Non-Food Franchise Opportunities for the New Year with Jon Ostenson

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. Brought to you by the HubSpot. Podcast Network, the audio destination for business professionals with great shows like The Hustle Daily Show. Today, we'll be breaking down non-food franchise opportunities for the new year. To drop these vibe bombs, I have brought John Ostenson into EO Fire Studios. John is a top 0.1 % franchise broker, consultant, investor, and author of the book, Non-Food Franchising. He draws on his experience as a former Inc. 500 franchise president and multi-brand franchisee in serving his clients.

0:36He is a frequent contributor on franchising for Forbes, Inc., Bloomberg, and the Franchise Journal. In today's foundation, we'll be talking about real-world examples that are working right now. We're going to get into the weeds, the day-to-day operations of running a franchise. We're going to talk about finding the right franchise opportunity for the right individual and oh, so much more. And a big thank you for sponsoring today's episode goes to John and our sponsors. Success Story, hosted by Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

1:07Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business, startups, and entrepreneurship. A recent episode discussing the billion-dollar health secret with the founder and CEO of Whoop is a must-listen. Listen to Success Story wherever you get your podcasts. I have a question for you, Fire Nation. Do you feel like your life is optimized, or do you feel like you're leaving a lot on the table when it comes to health, wealth, and relationships? If you think you could use some personal guidance in optimizing your life.

1:37Let me help. I've created a program called Optimize, where I will personally work with you one-on-one to get to know you, your life, your goals, and your dreams. If you want to learn more about this program, visit eofire.com slash optimize. John, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. John, so good to be back with you. I know we've had quite a few episodes and I'm looking forward to another great conversation today. So when I think about something, you know, that people oftentimes misunderstand around success, they think there's a perfect time to step out and take that plunge, to take the leap.

2:20And, you know, what I've realized is there's not a perfect time. You know, I oftentimes see people get to the edge of making what they feel is a good move for them. for example, stepping into business ownership, but then they decide the timing isn't right, or they paralyze themselves with over analysis. What I've learned through seeing countless examples and in my own life as well as others is the timing is never right. It will never be perfect. There will always be an excuse. There will always be a reason. There's always something you can point to. But really stepping out and fighting through that is what separates entrepreneurs from what I call wannabe preneurs.

2:54Fire Nation, you don't want to be a wannabe preneur. Believe me. And that's why you're listening to this episode right now, because we'll be talking about non-food franchise opportunities for the new year. And I want to say, John, congrats again. I mean, Franbridge is ranking super high in the Inc. 5000. I mean, we're talking number 584. And you're having your two-year anniversary for your bestselling book, Non-Food Franchising, which I know a lot of people in Fire Nation have read. So awesome there. And you've worked with hundreds of our listeners, helping them identify, evaluate, and then of course, step into franchise purchases and opportunities.

3:27So give us some color on what you're seeing in the franchise landscape as we launch into this brand new year. John, I've got to say entrepreneurship across the North America is alive and well, you know, the election is behind us and we only see momentum picking up further. When you look at the Google search results, starting a business is near an all-time high. In addition, there are record levels of cash sitting on the sideline looking for a good place to find yield. And so there's just a lot of macro factors supporting small business ownership and entrepreneurship. And really to that point of cash being on the sidelines, we're seeing a lot of real estate investors moving over to franchising.

4:06Frankly, there aren't that many deals to be had out there. Inventories, say, on single-family homes are very low. Interest rates are high. And real estate investors are waking up to franchising and business ownership, you know, the fact it's another tax advantage, alternative investment. Really, the tax code was written to incentivize people to create jobs and start businesses. And, you know, now with the new presidential administration, you know, there's a lot of optimism around, you know, what's going to be done with the tax code, whether it be re, you know, reestablishing the bonus depreciation or QBI, which stands for Qualified Business Income Deduction.

