279: Should You Buy a Franchise?

Catch the full episode: https://www.wealthformula.com/podcast/279-should-you-buy-a-franchise

Buck: Welcome back to the show, everyone. Today my guest on Wealth Formula podcast. She’s been on the show before and back by popular demand, Kim Daly. She spent the last 20 years helping people achieve financial freedom through franchise opportunities. She’s got a real keen sense for matching clients, backgrounds, interests and all their goals and financial goals and all that and to match them up with a good franchise. So today, again, we’re here to pick her brain and find out a little bit about what kind of experience she’s had with people in our group without mentioning names. Of course, Ryan Stieg mentioned her multiple times on the recent podcast so she can talk about that and not necessarily give too many details. But anyway, we’re going to talk about franchises. And Kim, thanks for being back on Wealth Formula Podcast.

Kim: It is totally my pleasure. Thank you.

Buck: Oh you say that to all the podcasters. Come on, Kim.

Kim: You know as we just said, your investors, they’re in the right mindset. They called me with big visions. They have clear, specific goals. They know what they’re trying to accomplish. And that is the easiest plan for me to then pick an efficient vehicle to help them for that journey.

Buck: Well, that’s good to hear. And, you know, I think franchises are, as we talked about before, is a really viable option for people who are interested in business ownership. And one of the reasons that business ownership in the context of what we do is so valuable is the enormous tax benefits and that sort of thing. But let’s start from the basics a little bit. Again. Let’s talk about, first of all, what is a franchise and who is it good for?

Kim: Okay, so a franchise is buying down the learning curve of starting a business. It’s partnering yourself with people who’ve already figured out how to make money in a certain industry in a certain way. And they’ve created a toolbox, the marketing and technology and the business plan. And you’re paying a franchise fee, which is a one time fee. You pay that franchise fee, which I call the cost of entry into Disney. It buys you instant access. So all of that, so that’s from day one, your time and money gets to move you toward profitability. And you have the infrastructure that would allow you to work on the business rather than in the business. Like an entrepreneur who might have to start from scratch, create all of those tools, and would never have the opportunity to have a full time job or have other investments that he or she is managing while they’re bringing this business to market as well. So in a nutshell, that’s what you’re doing. But the core of what I really encourage people to do is to find people that they believe in, to find a leadership team that inspires them, because Franchising is all about people helping people. So, yes, we’re using business plans to create an outcome, but we’re connecting with people that inspire us that have a vision that we buy into. And it’s a mutual evaluation process that will eventually lead to you, the candidate being awarded the opportunity to move forward with a particular business.

Buck: So if you’re thinking about getting into the business space, right. Like you want to be a business owner, you know, it’s probably the quickest way if you do it successfully to really kind of take it to the next level financially, talk about sort of like who you think Franchising in particular, might be good for. I mean, certainly there’s other options to get in business. There’s one that I’ve gone down, the root of which is starting business from scratch, and I’ve been pretty fortunate. Most of them have worked out. Some of them have not worked out, and they’ve certainly left scar tissue there. But then there’s the opportunity to potentially buy businesses that are really not necessarily franchise related, but may have some history to them, maybe standalone, maybe mom and pop, whatever. Where do franchises fit into that?

