RG 345 – How Franchises Rack In Millions a Year With Less Effort with Jon Ostenson

RG 345 – How Franchises Can Help You Rack In Millions of Dollars a Year with Less Effort with Jon Ostenson

RG 345 - How Franchises Rack In Millions a Year With Less Effort
What is non-food franchising and what are the potential opportunities within that space? We have Jon Ostenson, the CEO of FranBridge Consulting, to introduce us to the world of franchising.
Jon is a Certified Franchise Consultant, the author of Non-Food Franchising, and the CEO of FranBridge Consulting, where he helps investors understand the ins and outs of non-food franchising and connects them to the best opportunities possible.
In black and white, the franchise business model is quite easy to understand; you buy a franchise and manage the business under the guidance of its parent company. However, executing a successful franchise is where it gets tricky. Luckily, Jon has jumped on the show to explain how franchises work, the most successful ventures beyond food, and what the systems (marketing, management, training, etc.) look like in this model.

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In addition, Jon gives us some examples of real-life franchisees and how they made whopping profits from various businesses. If you think franchising might just be the next best opportunity for you, let Jon give you some valuable insights into what to expect.

KEY TAKEAWAYS

  • There are more franchising opportunities beyond food, such as hotels, home services businesses, health and wellness, and more.
  • Some franchising businesses come with tax benefits.
  • Franchising can help you learn more about running a business before you start your own unique venture.

LINKS

https://www.linkedin.com/in/jonostenson/
https://franbridgeconsulting.com/

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Podcast Transcript


Reed Goossen (00:00):
Good day Good day guys. Now, before we dive into today’s show, I want you to let you know that some of you may be aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double-digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show,
Jon Ostenson (00:41):
What I found again is a lot of times people think franchising, they think fast food, yet there’s this whole other world of opportunities and what that looks like. Broadly speaking, there’s about 4,000 franchise brands in the us. Roughly half of those are in food. You know, you’ve got some there in lodging or hotels. That’s also a sector that I just see as a different animal. Um, and we love the people that choose to go into food. We certainly need them and we appreciate them, but my humble belief, Reed, is there easier ways to make money? And that’s what most of our clients see as well.
Speaker 3 (01:22):
Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market. Join Reed as he interviews, go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing,
Reed Goossen (01:42):
Good day good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host, Reed Goossens. Good as always, Debbie with us on the show. Now, I’m glad that you’ve all tuned into it to learn from my incredible guests, and each and every one of them are the cream of other crop here in the United States when it comes to real estate investing, business, investing in entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created their businesses here in the us, how they’ve created financial freedom, massive amounts of cash flow, and ultimately create extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.
Reed Goossen (02:29):
If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed goossens. You can find the show wherever you podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reedgoossen.com, Click on the video link, and, and
Speaker 4 (02:59):
It’ll take you to the video recordings of these podcasts where you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking in into today’s show.
Reed Goossen (03:16):
So in the show ofthe pleasure of chatting with Jon Ostenson. Now John is a top 1% national franchisee, broker, investor, author, an international speaker specializing in the area. He has coined non-food franchising, very, very interesting. We’re gonna talk to him today about that. Now he has served as a president of an Inc 500 franchise system, and now as a multi-brand franchisee himself, he’s also uniquely positioned to educate others about franchising, choosing the Ran Fri Cha, choosing the right franchise brand to select. And he also serves as a CEO of Frand Bridge Consulting and has helped thousands of entrepreneurs and investors explore business ownership and investment opportunities through the world of franchising, which is on this show. We don’t talk a lot about franchising, we talk more about the real estate side, but really, really pumped and excited to have him on the show today to share his incredible knowledge and his insight about this real niche in the business. But enough outta me. Let’s get him out here, Goodday. John, welcome to the show. How you doing today, mate?
Jon Ostenson (04:09):
Hey, Reid, appreciate you having me. Love the show and looking forward to our conversation,
Reed Goossen (04:12):
Mate, my pleasure. From having you and you’re dialing in from Atlanta, Georgia. How’s the weather out there today?
