Can You Actually Make Money Buying a Franchise? (with Alex Smereczniak) SB1862

Every time you drive past a packed 7 Brew or a Raising Cane’s with a line around the block, you probably wonder for about 30 seconds what that owner’s life looks like. Is it printing money? Is it a nightmare? Is it something a regular person can actually do? Alex Smereczniak has owned franchises, helped hundreds of people buy them, and built a platform specifically to cut through the hype. He joins Joe and OG to answer the question honestly — including the parts the sales pitch leaves out.

What You’ll Walk Away With

• Why franchising is not passive income — especially in year one — and what you’re actually signing up for when you buy in
• The single best reason to buy a franchise instead of starting your own business from scratch: you’re starting three steps ahead of someone who goes it alone
• What kind of return franchise owners actually expect — and why it’s two to four times higher than what most people get from index funds or rental real estate
• The payback period question: how long should it take to get your money back, and when should that number make you walk away
• How to tell if a franchise is healthy or quietly falling apart — without reading a 200-page legal document
• Why calling existing franchise owners is one of the most powerful things you can do before committing — and exactly what to ask them
• The Chick-fil-A exception: why the most famous franchise in America only costs $15,000 to buy in — and why you’re essentially purchasing a very well-paying job
• The green flag, yellow flag, red flag quiz: “I can keep my full-time job,” “I’ll break even in 12 months,” “I don’t need industry experience,” “I can hire a manager and be hands-off”
• Why the business broker world is almost entirely unregulated — and what that means for the advice you get from someone helping you pick a franchise
• OG on the Bank of Mom and Dad headline: why helping your kids buy a house is a beautiful idea right up until the strings get attached — and the one thing he says never to do regardless of who’s asking

Why This Matters Now

Most people who wonder about franchising never get past the wondering stage because the information is either all hype or completely overwhelming. This episode is the honest middle ground — what it costs, what it pays, what it takes, and how to know if it’s right for you.

From the Basement

Alex Smereczniak joins Joe and OG to pull back the curtain on franchise ownership — from the weirdest franchise he’s ever seen (crime scene cleanup, seven figures a year, great margins, and no, he still wouldn’t do it) to why the first year will be harder than any brochure admits. The Wall Street Journal’s story on parents buying homes for adult children gives OG a full platform to explain exactly where he draws the line — and why the four-bedroom house with the pool and the eight-minute bike ride to dad’s place raises questions he’d want answered over two bourbons on a back patio.

Resources Mentioned

Stacking Benjamins Community — stackingbenjamins.com/basement

Franzy — free franchise research and coaching platform; compare opportunities side by side and get one-on-one coaching at no cost; franzy.com

Grind by the creator of Biggby Coffee — recommended read on what franchise ownership actually requires before you sign anything; available wherever books are sold

Wall Street Journal — “These Parents Are Buying Homes for Their Kids, With Strings Attached” by Rachel Wolff; linked at stackingbenjamins.com

Power Plate Savers blog — David’s write-up of his first Twin Cities BAD group meetup; powerplatesavers.com; linked at stackingbenjamins.com

Stacking Benjamins BAD Groups — meetups in Twin Cities, Seattle, Boston, Tucson, and Southern Minnesota; stackingbenjamins.com/bad

Stacking Benjamins Newsletter (The 201) — stackingbenjamins.com/201

OG financial planning calendar — stackingbenjamins.com/og

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Our Headline

• These Parents Are Buying Homes for Their Kids—With Strings Attached – WSJ (Wall Street Journal)

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Doug’s Trivia

• If the Z in ZIP stands for Zone and the P stands for Plan, what does the I stand for?

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• Check out The 201, our email that comes with every Monday and Wednesday episode, PLUS a list of more than 19 of the top money lessons Joe’s learned over his own life about money. From credit to cash reserves, and insurance to investing, we’ll tackle all of these. Head to StackingBenjamins.com/the201 to sign up (it’s free and we will never give away your email to others).

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Other Mentions

• Grind: A No-bullsh*t Approach to Take Your Business from Concept to Cash Flow
• The Basics of the FDD
• Franchise Rule | Federal Trade Commission
• SBA Franchise Directory | U.S. Small Business Administration

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Join Us Friday!

Tune in on Friday when our team swoops in and help you avoid retirement disasters.

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Written by: Kevin Bailey

Miss our last show? Listen here: When Borrowing Against Your House Is Smart (And When It Quietly Wrecks Your Plan) SB1861 | Stacking Benjamins

Episode transcript

[00:00:00] opener: Hey, shake and bake, Cal. Woo! Shake and bake

[00:00:09] Doug: Live from Joe’s mom’s basement, it’s The Stacking Benjamins Show

[00:00:23] Doug: Joe’s mom’s neighbor, Doug, and on today’s show, ever drive by a McDonald’s or a Marriott and think, “Man, I bet that local franchisee is rolling in Benjamins”? What do you think it takes to make your first move on the way to franchising? Ever wonder what the life of a franchisee looks like? Today, we dive headlong into the world of burgers, coffee, HVAC, house cleaning, hotels, and more, with a guy who’s mentored tons of people on how to build franchises, Alex Smurzack.

[00:00:54] Doug: In our headline segment, with housing prices higher than ever, some parents are helping their kids buy their first home. But to what extent do you want Bank of Mom and Dad involved? And if you are Bank of Mom and Dad, how much do you want to be involved? We’ll talk housing and your money. And then we’ll pivot one more time to the part of the show that’s always money, my trivia question.

[00:01:20] Doug: And now, two guys who are helping you shake and bake three days a week. Shake and bake, baby. It’s Joe and O. G-G-G-G.

[00:01:35] Doug: Shake it, baby 

[00:01:35] Joe: That’s right. If you’re not the first listener, you’re the last listener, Doug. Right? Welcome back to Stacking Benjamins. I am Joe Saul-Sehy. We’re so happy that you’re here with us, and you know what? If you are franchise curious, you might not ever even open one, but you wanna know how they work, well, then, uh, we’ve got the show for you.

[00:01:55] Joe: Alex Smrzak joining us, and easy for us to say. Doug, there’s a few, there’s a few- It- … letters missing in that pronunciation I was gonna 

[00:02:03] Doug: say, th- what they can’t see at home is what we can see on this, this person’s name. I mean, this is a, this is a challenge. It’s a, it’s a mountain to climb. 

[00:02:12] Joe: And a guy who can always be a challenge, Mr.

[00:02:15] Joe: OG- … is here with us as well. How are you, man? 

[00:02:18] OG: Fantastico. How are you? 

[00:02:20] Joe: Good. If you were gonna open a franchise of- Mm-hmm … anything, let’s say that you could get the rights to open any franchise, none existed in the Dallas-Fort Worth greater Texarkana area, uh, where, wh- which, uh, which franchise would be for you?

[00:02:37] OG: What franchise would I open were I to open a franchise?

[00:02:45] OG: And, and they didn’t exist? Like this is something I know is successful, but doesn’t hap- doesn’t… There’s no coverage of that in my local area. 

[00:02:51] Joe: Yeah, you’re able to bring it to your area. Mm. I’ve always heard that McDonald’s just is like printing money. 

[00:02:57] OG: I mean, that, that’s a guaranteed outcome. I’ll tell you one that I did try to bring actually.

[00:03:03] OG: I wanna say it was on like, it was either like Shark Tank type episode or the, um, I really like the show The Profit. 

[00:03:10] Joe: Oh, yeah. Is that still on the air? With Marcus Lemonis. 

[00:03:12] OG: Marcus Lemonis, 

[00:03:13] Joe: yeah. 

[00:03:14] OG: So he’s got a different show out now that’s somewhat similar. But anyways, I feel like it was on one of those two shows, but it was called like, the name of the store, it’s like Yard…

[00:03:22] OG: It’s not Yard House, ’cause that’s like a Applebee’s type of bar scene. That’s a thing, yeah. It’s something Yard something. 

[00:03:28] Joe: Little bit more upscale than Applebee’s, but yeah. 

[00:03:30] OG: It is indeed. 

[00:03:31] Joe: Yes. 

[00:03:31] OG: Yard something or another, but it, it was like homemade giant milkshakes. Ice cream- Okay … in a mason jar type 

[00:03:39] Joe: of- Listening.

[00:03:40] OG: Listening. Yeah. And so I looked at it, and I was like, “This is amazing.” And I sent in the thing, and they’re like, “Yeah, you don’t qualify. You’re not ice cream enough for us.” And I’m like, “But I love ice cream.” The interesting thing is, I, so there’s one in DFW- I’ve been training for this my whole life … I know.

[00:03:54] OG: I’m training. There’s one in DFW that I know of. We’ve been to it a number of times. It’s in the world’s worst place, so it gets no traffic. It’s completely dead in there all the time, and it’s insanely expensive. So maybe it was a blessing to have not been able to pursue that. 

[00:04:10] Doug: Oh. 

[00:04:11] OG: Like Raising Cane’s maybe, chicken fingers.

[00:04:13] OG: Oh, 

[00:04:14] Joe: yeah. Those are pretty- There’s always a 

[00:04:15] Doug: line- There’s a, yeah … at Raising 

[00:04:15] Joe: Cane’s. 

[00:04:16] Doug: It’s gonna, th- th- they’re big enough now, that’s gonna take some serious capital to buy. ‘Cause and you’re not gonna be able to open a Raising Cane’s. You’re gonna probably have to do a whole region. Yeah, but, but you get into the context of I already know- But they don’t know 

[00:04:28] OG: if they have coverage

[00:04:28] OG: that it’s amazing, and now I can bring it into the town. 

[00:04:31] Joe: Yeah. 

[00:04:31] OG: So- 

[00:04:32] Doug: Oh, 

[00:04:32] OG: okay … it wasn’t like what, you know. I mean, they’re opening one in my mom’s hometown or something. She’s like… But I think the secret, I’ll be interested to listen to this episode because the thing that I think makes franchises successful is they do one thing over and over and over again.

[00:04:48] OG: Like the 7 Brews you talked about. Yeah. Like they make their coffee. That’s how they do it. They don’t sell muffins and- You know what you’re gonna get … you know, all that other sort of nonsense. They don’t have, you know, I mean, maybe they do have muffins, but some adjacent things. Yeah. They’re not doing tacos also, right?

[00:04:59] Joe: For people wondering about the 7 Brew, we talked about that on Monday’s show as we were introducing this. There’s a 7 Brew- Yeah … in Texarkana, and it is always super full. Dutch Bros. But 

[00:05:08] OG: 7 

[00:05:10] Joe: Brew has blown past Dutch Brothers, has, uh, blown way past them- Yeah … looking at the numbers. Okay. It’s 

[00:05:16] OG: surprising. Yeah, no, no.

[00:05:16] OG: Like Raising Cane’s, chicken fingers, french fries, coleslaw. 

[00:05:20] Joe: That’s it. 

[00:05:20] OG: Garlic bread. 

[00:05:22] Joe: Yeah. Doesn’t do- And 

[00:05:23] OG: Raising Cane’s- … 

[00:05:23] Joe: other stuff 

[00:05:24] Doug: I wanna do a lasagna franchise. 

[00:05:28] OG: Like Olive Garden? 

[00:05:30] Doug: Just lasagna. That’s it. Free breadsticks. I wanna do one thing. Call it, like, Pasta La Vista, but make it only drive through.

