Exploring Franchising – Adam Goldman

Adam Goldman:
What I say to anyone, I don’t care if it’s a non brick and mortar business, is the first year is just hard. It’s just very hard to say when it goes well or not. I mean, it takes time. You can be started within 90 days. I’ve had a friend that started a service business. He built it to a seven figure business in the first year. But that’s not obviously the norm. That’s definitely one on the lower end, and that’s really a viable option for a lot of people.

Adam Goldman:
There are different attractive models, right? I have 75 industries represented in my inventory, but for someone in their fifties, it just all depends on what they’re looking to do. Do they want to run it? My apps and Ti have businesses that are. And they have the resources. Resources.

Dana Robinson:
Exit Plan is a podcast for business owners and those who want to be business owners. I’m always in search of the lesser known stories of entrepreneurship. In the exit Plan podcast, you’ll hear stories from startup to sale and hear from the professionals who helped business owners achieve their exit. Hosted by me, author and private equity manager Dana Robinson, along with my co hosts and guests, you’ll hear real stories, tips, and tools that will help you plan for the exit you want, whether you are still working at a day job or running a business. Let’s get started with this episode of the Exit Plan podcast. Hey, everybody, it’s Dana Robinson coming at you with another episode of the Exit Plan podcast. Today I’ve got Adam Goldman on from franchise coach to talk about, well, franchise stuff. But luckily, everyone who listens knows I love a good entrepreneur story, and Adam’s also been an entrepreneur business operator himself.

Dana Robinson:
So we’re going to draw some of your experiences. Adam, I want to hear detailed of your own experiences you’re willing to share. Don’t get yourself sued if you sign to NDAs and share your business journey with us. And then let’s talk about what you do to help people understand how to leverage franchises.

Adam Goldman:
Thank you so much, Dana. It’s a pleasure to be here with you today. So, I’ve been an entrepreneur even since, like a young kid. I’m 50 years old, and for the bicentennial, my mom said my first sales job was trying to convince the judges at age two that I should win the contest with a suboptimal costume. So I didn’t have the best costume, but I had the best, best shtick at age two. And I shook the hands of all the judges, ended up winning that. If you kind of fast forward some more years I was a, I owned a paper route, which was great. Yeah, I love that business.

Adam Goldman:
Being a paper boy was a really good gig. And what my favorite thing about it is, if you sold the most subscriptions, you could go ahead and win a trip to Disney World. So that was amazing. So it was, it was a really incredible experience being a 13 year old with all these other paper boys being chaperoned in Disney World as a paper boy. If you fast forward to college or even before college, I had a driveway ceiling business, which with my friend and then in University of Illinois with my fraternity brothers, we had a really cool business where we got paid by credit card companies, a pretty good sum per application. There’s a big margin. And what we gave to the college students was a two liter bottle of pop or soda of Mountain Dew in exchange for them giving us their Social Security number and application. That was a really, really good business.

Adam Goldman:
And since then, it’s been kind of, you know, just one business after the other. The businesses that kind of stick out is, I lived in Europe for seven years. I owned my own business that was kind of like an AC Nielsen, where I bought scanning data from different consumer goods. Sorry, from different. I bought it from the. Sorry. It was kind of like Costco, where I bought their scanning data, and then I sold it to Procter and gamble.

Dana Robinson:
Wow.

Adam Goldman:
In Europe. Yeah. Which is really interesting and kind of took this data and kind of made it better and easy to use. And what I, the other businesses that I also had after that were things such as I owned. I still own real estate, and now we can go forward to franchising, because in 2009, Dana, I was in a situation where I found all these amazing deals in 2008 and actually even 2009, but they started drying up in 2010 after the whole big recession. And I didnt know what I wanted to do. I saw a franchise coach and theyre like, hey, you should really think about franchises. And I really didnt know much about them.

Adam Goldman:
My only thing I knew was a thing such as McDonald’s or Burger King or Subway, and they kind of opened my eyes. I decided to invest in an office cleaning master franchise in 2010. Ran that for eight and a half years, built it up from scratch. I’m much better at creating, I’m sorry, at following process than creating process from scratch. And got an unsolicited offer for this business in 2018. And that’s when I started being a coach full time, where I’m helping to connect people that are potentially interested in franchise opportunities with pre screened franchise brands in 75 different industries.

Dana Robinson:
Cool. Well. Well, I’m glad you’ve had all those entrepreneurial experiences because I’ve always had this probably mistaken belief that you’re either the kind of person that feels like they need to be creating and innovating or somebody who needs to follow process. So it sounds like you actually are both, because clearly you originated really creative business, for example, in Europe. But you think that the franchise model actually was something that you flourished in.

Adam Goldman:
Absolutely. Absolutely. Because I really believe that there are different types of entrepreneurs. There’s kind of like this whole buzzword. They call it ETA. Right. Entrepreneurship through acquisition. Right.