Jon Ostenson (04:16):
Oh, it’s absolutely beautiful. So you, we’ve had a rocky winter, but um, in relative terms, but today is sunny in the mid sixties, so cannot complain.
Reed Goossen (04:24):
Awesome, awesome stuff. Well, look, mate, I’d like to start the show with every question. Can you rewind the clock and tell me how you made your first ever dollar as a kid?
Jon Ostenson (04:31):
First ever dollar was mowing grass and, uh, you know, back in the day, this was when inflation wasn’t running rampant. Um, you know, it, it was probably game paid between 10 and $20 a yard, and I got as many of those in every week as I could. And, uh, you know, eventually built up a little nest egg that I lost during the.com bubble. So that kind of dates me, you know, that was in college, we thought the start market finally go up, and then later I lost the money in the oh 7 0 8 real estate bust and, uh, you know, learned that what goes up can’t go down. But, um, yeah, but still, I, I think lear losing the, the lawn mowing money was the hardest lesson and it’s taught me a lot of investment lessons I go back to.
Reed Goossen (05:07):
Nice. To walk us through the background of where you’ve come from and how you’ve stumbled into this world of franchisee.
Jon Ostenson (05:14):
Yeah, like so many of your listeners spent a, a good bit of my career in the corporate world and, you know, kind of it was privileged to rise in the ranks and, you know, went to, got my MBA and kind of did the corporate path and could have stayed there forever. But like so many others, I had that entrepreneurial itch and finally chose to scratch it, um, at the age of 37. And so, you know, stepped away from the public company world and it’s kind of side stepped into franchising, had the opportunity to come in and service president of shelf Cheney franchise system, which was a large national growing franchise system all across North America. And, um, had the opportunity to support our franchise owners day in day out. And for me it was that light bulb moment of, hey, there are other paths within franchising the business ownership. And, um, you know, I just saw this sea of owners across North America. It’s all different types of diverse backgrounds doing very well, and they were doing life on their terms. And so, um, fast forward, I I partnered with the founder of Shelf Genie. We spun off, we’ve invested in franchises as franchisees ourselves. I’ve had other business partners. We’ve invested in franchises, you know, and I’m, I’m blessed to have good people running those businesses for us and allows me to spend over 90% of my time helping others do the same.
Reed Goossen (06:21):
Mm-hmm. . And did you stumble into the franchise world? Was it just through leading as a CEO being in, coming out of, uh, you said U b A? Did you just happen to stumble across that?
Jon Ostenson (06:32):
No, sir. I, he spent many years in corporate role. Carter’s Naka, Bagash largest children’s apparel company in the world, you know, based here in Atlanta. So , I never thought I’d be in the children’s apparel industry selling the Costco and TJ Max and Marshalls and, uh, you know, Macy’s. But then, you know, also never thought I’d be in franchising, you know, it just wasn’t on my radar. And what I find Reed is, you know, uh, well first of all, say over 75% of our clients also invest in real, real estate. So there’s a whole lot of synergy between franchising and real estate investing. Um, and, you know, I personally have single family homes, you know, that, that I invest in. So, um, and do a lot of real estate lending myself on the side from a more passive standpoint. Um, so, you know, what we find is a lot of people out there have this view of multiple cash flows.
Jon Ostenson (07:15):
You know, in some cases you’re a little more active, in some cases more passive. But, um, you know, it’s this desire to have a diverse defined portfolio. And, you know, we all know stock markets all over the place. Interest rates are high, only so many good real estate deals. I mean, you do an outstanding job. I I get all of your emails of when you’re uncovering, um, you know, but people are looking for other opportunities outside of crypto and baseball cards. So, um, you know, once the the light bulb goes on, they realize there’s other ways to get into business ownership and just the benefits and the tax benefits around it. Um, you know, they’re all ears. And so we love educating and people to help people
Reed Goossen (07:49):
Franchising. Let’s just talk about that for 30 seconds and maybe define what that might be. And it, it’s a dumb question, but it’s just, you know, we’re breaking it down for people who may not understand it. Uh, and then talk a little bit about the non-food, because I think you think, you see the McDonald’s, you see the red roosters, you see the Hungry Jacks, you see the food element of it, but you are in the non-food section, so, so also talk us a little bit about that as well.
