The Franchise Path to Freedom with Gregory Mohr

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. are brought to you by High Level, the all-in-one sales and marketing platform. Today, we'll be breaking down the franchise path to freedom. To drop these value bombs, I are brought to Greg Moore into EO Fire Studios. Greg is a Wall Street Journal bestselling author, Forbes Business Council member, and founder of Franchise Maven, helping high achievers build wealth through strategic franchise investing. And today, we're going to talk about the two - to three-year ROI framework, about the investigation protocol, fatal mistakes you must avoid, the semi-passive path, and oh, so much more.

0:36And the big thing for sponsoring today's episode goes to Greg and our sponsors. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white-label your own software. Say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today. In 2026, stop waiting and start selling with Shopify. Sign up for your$1 per month trial and start selling today at Shopify.com slash on fire. Go to Shopify.com slash on fire. That's Shopify.com slash on fire. Here you're first this new year with Shopify by your side.

1:25Greg, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. I don't know that too many people would disagree with anything I have to say about being your own boss. They think that being your own boss is like buying a job and it's absolutely not buying a job. You want to look for things where you can do it and you have other people doing the work for you. So you're not buying a job. If you get into some sort of business or being an entrepreneur where you're doing the one doing all the work, then yes, you definitely bought yourself a job.

2:02But being an entrepreneur is not about buying yourself a job. It's about buying systems and processes that run without you. Well, Fire Nation, that's why we're talking about the franchise path to freedom today with my main man Greg here. And I want to start with the two to three year ROI framework, Greg, because we need to get to revenue quickly. So how can service franchises specifically deliver a faster payback compared to say starting a business just from scratch? What you're looking for there, John, is you don't think of it as paying for the franchise or investing in the franchise or paying a franchise fee.

2:37Think of it as you're paying to skip all that trial and error period, all the mistakes that somebody else has already made. You want to look at that franchise as getting you to where you want to be two to three years quicker than if you were going to go out there and do it yourself. I like service franchises in particular, but I work with many different ones, so it's all up to the clients I work with what they want to look at. Service franchises have a lower investment, so it's generally a little bit quicker to return on investment. work from home, have a small office,$150 ,000 give or take on your total investment, pick a service industry that has recurring revenue that compounds faster than one-time sales, and look for franchises that have been around for a while, and they've duplicated that process in many different cities and states so that you know that they've got that proven track record of success.

3:30And really, the simple businesses like service businesses, they scale faster. They're straightforward operations compared to like, I used to be a restaurant manager in a restaurant, many, many moving parts in that and many different people where the service industry is a whole lot simpler and gets you to where you want to be and return on investment a whole lot quicker. I like to talk about product market fit because so many business owners that start from complete scratch, that's one major concern they have to have is will this idea that I have, will this product, will this service, will it have product market fit?

4:02And that's what I love about franchises. You can already look around the world and see all the other places where the product market fit has been proven. It's that proven model you're stepping in. Now, it's about hard work and execution, Fire Nation. And of course, things we'll be talking about here today. And I want to move on to the investigation protocol because Fire Nation likes specificity, Greg. So what specific due diligence steps separate the winners from the losers before signing on that dotted line? John, I have my five-question investigation protocol that I generally use with people.

4:38One, the first one, of course, is your financial runway. Can you afford 18 months with no profit? Simple as that. You want to make certain that you're well capitalized. One's something that people don't always consider is a skills match on that. Not only do you have the skills for whatever business, if it happens to be a franchise, like the ones I work with, do you have the skills that that franchise requires of you? And even more importantly, do you enjoy utilizing those skills on a daily basis? The franchise validation process is extremely important. You want to talk to at least 10 franchisees, preferably 15 to 20.

5:16and you want to know what they have to say. That's where you're going to validate everything that that franchisor told you. And if you want to be one of the top earners in that company, then talk to the ones that are making the most money. Find out how much did you make, how long did it take to get there, and most importantly, what do you got to do to get there? And make certain that as you're looking at that, that you can envision yourself doing that. You have those skills, and again, that you enjoy doing those skills. and then market demand. Is there market demand in my territory? Keep in mind, depending on the franchise or business you're looking at, you may not be the target audience, so you may not see it.