Adam Goldman:
I see a lot of executive mbas in Houston being excited or throughout the country about this, and I see people that are really good at starting up from scratch. Right. I think that’s a different animal. I see that in my entrepreneurs organization local branch here in Houston as well. I think there’s something else, and I think it’s called ETF, which is entrepreneurship through franchising. And I actually, I love that because I think that’s a different skill set. The kind of person that’s not afraid to follow a model, to tweak that model, and that can really execute well.

Dana Robinson:
So let’s talk about your first franchise and what was that was a nice long run. So the. You invested in a master franchise. Does that mean that you get, like, a territory and then you can own all the little mini for the sub unit franchises? Mini is nothing really good word in a geography. Or were you actually part of the parent? The whole franchisor.

Adam Goldman:
So, look, the term master franchisor is very rare in the franchising world. The people that are typically scaling businesses are multi unit operators. An example would be someone that has multiple units of a fast food restaurant. The way a master works, and it worked different in office cleaning, is the fact that I own the greater Houston region.

Dana Robinson:
Okay.

Adam Goldman:
And I had the right to sell franchises, we call them unit franchises to people in Houston. And I actually participated and received royalty fees from them, but the head office also received royalties as well. So it was. It was a situation where I was kind of like a franchisor. Right. But you could even call me a mini franchisor that only had a specific territory.

Dana Robinson:
Got it. Which probably was good for. I mean, I’ll just say your aptitude in entrepreneurship is probably sales. If you’re selling judges at two years old on you being the winner and selling the paper route. So you win. I’m going to call you a sales driver in the entrepreneurial world. What a great opportunity. Then for you to learn franchise, but also have a thing to turn around and say to other franchisees, buy in my region, and you got to sell franchises and get the benefit of that.

Adam Goldman:
It was a fascinating, exciting opportunity. But Dana, I can tell you that, frankly, from an operational point of view. Right. It was amazing at the beginning because every single customer you get, that’s a new customer, and it’s just you’re kind of building and building and building. Once you get to a certain level, right. There’s just so many new customers you can get. And just because of attrition, you’re losing things. So it becomes more operational heavy and less sales focused.

Adam Goldman:
And frankly, for me, it was less enjoyable towards the end.

Dana Robinson:
Okay. Yes, there is, there is something also about the, the people like starting things and, or selling things get bored at some point because then it needs somebody who doesn’t like to sell or to innovate and they like to run things. Right. So did you build a team that was able, I mean, eight years is a long time for somebody who’s going to get bored in two or three years. Were you hiring a management team? Did you build multi units that were yours to operate as well as the franchises that you sold to?

Adam Goldman:
One of the exciting things about the jet, this specific janitorial model, is that you’re able to really build it up to pretty big business. Right. Without having many people in your head office.

Dana Robinson:
Right.

Adam Goldman:
Like four or five people. That was really interesting. But one of the challenges of the janitorial business, frankly, is you don’t have the resources, the margins to afford to have really high caliber staff and to actually hire them even at the local level. That was one of the challenges. I built the team as best as I could, but I didn’t have the resources. I mean, janitorial. Right. You already have one strike against you trying to how many Harvard mbas want to go into the janitorial business? But if you don’t really have the resources to afford really, really high caliber management, that’s not, that’s two strikes against you as well.

Dana Robinson:
Yeah. Well, I’ll pause to just say that I’ve been in a lot of private equity meetings in the last two years where janitorial is considered an attractive business to roll up. So they, the capital markets are looking at it yet again as someplace for adults. And all of those capital market players are all Wharton and Harvard grads. Right. So it’s coming around for you. Was the opportunity to sell that as sort of a bundle? You know, was that, was that part of your plan in the beginning, or is that. You said it was unsolicited, but, you know, were you thinking the whole time, like, someday I’m gonna take my exit and sell this thing and do something else?

Adam Goldman:
You know, that’s a great question. I didn’t know when I started that I would end it that way. I thought maybe I’d have someone else manage it for me and maybe have it run passively and not being as involved in it. It just kind of evolved into this. And again, skill set year eight was different than skill set year one. I mean, it would have been a. I’m just not an opera chief operations officer. That’s not my strength.

Adam Goldman:
Especially for a complicated business like this with hundreds of clients. Right. Hundreds of buildings you’re cleaning and all these different moving parts. It’s very operationally heavy.

Dana Robinson:
Yeah. I did an interview with Reed Tileston. Reed’s got a book out that’s for the entrepreneur to learn entrepreneurship through acquisitions. So he actually learned his first big lesson in franchise by not following the franchisor’s recommendations. He opened a fitness center in a big metro. When they told him, these only really work in small town America. And, you know, he had a region. So they just being big city boys, he and his brother kind of tackled the biggest they could, and it completely flopped.

Dana Robinson:
And then he hunkered back down, and I kept his franchise rights and got out of the bad one and then did what they said, and it worked out really well. Do you align with that? Does that sound like, you know, this is a pretty. If someone’s got the recipe, how much can you deviate before you’re. You’re taking your chances with your life?