Jon Ostenson (08:11):
Yeah, it, at its core franchises three things. It’s a shared brand. It is some sort of support coming from that home office or corporate entity to a, you know, to, to a more local presence to a franchisee. And then it’s some sort of compensation from that franchisee going back to the home office for support that. So in some cases you have businesses operating as franchises that don’t know, know it, but, uh, you know, franchising, it’s re regularly by the Federal Trade Commission. You know, you have to cross your ts do your eyes as a franchise business. Um, and you know, what I found again is a lot of times people think franchising. They think fast food, yet there’s this whole other world of opportunities and what that looks like. Broadly speaking, there’s about 4,000 franchise brands in the us roughly half of those are in food.
Jon Ostenson (08:52):
You know, you’ve got some there in lodging or hotels. That’s also a sector that I just see as a different animal. Um, and, and we love the people that choose to go into food. We certainly need them and we appreciate them, but my humble belief, Reed, is there easier ways to make money? And that’s what most of our clients see as well. Um, and I’m happy to get into the reasons why, but you know, where we see people gravitating right now, it’s things like home and property services. You know, what I would call boring, non-sexy businesses. It’s things like gutters and insulation and dumpsters and concrete paving, um, you know, these cash flowing, Amazon resistant, um, you know, in some cases recession resistant or covid resistant, you know, very scalable businesses. That’s where we see doctors and lawyers and current business owners and corporate executives with no background in that space, put their business owner hat on and say, wait a minute, there’s a very fragmented industry.
Jon Ostenson (09:44):
If I come in and bring a white collar approach to a blue collar industry, you know, there, there’s opportunity. Um, so we see that segment. I’d say health and wellness is another very popular one. I do think within that umbrella of fitness is a little bit crowded, though there are some concepts I like, we’re still doing a lot of oil changes. Mm-hmm. still a very line now in Los Angeles where you’re, there’s probably not as much opportunity in the oil change industry, but across the country, you know, there, there’s a long road ahead for the oil change industry. Um, so it’s tapping into markets that are underserved, uh, you know, strategically and, and, you know, we’ve all been talking about a recession for the past 10 years. You know, what if it actually does materialize and economy goes downhill a little bit, you know, some say may in the back half of the year, what kind of business do you wanna be invested in? This is a common conversation we have with our clients, and I always go back to what will you continue to spend on, regardless of the economy? It’s the things you care about, your kids, your pets, your aging parents. And so I think businesses that cater to those sectors that cater to your home, cater to your health, those are the ones that are gonna continue to do well regardless. So, um, that’s where we’re spending most of our time in, in our clients’ time these days.
Reed Goossen (10:49):
Um, interesting. When you say pets and, you know, elderly and all that sort of stuff, do you look at specific businesses? D are you helping the business franchise or are you helping identify businesses that have already franchised, plural, you know, in past tens, past tense, um, to then identify for your investors’ opportunities to go and buy one of their franchisees? What, what, where, where, where, where are you in the spectrum?
Jon Ostenson (11:13):
The ladder is our core business. So we are the matchmakers executive recruiters, if you will. And what’s great is, is the way the model is set up is our clients never pay us a fee. We’re funded by the franchise brands, much like an executive search model. And so, you know, I’ve been blessed. I, I do more deals than anyone else in the country, uh, in, in franchise consulting and, you know, we’re just able to help a lot of people every year. And we’re affiliated with the largest brokerage in North America. We work with over 600 different franchise companies, um, across North America. And, you know, of those at any given time, I’d say there’s probably 50 or 60 that I would hold up and say, these are the best of the best. Where you’ve got the franchisors with the leadership experience and the track record, you’ve got a competitive advantage within a given industry.
Jon Ostenson (11:55):
You’ve got that financial model that really delivers a high return. And then we look at what’s resonating with clients of ours. I mean, because we do more deals than anyone else, we’re able to see at the tip of the spear on the ground what is resonating with different types of backgrounds and why is it resonating. We bring all that collective, um, you know, context into our client’s situation, and then I’d help them identify, here are the top 10 or so opportunities in your market for consideration. And then we work with them to kind of narrow those down and walk through the process of exploring them.