5:56The franchise is going to go over with you if you go into the franchise route, and they're going to determine, and they're going to show you the demographics of the people in your area and why they feel as good fit. Utilize also your free resources. A lot of people don't do that. Go to the Chamber of Commerce. go to the local score chapter. I did that. S-C-O-R-E. These are business people that have been in business in your area for a long time. Get their opinion on it. Free service. Great people. I utilize them. And last but not least is your exit strategy. Can you actually sell the business or franchise?

6:30If you look at the service industry and you go for recurring revenue, that makes it a whole lot easier to sell that franchise or any business for that matter. If you're looking at whatever business you're looking into, if you have that recurring revenue and think of things like maid service or senior care or groundskeeping, that has a recurring revenue. People sign up for it. A little bit easier to sell, although I had a gentleman who did kitchen remodeling, and after three years, he sold his business, and that was kind of a one-and-done type thing. But those are the things that you really need to look at, and that will separate you out and separate the franchises out or businesses out that you're looking at when you go through these steps.

7:09Fire Nation, the investigation protocol, it's there for you to do your due diligence. Greg, thanks for dropping those value bombs. And I want to talk about fatal mistakes because listen, entrepreneurs, man, some of them only have one real swing of the bat before they have to say, you know what? I tried. Now I got to go back to whatever it was that was paying the bill, so to speak. So let's talk about how entrepreneurs can lose$300 ,000 in a franchise deal. And of course, the strategies that we can implement to avoid a fatal error such as that. John, the three fatal mistakes that I go over with folks to make certain that they've got these covered.

7:47One is capitalization. Under capitalization is going to be one of the biggest ones that if you try something and you don't realize how much that's actually going to be for you, how much you actually have to invest in it, you may run out of money before you get to where you want to be. So calculate the total investment needed. The reason I like franchising is because they are transparent. So what the franchisor is going to have in there under their item number seven, the total investment, it's going to vary a little bit. It's going to vary because you may be in a different area. If you're in New York City, it's going to cost you a whole lot more than if you're going to build a business out here where I live, which is not a whole lot of people out there, so it's pretty cheap to live.

8:25But know that total investment needed and then give yourself a little bit of buffer on that. Skills mismatch is another one. just like I talked about before. Make certain that your daily work matches your natural abilities. If it doesn't, then it's not going to be a whole lot of fun and you're not going to be a whole lot of, you know, enthusiastic about it. Now, if you still really like that franchise and you still want to do it or that business, then you just have to know that you're going to have to hire somebody to do it for you. And in which case, when you're hiring other people to do things for you, you're going to have to make certain that one of your skill set is managing teams and managing managers.

9:04In the franchise disclosure documents under item number 20, there's a listing of the number of franchisees who currently started the business and the listing of the ones who started it and no longer running it. So easy math to do the failure rate or success rate, depending on if your class is half empty or half full. We want to see a success rate of 85 or 90 percent or better on that. That's going to tell you a couple of things. One's turnover rate on that, And it could be pointing to a couple different things. One, it could be pointing to the fact that it's just not a good profitable business and people are getting out of it if that's a high failure, right?

9:40The other one it could be pointing to is that the franchise doesn't know how to select the right franchisees for the business. Think of the movie, if you folks out there have ever watched it, The Founder with McDonald's. When he first started out, when he was starting to get people into his business, he picked the wrong ones. He picked the semi-absentee owners who weren't running it the way he wanted it run, and things weren't working out. He determined pretty soon after that that husband-and-wife teams made the best franchisees. So you can see that then in item number 20 in the franchise disclosure documents by checking to see what the turnover rate is.

10:16So always check that one. The underlying cause I see a lot of is emotional decision-making where excitement overrides logic. So what you're looking at there is something that's in fashion, something that's popular now. You have to really take a hard look at it and see, you know, where has it been? How did it get to this point? And where is it going to go into the future? And really, you know, you do buy with the emotional side of your brain when you get into it. So you've got to feel it, but the numbers have to make sense as well. Fire Nation, absolute value bombs from Greg. I was taking a lot of notes.

10:49The one thing that I really wanted to highlight was the skills mismatch. I mean, is there passion? Is there excitement for you when it comes to this? Because listen, you need to get up every single day and put in the flipping reps, okay? If there was just an easy button that everybody could push and get rich because they were basically just putting in one hour a week or one hour a month, I mean, it wouldn't be an opportunity because everybody would be doing it, okay? You have to be thinking about this thing, the marketing, how are you going to get ahead of your competitors? There has to be some passion there.