4:41You know, and that's all in addition to the traditional, you know, write offs that you can take as a business owner, for instance, maybe your spouse is a high paid W-2 and, you know, you're trying to find tax strategies. Oftentimes you're limited unless you own a business as well. We can do a whole episode just on the tax side. I tend to nerd out on it. But, you know, finally, I'll say there's so many in-demand opportunities out there really across a wide variety of fields, things like home and property services, health and wellness, B2B, kids, pets, seniors, There's great variety, but I'd say the general theme is what are those understandable cash flowing businesses that are non-trendy?

5:19They're not going to go out of fashion. You know, they will stand the test of time and do well regardless of the economy. Fire Nation, you're here not just for today, not just for tomorrow or next week, but for the test of time. That's why you want to find things that work for you, that are right for you, that you're passionate about, that you're excited about. And then guess what? that you also have skills and knowledge and that you can wake up every day and have that edge. Now, I wanna go over just a couple real world examples, John, of maybe a handful of franchise opportunities that are specifically resonating with your clients right now.

5:53Yeah, happy to share a few teasers and give you a taste of that variety. We'll start with one that I was with just this past week, a couple of nights ago here in town. It's a business that I helped start. It's custom pullout shelving for your kitchens and pantries. Think about it. People live in their kitchens, and they're proud of their kitchens, but they always need more space, and they're looking for ways to renovate their homes. We just added our 22nd franchisee to that system. In full transparency, I'm a minority investor in the business, so not super active, but that's one that people are really resonating with.

6:24Businesses in health and wellness, like I mentioned, are very popular. I think of one that's in the recovery service space. You've got a lot of gyms out there, but people are really learning more about recovery and how important that is. So under one roof, they've got everything from cryo to sauna, cold plunge, red light, IV drips, injections, oxygen, all under one roof. So one stop shop, oftentimes a recurring revenue type business, you know, membership based, you know, backed by a great franchise or, you know, kind of shifting gears to a non sexy one. You know, I think about restoration. There's a great restoration company.

6:56We work with it. You know, essentially it's cleanup. It's water mitigation, mold remediation. You know, it's a massive industry and it's a big ticket item. Oftentimes, you know, insurance companies are the ones footing the bill. So they're able to open up the wallet, you know, pay these bigger tickets. And, you know, this is a business that's got national accounts and it's a true needs based business. You know, another one that I would classify as a needs based non sexy business would be a B2B opportunity in the commercial kitchen space. So every restaurant out there, everywhere that serves food is required by law to have their exhaust systems cleaned and to have, you know, I won't claim to be an expert in this space, but, you know, all the services that surround that.

7:36And, you know, that has to be done on oftentimes a quarterly basis, sometimes even more frequently. So, again, it's a recurring revenue type business. You're not the one out there cleaning, but you build a team that does that work. Kind of transitioning to one that I'd call a little sexier would be sunless tanning. You know, we all know you're in Puerto Rico, you know, sunshine and you can only take so much sun before it becomes unhealthy. Right. So sunless tanning is really becoming a big thing. And there's a national player out there that has their own proprietary methods and products and really does an outstanding job.

8:06Just a great team behind it. Really strong financial models. That's another one that we see clients getting involved in. Just a couple more to throw out there. You know, I think about, you know, the aging population. Ten thousand people have been turning 65 every day for years now. Right. We've always heard that the silver tsunami. And a lot of these people are aging in place and, you know, they need not only ongoing maintenance of their homes in yards and everything else, but they also need companies that can come in and build build real wheelchair ramps and stair lifts and, you know, retrofit the bathroom with mobility solutions.

8:39So that plus the ongoing maintenance program, there's a company that provides all of that. We've had clients getting involved in, you know, some of the investments that people are making are really large. I had a client recently in Texas that bought 10 trampoline parks. Wow. Those are about$3 million each. So that would definitely be on the high end. But they just love the financial model, loved how it worked. And I mean, I know we spend a lot of money on trampoline parks for our kids. So, you know, for certain players, you know, there are opportunities like that. But we also have opportunities that are below$100 ,000.