Reed Goossen (12:25):
Right. And so now where my questions going, so when you identify those, identify those brands, you know, the, the pets, the, the mobile home services, what, is there a criteria that you look for in order to then, um, onsell it to your investors that want to get into to, to the, to the business?
Jon Ostenson (12:43):
Yeah, absolutely. And it’d be the criteria I just shared, you know, the, the franchisor, the financial model, the competitive advantages. And so while we work with hundreds of businesses, you know, I have a very, yeah, having been a franchisor myself and a franchisee, you know, I’ve got some pretty strict criteria that I use to then narrow it down even further to my clients. And we look at what’s available in their market, we look at the type of role that they want to play. Um, about one third of our clients will jump in as an owner operator where they run the day-to-day operation. About two-thirds are doing it through a semi passive executive model. Now, I never wanna sugarcoat it, read and say it’s easy, but it is very doable and we have a lot of client case studies to prove it out, including my own. Um, but that’s where franchising, you’ve got that franchisor that’s almost like a business partner to you as the owner. Um, you know, so if you hire a manager to run the day-to-day operations, you know, the buck still stops with you as the owner. However, that manager can go to the franchisor for all their technical needs, and it really serves as a great resource to kind of take some of that day-to-day burden off of your place.
Reed Goossen (13:44):
Yeah. And, and that, it brings up a good point because there’s be so many people out there who want to dip their toe in business, the business world. And so you mentioned the one third goes into the owner operator of that one third, are you seeing, I don’t wanna say, um, do, do you do anything to prep them in, in regards to this is gonna be a different, if you’re coming from a doctor or a lawyer or, you know, a different type of world, a white collar job into these more blue collar environments. Like you gotta, there’s these different things you have to put, you know, be prepared for. So are you seeing the, is there any failure rate? Is there any, you know, oh my gosh, this is way too hard and I don’t wanna do it. Thus we go down to the other route, which is the executive model route,
Jon Ostenson (14:22):
You know, of, of all the clients we’ve worked with, there’s only one that I know that’s no longer still in business and there’s kind of an explanation around it. Um, you know, which we, I’m happy to go down that path, but, um, no, we’ve had tremendous success and we see where I get my validation is when clients come back and buy additional locations six months down the road, 12 months down the road or where they come back, I’ve got multiple clients, you know, that, that have come back and bought additional loca or additional, um, franchise opportunities, additional brands, you know, kind of built out this portfolio. You know, I know an example of that would be Nathan Boco, a client of mine over in South Carolina that’s become a dear friend. Um, Nathan’s the largest franchisee of two men and a truck moving service operates in about 10 markets, only 40 years old, does about 30 million a year.
Jon Ostenson (15:04):
And I don’t think he’d mind me sharing that , um, . But he, uh, you know, he comes to me every year and says, Hey John, you know what, what’s new out there that you like that I can get into? And so we’ll look at a few opportunities he picks one puts a young guy that’s already proven himself within his organization in charge and says, Hey, go make us proud every time we’ve done that. He’s come back and bought additional locations within that first year. And so just had a tremendous success record. And we have multiple stories like that of what, how you can build out this portfolio that compliments, you know, your real estate. I mean, in a lot of cases, you know, these property services, home services that I’m talking about, you know, can correlate directly with real estate investing. You know, if you have a portfolio of single family homes, let’s say, um, in some cases, you know, we’ve got real estate brokers that are clients of ours that will buy a property management franchise to kind of compliment their business. So in some cases they’re looking to diversify. In some cases they’re looking to more, um, you know, really kind of synergize with what they have going,
Reed Goossen (15:58):
What, what’s the average type of buy-in of a franchisee, and h how are they protected and what are they, what assets are they buying besides just the brand? What are they buying, like you mentioned two men, two men and a truck. Are they buying the trucks? Are they buying, you know, where they’re the location of which they’re housing the trucks? Like what, what, just walk us through a bit of an example like that.