[00:05:38] Doug: And then- Have that one like 

[00:05:38] Joe: the 7 Brew in the parking lot? Yeah. 

[00:05:40] Doug: Yeah, seven, like right in the middle of a parking lot, so you have to drive there with your car. It’s pretty tough food to eat in your car, right? Lasagna? Like a 

[00:05:47] OG: paper plate with, like, a f- plastic 

[00:05:48] Doug: fork. Like flimsy. Or, or it’s in the, it’s in the, like, clam shell, but after a couple of minutes- A clam shell

[00:05:54] Doug: it gets all soggy. So then you’re- It gets all soggy and nasty … supporting the 

[00:05:57] OG: bottom while you’re driving with your knee? 

[00:05:59] Doug: Yeah. And then, get this, and then- Trying to rip 

[00:06:01] Joe: that crap open … 

[00:06:02] Doug: I open a car insurance place right nearby. Oh. ‘Cause of all the accidents that are gonna happen while people try to eat their soggy lasagna- Perfect

[00:06:12] Doug: in a soggy container. 

[00:06:13] Joe: And you can, you can print the, uh, the ad for the car insurance right on the top of the clam shell. 

[00:06:17] OG: Absolutely. I mean, they kinda do that already, don’t they, with, like, uh, Schlotskys and Cinnabon in the same place now? Like, have you tried to eat a Cinnabon or a Schlotskys as a drive-through?

[00:06:26] OG: Like, that is just- 

[00:06:27] Joe: You can’t do either 

[00:06:28] OG: one of those … you’re just asking for trouble. 

[00:06:29] Joe: Yeah. Yeah. Cinnabon, I like the Jim Gaffigan on Cinnabon. “Do I eat it or just staple it to my ass? ‘Cause that’s where it’s going anyway.” Yeah. Well, we got a great show. As you can see, we get really excited just talking about franchises.

[00:06:42] Joe: But how do they work? How does it all happen? Well, Alex Smerznak is a guy who owned a franchise for a long time, got really involved in franchising. He didn’t just own one, he owned multiple locations, and he really got involved. So today, he’s an expert in franchising, helping people like you and I get our next franchise, and makes sure that it really fits.

[00:07:05] Joe: Because while you may think that it’s a fit, you… it might just be the hype. What are the numbers that you look at? How do you evaluate whether it’s really not just a good opportunity, but a good opportunity for you? I’ve been reading, by the way, a book, uh, by a franchisor, uh, up by you, Doug, the, the creator of Big Bee Coffee- Yeah

[00:07:23] Joe: has a fantastic book called Grind, about what it takes to open up a franchise, another great resource. Oh, I see what he did there. But Alex is here. You don’t have to be a reader. Yeah, grind, get it? Coffee. You some kind 

[00:07:34] Doug: of reader, are 

[00:07:35] Joe: you, Joe? He’s, he’s, he’s ama- he’s a, he’s amazing. I didn’t 

[00:07:37] Doug: realize you were one of those reading people.

[00:07:40] Joe: Alex, coming up next. He’s on his way down the stairs to the basement. As he’s getting situated, we’ve got a couple of sponsors who help us keep on keeping on. We’re gonna hear from them. We only have two breaks for sponsors during the show, now and in the middle of Doug’s trivia. So we’re gonna hear from them so we can keep podcasting.

[00:08:00] Joe: When we come back, Alex and I are gonna sit down and dive into the world of franchising

[00:08:13] Joe: And here he comes, our mentor on franchising. Finally, we talk about franchising. It’s been forever. Alex, welcome to the show, man. Glad you’re here. 

[00:08:21] Alex: Joe, thanks for having me, and your mom has a great taste in floral furniture down here, I’ve got to say.

[00:08:31] Joe: It’s the… It is the… It matches the shag carpeting, Alex. Can… I mean, we are nothing but fashionistas, dude. I wanna open in a way… You’ve done… Listen, you’ve done lots of interviews. You talk franchising every day. I wanna get into a lot of… I wanna pick your brain in so many ways, but let’s start off with a quick lightning round, ’cause that’s kind of more Stacking Benjamins’ way to introduce people to this.

[00:08:52] Joe: What’s the weirdest franchise you’ve ever seen? 

[00:08:55] Alex: Okay, easy. It’s a crime scene cleanup. They literally come and clean up dead bodies and all sorts of… And it, it is bizarre. I can’t ever imagine saying, “I’m gonna do that.” You know, I’m gonna buy this business. The economics are great. I don’t care how good they are, you’re not gonna find me in a hazmat suit cleaning up crime scenes and, and doing that.

[00:09:15] Alex: I just think it’s the most bizarre thing, but there’s a franchise for everything. 

[00:09:20] Joe: I know I said this is gonna be a lightning round, but I do know that I know some people that tried to go into, like, these, um… when, uh, when there’s been a fire or there’s been a flood, and, you know, they, they would just walk in at first, and, and I remember some health department official going, “Uh, you can’t do that.”

[00:09:35] Joe: Like, there’s all these things you have to do. That sounds like a subset of a subset franchise. 

[00:09:41] Alex: Yeah. There… I mean, there’s restoration, you know, there’s flood, you have kind of recovery, burned down buildings, et cetera. But to your point, just because you own that business doesn’t mean you can just walk under the yellow caution tape and do as you will.

[00:09:54] Alex: But yeah, crime scene cleanup is one of those ones where you have to get licensed and certain certificates, et cetera, to be able to do. But- It’s a job that has to be done, I guess, and it’s one that you just, you don’t think of. I mean, I, I hadn’t thought about it until I saw the franchise. It’s called Bio-One.

[00:10:09] Joe: I’d imagine, though, that once you get in in an area, I mean, once the paramedics know who you are, the local authorities know who you are, like, that’s a… That’s gotta be, Alex, like printing money, I would think. 

[00:10:20] Alex: Yeah, it’s a great business, the economic… I mean, it’s a seven-figure a year revenue business with pretty high margin because it’s…

[00:10:26] Alex: You know, you’re getting paid a lot ’cause no one wants to do it. Um, I just, I think it’s bizarre. I couldn’t do it. Can you- Like, imagine the, the, the conversations around the dinner table at night or at- … you know, friends’ parties. “Oh, I was just collecting another dead body the other day.” And it’s like, “Okay.

[00:10:41] Alex: All right.” “

[00:10:42] Joe: Oh, this spaghetti looks like what I saw on…” Yeah. Gross. Okay, there’s gotta be a franchise category when, you know, you’re at a dinner party or something, somebody’s like, “Oh,” this type of franchise, where you roll your eyes. What’s the most overrated franchise category that everybody wants to talk about, but the, the juice might not be worth the squeeze?

[00:11:04] Alex: Overrated. I mean, I think food honestly gets… It, it’s the majority of franchises. It’s 40% of the franchise ecosystem, and I think people hear it and they think, “Yeah, it’s low margin. It’s a ton of labor.” So while it’s talked about the most, I guess it’s not overrated, though. It gets talked about a lot, but they can do really well if you get into the right one.

[00:11:26] Alex: If you get to the wrong food brand, it is one of the worst things you could have done because the investment is so high, the labor is… You know, it’s so much to manage. The margins are so thin. But if you get into a, you know, call it Pop Up Bagels if you’re familiar with the brand or a Dave’s Hot Chicken- Oh, yeah

[00:11:41] Alex: the economics are fantastic, and then you see these individuals add a fifth, a sixth, and then eventually they’re at 20, and, you know, they start building this mini empire basically, and it becomes a very, very good way of life. You just have to be good at picking the right jockey and the right, you know, the right brand to get into.

[00:11:59] Joe: I wanna get into a lot of those checkboxes, like what we look for, what we… You know, what the red flags are and that stuff, but I got a couple more of these. Uh, let me see. Franchise category that surprised you the most. I suppose crime scene surprises you. But do you got another one where you go, “Wow, this is a surprise that somebody would create a franchise in this area”?

[00:12:19] Alex: So I’ve been surprised by home services franchises, ’cause I figured it was all these local operators, you know, one or two-man crews, et cetera, and I just didn’t realize how- pervasive franchising is until I got more and more into this world. And, like, if you think about Benjamin Franklin Plumbing, Roto-Rooter, like all these businesses are franchises that we all just thought were national brands with, I guess, corporate technicians in each city.

[00:12:43] Alex: Well, in reality they’re actually franchise-owned businesses doing, you know, home services for all of us. Wow. And I, I had no idea. And, and another category that falls into that same bucket is hospitality. Most people don’t realize that Hilton, Marriott, those are franchised locations. A lot of corporate-owned locations, but many of those hotels that we all frequent are franchise-owned.

[00:13:03] Alex: They’re owned by some local operator or a private equity group that owns a handful of regions as well. And again, I just, I didn’t realize that that was part of the franchise ecosystem. 

[00:13:13] Joe: Every once in a while as I’m reading the Wall Street Journal that rears its head, I know that right now a bunch of Marriott owners are, are kind of angry at Marriott ’cause they disclosed how much money they make off their Bonvoy point program.

[00:13:25] Joe: And the franchisees didn’t know. They’re the ones giving out the free… Yeah, exactly. They’re the ones giving out the free rooms, Alex, and yet Marriott’s bathing in all this money, so there’s a little disagreement there. 

[00:13:36] Alex: That’s one of the downsides to franchising, is the corporate, you know, franchisor-franchisee relationship.

[00:13:41] Alex: There’s always gonna be a little bit of friction, but the systems that do the best, they’ve got this win-win-win, and that’s how franchising’s supposed to be. The corporate’s making good money, the franchisees are making good money, and the customer gets a better experience, and hopefully a lower cost as a result of all these things that are happening.

[00:13:56] Alex: So it happens, but it’s not as frequent as you’d, you’d like to see. 

[00:14:00] Joe: I’m gonna put that on the list too to dive into more. If I disagree, what do I do if I’m already in? But, uh, before we get there, I got one more. What’s one franchise everybody thinks makes a ton of money, but doesn’t? You and I, before we hit record, you were talking about how many McDonald’s millionaires there are.

[00:14:18] Joe: Like, that’s a ton of money. I think everybody knows that’s money. There’s a few others that I think people know are money, but is there a franchise where everybody thinks, “Oh, they must be bathing in it,” but not so much? 

[00:14:28] Alex: Yeah, some of the ones are with all the, the high overhead. Some of these larger ticket commercial services like roofing or, you know, home services like that.

[00:14:38] Alex: S- so much labor goes into it. Uh, materials costs are higher than you’d think, and you’re doing all this manual, you know, labor to get there. You’d think, “Oh, there’s no fixed costs. Uh, because I don’t have a retail location, it should be m- you know, very profitable.” The reality is, is you have to do so many jobs, and there’s not a lot of recurring revenue, so you’re always constantly building your base back up each month.

[00:14:58] Alex: So some of those high ticket kind of one-off services based businesses- Uh … like fencing, roofing, painting, you know, that category where it’s a one-off project. The project sizes are big, but again, the recurring ra- uh, nature isn’t there, and the margin, you can only do so much with it. 

[00:15:15] Joe: It’s almost like at the crime scene people have to get in with local authorities.

[00:15:18] Joe: These guys would have to… Well, seriously, if I build fencing, I gotta get in with local contractors is kind of what you’re saying. Yeah. It’s like this specialized, really niche, niche thing. What is the fantasy versus the reality of franchising? Let’s start to get into, like, the reality of what we’re looking for.

