The Underrated Business Model That Creates More Millionaires Than the NFL | Entrepreneurship | How We Profit | E3 | Part 1

21:04I know a lot of franchisees who started with one, they're now up to 10, 15. One guy I know started seven years ago. he's up to 120 locations now and so you can imagine his org he's got thousands of employees and so there's a second line of defense the third line of defense the fourth line of defense and he can go to the beach and travel here and do whatever he wants whenever he wants but it took him seven years to get there and then it's passive so he can get there the the answer those up front none of it's really passive and if you have a broker telling you or some sort of you know franchise coach, et cetera, telling you, oh, it's semi-absentee or that is a very big red flag.

21:43There are some passive concepts, but very, very, very few. Almost all of them are going to take some level of work. And if you're well-capitalized, sure, you can maybe get out of the day-to-day faster because you can afford to hire a GM sooner and burn some cash essentially. But for the most part, you're going to have to roll up your sleeves and get after it.

22:02Hala Taha:Do you think it's doable? like sometimes for me i'm crazy because i always like to start businesses and stuff so like i want to start like my own pilates studio my own spa but then i was like oh well maybe i can do a franchise pilates studio as like a side hustle but you you think you need like full i think if you brought like depending on the how you financed it you could hire a gm and an operating partner and say hey me and my one of my partners on a separate venture doing this in minnesota with a a bagel concept, neither one of us can be day-to-day, 40, 50 hours a week necessarily. So we're bringing on an operating partner who we'll give equity to, who wouldn't have had the capital otherwise to own these locations.

22:44So this is a once-in-a-lifetime opportunity for them, but they will take that day-to-day load off of my partner and I so that we can be more passive. Got it. So you could do that because you could say, hey, I'm going to find someone. I have enough capital to finance all these locations and then put them in place.

22:59Hala Taha:Give them some equity so they act like an owner. Yes.

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26:12Hala Taha:So I'm really interested in that as well. Yeah. So I, uh, I'm from Minnesota. I ended up going to school in North Carolina, which is where I live now. I went to Wake Forest, studied finance, was going to go do the investment banking thing in New York. Um, and then my freshman year, I worked for the student run. It started as a student, uh, like project, the classroom project. And I worked for this group that did laundry and dry cleaning delivery. And I fell in love with it. Not again, the laundry piece, but I was like, You guys are learning a ton. You're making money. You guys are like 21 years old and you're doing all this.

26:44This is so cool. Are you going to sell it when you graduate? And they're like, yeah, this was just kind of like a resume builder for us. It's like, I want to buy it. What are you going to sell it for? They're like 30 some thousand dollars. My jaw hit the floor. You're like, how are we going to afford this? This is the most money I've ever heard of. Because at the time, I had, I don't know, maybe a thousand or two. I'm 18 years old. And I was like, all right, I'll figure it out. I have like one or two grand saved up. Like you're not even close. And then I found two partners. we got to nine or 10 K.

27:11So shit, we're still short. And so then we started knocking on doors at the business school. We're like, maybe these finance professors can help us. And we weren't even in the business school yet. And thankfully these professors were so giving with their time and wanted to help us. And they're like, well, have you thought about seller financing? Have you run a discounted cashflow analysis yet to see if this is even the value? I'm like, what is that? You're like, I know what you're talking about. I'm like, you'll learn about this in two years. I was like, no, we need to learn now because we're going to do this.

27:36so we ended up figuring out the true value of the business and then we said oh we could do seller financing where we give them a percentage of the revenue that we generate over the course of the two or three years that will run it because then we'll probably sell it when we graduate just like they did and we want the next group of students to have the same experience we had and so that's exactly what we did we went to them and said hey we can give you this 10 11 grand in cash and then can we give you another 20 percent of revenue over the next few years and you know we did some math together and they're like yeah this is pretty interesting of course we knocked it out of the park.

28:06Oh, great. So we, you know, it took the business from 40, 50K school year in revenue to like 220. So they got a great deal with the seller financing. We were like, crap, maybe we should have figured something else out. Yeah, capped it or something. But hey, lesson learned. And it opened my eyes though to just, there's a whole other path. I think we're all so conditioned to get good grades in middle school to then get good grades in high school so you can get into a good college where you get good grades again and then go work for a fortune 500 company and do that for 40 years and then die you know it's like there's got to be more to life than this and that little laundry thing in college completely changed the trajectory of my life

28:48Hala Taha:one thing led to another after that experience so you had a lot of learning lessons from that you were able to um like really maximize the amount of revenue that you guys got from it so what were some of the key lessons in terms of like customer acquisition that you learned? So we were on campus we're the exclusive provider I think Wake loved it because it was a story for them to look what our students are doing. And it's called like Wake Wash or something so you branded it yeah. So the school would write about it in their magazines like look three Wake students are running this business for Wake students and that was like our primary source of distribution they gave us a booth at freshman orientation.

29:29And most of our customers were freshmen because they're going off away from home for the first time. The parents, especially the moms, were like, little Timmy and Susan, they can't do their laundry on their own. So we'd have this booth that, I don't know in hindsight why they gave us such prime real estate, but it was get your meal plan, get your parking pass.

