and introduce alternatives that may very well be a match that they have not thought-about.

Dr. Jim Dahle:
When you’re simply tuning in, we’re speaking with Jon Ostenson, a FranBridge Consulting. He is an professional in non-food franchising. So, Jon, who’re these individuals? Who buys franchises and why do they purchase them?
Jon Ostenson:
Yeah. Properly, I actually do myself. After I confer with our shoppers, that is the info set we’re working with. We do have purview and views into what is going on on out there as a complete.
Jon Ostenson:
However I might say roughly half of them are what we name proprietor operators. They’re trying to depart the company world or the medical area and run the enterprise everyday, not less than out of the gate.
Jon Ostenson:
After which the second mannequin, which most franchises permit for and lend themselves to as nicely, is known as semi-absentee or semi passive, or we’ll name it our government mannequin. And that is the place they’re placing the supervisor in place on day one, that is going to run the day-to-day operations. They’re taking extra of a mentoring and training position from the sidelines.
Jon Ostenson:
Now, nothing is ever precisely turnkey or completely passive. They nonetheless should have some position within the enterprise, particularly if they do not have the suitable common supervisor in place. You bought to get the suitable particular person. However from an age bracket, demographic standpoint, we have finished offers yr to day with these of their 20s during their 60s. Definitely, the candy spot, I might say, is, 30s by way of 50s. That is the place a lot of the offers are occurring.

Jon Ostenson:
Nevertheless it’s throughout the nation. We hear all of the headlines about individuals transferring to the south. I might say markets like Atlanta, Dallas, Florida, Charlotte, Raleigh they’re as scorching as something. Manufacturers are going very, very quick in these markets. However we’re doing loads of exercise in New York and California. A few of these states that get dangerous press from individuals transferring out, perhaps they are not as enterprise pleasant. There’s nonetheless loads of exercise from an entrepreneurial standpoint on the bottom. Actually, it is a big swath.
Jon Ostenson:
And once more, a few of our shoppers are present enterprise house owners and so they’re trying to construct out that portfolio and their present companies could also be franchised or not franchised. We have case research of each, however they’re trying so as to add in extra items to that portfolio that both serve to enhance their core enterprise or companies or diversify from them.

Dr. Jim Dahle:
Let’s discuss concerning the different finish of it. I am unsure if I am utilizing the suitable phrases right here. I believe the suitable phrases of franchisor and franchisee. What possesses a franchisor to make use of this mannequin as a substitute of simply opening one other location themselves, hiring administration themselves? Why are they opting to franchise and herald any person else that is basically one other proprietor?
Jon Ostenson:
Yeah. Nice query. We work with loads of companies which are excited about going by way of the franchising course of. And for some it is the suitable transfer, for some it is not, however I believe it is a very smart factor to not less than scale and begin pondering of your corporation as a franchise, since you begin placing finest practices into place if you put that headset on.
Jon Ostenson:
However no, the explanations you’ll select to franchise are you’ll be able to usually scale at a a lot sooner fee since you’re utilizing different individuals’s cash. So, you are not taking up as a lot debt to illustrate or fairness companions. As a enterprise proprietor you all the time need your staff to have an proprietor’s mentality. So, right here as a franchisor you’ll be able to open up in different markets the place individuals know the native markets, they have pores and skin within the sport, they’ll act as house owners.
Jon Ostenson:
And so, these could be a few of the causes. From an exit standpoint, this oftentimes is unknown, however non-public fairness loves franchising. When you Google non-public fairness franchise acquisitions, acquisitions are going down each week proper now. I get PE companies reaching out on a regular basis, desirous to know what we’re seeing on the bottom. There’s a lot cash on the sidelines and so they love the franchise mannequin for a similar motive loads of others love the mannequin. So, it does set you up for perhaps a extra worthwhile exit, increased, a number of down the street as nicely.
Jon Ostenson:
These could be a few of the advantages as to why somebody would select to franchise. Now I all the time inform them from my expertise, all these are nice advantages, however you’ll get up at some point as a franchisor and understand you have bought youngsters all throughout the nation which have expectations of you. And also you’re making an attempt to maintain the children taking part in good and completely satisfied. And it does change your day-to-day position and also you do must be sure you’ve bought staffing in place to assist these house owners and actually set them up for fulfillment.

Dr. Jim Dahle:
I presume you’re employed with two several types of transactions right here. People who find themselves simply beginning, they’re shopping for a constructing, they’re paying the franchise charge, simply getting going. After which there have to be people who find themselves exiting. They purchased a franchise a number of years in the past and now they’re making an attempt to go it on to any person else.