Adam Goldman:
So, Dana, what I would say is this. That look, I truly believe if you look at and look, a lot of these things work out. But I’ve had been exposed to a lot of deals in the past seven years, seven half years doing this role connector. And the number one reason why things don’t work out is, frankly, because the person that’s running the franchise isn’t following the model. So that’s the number one reason why. So, yes, you might be able to deviate a little bit, but certainly don’t deviate that first year or two. I mean, you’re buying a brand, but more importantly, you’re buying a system. And so if you can’t follow that system, you shouldn’t be buying it to begin with, in my opinion.

Dana Robinson:
So, see, I mean, the. In that eight years, you’ve. You probably met a lot of people, counseled a lot of people walk people through. You’re sort of a business psychologist at this point. What’s the talk me through? Like, what are some of the things that, you know, the types of people that come to you and the, and the path, the journey that they’re on and let’s just kind of talk about someone’s listening. They’re like, okay, you got my attention. I’ve never thought about owning a franchise. You know, who’s it for? What does it cost? How do you finance it? You know, who’s not a good fit of.

Dana Robinson:
Now let’s talk about franchise coach.

Adam Goldman:
So let’s, so, great. So look, I mean, let’s talk, let’s start with who’s not a fit. This kind of entrepreneur that can’t follow a model that’s going to be running a rural franchise in New York City. Don’t come to me. Right? I’m probably not. You’re the good person for you, someone that wants to buy McDonald’s and sell heroes there, or Eros, however you pronounce it, and have golden, not golden arches, but something else from coming to America. Don’t. Don’t invest in a franchise.

Adam Goldman:
The right person for franchising is someone that typically, it’s corporate America types, right? It’s people that probably between the ages of, I’ve had candidates that are, that have decided to invest, that are as young as in their twenties. I’ve had candidates in their seventies that have invested, that still have gas in the tank. It’s anyone that’s ready and like, wait a second here. I’ve always wanted to start my own business. I want to at least have an exit plan from corporate America. This is a way for me to do this and to potentially have training wheels as an entrepreneur, meaning my chances of success are probably higher than if I were to start things on my own. It’s more scalable because I’m actually going to be able to leverage through the system and be able to avoid mistakes that other people otherwise would make if they didn’t have the system.

Dana Robinson:
So let’s, I, like you mentioned the young and the old. So I’m going to ask you to talk me through a 20 year old who’s got 20 grand in the bank. They’re ambitious. What an opportunity is for them. But then keep in mind, I want you to throw, because here’s a real world. I’ve got a bunch of guys my age, early fifties, laid off because we’re aging out of the workforce as professional. So you got a high paid professional who’s used to making 180 grand a year and capable of anything, has access to resources, has savings. Walk me through those two journeys.

Adam Goldman:
So let’s talk about journey one. Right. So twenties. And by the way, I don’t really have anything for 20k. All in. I just don’t.

Dana Robinson:
Okay. Find the cheapest one like the. Got it.

Adam Goldman:
Got it. So the least expensive thing I have is about 125,000, $150,000 all in. It might be a service business. Now you’re in San Diego and la la land. Right. But if you’re in Houston, Texas like me, we have a lot of mosquitoes. Right. So mosquito spraying is a great business.

Adam Goldman:
Right. Recurring revenue margins that could make you blush. I’m just using it as an example. No expensive lease and scalable potentially. So you could potentially get a loan. You could have friends and family help you to reach that. I have situations where parents buy businesses for their kids.

Dana Robinson:
Yeah. Yeah. About financing. So let’s just take so your, your cheapest franchise, 100 and how good you sound.

Adam Goldman:
25. 125,000. All in.

Dana Robinson:
All in. And you can finance some portion of that. What’s.

Adam Goldman:
Yeah, you probably got to come with 25 or fifty k of your own money.

Dana Robinson:
Okay. Okay.

Adam Goldman:
So you can use your 401k without penalty, take it out of Amazon stock, put it in your own and Dana incorporated stock.

Dana Robinson:
Right. Certainly. Okay.

Adam Goldman:
That’s yourself.

Dana Robinson:
So really a kid in their twenties who’s gone to college or decided they don’t want to go to college, that has access to 50 grand could own $125,000 mosquito sprain franchise that’s scalable with high margins and they would be able to pay their bills from the very beginning of running that business. Do you think, or how long? What’s the ramp up to critical mass?

Adam Goldman:
What I say to anyone, I don’t care if it’s a non brick and mortar business, is the first year is just hard. It’s just very hard to say when it goes well or not. I mean it takes time. You can be started within 90 days. I’ve had a friend that started a service business. He built it to a seven figure business in the first year. Right. But that’s not obviously the norm.

Adam Goldman:
And I don’t know what his profit margin was on that. But yes, I mean that’s definitely one on the lower end and that’s really a viable option for a lot of people, service businesses. Now let’s kind of pivot and talk about people in their fifties or whatever that might be like myself and it sounds like you as well. Look, some people decide to invest in service businesses as well. There’s an attraction for being in service businesses without not being on the hook for a ten year lease for some sort of a fitness concept. If you have a service company, you have a very quick ramp up. You also have a situation where you might have just really good margins for this. And there are different attractive models.