9:08You know, not a ton of them, but there are some. I think a great B2B one for people with a sales background where you're working with small and medium-sized companies and helping them reduce their costs. And again, these companies have all the ways to help mitigate those costs, and they train you in those. That's a business where you don't have to have any employees. You can work remote. That's been a popular one. And finally, I'll just finish with this. You know, funding-wise, you know, people will oftentimes put in, you know, maybe somewhere around the neighborhood of$50 ,000 or$60 ,000 in cash, and then they'll use an SBA loan to fund the balance.

9:40And so a lot of opportunities, kind of in that$150 ,000 to$300 ,000 investment range. and typically the majority of that is funded by SBA loans because banks obviously prefer franchises than lending to startups. So it does make it a lot more doable for a lot of people out there. What I love about this Fire Nation is that you can literally just listen to and hear and see the opportunities that are out there that John's talking about and then the many more that there are, of course, as well. Which ones resonate with you? Which ones get you excited? Which ones do click with what you have going on in your world right now?

10:14I mean, you brought up the trampoline park. I literally was just at one last week. And I mean, it's probably going to be my new life because I now have a one-year-old and Kate's in a mom's group with 14 other babies that were born in 2023. So I mean, it's just like mayhem. It's just like, it's always somebody's birthday. It's always somebody's X, Y, or Z. And guess what? There's a trampoline park within 25 minutes of our house. And that is just a place that the kids love. It's their dream zone. And they go there and I'm looking around and I'm like, this is a pretty cool model. Of course, you know, I'm going to want some liability insurance on that, but I mean, let's go.

10:45I mean, it could be a really fun, interesting opportunity. And where are you at in life that makes sense, Fire Nation, for something that John's mentioned or one of the other countless opportunities that are out there in the non-food franchising space. And we have a lot more to talk about within this when we get back from thanking our sponsors. If you're a marketer, then you know what it's like to feel like you're moving in a hundred different directions at any given time, like you're spread too thin? Between creating content, launching campaigns, generating and nurturing leads, and more, you barely have a moment to breathe, let alone do your best marketing.

11:19What if there was a better way? This is where HubSpot and Breeze, its new built-in AI, come in. When you combine the power of Marketing Hub and Content Hub, you can have your best quarter every quarter. Want to remix your content, leverage lead scoring to shine a light on potential customers, and automate analytics for reports and KPIs? With this toolkit, consider it done. As if that weren't enough, you've also got co-pilots and agents to automate your tasks, making your life easier, getting you faster results, and better connecting you to all your data all in one place. Stop spreading yourself thin and start making major moves with HubSpot.

11:56Visit hubspot.com slash marketers to learn more. We've managed a lot of projects here at EO Fire, and one of the most impressive pieces of software we've seen to help you keep your workflow tight is Notion. We first discovered Notion thanks to one of our sponsors, and it made it so easy to track talking points, due dates, deliverables, and more. Every time we had a question about the sponsorship, all we had to do was check Notion and all the details were laid out for us. It made the entire process simple and straightforward. That's because Notion combines your notes, docs, and projects into one space that's simple and beautifully designed.

12:29And now it has the power of AI built right inside of it, which means you don't have to jump between your work and a separate AI power tool to make magic happen. Notion AI helps you work faster, write better, and think bigger, doing tasks that normally take you hours and just seconds. Try Notion for free when you go to notion.com slash John Lee Dumas. That's all lowercase letters, notion.com slash John Lee Dumas to try the powerful, easy-to-use Notion AI today. And when you use our link, you're supporting our show, notion.com slash John Lee Dumas. I have a question for you, Fire Nation. Do you feel like your life is optimized or do you feel like you're leaving a lot on the table when it comes to health, wealth, and relationships?

13:12After interviewing over 4 ,500 successful entrepreneurs, I have found that every one of them have optimized their life to a high level. In over 12 years of running a multi seven-figure a year business myself, while staying healthy and raising a wonderful family, I figured out how to optimize my life to an amazing level. It didn't happen automatically. there was a lot of struggles, but through mentorship from others and a lot of intentional work, I got there. And if you think you could use some personal guidance in optimizing your life, let me help. I've created a program called Optimize, where I will personally work with you one-on-one to get to know you, your life, your goals, and your dreams.