Dr. Jim Dahle:
You talked about the franchise charge to get it initially is $50,000, perhaps much less for repeat branches basically. What are loads of these franchise companies promote for later as soon as they have been developed a little bit bit, after they’re rotated and promoting the enterprise to the following proprietor?
Jon Ostenson:
Yeah. A few ideas on that. First off, individuals do have a tendency to carry onto these for fairly some time, however we actually do resales. I am invested in a driveway restore enterprise right here in Atlanta, which has simply taken off and finished nice. And we not too long ago purchased out two different franchisees that have been in our market to broaden our kingdom. So, it does create sort of a pure exit to rollups or to different franchisees.
Jon Ostenson:
At occasions, you will see non-public fairness coming in and by and huge swath the franchise areas. I might say that is not frequent, but it surely does occur. It occurred with Orangetheory not too long ago. It occurred with PODS. Or they’re going to take them company. They’re going to basically purchase the rights again from the franchisee and take them company. Most frequently occasions, although, you might be seeing them on the market on the open market and usually the franchisor helps facilitate the method for that exit.
Jon Ostenson:
They love to search out another person that may step in and run the enterprise nicely. And so, they’re going to assist you. They in all probability have a lead listing of those who have proven curiosity in that enterprise over time in that market. So, you sort of have a pure start line if you happen to’re trying to promote.
Jon Ostenson:
There was a research finished not too long ago that checked out franchise companies versus non franchise companies. It was finished by the Rinker Faculty of Enterprise. And what they checked out was exits over a 20-year interval for two,000 companies in gentle form industries of franchise versus non-franchise.
Jon Ostenson:
What they discovered have been the franchise companies traded at a mean a number of of 1 and a half occasions non-franchised. There may be that worth seen from a resale standpoint sooner or later purchaser. And so, it depends upon the trade so far as the a number of goes. It depends upon if it is a recurring income enterprise, the kind of mannequin, clearly.
Jon Ostenson:
A whole lot of occasions, the bigger you construct the enterprise, the higher a number of you get as nicely. However quite common, I might say from an EBITDA incomes standpoint, I might say three- or four-times earnings is quite common. Generally you positively see above that. At occasions it may be a little bit bit beneath too, however that is a superb rule of thumb.
Dr. Jim Dahle:
These are typically six determine transactions then for essentially the most half or most of them are seven determine transactions?
Jon Ostenson:
It relies upon. For one location, I might say most frequently the vast majority of those I see are extra six determine offers, however we actually see them within the seven figures as nicely, particularly if it is multi-location.
Dr. Jim Dahle:
Okay. Now I believe lots of people fear that they are simply shopping for a job after they do that. Is {that a} official concern? Ought to individuals be nervous that they are simply shopping for a job that they are leaving Company America and now they’re shopping for a job as a supervisor of a franchise?
Jon Ostenson:
I imply, you actually can purchase a job, if you consider it that manner, however if you happen to’re an proprietor operator then yeah, you are shifting your efforts into operating a enterprise right here. Nonetheless, most individuals do not assume it as shopping for a job as a result of even when they’re operating the enterprise day one, over time, they’ll pull themselves again to perhaps their increased payoff actions and put a supervisor in place that is operating extra of the everyday and perhaps they’re extra strategic or engaged on referral agreements going after the elephants of their city to go promote to. And so, I believe over time, oftentimes I see individuals step in, run it full time after which begin to reduce and probably then herald that second alternative.
Jon Ostenson:
Very, quite common we do loads of repeat offers with shoppers the place they’re constructing out that portfolio. One factor to consider, at the same time as an proprietor operator although you are constructing money stream as you’ll with the W2 revenue, to illustrate. However as a enterprise proprietor, you are additionally in a position to write off bills. As a W2, you’ll be able to’t do this.
Jon Ostenson:
So, there are loads of journey bills or different bills which you could tag to the enterprise that you just profit from, having the ability to write off. Then in fact, you are additionally constructing an asset that is going to should exit down the street. As a W2, you’ll be able to’t actually promote your self down the street. There are a few dimensions past simply that money stream equal.
Dr. Jim Dahle:
Now your job is to attach franchisors and franchisees. Clearly, you are not working without spending a dime. There’s some type of fee or a minimize that you just get on a transaction. What does that are typically? What’s a typical fee on these transactions and who pays it? The vendor, like in actual property, or how’s that work?

Jon Ostenson:
Yeah. It might be the vendor. Our shoppers by no means pay us a nickel. Going by way of their course of, we by no means get compensated by them. However it’s a fee on the again finish. And that is very very like an government recruiter sort mannequin. We have agreements in place with actually 500 – 600 franchisors throughout the nation. And so they’re fairly even throughout the boards. We’re not swayed a technique or one other. That by no means comes into our pondering.
Jon Ostenson:
With the franchise manufacturers, none of that ever will get handed onto our shoppers in any manner. For them, the franchise charge is the franchise charge. It does not change. When you have been to go on to a franchisor versus working by way of us, you are paying the very same factor. For them, it is only a gross sales and advertising and marketing minimize. So, it varies. I will not get into the precise quantities, however, yeah, we do nicely, however we additionally carry unbelievable shoppers to them that grow to be new house owners.
Jon Ostenson:
We have been very lucky that we do extra offers than about 99% of others out there within the US. And so, we have got these relationships with the franchisors that I’d say are extra necessary now than ever, as a result of in a market like Salt Lake Metropolis, to illustrate, you are going to have a number of individuals wanting the identical alternative on the identical time. And so, what we’re in a position to do is figure {our relationships} time and time once more with the franchisors to finest place our shoppers forward of different candidates out there.

Dr. Jim Dahle:
After I take into consideration an government recruiting mannequin, I believe greater than a 3rd of their first-year wage, versus a 5% or 6% actual property fee on transacting a property. So, presumably it is a important chunk of that franchising charge so that you can carry them somebody they need to be in enterprise with.
Jon Ostenson:
Yeah. It is a significant mannequin however we love serving to individuals. I imply, that is an enormous piece. I’ve had shoppers reaching out. I used to be on the telephone with a shopper this morning that I bought a short while again and simply seeing their success. That is what will get me going.
Jon Ostenson:
And I’ve solely had one shopper the place it hasn’t labored out for them in our time of doing this. Usually, they’re coming again, shopping for extra areas. And in that one occasion the place it did not work out, he lived three hours exterior the market. He might have saved operating with the enterprise, but it surely was a type of companies that it actually helped be out there, that floor sport, grassroots out the gate I believe would’ve helped him gotten off to a sooner begin. So, a number of months in, he selected to throw within the towel. However once more, that is very uncommon primarily based on what we have seen.