[00:15:35] Joe: I think I might want to join a franchise What do you tell people to stop looking at, and what do you tell them to look at more which is really gonna provide them a better life? 

[00:15:48] Alex: Yeah, that’s a great question, and one that I like to talk a lot about because I think people look at franchising almost as an asset class, which it- you- many ways it is, you can argue, but it’s not mailbox money.

[00:16:00] Alex: It’s not like the S&P where you put, you know, X dollars in and it’s gonna kick Y dollars out, or real estate where, hey, I’m just gonna collect rent checks now. You don’t just buy a McDonald’s and, oh, there’s a playbook and it just works now. I plug it into the wall, and it starts printing money. Um- 

[00:16:13] Joe: So this is not…

[00:16:14] Joe: What you’re saying, specifically to use the lingo we use here on the show a lot, this is not passive income is what you’re saying. 

[00:16:20] Alex: No. I mean, it can become passive income, but even, like, real estate that can become passive or other asset classes, this one of all of them requires a lot more work upfront, the first year especially.

[00:16:34] Alex: If it’s a retail-based franchise, you’re looking for sites. You’re working with general contractors to build out and upfit the location. You’re going to market. You’re getting your first customers. The brand just doesn’t turn on this spigot and, you know, now everyone comes. I mean, there’s some of that because there’s brand awareness and presence and national ad dollars depending on how mature the franchise system is.

[00:16:52] Alex: But the common misnomer is that this is passive mailbox money. I’m just gonna invest 200K and make 100K a year off of it and life is gonna be great. It can get to that, but it takes a couple years. You’re building. You’re an entrepreneur. You’re a business owner. You’re not a, you know, passive Wall Street investor or, you know, landlord that’s just collecting rent.

[00:17:12] Alex: You’ve gotta hire employees and get customers, and that, if I could stress on anything, is there’s tons of money to be made here and a great life cycle and tons of financial freedom and time freedom later on, pretty quickly, honestly, but the first year or two is always gonna take some level of hard work.

[00:17:30] Joe: I’ve actually been reading a book on this topic that I would encourage all of our Stackers to read. Alex, you may have already read this. It’s a regional franchisor called Big Bee Coffee- Yep … in the Midwest, and the creator wrote this great book called Grind. And he says exactly what you just… Which, you know, coffee, grind.

[00:17:48] Joe: He’s here all week. But Grind, he means specifically what you’re saying, that if you’re not married to this at the beginning, you’re making a huge mistake. Mm-hmm. Like, you are making a monster… If you think that jobs are beneath you, you’re making a big mistake. You need to be all hands on deck and selling all the time and thinking about your customer all the time.

[00:18:07] Joe: What are you buying then with a franchise? Like, why franchise versus then start your own thing? I wanna be a restaurateur. Mm-hmm. Why would I go open up a Chick-f- well, we know why you’d open a Chick-fil-A. But w- why would I go open X new thing that’s not in my area versus just start my own restaurant? 

[00:18:26] Alex: Yeah.

[00:18:26] Alex: So the way I always describe it is the journey of business, let’s call it a 10-step process or a, you know, a journey to get to 10. And starting on your own, you’re starting at square zero or square one. With a franchise, you’re on square three or four out of the gate. They have a brand, they’ve got a menu, or they have a, you know, pricing schema set up already.

[00:18:46] Alex: They’ve got marketing already set up. A lot of these foundational things that would take you probably a year, if not more, and many cycles of trial and error to get it right and to, you know, perfect it and figure it out, you jump in day one with, “Here’s the playbook. Let’s go run the play.” You’re still a business owner.

[00:19:01] Alex: You still have to hire people. You still have to take on some level of risk, responsibility, and ownership of what you’re doing, but you’re not starting from zero, and you have this peer network with you the whole way. So on the weekend when you wanna quit, which, let’s admit, we’re all our own worst enemies.

[00:19:14] Alex: You go to the gym for a month in January, then you quit ’cause there’s no one holding you accountable. 

[00:19:17] Joe: This 

[00:19:17] Alex: system- Nobody’s ever 

[00:19:18] Joe: done that. Come on. 

[00:19:20] Alex: This, this system holds you accountable the whole way. Like, once you’re in, you’re in, and when you wanna… You’re undoubtedly on the weekend maybe crying, “Why did I do this?

[00:19:29] Alex: I bet all this money and it’s not working,” or, “I’m having a hard time,” you have this whole group of people to call up to say, “Hey, Joe, I was here at one point, too. Stick it out. It’s worth it, and here’s how I handled the same problem that you’re facing.” It’s hard to put a price on that kind of support system you have both, you know, emotionally but also just intellectually figuring out and trial and erroring things through to, to get to that ultimate outcome, which is a business that does become passive, that gets you into a lifestyle that you’ve maybe only ever dreamed of before.

[00:19:58] Alex: That’s the value is it’s de-risked. You have a playbook. You’re starting three steps ahead of the game, and you’ve got a peer group that’s gonna be with you the whole way. 

[00:20:06] Joe: What’s the right way, if I invest money in a franchise, what’s the right way to think about my return on investment, Alex? 

[00:20:13] Alex: Yeah. So this is where I do start to look at it like an asset class, but that’s with the assumption of you or an operating partner that you find.

[00:20:20] Alex: So there is a caveat to what I said earlier. This can be passive out of the gate if you’re coming into the game with a cheat code, which is a pile of money or a war chest of money . And you can hire an operating partner, and you can afford to lose a little bit more money in the first year in exchange for your time to go focus on maybe your other investments or other businesses or family or whatever it may be.

[00:20:39] Alex: So it is possible to be passive out of the gate. But if it’s not, I look at this like, you know, what is this compared to a return on money in the stock market or into a real estate deal? And if you look historically, the S&P 500 is, you know, 10% typically on average, so 100K to the S&P, I’m making 10K a year, mostly passively.

[00:20:57] Alex: Uh, into real estate, you know, I’ll be happy if I make 12% to 15% IRR on a real estate deal. Franchise operators are upset if it’s less than 25%. So you’re- Wow … looking at two to three, sometimes four times the return on other asset classes that many of us are familiar with and, and used to. 

[00:21:16] Joe: But to be clear, though, in the first year, you’re also adding your time to that equation, which, you know, there’s a price tag on your time.

[00:21:24] Alex: Correct. And you, you do have to value that. I think franchising has, or business ownership in general, whether it’s franchising or not, has the most terminal value and escape velocity compared to any other asset class because you can compound adding more and more businesses. The outsized return that you get starts to compound faster, and then this exit value is one that I think it’s overlooked, and that is a franchise business sells for a multiple one to three times higher than an independent business, and you’re not gonna get that from a stock necessarily.

[00:21:53] Alex: The principle will be there, you know, still, but you might not have, again, this physical asset or business asset that you can package up and sell for some multiple of earnings that you’ve worked so hard with your time to build. 

[00:22:07] Joe: Man, and that’s an important thing that I often see ma and pa investors forget.

[00:22:12] Joe: I’ve seen so many businesses, well, I’m sure you have, too, I’m speaking to the guy that knows way more about this than I do, where they just close up shop. And you’re like, “What are you doing? There’s somebody that wants to buy this opportunity, and you’re just gonna close it down?” We had this awesome Asian food restaurant that just closed, uh, when Panda Express came to Texarkana.

[00:22:31] Joe: They just closed, like, “Yeah, we’re not competing. We’re cl-” Well, somebody’s gonna wanna compete. 

[00:22:35] Alex: Mm-hmm. 

[00:22:36] Joe: You might not get a huge pile of money, but having this sellable asset to go into retirement, I think is, is, is quite a big deal. 

[00:22:44] Alex: Yeah, you really need to find… And that is where the right brand can matter, the right location.

[00:22:50] Alex: There’s certain things that can lock an operator, again, whether a franchise or not, into a situation that is harder to get out of. But to your point, there is always someone that believes there’s a turnaround story, or they see a part of the business that the other, you know, previous owner might have devalued and just didn’t think was that important, that the new owner, you know, sees value.

[00:23:09] Alex: And another man’s trash is another man’s treasure. And I think some of the best resale opportunities are those that, they’re this diamond in the rough, essentially, where you have to do the search. You have to find the distressed asset. Every search fund person that I come across, they’re like, “Ah, it’s taken me three years.

[00:23:24] Alex: I haven’t found anything. I’ve been in diligence four times and the deals fall apart.” I’m like, “Yeah, because you’re trying to run this whole thing off of a spreadsheet and not accepting reality,” which is every deal has some hair on it. It’s which- Ah. Which type of hair do you c- can you tolerate- … is what, is, is what you need to figure out.

[00:23:39] Alex: And franchising is the same thing. It’s what are you good at, what are you bad at, and try to find the one that aligns with what you’re good at and doesn’t have a lot of what you’re bad at. 

[00:23:47] Joe: Yeah, trying to find that unicorn. Like, come on. 

[00:23:49] Alex: It doesn’t exist. I, I s- I can’t tell you the countless number of ETA search fund people that I meet that just blow through two or three years of time and someone else’s money if it’s a sponsored search- to look for this business where it’s like, “We- well, we want it to be doing 10 million in revenue with, you know, 30% EBITDA margins and no issues with it at all, and all the employees plan to stay for the next 20 years.”

[00:24:10] Alex: I’m like, “Yeah, if you find it, let me, let me know ’cause I want one of those too.” It’s just- 

[00:24:15] Joe: You gotta send them, you gotta have your team at Franzi send them some ruby slippers and have them click them together three times. Yeah. There’s no place like money. They just repeat that. Yeah. There are some numbers that are very important.

[00:24:27] Joe: Our stackers are numbers people. When you’re evaluating franchise, let’s talk about the hair. Like, what, what, what numbers specifically should I be zeroing in on when I’m starting my search? 

[00:24:38] Alex: Yep. So one of the most important documents or things to look at when you’re buying a franchise is called the FDD, and it’s as fun as it sounds.

[00:24:46] Alex: It’s, it stands for the Franchise Disclosure Document. 

[00:24:49] Joe: Sounds so fun. 

[00:24:51] Alex: And the FTC, the Federal Trade Commission, regulates franchising, so they require everyone to have this document. So it’s fairly standard, but it is 200 pages of legal jargon. Oh, man. So what we’ve done, and I know we’ll get into this later, but what we’ve done at Franzi is we’ve cleaned all these documents up, we pulled all the data out that is actually relevant to this diligence process, and we’ve made these kind of, you know, sexier Zillow-like brand profile pages that show you the revenue it can make, the cost to get into, how many stores have closed, what the royalties 

[00:25:19] Joe: are.

[00:25:20] Joe: This is like, this is like Morningstar with the mutual fund prospectus, just instead giving you the, the data so I can throw away that big thick book they send you. Yes. 

[00:25:28] Alex: Gotcha. That’s a great analogy. I’m gonna use that later, for sure. You’re welcome. I’m gonna borrow that. Thank you for that. But yes, it’s exactly like what Morningstar has done for these other long, arduous legal documents.

[00:25:37] Alex: Even within that, there’s certain numbers to look at. So let’s talk about that. Payback period to me is arguably one of the most important things, and a good franchise should pay back your initial investment in less than three years. A fantastic, you know, edge case is less than a, you know, a year and a half, two years.