Adam Goldman:
Right. I have 75 industries represented in my inventory. But for someone in their fifties, I mean it just all depends on what they’re looking to do. Do they want to run it? Semi apps and TI have businesses that are, and they have the resources. I have things that are real estate related. If you look at the real estate market right now, you have winners and losers. Within 5 miles of my house, I’ve had two to three real estate retailers that have gone out of business and franchise brands have come in instead at really good ti from the landlord. And it’s been a good time, bad time to be Best Buy or Chuck E.

Adam Goldman:
Cheese, but a good time to be the right franchise brand. So I mean there are certain winners and losers in the retail game as well.

Dana Robinson:
Yeah, well maybe, maybe let’s talk through some of the, I’ll say maybe three buckets you got. And again, I’m speaking to the career changer because I swear I’ve got like five of them in my life right now that are, you know, smart, capable, have their degree, ran their course and then, you know, either burned out or, or really the market shifted and they’re, they’re looking for what’s next and they could get a job. But now’s the opportunity to say, well maybe I need to buy something and own a business. So you’ve got the buy it and operate it, the buy it and create passive income where you’re a sort of investor owner. And then the real estate oriented investment is the third thing that you mentioned. I don’t know if you can talk about particular brands within your franchise inventory that suit those or just use some hypotheticals about what does the business look like that you’re going to run in terms of cost to get in and the ramp up to the point where you’re call it paying your bills with that business as an operator and then what’s different? That and one where you’re just like, I don’t have to work. I want to deploy my money and I want to, and I want to make money with a franchise.

Adam Goldman:
Great questions. I can’t go into specific brands today, but I can kind of give examples. Great. So for instance, my friends own a kids gym related franchise thing where you bounce around and they live in Houston, right, but their gyms in Florida. And this thing’s like a huge money maker, right? I mean, it’s a cash, total cash cow. Now, you do have issues when it comes to liability, right? Because when my daughter fell at a local bouncy house place, I’ve never seen anyone more happy like that. Sir, would you, like, was your daughter, like a free slushie? They didn’t want to get sued. Right.

Adam Goldman:
But the point is, is that there’s this. This is interesting, but the challenge about businesses like those, frankly, is we’re talking millions of dollars to get into these, right? And probably six months to a year build out. Those are definitely viable. Right. There’s business. There are businesses like that. There are real estate related plays like that on the high end. If we’re talking about the second bucket of things that are owner operators, that’s one of the benefits of being an owner operator, is.

Adam Goldman:
Look, a lot of people’s motivation is they say, they raise their hand and they say to me, I have this every day. I’m 55 and I’m not ready to put it in. I have gas in my tank. And it’s let, it’s, look, I want to make money, but I also want to wake up in the morning and feel a purpose or a why or freedom. And I’m miserable. I’m not the kind of person at age 55, I don’t want to go play golf every day or whatever or hang up. My wife is just upset at seeing me every day. I really want to do something, and I might have some sort of operational and or sales background and experience and.

Adam Goldman:
But corporate America has given up on me. And that’s the great thing about franchising. It’s really meritocracy, right? You come in in your fifties. I saw that with my office cleaning master franchise network. We had people that were somehow washed up in corporate America and had their second act and were amazing at this office cleaning business. I mean, there’s so many different models that would work as an owner operator, both brick and mortar retail and non brick and mortar retail service businesses. Now, let’s talk about the semi absentee model one where you have a manager, you’re managing a manager. And what I want to say about that is that you just kind of have to be good at managing people.

Adam Goldman:
It’s not like you could be someone that only has an art degree and you kind of come in and you’re like, okay, I’m going to hire this person and see what’s going on. But I have no idea about business myself. Or it’s got to be someone that can run it on the side, that has managerial acumen that could, that could kind of run it passively. I’ve seen that work for the right candidate. Now, you talked also about something related to just making investments in franchises. And the one thing I would say is I don’t really believe that franchising as an asset class is a passive asset class. If you want passive, go to Vanguard. Buy a mutual fund or index fund.

Adam Goldman:
You got to put some skin in this game when it comes to not only cash, but some sort of resources or some of your own time into it. But there’s certain, look, if you can build up this whole business and have the right people behind you, you can kind of make a step back.

Dana Robinson:
Dana Robinson here. Quick plug for my book, the King’s Flyswatter. You can see it here behind me. If you’re watching this, I’ve got it in my hand. It’s a beautiful hardcover book, printed to make it giftable, something that you can share with a family member buy as a gift. So this latest book, it’s a fable about a person who has a really crappy job. Let’s just start there. This is a book that most people can relate to because we’ve all had crappy jobs.