29:49Hala Taha:That's amazing. Here's the wake wash booth, which laundry was included in room and board. So it's not like they needed to do this. And so the parents are coming down, signing up for all these things, checkbooks out. And then I was there like the sham wow guy, like step right up. It's the premier laundry service on campus. And the parents, they're laughing because they, there's like, you guys are ridiculous. And they would shell out, you know, there's a subscription model. So they'd pay 800 bucks for the whole school year, 500 for, I think a semester. And then there was weekly and biweekly options that increased or decreased the price.

30:20And in that one or two week window, we did 160 K in revenue. And I just remember being like, oh my gosh, this is so much fun. Like every business is this easy, which made me, I had false expectations on everything I've done since because I was like, oh yeah, every business should do 150K in its first week of being open. Yeah. Not the case. But so learned a lot about distribution and partnerships for sure. The university partnership completely changed it for us. Learned a lot about operations. Learned a lot about customer service. You know, laundry is very personal. Things are going to go wrong.

30:54How do you handle it? And then learned a lot about picking the right partners too. Like we had four partners at first and we kind of did it out of convenience. Like we were all friends and you hear that cliche, like don't get into business with friends and family. And I actually disagree with that, but I do think you can't make the mistake that I did early on, which was don't do it just because they're friends and family. But if they are friends and family that have complimentary skill sets to you, then it's like the best thing ever. You have this deep trust for each other. You can have hard conversations with each other.

31:26Yes, there's high emotions. But if you're good at ops and I'm good at marketing and we already have that relationship, it's so powerful. It is the best thing ever.

31:35Hala Taha:Nothing's better than working with your best friends. It's so much fun. You started your company, all your companies with your best friend from like sixth grade or something, right? Yes. So the college one was fraternity brothers. But then when we sold that when we graduated, I went and did corporate for, I made it a year and a half. I gotta go do this crazy entrepreneur stuff again. But start up another laundry business when you saw all the Uber for X things popping up. So Instacart, Shipt, Wag, Rover, Uber Eats, DoorDash, like someone's going to do this for laundry and dry cleaning. And so I'd called up Dan DeQuisto.

32:13He's been my best friend since sixth grade, but not because he was my best friend. He was at startups in Minneapolis. So he understood the grind and the culture and how hard it is and the work-life balance not being super you know balanced yeah um but he also was really good at marketing and sales and my background was at the time especially it was just way more numbers finance operations i was like i need someone like you and you need someone like me and we love each other we care about each other we trust each other we have shared values we should do this and we're 22 23 and he quits his job he breaks up with his girlfriend at the time, who's now his wife, so it all worked out, breaks the lease on his apartment and packs the car and drives straight.

32:57He did it straight, didn't even stop down to Charlotte and like, let's just figure this out. We had no idea what it was going to look like, but it ended up being the most fun, stressful, challenging, fulfilling thing, you know, we've ever done.

33:11Hala Taha:And that was your first franchise. So you took your experience from laundry from college and and you're like, I want to make this a franchise. Why did you, did you set out to make it a franchise initially? I got excited about what Uber was doing to this like sleepy boy, like, oh, taxis have always been around. Let's go make them better. And in the same vein, do good for society. We're reducing drunk driving and all this other, you know, all this negative stuff that Uber was tackling. And how they went about it is questionable and they could have probably done some things better. But I saw just the impact you could have by building a huge national venture scale business.

33:47and i always wanted to do that and so i thought laundry is something that everyone does it's the most hated household chore in the country what if we like uber you know uberized laundry and so it started out as a marketplace business again where we would pair existing laundromats and dry cleaners with those that wanted their laundry and dry cleaning picked up from their door done for them return the next day kind of like what we did in college and it worked really well in charlotte we thought it'd be busy professionals, which it was some of, but very quickly we learned just because we're not our ideal customer profile doesn't mean someone else isn't going to present themselves as the perfect customer for this business.

34:24And for us, that was mom. It was mostly women making the purchasing decision, ages, you know, late thirties to early fifties. And they would, we'd get calls. Some moms audibly crying on the phone. You have no idea. This is the bane of my existence. I come home from work. There's a pile sitting there. I do one load. And by the time I'm done with one, there's a whole other mountain again. It's just constantly stressing me out. And we're like, we got you. We can deal with you for you. And so the goal was to build this national brand where we paired, you know, existing demand with existing supply.

34:59And boy, were we wrong. We were so wrong. The issue that we had was, you know, compared to an Uber Eats or a food delivery business is all these restaurants are already making meals. Delivery is just enabling them to do more for people that aren't going to step foot in the restaurant. So we thought, oh, that should work for dry cleaning and laundry. It did work for dry cleaning because they have these big plants that do have the volume for the drop stores already. And so they just said, yeah, bring us more volume. We'll do it. Great. On the laundry piece, what we would do in our washers and dryers at home, there had never been a need for mass volume, individualized laundry before.