[00:25:52] Alex: Five years is doable. It’s okay. Anything beyond that, I just would stay away from. It’s not worth the time and the energy to, to go do this. 

[00:25:59] Joe: Take you way too long to get your money back. 

[00:26:01] Alex: Yeah, and, and mind you, part of this is off of one unit. Some people might look at five years and say, “Hey, if I can parlay this into a system of 10 of these, and I’m starting to acquire some that are existing and I bolt them on,” that speeds this whole process up, and you get to scale faster, which, you know, brings better margin.

[00:26:17] Alex: And some of that economy is a scale that you get, and we’ll talk about some of these scalers, you know, later as well. There’s always an exception to the norm, but mainly I look for payback period. And then I look for u- uh, unit closures. So these FDDs are released every year with new updates on average unit volume, so average revenue per location, average cost to build one, how many units have opened in the last year, how many have closed.

[00:26:40] Alex: So if you start seeing a lot of units closing over the last few years, so if you’re listening and you look at an FDD or you go to Franzi and you look at these, look at not just the 2026, the most recent FDD, but look at 2025, 2024, 2023, and is there a trend? 

[00:26:54] Joe: See 

[00:26:55] Alex: the trend. Yeah. Are they opening? Are they growing, or is the system closing?

[00:26:57] Alex: If the system is contracting- There is a potential problem. Why is everyone getting out? Why is everyone shutting their stores down? Why are they closing? And a way that some brands hide things in this case is they’ll transfer these stores to someone else, sometimes themselves as corporate- Oh … because then it doesn’t show up as a closure.

[00:27:14] Alex: It’s a transfer instead, and that’s kind of easier to hide. So I look for things like that where you can really tell the health of the system with no hiding. I look for payback periods. You know, what’s this cost versus the average revenue of the system? I look at the top quartiles of revenue as well, if they sh- disclose it, and that’s where I can back into, do I think that I, as an operator, am gonna be a top quartile operator, or this market, will this market be a top quartile market?

[00:27:38] Alex: And then I can make a risk-adjusted decision on if I hit the average, is that likely? Is that enough economic upside to do or not? What’s the chance that I hit this lower quartile or upper quartile? Those are the two or three big areas I look at, and then I couple that with qualitative feedback from existing franchisees.

[00:27:57] Alex: Call as many as you can- 

[00:27:58] Joe: That was exactly where I was going next. You can call them. They will talk to you. 

[00:28:01] Alex: Yes. Yes. Many of them I’ve found, just like in entrepreneurship in general, franchising or not, if you reach out thoughtfully to someone with a good question, “Here’s what I’m trying to do. I’m betting a lot of my life savings, my family’s future financial health, my h- happiness as an individual on this decision.

[00:28:19] Alex: You’ve done it before. I really respect what you’ve built. Would you give me 30 minutes of your time for me to ask you would you do it all over again? What things to avoid, you know, to definitely do, not do, et cetera?” You will be amazed at how many people are willing to give you their time because someone did it for them, or they’ve been in the trenches now and they get how hard this can be, but how fulfilling and amazing it can also be, and they wanna tell you, you know, their story and, and, and be helpful.

[00:28:42] Alex: So I challenge anyone, again, listening, whether it’s franchising or just anything in life, reach out thoughtfully, and it’s amazing how giving people are with their time. But don’t, don’t mail it in with a, “Can I pick your brain?” You know? 

[00:28:56] Joe: Oh, please, God. Can I buy you coffee? As if my, my time is worth six bucks.

[00:29:03] Joe: Talk about the qualitative stuff. What type of training should I expect from the franchise? Or does this, does this differ across the vast spectrum of different franchises that are out there? What type of advertising support, you mentioned national advertising that I get, what, what are some of the, the standard, like, table stakes things that I should look for with almost any deal?

[00:29:24] Alex: Yeah. The issue is it does vary, right? Ma- mature brands are getting Super Bowl ads, and it’s benefiting the whole system. And, you know, some emerging brands obviously aren’t spending a couple million on a, a Super Bowl ad. So it does vary, but the table stakes is that they’ll have a brand fund fee which is going towards a marketing team, which as an individual, you know, Joe and Alex’s Gym, we probably don’t have a full marketing team, but if we’re an Orange Theory Fitness or we’re in Burn Boot Camp, now at least someone is coming up with social media posts, landing pages for a website.

[00:29:52] Alex: They’re doing SEO for us. We don’t have to learn any of that or, or know what that means even. And so, like, all of these kind of table stakes marketing things are happening for us in the background specific to our location as well as the brand nationally. So table stakes would be I’m getting landing pages, brand assets and collateral, a website, local social media, Facebook ads, creative done for me so that if I wanna spend on local Facebook ads, I can without having to design a bunch of things and figure out ad copy and all that.

[00:30:18] Alex: So all that’s done from a marketing perspective. Technology’s being either built or invested in, so same thing there. I don’t have to go build my own systems from scratch. They’re already provided. And then training, they’re walking in and saying, “Here’s how we find the right site if there’s a retail component.

[00:30:31] Alex: Here’s how we go to market and launch with a big splash. Here’s the playbook we’ve done 50 times that has guaranteed or at a high level of confidence generated X thousands of dollars the first few months, and the first few months are the most important. Here’s how we do it.” All the way to the training.

[00:30:45] Alex: You know, we mentioned some will be very hands-on. You’re shadowing in a store. Some people, like Chick-fil-A, they require six months of training where you actually work at someone else’s location for that long playing every role, and it’s very thorough. Others, it’s a week or two of training, and still pretty, uh, exhaustive, but not six months, more a few weeks instead.

[00:31:06] Alex: Yeah. 

[00:31:06] Joe: It’s interesting, though. You can see why they’re successful, you know? I mean, six months of training, you’re probably gonna succeed when you get out of that six months. 

[00:31:13] Alex: And they are an anomaly for sure. Chick-fil-A I sometimes argue is not even a franchise ’cause they take 50% of profits. Most franchises take s- four to 10% of revenue.

[00:31:24] Joe: That was my very next question. That’s it. So you- Yeah. So I may pay a lot. If I pay a lot, then you’re saying I need to expect a lot, and Chick-fil-A it sounds like rolls out the red carpet, helps you do everything, but also takes a big chunk of cash for it. 

[00:31:39] Alex: When you can get into a Chick-fil-A for 15 grand because they buy the building, they develop the land, they buy the land, they basically do everything You know, said frankly, you’re buying yourself a very high-paying job by becoming a Chick-fil-A franchisee.

[00:31:53] Alex: You can’t– Most people can’t open a second location. They’ve made a few exceptions for people, but most can only do one. But that one will pay you, you know, anywhere from half a million to a million dollars a year in, in profit as the individual. So- There are worse 

[00:32:05] Joe: jobs. 

[00:32:05] Alex: There are way worse jobs, but you’ve gotta work there every week.

[00:32:09] Alex: That’s the one where you’re not gonna get out of it. You have to be the GM, essentially, of that location mostly for the rest of time. Again, there’s exceptions where you can hire assistant GMs and start to take time off, but they really require you to be in that location running it 

[00:32:23] Joe: When we talk about rental real estate and long-term owning, uh, real estate, having three to six months of money that’s kind of in your operating till.

[00:32:33] Joe: You know, if somebody doesn’t come in, if the roof goes down, whatever it might be. How much money should the average franchisee expect to keep in their working capital fund? 

[00:32:44] Alex: Yeah, so most bra- and this is where it’s a little misleading. Most brands, and the FDD requires this, it, you know, tells you what three months of working capital should be.

[00:32:53] Alex: I tell people you should have six months or so of working capital in the beginning just because you’re getting off the ground, revenue’s ramping, you don’t know what kind of bumps in the night are gonna happen, and it’s good to have that, you know, six to even 10 months at times rainy day fund of getting through the first year.

[00:33:09] Alex: I can’t stress enough, that is the hardest part, but once you are through, business ownership, entrepreneurship is by far the most fulfilling thing that I’ve personally, you know, ever done. I mean, I have, you know, a 13-month-old that’s, that’s up there as, you know, 1A, and this, business ownership- … is probably 1B.

[00:33:25] Alex: So I’ll, I’ll correct that. But it is so rewarding the, you know, the customers you get to serve, th- this game that you get to play of growing things and working with customers, working with other vendors. Um, once you’re through the hard part, I don’t know, it’s, uh, there’s nothing quite like it. 

[00:33:40] Joe: What’s a disaster that you’ve seen?

[00:33:42] Joe: I’m sure you’ve seen this before, but somebody that didn’t do enough due diligence and it really came back to just smoke ’em. 

[00:33:49] Alex: Yeah, it’s… And this happens, and I think this is why franchising sometimes gets a bad rep, and again, part of why we’re trying to do Franzi, but it’s misaligned incentives or expectations is usually what is the root cause of some of these horror stories I’ve seen.

[00:34:02] Alex: It’s people that think it’s mailbox money and they’re gonna keep their nine to five. And again, some people can, if they are capitalized well enough, to go hire someone to replace the day-to-day training of new employees and getting the business off the ground or at least supplement it. It’s people who think they can launch it without that person and do it, you know, five hours on nights and weekends, and that’s enough time to, to get a whole business off the ground.

[00:34:24] Alex: And they end up getting burnt because their expectations were misaligned. They’ve invested all this money now. They weren’t willing to quit their job or, you know, create the time to go do this more, uh, seriously. And they’re in a really bad spot at that point because they can’t get the money out. The business they invested in is, is…

[00:34:37] Alex: You know, they might not own the building or an asset underneath it, and maybe they took out an SBA loan and they personally guaranteed it. Oh, yeah. Like, those are the horror stories where you’re trapped and you’re, you’re caught in a bad spot. The other issue I see is, you know, this world of business brokers- It’s the Wild West.

[00:34:53] Alex: There’s no regulation. You and I can become business brokers on this call if we want. We don’t need to be licensed. We don’t need to be approved by the state, and we take a 60% commission from the franchisor on- Oh my God … of the franchise fee. So it’s a very high payout with no coursework or licensure disclosure requirements.

[00:35:12] Alex: And so as you can imagine, that attracts a lot of bad actors, people who are fine saying whatever they need to say to convince someone to make this decision without really ensuring that it’s the right fit, that it’s the right level of risk, that it’s the right level of, you know, financial investment, that it aligns with their skill set and their goals, et cetera.

[00:35:29] Alex: They’re kind of just telling you what you need to hear. You do it, and then they take their commission and they ride off into the sunset with no recourse. We’re passionate about this because I think a lot of people have gotten burnt for th- that exact reason, and it’s why we’ve created Franzi. We thought the government’s gonna take too long to come figure this out.

[00:35:43] Alex: Let’s let capitalism do its thing, and let’s democratize access to all this data, match you directly with brands, cut the middleman out, and give you the tools to do the diligence you need to, as well as some kind of AI support to ensure this is really aligned with your skills and your risk tolerance.

[00:35:59] Joe: Yeah, let’s jump into it. Let’s talk about how that works, but before we do, I gotta play one more game ’cause, ’cause we play games here. 

[00:36:06] Alex: Let’s do it. 

[00:36:06] Joe: I would like you to say green flag, yellow flag, or red flag to each one- Okay … of these three things. All right? So Franzi says… I tell you, “I can keep my full-time job while running this franchise.”

