The Professionalist Real Estate Investing Podcast

Beyond the Brand: What Really Matters in Franchise Investment w/Adam Goldman

• The Professionalist Real Estate Investing Podcast

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Speaker 1:

Welcome everybody to the Professionalist Real Estate Investing Podcast. I'm with Adam Goldman. How are you doing, adam, today?

Speaker 2:

Doing great, Tony. How are you today?

Speaker 1:

I'm doing great, great and the world out there. Adam, he is a franchise consultant, an entrepreneur with a track record of helping people achieve financial freedom through smart business ownership. Adam, how did you get into this field, right here? How did you start off?

Speaker 2:

So, look, I kind of became a franchise coach by accident. I started out in the franchising world in 2010, after the last great recession. I didn't know what I wanted to do next. I had all these different real estate investments that were. The opportunities were kind of drying up. It was a situation where private equity was getting into the single family residence market and I talked to a friend who had a friend who was in the franchising world and she gave me a few different options and I decided to invest in Vanguard Cleaning, which was an office cleaning master franchise, owned that business for about eight and a half years and was able to sell that business and I kind of stumbled into franchise coaching, meaning I'm in here to kind of make matches between franchise brands that are looking for franchisees and franchisees that are looking for great investments, and so that's my role. I'm kind of I'm like eHarmony or Matchcom for the franchising world.

Speaker 1:

Ok that's great, that's great. And then 2010. So, yeah, you, you started right after the housing market went down and everything. And then from there, that's when you started. Okay, how do you feel, like right now, with financial wise like this is a general question, I ask especially with the change of leadership, with our government and everything, how do you think it's going to do in the sector of real estate investing, financial market?

Speaker 2:

So I think there's a lot of uncertainty in the market about what's happening right. We keep on hearing different things. We hear that unemployment's down, but I talk to people that talk about how hard it is to find jobs, especially good jobs. We talk about how great the economy is doing right, but you also hear kind of mixed messages. Look, I would say that not all of my placements are real estate related. When it comes to franchise investing, franchise investors Some are brick and mortar franchises, some are non-brick and mortar I think that the outlook is very unclear. I definitely think that the current administration is going to stimulate the economy. For sure. That means that there will be demand, but it's still to be determined if we can actually go ahead and tame inflation. I wish I had a crystal ball. I don't know where we're going. Yeah.

Speaker 1:

Yeah, that's true. I don't know where it's at right now. I know, like, with the interest rate where it is, it's going to go down a little bit, but it's not going to be like it was when COVID was around. I said that was just a generational time period, right there with the interest rate, the way it was.

Speaker 2:

I'm very grateful that I was able to buy my house and get a two and a half percent jumbo mortgage. But the disadvantage of that, Tony, is that I'm not I'm never going to be able to sell my house and to find another house with that same rate in my lifetime I think I'm kind of stuck in my house.

Speaker 1:

Wow, that is true. That's true. The lowest I've ever seen someone in that time period is they got a one point. Nine, nine.

Speaker 2:

Oh my gosh.

Speaker 1:

That'll never, ever happen again.

Speaker 2:

No, I never say never, but I don't see that happening anytime soon. No, no, no, no.

Speaker 1:

I never say never, but I don't see that happening anytime soon. No, no, no, no. What type?

Speaker 2:

of actionable strategies do you use with you being a franchise coach? So, look, my role is to kind of make this perfect match and I have a personalized approach. And look, people always ask me, even at like cocktail parties, hey, adam what's the?

Speaker 2:

hottest brand out there? Which three brands would you recognize for me or would you recommend to me? And that's really it's hard for me to, before I know people, to kind of give them my top three. And so what I do is first I get to know them, I send out a survey that takes five to 10 minutes and then, once I got that survey back, I go ahead and speak to them and anyone else involved in the decision and kind of get to know them better, like a matchmaking type thing, where I find out what they're looking for, why they're looking to invest in franchises, and then I see which territories are available. I work with brands that are in 75 different industries that are pre-screened.

Speaker 1:

And then I make the.

Speaker 2:

I'm trying to narrow it down to three brands that are a good match from a just from a characteristic point of view for my candidates okay, that brings a good question, because there's a lot out there talk about branding all the time.

Speaker 1:

Um, what makes a good, solid brand? Because there's a lot of people that they view like, oh, it's the logo, oh, it's it's the, the purpose of the company. Um, is there, like all different types, little equations that make a brand solid?

Speaker 2:

look, I'm so glad you brought that up, because um brand is one of the pieces for franchising right.