Dr. Jim Dahle:
Let’s speak about leverage for a minute. How leveraged are most of those purchases and the place are individuals getting financing for them?
Jon Ostenson:
A couple of third of our shoppers use debt. So, SBA loans are most typical inside that. A couple of third of our shoppers are paying out of pocket as a result of proper now there are report ranges of money sitting on the sidelines. Persons are nervous concerning the inventory market, solely so many good actual property offers be had. So, we do see some individuals paying out of pocket.
Jon Ostenson:
A couple of third of our shoppers are utilizing what’s known as the ROBS program or portfolio mortgage ROBS program is the place they will faucet into their 401(okay) or IRA. They arrange the enterprise as a C Corp and so they truly self-direct their retirement plan to buy the enterprise. And so, it is a distinctive mannequin. We have a accomplice FranFund that helps shoppers with this course of. Portfolio mortgage could be the place you borrow towards your brokerage account, your non retirement brokerage account, which might be actually compelling.
Jon Ostenson:
I do this personally. I am paying like 1.5% curiosity and it is variable. It will go up over time, clearly, however proper now, I am paying 1.5% %. After which I both spend money on franchises or I spend money on some non-public lending offers that I do at 12% to 14% return. So, it is a whole arbitrage play if you consider it that manner. That is a round approach to get again to the SBA loans that you just’re asking about.
Jon Ostenson:
Usually, individuals are placing down someplace between 20% – 25% of the acquisition. I might say the typical mortgage that we’re doing might be $200,000. Once more, we have got companions that assist our shoppers by way of the method A to Z. However if you happen to have been taking out a $200,000 mortgage and placing in, say $50,000, after which the good factor is with SBA, you might be personally guaranteeing it. There are some caveats to it, however you’ll be able to pay it again early. So as soon as your corporation is up and money flowing, you’ll be able to pay that down.
Jon Ostenson:
The charges I have been seeing are in all probability within the 6% ballpark. I’d guess that is going to go up, clearly, from what we’re seeing out there at present. It’s not going to be as little as your property mortgage, nonetheless from a historic enterprise touchdown standpoint, they’re nonetheless comparatively low.
Dr. Jim Dahle:
Let’s stroll by way of a little bit little bit of a case research if you’ll, of perhaps a mean franchise deal. What’s it seems to be like? You purchase it. What’s your income appear like within the first couple of years? What sort of bills do you are likely to see? What sort of revenue do you usually get? Are you able to stroll us by way of what a mean deal would possibly appear like? Not a spectacular one, however not a catastrophe both.
Jon Ostenson:
Yeah. One which involves thoughts, we have had three of those offers undergo previously two months. I discussed the gutter enterprise. I believe that’d be a superb instance. A 47-year-old Wall Road legal professional exterior of Boston simply bought it. We had two brothers in South Carolina buy, that had a background within the insurance coverage area. We simply had a company government within the gross sales and advertising and marketing area in New Jersey buy.
Jon Ostenson:
So, it is sort of a superb illustration there for the white-collar background. None of them had a background in house companies or property companies. They mentioned, “Wait a minute, we actually just like the area of interest these guys function in. It is a 6 billion market. We just like the management, the mannequin they’ve confirmed out. We just like the tradition. After which we just like the financials.”
Jon Ostenson:
All in funding on this one, if you happen to have been to do two areas, which is common. Location being outlined because the territory of, name it 250,000 to 300,000 in inhabitants. The franchisor works with you to outline that territory. So, you buy two, you’re all in funding, you are between $160,000 and $200,000 all in. Actually the largest variable is, “Do you financial your monitor or do you buy it outright or do you lease it? That will be your greatest variable value.
Jon Ostenson:
So, let’s simply say $200,000 all in on the excessive facet. What they’re displaying is common income as of final yr, for inception thus far, and so they’ve bought over 100 areas. Common throughout their franchise house owners was $1.2 million. This yr, their new FDD simply got here out, franchisors come out with a brand new FDD usually each spring. Their common is now $1.7 million. The enterprise is prospering.