35:35And so we would go to these mom and pop laundromat owners and say, hey, we'll double or triple your revenue, but we need you to do all this volume. And they're like, yeah, yeah, yeah, we'll figure it out. And they couldn't handle it. Because if you think about a laundromat, it's a passive self-service business that people come into, put quarters into the machine. The owner doesn't have any employees most of the time. And if they do, it's maybe one, maybe two. We now needed them to have 15 employees per location to be good at operations, tracking errors, fixing quality issues. They are not good at that.

36:04They're landlords essentially. And so we ran into the issue of messing people's stuff up, mixing your clothes with mine. And we're like, if this is what it's like with five locations, what's it going to be like with 500 or 5 ,000? This doesn't scale. And so then we started going overnight into existing people's laundromats. So we were in our mid twenties at three in the morning at these kind of sketchy laundromats producing all of this delivery volume and that perfected our process we built technology around it and then it became we can't be doing this in other

36:37Hala Taha:people's hole in the wall laundromats especially for like quality right and just standardization of everything and just the quality of you know life for our employees like they're working in these tight spaces and you know they're storing things in this you know shed in the back of the laundromat it was just like this isn't this isn't going to scale either even though the process now scales and the tech scales the infrastructure does it now so now what do we do so we partnered with electrolux they're one of the largest appliance manufacturers in the world they own brands like frigidaire and um others and their north american headquarters happened to be in charlotte so talk about right place right time stars aligning and so we had approached them and they said yeah we've been tracking you we love the business and what you're doing and we showed them our numbers and like you should just open your own store you're going to be more than profitable day one we'll finance it because the issue we had was we didn't want to use venture capital to buy washers and dryers okay terrible use of capital and we weren't bankable yet because we were two 25 year olds in a business that was kind of mostly losing money or breaking even um so we weren't bankable and so electrolock said we'll be the bank we'll finance the whole first location we believe in you guys you already have enough revenue to make it work and we bought an old McDonald's.

37:48It was the first building we bought, 6 ,500 square feet. I'm negotiating with McDonald's corporate at 25 years old. And McDonald's is like one of the largest real estate companies in the world. And of course we had mentors in my ear being like, say this, change this clause. And McDonald's is like, what? How did you, what? It was such a fun, like cool first experience. But then we built this hybrid facility that is open to the public for walk-in laundry seven days a week. But Monday through Friday, most people aren't doing laundry at 2 p.m. on a Tuesday. They're working. And so that's when we would shut down half of the store and do all of our delivery volume for the more kind of affluent, higher income customer.

38:30And so now you have two customer bases being cleaned out of the same asset base and same infrastructure, and it really worked. And that's where the question of how do we open 100 of these came and popped up.

38:41Hala Taha:So that's the one that turned into a franchise. So it's a laundry lab. Is that how you say it? So then what did you do with the other business? You just shut it down. So the idea was the whole thing is working in unison. It's kind of like we've built, you know, McDonald's and infrastructure plus the delivery engine like DoorDash or Uber Eats. Yeah. We've done the same with the laundromat and the delivery mechanism we've built and all the process and tech. So like we need more physical locations now. How do we do this? it's going to be$100 million to go at speed and pace we want to go? Or what if we franchise the brick and mortar and then layer the delivery piece on top?

39:20Just like Uber Eats. But now this time around, instead of having legacy owners and small 1 ,000 to 2 ,000 square foot spaces, we get to hand select the franchisee. They know up front the intention is for us to do delivery as well as just walk in. So everyone's on the same page. They're going to have to be operators, not landlords. And we get to have control over the size of the store, the equipment mix, the layout, all the stuff that we need. But we get to partner with others now who can bring their capital in and allow us to build many more locations faster.

39:50Hala Taha:Cool. So Laundro Lab is the franchise portion. To you, Laundry is the app that delivers. And you were the CEO of that app. And that app just like funnels to different Laundro Labs basically to do the deliveries really interesting now let's talk about raising money for an unsexy business oh my gosh yeah that was like early on it was it was kind of sexy like oh delivery app because there was a delivery app for everything yeah delivery apps were hot like dog walking flower delivery and there was like on-demand massage zeal i think it was the name of it they'd come to like a corporate office building and do massages that were i was like wow this is wild everything was getting uberized and so that space was kind of hot for a little bit and so we wrote a little bit of that wave but i think we missed it by a year or two as well and so then we when we started vertically integrating and building physical stores it was a little tricky to raise capital because it's like what are you are you a franchise retail thing are you a tech delivery thing and we're like we're kind of both they they the ecosystem fits in and so we'd have to have different conversations with different types of investors to really get them there um and eventually when we started franchising, you know, we had just raised $6 million right before COVID had happened.

41:05And that was to go, we're going to do a corporate own at that point. We're like, let's just go and see how far we can go with just corporate locations. COVID happens. Our board is like, we should shut things down or shut markets down that we just launched because they're not going to be profitable for a year. And the foresight that they had, it was January of, I guess what would that have been, 2020. They were like, whatever is happening in Asia is going to happen here eventually like we're gonna have stay-at-home orders there's gonna be no weddings and all these things and i remember the guy on our board saying this and i was like it makes so much sense but the rest of society is just pretending like oh it's over there we're gonna be fine like no one responded and sure enough come april is when the nba went to the bubble and all that that's when we as a society started responding but we were talking about this in january i was like it took three or four months for like our government and the rest of it but anyway a lot of learning at that moment.