Kim: Yeah. So a franchise, I like to say a franchise is for anybody who wants to leverage again, a team, a proven process, a proven plan who might not want to pay some giant multiple for some successful business. If you were to go buy a private business for sale and it’s a good business, you don’t have to pay for that now. Yeah, you get to walk into that ready made cash flow. But in many scenarios, I can show an investor an opportunity to start from scratch. So there’s no baggage with this business. You get to build it from day one and invest way less money and get it to that point yourself and then be the one selling it for the multiple at the end of that. So I need people that want to follow a process. There is such a thing as an entrepreneur that’s not going to fit into the franchise role. If you’re the kind of person that always wants to be creating and inventing Franchising may not be the right thing for you. But if you’re like, hey, I want to take the proven plan and get to the part of making money sooner rather than later. And statistically having that success rate, then franchising might be a viable option for you. And if you have as I said earlier, if you have a full time job, you’re still W two employed and or you are building your investment portfolio. Like so many of the people that I’ve met through you book who have great their physicians, they’re dentists, they have great W two jobs, but they’re building their investment portfolio so that eventually they have enough passive income to cover their W2 income, and they no longer have to have W2 income. Franchising can fit into that because you can come in leverage through a brand, through proven technology, through the infrastructure that the franchisor has provided, where you then get to work on it rather than in it. It can be managed to run what we call semi absentee. So a business is never going to be truly absentee. Like a rental property, a business always needs an owner to lead it and guide it. But there are opportunities in franchising where that time commitment can be as low as 5 hours a week. I’d say on average, semi absentee means somewhere between ten to 20 hours a week. But we do have a few options where you can be down to that five hour a week range. So that gives you all of that time flexibility.

Buck: Let’s talk a little bit, I just want to drill down a little bit on who is it right for now. Part of what I think you can certainly correct me if I’m wrong. I’m no franchise expert, but franchises seem like a nice option for people who aren’t necessarily like entrepreneurs, who want to be business people. It probably is more a better business school for entrepreneurship than an actual business school would be. Because really, to me, that’s really what businesses. You know, people ask me a lot of times, should I go to business school? Are you kidding? Why would you go to business school? Do you want to be a manager, or do you want to be an entrepreneur? If you want to be an entrepreneur, if you want to be a business owner, business school makes no sense at all. Those are the people that they train to work for me or not like to own businesses.

Kim: Golden advice.

Buck: Curious on your take on if that is a good place to learn, potentially for somebody who doesn’t feel confident in business.

Kim: For sure. It’s absolutely a great place to learn, but it’s also a place to build wealth. I just recorded an episode on Kim Daly TV with a former Wall Street banker guide, been there for 20 years, decided he wanted to take his global leadership skills and apply them to his own business. And 40 years later, that guy has built a $21 million a year in revenue, a restoration company. So from Wall Street to restoration like he didn’t know anything about restoration. But that’s one of the keys about Franchising. You can leverage the training. You don’t have to come with the experience. This guy had never run a business for himself, but he had run a business for somebody else and managed a lot of people. And on the interview with him, he told me he’s not stopping until he gets to $100 million. So he had just purchased, he lives in Houston, and he’s kind of gobbling up all the little smaller franchises and his company around him. And then he had just bought his first territory in Raleigh, North Carolina. So now he’s looking beyond the Houston area to other markets around the country again, just leveraging his proven management skills and applying it for his own benefit. And in four years, he took a relatively low investment and turned it into a business that today is doing $21 million. And that’s just the beginning. So it’s not just for small thinkers or for people that are trying to put their training wheels on, if you will, into entrepreneurship, you can make some legit money in Franchising.

Buck: Sure. I’m curious in terms of we’ve talked a little bit about it being potentially those s for root, and I think that’s probably the case. Do you know statistics on this? Because we always talk about business failures, right? And how high percentage business failures are. Compare that to Franchising?