Speaker 2:

It's the system as well that you're buying, and everyone's heard of crumble cookie or orange theory but in reality, if you're one of the major markets in the United States, it's probably been spilled out already, right? So the system, in my opinion, is more important than the brand. Chipotle was an emerging brand when, when McDonald's bought the franchise. Right, and all of a sudden, if you're a Chipotle franchisee, you have McDonald's management team and get a Chipotle brand which at that time wasn't a very powerful brand but became more powerful.

Speaker 2:

So to answer your question about brands in general, I mean what makes a strong brand is something that's recognizable and has trust right. It could be Sprint or T-Mobile that everyone's heard of, or Spirit Airlines Nothing against Spirit, but it has a horrible NPS score right. So just because it's recognizable doesn't mean it's going to be trusted.

Speaker 1:

OK, true, very true. And what would? If a person is coming in and they're like you know what, I'm going to start my own business, or you know I'll be an entrepreneur or in that sector, right there, what? How should they start developing a brand? Because I know a lot of people come to me and they ask me that question a lot, and they ask me that question a lot, and I tell them I said, well, I told them the way I did it, but my ways might not be the best way for them, because it's all different ways, they're all different options.

Speaker 2:

So, look, I'm glad you're talking about branding, right? Because? One of the great things about your brand is like McDonald's right or Chick-fil-A, whatever that might be. You have to just kind of emulate the brand and maybe make tweaks to it. So the great thing about franchising is you're not creating it from scratch because you're right, it's hard to create a brand from scratch, right and look. A brand isn't only a logo, but it's also a feeling right when people go into a specific they have a specific feeling about Southwest Airlines.

Speaker 2:

That's why I'm so sad about what's happening there this week. I think it's one. When I was at business school we learned about Southwest and just how amazing that brand is.

Speaker 2:

It's almost an emotional attachment to it and the private equity group that decided to take over Southwest is making all these changes is really gutting the company. There's a reason why the valuation of Southwest was so much higher than all its peers because of their culture and the brand people, Wall Street was willing to give it a higher valuation up until this week. It's really sad.

Speaker 1:

I was looking at that too, because I'm always looking at, listening to a lot of news, especially when it comes to business.

Speaker 2:

Aren't they laying?

Speaker 1:

off people. This is like the first time in many years that they're laying off people.

Speaker 2:

First time ever to lay off people. They're laying off 15% of their workforce and, by the way, no more feeding. That is by section or by letter. Right, it's going to be assigned seating on Southwest.

Speaker 1:

Oh, it's going to be assigned seating now. Yeah, oh wow. That's a huge change, Because Southwest you just go on board and first come, first serve. That's why I always loved it.

Speaker 2:

Yeah, me too. It's coming next year and they're taking what made it different at the core of the brand or the core of the company, the essence of the company and just kind of the differentiator, and getting rid of that. And look, I mean a brand is you have like this, this vision of what it what it might be. Coca-cola spends billions of dollars or millions of dollars to make you think that caramel flavored water is somehow refreshing.

Speaker 1:

Yeah, exactly, or whatever it might be, it's just it's, it's, it's just the essence of the business be it, just it's it's, it's just the essence of the business.

Speaker 1:

Yeah, why is it? Do you think that a lot of companies I don't know where it's like maybe third party, why do they, if it isn't broke, don't fix it? Why do you feel that a lot of them change, like from their solid background to something different? It's like, is it the sign of the times, or they want to experiment or are they bored? Frankly, I think a lot.

Speaker 2:

it's greed, right. If you look at a company like Jaguar, right, jaguar had the most amazing iconic brand. You have this Puma, whatever it is, or Jaguar that's on the front of the car and it's just an amazing brand. And supposedly they had some sort of management team come in or some sort of ad agency and they came up with something that was just unrecognizable anymore, uh, for the, for their car. So I have no idea why people change and mess with it.

Speaker 1:

you're right, if it's, if it's not, broke, don't fix it yeah, because it's a like a solid foundation, like, look at, uh, I'm a huge, I wear everything. Basically nike, like n Nike's always like, just do it. Like just that model itself, I mean, just that simple model is always been the way it is. And like what else? Let me think, whatever. Like KFC they changed, they changed. It was Kentucky Fried Chicken, they changed the KFC, and then they changed a little bit there. They it was Kentucky Fried Chicken, they changed the KFC, and then they changed a little bit there. And you're right, when it comes to branding, it's, it's it's different for everyone. It's definitely different, especially with these companies too, and I find a lot of it nowadays they're changing little, they're tweaking a little bit there, and I'm just like if it's there, don't. If it's there, don't, fix it, because that's how people know it.