Dana Robinson:
This is the story of Ubar, a servant in the court of a babylonian king who masters his boring, monotonous job and then learns to listen to the king, hearing him rule the kingdom while quietly swatting flies behind the cane. Eventually, Hubar becomes the wisest and most successful man in the kingdom. The story is fun and it’s easy to read, but it’s not mythology. It’s my story. And as I shared the idea with colleagues and friends, I learned that it was their story. And guess what? It’s your story if you’re at a job of any kind, one that you love, one that you hate, one that’s just enough to get by. This little book gives fresh perspective on how to leverage that job to get you something greater than a paycheck. The lessons in this parable are entrepreneurial lessons, but not what you might think from the current entrepreneurial zeitgeist.

Dana Robinson:
If you or someone you know are looking for a real pathway to entrepreneurship, here’s the secret. Your job is the way out of your job. It’s counterintuitive, but once you see how it works, you can’t unsee it. Learn the way of the fly swatter from the parable of Ubar and from the stories I share from my 30 year business journey. You can get a free copy of the King’s Fly swatter by going to danarobinson.com dot. Now, I’ve heard in sort of the business lore that McDonald’s as an example, but also what’s the Chick fil A are really good at turning their franchisees into experts, like kind of training them in the way of the business, because they do know that you need to be able to run this thing yourself. And then eventually you’ll be able to make money and buy another one. And then you’ll hire a manager, and then eventually you’ve got GM’s and regionals managing your franchises.

Dana Robinson:
Are there, is that, is that common in the franchise business where you have a lot of, I’ll call it education. So you take someone that’s been in it, they now own a housekeeping franchise. They’re good at managing people. They’re smart, they can manage the books and all of that stuff. Are they going to get an education or do they need to kind of run that in parallel?

Adam Goldman:
Great question. So look, I mean, there are two thoughts with franchising, right? So the first thought is, hey, I’m going to put all this money into this franchise brand and they’re not going to give me anything, right? Meaning I’m going to pay all these royalty fees and we get nothing in return. I might get a brand name. Right. The second kind of person that comes to me says, hey, I’m going to invest all this money and they’re going to do everything for me. I’m just going to sit back and so the reality is somewhere in between, right, where you’re going to get, you’re going to get certain processes and systems and support, but they’re not going to do everything for you. You’ve got to make it happen yourself. Right.

Adam Goldman:
So what I would also say about this is that everyone’s different. My advice to my candidates when they decide to invest is be the best friend for that operational person or the operations team, because they’re limited resources at every franchise brand. It’s just reality. People like to help people that they like, right? So if they have a limit amount of time, they make sure they want to spend it with you.

Dana Robinson:
Yeah. Yeah. I guess the answer is it’s kind of both, right. You’re going to end up with, franchises are going to give you the resources that they know are going to work. Just like my friend Reed, who learned the hard way that he should pay attention to the best practices given to him by the franchisor. But most of the success in business is a people skill. And the people skill means you need to keep the people you have working for you happy to be working for you, because they’re the tool you have for being able to grow that business. And that, that’s a skill you don’t get from your franchise or that’s a skill you get from becoming a student of business.

Adam Goldman:
I think I agree.

Dana Robinson:
Let’s talk about the real, the ones that are real estate heavy. Help me understand that, because I’ve always viewed, like I looked at buying a building once. I’ve had a number of properties and apartment complex about 100 doors. I looked at flipping out of multifamily into triple net and it was kind of like as a real estate investor, pick your creditworthiness or gamble, gamble on your franchisee, you know, or the brand. And so, you know, the Buffalo wild wings or the, you know, pick picking a brand that would be in your strip mall. The real estate investing to me always seemed like its own thing that was kind of a triple net. Invest in the place where franchise businesses need to run and then, you know, properly allocate their tI’s and then become a landlord where you’re making money because they’re succeeding in the pay their rent. So when you mentioned that real estate as a piece of the business, are there franchises where you owning the real estate is a piece of the business model?

Adam Goldman:
Absolutely. I mean, look, you don’t have to, but I have businesses that are very real estate heavy where if you decide you could potentially buy the dirt underneath, that happens as well. It’s not a requirement. You could potentially lease it as well. But that’s, I mean, look, I even have businesses that are related in that are opportunity zones, investments where you have certain benefits of investing in them and you have a franchise, you could potentially sell the dirt and lease it back afterwards. So there are all these different things to do that got it.

Dana Robinson:
So if somebody has some, some desire to get exposure to being, you know, owning the business as an asset, but also owning the real estate, then they’re, they’re capable of owning them together, but they’re also capable, capable of separating them at some point as well. Right? I mean if you own, you own a Buffalo Wild Wings franchise and you own the unit it’s in, you can wait until you, the triple net real estate prices are up and sell the real estate and then you’re just paying rent as the franchisee.

Adam Goldman:
That’s true, Dana. That is absolutely true.

Dana Robinson:
I love. What do you think of some of the mistakes that people make when they’re either in your early stages of consulting, either mistaken beliefs, limiting beliefs, things that they think. But also, I want to talk about what are the things people that, where can you go wrong on here and how do you get ahead of that?

