Mike Stohler: Hey everybody, welcome back to another episode
of The Richer Geek Podcast. Today we have Greg Mohr, the
author of Real Freedom. It's a book that explores franchising
as a wealth building tool. We all need wealth building. It's
one of the biggest things in time freedom. So we'll talk
about how much time, how much effort all these things have to
do with franchising. How you doing, Greg?
Greg Mohr: Great, Mchael. Another beautiful day in the
neighborhood. Thank you for having me.
Mike Stohler: Absolutely. So I always like to dig into a little
bit about your background, how you got involved in franchises,
and what was your aha moment that got you into this type of
business.
Greg Mohr: I appreciate that, Michael. Actually, back in my
day when we're in high school, we had to get a job somewhere,
and usually fast food at the time. I think I knew the
managers there from some other time, but I ended up moving up
in the Taco Bell world and becoming a manager. And I found
out I was working for a lady named Kathy, and Kathy owned 50
Taco Bells throughout the Sacramento, California area. She
was a master franchiser or area developer for Taco Bell there,
so I helped her build up her teams throughout the Sacramento,
California area, and I really enjoyed that experience. Went on
to managing another restaurant in the Northern California area.
Did that for 15 years, got a degree in Electrical Engineering
and Physics, became micro electronics circuit engineer.
Did that for 15 years, got it a Master's Degree in Business.
Read Robert Kiyosaki his book, Rich Dad, Poor Dad, and said
that's the end of my corporate career. He ruined it in a good
way, though, on that one and so I made a friend of mine. We
purchased the dry cleaners, a private loan, dry cleaners
storage units, and I had some rental properties as well on
that. So I sold off all my half to him, and said, time to get
out of the corporate world. He got out of the corporate world.
Same time. I said that franchising thing was really
cool. I liked it when I did that very easy, step by step process.
Walk right into business in a box. I don't have the latest
greatest idea. I'm going to go back to doing that. So I went
and click, happy on the internet, had about 20 franchise
development people calling me from all over the place, finally
got a hold of a franchise consultant. Did not know they
existed, and he directed me to my franchise, and that's how I
got into franchising.
Mike Stohler: Yeah, it's fascinating. I'd say, what is
90% of the investment podcast guests that I have on the show?
Robert Kiyosaki, Rich Dad, Poor Dad. That was my AHA moment back
in the pre-Google days, when I read that and started the same
getting into investments. So let's talk about the different
types of franchises. Most people you talk about Taco Bell and
McDonald's, people know that maybe great clips. And you have
your regular, nationally known franchises that are kind of
like, there's one in every town, right? And then you have some
that are kind of trendy that kind of get in you I remember
the pure bars and the orange theories, and some of the
different ones that all of a sudden it's like, "Hey, let's do
this." So talk about franchising, some of the
different kinds, and then we'll kind of get into what you like
and what you don't like.
Greg Mohr: You got it, Michael. Yeah, what you're referring to
there is the brick and mortar type franchise businesses, you
and I driving around, and everybody out there driving
around this what we see so brick and mortar, generally speaking,
you're looking at 250 $300,000 investment on up from there,
just depending on what you get into simple you build it, and
they will come as a general theme. And with the great
franchise system, who will have a real estate team that will go
out there and find you that great location and do the lease
negotiation with you as well. Good way to go. The other end of
the spectrum is what we call the services industry. This is where
your clients don't necessarily know you exist until they need
you. So in that case, you need a really good franchise system to
drive people to you when that need exists. Think of tutoring
think of senior care, home services, many different things
in the home services, business, electrical, plumbing, HVAC,
restoration services. And there's lots of big companies
that are out there that do that, that you may not have heard of
because you just didn't need their services, and that you're
looking at around $150,000 investment for one of those,
give or take, depending on, if you need any equipment. But you
generally start off with either working from home or a small
office.
Mike Stohler: Okay. And there's you can get in, e-commerce,
franchising, and you get into all these other different kinds,
where I own a franchise and it's all on the web. I think that's
kind of like the Franchising 3.0. I heard this on Meta, the
headset, you can get franchises that are in the cloudverse, or
whatever it is. I mean, just absolutely crazy. Which ones do
you tend to go after? What are the pros and cons of the brick
and mortar? I know cost, right? I mean, you actually have a
place, and then one is kind of like the e-commerce, where
people most likely just kind of looking you up, Googling you,
and you may or may not have a brick or mortar, because you can
do a franchise out of your home. Now, which ones do you like? Do
you like them both? What do you gear yourself towards?
