Submit
Feedback

Absentee Owner Franchise: a Deep Dive with Jon Ostenson

Written by: Patrick Findaro
Last Updated by María Fernández Amato: January 12, 2023
Free Download Our Exclusive Business Service Guide
Download Now

This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.

Patrick: Patrick Findaro here, co-founder at Vetted Biz. Excited to have John Ostenson. He’s a franchise consultant. He was a franchise executive at a pretty sizable brand. Jon, awesome to have you on today.

Jon: Yeah, Patrick. Appreciate you having me. Looking forward to our conversation. We were having a great conversation prior to hitting record here and we’re gonna dive in deeper.

Contents

Follow the podcast

Apple Podcast    Spotify    Google Podcast 

Jon Ostenson's Franchise Experience

P: Tell us how you got into franchising.

J: Yeah, I stumbled into it. Like so many of your listeners I had spent most of my career in the corporate world and had a good run but had that itch to do something a little bit different. So, left the public company world just six years ago, so not too long back. And came in and had the opportunity to lead the ShelfGenie franchise organization, supporting our owners across North America day to day.

And for me, it was an eye-opening experience in this world that I’ve now dubbed non-food franchising. But ended up partnering with founder Allan Young. We spun off, we’ve invested in our franchises ourselves, as well as with other partners and, you know, for the most part, having good people running those businesses for us allows me to spend most of my time helping others do the same now, playing a matchmaker.

absentee owner franchise

P: I like that you do what you preach because, like a lot of people in the franchise space,  they’re selling opportunities, but they’re not investing. They’re putting their capital elsewhere and they’re not actually doing what they’re preaching.

Maybe just tell me a little bit about the investments you’ve currently done with your partner and how that’s structured, like finding a daily operator and everything.

J: Absolutely. So, the niche again, ShelfGenie is custom pullout shelving through kitchens and pantries, property services. That’s the space that I’ve got some background in and kind of understand a little bit more and just like some of the mechanics behind it.

I’ve invested in pool cleaning, home cleaning, carpet cleaning, had a mosquito business for a little while, all under different franchise brands. The one that I’m probably most excited about right now is called The Driveway Company and it’s a niche player out there, but it’s got a great name, the Driveway Company, and we’ve got that and Soft Rock, which is kind of the sister brand to it. And, no, lots of lessons learned. It’s not like we’ve figured everything out on day one, but it comes down to having good people, good partnerships, good agreements upfront.

Franchising: Thoughts and Advice

What we found is there’s so many folks out there that love the idea of stepping in or running a business. At the same time you have a lot of people with capital on the sidelines. And so trying to marry these two has kind of been, you know, a lot of beta testing on our part. But no, it’s worked really well.

The guy that runs the Driveway Company for us, 27 years old, he was a CPA, no background in concrete, and he was tired of living in a cubicle five days a week, over five years. And so, anyway, he’s jumped out there and really just done a great job growing the business and we’ve acquired other franchise locations since then, kind of given them an exit, allowed us to expand our footprint. And so it’s been fun.

We’ve done everything from sponsoring a NASCAR and wrapping it with the driveway company to just having team lunches every month, just having a good time with it. But yeah, it comes down to having good partners and then good alignment with that key manager that’s running the day-to-day, making sure the better the business does, the better they do, the better you do. And just aligning your interests.

P: And how did you find that manager?

absentee owner franchise

J: Yeah, we kinda lucked into this one. So, he was the husband of a lady that was working with one of our business partners. We lucked into that one, but you know, a lot of people don’t have that situation or don’t have that cousin that’s ready to jump from the military into running a business.

And so that, I’d say, for our clients, that’s probably what makes them the most nervous. And we recently partnered with a national recruiting firm that now helps our clients find that general manager. You know, there’s a small investment behind it, but they do a good job of doing the seeking out and the vetting and the interviewing and background checks and then…

P: Yeah. But I mean, even if you’re paying $10k or $20k, if you’re able to get another $100k of profit over like a year or two, I mean, it pays for itself.

J: Absolutely. And fortunately, it’s not that much, but it is… I guess you throw it in with all the other investments you’re making at the start of the business.

franchise advisor

P: It’s an upfront commitment that a lot of people aren’t maybe willing to take. But like part of that, you know, you said you stumbled into it, but you’re probably putting yourself out there, like you have a very big LinkedIn presence.