41:57So we shut down the non-profitable parts and that's when we really developed the franchise concept. We ended up selling 118 locations in 12 months. People wanted laundromats. They're sexy, boring businesses. And off of that, we ended up raising about a$20 million Series B and that became more private equity. And hey, you guys have a trajectory here. You have a pipeline of stores to open. Plus you have this interesting venture tech piece on top. And we liked the whole thing combined, but it was not easy. I mean, many rounds of capital where we had two weeks left of cash before we weren't going to, you know, be able to make payroll or entirely run out of money.

42:37And it's a roller coaster.

42:38Hala Taha:Yeah, it is. I bootstrapped my company, but I have friends that are VC backed and a lot of them that are in industries that aren't AI at this point are really struggling now to raise money. So what advice do you have for them in terms of like things to focus on instead of the industry that they're in? Yes. I think if it's a non-AI thing that you're building, I would try to bootstrap as much as you can now. And it's easy to say that, hard to do that, but it's easier to actually execute that today than it's ever been. Our software team that's building what we're building today is a fifth to maybe even a tenth of the size of what it would have needed to be three to five years ago.

43:18So you can just do so much more with so much less with all these different AI tools. So I would encourage people to like really get creative and scrappy on like, what do you actually need to build? And can you do it with cloud code and with these off the shelf tools and how far can you get and maybe hire one engineer that can use these tools instead of three or four or five, which requires you to raise money and get on that treadmill. So that's one piece of advice. The second is if you are going to raise money, this idea of seed strapping is like this hybrid of bootstrapping plus raising small chunks of cash.

43:51So like we're actually doing that for Fransy. We raised a million bucks initially and then two and a half, we're about to close another$2 million round now. So it's these like micro rounds. Yeah, nothing too crazy. You're still getting good valuation increases each time, but we're not going to raise the$20 million round and now you have to spend it and the expectation is to grow. 3X. Yeah. So that's the advice too, is like be super thoughtful about the cap table and how you raise money and who you raise it from and even more deliberate and intentional than you would have had to be historically.

44:19Hala Taha:So you started Franzy, you decided to also step down as CEO. And tell me the real reason why. Was it because you wanted to start something different and do something more exciting? Or was it because you felt like you weren't the right person to scale Laundro Labs? It was a combination of things for sure. So in 2022, and I'm an open book about everything. So in 2022, we raised the 20 million. And then in early 23, my dad was diagnosed with cancer. He's good. He's cancer free now. Oh, great. He has to track it every couple months and go get tested. But they live in Minnesota. They had me when they were older.

44:59I have two older brothers. So my dad's 74. I'm 34. And I had already been thinking about, all right, I go home two, maybe three times a year. He's 74. Average life expectancy is 85. Yeah. 10 times two or three is like I got 20 to 30 more times with my dad.

45:15Hala Taha:I think about that all the time. All the time. And I read this article right before he got diagnosed with cancer. And it had you enter your age, their age, how far apart you lived. How many times see him? It's spit out baseballs for some reason. Like baseball is the infographic. And mine had like 24 baseballs. And I was like, what? Like this can't be right. I was like, so then I made a very intentional effort. I was like, I'm going to double that or triple that. I'm going to go home more. I'm going to have them come down more. And then he got six. That really weighed on me. My wife found out that she was not a U.S.

45:43citizen after believing she was one. her whole life. And so that created a wrinkle and, you know, it was a really challenging thing. My COO had a heart attack and passed away, unfortunately. And I ruptured my Achilles all within a three to four month window. And so I tried to hang on. I was like, I've been through hard stuff. You can do hard things. You can, I was trying to be tough.

46:07Hala Taha:Yeah. And I just found myself eventually for no reason crying, like almost, well, I guess for reasons, but every day, like I could drop a pencil and that would like set me off. I just like, I give up. I can't do this. Like the pencil just fell. Like everything, I was like, all right, I think I'm depressed or something's going on. Yeah, something's different. So I went to our board and I just said, look, this is a competitive sport. We're at the height of opening stores and everything going on. Just, you know, the worst time to have someone with as much personal stuff happening, going on as I have trying to lead this thing.

46:39I was like, I tried the last six months, but I'm clearly not in the right space to do this. And they're like, why didn't you say, their response was, why don't you say anything sooner? You're 100 % right. You're human. You need to take time. You need to take a break, regardless of what's happening in the company. And so the lesson for me there was like, if things are getting tough, talk to your partners, talk to your board. They're not going to punish you. They're there to help. And so I went and took a three or four month sabbatical and did a lot of thinking during that time and just realized the business is drastically different than what it was when I started.

47:11I thought this was Uber for X, a tech company. And now it's one with trucks and washers and dryers and physical laundromats. And I don't think I'm the guy and I don't know if I want to be the guy that takes us from 30 physical laundromats to 300 or a thousand. And we should go hire a CEO that has some level of retail experience and understands logistically intensive businesses because that's what this has become. So we did a CEO search. We found him. He's great. Um, and it allowed me, you know, part of the answer is also, yeah, I've had this idea for Franzi and it was sitting there. Um, but it gave me the space to go think about that and like, what am I going to do next?