Adam Goldman:
So the biggest thing is not following the model. We spoke about this before. Right. But I would, I would argue that one of the biggest challenges people have is that they just don’t they invest in something. They probably, most people look at franchises the wrong way. I think that what they do is they kind of see something advertised somewhere and they dig deep in that and maybe they buy it, but they probably shouldn’t even looked at that franchise to begin with because it probably wasn’t even either a cultural fit or didn’t have the right characteristics for them. And so I would argue that many people are buying the wrong business without even looking at the universe of franchises, thinking about it as being different characteristics, whether or not it’s, what kind of employees do you have? What kind of headcount do you have? Can this business be run semi absentee? And that’s kind of what I’m doing. I’m here to kind of narrow it down for the right characteristics for you first.

Adam Goldman:
And then you can dig deep into three brands that really fit these criteria, as opposed to kind of throwing a darth and seeing what would stick about something that probably isn’t a good fit to begin with because not all franchises are equal.

Dana Robinson:
Yeah. Okay. So the biggest mistake in going the franchise route is really the kind of thinking that you’ve got to go it alone. And so that’s why you’re out here being sure that you’re visible on podcasts like mine. I know that podcast coaches exist because. I’m sorry, podcasts, that franchise coaches exist because I had one on when we were called the opt out life many, probably five years ago, and it was fascinating. His model was, he got paid by the franchisor.

Adam Goldman:
I’m the same way. The same way.

Dana Robinson:
Great. So not only the biggest mistake people make is going it alone and trying to pick something on their own, and the alternative is using you or someone like you and not paying anything for it.

Adam Goldman:
That’s correct.

Dana Robinson:
Now, once you get somebody in, like, let’s, let’s again, sort of think through, let’s stay away from my 20 year old and let’s just stick with us career changing 50 somethings. Like what, what’s the process of you bringing somebody in and helping them begin to think about this.

Adam Goldman:
So it’s the same process for some of their twenties or fifties. Right. So first I have a free, no obligation, 15 minutes chat where I get to know someone, and if I don’t think that you’re a fit, I promise to tell you. Right. I’m just kind of getting to know you a little bit and seeing what you’re looking for. And then I ask you to fill out a survey. And then what happens is after you fill out that survey, we’re going to have a follow up chat where I get to know even more and anyone else involved in this decision, finding a little bit more about what your why is right now, and then also finding out just what your thoughts are about different businesses and different preconceived notions, and just trying to find out what kind of fear you might have along with this process. Because fear is a big part of every single candidate that I work with.

Dana Robinson:
Sure.

Adam Goldman:
And then I’ll give you my top three brands after I write this two page letter or model where I’m just kind of coming up with these must haves for you with this ideal franchise, whether that’s headcount or blue collar employees or how many hours you want to work per week, and then after I give you these top three brands in San Diego, wherever that might be, I’m going to go ahead and I’ll be there with you all across, all along this process. Right. I typically talk to my candidates every week and we kind of discuss different steps along the process from the time where I introduce these brands all the way to a meet the team day where they say yes or no. And most people typically say yes or no within two to three months. And things do sell out. Right now things are very popular, and if someone doesn’t decide to say yes within a couple months time, things typically sell out.

Dana Robinson:
Got it. So, yeah. So anything that that’s hot is something that if you’re helping and you say, look, this is an opportunity, there might be some time sensitivity to that, there might be some urgency for them to pull the trigger on that.

Adam Goldman:
If someone tells me they’re two or three years away, I’m probably not a fit. Most franchise brands really have a two to three month timeframe themselves. And typically when I give people three options, one of the three sells out within a few weeks.

Dana Robinson:
Interesting. What are some, what are some ways that people can, like, prepare, educate themselves? I mean, obviously, free call with you is great. Are there other, are there other resources, books people should be reading blogs.

Adam Goldman:
They should follow other shameless plug right here.

Dana Robinson:
All right.

Adam Goldman:
Franchisee lifestyle. Great book. It’s a. I wrote it. It’s.

Dana Robinson:
That’s why it’s a great book.

Adam Goldman:
Exactly. There you go.

Dana Robinson:
Franchisee lifestyle by the, by, the guy who’s owned it and, and run and now coaches franchises. I’m just going to say the title. The franchise E. Lifestyle.

Adam Goldman:
Yes.

Dana Robinson:
Adam Goldman. Can they get that for free from you or do they have to pay you?

Adam Goldman:
Look, anyone that fills out a survey gets it for free. Right, exactly. Exactly. But if you’re interested in general, it’s on Amazon. There’s also an audible version of this book. And the idea behind it is it kind of, the idea is for people to change their mindset of franchises and to understand that it’s much more than McDonald’s and french fries and you yourself going ahead and flipping those burgers in the back and has real case studies of people that have been successful franchisees and just kind of talks about the industry in general.