People know you, I’m sure, in your community that you’re a franchise investor, a franchise consultant, a former executive of franchise brands. So, you stumbled into it but, if people in your community and in your network didn’t know that, that was a possibility, then probably it wouldn’t have been that easy to find that person that was one or two connections off.

J: Absolutely. And I definitely make it known out there. We stay active on social media. We just had our book come out this morning, which I’m really excited about, which I’m happy to share a copy with any of your listeners. You know, if you come out to franbridgeconsulting.com, we’ll get a free copy to you. But it’s called Non-Food Franchising.

So, no, we do a pretty good job of letting it be known out there and we’ve always networked well, and my thought is activity breeds activity. The more active you are, the better things happen, you know. And so oftentimes in my career, and this is just a good reminder to everyone, I’ll be analyzing option A or option B, and then because you’ve been active along the way, option C comes out of left field and surprises you. So, it pays to stay active, which I know you and your brother are very active yourself.

P: Definitely. Yeah. I think a lot of what we do is to be hyper-transparent, even if it’s with competitors. Because usually there’s some synergy to be had and they do something better than we do.

So, there could be some immediate opportunity right away or down the line. I think a lot of people get afraid of like, “I don’t know if this person should know,” but the net positive usually is well worth it. And I even know a franchisor that acquired which was a competitor, and if he wasn’t so open, he wouldn’t have known that they were in a situation that they wanted to sell. And it made a lot of sense, sense for everyone. But if they didn’t have that initial conversation, then it would never have transpired.

absentee owner franchise

What Inspired You to Write the Book?

Jon: A hundred percent. No. And I love what you and your brother are doing and the way that you’re helping so many out there really across franchising. You know, I know you guys don’t toot your own horn enough but really cool and you’ve got a book coming out yourself, don’t you?

Patrick: Definitely. Yeah. So, it’s funny, an attorney, I was on his podcast, inspired me and he is like, “Patrick like you should be an author. You have all this information. And like, it would be cool if I could be like, author Patrick Findaro on the podcast.” I should have done that for you actually as a nice intro.

But, it’s How to Buy a Franchise: Employee to Entrepreneur in 12 Weeks. So, super pumped with that released in a month. Well, depending on if this is released, it’ll probably be just a couple of days after December 15th. So, very excited on that. And it wasn’t that difficult because I’ve done so many interviews and had it transcribed and have a nice team of employees and my father that helped out on the structuring and editing.

But more on you. So non-food franchises, like it makes intuitive sense as over half of franchises are not food related. What inspired you to write the book and spread all this knowledge that you’ve accumulated over the years?

J: Yeah. You know, of the 4,000 franchise brands in the U.S., we always have new ones coming online. Like you said, more than half are in the non-food space. And I’d say non-food, non-lodging, I really go deep in areas like property services and health and wellness and automotive and kids, pets, aging population, all the things that people are willing to spend on regardless of what economic conditions we’re in. And so I just continue to hear from my clients and I think food is a little bit of a different animal. Granted, we need people getting involved in the food. That’s just not my specialty and I’d rather, share what I know.

And my humble belief is there are easier ways to make money, whether it be the capital expenses or the operating hours, or the employees. I’m happy to go down that path.

franchise specialist

But I’d say probably 95% of my clients are interested in these other industries oftentimes than non-sexy, cash-flowing, understandable businesses from insulation to gutters to dumpsters to… You know, I was talking with the client this morning. I mean, we work with a lot of doctors, a lot of lawyers, and a lot of professionals or existing business owners that are looking to expand their portfolios. And they’ve got zero background in some of these areas, but then they step in, they love concrete paving, these businesses that are cash flowing that… So, I think, the impetus behind the book was the educating side. I do some speaking and kind of getting the word out there, but the book is a way to reach the masses on here’s other opportunities.

I think there’s a lot of cash on the sidelines, a lot of people wanting to get in the game—they don’t know what that looks like. They haven’t thought about franchising because they associate franchising with food. And so, I just have so many people who reach out and say, “We wanted to talk with you because you specialize in non-food franchising.” Like they’re using that goofy-sounding term, non-food franchising. So, really the book is soup to nuts. It’s everything from finding the right opportunity to whether franchising is right for you. You know, we compare it versus startups, compare it versus entrepreneurship through acquisition, which is the whole resale side of the business. You know, financials, how does the funding side work, how does item 19 work? The whole legal piece.