47:47What did I like about the business we had built? What did I not like? And can I go find or come up with the next thing that has those characteristics of things that I'm good at, not, you know, and not the things that I'm not good at.

47:57Hala Taha:Yeah. So you came up with Franzi. What were the first steps that you took to validate the idea? Yeah. Yeah, so I had been thinking about it for years. And I joke with people that starting a business is almost like getting a tattoo. And hear me out. This will make sense in a second. My brother gave me this advice. I only have like one or two. And he was like, think about the idea of what you would get and then wait a year. And if in a year you still want to go do it, you must really care about this tattoo and think it's so important and whatever else. So then do it. But don't do it on an impulse.

48:28Don't do it that week, that month, whatever. Wait a year. And I think starting a business is similar. I think you might have this idea because you had a hard day at work or you saw some problem, but it might actually be that someone else is doing it or that you were just upset that day about that thing. And it wasn't actually that big of a deal a week later. So I tell people to give it six to 12 months. And if you're still thinking about it, then go and start it, take the leap. I felt that way about Franzie. I've been thinking about it for years and I kept seeing the pain point over and over. I kept seeing all the misalignment, people buying businesses they shouldn't have been.

48:57and sort of validate it initially we just went and talked to a bunch of brands and said like hey we're thinking about doing it this way instead of a 60 commission it'll be a flat rate it'll be this open marketplace what do you think and the brands all loved it because it didn't cost me anything i'm not paying per lead i hate paying per lead because it's 40 bucks you know lead and i have to sift through 400 of them so i'm now you know all this money in and time now to sift through mediocre to crappy leads just to find one deal so like i like that so brands loved it the big question mark was would prospective franchisees find value in this and the proxy for us was they're all using brokers so like we still provide that level of service so we know they're going to value that they want access to data which they don't have really there's all these google searches there's data that shows that that exists so they clearly want stuff that isn't really there and more and more i think just in society people want self-serve options like think about zillow

49:50Hala Taha:like we like to go yep we just i think it's like a pastime yeah exactly like you would just do it for fun if they're not even looking goes like once a week to zillow yeah i could it was something like that i can't don't hold me to that i remember reading that being like really they're just like online shopping dreaming about houses and stuff i have friends that they just like look up an address on zillow because they're curious of what it's sold for and all the time and so our thought was like if that's true for houses and cars and why not businesses so we went and did like a very light version of the site.

50:20We pulled some data in and we just, we put it out in the Charlotte market. We did some LinkedIn posts and people started going, started getting a couple thousand a month in traffic, 10 ,000. We were up to 60, 70 ,000 unique visitors a month now and helping, helping a lot of people become entrepreneurs either for the first time or the 20th time, you know, they're buying their 20th thing.

50:39Hala Taha:Talk to me about how much it took to start Francie. How much money did it take? You mentioned that you didn't have such a big development team. You started it in 2025? No, we started working on it late summer of 24. Okay. So like AI was like just coming out. Like, I don't know how much was out there with AI. So how much money did you end up spending to like build this platform? So I remember the first thing was like find a good co-founder again. I don't want to do anything on my own for a number of reasons. It's way more fun to me to do it with someone else. And that complimentary skill set, I think, just speeds everything up.

51:11So found my co-founder quicker than I thought. In my head, I was like, I'm going to give myself, you know, six months. I just left this business that I built and I'm going to take some time off. And sure enough, the stars aligned. It was a guy I've known forever in Charlotte. Very complimentary to me. And he was transitioning too. So I was like, all right, maybe we do this six months sooner than I thought. So I found him and we were like, we're each just going to put like 20K into this. And honestly, that'll probably get us far enough to get an MVP built. There were a lot of AI coding tools at the point.

51:41Not as sophisticated, as good as they are now, but still pretty good. and so we use some of those tools plus uh offshore developers at first like let's just get a basic thing out to see so we were only in like 20 or 30 grand to get our mvp out and then we started getting enough traction they were like let's raise money because i'd talked to a few of our old investors and two of them were like we love the idea it's way more scalable than what you were doing last time you're now a veteran not really but in their eyes while your second time around you have some of the battle wounds and scars that'll make you better faster etc um and they like sight unseen were like we'll put a million dollars in and like you know we don't even know like we don't need a million dollars and i was like all right well this is a huge market opportunity it's big let's take it and we off to the races we started cruising from there um when you get that money you spend it right and so the joke that i've heard from other entrepreneurs and investors is regardless of whether you raise a million dollars or 50 million dollars you're going to spend it in 18 to 26 months like you'll find like not that you want to find ways but like opportunities will come up we could acquire this company we could build this feature that we were going to wait on and so these things come you have to be disciplined to say no to a lot of it but good opportunities do come up and if you have the war chest to capitalize on it that's kind of the whole point and so we did that the first year officially launched uh february of 2025 and it's been one of the fastest like most exhilarating things i've been a part of it i've heard other entrepreneurs tell me about lightning in a bottle and i feel like we've yeah i mean it's such a cool idea like

53:19Hala Taha:learning about it it makes me be like oh like i want to go research franchises and options and just like it's just a really cool way to actually standardize the way that people buy franchises and And it's a real problem because brokers will sometimes lean into the opportunity that they'll make the most money on, not necessarily what is the best fit for the customer. So there was a real problem that you were solving. It is insane. Honestly, I'll stay off my soapbox for forever. Go on your soapbox. That's why you're here. Not for too long. But we, when we were selling the laundromats, we worked with brokers.