Dana Robinson:
Love it. So we talked a little bit about the minimum investment. Is there sort of. Again, just thinking of advising the career. You know, I think if you’re listening to this and you’re mid career and you’re thinking, I need to make a choice, you should have an IRA, some 401K money, some real estate equity. You have access to some capital. So, you know, I was met a friend who’s running a franchise, Adam, and talked I just for the sake of understanding the business so I could help tell other people about it. It’s a fairly new Jim franchise.

Dana Robinson:
It’s a 700,000 million dollars deal. So the numbers sounded really big. But then when you start talking about tenant improvement allocations, more than half of the money needed can be, if you find it a landlord that has the right allocation of Ti, then you could pay for half your franchise as a basically, basically baked into your lease, which leaves the other half, let’s call it on a $700,000 deal, 350. And out of the 350, you can go get an SBA loan. So the number that sounded really big in my head was, wow, who can afford to have a million dollars, $700,000, a million dollars to start this business? But then when you learn that there’s more to it, the financing than that, does that ring true? Is that true in other franchises besides the sort of the gym, which is a heavy Ti business?

Adam Goldman:
Sure. I mean, Ti is, is kind of the norm now depending on the landlord. And yeah, there’s a lot of Ti out there.

Dana Robinson:
So anyone listening. Ti is tenant improvement. If a landlord wants to get that property rented, they’ll set a price, a lease price per square foot that bakes into it a big lump capital expenditure that they spend for you to build out your site. So in my example that I just said, you take an empty space and you’re going to rent it for ten years, they say, great, you have $350,000 you can spend on tenant improvements, and that literally includes anything that goes into that. And in the case of fitness, that can include the gym equipment. In the case of restaurants, it can include the ovens and grease traps and the expensive things that it takes to get a restaurant open. So you’re seeing that Ti is a big piece of the capital stack, I guess, as it were, to get into a franchise. So you’re basically borrowing from the landlord and the landlord is borrowing from the bank, and then you’re paying it back and baked into the lease payment.

Adam Goldman:
And, Dana, it goes even one step further. Right. If you have a fitness concept that’s really good at pre sales, you could potentially even open in the black. Right. So, I mean, that’s really exciting because pre sales, it’s where you’re selling. You’re not even paying any rent yet. Right. But you’re selling ahead of time, and people get excited.

Adam Goldman:
If you have the right sort of brand that’s going ahead and doing a good job of making sure that people go ahead and pay money for their membership.

Dana Robinson:
I love that. Is there any other businesses that are, that you can pre sell to kind of ramp up beforehand besides the gym.

Adam Goldman:
Concepts, any subscription model? Right. So if you own a. Some sort of other, I don’t know, it could be a chiropractor clinic. Right. Or someplace else, anything that, or it could even be a med spa that has some sort of recurring revenue. People can sign up early and become a founding member of that Medspa.

Dana Robinson:
That’s right. Yes. The massage and Medspa and chiropractic that have moved toward paying a monthly subscription fee? You get more out of it as long as you use it as a consumer, and then the business gets predictable, recurring revenue that’s going to help them with some of that more cyclical business. And then, yeah, if you’ve pre sold right out of the gate, you’ve got revenue coming into the business.

Adam Goldman:
Don’t forget businesses that have, like, gift cards. Right. I mean, I know a lot of people buy massages or facials. I was shocked at how big of a percentage that is of revenue for my friends that are in that industry. And frankly, what makes it so exciting and interesting is a huge percentage of these gift cards just don’t get used ever.

Dana Robinson:
Right? Yeah. There is the infusion that you get from. And even if it does get used, the sort of like, long, long, long horizon is going to ease the cost to you as it sits on your books as a liability, but you don’t actually have to pay until someone shows up some years down the road in some cases. I love it. Adam, what else? As we kind of get to the last, you know, five, seven minutes of our. Of our time together, is there other things as the expert who knows all things franchise that you come to mind as things that people really should be thinking about that will help themselves select out of this whole thing or help them understand? Like, you know, that I don’t, you know, and I know you probably don’t want to tell an aggressive success story, but, you know, if there’s a middle of the road success story you can talk about, that’s maybe an avatar character who succeeded in this. Love to hear that, too.

Adam Goldman:
Sure. Sure. So let’s talk about. I mean, one of the questions I ask a lot of my candidates, Dana, is I ask them, hey, you know, how important is status in selecting this business, right. If you had a Porta potty and dumpster business, what would you and your wife or you and your spouse think about that?

Dana Robinson:
I’d love to be.

Adam Goldman:
And, I mean, look, but not everyone feels that way. And my business works best when people come in with an open mind. The only person, in my opinion, that says to you, hey, go out there, follow your passion, right. Is the kind of person that is already owned some sort of multi billion dollar toxic guzzling company, and they have some sort of address, and they’re saying it to, like, a commencement speech. Follow your passion. Right. It’s just there’s a lot of hypocrisy in that.

Dana Robinson:
I agree.