You know, and then we talk about strategies too, whether it be your first venture or building out that portfolio. We get into case studies of clients of ours that have, you know, maybe had businesses that are non-franchised and they step into, “Hey, for this next go-round, let’s add in a business that is franchised”. And then I’ve got clients that have stuck with franchising all the way through. And in some cases, as they build out this portfolio, they love the fact that these businesses complement each other. Maybe it’s sharing marketing on the front end and customer bases and resources on the backend, or maybe they serve to diversify. So, again, we share a lot of case studies in the book, helping people understand how it all works.

P: Very cool. I look forward to reading it.

J: Appreciate it. We’ll definitely get a copy to you.

P: I read a ton of franchise books before writing my book and I was surprised by the lack of people going into numbers and like citing actual franchise examples. And I think part of people buy franchises based on emotions and like I think both of us are trying to change that where it’s like, no, this is like your life. This is a financial decision and you’re gonna have to stick with it for some years.

So, I’m very excited to read your book and like learn from you and how you convey the message on basically helping people’s financial future and their lifestyle.

J: Yeah. I know that you’re seeing this too. I call it franchising as an asset class and, it’s not gonna be the only thing you invest in, but in addition to, hopefully, you don’t have too much in crypto currently. But you know, in addition to the public equities and maybe some private investments in real estate, and frankly, there are only so many good real estate deals to be had out there right now.

What are those other ways to put capital to work? And I think a lot of people want to get into business ownership. They don’t know how. Just like you guys, you do a great job leading people down that path.

Investments, Costs and Profits

P: Well, I’m sure too, like you have some clients that they and their spouse are making $300k, $400k, $500k, and there can be some serious tax savings if they have an operating business and they’re not just receiving a W2 paycheck.

J: I call it a trifecta. You get the cash flow going, you’re building an asset with an exit value. But then there’s also that third piece that you mentioned of being able to write off expenses. And yet it’s one of the few areas the government’s still supporting us from a tax policy standpoint would be, you know, small business ownership and just benefits that go with.

P: Definitely. Yeah, there’s a lot of ways to mitigate your tax bill, I guess on the upfront part, on the depreciation, and then on the ongoing side on the expenses.

J: Yeah. And if it’s a CapEx-heavy business, be able to accelerate the depreciation on the equipment or heaven forbid, but maybe you have an operating loss that first year, which is a very real possibility. And, you know, people wanna write that off. And I’ve been in that boat. We’ve had to write off some losses before, but you kind of grind and you set it up for the long term.

Patrick: So, we’ve compared a lot like the initial investment to the resale value, and we’re gonna be putting that metric out on Vetted Biz for thousands of franchises. And a lot of the food concepts, especially the resale value is less than the initial investment. So, like a Subway restaurant, it’s 350k to open their midpoint investment, and they’re being sold for like $150, $200. And I can imagine the type of businesses your clients are investing in, it’s more, I mean, inverted or, you know, there should be a 3x return in year five or year seven.

Jon: Yeah. It’s a great point. It does vary within food, but, you know, I think in property services. I oftentimes guide clients that that exit multiple is somewhere between 0.75 and 1.25 of sales, which, to your point, translates to your 0.3 to 0.4 EBITDA, multiple. And there are different factors there. I think the larger the business is, it also commands a higher multiple. And it just ends up on more people’s radars. You know, if it’s a recurring revenue type business, the strong franchisor opportunity to scale, buy up additional territories…I think all those go into that price.

It’s interesting, there was a study done by the Rinker School of Business a couple of years ago where they looked at 2,000 transactions over a 10-year period and compared within like-kind industries, both franchised and non-franchised businesses upon their exits. And food was one of the ones they looked at. But what they found was on average franchise businesses traded at a multiple one and half times non-franchise. And so really fascinating. I’m happy to share that with you after the show.

P: Please do.

J: You know resellers, those that are looking to buy resales oftentimes do see that value because we both know if you step into a business and it’s not a franchise and you’re buying a resale, I mean, it’s great that, you know, there may be some awareness in the market. You may have some…

P: Yeah, but like the guy was like probably paying people in cash. I mean, at least if you’re buying a business down in Florida under $500k, under $1 million, like they’re violating IRS tax law and they’re violating labor law maybe 80%, 90% of the time.