[00:36:18] Joe: You say… 

[00:36:19] Alex: Red flag. 

[00:36:20] Joe: Red flag, yeah. The franchisor says I’ll break even in 12 months. 

[00:36:26] Alex: If it’s backed by the FDD, green flag. If there’s data and other franchisees verifying this, green flag. If it’s just like a flippant statement like, “Yeah, you’re gonna make all this money. You’re gonna be rich beyond your wildest dreams,” if it’s said like that, red flag.

[00:36:40] Joe: This is a big one that I’ll just ask you this way. I don’t need industry experience. 

[00:36:45] Alex: Yellow flag. Some people don’t. I mean, people are getting… Like, I’m getting out… Personally, I’m developing a bagel concept in the Midwest. I know nothing about making, steaming, and, you know, baking bagels, and making schmears.

[00:36:57] Alex: I’m not a sh- culinary person at all, but I know business, and I know I can scale this thing and hire people. And the brand, again, this is the cheat code of franchising, they’re giving me the playbook on how to bake them- Yeah … and steam them, and the, the schmear partnerships, and the, the marketing, distribution, all the stuff they’ve handled already.

[00:37:12] Alex: I just need to go run the play, and I can run the play. 

[00:37:15] Joe: That’s great. Much less than you’d need if you went off on your own, by far. 

[00:37:18] Alex: Mm-hmm. 

[00:37:19] Joe: I can hire a manager and be mostly hands-off. 

[00:37:23] Alex: Yellow flag. It’s possible, as I mentioned, if you can hire a good operating partner, you give him some equity, and you pay him, and you’re fine losing more money in the first year because you’re offsetting your time with a, a paid person.

[00:37:34] Alex: But if you just think, like, you’re not gonna be i- involved at all, zero, red flag, ’cause you still need to oversee that person and help with site selection and things like that. 

[00:37:42] Joe: I saw that here in Texarkana, Alex. We had a, um, we had a Steak ‘n Shake open up, and from the very beginning the owner was absent, hired the wrong GM from the very beginning.

[00:37:53] Joe: And even before the thing opened, I had heard… And I know nothing about any of this. So it’s just a guy who lives here in town who’s hearing about all of the inside problems this place and how troubled it was. This Steak ‘n Shake was maybe open for six weeks before it shut down. Wow. And, and it’s right along the highway.

[00:38:11] Joe: Beautiful place. I could not understand, understand that. W- we, we also had a Buffalo Wild Wings here, where the franchisee decided, and the guy in Grind writes about this with Big B Coffee, that every once in a while the franchisee goes, “You know what? I can get the pieces of this coffee or these wings cheaper on my own than buying it, you know, through the-” Yeah

[00:38:34] Joe: through the franchisor. In the case of Buffalo Wild Wings, the food quality went downhill quickly. And finally the franchisor found out and just stripped them of Buffalo Wild Wings. It was just… They, they, they were done. They violated the contract. But anyway, last one, the franchise doesn’t provide earnings claims.

[00:38:54] Alex: Green flag. Because they, they shouldn’t be promising things, and every owner is different, every location is different. And if, again, if a franchise says, “You’re gonna make a million dollars,” you know, head for the hills because it’s, it should be audited financials in the FDD, and you should be having conversations with other franchisees.

[00:39:12] Joe: The reason I wanted to talk to you so much was, A, the conversation that we just had, but I knew we’d have this type of conversation because I love what you guys do and the way that Morningstar helps me with my other investments. If I want to buy a franchise, I don’t have to read this huge document like you talked about.

[00:39:30] Joe: I may wanna read it later on, but, but I definitely wanna just get the data so I can begin comparing. Let’s talk about this. So I go to Franzi. Mm-hmm. How does it work? Can we dive into how you distill all this information down so I can very quickly look at option A, option B, option C, and, uh, compare and contrast them against each other?

[00:39:49] Alex: Yeah. That’s exactly right. So if you head to Franzi, it functions very similarly to Zillow in that you can set all sort of parameters. So out of the gate, you can do a free-form search. You don’t have to give us any information about yourself if you don’t want to. If you wanna just search and say, “I have less than, you know, 200K to invest.

[00:40:05] Alex: I am looking at these types of concepts. These are my backgr- this is my background and my skill set. I’m good at sales and, you know, managing a small team,” we’ll then start to show you concepts that are available in your area that fit your investment criteria, that fit your risk tolerance, and that maybe match the skill set that you have.

[00:40:20] Alex: And so you can start to then select multiple, show them side by side, what would each one cost me? What’s the potential revenue of each? And then you can go as deep as you want, pull up sections of the FDD on like a quick viewer, so you’re just getting the parts that matter. You can see who their executive team is and their bios.

[00:40:35] Alex: You can see if there’s any ongoing litigation or, you know, bankruptcy. You can see the royalties, the investment costs. I mean, everything that you wanna see is there. And then if you want one-on-one support, we actually give free coaching with folks that have 10, 15 plus years of experience as a franchisee themselves, you know, currently or previously and have sold theirs, or have worked within franchising and has…

[00:40:59] Alex: have run this process for that same time. All that coaching is free because Franzi monetizes on loans that we originate. So if you have… were to buy a business and borrow money, we have tons of lenders we work with, and we get origination fees. We also get paid a flat platform fee from brands regardless of their franchise fee.

[00:41:17] Alex: So we’re not incentivized to promote any one brand over the other, ’cause we get paid the same from each brand, regardless of whether you buy a concept or not, or which concept it is or not. So we give that coaching ’cause we know this is a huge life decision, we know it’s intimidating, and we want people to be set up for success so that they don’t get burnt picking the wrong brand or being mismatched on expectations and alignment.

[00:41:38] Alex: ‘Cause I think that’s the core issue people get burned is improper expectations or they were misaligned, you know, from the beginning, from a skill set or a risk perspective or a financial perspective with the brand they ended up buying. 

[00:41:50] Joe: Yeah, I saw that, uh, reading this just fascinating book I can’t stop talking about.

[00:41:55] Joe: Like, the number of people that come and they wanna start a, a coffee franchise. They know nothing about coffee, which is fine, to your point. They don’t like to wake up early. You know? They don’t see themselves out talking to… They feel like it’s beneath them to be out in front of the customer when, especially when you start out, that’s right where you have to be.

[00:42:13] Joe: So knowing those things ahead of time. I love the fact that there’s 9,000 different opportunities out there, and you can distill it to the ones that really fit you without wondering, you know, “Am I leaving some stuff out?” Speaking of that, you mentioned how you’re paid, that you get paid by, by different brands.

[00:42:30] Joe: So to clarify, brands pay you a set fee just to be listed on Franzy so they get a chance to compete. 

[00:42:38] Alex: Yeah, the, we’ll do a, an element of that, but then also a, call it a success fee. So if Joe were to buy a business, that brand pays us a flat dollar amount. So similar to what they would a broker, but instead of 60%, it’s about half of what a broker would charge, and it’s a flat dollar amount across all brands.

[00:42:53] Alex: So we and our team don’t really have a preference on which brand it is. 

[00:42:58] Joe: But you’re getting a brokerage commission, but you don’t have to sit here and fill my head full of a bunch of crap to get- Right … yeah, ’cause, ’cause if somebody buys the one that’s best for you, it’s better for you, and it’s better for me.

[00:43:11] Alex: Yes. And so our, my goal in anything I’ve ever done in business is: how do you create a win-win-win where everyone’s happier? The brand is getting a great fit because it matches what they’re looking for as well, ’cause the brands also give us what we call the perfect prospect. They’re giving us, what does that person look like from an operational skill set?

[00:43:27] Alex: What level of experience do they have? What risk tolerance do they have? What financial resources do they have? And then we’re pairing that using AI with Joe also shared as he created an account at this point what his risk tolerance is, and we ask a number of questions to distill that. You know, if your friend jumped off of a 20-foot, you know, cliff into a lake, would you go as well, or would you be the first one to jump, second, or th-?

[00:43:47] Alex: You know, we ask kinda questions like that to see what kinda, like, risk-seeking personalities people have, what financial resources do they have available, risk tolerance, and then goals and, and interests again. And we start to pare all that down. So the brand wins ’cause they get a good operator that fits and is aligned with them.

[00:44:00] Joe: Right. 

[00:44:00] Alex: The investor or the business owner is getting into the right fit as well, and then we, you know, get to win as a participant in making this match happen. So everyone’s better off. That’s the goal. And so far it’s, it’s, it’s been working really well. We’ve helped hundreds of people become entrepreneurs, either for the first time or the 10th time, and some pretty cool success stories of, you know, people coming back a year later, a year and a half later, and being like, “This is…

[00:44:23] Alex: I’ve made it through that tough first year, and this is like, why didn’t I do this 10 years ago?” kind of. 

[00:44:29] Joe: We me- we mentioned with the Chick-fil-A, they will only let you buy one. Most franchises aren’t like that. They want you to scale and expand. Is it, is it better though, especially if you’ve never franchised, I gotta imagine it’s better to start with one, see how it goes, get your sea legs, and then expand, versus trying to buy three, four, five areas at one time?

[00:44:52] Alex: Yeah, 100%. My advice to people is just get in the arena, get in the game. ‘Cause once you’re in, you also… Other brands and other f- operators look at you as one of them, whether you have one or 10 or 50. You’re now in the, kind of the club, if you will. It’s like you get what it’s like to be an owner, an entrepreneur, someone operating a business day to day, and with that comes access to other opportunities.

[00:45:15] Alex: Acquisition opportunities start to present themselves. New brands coming up start to present themselves. And let’s say you buy one, but you have aspirations to get to five. You can buy the rights to three or four up front, and basically reserve that territory. 

[00:45:30] Joe: Like an 

[00:45:30] Alex: option. The worst… Like an option. The worst thing that happens is you’ve s- you’ve shelled out 20K, which I don’t wanna, you know, sniff at, but in the grand scheme of things, 20K, 30K even for that option, if you decide two years from now to open a second one, a third one, is there.

[00:45:43] Alex: And if you don’t, you’re out 20 or 30K, but your business, your first one ideally is profitable enough at that point that it was a drop in the bucket in the grand scheme of things. But you at least protected your territory up front in this brand that you had a lot of conviction and belief in. 

[00:45:58] Joe: Last question.

[00:45:58] Joe: How much does it cost me to create a Franzi account? 

[00:46:01] Alex: It’s free. 

[00:46:03] Joe: Awesome. We will link to Franzi in our show notes, Stackers, so that you can get started on your franchise journey. I know we’ve got so many people that are franchise curious. We get questions every year, and we haven’t covered this in so long, and you’ve covered so much ground.

[00:46:17] Joe: I hope you’ll come back and help us as we mature into this game, Alex, ’cause this has been a wealth of information. Thank you so much. 

[00:46:24] Alex: Yeah. Thanks for having me, and would, would be happy to come back any time. I mean, we could go so deep in so many different directions and talk about specific brands and how to underwrite a deal and how to look at an FDD or what do each of these numbers mean, you know, side by side.

[00:46:38] Alex: So thank you for having me, and would love to do it again in the future.