Greg Mohr: I personally like a chocolate shop or a doggy
daycare center, because I happen to love chocolate and I happen
to love dog dogs on that. So that's my favorite. I was going
to do one, but I live out in the middle of nowhere, so I can't
have one out here. But if I wasn't doing that's what I would
do. That's what I like. What my people like is all varies, all
over the place. So what I've been seeing lately here is when
I first started 10 years ago, a lot of it was the brick and
mortar type franchises. But as time went on, I find that a lot
of people are not willing to necessarily put up that kind of
an investment, especially on their first go out for it. And
with the services industry, it's a lot less of an investment, and
it doesn't make a difference too much for the most part, what you
invest in brick and mortar versus services as far as how
much money you can make. So with the with the COVID that went on,
people are kind of really steering away then at that point
in time, from the brick and mortar, and they're looking for
more of the essential services type franchises. So what kind of
business, no matter what the economy is doing out there, no
matter what's going on, do people have to have on a regular
basis. Your HVAC, you're heating and air conditioning. That's
broke. Man, we're fixing it. Michael's over there in Arizona.
If there's air AC goes out, that's it. And I lived in Texas
for 20 years. Boy, yeah, that AC went out. You can do that no
matter what, plumbing, electrical, restoration
services, senior care services, tutoring was real huge. Always
been good, because people will always want to make sure their
kids have the best education possible. So think of those
things that people need all the time, and that's what a lot of
my people have really been gravitating towards here
recently on those still get a lot of people interested in
fitnesses, like you were talking about the orange theory thing.
There's still some good fitnesses out there, most of
them are like the like the orange theory, the more boutique
fitness, as opposed to people are kind of staying away from
those big box gyms, and they want something that's more one
on one, or one with a small group on that. So still plenty
of interest there. But mostly the essential services are what
people are looking for these days.
Mike Stohler: Now, my wife was looking at a franchise at one
point. It was kind of like that dog. It was a spa. You wash
them, clip them, watch them, all these different it's like a
human spa. But one of the caveats in the franchise is it
was very owner intensive. They wanted the owner to be at the
brick and mortar, and she didn't do it because she's like, "Well,
I don't want to go to a place. I want to own it and then have
everyone do something, hire people to do it." What are you
seeing and challenges that you're seeing some of the
franchises. Maybe the person gives an HVAC tech, if he wants
to own his franchises, he'll be the one doing it. But what are
you seeing with the differences, or the percentages of, "Hey, you
got to be part of it, maybe even just for one year." But how
intensive is it for or the difference between someone who
just wants to own the franchise without actually working in the
franchise, and then the people that are saying, hey, you know
what, I have a trade and I just want to own my own thing.
Mike Stohler: Yeah. And that's a really good point. Ladies and
Greg Mohr: Great question, Michael, because I get a lot of
investors and a lot of people that want to stay in their jobs
in the corporate world, right? Want to do something on the
gentlemen, if you're listening to this, do your due diligence.
side. Yeah, that's what probably about 75% of my people actually
want to do something semi-absentee. So within the
franchising world, they are, as Michael just said, there are
I talk to a lot of people, and they get into a franchise
many franchises out there that want you to be that owner, not
doing anything else, just being in that shop or doing whatever
it is. There's also many franchises where you can be semi
because it's their passion. I love making cupcakes, and I'm
absentee. So what it really boils down to is, what does semi
absentee really mean? Generally speaking, 10 to 15 hours a week,
managing the manager, managing the profit, loss statements.
going to do a cupcake franchise in this high cost district. And
What I tell people when I put them in there, when I look for
franchises that say, yes, you can be semi-absentee on their I
tell them to talk with the people who started it as semi
I'm thinking to myself, how many cupcakes you have to sell just
absentee to begin with and find out what does that semi-absentee
really mean on, uh, you know, putting the boots to the ground,
I think because, yes, starting out a business, you've got to be
to pay your rent? So within your consulting, do you sit there and
a little bit risk adverse, because it's going to be risky.