J: Yeah. I mean the books are never, you know, well how do you define the owner’s discretionary? And then, you don’t know if key employees might leave the next day and then that becomes a ripple effect if they leave, then they leave, and all of a sudden you’re there holding the bag. And granted, that’s not the case in every situation, but it is a risk you incur for what you see as a non-risky purchase, versus a new startup. And so I think you also could have customer attrition that, you know, that they never let you onto at the time of the sale either. And so…

P: It seems, especially if it’s your first time around like it’s generally less capital and there’s more runway to make mistakes like with starting a new franchise compared to like buying an existing business, buying an existing franchise where it could be double, triple the cost and if you’re not on point, you can have like serious issues and start bleeding cash.

J: A hundred percent. You and I are aligned on that and yeah, there are exceptions to every rule, but I think as a general rule of thumb, that’s accurate.

And my humble belief is there are easier ways to make money, whether it be the capital expenses or the operating hours, or the employees. I'm happy to go down that path.

franchise specialist

Types of Clients: How to Deal with Them

Patrick: And tell me a little bit about the doctors, because I have a lot of doctor buddies here in Miami and they ask me about franchises and I’ve been hesitant because I know they can do a per diem and get 2,000 bucks cash. So, if they have a manager turnover, then they’re gonna have to be like, be working crazy hours and they’re not gonna stay focused on what gives them that yearly salary of say $500k.

How do you handle that with your type of clients that are making say, over $300k where they need to protect their hours? How do you deal with those types of clients? Because you have had success and I think it’s a pretty difficult thing to navigate where like not just any franchise consultant can like really plug in and help advise someone like that.

Jon: Yeah, I think it really comes down to having the right franchise system, and just like any industry, I mean, we have a lot of doctors get excited about the idea on paper, and then once reality hits, they say, “Wait a minute, there is too much risk to my hours.” Because I have very few doctors that are wanting to walk away from their core business. You know, they put in too much training all these years. I mean, most of them are not looking to do that. I did have a Wall Street attorney jump ship last year to run a gutter business. So, you do see…

P: That’s awesome.

J: … I’d say in the medical field, I’ve not seen people leaving, and we work with dentists, we work with orthopedic surgeons, we’ve got all sorts of physicians. But you know, we did a deal last week up in Raleigh in a, say, pet-related franchise, but it’s one that’s extremely hands-off. And so two doctors went in together. We’ve got two clients, just up the road from you down in the West Palm area buying a floor-coating business. They close on it next week and again, they’re partnered up. 

P: So, how does that work? Like are you giving equity to the day-to-day manager? Do you have profit share? What have you seen as like the best model for someone that has a significant net worth and significant income and they’re trying to be as less hands-on as possible?

absentee owner franchise

J: Yeah. So, a couple of thoughts around that. So, I look at our driveway business here. You know, we pay a base salary, I think it’s $70,000 give or take to this 27-year-old. And then we provide a quarterly bonus program that aligns both to the top line of the business as well as the bottom line. So, it aligns our incentives in him growing the business top line and expanding, but then also, managing the business well from a cashflow standpoint.

So, the better the business does, the better he does, the better we do. He came to us about a month or two into running the business and said, “Hey, I like what we’re building. Can I buy into some equity?” We allowed him to buy into 20% equity at a discounted rate, and there’s a clawback provision. If he leaves in the first year, then he loses the equity; he leaves between 12 and 24 months, he loses half of that; and then a fully vested 24 months. That’s an approach I like. What I found is a lot of people want equity. A lot of young folks do. It sounds good, but they don’t really want equity.

P: Well, also in this whole startup world, like I have a lot of friends that went to San Francisco, and like one of them has been at multiple startups where he got equity and like he didn’t mean anything.

But people want that equity even though, you know, it’s just people are dying for it and it might not be the right decision for them, but that’s what they want, I guess.

J: I think the core is, you know, having a good base salary that they can live off of so they’re not totally live or die by that. But then also having that upside potential, whether it be through profit sharing or phantom stock, there’s a lot of ways to deploy this. It is interesting too. People want equity. They want the upside, they want that profit sharing. They don’t want downside. If you have to write, say if there’s a lawsuit, they don’t wanna be a part of that.

franchise advisor

Study Case: Client's Experience

Patrick: The cash injections.