Jon Ostenson:
So, that is your common income. They’re doing 31% on the underside line if you happen to’re operating it as an proprietor operator. So, 31%, we’ll simply spherical down, name it $550,000. Now, if you happen to’re paying a common supervisor to run the enterprise, together with incentives, you are aligning your curiosity, you are in all probability paying them, let’s name it $100,000. So, you are still dropping $450,000 to the underside line.
Jon Ostenson:
I all the time inform my shoppers “Let’s go conservative. Even when that’s their common throughout a big swath of householders, let’s go conservative in our assumptions.” Some companies you might have sooner break evens, you may get out of the gate sooner. Some are slower. These guys, again in 2020 I keep in mind a few case research the place one man did $800,000 within the first yr. One did $1.2 million. One truly hit $2 million of their very first yr. So, you’ll be able to stand up and operating pretty shortly. That is a 31% backside line. I might say usually in that area, house and property companies, you see someplace on common round 20% to 25%. In order that one could be a little bit bit increased than common.
Jon Ostenson:
I discussed the health idea earlier. Let’s simply take a look at that case research actually quick. All in funding, you are in all probability $200,000, together with the construct out, together with your working capital. It’s not an enormous footprint, however you have bought some high-end tech machines in there. So, $200,000. They’re averaging decrease income. It is about $260,000 per location and so they’re dropping about 40% to the underside line.
Jon Ostenson:
So wholesome margin, recurring income sort operation. However you are in all probability going to need to open up a few these to get to the place you need to be from a quantity standpoint. And you do not have to open up all of them at day one. You possibly can open them up perhaps each six months, each 9 months. Oftentimes you might have a phased method to scale. So, these could be two examples.
Jon Ostenson:
And I am going to simply point out yet another, Jim, which may be useful. Simply switching to a different trade. There’s an oil change enterprise. We take into consideration electrical automobiles. Electrical automobiles get all of the headlines, nonetheless if you take a look at 15 years down the street given the typical age of automobiles is 12 years on the street. Nonetheless lower than 10% of automobiles on the street are projected to be electrical. It’s nonetheless a protracted runway for the oil change trade.
Jon Ostenson:
And there is a mannequin proper now that we have been doing loads of placements with it. It’s really a semi passive government mannequin. The blokes shopping for into it have no background within the auto area. Nevertheless it makes use of prefabricated buildings. They’re backed by an investor group that operates out of unused parking areas in a retailer buying middle. So, you get nice street frontage and comfort. Individuals get to remain of their automotive. It is a 10-minute oil change out and in.
Jon Ostenson:
All in funding on this since you’re leasing the constructing, you are leasing the area, though it is technically brick and mortar, you are in a position to get in for $140,000 – $150,000 per location. And so they’re kicking off $335,000 in prime line income with about $130,000 dropping off the underside line. Once more, a method right here could be, let’s open up three of those, put a supervisor over all three of them and run it from an government mannequin standpoint.

Dr. Jim Dahle:
Proper. However you are speaking about getting your a reimbursement inside a yr in loads of these. Six months to 2 years. That is a implausible funding return.

Jon Ostenson:
Properly, with the oil change, that is their common. A few of these have been open a number of years, so it is not essentially yr one, however you’ll be able to get it again. After which once more, you are constructing an asset that you are going to have the ability to promote down the street.
Jon Ostenson:
So, Jim, I discovered it is actually eye-opening to individuals as soon as they extrapolate, “Hey, listed here are the varieties of returns which you could get.” And it is not simply pie within the sky. It is not simply again within the serviette. The info needs to be audited, t’s crossed, i’s dotted since you’re regulated by the Federal Commerce Fee. You are taking a look at a big swath. It is not a assure of success. It does not completely de-risk it, however you are in a position to go in with a really eyes huge open view into what to anticipate from a return standpoint.
Dr. Jim Dahle:
Okay. How do you make this as passive as doable? When you’ve got any administration position in anyway right here, you’ll be able to solely scale so huge. The extra passive you go, the extra you’ll be able to scale this. So, what is the secret to creating these utterly passive?
Jon Ostenson:
We do have two or three ideas that may be utterly passive the place the franchisor will truly run the enterprise as a company mannequin, company location. That is positively a uncommon case, however we do have a number of of these. By and huge it is semi passive and I stress that it is semi passive. You must anticipate to have some stage of involvement within the enterprise.
Jon Ostenson:
I do not need to misguide individuals, however a few issues that we’re doing to assist our shoppers as a result of we now have that request coming loads of, “Hey, I might like to get into franchising, however I actually have no time.” Having that common supervisor, we’re partnering with a recruiter. That is out of the gate. That is new information, however we’re partnering with a recruiter that is going to assist our shoppers discover common supervisor candidates for them to then interview. So, it will sort of take a few of the work out of that course of.
Jon Ostenson:
A former shopper of mine, a man named Nathan Bocock, nice man, proper round 40 years previous. He constructed up Two Males and a Truck Franchise. He purchased in and bought extra areas. That is a transferring service and it is a franchise. However he has about 10 areas doing over $30 million a yr in whole.
Jon Ostenson:
He and I’ve finished a few offers collectively previously few years the place he is like, “Hey, I need to broaden and diversify my portfolio.” I’ve launched him to alternatives that he is purchased into. And in each case, he places a younger common supervisor in place. They do not should be younger. It is simply sort of the way it’s occurred.
Jon Ostenson:
However he truly provides them some equities. He says, “Hey, I would like you to truly be an proprietor. Not simply assume like an proprietor.” He sources these guys by way of church, oftentimes. He simply sort of will get to know these guys and says, “Hey, I belief you. Go make us proud.” And generally even in different cities, he’ll place them. And in each deal, we have finished, he is come again and purchased extra areas. He simply had loads of success.
Jon Ostenson:
Anyway, that is a good distance of claiming he’s now working with us to educate our shoppers. When we now have a shopper signal a franchise settlement, we carry Nathan in for a few teaching calls that we fund and Nathan will share his learnings, finest practices and the way you align curiosity with the overall supervisor, what’s labored, what hasn’t. Once more, simply making an attempt to assist the shoppers get out of the gate sturdy, and have the ability to be as semi-passive as doable.

Dr. Jim Dahle:
Let’s speak about location for a minute. The place ought to one open a franchise? Ought to it all the time be near the place you reside? Ought to or not it’s in your city, your metropolis? Do you have to take a look at different states? Are you searching for cities which are rising? Are you searching for tax free states? What’s your recommendation on the place to open it?
Jon Ostenson:
I actually do have shoppers which are transferring from California to Texas and to Nashville. We see that taking place. Clearly, enterprise pleasant states are simpler to stand up and operating and do enterprise in and perhaps a number of much less rules.
Jon Ostenson:
We glance closely on the demographics of the realm and that is one thing that the franchisor actually has experience on. They know, “Hey, can we function in small markets? Are we higher in small markets? Possibly the place there’s much less competitors. Or are we higher off in huge cities?”