Kim: There’s definitely statistics out there. Listen, I’m not going to give any statistics because I don’t want to be caught like she had this. But if you go to Franchise.org, which is the International Franchise Association, they gather all that kind of data. But here’s what I’m going to tell you, because this is what’s most important to the listener who may be looking to explore franchise. Every franchise business that you’re going to look at is required by the Federal Trade Commission to disclose to you their own failure rate and or success rate in what’s called a franchise disclosure document. So this franchise disclosure document allows you, the potential investor, to really full disclosure about the history, how the company got started, any litigation in the system over the last five years, any failures in the system. And by law, those people who failed out their name has to remain in that disclosure document up to three years. And by law, you’re entitled to call anybody on that list before you give them the franchise, or one time, they’re not under any obligation to call you back. And if you work with a Daly coach, I’m going to tell you, it’s infinitely more important that you find the top performing people in the system, the people that are your role models, not the people who it didn’t work out for, because just like anything else in life, like success is going to be related to the owner and your vision, your goals and how you take the tools and work the tools. It’s not that Franchising is some magical, you know, business in a box, and it works for everybody. The business system can fit in a box, but it’s how the owner uses what’s in the box to create a result that’s going to create the result. Right? So in my experience, it’s the top performing people that you want to find, because if they have a science to what they do, then they’ll be able to share that with you. And so they also know factually why people on their business won’t be successful. And, in fact, one more thing on that, that’s exactly my story. So I spent eight years being an average performing consultant here in my company with my franchise called Fran Choice, and then I got very clear about what I wanted to accomplish. I sort of had a theory in my head what would happen if and I decided to put my head down, not tell anybody about what I was doing, hold myself accountable. In one year later, I was a history maker. I had built the largest franchise consulting business in the history of franchise consulting. And that was back in 2012. And so, not wanting to be a one hit wonder, I’ve mentioned to really look at my numbers and figure out what that one thing that I was focused on doing had done to the rest of my business. And then I was able to turn it into a science that then I could replicate year over year over year. And so people will look at my results and say, it’s kind of magical, you’re so consistent. And I’m like, well, I’m consistent at certain things, which then creates a consistent result. So once I became a top performer, and I had been an average performer for eight years, and then a top performer. So what changed? What changed was what I was doing. I know what to do now. But more importantly, I know what I wasn’t doing then. And this is the coaching that I’m gonna give to candidates so that you don’t get stuck in the trap of focusing on why it didn’t work out for people who cares, find the people who it is working out for, and let’s role model what they do.

Buck: Well, the next question I was going to ask you is tell me an example of where it doesn’t work out, you know, and I know you’re like, don’t focus on them. But Sometimes it’s good to know.

Kim: It doesn’t work out for people that don’t have clear goals. There’s a lot of people who come to the idea of investing in a franchise, and it’s all about the numbers. All they care about is the numbers. It’s like it’s a transaction, but that’s never going to be an inspired action. And that person is probably not going to be an inspiring leader that people want to work for it. So you’ve got to come with a bigger why than just money. The money will come if you’re invested with the right people, and you have the right potential to scale your business. The wealth will always be created through the scale. But so you’ve got to find the people, and you’ve got to find the opportunity that allows you the market potential to scale up or to scale wide whichever way you go, that’s going to be the most important thing.

Buck: Sounds good. Let’s talk then on your focus, which is the successful people. And let’s talk a little bit about the successes that you’ve had. And certainly, Ryan sounds like, he was on the show recently. Ryan, Steven was really happy with the types of things you’ve been working with him. Give us some success stories, your clients.