Speaker 1:

Yeah and again that's one of the big advantages of investing in a franchise business that you don't have to create this from scratch yes, so when somebody look, so someone comes to you, adam, and they want to invest in a franchise or or buy a franchise, what, what's the steps do they need to take? So they, they're coming to you, they're like, adam, I want to get into this franchise or buy this franchise, or be part of this franchise. What's the first step that they need to do when they come to you?

Speaker 2:

Got it. So first they have to book a call, right? I mentioned before about filling out surveys and getting people involved in that process, right, but they just have to kind of make a call and if someone's not a fit, I promise to let them know and look what I would say is it's a big investment.

Speaker 2:

It's one of the biggest things people invest money in besides their house. So it's a six-figure investment or more. There is financing available, but they really have to understand what their why is, because people that don't really have a strong reason to invest in a franchise aren't probably you're not going to invest in one that's true, that's true, and I always said, yeah, you need to know your why, what's your purpose behind, behind your decision right there.

Speaker 1:

And see, it just came slipped out of my mind. Um, when it comes to the, the franchises, because everything is structured, um, oh man, I just thought I just it just slipped out of my mind. That's okay. Uh, when it comes, when it comes to the franchising part and everything, and, like I said, you need to know your why. Um, like, like, do you give, like, an evaluation? You tell them what the evaluation of the franchise, whatever they're, which one they want to be, whatever, whichever one they want to purchase, is there like a grade scale?

Speaker 2:

So such a great question. So my goal, I'm trying to give A plus right for all three of these brands because I have brands that are pre-screened in 75 industries that are in my portfolio.

Speaker 2:

But an A plus brand, right, isn't necessarily an A plus match for everyone, right? So I'm trying to make these matches just like if you're on Matchcom, your spouse or my spouse might not be the perfect match for someone else, right? So it's really digging in and finding out what that, what they're looking for, and then really finding that right fit OK.

Speaker 1:

Yes, ok, and then I remember it was. I now remember now what I was going to say when the purchasing with the, the person of the franchise, and everything. What tax benefits is there with purchasing a franchise? Cause I'm huge, I'm a I'm a huge person when it comes to taxes.

Speaker 2:

Yeah Well, look, um, you're. You're in the right place when it comes to franchising, because what I can tell you is and I'll give you an example I believe that there's black and white in the county Right and there's gray, if you go, if you go, if you have I live in Houston Right. If you have a legitimate reason to have Texans season tickets and you're taking clients there, that's a legitimate business expense, right. If you have a cell phone that you're using for business and maybe every once in a while there's personal calls, that's a legitimate business expense, right. If you're using a portion of your house for your office, that's a legitimate business expense. So I'm not a CPA, but there are many different things that you could potentially use from a tax point of view for businesses and for real estate.

Speaker 2:

That's an advantage of being a business owner. No question about it.

Speaker 1:

Yes, that's great. That's great. Yeah, I was thinking that maybe there was more to that, but you're spot on with everything you say, because that's exactly what I was thinking also. So if anyone wants to get in touch with you, what's the best way possible?

Speaker 2:

So two ways. First one is just go to my website. Franchiseadamcom and it's a 15 minute link. Go ahead and just kind of book that link, and if I don't think you're a good fit for franchising, I promise to let you know. Book that link, and if I don't think you're a good fit for franchising, I promise to let you know. Alternatively, if you want to go to FranchiseCoachnet, it has more information about people that have gone through my process and it's also a place where you can potentially book a 15-minute chat.

Speaker 1:

Okay, great, great. So, world, this is Adam Goldman. He deals with buying. If you want to buy a franchise, he's definitely the man to go to. I just want everybody know and I will put down all the resources and everything for if anyone gets going to get in touch with Adam and please, please, like, subscribe to Professor Real Estate Investing at dot com If you want to book on to be on the podcast. Adam, this is an honor and a pleasure because I didn't know anything about franchise and how it was structured. I would definitely get your information on the podcast and everything that's needed for people to come to you and, rather than that, it's an honor and a pleasure having you on the podcast. I know we've been having our hiccups back and forth, but we finally got on it and I just want to let the world know what Adam does.

Speaker 2:

Thank you so much, Tony. It's been my pleasure to be on the show.

Speaker 1:

Thank you, thank you so much and, yeah, I'll get everything out there. And everybody have a blessed day.