Adam Goldman:
What I would say, too, is that there’s just so much money in muck, in my opinion. Right. If you look at things that other people don’t want to do, I mean, I look at recession resistant service businesses with high margins. That’s a really interesting business to be in. And that get. That gets me excited. Things that are. That are not nice to have but need to have different industries like that.

Adam Goldman:
I mean, one story that really comes to mind that I’m thinking of is someone that I had, someone that bought a real estate related business. This is a guy that is a vp at a Fortune 500 company. He and his wife always wanted to be entrepreneurs. This just, their careers got in the way and they didn’t even know what they were signing up for. And next thing they know, they’re able to build this up with multiple units. Just a really good situation for both of them. And they own the real estate underneath. Just a really, really just very happy.

Adam Goldman:
Being able to change people’s lives like that is really powerful for me.

Dana Robinson:
That brings me to a question we probably should have addressed earlier. So let’s talk about the person that keeps their day job. There’s got to be some, and maybe this is the one you just talked about. There’s got to be some franchises that are perfect for people that are going to keep their day job because they require financing, like real estate. And if you have a day job still, you’re still the director of marketing or whatever, and your day job pays the bills. The financing is always easier. I know that because I’ve rarely had a job and financing is never easy for me. So you got a job, you’re going to keep your job.

Dana Robinson:
What’s the sweet spot for that, for that person? Is it, you know, because you have, you do have to commit. As you said, this isn’t passive. It’s not an allocation. You’re in business, you own it, you have to care about it. The keys are in your pocket to this business. I want to keep my job, keep making money. What are the types of franchise businesses that they should be thinking about?

Adam Goldman:
Preston, if you and I were going to speak like five years ago, I’d say these are only brick and mortar retail. Right. What kind of shift that’s happened in the franchising world is these non brick and mortar businesses have become more sophisticated with their systems and they’re allowing the right operator that can manage managers to allow them. So I would say that it’s both brick and mortar and non brick and mortar businesses, if you have the right sort of acumen. And we’re talking about things as low as 150 to get in and as expensive as over a million dollars or more. So I hate to give you this answer that’s very vague, but it’s really, really varied right now. And that’s actually a great thing about the franchising world, being open to people that are semi absentee owners that have acumen.

Dana Robinson:
Right. So they need acumen. But I guess would you be then if you’re, if you’re like, again, this person who’s the vice president, not leaving their job until they really retiree trying to build some, some wealth in business outside of that, are they going to rely on people who’ve already worked within the franchise? You know, you’re sort of recruiting for, like, him running a, you know, I’ll just say massage envy because I know there’s one not far from me. I’m running a massage envy and I just bought it and I’m recruiting you. You just try and hire smart people that already know the business and the business model because you can’t quit. You can’t. You’re not going to quit your job. But the asset, the important part is, I guess you don’t need as much draw to pay your own bills because you have a job.

Dana Robinson:
So you can hire talent. Is that kind of the game?

Adam Goldman:
So, Dana, the other part of the game, let’s not forget this. Look, a lot of my friends in their fifties have kids that are going to college or soon going to college, right. That don’t need them as much. And maybe you have a spouse that’s been staying at home. It’s just desperate to go back into the workforce and good luck at that at age 50 something. So you have really great talent. And maybe these are, if it’s even your kids and their twenties that could help you run this, right? People that you trust. It could be your spouse or your kids that could be helping you to run it as well.

Adam Goldman:
There’s. That’s a great way to do this.

Dana Robinson:
Good. Okay. So, yeah, leverage the family as trusted people, because you really just need someone who’s going to show up, do what the system says, not steal from you. And you’ve got an operator when you’re talking to a lot of franchises.

Adam Goldman:
Absolutely.

Dana Robinson:
I love it. Well, did I miss anything that comes to mind that’s part of your. Let’s be sure I do more talking than I probably should for not being the expert. Did I miss anything that’s important to talk about?

Adam Goldman:
No, I think you asked great things, and it’s been a pleasure talking about this with you.

Dana Robinson:
Thanks, adam. Thanks for coming on. If people want to get in touch with you, let’s tell them where to go.

Adam Goldman:
So best place to schedule a 15 minutes chat with me would be at franchise adam.com. alternatively, you can also go to franchisecoach.net, and there’s a link there. It also tells you more about my company and the services that we provide to our candidates.

Dana Robinson:
Awesome. Franchisecoach.net.

Adam Goldman:
Franchise adam.com dot franchise adam.

Dana Robinson:
That’s good. That’s like a Dj name. Adam. There you go, adam. Thanks for coming on the podcast today. Anybody else who’s listening, always feel free to hit me up. Hello@danarobinson.com? and hopefully anyone listening to this will take advantage of the free 15 minutes coaching from Adam about franchises.

Adam Goldman:
Thank you so much, Dana.

Dana Robinson:
My pleasure. Thanks for joining me on this episode of the Exit Plan podcast. I’d love to hear from you. Feel free to hit me up with questions or comments by emailing me at hello@danarobinson.com or leave comments and questions by calling 858-252-7785 call 858-252-7785 and leave a message.