Jon Ostenson:
They’re going to outline their areas and territories by inhabitants or quite a lot of addressable households with an revenue of not less than this or quite a lot of addressable companies that meet these standards. They’ve entry to all that info of their methods. And so, they’re in a position to work to assist outline these areas with franchisees, however they know primarily based on trial and error, what to search for in new areas.
Jon Ostenson:
So, it varies. I might say extra typically occasions than not you’re looking extra in the direction of huge cities or areas that you just anticipate development individuals transferring in, not transferring out. However once more, we’re doing loads of enterprise in states like upstate New York or Western Massachusetts or areas that you do not consider as hotbeds for attracting new relocations.

Dr. Jim Dahle:
Okay. So, I am sort of excited about franchising, proper? I come to you and I am like, “Properly, this sounds nice. I could make some huge cash with these. Possibly I can reduce on no matter else I am doing. Possibly I can provide myself a little bit bit of economic freedom.” However there’s so many, proper? There are lots of of those firms, these franchises on the market that I can select from. How do you choose which one not less than to start out with?
Jon Ostenson:
You possibly can actually go on the market and Google round and get some info. The problem goes to be, each model is placing ahead their finest foot on-line and you are going to see their advertising and marketing messages. And you may even see within the case of the insulation, “Oh, they have 5 areas. That is a little bit too small. I want one thing extra confirmed.” Properly, they might have a ton of momentum and have 100 areas opening up within the subsequent six months, however you do not have perception into that or the background of the CEO essentially.
Jon Ostenson:
Once more, we love participating with shoppers. And what we have finished is we have taken out the meals and the lodging franchises. We do not take care of motels. That is only a completely different sport as nicely. However then we have taken these and utilized completely different screens to them. Once more, we work with all these completely different improvement teams that work with the franchise manufacturers. After I say improvement teams, they’re going to are available in and signify on the gross sales facet these completely different rising manufacturers, permitting the franchisor to then concentrate on their new franchisees and setting them up for fulfillment fairly than having all the time promote new franchises.
Jon Ostenson:
Anyway, there’s companions that we now have out there which have already finished a few of the screening as a primary step, and we do loads of enterprise with them. After which personally I draw on my expertise as a franchisor and franchisee. I community, I am going to occasions, I get to know these franchisors, perceive what their development projections are, what’s their aggressive benefit out there. What varieties of franchisees are they attracting? Are they attracting many franchisees? What could be related to a market?
Jon Ostenson:
All of that goes by way of into the choice that we now have. Like I mentioned, we work with over 500 manufacturers. At any given time, there’s in all probability 30 to 40 that I am actually enthusiastic about introducing my shoppers to, but it surely has to satisfy a few of my shopper’s standards.
Jon Ostenson:
We get to know our shoppers by way of a sequence of a few calls, get to know their background, their ability set. They could be coming from a completely completely different trade, however they’re open to this trade. All these various things, do they like a big staff, small staff, brick and mortar, or non-physical location? The place are they trying to make investments financially? Are they trying to construct a portfolio? What’s their timeline for being in enterprise? All these come into play.
Jon Ostenson:
After which we additionally bash that towards what we see going down out there. I might be hesitant to purchase right into a franchise system that hasn’t offered a franchise in six months. Nonetheless, I’d like to take a tough take a look at one which offered 50 areas previously three months. There’s one thing that is resonating with others oftentimes with related backgrounds.
Jon Ostenson:
So, all these information factors come into place. And what we’ll do is take shoppers by way of usually 8, 9, 10 alternatives that match the factors we have mentioned with them which are obtainable of their market. The shopper works to slim these down to 2 or three, perhaps 4 alternatives. We then make the introductions after which they begin the method of getting a number of calls with the franchisors, listening to all about completely different dynamics of the enterprise, the financials, the ins and outs, the branding, the FDD evaluation.
Jon Ostenson:
They get to do what’s known as validation the place they discuss to different house owners within the franchise system and listen to about their expertise. What was your ramp up? What sort of assist are you getting from the franchisor? Something you’d do in a different way? Actually with the purpose of an eyes huge open method, in the end culminating in what’s known as a discovery day the place they meet with the franchisor’s staff on the house workplace, get to satisfy all of them. They want to verify it is a match each methods. After which they get the provide to affix the franchise system.
Jon Ostenson:
We’re serving as a sounding board, holding our shoppers’ fingers by way of your entire course of. In the event that they get off the decision and say, “Hey, I do not assume that is the suitable match for me.” No hurt. We let the model know. However what is going to occur is they’ll say “There’s one thing that I heard on that decision that I actually like. Hey Jon, can we take a look at another alternatives to suit these standards?”

Jon Ostenson:
As a result of our shoppers’ pondering evolves as they undergo this. You create a framework and lenses by way of which to investigate possibility A versus possibility B. It is this muscle that you have not essentially used previously – “How do you analyze companies?” And so, that is what the method seems to be like and sort of how we assist them slim down so they are not overwhelmed at this universe of noise on the market.