53:55And the more I got into how it worked, the more I was like, how is this legal? um you know to buy a house you're just i'm sorry to you know help someone buy or sell a house you have to be licensed you have to uh disclose how much you make what percentage uh you have to do coursework there's all these you know things to be registered in that state to buy and sell a franchise or help someone to buy and sell a franchise boom you and i are legitimate our business broker you can go sell whoever's listening you know a concept and so that's a big problem because it attracts bad actors because there's no hurdle.

54:29There's the barrier to entry is zero. And you're helping people make, I would say just as big of, maybe not as big, but close to as big of a decision as buying a home. It is a multi hundred thousand dollar decision, sometimes half a million, sometimes multiple millions of dollars. And so you're working with this person who's not licensed, not legally required to tell you how much they make and how they make money. And so the incentives are very misaligned, but you as a, you know, the person working with them think, oh, this person has my back. Why wouldn't they? It's the ethical thing to do. And it's probably like buying a house and they probably are regulated like that.

55:03They're not, which is crazy. And I hope regulation comes. I'm not usually a huge proponent of regulation. In this case, it needs it. But then they also make a 60 % commission on the franchise fee. I know a ton of salespeople. I've never heard of a commission that high. Yeah, that's very, very high.

55:19Hala Taha:Yeah. Yeah. It's usually 15, 20%, 30. And so like that high commission without regulation, again, it's a perfect storm of attracting bad actors. There's a lot of great business brokers. I don't want to trash the whole model. There's a lot of really good ethical, super helpful, very moral, morally aligned people, et cetera. But for every one of those, there's 10 bad ones because of the wild west nature of it. And so we looked at the opportunity to say, hey, we can build franzi and let capitalism do its thing and bulldoze a path through the brokers and say, we'll charge a flat fee. So it's super aligned with the individual and the brand because we don't care which brand it is.

55:55We get paid the same amount of money. So we have no incentive to say, hey, Holla, this brand is way better for you because their franchise fee is 60K. And this other brand that actually is a better fit for you, the franchise fee is 30K. As a broker, I make twice as much money by pushing this one in front of you. That's a huge incentive. We're not talking about a couple thousand more dollars. We're talking about tens of thousands of dollars more. And so we said, hey, it's a flat fee. So we rip out that incentive. We also disclose like a real estate agent would up front. Here's how we make money.

56:25Here's how much so that you know is the prospect. And we also explained to them how the broker world works traditionally like, wow, I can't believe that was allowed. And then the brands love it because they're also paying less overall. And again, it's a line. The best brand has to win and that's how it should be. It shouldn't be the brand that pays to play the most.

56:41Hala Taha:So you are contracting with the brands. Brands do pay us the platform fee. So you're also trying to recruit brands, right? All the time. So we have 4 ,000 on the platform, which is the whole universe because we have those documents. But then we have what are called verified brands. So it's like a purple checkmark or a blue checkmark on Instagram. So we've vetted them at that point. They've claimed their profile. Like you and I can claim our houses on Zillow. And so it's the same way. It's free for them to do. It doesn't cost them anything. They can update the data, though, once they claim it. They can see leads coming in.

57:13And so our incentive to the brand is we have all these eyeballs looking at your concept. They want to come talk to you. We gatekeep a little. We're like, hey, they can go direct to the brand from the platform from there. But the brands really want to come on because we've built all these tools that make their sales team more efficient, more insights. And then prospects love it because they're getting all this free education, support, handholding, access to the best lenders, the best rates, entity formation, CPAs, attorneys, etc.

57:39Hala Taha:Yeah. So it just makes it easier for them. They don't really pay anything for it. There's so much to unpack in what you just said. So why don't we start with how you make money on the transaction? Yep. So brands don't pay you. Only if a deal is completed. So they only pay you when a transaction actually happens and you get some sort of a fee that's transparent to everyone? Yes. So we call it a platform success fee. And it's typically$20 ,000 to$25 ,000. So there's a little bit of variance depending on the brand's franchise fee because we don't want them, if it's a very low fee, to be unprofitable on a deal.

58:15So we'll give a little wiggle room, but it's not this flat percentage. So we'll kind of put them into buckets. If your franchise fee is zero to$40K, it's X.

58:22Hala Taha:And what's a franchise fee? So if you and I were to go buy Jersey Mike's together, they might say, hey, you guys get the rights to three in Austin. To preserve or reserve those rights for us, we're paying a franchise fee. We're saying, all right, for three of them, it's 40K for one territory. And they usually scale down as you buy more. So 40K for one, 30K for the second, 25K for the third. But that's not how much it costs to open up a franchise. That's just like the cost of getting the brand. Yeah. Okay. So it's just a ticket. Your ticket in line. We now, if we buy those three Jersey Mike's territories, we pay our, call it 100K to reserve that right.