11:17And we have a lot more to talk about, semi-passive path, real numbers, the 10 operator rule when we get back from thanking our sponsors. I'm all about the basics when it comes to running my business, and there's nothing more basic and important than how you talk to customers and keeping your team on the same page. That's why today's episode is sponsored by Quo, spelled Q-U-O, the modern alternative to run your business communications. Quo makes it easy for your entire team to handle calls and texts from one shared business number so nothing slips through the cracks. No more missed messages or disconnected conversations.

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14:57High Level, join the revolution. Greg, we're back, and I want to talk about the semi-passive path. I mean, how can someone build a franchise business that generates income without consuming their entire life? I mean, we're talking more like 10 to 15 hours a week. Now, again, I want to go back and say, listen, you got to put in the reps. We've both already talked about that so far, but there is a semi-passive path that you've seen. So talk about it. Absolutely, John. So what you want to take a look at, and let's talk about franchising since that's obviously what I do. You can do it with any business.

15:28But when you're looking at a franchise system and you're thinking about getting into it, if you want to go the semi-passive path, there's a couple of different things you need to consider. One is how well you are at managing teams and managing managers. because basically you're going to be hiring other people to do things for you. So your skill set is going to have to be working with people on that. Then you want to take a look at the franchises that actually allow semi-passive ownership. You want to talk with the franchisees. If you're going to start something out as semi-passive, you want to talk to the franchisees who have started it out semi-passive and find out from them what exactly does semi-passive mean on an hourly basis when you're first starting out that business.

16:09that's going to vary quite a bit. A franchise may say they're semi-passive, but some require just a bit more time than others. 10 to 15 hours is a general one. I think all businesses, you can work into that once you get the systems and processes in place. I work 10 to 15 hours a week. And how I do that, and I generate close to half a million dollars annually. How I do that is I find people who do the things that I don't like doing. They do them better. They're very enthusiastic about them, and I'm not, and I limit it to my core skill set, my genius, if you will, although I don't think I'm really a genius.

16:47But anyway, my core skill set, I stick with that, which is talking to people, talking to my clients, anything else that has to do with marketing, advertising, CPAs, I have assistance to that for me. You'll always find people who can do something that you don't like doing and they love doing it and do it much better than you will. So you want to look and build around, you build your business around high value expertise, which is you. It will scale if you can get other people to do the work that you don't want to do. But you have to be strategic about it and you have to be able to be good with people, working with people.

17:26Don't necessarily have to be employees. In my case, they're all contractors. But most of the businesses that you really want to scale, you're going to be scaling with employees and with managers on that, just keep in mind, that's got to be a skill set. And that's got to be something that you enjoy doing. Fire Nation, what are you great at? What should you be spending all of your time doing? Because it's the highest producing income tactic or strategy or action that you can take on a day to day basis. Do that thing over and over and over again, and hire out the rest, either employees or independent contractors, like Greg said, make it happen.

18:00Now, Greg, I want to talk about real numbers in the service franchises space. What are the typical investment ranges? What are the typical expected returns, the timelines of profitability, specifically in service franchises? Well, specifically in service franchises, John, we're going to look at two different ones. One is the one where you work from home. So either you work from home or you hire a manager who's working from home. Now, this does not mean that people are coming to your home to do business with you. It means that you're going out or your manager is going out in the semi-passive realm.

18:35If you're doing that, they're going out to visit with the clients on that, or you have a small office. So working from home, you're usually looking at a total investment of around$100 ,000. Not much overhead with that franchise fee plus marketing and advertising. Small office,$150 ,000 give or take, and it's going to depend on if you need any sort of specialized equipment as well. So if you're looking at like HVAC, electrical, or plumbing, you may need a little bit more, or restoration services, you may need a little bit more equipment. Typically speaking, let's take a look at the senior care industry, for instance.

19:09A wonderful one. I put lots of people into senior care. That's where you're helping mom and dad stay at home longer so they don't have to go to an assisted living facility. You're looking at around$150 ,000 total investment. You're going to have a small office. You're going to hire a couple people to help you out around the office, and then you'll hire caregivers as you get busier. Once you get about 50 seniors into that business, you're bringing in probably about$2 ,000 a month per senior, so it's about$100 ,000 a month at that point in time, about a million dollars a year. You're dropping generally about$200 ,000,$250 ,000 to the bottom line, and it generally takes 18 to 36 months to build something like that up.