Dr. Jim Dahle:
Now, what position does ardour play right here? Lots of people select their profession. A whole lot of our listeners are medical doctors, they really feel passionately about drugs. They really feel it as a calling as an example. What position does that play when selecting a franchise, if any?
Jon Ostenson:
I do have shoppers that say, “Hey, I am captivated with pets. I’ve bought 5 canine. I need to do one thing pet associated.” Properly, there’s loads of companies that cater to the pet trade and doubtless some they hadn’t thought of. So, we introduce that world of pets. In the event that they know that is the place they need to be, we do not attempt to discuss them into one thing else.
Jon Ostenson:
However the overwhelming majority, they arrive in and say, “Hey, I am open-minded, this is what I would like. This is my long-term imaginative and prescient.” I simply hear this present day in time out by way of could be entrepreneurs throughout North America. Some which have by no means owned a enterprise earlier than, some which have, and so they say, “Hey, this is what it seems to be like from 30,000 toes. Assist me break it right down to what tangibly might match that mildew.” And in some circumstances, I say, there’s nothing that may match that mildew. However in loads of circumstances, it is, “Hey, this is what we have seen achieve success for others that you could be not have thought-about. Let’s not less than take into account it, perhaps have a dialog with them.”
Jon Ostenson:
And inevitably Jim, even as soon as we evaluation alternatives with the shopper, what was ranked quantity three of their thoughts, after they discuss with them, they are saying, “Hey, that is now my primary.”
Jon Ostenson:
And so, I simply encourage individuals to return in with an open thoughts. From a ardour standpoint, there are occasions the eagerness comes into play. I might say the vast majority of my shoppers say, “Hey, I am passionate a couple of way of life for my household, the work life stability. And I’ll should work arduous initially, however long run, I see what this may result in.” So, that is extra of the place the eagerness lies versus, “Hey, I am captivated with this trade.”
Jon Ostenson:
I’ll say although it’s pretty frequent for individuals to return and say, “Hey, I do know I do not desire a bodily location. I need to do it remotely.” Others say, “Hey, I actually need one thing that has a bodily location.” So, there are some standards that we will apply that take out giant swaths of alternatives however by and huge, it is extra what they’re captivated with versus the enterprise itself.

Dr. Jim Dahle:
Now there’s one other particular person with a say on this course of, the franchisor. How selective are these firms in selecting their franchise companions and areas? I presume you’ll be able to’t simply go to them and say, “I would like in, and I need to do that in my hometown.” They will not be cool with that. How selective is that course of? Is it aggressive? Is it arduous? What do you usually see?
Jon Ostenson:
It’s actually a two-way partnership. The shoppers that we have been working with are sharp of us. We have gotten accolades from the franchise world on the varieties of shoppers that we carry to them.
Jon Ostenson:
And so, we’ve not run into that too typically the place they are saying, “Hey, you are completely not a superb match.” I might say if it is a sales-oriented enterprise the place the enterprise lives and dies primarily based on gross sales orientation. When you’ve got no gross sales in your background, you do not need to rent somebody to be a gross sales particular person and handle a gross sales particular person. I might say generally these are simple disqualifiers. After we say, “Hey, it is simply not going to be the suitable match.”
Jon Ostenson:
However in loads of circumstances, there are transferable abilities. Once more, I take into consideration the medical career and the medical doctors, a lot of whom are listening. You have realized the best way to work with others. You have realized the best way to work with shoppers, if you’ll, the best way to negotiate on the again finish of reimbursements or what have you ever. There’s loads of issues that you’ve got finished that can be relevant although could look a little bit bit completely different however these are ability units that you’ve got honed over time.
Jon Ostenson:
I all the time say that if you happen to care about individuals, I imply that is the largest factor. At ShelfGenie we might have candidates undergo the method and so they’d say, “Wait a minute, you are advertising and marketing, making our telephones ring. You are answering the telephones, you are setting appointments. You are supporting us on the know-how facet and product improvement. What will we do day in, time out?”
Jon Ostenson:
And my reply inevitably was become involved in your native market, get some grassroots. Whether or not or not it’s supporting the little league baseball staff or getting concerned within the chamber of commerce. However then actually your most necessary factor goes to be round individuals, discovering and hiring the suitable expertise, incentivizing them, supporting them after which making powerful calls when wanted. I might say that the largest factor is simply your capability to work with different individuals.

Jon Ostenson:
And it sounds commonplace, however for some individuals it is more durable than others. So, I might say with the franchisor, the largest problem we’re operating into proper now could be once more, the place you might have a number of candidates wanting the identical alternative on the identical time in the identical market. They don’t seem to be going to allow you to open up in a market that does not make sense. If it is a mosquito enterprise, you are in all probability not going to go promote it in. Do you might have mosquitoes in Salt Lake?

Dr. Jim Dahle:
Not lots. It is in all probability not going to work nice right here.
Jon Ostenson:
Proper, proper. So, it is a little bit little bit of a extra regional enterprise. They will need you to achieve success. Once more, your numbers get rolled into their merchandise 19 of their FDD. If you are going to be too tough to work with, if by way of the method you have not been in a position to comply with the event course of to result in that time of settlement, they’ll say you are not the suitable match from a tradition standpoint. We do not see you abiding by the system. In order that does occur, but it surely’s positively extra uncommon from our expertise.

Dr. Jim Dahle:
More often than not, you may get what you need.

Jon Ostenson:
More often than not.
Dr. Jim Dahle:
All proper. Persons are all the time excited about listening to horror tales. When do these offers go dangerous? Are you able to share some tales? And so they do not should be ones that you just have been personally concerned with, however the place any person bought into franchising and it labored out horribly.

Jon Ostenson:
Yeah. Once more, the one instance that I’ve from our shoppers the place actually it did not work out was the instance the place he lived three hours exterior the city and simply did not have any connections in that space. And it was a enterprise that lent itself to that.
Jon Ostenson:
I am going to provide you with an instance from my private expertise. I had two companions, and I all the time say the partnerships are nice till they don’t seem to be. My partnerships I am concerned in now, I could not be extra thrilled. If you are going to accomplice up, be certain it is the suitable particular person.