[00:46:45] Doug: Hey there, Stackers. I’m Joe’s mom’s neighbor, Doug, and after all that talk with Alex about franchises, it’s become clear to me that location matters. And speaking of location, on this day in 1963, the US Post Office introduced zip codes, which raises a question I’ve had for years. If zip codes are so important, why does every piece of mail mom gets still somehow arrive even though it’s only addressed to That nice lady with the weird son and his friends in the basement?

[00:47:14] Doug: It’s just, I don’t know how this stuff’s getting here. Here’s today’s question. If the Z in zip stands for zone and the P in zip stands for plan, what does the I stand for? I’ll give you a hint. The US Postal Service created zip codes to find a better way to deliver mail. So what is it? I’ll tell you right after I go improve mom’s zip code.

[00:47:40] Doug: Apparently, it’s been the same one for years. Yeah, you’re welcome, Ma.

[00:47:50] Doug: Hey there, Stackers. I’m guy who people have compared to a certain postal worker. I tell ya, Normie. That guy. And guy who everyone loves down at the Sizzler, Joe’s mom’s neighbor, Doug. Today we’re talking zip codes, and I asked you what ZIP stands for. If the Z is zone and the P is plan, what’s the I? Well, the US Postal Service was trying to find a more efficient way to deliver mail, so they were looking for a zone improvement plan, which is ironic because that’s exactly what Mom keeps calling my future move-out strategy.

[00:48:24] Doug: “Doug, what’s your zone improvement plan?” “Well, first I’m gonna finish the leftover Sizzler coupon book, Ma.” Thank goodness I got 19 of those left, which I may be able to stretch out until Thanksgiving. By then maybe she’ll have forgotten this whole thing about me moving out. One thing I haven’t forgotten, and that’s how to segue smoothly back to Joe and OG.

[00:48:45] Doug: See, look, it just happened. You didn’t even know it was happening. That’s how smooth it was. 

[00:48:49] Joe: Thank you, Doug. Hey, let’s do a headline. 

[00:48:52] headlines: Hello, darlings. And now it’s time for your favorite part of the show, our Stacking Benjamins headlines. 

[00:48:59] Joe: Today’s discussion comes from The Wall Street Journal. This is a piece by Rachel Wolff, which is titled These Parents Are Buying Homes for Their Kids, with Strings Attached

[00:49:08] Joe: It looks at this growing trend, parents helping adult children buy houses in a housing market that’s, of course, becoming pretty difficult to navigate on one’s own. Doug, if somebody offered to buy you a house tomorrow, would you take it? 

[00:49:21] Doug: Ooh, offer to buy me a house Yeah, I’d flip it 

[00:49:27] Joe: You, you’d, d- Yeah … you would take it, you’d sell it, and keep the cash?

[00:49:31] Doug: Yep. Absolutely. Arbitrage baby. 

[00:49:33] Joe: What if they bought you a house, but they actually also got a vote on where you lived or the stipulations around living in it? 

[00:49:42] Doug: See ya. 

[00:49:43] Joe: You, you wouldn’t do it? 

[00:49:45] Doug: Oh, God, there’d be a smoke trail behind me. 

[00:49:48] Joe: Let’s start here because I think a lot of us automatically assume that this is a bad thing.

[00:49:53] Joe: Of course, Doug does. Uh, from this piece, Rachel writes, “In Savannah, Georgia, Jessica and James Torrance knew their days of squeezing their three kids into a 900 square foot apartment were numbered. James is a self-employed truck driver. Jessica’s a stay-at-home mom. But after looking at the homes they could afford in their budget, which topped out at $250,000, they figured they’d just move to a bigger rental, until James’ mom stepped in.

[00:50:17] Joe: Louise Baker had already been coming along to listing appointments, and was equally unimpressed by the dilapidated options and struggling school districts available, so she started- 

[00:50:27] OG: Helicopter parent much? 

[00:50:29] Joe: Right. 

[00:50:30] OG: Get out of my world, Mom. Like, what the heck? 

[00:50:32] Joe: Well, hold on. She started sending them listings in the 300s, and she actually kicked in- Mind 

[00:50:39] OG: your business, devil woman

[00:50:41] Joe: to help them buy a house. She contributed $155,000. They bought a house for 375,000 bucks. They have a four-bedroom house. Jessica says, “Never in a million years would we have been able to do this on our own.” So is it helping your kids, OG, what building wealth is all about? 

[00:51:02] OG: I mean, yeah, that’s my goal, is to help my kids, uh, be financially successful.

[00:51:06] OG: But sometimes the lesson is you can’t afford that, or you should move to a cheaper area to be able to pull off what you want. And I’m all for helping the kids with the house down payment, too. I get it, that it’s more expensive than, you know… People say, like, “Well, you know, it’s more expensive than it used to be,” and stuff like that.

[00:51:23] OG: But man, like, having, having, having my mom ta- or my, worse, my in- mother-in-law tagging around to my home, uh, home, uh, uh, how miserable was that for the real estate agent? Like, who am I dealing- who’s the customer here? I think this setup sounds a lot different than your parent, like, literally saying, “Hey, I know you guys are shopping for a house.

[00:51:45] OG: If there’s anything we can do to help, you know, I know it’s a little pricey, let us know.” And then have the kid come to Mom and Dad and say, “You know, we looked and, you know, our budget’s really only, like, 250K.” 

[00:51:56] Joe: But that’s all she did You 

[00:51:57] OG: know? And, and there’s- 

[00:51:58] Joe: That’s all she did … 

[00:51:59] OG: it said that she went to the listing agents and then sent her daughter a bunch of houses that she should go look at.

[00:52:04] OG: That is not 

[00:52:04] Joe: just- Well, she did, and then, and then she paid the difference. The daughter still chose the house. 

[00:52:09] OG: Oh, 

[00:52:09] Joe: okay. Sure she did. The daughter still chose the house. 

[00:52:10] OG: Sure she did. Yeah. Yeah, okay 

[00:52:14] Joe: I don’t know. No. W- well, okay 

[00:52:16] OG: No, I’m not, I’m not… This is the worst version of this, uh, that I’ve ever heard in my life.

[00:52:20] Joe: A question here is what counts as strings? ‘Cause listen to these strings, guys. You guys don’t like those strings. I don’t know. It sounds to me like everybody’s happy. The family of, the family seem- Oh, 

[00:52:29] OG: yeah, I wanna ask the husband how happy he is. Not under oath, by the way. Like, two bourbons in- … like on the back patio at my house.

[00:52:39] OG: Couple cigars, and then you just go, “Hey, you know, by the way, what’s the vibe on that house thing with your mother-in-law?” And then there’s that long pause, and then he, like, does, he takes his glasses off and just kind of goes, “I mean, we’re grateful.” 

[00:52:53] Doug: Or the high-pitched, “It’s good. It’s good, you know?” 

[00:52:56] OG: Yeah, I mean- “It’s all good”

[00:52:57] OG: it’s, it’s fine. Yeah. We’re super lucky. 

[00:52:59] Joe: Here’s a different set of strings. Listen to this one. There’s a lot to love, Rachel writes, about Jennifer Gross’ new Phoenix home. The stucco four-bedroom with a clay-tiled roof has a three-car garage, overlooks a park, and comes with a brick border pool and a hot tub.

[00:53:11] Joe: It has arched entryways, floor-to-ceiling windows, and a second-story balcony. The best feature? Her dad bought it for her. After years of annual moves in search of lower rent, Gross had ended up with a roughly two-hour round-trip commute to work. Her father stepped in and offered to buy her a house. She gratefully accepted.

[00:53:31] Joe: “I save and I can afford a couch but I can’t afford a house,” said Jennifer, adding that she’d never accepted financial help from her parents before, aside from staying on their cellphone plan. “What am I working for day after day?” Buying a home’s always been a milestone of financial independence. Okay, Jennifer’s dad, Mark Gross, had a spending limit of 700,000 and one condition.

[00:53:56] Joe: One condition. She had to stay within two miles of where he lived. The house they closed on last month was 625,000 and an eight-minute bike ride away. The mortgage is in her father’s name, and Jennifer pays him 2,200 a month to cover a portion of the payments. He bought her sister, Jessica, a house nearby a few months earlier, fulfilling, here’s the string, fulfilling their mother’s dying wish that the family live close to each other.

[00:54:26] OG: I mean, again, this is back to here’s, here- th- this sounds a lot like, “Here’s the budget, here are the parameters, go shopping.” Okay, cool, right? If you’re financially able to pull that off for your kids or people around you, so be it. That sounds materially different than, “I’m going on the listing appointments with you, by the way, and here’s a, here’s a couple houses in the neighborhood.”

[00:54:47] OG: Like, okay, I got it. I would submit to the court, like, I didn’t hear anything about kids, spouse, future family goals, any of that sort of stuff. What do, what do we need? Four bedrooms on a park with a giant pool, over- with a balcony. Like, what, what are we doing? There’s a reason that rentals exist. It’s because that’s where you’re supposed to be when you’re single, and you don’t have any money, and you don’t have any things tying you down.

[00:55:14] OG: So you don’t 

[00:55:15] Joe: like- 

[00:55:15] OG: And if your commute’s two hours, then get a frigging job closer to your work or your, your house, or get a work closer to your house. Like, I mean- 

[00:55:23] Joe: You, you don’t like the parent providing the down payment at all 

[00:55:27] OG: I’m not saying that at all, no. I mean, I have it in my plan that I want the flexibility to be able to do it because like deceased mother, like I would love for my kids to live across the street, you know, when they grow up because I want my grandkids to live across the street ’cause I think that would be super convenient for you know who?

[00:55:44] OG: Me. Me, me, me, me, me. This is all about me. But you know what? If my kids goes, “But Dad, the job’s in Austin,” I’m not gonna be like, “Well, eh.” 

[00:55:55] Joe: I think the kid could’ve said no. In that case, the kid could’ve said no. 

[00:55:58] OG: Of course she could say no. Yeah, of course she could’ve said no. Do you think Dad would’ve said, “Well, all right.

[00:56:04] OG: Here’s the 700 grand anyway. I get it. Your career is where it is- No … and whatever”? 

[00:56:07] Joe: No. 

[00:56:08] OG: No. So who’s this about? 

[00:56:10] Joe: It’s about him. 

[00:56:12] OG: Damn right 

[00:56:12] Joe: it is. Well, it’s, it’s- It’s bullshit … about him or is it about deceased mom? 

[00:56:16] OG: Okay, he’s- 

[00:56:17] Joe: It sounds like it’s about deceased mom. 

[00:56:19] OG: Okay, fine. Maybe, to some degree. 

[00:56:22] Doug: Yeah, I’m with OG on this one.

[00:56:24] OG: But honestly, if you have the financial wherewithal, like I just got done saying, and Joe, your kids are spread hither and yon, right? Like, do you have a desire for your kids to live near… Like, if there was a perfect scenario and your kids could live in Texarkana, wouldn’t you take that? 

[00:56:36] Joe: No. No, I’m kidding.

[00:56:40] Joe: Who do you think kicked ’em out? 

[00:56:42] OG: Yeah. No, you would. 

[00:56:44] Doug: And- Joe just, Joe just threw up in his mouth a little bit. 

[00:56:47] OG: Next you’re gonna tell me I gotta live in the same town as my mother-in-law. You know? So again, I think if you call it the way it is, which is this is more for his personal satisfaction, which is great, but I would also say like, all right, so you got three-quarters of a million lying around.