Jon: Cash injections, capital calls. They don’t wanna be part of that, so…

P: This is a very common part of partnerships and it’s not a pleasant thing. As long as people are communicating to me, “Hey, this is what’s happening.” But I don’t want to get a surprise. “Hey, you need to inject this by this date.”

J: A hundred percent. Now, you know, one case study, a client of ours, Nathan Bokaku, a great guy, around 40 years old, same stage of life over in Columbia, South Carolina. He’s the largest franchisee of Two Men and a Truck Moving Service, operates in like 10 markets. So, he and I do about a franchise deal together every year. That’s just kind of our cadence. And he’ll put a young guy from his church or his community over the business, you know, kind of that mid-20s avatar if you will. And in his case, he gives him a lot of equity out of the gate because he’s already…

P: But there’s also that trust factor. Like I hired one of our key employees. We hired her and she brought in another eight people from her church. So, it’s like they’re shared of values, there’s very close…

J: A hundred percent.

P: You’re going to work through problems. You’re not going to just quit the job. Like you’re going to work through it. And I think probably a lot of business partnerships go wrong because one of the partners isn’t willing to put in the time and effort to work through it, the little trough.

J: Exactly. And he’ll give them close to 50% equity. You know and I don’t think he minds me sharing that. He coaches some of our clients actually, in how to go about it. But he’s all about giving the equity and then saying, “Hey, I’d rather have a small piece of a big nut than a big piece of a small nut. Go make us proud.” In every case, every deal that we’ve done, he’s come back and bought additional locations within the first year. It’s in the methodology as well.

absentee owner franchise

P: There’s one franchise system I won’t name, but it’s in the fast food space. We’re growing, growing, growing, hit up 500 units. One of the multi-unit operators just stopped opening more and everyone else froze. And the system has just been like that. So, I mean that’s the biggest testament that he’s having success and that the franchise system is having success is where people are opening more territories that they’re not obligated to open, where maybe someone bought three territories started and yeah, they’re gonna push through and open those three. But if they bought one or bought two and they keep opening… People have a lot of choices and a lot of opportunities and the fact that they’re putting their money into that opportunity again. I mean, it’s huge…

J: That’s true validation right there, right?

What Do You Recommend for Prospective Franchisees?

P: And what do you recommend, like for prospective franchisees? We have a lot that are listening on our podcast, and YouTube channel. How many franchisees, current franchisees should they validate the information for, should they talk to former franchisees? How do you approach that process with your clients?

J: Yeah. You know, I let the franchisor take a little bit of the leadership there because they know the situations that are most like my clients. You know, what are those comparable markets, similar backgrounds? I’ll have clients that are semi-absentee, and a franchisor will introduce them to a couple of owner-operators. So I’ll have to intervene sometimes, say, “No, they’re semi-absentee.” But, I had a client the other day, he was at a discovery day this past week for a business. He’s out in New York and I introduced him to Nathan. He wanted to talk to someone outside the franchise system. There was another objective. And so I pay Nathan to get on these calls and I pay him a healthy sum, but it’s worth every penny.

And so he got on and calls Nathan. And Nathan, said, “Hey, here are the things to think about. Good, bad, ugly. Here’s how I would evaluate it.” So, I think sometimes you do need to bring in an outside perspective as well. Obviously working with a good franchise attorney, they’re gonna point some things out and raise some questions. And so, the goal is really through the process, let’s give them as much information—you guys are great about doing this as well. You know, make it as eyes wide open for that final decision to make sure that you’re getting into something that’s gonna make sense. And I mean, my favorite clients are those that are referred by past happy clients of mine. And so, my client’s success is everything to me. I mean, that’s where I find my validation of what I do.

Patrick: That makes sense. And for the structuring, I imagine, are they mostly leaning on you, or does the franchisor also suggest different models or even suggest potential employees to work with your clients that aren’t able to dedicate, day-to-day hours to the business?

Jon: Yeah, I’d say the more the onus on finding that manager or key employee is on the client side than the franchisor side. But what the franchisor is willing to do is train those key employees. So, as long as my client will pay for the cost of a flight and hotels and send them off for a week at training. And that’s what we did with our driveway guy. We sent him out to Waco, had him trained up, and he came back fully prepared.