And risky and you have a manager doing it for you, just a little
bit because you're not there doing that COVID. It's going to
say, "Hey, I understand. What do you want to do? You want to make
come down to your management skill and style, but really
understand what that business is all about, and the fact that you
need to find a great manager to begin with. And some of the
money. Is this your passion?" Do you help them with the due
franchises will want to approve that manager as well be semi
absentee on that. But just just keep that mind. Almost any
industry that I can think of has the opportunity to for you to be
diligence? Say, okay, realize you have to bake and sell this
semi absentee. But again, just make certain that you talk with
enough semi-absentee franchisees to get a real good feel for what
many cupcakes just to break even in this district that you want
does that semi-absentee really mean?
in this neighborhood that you want talk just a little bit
about overcoming some of those strategies and concerns and kind
of talking people in to say, "Hey, look, this is also a
business. Don't just open up your little franchise bead shop
and sell beads when you're rents $3,000 a month or something like
that. So talk to us a little bit about that.
Greg Mohr: It's a great question, Michael. On some of
those, what you need to do is you need to put together a pro
forma and a franchise will help you with that on there. Keep in
mind that when you're opening up that shop, or when you're
looking at that type of business, especially if you're
looking at something like a fad, really find out what that
business where's that business going to go? You don't have to
know the industry necessarily to begin with, but get to know that
industry and find out where does that income come from today, and
where is that income going to come from tomorrow? The
franchise will help you put together a pro forma. There's
rules and regulations within the Federal Trade Commission of what
they can and can't do on there, so they can kind of point you in
the right direction, and then get together with with
franchisees who will do that for you. But you really need to get
that because I've got a gentleman that's looking at a a
fitness center, and he's doing that, he's putting it down into
his, who's he going to pay? The different people you're going to
pay? How many people are you going to need to come in with
that? So how many people are you going to be working with, how
much is that going to generate compared to how much you're
paying out? And then what he does is he's goes out to calls
all the different franchisees that are doing it, which is what
everybody should do before they get into a franchise, and
finding out from them, how do your numbers look? Is this what
you're paying this person? Are you paying them $10/hour?
$15/hour with that? And then put it all together and see where is
my break even point going to be, and how many cupcakes am I going
to need to sell every day in order to make that happen? And
then you put in your fixed costs into that pro forma as well, and
make certain that you've got a good number and that however
long it takes for you to get that a business, that you're
okay with, that period of time that you do there. But a lot of
people, Michael, come to me and they just say, "I just want to
make money." So okay, I can't tell you how much each franchise
is going to make, because Federal Trade Commission doesn't
allow me to do that. However, I talk with enough franchises,
well, I got kind of a pretty good feel of what you're going
to make with that. So if you just want to make money, yeah, I
mean, they may make my job a whole lot easier. I just go to
the ones where I know that they're making.
There's no great deal of money on that, as long as you're okay
with the industry and the people that the industries and the
franchises I work with are moral, ethical and legal for the
most part, not for the most part, for all parts. That
ethical part might be a big challenge. But I stay away from,
you know, devices, alcohol.
Mike Stohler: Yeah, cannabis.
Greg Mohr: Yeah. I stay away from those. So most part,
everybody is going to feel that they're moral, ethical and
legal. So if we just need to make money, that's fine. I ask
people too. You want to give back to society, so you want a
senior care or you want a tutoring franchise, or if you
just want to make money, there's plenty franchises out there
where we'll get you familiar with the industry. We'll get you
not talking with enough people will put together a pro forma,
not for you, because they can't do that. And we'll figure out,
you know, how long is it going to take you to get there? What
do you got to do to get it? And are you okay with that?
Mike Stohler: You know, along with the market analysis, how
many are in the area, and will the the market bear to have
another whatever franchise? We do that in the hotel business,
right? We have to have the not on the performers, but the
market analysis, feasibility studies, blah, blah, blah, all
this sort of stuff to see if I can build something there. If
you build it, they will come. We have to figure out if that is,
if that is true or not. So let's get into your book. Again
everybody, this is Greg Mohr, franchise consultant, and he's
the best selling author of“Real Freedom, Why Franchises Are
Worth Considering and How They Can Be Used For Building Wealth"
so give us a little background on what's in your book.