[00:57:01] OG: Like, you can kinda travel, you can kinda do your thing, but now what happens? Like, what are the downstream effects of this? Now my, my job search, my career has to be within this radius- Yeah, right … because I can’t let Dad down because I can’t let Mom down because, you know, Mom said she really wanted this and my sister lives across the street, and that’s really cool too.

[00:57:18] OG: I mean, Mom really in some 

[00:57:19] Joe: ways, M- mom in some ways cursed them with that. 

[00:57:22] Doug: It’s rich people passive aggressiveness. 

[00:57:25] OG: I don’t know. I mean, again, I would love the ability to help my kids out. I would love to be in the financial spot to be able to say, “Hey, I get it. You live in Chicago, and buying a house in Chicago is more expensive than buying one in Columbus, Ohio or whatever” maybe not, but y- some, you know, some different town, and it’s like, yes, I want my kids to be comfortable and my grandkids.

[00:57:46] OG: I hope that I don’t have the same me-isms that I’ve just heard these last two. 

[00:57:51] Joe: Okay, so let me give you some scenarios. Parent provides the down payment. You, OG, provide a down payment for one of your kids on their house. Do you get a key to the house because you gave the down payment? 

[00:58:03] OG: I mean, not unless they wanted me to have one.

[00:58:05] Joe: You’re buying the house. 

[00:58:07] OG: You said I’m getting the down payment, but- 

[00:58:08] Joe: No, no, no, no, that was option one. Okay. 

[00:58:10] OG: Oh. Oh, sorry. Okay, I gotcha. 

[00:58:12] Joe: Yes. Uh, 

[00:58:12] OG: sorry. 

[00:58:13] Joe: That was scenario number one. You’re like, “No.” Scenario number two, you buy the complete house. Do you get to weigh in- Mm … on whether you not, or you like the neighborhood that they’re moving into?

[00:58:25] Joe: ‘Cause that’s what the mom’s doing there 

[00:58:27] OG: Well, I can tell you how I did this for my mom. I bought the house and went, “Here you go.” But- “

[00:58:34] Joe: You’re gonna 

[00:58:34] OG: live 

[00:58:34] Joe: here” … it 

[00:58:36] OG: wasn’t… Yes, but it wasn’t, it wasn’t a hard sale, let me put it that way. Like, it was, it was a noticeable upgrade and- 

[00:58:43] Doug: But it was, but it was your investment- 

[00:58:46] OG: Mm-hmm

[00:58:46] Doug: and so you’re gonna choose the best thing you can for your investment, and then you made an offer to say, “You can live here if you want to.” Now- 

[00:58:54] OG: Yes. I mean- … it’s not a big town … basically I said, “Here’s what I’m gonna do. I’m doing this. You can participate in it. You can be the renter in this house for $0 or, or I’ll rent it to somebody else” I think 

[00:59:03] Joe: this is very much what mother-in-law was doing with the first group that we talked about.

[00:59:07] Joe: Very much the same thing. 

[00:59:09] OG: Okay. 

[00:59:09] Joe: Very close. Scenario three: You cosign on the mortgage. 

[00:59:15] OG: Never would do that, but go on. 

[00:59:16] Joe: Okay. Well, well, then we’ll skip it- Yeah … because I think, I think that’s an important lesson right there. Don’t do it, right? So I’m gonna skip that scenario. 

[00:59:22] OG: Yeah. Never, never, never, never, never, never cosign.

[00:59:25] OG: Never, never. Right. Never, ever, ever, never. Never, ever. “But it’s my kid. It’s my best friend. It’s my wife.” No, do not frigging do that. 

[00:59:33] Joe: You give the money- 

[00:59:34] OG: Okay, maybe your wife. 

[00:59:35] Joe: You give the money. The kid remodels … The kid remodels the kitchen, and it’s all in Ohio State colors 

[00:59:45] OG: Yeah. They just, we just don’t go there for Thanksgiving.

[00:59:48] Joe: We just- So … 

[00:59:48] OG: never 

[00:59:48] Joe: talk to that kid again. 

[00:59:49] Doug: Wow. There might be some disownership. I mean, I w- Maybe like cut you 

[00:59:52] OG: out of the will … I just don’t even disown them. I just, you know, I’m just not gonna go there ever. Ohio State. Like, I mean, honestly, William asked that. He goes, “Dad, full ride to Ohio State ’cause I’m really smart, or I gotta pay the full tuition at Michigan out of state whatever, and you’re paying.”

[01:00:11] OG: I go, “Michigan, obviously.” He’s like, “Okay, I only apply to Ohio State and I get a full ride, and I’m…” Or, or he only applies to Ohio State and he has to pay. I’m like, “Well, then you’re paying for college on your own.” You know? He’s like, “Well, you’re paying for Alex’.” There’s- I go, ” ‘Cause he has not acted like an idiot.”

[01:00:31] Doug: He heeded his upbringing. 

[01:00:33] Joe: Yeah. But this is actually super enlightening because I think that this is not a real question about houses. I think this is actually a question, and I love, I love that he brought this up about the Ohio State thing because what he’s doing ahead of time I think is defining expectations, right?

[01:00:48] Joe: And I think that if I’m going for a house and all of a sudden my mother-in-law or dad includes themself on that and tries to barge their way in, I think that’s a pretty unhealthy thing. It 

[01:00:59] OG: feels gross, right? 

[01:01:00] Joe: Mm-hmm. Yes. But if I’ve discussed with Mother-in-law or my dad ahead of time what I need, what the boundaries are, what the ownership is.

[01:01:08] Joe: How much of, uh, this Ohio State diploma am I gonna own, Dad? Yeah. Like, that is that’s a super conversation to have ahead of time. 

[01:01:15] Doug: I am really, really strongly guessing that some of our younger stackers listening right now, or anybody younger presented with this hypothetical scenario, is gonna say, “You don’t understand how expensive it is.

[01:01:30] Doug: It’s our only way that we’re gonna be able to get a house is if my parents contribute a down payment or buy it for me- It’s almost like- … or something like that … 

[01:01:38] Joe: come work here with these golden handcuffs. 

[01:01:40] Doug: That’s it. Or- That’s it … don’t come work here. And I just don’t- Like- … I don’t th- I think there’s so much negative media.

[01:01:46] Doug: Some of it is real in the sense of, yes, it is a bit more expensive now, a bit more expensive now than it was. They feel like, “I have no other options. I have to take these golden handcuffs.” I think you better think long and hard about it because after the initial excitement wears off after a year or something, those handcuffs start to chafe.

[01:02:06] Joe: OG comes down in his tighty whities to grab some Cheetos in your house. Just- Yeah … not good. It’s 

[01:02:13] OG: happened. I mean, can you imagine? ‘Cause you know that that would come out in frustration, right? So your mother-in-law has, like, 40% of the down payment on your house, and you guys decide to go with the- tile backsplash instead of the stick-on tile instead of the, you know, whatever, and something chips off, and it’s like, “I would have never done that,” you know?

[01:02:34] OG: Or, “Why did you- Yeah … do this to my house?” Yeah. Like, in a, in a fit, whoa, in a fit of rage. 

[01:02:39] Doug: Well- 

[01:02:40] OG: Oof … 

[01:02:40] Doug: and even if you have none of that, it’s, I think it’s also, uh, what Joe was talking about, of now you feel constrained. Your life options- Yeah … and choices are a little different. I have to get a job here. Yeah.

[01:02:54] Doug: Like, you know? It, it changes- Well, how do 

[01:02:55] Joe: you handle this, then? How do you handle it? Do you, OG, is it kind of like William talking about Ohio State? I mean, to be… I- is, is it, “Hey, listen, I would love you to help me with the house, but here’s gonna be the boundary”? 

[01:03:08] OG: I mean, okay, first of all, the stones to go to your parents and be like like, “Hey, I need you to float me 150 grand.”

[01:03:15] OG: I know. So, I mean, so that’s, that, to me, that doesn’t even enter my consciousness of, like, being able to, like, do that. Well, let’s say they offer. 

[01:03:21] Joe: Let’s say they offer. But, 

[01:03:22] OG: but yeah, so listen, here’s how I hope this goes with my kids. I hope that we have an open relationship when it comes to what’s going on in their world money-wise, within the bounds of what they feel comfortable sharing, and I hope it comes up, and they say, “Man, hey, you know, we’ve got the two kids now.

[01:03:38] OG: We’re outgrowing the apartment. We’re really looking for a house in such-and-such a neighborhood, but man, are they expensive.” And I hope if we’re financially able to do that, I could say something like, “Oh, well, Mom and I have talked about it,” or just take that all in, bring it to Alyssa, and say, “Hey, this is what I’m thinking.

[01:03:53] OG: I worked it in the plan. I think we can help. I think we can give them 100 grand,” you know, whatever, right? I would love to be able to come back to my kid and go, “Hey, Mom and I talked about it. We’d like to help you with a gift, you know, as you guys are searching for it. Here’s what we can help you with. I don’t know if that gets you all the way there.

[01:04:06] OG: I don’t know if it gets you part of the way there, you know, but this is what we’d like to be able to do,” and shut my frigging trap after that, because it’s a gift, right? If you’re gonna do a gift to your family, and we’ve talked about this on other shows about, like, lending money to your family. 

[01:04:19] Joe: Sure, 

[01:04:20] OG: yeah.

[01:04:20] OG: Don’t lend money to your family. Frigging give it to them. And if they pay it back to you, awesome. But don’t… You know? Like, how awkward is the, you know, Christmas dinner when your sister owes- So bad … you 1,500 bucks, and you’re like, “Oh, so your kid got a new Xbox for Christmas, huh?” 

[01:04:34] Joe: Well, let’s put it on the other side.

[01:04:36] Joe: You’re the recipient. 

[01:04:38] OG: Yeah, and they judge everything, and you, and you feel you’re being judged for every decision 

[01:04:41] Joe: you 

[01:04:41] OG: make. 

[01:04:42] Joe: No, no, no, no. No, no, no. I wanna ask you a, a question on the other side. You’re the recipient, and Doug’s gonna loan you the money, but he has the strings attached. What do you say to that, OG?

[01:04:51] Joe: Like, as the recipient- I mean- … do you, do you say no? Do you go- Yeah … “Yeah, hard pass”? 

[01:04:56] OG: Well, I mean, I wouldn’t be that about it, but I- … prob- well, I mean, I would be. You totally would be, dude. But I, I mean, I would be. Be like, I’d just be like- You 100% would … “No, I’m good, bro.” Yeah. I, I think, I think, you know, if you’re 30, and, you know, there’s all these requirements, I would say, “Well, you know, that’s a really generous offer, and, you know, if we can find, if we can find the right thing that puts us in that neighborhood, boy, we’d s- really strongly look at it.”

[01:05:23] OG: I don’t know. There’s nothing wrong with going slow with this. I feel, a- and this is gonna sound like old man yelling at cloud for the 30-year-olds, the, “You don’t understand what it’s like to be us.” It’s like, well, I do. We were all there at one point in time, and we all have our unique stories of struggle.

[01:05:38] OG: But I feel like more and more of this conversation around housing is, you know, I can’t afford the house that my parents bought last, first It’s like, and, and my kids have said this to me. They’re like, “I know what your house is worth. I can look it up on Zillow. How do I afford this house?” And I’m like- You don’t

[01:05:58] OG: “You don’t. This is the last house we bought, not the first. The first one was this really tiny one, and then the second one was a little… And then we bought, and then we rented an apartment for 15 months after we had owned two hou-” You know what I mean? Like, like, it was a different path to get to this. It’s not like you don’t get to the big giant golf course pool house first, generally speaking.