19:47You want to, again, And talk to the franchisees about that and find out what it is that they're doing to get there. And you want to verify all that information that the franchisor told you with the franchisees. But those are pretty typical numbers. If you look at things like HVAC, the ones that are very important, restoration services, electrical plumbing services, great franchises that you can get into with those. Those are absolutely essential services. Essential services are great with the number of clients you're going to have because everybody uses it. You know, your hair conditioning or your heating goes out.

20:22That's one of the things you're going to get done, you know, right away. I had one of those home service companies that I would call back when I lived in Texas and they, you know, you pay them 50 or$75 a month and they'll have somebody out there that will take care of your problem within, you know, two to three days. Well, I never called them for, you know, AC breakage because I'm not waiting two or three days to get that done. And so that's the kind of business you're looking at where people absolutely have to have it. Those ones you'll be bringing in, you know, two or three years later, you're going to be upwards of a million dollars or more.

20:54Some of them get up to four, you know, three, four million dollars total or gross, gross income. And then you're still dropping, you know, 20, 25 percent to the bottom line on those. So those are absolutely wonderful businesses to get into. Check with the franchise on their item number 19. you want to take a look at the medians and not the averages when you're looking at item 19 is their financial disclosures what each franchisee is making on that you want to make certain that those numbers and we're talking real numbers here we want medians we don't want averages for anything averages are bad you take five numbers four of them 100 000 one's two million so four franchises are making 100 000 one's making two million you average that the average is 480 000 You take the median, it's$100 ,000.

21:41So it gets rid of that outlier, a little bit of statistics there. But for real numbers, total expected returns, when you're looking at those franchise disclosure documents, you want to look at medians, you want to look at how long those franchisees have been in business, and you want to look at the number of territories each one has to make certain that you get real numbers from those franchises. And again, those electricals, senior care, essential services, great money makers 20-25%. Some of the ones, I know the one that does vinyl, leather, and repair, they bring in probably 50-60 % ROI because there's not a lot of overhead.

22:23It's mostly just labor on that one. So really good numbers with some of those businesses. Service franchises are generally some of the better ones because again, not a lot of overhead on those. But check with the franchise that you're looking at, item number 19, always look for medians, how many franchisees, how many territories they have, how long they've been in business. That'll give you good solid, good solid figures. Fire Nation, again, just great information coming here from Greg about actually speaking to the people who are in operation. And what I love about this, and Greg, you can kind of correct me if I'm wrong, as we move on to the next point here, is that a lot of times these people will talk to you because they're not going to be direct competition.

23:04Like, you know, you're a service-based industry. So if you're working out of, let's say, Massachusetts, you're talking to somebody in Colorado, like that's not a direct competitor from you because of the distance, because of things like along those lines that are happening where you're just not going to be competing for the exact same customer. And that kind of moves me into Greg, the 10 operator rule. What the heck is this rule? Break it down for us. You got it, John. And to go back on your point there, when you're talking to other franchisees, One thing I failed to mention was that generally 99 % of franchises give you a protected territory.

23:37So nobody is competing with anybody else. Everybody's got a protected territory. So not only are they, you are not competing with each other, you're all building that brand up together. Keep that in mind. And there you are going to make friends. These are going to be your friends. The franchise is going to help you grow your business, but the franchisees that you talk to as well are your friends. They're going to help you grow it, and that's the tenant operator rule. Always speak with at least 10 different franchisees before you invest in a franchise. I just talked with a franchisor the other day, said my client, he's talked to three different franchisees.

24:16I want him to talk to some more, and the franchisor came back to me and said, well, most people talk to two to four franchisees. I'm like, well, therein lies the problem why some people fail because you're not talking to enough. The 10 operator rule, you always want to talk to at least 10 operators. That gives you a really good feel for the business. You want to make certain that you're hearing the same thing over and over again. Hopefully good. If it's bad, walk away. Obviously, that's bad, but hopefully good. These folks are, I find that they're actually quite rudely honest at times. You may actually catch them on a not so good day and you'll get an earful on that.