Greg Mohr: Well, Michael, I've been doing this for about 10
years. Two years ago, I decided that there's enough people that
ask the same questions that I thought, why don't I just put a
book together and just walk everybody through the entire
process of what they need to look for in a franchise system.
So that's what I do, from start to finish, what you and I are
going to go through, walking through step by step process.
How do we figure out which franchise is a good fit for you
based on where have you been? Where you at now? Where. You
Mike Stohler: You know, it's kind of funny. There's 50-50,
want to be going through funding, CPAs, franchise
attorneys, due diligence process, what to look at in a
franchise disclosure document? If you're using a franchise
attorney, what generally can you negotiate? What generally can
you not negotiate on that the importance of getting a
franchise attorney, very last chapter is about turning your
business into a franchise. And I talked with a couple of
gentlemen that did that. So real world examples throughout my
book of the different people that I've worked with to get
them to a report there they want to be. So if you're a do it
maybe on the people. It's like going, "Okay, I've read the
yourselfer, grab the book. Do it yourself. I mean, it's just
right there, step by step. So I thought I give you some
background on myself as well, so that you can get my book. You
can read through there, and you can say, "This guy's a complete
idiot," I am never going to go near him. Or, "Hey, I resonated
with this guy. I think I'll give him a call." So I weed out the
ones that think I'm a complete idiot and the ones that really
like me, who wouldn't give me a call, they can. Or, again, you
can just do it yourself, because it's really just a step by step
process of what you need to look for when you're going to be
book. I'm smart enough. I'll just do it on myself." And they
looking into a franchise.
end up spending a lot more money figuring it out than they would
have just hired you. And we've all been through there, I didn't
get my success didn't grow until I got the business coach, the
mentors, those types of people would say, "Hey, look, I have
1,500 homes. You want to learn from me? Or do you want to learn
off of YouTube?" You know, I was like, "Yeah, you know what? It
might be worth a little bit money, because I can actually
contact and get a hold of this guy that's done it 100 times
more than me." Yes, they can read the book. What's the
importance of going with a mentor, someone that's done it
for 10 years. It's some of it's obvious well, because, you know,
we can learn from your mistakes, right? But talk to us a little
bit about what you give them that they otherwise couldn't
get.
Greg Mohr: Well, the greatest factor in the whole wide world
is about the whole thing is that I'm actually free, so I don't
charge for my services. If you decide to invest in one of the
franchises I introduced you to a franchise, always pay me a
referral fee. That's a good starting point. Now, what do I
bring to the table? So I've owned my own franchise. I own my
own businesses. Well, with a friend of mine back there, we've
done that. I've been doing this for about 12 years. So there's
one thing that people that's a real challenge for people to do
is really finding that franchise. Because unlike real
estate, where you can just go and you can go to a real estate
site, you can see all the real estate that's listed in your
area you don't know, and there's no site for franchises where you
can say which franchises are available in my area, which
franchises are looking for people with my background, which
franchises are in the investment level that I lived in, and which
franchise are in the industry that I'm in. So what I can do is
I can save you time. So I did it myself to begin with. So that's
why, when I when we were talking about that, Michael, when I said
I had like, 20 different franchise development people
calling me when I first started, because I went click, happy. I
didn't know where to look for it. So what we do as franchise
consultants, we streamline that process. We save you a lot of
time and effort going through to try and figure out, what do you
qualify for, both financially and with your background, who's
got territory available in your area? I'll go back and forth
with you a couple times. We'll have a couple different phone
calls. I'll have a questionnaire for you to fill out, and we'll
really look at, you know, where have you been? So you know,
what's your skill set? What franchises are looking for
people like you. Where are you at now? So how much time do you
want to invest in in the franchise? What are you
comfortable investing at, money wise? And then what do you see
that franchise doing for you? So I'm like a match.com and
realtor.com all kind of rolled into one putting people
together, so we save people a whole lot of time and hassle.