[01:06:17] OG: Um, so I feel like, I feel like some of the narrative is around, like, you know, “Nobody can live in that neighborhood. It’s too expensive.” It’s like, well, yeah. Yeah. 25-year-olds generally can’t. Of course not. 

[01:06:27] Joe: Well, no, in this case, that family was considering just a bigger rental OG for their budding family, so they weren’t trying to, you know, get ahead of their skis.

[01:06:37] Joe: They knew the size of their skis. Yeah. Then mom comes along and goes, “Hey, uh, I’ll help you, I’ll help you look at these.” Well, 

[01:06:43] OG: and is, is homeownership, you know, all it’s cracked up to be? I mean, we talked yesterday about, or, uh, Monday rather. Uh, was it, it was a quiz question. Some- Yeah, it was … some- somebody said something about, like, housing costs, and it was like, you know, like, that’s a solid 1% of the value of your house, you know?

[01:06:58] OG: I think that’s the other mistake people make is they look at this rent, and y- you know, you, you hear this, right? Rent is throwing money away. People say that. That’s a phrase. But when you own a house, you can’t compare principal and interest on your mortgage to rent because your principal and interest plus taxes, plus insurance, plus upkeep, plus it’s bigger, right?

[01:07:20] OG: Because, you know, this person moved from a 900 square foot apartment to a b- so you have more heating and cooling. You have more consumables in terms of, you know, whatever. It takes longer to clean. Like, there’s just more and more stuff that goes into that that’s not part of that, like, rent is 2,500, my housing payment’s 2,500.

[01:07:37] OG: I can just swap that over, you know? Um, cost of capital that you gotta outlay. You gotta put some money down. In this person’s case it was mom’s money, but maybe they put some down, that that money is now out of the system, right? You, you’re not, like we talked about y- on Monday, you’re not counting that as part of your retirement anymore.

[01:07:55] OG: You had 100 grand in your brokerage account. Now you have zero in your brokerage account and 100 grand in equity in your house, but that doesn’t turn into retirement money, generally speaking. So there’s some other downstream things here, and there’s more and more people now that are just saying, “You know what?

[01:08:09] OG: Renting’s not awful.” Grant Cardone pr- primarily. 

[01:08:14] Joe: I think that’s a great place for us to wrap it up. I would love to hear, Stackers, what you think about this, what you, uh, w- i- if you’ve been in on these discussions, but I think it is healthy- Hate mail 

[01:08:24] OG: at OG at Stacking Benjamins. Well, I, 

[01:08:26] Joe: I don’t know that there…

[01:08:27] Joe: I don’t think there’s gonna be any hate mail ’cause I think we came- There might be a few … down on having the discussion- Yeah … ahead of time, no matter what your feelings are. You know what? If, if, if mom’s dying wish was for you to stay close and dad’s willing to do it, you wanna live in that house, you’re able to be close to work, and it works out for everybody, fantastic, as long as you’re all on the same page.

[01:08:47] Joe: That’s- You know, where I, where I come down. But the handcuffs, do you want them? Uh, love to hear everyone’s take. There’s a time 

[01:08:53] OG: and a place for handcuffs. 

[01:08:55] Joe: Well, regardless, send me… Either send me your thoughts, joe@stackingbenjamins.com, and we’ll chat about it here or in The Basement Facebook group. Love to see you there.

[01:09:06] Joe: If you’re not in our Facebook group, The Basement, come join. The water’s warm. We have some great discussions, like this one. Uh, and to get there, stackingbenjamins.com/basement. But I think, uh, this is really not about, uh, renting versus buying. This is definitely about healthy money conversations and having them ahead of time.

[01:09:25] Joe: All right. Let’s, uh, move into where we don’t talk about financial success. We talk about the people who are doing things- Yeah … successfully. And we got some groups around the country, Doug, doing some pretty kick-ass stuff. 

[01:09:40] Doug: Well, yeah. There’s two things I wanna talk about, I would say both related to one of our groups.

[01:09:44] Doug: We have amazing Benjamins After Dark groups around the country. Twin Cities, and Minnesota in general, is… They’re just, they’re killing it right now. Uh, every time I see a picture of their group, it just gets bigger and bigger. I think it looked like there were at least 25 people at their last meetup. And it was so good that one of the people in attendance, uh, David, wrote a blog post about it.

[01:10:07] Doug: And- So 

[01:10:07] Joe: neat … 

[01:10:08] Doug: it was a… I mean, it’s a great piece of writing. Um- It’s their first 

[01:10:11] Joe: time going to an event. 

[01:10:13] Doug: Right. It kinda talks about what it… Like, nervous. He, he and his partner went, and they were nervous on the way there, weren’t expecting. You know, it’s like this whole new social situation. Do we bring food?

[01:10:22] Doug: Answer is usually yes, if you’re coming to my house, David. But it was a good piece of writing and it, and, uh, I would, I would recommend it. Joe, can we link to this? Can we help- We- … help his blog out? 

[01:10:32] Joe: Yes. We’ll do that in the show notes if you’d like to read it. Yeah. If you wonder what coming to a BAD meeting…

[01:10:38] Joe: We call them BAD ’cause it’s- Yeah … Benjamins After Dark. They’re a lot of fun. It’s 

[01:10:41] Doug: at Power Plate Savers. Okay. powerplatesavers.com. And it’s their first FI meetup. 

[01:10:47] Joe: We also, if you’re in one of the groups, I know that, uh, the piece is also making the rounds of all the groups. And I know there’s people that are in the online communities that have yet to go to a meetup.

[01:10:58] Joe: So you can go into any of those Facebook groups and see it or The Basement Facebook group, uh, where around the country if you’re thinking about starting a group. I do have some things there, Doug. A few things. Number one is, is that we have groups in Southern Minnesota, in the Twin Cities, in Seattle, in Tucson, and in Boston.

[01:11:21] Joe: If you’re in one of those areas right now, just come on out and join us. Uh, if you just put in Stacking Benjamins and any of those names, Seattle, Twin Cities, Boston, Tucson, Southern Minnesota, you’ll find the group. Ask to join the group, and then you’ll, you’ll see all of the upcoming meetings and what’s going on, uh, in your neck of the woods.

[01:11:43] Joe: If you’re not in one of those areas, I have some news for you there in just a moment. But in, in Seattle, of our existing groups, listen, running these groups is not easy. It is… The, the work that these wonderful people do in all these cities to, to keep the thing running, to make sure that we have a great experience, Chris and Veronica do that in the Twin Cities.

[01:12:06] Joe: And as you can see, they’ve done such a nice job to make people feel welcome. Uh, we need another coordinator to help us in Seattle. We got a couple great coordinators in Cole and Chris, but they’ve, uh, said they’re… That they need some help. So if you’re in Seattle and wanna help our Benjamins After Dark group there, uh, which has been going great.

[01:12:28] Joe: I got to meet with everybody. Finn, your… The Finn turn was at the meeting that I went to in Seattle. Yeah. It was so much fun. But if you’d like to help us in Seattle, just write me, joe@stackingbenjamins.com, and, uh, we will plug you in. Uh, we’re also in talks, if you are in the Bay Area or you are in DC, I know that I’ve been doing some traveling lately, so we kinda put those on hold, but those discussions are getting ready to pick back up.

[01:12:53] Joe: So if you wanna help us there and you haven’t written to me, write to me if you’re in the Washington, DC area or you’re in the, uh, Bay Area, and, uh, we’ll get you on the Zoom call when we meet with all the people that are interested in helping to organize those groups. And we’ve had great, great groups of people.

[01:13:11] Joe: I’ve been the person holding those up, uh, so far. But if you want one in another area, we’ve had, uh, people write to me about other areas. We’ll help you out. We’ll show you what it takes. Just, again, joe@stackingbenjamins.com. 

[01:13:24] Doug: Anybody in the Telluride area, perhaps Switzerland. Uh, you know, we, we would really enjoy…

[01:13:30] Doug: I m- maybe even Banff. That would- I’m just throwing some, some ideas out there. 

[01:13:33] Joe: Yeah, that would love to help, uh, also fund Doug coming. Have some dues- Yeah, man … so that they can pay for Doug coming. 

[01:13:40] Doug: I might not even require, uh, support there. Might just show 

[01:13:43] Joe: up. We’ll get to that. 

[01:13:44] Doug: Yeah. 

[01:13:44] Joe: Yeah. Well, you promised if they got breakf- if, if they did win Tucson breakfast burritos, so when’s the Tucson- Yeah

[01:13:50] Joe: visit coming, Doug? 

[01:13:52] Doug: I haven’t, I haven’t been offered the burrito yet.

[01:13:57] Doug: It’s like, it’s like they’re fishing, and they just have a big burrito on the end of 

[01:14:03] Joe: the… I don’t, I don’t know. All right, on that note, we gotta go. Uh, hey, if you know somebody who is worried about, uh, family dynamic in these discussions, uh, parents wanna buy you a house, relative wants to help you buy a house, uh, maybe this is the episode for them to listen to.

[01:14:19] Joe: Send that their way. You can help another person become a stacker. That would be awesome. Coming up on Friday, we have a round table discussion at Stacking Benjamins. Joining us, Mr. Joel Larsgaard from the How to Money podcast. Uh, and we always have fun when Joel is with us. So, uh, so come join us on Friday.

[01:14:39] Joe: And if you wanna watch our show, our Friday show is being made live. We do those Monday afternoons on YouTube. Of course, OG and Anna also have their beginner series that’s also on YouTube, along with some of our best interviews with some of our mentors, like Alex today, who really brought it, helped us understand franchising.

[01:14:56] Joe: All right, Doug, we got some to-dos on our list. What would you say the top three are? 

[01:15:01] Doug: Well, Joe, first, take some advice from Alex. Starting a franchise? Don’t get caught up in the hype or the story. Focus on the data and you’ll be ready to take on the world. Second, how are you talking about money with your children or parents?

[01:15:17] Doug: Maybe those conversations start with just opening the door. Start with a good family discussion, and then maybe that’ll end in an agreement everyone can appreciate. But the big lesson, one thing I learned from Alex today is that the secret to a strong business is consistency. In fact, people know exactly what they’re getting from me at poker night.

[01:15:37] Doug: I’m not sure what it is, but Joe’s mom’s friends seem very excited whenever I sit down. Thanks to Alex for joining us today. You’ll find his company Franzi at franzi.com. Thinking about starting a franchise? Go check it out. I’m wondering already how I can franchise Sizzler happy hours. It’d be like a franchise within a franchise.

[01:16:01] Doug: Everyone’ll be rich. We’ll also include links to Franzi, but not my Sizzler happy hour idea. No, that one’s mine, in our show notes at stackingbenjamins.com. This show is the property of SB Podcast LLC, copyright 2026, and is created by Joe Saul-Sehy. You’ll find out about our awesome team at stackingbenjamins.com, along with the show notes and how you can find us on YouTube and all the usual social media spots.

[01:16:28] Doug: Come say hello. And oh yeah, before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s mom’s neighbor, Doug, and we’ll see you next time back here at The Stacking Benjamins Show