13:50Then over a three-month timeframe, we will create a fully optimized life that will set you up for a lifetime of optimized health, wealth, and relationships based off your goals and your dreams. and optimized life does not happen automatically. It only happens through intentional work and guidance from someone who has reached that level that you are striving for. My goal is to turn you into a fully optimized human based off of your life goals. If you wanna learn more about this program, visit eofire.com slash optimize. We'll jump on a call, we'll discuss the specifics of the program and if we both feel to fit, we'll talk about next steps.

14:26eofire.com slash optimize. John, we're back and I wanna get in the weeds here a little bit because Fire Nation always appreciates that. So are most of your clients actually running the day-to-day operations? Like, are they rolling their sleeves up and getting dirty and like fixing a spring on a trampoline? Or are they bringing in a hiring manager to make that happen? Roughly half of our clients are looking to run the day-to-day operations as an owner-operator, at least for the time being, and eventually replace themselves as the general idea. But the other half start with a manager in place day one, which allows them to keep their day job.

14:59Now, franchises oftentimes build themselves with that model as a semi-absentee or semi-passive model, or some call it an executive model. Now, I think the fair term would be semi-involved. There's still going to be some level of involvement, so I never want sugar-coated to make it sound easy. You know, standing up a new business, even with the franchisor support, does take effort, does take some time. So don't want to claim that it's totally passive because it does take work. But the beautiful thing about franchising is if you have a strong franchisor on the sideline and you've got a strong operator in place, and that's a big if, right?

15:30If you've got someone that you trust to run the day to day, then that franchisor can really carry a lot of the support water for you from a day to day standpoint. That manager of yours can go to the franchisor for a lot of their questions and needs and then only escalate to you what only you can provide. I mean, buck still stops with you, but the franchise model does make it a lot more doable. And so really, again, the success comes down to a strong operator day to day and a strong franchisor on the sideline. Fire Nation, I love how it's kind of about a 50-50 model on this because, you know, for people that want to just get in there and learn the business first and do that, you can do that.

16:03And those people that are like, well, I've already got X, Y, or Z going on. So maybe I just, you know, from day one, you know, have a hiring manager or I hire a manager to run this, to make this happen. Now, what about for those who are looking to acquire existing businesses? What are your thoughts on those strategies? You know, I have those conversations every single day. There's so many out there that have caught the bug of ETA, entrepreneurship through acquisition, and read the books and listened to podcasts and are out there looking. The problem is they spend most of their time looking and it can be a process.

16:33So, you know, most of those that have come to us say, hey, we've been trying to thread the needle. But, you know, we've been looking for years, literally two or three years. And now oftentimes they've gone under LOI, letter of intent, you know, with several opportunities or or they've been being out by buyers on other ones or they found things doing during due diligence on other existing businesses. Sometimes they couldn't negotiate the price down. The process is incredibly time consuming. And, you know, of course, there are always surprises once you buy a business, too. But, you know, we hear that the listings are down and we'll do some resales with our clients, you know, within the franchise world.

17:08But I'd say it's probably five or 10 percent of what we do, not because there's not demand, but there's just not supply. And we're seeing that outside of franchising as well. The listings are down. Part of that's due to high interest rates. Buyers can afford less as a result. And therefore, multiples are coming down and the sellers are saying, hey, instead of selling, we're going to hold on to this business a little bit longer. So that's kind of the general theme that we're seeing. And, you know, and one other thought, you know, existing businesses sound great on paper because, you know, you've got a team in place, you've got market awareness, maybe they're cash flowing.

17:37But whenever you have a change in ownership, you're going to have a change in culture. You could lose key employees. You could lose key customers, things that, you know, you paid a premium for when you bought that business, assuming things wouldn't change. So a lot of times people think, hey, an existing business is less risky. I would say, hey, there's still some risk that you can't overlook with an existing business when it comes to losing key things that you thought were going to be in place that no longer are when you have that change in ownership. So, you know, it's just important to take that full perspective.