And then I stay with you through the entire process. As we're
going through that, not only do I find franchises for you, but
then as you're going through that due diligence process of
investigating, I make certain you're getting the answers to
the questions that you want answered. I give you a list of
questions for franchise or for franchisees, you'll have a list
of your own, but I'll have you, I'll give you a whole bunch, so
that I make certain you cover all your bases. So by the end of
the time that you're through it, you really know what you're
getting yourself into, and you're okay with it. And the
franchise attorney, again, will do the same thing when they go
through your franchise agreement. I've got a few
different franchise attorneys, a few different CPAs, a few
different funding people dealt with that. So you'll know what,
either franchising is not for you, or it's exactly right for
me, and I know which one it is, but you'll know that by the time
you get through with me.
Mike Stohler: What are some of the risks that you tell people
while they're getting sent? It's like, okay, if you do it on your
own, these are the things that you really have to watch out
for. You know, some gotchas that you've learned over the times.
Greg Mohr: Running that dry cleaner business, we didn't know
what to do with the excess chemicals after we're through
doing them. Some of the things we forgot to ask the guy, can we
just dump them down the drain? Or city going to get a little
upset about that? So we had to research some of that stuff. And
then you had to look at. Okay, so where do I get the best
equipment from? Where do I get the best deal for replacement
parts? Who are the best service people to service that
equipment? How do I get different accounts? How do I get
bigger accounts, rather than just people stopping by because
I built it and they will come where they see me and they stop
by. How do I get those bigger accounts where people use
uniforms all the time? How do I talk to them. How do I market to
them? Who do I contact? Those are all the things that the
franchise has already done that we did. I didn't know anything
about dry cleaning.
We're engineers. That was restaurant manager before that.
So, dry cleaning is just like the storage units are pretty
easy. Storage Unit just advertise got space you want it
right over here. Cool storage that was easy. Dry cleaner that
was a little bit more of a challenge. So those are the
things that are, are gotchas. When you get into the business,
a private business, on your own, that you don't always think
about, these little things will pop up along the way as you're
going through that. You know, if I have to replace a machine,
who's got the best deal for it, or if you're in the franchise,
they have national accounts, so they've got people that you can
get, you can get the pistols from right away. You just call
the franchise, or, if you don't know, because you never wonder
in a franchise what to do next, you call the franchise, or call
another franchisee, and so and so, I'll get them out to you. I
use them all the time. He's great guy, great girl. Get him
out. Yep. Those are the gotchas.
Mike Stohler: Let's talk about horizontal versus vertical
growth, you know, once you've got it, tell us about the
difference between that and some of the challenges. I saw a donut
shop franchise, and this person opened up, I don't even maybe a
dozen, and within a couple years, they're down to two.
Again, grew too fast, that's another question. But, you know,
horizontal versus vertical growth. Talk to us a little bit
about that.
Greg Mohr: Horizontal growth we're looking at there, Michael,
is that you're taking this the one franchise, and you want to
take over huge territory on that so with the service industry,
it's going to be a little bit easier than if you order like
you were just mentioning the donut shop. So the donut shop,
or with the brick and mortar, if you take over a larger area,
you're generally not going to be servicing that area, entire area
at because you have to build out a new location ever for them to
come to, because your territory is generally going to be in a
mile radius, because so people won't necessarily go too far to
get that donut if there's another donut shop clip, and
it's a little bit more of an expense as well, when you're
looking at the brick and mortar, and you look at our horizon, but
horizontal growth is where you have the same franchise and you
just take over the larger territory service industry. It's
a little bit easier, because then you're just sending your
people out to a larger area. So we got a larger area to service.
So pretty much, you can have one office or one location, and then
you pick up three territories. You people are just driving out
a little bit further reach times. That's a little bit
easier.
With vertical growth, you're looking at that one same
territory. And let's take the home services that we talked
about earlier. For instance, you might start off with outside,
with their lawn service on that for this one territory in there.
Now you want to do the vertical growth. Okay, you might step
inside the house at that point in time and then start doing
their maid service at that cleaning their windows, HVAC
systems, plumbing, electrical, roofing, regular, general
handyman services. So now you're not marketing to anybody else.