58:57That's our zip code or that's our 10 mile radius that only we can develop a Jersey Mike's And no one else can ever do that. We own the rights to that now. We then have to go pay however many hundreds of thousands to develop and build the Jersey Mikes and get the store footprint ready, et cetera. So the franchise fee, and every franchise has it, is basically your right to develop that territory or that market.

59:23Hala Taha:Got it. So you charge a flat fee depending on how much their franchise fee is. And that's the only time that you monetize in the transaction. Yeah, with the brand. Now, let's say in that same example, you and I go and we're like, we need a million dollars to go do this to develop these locations. We have hundreds of lenders that some love food, some hate food, some like fitness, some hate fitness. We pair you with the right lender. And if we borrow that million, Franzie makes another 100 to 200 basis points. So you're also adding like additional services that they're going to need anyway. So you can be like an all-in-one platform and then you're monetizing on those additional services.

59:59Hala Taha:Is there any other services that you're kind of baking in? So CPA, so you need to form an entity and get your standard chart of accounts done. So entity formation and getting your books ready. Okay. We refer attorneys, but they can't pay referral fees. That's just us being the one-stop shop and wanting to be value accretive. Brands will pay us kind of sponsorship. So we do a ton of our own content as well. We have a podcast. We've got a bunch of educational content we put out, short form, long form YouTube series, et cetera. And so brands will pay us sponsorships as well to do commercials and those things.

1:00:33or to be referenced more often in my LinkedIn posts and things like that.

1:00:36Hala Taha:Do you think there's a world in which brands will start to pay you to get like featured in your app or promoted? Or do you feel like that would be bad for incentives? I think if it's done tastefully, because what I want to avoid is the same thing that happens with the brokers. It's kind of like pay to play thing. And so almost like a paid Google ad where it's very clear in a Google search, it's like paid, paid, paid, paid, paid, sponsored. If it's like that, I think it's like, oh, this brand paid to be here. Yeah. It's not necessarily what Franzi is saying is the best brand. Because we want to be very clear on, you know, remaining unbiased and objective about it.

1:01:09Hala Taha:Yeah. Something that's really cool is all the data that you're collecting about all these franchises. And that's how people are actually further vetting the opportunities, right? So how are you getting that info? Is that just like the available data or are you collecting it in some way? It's a combination of honestly like four or five things. So these FDDs, we have 26 ,000 of them going back five or six years. Each year, a brand has to do a new FDD, and that's franchise disclosure document. And so we can see the trend of the stores. They've opened, closed, shut down, which is important. And so if you look at one in isolation, it tells a little bit of a story, but it's a dot on a, you know, you've heard that story before, like, you know, lines tell stories, a dot, you know, is less useful.

1:01:51And so we start to put and plot where did revenue go each year? where did stores open or closed or shut down go and we start to surface those insights to people on the platform so the fdds is a huge source uh brands when they claim their their their brand on franzi they give us a ton of additional information so that is another source uh we pull in other third-party data um like traffic patterns and google my business reviews we have millions of reviews that we've surfaced to say hey in this market this brand this is the perception of the local consumer. Because you as someone buying it, you might love the team and you might have heard from your friend in New Jersey that this concept is great, but in this market, maybe Chick-fil-A is just dominating, so raising canes isn't going to make sense there.

1:02:35Hala Taha:So are people actually buying a franchise in a specific city with a specific location already, or are they just buying the rights to start one up themselves? So we have de novo development, so net new development, where they're buying the rights because maybe the brand isn't there yet, or they haven't sold out that territory. We also have resales where, let's use you and I and Jersey Mike's again, like we've been doing it for 10 years. We're like, we're sick of the sandwich business. Let's sell it. And so now we list our Jersey Mike's on Franzi as a resale. And now vetted buyers are coming in.

1:03:07They can't see all of our data until we've on the Franzi platform have determined it's a serious buyer because we don't want yours and I's sensitive data out there unless it's a serious person. And that's a newer thing we're developing. It's very manual today, but the goal is over time to have just as robust of a resale marketplace as we have a net new territory. It's really cool.

1:03:30Hala Taha:So you start, you launched it in 2025. How many transactions have you made so far? Yep. So we've done just under a hundred, which is like the main metric that we care about. Cause in our, when we close a deal, we call it, you know, like a new entrepreneur made. Oh, cool. And that's the, that's what I love. Like, again, it's changed my life. It is the most fulfilling thing I've ever done. And so when we have someone else do it and you can see how excited they are and like they're scared and they're nervous as they should be because they're about to embark on this wild journey um but that gives me like those warm fuzzies of like all right someone's gonna go yeah chase their dream now and build something and i know how much they're gonna learn i know how hard it's gonna be and i know how fulfilling it's gonna be so do you have a way to connect with the franchisee after the fact to kind of understand how things have went and improve your process yep so we follow up every like three six, nine months just to see how they're doing.