18:08You know, and also, you know, we are seeing some people going out there and starting businesses, right? Just outside of franchising, outside of existing businesses, you know, traditional startups, oftentimes like in the tech space, you know. But what I found is oftentimes people that are going down that path, once they get exposed to franchising, you know, they realize, hey, there's so much that comes with starting on third base where product market fit has already been proven out. It's a lot less risky. You know, there's still risk to anything, but it's less risky. You've got a franchisor like a coach on the sidelines.

18:39You've got other franchisees living the same thing day in, day out. So you've got a community and, you know, you're in business for yourself, but not by yourself to be cliche. but you've got the systems, the marketing's already optimized. There's just so much more that you don't have to figure out and take the risk on that unless you're really in a high-tech field, just a traditional startup, people are coming back to franchising in large droves. A lot of good points there. And one thing I will add to that, Fire Nation, is if somebody's selling a business, not always, but sometimes, and probably even the majority of the times, there's a reason.

19:09There's a reason why they want to get out. Because if it was so good, if the business was so good, they would find a way. They would keep going with it. They would hand it off to somebody else. They would do, there'd be, it wouldn't be like available out there as often as you would think. And again, there's exceptions to every rule. I mean, there are amazing businesses out there that you can go ahead and acquire, but definitely want to have that thorough look through like John's mentioning before. You would do something like that. Now, how would Fire Nation go about finding the right franchise opportunity for them?

19:40So many people start with just Googling, right? We Google everything, but you know, If you do that, what you're going to find is every company is putting their best foot forward. Oftentimes, they're not even available in your market, even if it's not showing up on the website. They've got a sole location or they're not looking to develop in the States. It could take time just on that piece, but they're putting their best foot forward. You don't always see the full picture of what's going on behind the scenes. Who is that leadership team? What's their background? What are current owners in their system saying about their experience?

20:09And even if you find a top 100 list or a top 50 list, you know, different publications put those out. Oftentimes those companies are actually paying to be on that list. So it's simply a PR move. So, again, there's a lot of noise. It can be a little deceiving. Or the other alternative is you partner with us. As I've said before on your show, you know, it's entirely free to work with us. I'm essentially a real estate broker, but for franchises. And so I simply get a referral fee from the franchisor on the sideline. None of that gets passed on to our clients in any way. It's simply a sales and marketing expense for them.

20:39So really, it's kind of a no-brainer. You know, there's zero to lose. You know, in a nutshell, there are roughly 3 ,500 franchise companies in the U.S., give or take, at any given time. And, you know, what we do is we take out the food companies. They're easier ways to make money, which I'm happy to discuss. And we take out the hotels and a few other categories. But by and large, we're focused on just a wide variety of industries. And that really, when you start to filter that, plus what companies are looking to expand that still have markets to expand into, then those that have good leadership teams and good franchisee validation and good financial models, all of a sudden it narrows us down.

21:17And we end up working with about 600 companies at the end of the day that are looking to expand across all these different industries. And, you know, of those, even then, there's probably 50 or 60 that I feel strongest about, just having been a franchisor myself. And I am a multi-brand franchisee. So I'm looking through those lenses at some of those key tangible and intangible items when I look at these businesses. So, you know, one other thing is we get to see what's resonating with others with similar backgrounds as our clients all across North America. So bringing those insights together, combined with everything else that I just mentioned, it usually allows us to present a client with a large handful of opportunities that are open in their market.

21:56That if I'm in their shoes based on their background, based on what they're looking to do, here are the ones I'd want to be considering. So we've created a really streamlined process to work with our clients in this fashion and have a great record here of success with many EO Fire listeners as well. And, yeah, I'd be more than happy to help anyone that does have an interest as far as next steps. They can go out to our website, FranBridgeConsulting.com. You know, we'd love to share a free copy of our book, you know, non-food franchising, a free digital copy with anyone that shares their email address on our website.