Kim: Okay. So let me first say this again. Not to be evasive, but I don’t really get to own people’s success, because my job as the consultant is to teach people how to explore franchise, to help you get clear and specific about your vision and what you’re trying to accomplish, and then to bring the right types of opportunities to you that match what you’re looking to achieve through a business, and then to coach you on how to do that due diligence so that you feel competent in what you’re doing and ultimately confident. Yes. So I equate my whole part of this process is like a courtship leading to that marriage to that wedding day, or I marry you off to the franchise, and then I go away in theory, so I can’t really own what people do beyond that moment. But having said that, I don’t expect that my people are going to go on and be any less successful than an average performing person in that franchise. I hope that they’re going to go on and become some of the rookie of the year and the top performing people, mostly Buck. Because the Daly Coach I mean, I’m definitely all about the good news. My YouTube channel, Kim Daly TV, is all about sharing the good news. I’m looking for the inspiring stories because that’s what’s gonna inspire people’s dreams. If all we do is talk about why it doesn’t work by the law of attraction, then what are we gonna get. We’re going to get what we’re talking about. So why are we focusing on that? Let’s focus on what we want, and that in a franchise, the gift of a franchise is that it’s built in that you have all these other mentors, not just the franchisor but all of the other franchise. They’re not competitors with you. They’re going to share what they’re doing. People are like they’re going to tell me how to be successful. Absolutely. That’s what we knew in Franchising, because we’re all shareholders. So, yes, as humans, we love to compete to find out. Like, who has the biggest business at the end of the year. But we all laugh, because as long as we’re all making money and we’re all living the life of our dreams, and we’re all helping our end customer, then we’re all winning. So the validation that what we call it with the existing franchise owners is one of the key differences between exploring Franchising and looking at a private business for sale or even starting a business on your own. This idea that, again, it’s collaborative. We’re working with people now. I say that. But let me also say that that doesn’t mean that an entrepreneur who isn’t really into working with other people can’t find a place here because I’m about as independent as they come. My dad will tell you, I’ve been the boss of me since I was two years old. And so it’s all about the finding the franchise system that gives you enough support, but then gives you enough freedom. And how would you do that on your own? You probably couldn’t. I mean, this is why I have a business, really. There are some people that love highly structured environments where every I is dotted and every T is crossed, and that’s what’s going to make them feel safe with this investment. And then there are others of us that are like, that would be too suffocating. I need a lot of freedom to bring myself into that model. And so that’s part of what I’m measuring. I came to help them figure out what’s going to be the most successful opportunity for them, because that success is not just measured monetarily, right? The money is going to be there. I’m not going to bring you an opportunity that doesn’t work financially. But how you work, the plan will determine how well financially it works for you. But the success here has to be also defined by going on and living the life of your dreams. Earlier today, I was talking to a franchisor that was sharing his story about awarding all kinds of licenses through the years. And he was talking about a woman who, when she first got her franchise, she had the goal to build it to where it was self sustaining. And she could literally live in different parts of the world for six months at a time. Like, I’m gonna go to Paris and live there for six months and then come back and check on my business and then go to Tokyo and live for six months. And I mean, that’s amazing, right? We’re talking about building wealth like that’s a definition of wealth, not just money, but like, time and freedom. So that’s what we’re talking about here in Franchising. I don’t really “sell Franchising”. I sell freedom like you, too, I guess.

Buck: Yeah. Well, good. So talk a little bit about if somebody’s interested in this. Sounds interesting. And I want to talk to that Kim Daly. What does that look like when people do that? What’s the process?

Kim: Okay, sure. So my services are free. You never pay any money. I get paid like a recruiter. So these franchisors, they don’t want to go to trade shows anymore. They don’t want that’s, like the old fashioned way of prospecting. The 2021 way is they come to consultants.

Buck: You don’t go to the bar anymore, right? Kim?

Kim: Exactly. I’m like the eHarmony of franchising. That’s exactly what we’re doing. I have videos where I’m like, Are you gonna get you got to get the franchisor to give you a rose, you know, playing off The Bachelor or The Bachelorette. Yes. That’s what’s going on. I maximize their time with the highest quality people who are motivated, financially qualified. So that’s why they pay me to do my job. So for you, that means getting to know you through a two step process where I’m looking at you personally, professionally and financially, and then bringing you ideas that have open territory in the markets where you want to be. Once we’ve got three to five companies that fit what you’re trying to accomplish, then I start the dating process, costing you on how to date a franchisor. And that whole process, Buck, takes about one to two months, depending on how much time somebody has to put in. I’m really consistent. Around six weeks. That includes everything figuring out the funding if you need outside lending. I have resources for that. It’s going over the franchise disclosure document so that you feel comfortable with what’s in there and how it benefits you and how it really benefits the franchisor and why. That is everything from soup to nuts. And in terms of what you need to know to be competent, that you’ve done good due diligence and asked a lot of questions.

Buck: Right. Good. What am I not asking that you think is important for people to know about Franchising?

