Tyler and Michael had a comprehensive discussion about the current state of businesses and the economy. They explored alternative investment opportunities, including franchising, real estate, and cash-flow businesses, as potential avenues for financial security. The conversation also featured Greg Mohr, who provided insights into the franchising process, including different types of franchise models, fee structures, and potential earnings in the service sector.
Business, Economy, and Investment Challenges
Tyler and Michael discussed the current state of businesses and the economy, focusing on the challenges faced by employees and business owners due to government intervention and market uncertainties. They also explored alternative investment opportunities, including franchising, real estate, and cash-flow businesses, as potential avenues for financial security. Greg Mohr, the owner of Franchise Maven, joined the conversation to explain his role as a middleman between franchisees and franchisors, providing valuable insights into the franchising process.
Franchise Models and Earnings Potential
Greg provided Tyler with an explanation of the different types of franchise models, particularly the role of a master franchisor. He detailed how a master franchisor purchases all 10 territories in an area and uses one as a training unit for new franchisees, then sells the remaining territories to other franchisees and earns a commission on the franchise fees and royalties. The team also discussed the concept of multi-level marketing, real estate ownership in the fast-food industry, and the potential earnings in the service sector. Tyler shared his personal experience with the service sector, expressing concerns about high fees and a lack of understanding from some service providers.
Franchise Fee Structures and Vetting Process
Tyler and Greg discussed the general fee structures of buying a franchise. Greg explained that the one-time franchise fee usually ranges from $50,000 and includes all necessary information and training. The ongoing fee is a percentage of the gross sales, typically between 5 and 10%. Greg emphasized that franchisors are looking for both business and background experience from potential franchisees. Tyler shared that their model is similar to a franchise, where they rent their facilities to operators. However, they have implemented strict measures, including hiring a consultant with real estate and business experience, to ensure the quality of care for their residents. Greg and Tyler also agreed that involving a consultant in the vetting process can increase the success of the franchise.
Franchise Feasibility Discussion
Greg and Tyler discussed the feasibility of starting a franchise as a side hustle with a budget of around $50,000. Greg confirmed that it is possible to manage a franchise with a time commitment of 10 to 15 hours weekly and that he has many clients who continue to hold their primary jobs while managing their franchises. Tyler raised a question about the process for someone who doesn't know which franchise to invest in, to which Greg clarified that the first step would be to have a conversation to understand the individual's interests and aspirations.
Franchise Earnings Inquiry and Information
Tyler inquires about the potential earnings for a franchise investment. Greg explains that the Federal Trade Commission prohibits the disclosure of specific earnings data by franchisors. However, Greg assures Tyler that he will provide all the necessary information to help him make an informed decision. Greg also mentions that he will talk to multiple franchisees to get a sense of their earnings and experiences. Towards the end, Greg outlines his role as a coach in the process, helping Tyler determine if franchising is right for him and, if so, identifying the most suitable franchise opportunity.
Franchisee Characteristics and Benefits
Michael discussed the characteristics of a successful franchisee with Greg, who emphasized the importance of being coachable and willing to follow a process. Greg also highlighted the benefits of being part of a supportive network and following a specific territory. The discussion revealed that Greg provides free services to help potential franchisees find a suitable franchise within their area. The group also touched on the availability of SBA loans for financing.
Funding and Exit Strategies for Businesses
Greg and Tyler discussed funding options for SBA loans and SBA express loans, with Greg explaining that SBA loans can be obtained quickly while SBA express loans take longer. He introduced the concept of using a 7a loan for larger loans and using a 401k plan from a previous employer for funding by doing a rollover into a self-directed 401k. Greg also shared his experience of using retirement money to fund his business by creating a C corporation. Michael expressed his desire to terminate his franchise commitment and start a new business venture, leading to Greg explaining the process of exiting a franchise agreement.
Greg can be reached via FranchiseMaven.com