Jon Ostenson:
And one in all these two companions was one which I’ve finished loads of enterprise previously. I actually trusted him, he trusted me. However we introduced in an working accomplice on an equal area with us. We have been each third house owners of the enterprise.
Jon Ostenson:
And lengthy story quick, the working accomplice ended up not being who we thought he was. It was a scenario the place he wasn’t operating the enterprise nicely, however he was reporting again to us basically that issues have been going higher than they have been. And as soon as we actually dug, it was our fault for not being extra fingers on, in all probability early on, however as soon as we dug in, we realized, “Oh gosh, he is actually put us in a gap. We’ll should put in some extra capital, which isn’t splendid.”
Jon Ostenson:
And so, that created a little bit little bit of stress as nicely, that he’d sort of run the enterprise poorly after which could not put in extra capital. And that actually created some riffs, particularly between him and my different accomplice.

Jon Ostenson:
Nevertheless it ended up that we wanted to take away him and actually get him out of the equation. So, to incentivize my different accomplice, who wasn’t planning on being an working accomplice, I ended up promoting my fairness to him within the enterprise at a reasonably low fee. So, I took a loss on that deal and tried to set him as much as be motivated to run the enterprise, which he hadn’t deliberate on doing. So, yeah, that was the horror story, I assume. And it does not sound as dangerous now, however if you’re residing within the second, there’s some drama and I do not like drama.

Dr. Jim Dahle:
How about if I need to become involved in a few of these well-known manufacturers? I need to be a Chick-fil-A location proprietor. Are you able to assist me to perform that?

Jon Ostenson:
Properly, Chick-fil-A. Really, Andrew Cathy is an effective pal right here in Atlanta. So, I’d have the ability to pull some strings over there. However Andrew, in fact, took over for his dad this previous yr for Dan Cathy.
Jon Ostenson:
Chick-fil-A might be the toughest one to get into. It is simply such a singular operator mannequin that they’ve with that enterprise and tradition smart and all the pieces, however nice, nice enterprise. Right here in Atlanta, we now have loads of of us over there.

Jon Ostenson:
The meals trade is a unique animal. Once more, what I am targeted on right here is the non-food. And if you happen to have been to get into Wendy’s, and one acquires 78 Wendy’s, it is only a completely different stage. You are coping with much more non-public fairness patrons which are proudly owning lots of of areas. I’ve bought a pal that runs Atticus Franchise Group. They have over 100 Sonics, bought over 100 Therapeutic massage Envies.
Jon Ostenson:
And so, it’s a little little bit of a unique realm and that is not the place we focus. A whole lot of the manufacturers that we work with are ones that you’ve got heard of. They’re family names, however usually they’re both resales otherwise you’re shopping for into smaller markets they have not developed but.
Jon Ostenson:
The advantages of shopping for right into a model that you’ve got heard of is that they’ve in all probability been round for some time. There might be some model consciousness out there, however it’s possible you’ll go in and be franchisee quantity 741. You are not going to get fairly the identical hands-on consideration. You are not going to get a seat on the desk. You will in all probability should work round another prime areas of current franchisees.
Jon Ostenson:
With an rising model, the chance is you get to go in and get selection territory. You get extra hands-on therapy. The problem is perhaps they have not seen each scenario or encountered all the pieces previously that you could be encounter. That is the place we do our investing, want that rising model alternative, given they have the management, the monetary mannequin of aggressive benefits, all these issues in place. However we might fairly get in early on, get the suitable market, actually get a seat on the desk in loads of circumstances as nicely.

Dr. Jim Dahle:
All proper. Our time is operating quick, however you have bought the ear of 30,000 to 40,000 excessive revenue professionals, largely docs. What’s one factor we’ve not but talked about that you just assume they need to know?

Jon Ostenson:
Yeah. I believe simply from a excessive stage, we’re having conversations throughout North America with all kinds of backgrounds. Many within the medical area, many coming from the company world or within the authorized area. In some circumstances, current enterprise house owners.
Jon Ostenson:
So, there is a need I imagine in everybody to be a enterprise proprietor to say, “Hey, do I’ve what it takes?” And so they need that concept of economic freedom and independence that you just so typically speak about in your present, Jim. They simply don’t know the place to start out. And so, we have simply seen success story after success story. And once more, not everybody strikes all the best way ahead. They’re going to undergo the method and resolve it is not proper for them. That occurs on a regular basis.
Jon Ostenson:
However I believe it is a actually good concept for individuals to not less than give it a consideration as a result of there are loads of unknowns in franchising. And as soon as you actually begin realizing the advantages that may be had, you’ll be able to shortly decide if that could be a doable match. And if that’s the case, let’s not less than dip a toe within the water, test it out and see if it may very well be a superb path.
Jon Ostenson:
We see households going into enterprise collectively, oftentimes {couples}. We’ll buy a franchise collectively. Or we simply had two brothers, as I discussed, or a brother-in-law. That sounds a little bit scary, perhaps not a brother-in-law. However in loads of occasions, it’s, “Hey, it’s a superb pal of mine, we need to accomplice up and he is bought relationships with all of the industrial actual property brokers on the town.”
Jon Ostenson:
And begin excited about in your market, the place are the wants? The place are individuals being underserved at present? And perhaps the service simply is not that nice. And also you say, “Wait a minute, we will do this higher.” Oftentimes it is a fragmented trade that you just step into with a model, with a white-collar method, the know-how, and simply actually differentiate. So, begin having these ideas in addition to take into consideration connections out there and what would aid you get out of the gate quick?