You're still marketing to that one group, same group of people,
but essentially, you own the home with that anything that
homeowner needs you've got an answer for. So that's the ones
with the vertical growth and many different franchise groups
have different franchises in their system. Neighborly group
has 20 different franchises. That's a good example. The
largest home services franchise in the US. Authority brands,
they have many different franchises in their group.
Happiness brands, again, many different franchises within
their group. So we can grow vertically.
Mike Stohler: Yeah. I mean, there are some really big, large
ones out there. Talk about finance, one of the great things
about owning a small business is that you get to do with the SBA.
I do that also with the hotels you get, I'm eligible for SBA
loans. Talk to us a little bit about how we can use because a
lot of people think it's like, I'll never get a bank loan, or
my bank won't give me a loan, and they don't even think about
the SBA. So tell us a little bit about financing franchises.
Greg Mohr: Funding a franchise is very simple. There's two
different ways to do it, your money, other people's money. So
let's go over what Michael was referring to with the SBA. I
have many different people that fund franchises on a regular
basis. So funding a franchise is actually very simple. They've
got a proven track record of success, which is what the
funding people I have, they love the funding partners that they
use. Just love so that what we're really going to look at is
your credit score, your credit background. As long as you have
good credit, if you get into a service industry franchise,
you'll probably get an express loan, put down about $20,000
you'll get about $150,000-$200,000 from them.
They'll destroy they'll just drop it in your bank. If you're
looking at a brick and mortar, you're probably going to use a
seven a loan, so you're probably going to be putting down about
20% and they don't drop the money right into the bank. It's
over time that they'll give that to you as well. Very easy to do,
as long as you've got good credit. It's actually a very
easy, I say. It's easy for me, but the people that are doing
have a lot of paperwork to fill out, as you well, there is good
deal of paperwork crazy. So it's easy from the point that you can
get it, it can get done, long as you're okay with the paperwork
on that. The other end of the spectrum there is using your own
money. So how do you do that? You generally do that with a
rollover, a self directed rollover, 401(k), IRA funds,
401(k) fund from a previous employer that you have. You
can't use the one that you're working with now. You can do
that. That's what I did to start my business. Personal decision,
definitely personal decision on this, because you're using your
retirement funds on that. I bet it on myself. I said I think I
could do it. So you basically create a C corporation, create a
checking account for your C corporation. And since you, they
call that a self directed role, okay? Because you can put that
into a self-directed fund. You can buy any stock in any company
that has stock. In C corporations have stock. So now
you have a C corporation. Now you got stock. So you buy stock.
We have people that do that for you. It sounds complicated. It
probably is, but my people that that I worked with personally,
and that I have other people work with, can make sure that
you're compliant with the IRS on that, and we'll do that process
for you. It costs $5,000 generally to do upfront fee, and
then it costs a couple $100 a month keep you in compliance
with that. And then you have to have your stocks evaluated once
a year, which is generally around $750 to get that done.
Other fees associated with it. A lot of good benefits to it. Once
I built too much money into my C corp account, andI can still put
some money into that, you know, into the 401(k), but once I
built too much into it, I just bought the stocks back and
converted to an LLC so I didn't pay any taxes on this, on the
sale of the stocks, however, you're going to be taxed on the
income that's coming in because you're a C corporation, and then
you're going to be taxed again when you pay yourself to as an
employee on there. So keep that in mind. You have that double
taxation that people worry about. But if you don't
necessarily need a lot of money, I didn't necessarily need a lot
of money, it worked out pretty good. Again, My people will go
over that with you, and I've got plenty of people that will. I'll
go over that with you. So good and bad points about both ways.
But I don't, I didn't go into debt. That's one thing. I
didn't. I didn't want to go into debt.
Mike Stohler: Yeah, that would be nice, Greg. It's been a
pleasure having you on the podcast. How can people find
you, if they're interested?
Greg Mohr: Go to my website, franchisemaven.com. That's
franchise M A V, as in Victor E N dot com Email me at
greg@franchisemaven.com or just pick up the phone and give me a
call at 361-772-6401.
Mike Stohler: Great. Ladies and gentlemen, Greg Mohr, Franchise
Maven and the book about Real Freedom.
Greg, it's been a pleasure. Thank you for coming on The
Richer Geek Podcast.
Greg Mohr: Thank you for having me, Michael. I appreciate it's
been an honor.