And the nice thing, and you talk about this on your podcast oftentimes, but with the franchisor versus just a startup, the running semi-absentee, the burden doesn’t totally fall on you as the owner. You do have that franchisor who’s your business partner. That manager of yours can go to the franchisor for technical questions, for support. They’re gonna keep them marching in the right direction. So, even though you’re involved in managing the manager, if you’ve got a good person in the role, they’re gonna be able to get a lot of that support from the franchisor.

P: That’s a great point. Because like there’s a lot of service-based concepts where the franchisor is handling sales, marketing, and then the day-to-day operator or the franchisees more on the client service and then like the operations. So, yeah, if it’s client service or operations, it gets kicked up to you as the majority owner in the franchise. But if it’s sales, marketing, or an issue with the technology that’s used for the business, they’re going to the franchisor. They’re not bothering you as the business owner.

J: Yeah, totally. And I encourage our clients, what are those things that you enjoy doing? What are you good at? Like, where in the limited time that you have, where should you lean in? Is it getting involved in the chamber of commerce? Is it putting the brand behind your son’s little league baseball team and sponsoring them? What is it? And I’d say oftentimes it’s that community involvement, getting the word out there, the grassroots efforts, lowers the cost of customer acquisition, you know for the business, if you get referrals instead of just relying on digital marketing, let’s say. So, I’d say that’s oftentimes where we see them leaning in, but then also just coaching and holding their manager accountable and having those weekly touch bases and maybe monthly team meetings where you take them out to dinner and you build that culture and everything else. So, yeah, when we start talking about that, that’s what gets people excited. That’s where they wanna put their time.

P: That makes sense. Yeah, where they can have the biggest impact at the end of the day, and usually that they also enjoy it to some extent.

J: Yeah. Absolutely.

P: And so, I mean, you probably hear this all the time from your clients, your current candidates you’re helping or, you know, your former and investors like the one that keeps going to you every year. But how do you see the upcoming recession or the current recession that we’re in? Are there any specific industries that you might suggest our clients focus on?

J: Yeah, I’d say it is not just what I think, but I take a lot of input from different sources. I listen to a lot of real estate professionals, a lot of economists, just a lot of talking heads too, just to get diverging views on things. So, I think ultimately people thrive in times of recession and they struggle in times of recession in the same way they do in any other economic climate. I think that for some people, they see it as an opportunity to go out and gain market share, and for others who are cutting back on their marketing maybe we lean in heavy. So, I think so much of it comes down to, you know, what’s in your head and how you approach things. I had a client recently that was buying a business and he had three other companies in this area come out and give quotes from the same industry to kind of get a feel for us as an industry I wanna be in.

franchise specialist

And he said yeah, there’s only one of the three that would really be a formidable competitor to him in the market. He’s like, “But I don’t know about that one.” I said, “We’ll, go out and poach some of their best people right before you launch.” And he’s like, “I like that idea, you know.” And so I think there are ways to reframe things. We are in a recession, whether or not people agree with it. And, you know, I do think as a business owner, again, you have more leeway. Would you rather be flying the airplane or you’re a riding passenger even if you’re in business class? I mean, I like to have control. I like to be able to set my own prices. I like to be able to, you know, maneuver, be flexible, get lean when need to.

So, I think for a lot of the right people, regardless of industry, they’re going to do well. I do think that, you know? I think fitness is really competitive right now. I think a lot of overlap is taking place. I think, what are those discretionary places that people can cut back on versus others? But yeah.

P: So, you were saying fitness. Did I hear that as one that may be to avoid or…?

J: Yeah, but you know, regardless of the economy, I mean people will spend on their homes, their health, their kids, their pets, and their aging parents. Businesses that cater to those that do a kick-butt job are gonna do well in times of recession. And there’s gonna be an opportunity to lean in and gain market share. This goes back to when I was in the corporate world 12 years ago, where, you know, there was a huge cotton crisis and that impacted the business that I was leading. And what did we do? We didn’t raise prices to the same degree everyone else did, but we raised them half as much and we gained tons of market share that made us stronger coming out of the recession, so…

P: That was at Carter’s?

J: Yeah. Carter’s.

P: Super strong brand.

J: Carter’s OshKosh B’gosh children’s apparel. Yeah. Talk about a career pivot from there to ShelfGenie.

P: Well, now I’m sure, yeah, I mean that’s clothing in general, like just a tough business to be in. So, I’m sure you prefer the service space that you’re investing in and advising your clients on.