1:04:19We're starting to work on software and AI tools to be with them the rest of the relationship. So right now, if you think about franzi.com today, it's the buy bucket. It's resales, it's existing or net new, it's lending, it's CPAs, it's attorneys, it's all that stuff. As soon as they buy, it's kind of like, well, our relationship's over. We check in like we do, but we want to be with you to make you a better operator now because There's a lot of terrible software that's not franchise-specific or purpose-built. And so we're starting to develop this AI intelligence layer. It's a single pane of glass is what we call it, where we're connected to all your other systems and serve up everyday daily recommendations for you and your team to better drive profitability in your business.

1:05:00So then we'll be with you the whole journey. And then when you go to sell, we know everything about your business. You just hit list, and it goes back onto the marketplace. So that is something that we're working on confidentially. You can share this, but we're planning to go to market in September with that tool. Very excited about it. That's exciting. Then we will be with you the whole way. But for now, we're just checking in every three, six, nine months. And some of the stories are phenomenal. One guy quit his job. He was from New Jersey, moved to, I think it was Waco, to do an artificial turf business.

1:05:32And he's on pace to do over a million dollars in his first year. amazing and he just is like he's getting into content now which like if you met the guy when we first met him he's like not like that kind of like he's i was like that you know as well i still kind of am it's kind of quiet reserved calculated now he's like all right guys like i can make your backyard super safe kid friendly pet friendly he's like doing it and it's working and he's got some he's a sham wow guy now yeah exactly he's got cowboys players signing up and like he's couldn't be happier. Like that feels selfishly really good.

1:06:04Yeah. We were part of that. Um, and knock on wood, I think we might go on a good morning America later this year because they want to have stories like that where, because we talked to them about a year ago and they're like, yeah, you're just getting started. They're like, come back and let's do a story when someone's like taking the leap, quit their job. Now they're a year or two in and they're like on top of the world. And you know, there's a good success story.

1:06:26Hala Taha:There's so much opportunity and it's so interesting and we're going to have a part two of this episode where we're going to go into some case studies and artificial turf is going to be one of them because there's really low overhead, but lots of upside. And so there's so many cool opportunities for people. I had no idea. I used to, I think I told you at the beginning, I used to be a franchise hater. I think a lot of people are, and you think, oh, it's just McDonald's, it's Subway, or it's these like snake oil salesman type concepts that aren't working and you shouldn't pay attention to. And so I used to write franchising off.

1:06:57And the more I've gotten into it and the more I've seen how much wealth has been created, how much happiness and fulfillment has been created and how the average person, again, isn't going to go start Uber. Like, I love this. If you find the right fit that complements your skill set that you can afford and that your risk tolerance aligns with, like sky's the limit. You're in full control. And I think it's what a lot of us want is freedom and control over what we do.

1:07:20Hala Taha:Yeah. As somebody who loves to start businesses, for me, it's so tempting to want to start some sort of a franchise. We'll get you into one. Yeah, I feel like I should. And that's a wrap for part one of my conversation with Alex. The biggest lesson so far in this conversation is that you don't always need to invent a brand new idea to build wealth. Sometimes the opportunity is in seeing where an existing industry is broken, then using better systems, better data, and better incentives to make it work. But we're not done yet. In part two, Alex is going to walk us through the five things every entrepreneur needs to consider before buying a franchise.

1:07:57Hala Taha:We'll also break down real franchise opportunities, including spray tanning, Pilates studios, coffee shops, home services, and so much more. And trust me, you're going to be surprised. So if you ever thought, could franchising be my path to entrepreneurship? You do not want to miss part two. I'm Hala Taha, and this is How We Profit Wednesdays.

1:08:21Hala Taha:Hey, App Fam, we're about to launch something that might be my favorite thing we've ever done on the podcast. a brand new series called How We Profit. Now, I've been doing Young and Profiting Podcast for eight years and my listeners are successful. We are real entrepreneurs with real businesses and a lot of you guys are crushing it behind the scenes. You may not be super famous, you may not be a billionaire yet, but you've got a business that you've learned how to scale and we wanna hear from you. One of the best ways to learn as an entrepreneur is from your peers. And I found it super helpful to be in these peer entrepreneurship groups and learn from other entrepreneurs who are at my level, but just in a different industry.

1:09:00Hala Taha:So that's what I wanna bring to this podcast. I want this to be our own peer group, but on the podcast. And so I'm gonna be interviewing people who are making anywhere from 500 ,000 to$10 million a year. They're not super famous. They're not the typical billionaires that are on my show. These are real entrepreneurs who are crushing it behind the scenes. And we're gonna uncover what they do to sell, how they get their customers, what their profit margin looks like, how they market, and so much more. If this sounds like you and you want to be featured on Young and Profiting Podcast for our How We Profit series, just head to youngandprofiting.com slash apply and share your story.

1:09:35Hala Taha:Let me know why you think you should be featured on the show. Again, that's youngandprofiting.com slash apply. And who knows, maybe you'll be our next guest on Young and Profiting Podcast. The right window treatments change everything. Your sleep, your privacy, the way every room looks and feels. At Blinds.com, we've spent 30 years making it surprisingly simple to get exactly what your home needs. We've covered over 25 million windows and have 50 ,000 five-star reviews to prove we deliver. Whether you DIY it or want a pro to handle everything from measure to install, we have you covered. Real design professionals.

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