Jon Ostenson (16:16):
Yeah, absolutely. So I’d say, you know, we’re doing million dollar deals, but probably 75% of our placements right now are between 150,000 and 300,000. Wow. From an all in investment standpoint, that’s your franchise fee, startup cost, working capital, and what you’re buying, you know, I, I think in food, the brand is extremely important, but in some of these other industries, it, it’s all those other things that are more important than the brand. You know, I think about the insulation industry. I mentioned that one 53 billion industry just in the us you know, residential and commercial. Most, most of your listeners probably couldn’t name one insulation company, you know, that’s not it. And yet, this, this is fragmented space. You’re able to come in with a white collar approach to the blue collar industry, and you come in with better marketing, better systems, um, you know, call center answering the phone on the back ends.
Jon Ostenson (17:01):
And so from a franchisor standpoint, what the value that they’re providing, and I always tell my clients, Hey, let’s make sure they’re asking all those questions along the way and make sure you’re getting the, the bang for the buck. But it’s, um, you know, it’s a fact that they’re helping you start on third base. You know, they’re, they’ve been there, they’ve proven it out. They know what marketing works best. They don’t have to optimize yours because it’s already been optimized. They’re working off the large data sets and they’re typically running a lot of that digital marketing for you. Um, you know, all the training, you know, if you have run the business with the manager, send that manager off to the franchise or to be trained, you know, you don’t have to train them. Um, you know, it, it’s, they’ve got vendor agreements oftentimes with service providers or whether it be procuring the vehicles at a discounted rate and getting the wrapping on ’em, let’s say.
Jon Ostenson (17:44):
Um, and so in addition to all this, there’s value in that community of franchisees. You know, you’ve got the coach on the sidelines on the franchise, or you also have a group of other owners that are living the same thing day in, day out. You’re exchanging best practices, um, you know, constantly. And, you know, when you think about exiting the business down the road, you know, oftentimes, like I own a driveway company franchise, well, we acquired two other franchisees that were in our market as well. And so gave them an exit, allowed us to expand our footprint. So it does create some natural synergies around exits. And there was an interesting study that was done recently, uh, by a third party where they looked at, um, 2000 transactions, uh, uh, franchise and non-franchise businesses and like kind industries over a 10 year period. What they found was franchise businesses traded and had an exit multiple, one and a half times non-ed. So there’s, what I love about business ownership and franchising is you’re building a cash flow, you’re building a business with good exit value down the road. Of course you’re able to write off expenses along the way. So it’s kind of this trifecta effect, uh, if you will.
Reed Goossen (18:45):
What, what’s the sort of r ROI on a $300,000 investment over and and what’s the sort of length o of time at which you wanna see, or your franchisees hold these, these businesses for?
Jon Ostenson (18:58):
Yeah, it really varies on the whole time. I mean, some will, you know, hold it for a few years, some will hold it, you know, for many years. Um, you know, I, it’s really across the board, but, you know, I’ll just point to, and I’m kind of staying on these property services ones, just cuz I’ve seen probably the most interest. You know, we have some real estate clients that, you know, are really involved in the commercial space or in retail and you know, they wanna, there’s some different strategies we deploy, but kind of sticking on where we’ve seen the majority of them go into this property services. We had seven clients buy into a gutter business last year. These are gutter installs, you know, 6 billion industry, again, very fragmented space for an all-in investment of around two 50. And that includes working capital. Uh, they’re average franchisee across their systems doing 1.7 million in revenue
Reed Goossen (19:42):
A year,
Jon Ostenson (19:43):
A year. The prior year they were doing 1.2 million. So you’re seeing some good system-wide growth and not every franchise system and property services is quite that
Reed Goossen (19:50):
Profitable
Jon Ostenson (19:51):
Level. But I just wanna give a g example here. So 1.7, they’re netting 29% to the bottom line, so call it 30 Roughly, you know, just under 600,000. And so what I like to do read with my clients is say, Hey, let’s take a conservative approach, you know, let’s haircut that even further. Just go in very conservatively in our proforma. And, um, even when you do that, there’s so much meat on the bone, you know, with a business like that to run it semi absentee and put a manager in place. And when you look at the profiles of who got into the gutter business this past year, we had two different doctors. We had a Wall Street attorney outside of Boston. We had insurance guys in South Carolina, uh, corporate executive up in New Jersey. Uh, we have a client that’s getting ready to purchase it up in San Francisco. Um, so again, that’s just the one example, but it shows you the kind of returns you can’t get. Cuz let’s just say you netted 400,000 mm-hmm. , that’s on an initial investment of two 50 mm-hmm. , and that’s 400,000 per year year. That’s a pretty good return and you’re gonna have an exit value down the
Reed Goossen (20:50):
Road. Right, right. No, that’s, that’s a, that’s that’s very, very attractive. I’m surprised not many more people do it because
Jon Ostenson (20:57):
They don’t know about it. Yeah,
Reed Goossen (20:58):
I know. I real estate deals, we can’t offer that type of return and not, not, not new one. At least
Speaker 4 (21:10):
For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multi-family value add deals, then head over to reedgoossens.com And sign up for my monthly newsletter By signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com And sign up today. Now back into the show,
Reed Goossen (21:46):
I guess at the tax benefits from like, cause it’s not a physical asset, right? So you don’t get to all the depreciation that comes with, you know, a, a, a physical investment, but it is, you get some right off with expenses. Correct?