J: I do. No, it was good for a season and a very long season. We had some big successes during that time, but you know, lots of learnings that I was able to take with me, and yeah, thankful to not be a part of a big corporation anymore.

absentee owner franchise

What Do You Recommend for the Finances?

Patrick: And what about the financing side? Like, what do you recommend clients do? Do you work with like an outside loan broker or someone that helps with 401(k) rollovers? How do you work with clients on that?

Jon: Yeah. You know, I’d say about a third of our clients will use cash to fund the investment, and probably a third will use SBA loans. And we do work with Fran Fund as our primary lending partner there, that they work with franchise-friendly lenders as an intermediary. You know, but we don’t discriminate. I mean, we were working with other lending partners as well, and the small alternative ones that we have in our back pocket.

But franchise, you know, and then I’d say a third of our clients will use, like you said, the retirement self-directed approach, which is called the Rob’s plan. Again, we’ve got some providers that provide that. We also see people tapping into home equity right now using HELOCs. I mean, those rates can be a little bit lower than some others, and you can access them more like a credit line versus a lump sum so there’s some benefits. And another one, Patrick, that I don’t know if you’ve seen as often, but a portfolio loan. I’m a big fan of this. If you have assets in a non-retirement brokerage account, be able to borrow against those, that’s probably gonna be your best rate of interest rate…

P: Yeah and it seems like it’s very, very low rates despite, you know, the current environment compared to other financing mechanisms.

J: Yeah, I mean, I’ve got one of those. I think I’m paying 7% now. I was paying 2% a year ago. But then I’ll either invest those in franchises or anything that’s not a public security. So, I do a lot of real estate lending just personally at, you know, 12%, 13% rates.

P: So, that’s a nice carry trade.

J: It’s called arbitrage. Absolutely

absentee owner franchise

Concluding Thoughts

P: Yeah, I think so. Well, Jon, I’ve enjoyed today’s conversation. We’ve gone through a lot. Is there any closing thoughts on whether this perspective franchisee, we have a lot of franchisors that listen as well, current franchisees? Any closing thoughts that you would like to convey?

J: Yeah, I would just say, from where we sit, I mean, we’ve never been busier. I think the landscape is extremely active right now. Q4 is always a big time. But I’m just encouraged, I’m encouraged for our country as well, despite all the political tensions out there, entrepreneurship is alive and well. And we see the activity on the ground and I love people’s mindset and what they’re looking to build.

So, I’m encouraged just broadly speaking and you know, if we can ever help in any way, again, our book just came out so excited about Non-Food Franchising. If you come out to our website, franbridgeconsulting.com, we would love to get a free copy to all of your listeners. And again, if there’s anything we can do to help, I’m more than happy to. I really appreciate you having us on the show, Patrick, really enjoyed the conversation.

P: Jon, it was great. We’ll be sure to include the link to your book as well as a link to your website. And again, anyone that wants to get in contact with Jon, feel free in the show notes to reach out. John, this is great. I learned a lot, especially on the structuring side. If I was gonna invest in a certain business, some different avenues to look at as well as for my friends and my network that they don’t wanna work day to day, that franchising can be a good option if it’s done right with the right business model and then done with ideally someone that’s close to you or potentially working with a recruiting company and just making sure it’s structured well.

Jon: Absolutely. You know, you hit it on the head. Again, I love the show. Love what you’re doing for everyone, Patrick. So, keep up the good work.

Patrick: Thanks, Jon. Appreciate it.

Your Suscription has expired!

Looks like your subscription is due. Please renew to keep using our services.

Share link

Or

Downgrade subscription

You are going to downgrade your subscription.This action will proceed the difference in cost of plans and reset subscription period after moneyback.

Vetted Member $79/month

Simple Start Free

Upgrade subscription

You are going to upgrade your subscription.This action will proceed the difference in cost of plans and reset subscription period after moneyback.

Simple Start Free

Vetted Member $79/month

Cancel subscription

You’re about to cancel your subscription. Please confirm by clicking on the “Cancel Subscription” button below.

Performing this action will delete your account.

Plan Updated

Your current subscription plan is:

Vetted Member $79/month

Support Form

Please fill out the form below with any technical issues, questions or feedback you might have.

Sorry. You must be logged in to view this form.

close
close

Franchise Specialist Request

close

Business Services For Listings

Name(Required)
Would you like to consult with a franchise specialist?