Dr. Jim Dahle:
All proper, Jon. If somebody desires to rent you as a marketing consultant or a dealer, what’s one of the simplest ways for them to get in contact with you?
Jon Ostenson:
Yeah. As a primary step, I might come out to our web site, franbridgeconsulting.com. I might say as a primary step, join our publication. We ship nice content material each month. We have a e book popping out within the third quarter. And so, Jim, I might lengthen the provide to your entire listeners that if you would like to get a replica of our e book, it is known as The E-book on Nonfood Franchising. It’ll be releasing within the subsequent few months. We’ll be certain to get copied to everybody that indicators up.
Jon Ostenson:
However yeah, if that is an space that you just need to take a subsequent step in and really have a dialog, I might be completely satisfied to get on 10- or 15-minute name and listen to a little bit bit extra about your background and sort of what you are trying to do and assist you consider does it make sense to leap into the method and take subsequent steps.

Dr. Jim Dahle:
All proper. We have been speaking with Jon Ostenson, a non-food franchise dealer. Thanks a lot for approaching the present, Jon.
Jon Ostenson:
Thanks for having Jim.

Dr. Jim Dahle:
All proper. I hope you loved that interview. Clearly, bringing on a visitor like that, he desires you to rent him. That is why he comes on a podcast like this. We get pitched a podcast interview like this about 5 occasions every week. And we take virtually none of them. I believe we will depend them on one hand or much less all of the individuals the entire time we have been doing this podcast that reached out to us, that we introduced onto the podcast. More often than not we’re reaching out to them.
Dr. Jim Dahle:
However this one I believed was fascinating. I have been an enormous fan of possession, whether or not it is proudly owning your follow, whether or not it is proudly owning your property, whether or not it is proudly owning a small enterprise on the facet. You’re way more more likely to grow to be rich if you personal stuff, whether or not that is in your portfolio, shares, actual property, bonds, and so on, or within the methods you generate cash. It is only a more likely path to constructing actual wealth and positively to constructing any type of passive revenue.
Dr. Jim Dahle:
I do not understand how many individuals in our viewers could be excited about franchising. However I do know I’ve gotten questions on it over time, and I used to be excited about studying a little bit bit extra myself about it. And so, that is why we introduced him on.
Dr. Jim Dahle:
All proper. What else do I must inform you about? We bought a scholarship, proper? We give away cash. We’re freely giving tens of 1000’s of {dollars} to medical and dental college students and different pre-professional college students. All you must do is apply. We get, I do not know, 700 or 800 purposes a yr. You possibly can apply at whitecoatinvestor.com/scholarship.
Dr. Jim Dahle:
If you’re excited about being a decide for the scholarship, you’ll be able to’t be a pupil, you’ll be able to’t be a resident. You must be a high-income skilled of some sort. You might be retired, that is okay. However if you want to be a decide, apply at [email protected], put the phrase “Decide” within the topic line and we’ll allow you to assist select the winners of this scholarship.
Dr. Jim Dahle:
No person on the White Coat Investor chooses the winners of this scholarship. We’re utterly divorced from it. We simply assist fund it. However it’s our viewers, our volunteer judges that resolve who wins the scholarships annually. So please, if you happen to’re excited about successful that, you bought to be a full-time pupil in good standing, go forward and apply. When you’re excited about judging it, please additionally shoot us an e-mail. We’d like to have you ever assist us to guage this contest.
Dr. Jim Dahle:
This podcast was dropped at you by Laurel Street for medical doctors. Laurel Street is dedicated to serving the monetary wants of medical doctors such as you. You care for us, it is time somebody took care of you.
Dr. Jim Dahle:
With Laurel Street’s doctor mortgage, it’s possible you’ll be eligible for a fee low cost if you take out a brand new mortgage or refinance your current mortgage. Particularly designed for medical doctors, this doctor mortgage has versatile financing choices, and should have fewer restrictions than a standard mortgage. That may imply decrease month-to-month funds.
Dr. Jim Dahle:
For phrases and circumstances please go to www.laurelroad.com/wci. Laurel Street is a model of KeyBank NA, and an equal housing lender, NMLS quantity 399797.
Dr. Jim Dahle:
Thanks for these of you leaving us a five-star evaluation and telling your pals concerning the podcast. Our most up-to-date one mentioned “Wonderful podcast. I’m usually not a podcast particular person, however I’ve by no means missed an episode of this podcast. Between Dr. Dahle’s weblog, podcast and books, I’ve gone from financially illiterate to snug managing my very own funds with no monetary advisor.
Dr. Jim Dahle:
The content material is listener pushed and covers matters of various complexity so individuals in any respect ranges of economic literacy are in a position to study one thing from every podcast. I discover myself simply as on this content material now as I used to be six years in the past once I first discovered his weblog. If you have not listened but, get began now.” 5 stars.
Dr. Jim Dahle:
Thanks, Alpheus06 for that nice evaluation. For the remainder of you, maintain your head up, maintain your shoulders again. You have bought this and we will help. You might be financially profitable. All it takes is a little bit little bit of effort, a little bit bit of data and a little bit little bit of self-discipline. See you subsequent time on the podcast.

Disclaimer:
The hosts of the White Coat Investor podcast will not be licensed accountants, attorneys, or monetary advisors. This podcast is on your leisure and data solely. It shouldn’t be thought-about skilled or personalised monetary recommendation. You must seek the advice of the suitable skilled for particular recommendation regarding your scenario.