Kim: I think you did a great job. He asked me so many fun questions. You know, there’s a lot of misconceptions about Franchising out there. I mean, I spend a lot of time on my YouTube channel, Myth Busting, and that just comes from 20 years of traveling around the country, hosting live events, fielding all kinds of questions from thousands of audiences. And it’s always like the question that’s asked, but it’s like the tone in which the question is asked. All those franchisors, and they’re just there to take my money. And the person who’s really getting wealth is the franchisor because they’re just collecting that royalty every month. Yeah. We want our franchisor to be there to support us. And so it takes money for them to keep growing the brand and growing the opportunity. And, in fact, I mean, I can give you so many stories. My own story where I’m making a lot of money. I’m living the white life of my dreams. I’m helping people. Every day. I get out of bed every single day excited about what I get to go do in my business. That’s why I’ve done it for 20 years with so much passion. Like, who the heck now, you know? And so it’s not just the franchisor that wins in this equation. It’s a win-win for everybody. When we win as the franchisees, then they win. That’s a healthy franchise system.

Buck: That sounds good. Now you have quite a presence. It sounds like. And we were talking about this offline because you asked if I’d watch one of your YouTube videos. I don’t watch any YouTube channels, but you have, like, more than one, right? So why don’t we talk a little bit about those just so we know all the things you’re doing.

Kim: Yeah. Covid forced us all to adapt, and I couldn’t fly and travel and host live events and inspire my people anymore. So I literally had to adapt. And it’s the greatest adaptation in the history of my life. My YouTube channel, which is, you can go on YouTube, look up The Daly Coach or easier to just go to Kim Daly TV. And it’s been the greatest project I’ve ever created. I have super big dreams from the fun that I am having, interviewing people, sharing stories, busting those myths about Franchising just doing what I would normally do live event by live event, but I’m able to push out a lot more content this way. We’re putting out about 15 videos a month right now, so please check it out and subscribe. Ring the bell so that you can be notified. And it’s not just on Franchising. The Daly Coach is a Millionaire Mindset coach. When I reached my history making year back in 2012, it was really a life changing year for me. And as I was able to turn that into a science that I could replicate and then start to share with other consultants and then start to share with my candidates, it really changed how I coach on everything. And as I got more into my own personal development and understanding this thing called the Law of Attraction, and how it’s always been there, whether I knew it or not, gravity, I was using it, but not deliberately and then learning to use it deliberately. It’s literally changed everything. And so I have my first coaching program, my first Millionaire Mindset coaching program, coming out maybe later this year, or probably more likely the first quarter of 2022. So that’s where it’s going for me. But you can check everything out on Kim Daly TV. And also my website is TheDalyCoach.com.

Buck: So that’s a different business that you have. It’s sort of a coaching program for people.

Kim: I mean, it’s just innate in me. It’s what I do. I want to help. I’m known in my industry for helping people. That’s what I do. It’s not just about leading you to the franchise, but I want you to live the life, like one of the people I just met through you an Er doctor. She and her husband just signed their franchise agreement. And I was talking to them yesterday and I said, look, you know, this is like the pass off for me, kind of like kissing you off on your wedding day to your franchisor now and wishing you good luck. But I’m not just here to get you to say yes, I want you to live the life of your dreams. So if you’re having a bad day or you need encouragement or you need more from me, you’ve got to reach back out. And I do all of that kind of coaching for free for my candidates, just because I want to do it. I want to watch these people go on and build the life of their dreams, whatever that would be. It’s not always related to money. Although money is pretty fun. Yeah, no, money drives the quality of life that most of us want to live. So it starts with the money.

Buck: But again, it’s usually more than just the money.

Kim: That’s right.

Buck: Well, I love your enthusiasm, Kim. And yeah, I mean, boy, you are a ball of energy. I’ll tell you that much. I’m getting tired just…Just kidding.

Kim: There’s so many good things to do. You got to be passionate about it.

Buck: Well, fantastic. And again, is Kim Daly. Thedalycoach.com That’s D-A-L-Y, thedalycoach.com. Kim, thanks for coming back. And we’ll definitely love to hear from you in the future.

Kim: Thank you so much. I would always, always, always come back. Thank you so much. Buck: We’ll be right back.