Jon Ostenson (21:58):
Great question. Great question. Of course, if you were to purchased your vehicle and you’ve got 6,000 pound rule in all that, I mean there, there can be, some of our businesses do have heavier equipment where maybe that vehicle’s, you know, I think of like a junk lugging type franchise or I, I’ve got a client that, uh, has done extremely well in dumpsters and you know, I’m, that’s heavy CapEx. Um, you know, there, there’s one, we just have clients in Dallas last week, uh, sign a deal for, and this is a really cool one. Uh, it’s a B2B business, it’s temporary type walls. And so when you’re doing construction projects, renovations, you need these temporary walls to go up. Well, these are the only guys that will do the setup, the rental and the takedown out there in the market. And so they’re growing really fast, you know, it’s just those niches, I mean, riches and the niches, that’s another business with very similar financials to the gutter business. But that’s one where you would be able to, I I’m, I’m not a tax accountant, but my understanding is, you know, be able to write off these, uh, walls, you know, and the walls pay for themselves after 70 days of use. Right. So you kinda build up this inventory and then you can keep
Reed Goossen (22:58):
Deploying it. No, well the other question I have for you is, which is just as a curiosity thing, do you see many people in these niches niches go and then say, I don’t want to be a franchisee anymore, I can actually do this better and create competition. You know, like they see behind, they, they, they see how to fish and they’re like, uh, I, I’m gonna go, don’t gimme the fish, I wanna go fish myself,
Jon Ostenson (23:22):
You know, if it’s a good franchise or they’re gonna give ’em a lot of leeway to kind of do, you know, go a little bit outside the lines and do, you know, test things and do things their own way. I mean, you know, obviously you’re going in, you’re getting exposed to a whole lot of intellectual capital and intellectual property, and so I mean, you’re, you are prohibitive from going out and just starting the same kind of business, you know, the next day. Um, you know, that would be kind of screwing, screwing the franchise. Um, but that’s also not in your best interest. I, I, I don’t think I, in multiple ways, I’d say this is interesting, a lot of our clients are existing business owners. Uh, many of them are from the non-franchise space. And then they say, Hey, my next rodeo, next season here, I wanna do something in franchising. Because again, I’ve been there, done that. I know how much work goes into trying to, and here you’ve got a business that’s proven that, you know, the road to profitability on day one, you’re not having to go out and question like a startup. Is there a road to profitability? Right?
Reed Goossen (24:12):
You got like, it’s like a minimum viable product. It’s already proven out.
Jon Ostenson (24:15):
Yeah. The challenge is some of these people are too entrepreneurial that they can’t live within the pounds of a franchise. And I, you don’t have to tell ’em that. Um, but for most of them, they, they love the idea of not having to go out there and restart it. Um, and, and what I tell my clients is, Hey, think about it in terms of seasons, you know, you’re gonna have a lot of seasons ahead. Whatever your next decision is isn’t necessarily the the only thing you’re ever gonna do, but whatever you do next is gonna be a building block. It’s also gonna inform what you do after that. So, um, you know, we do have some clients that say, Hey, I want, you know, like doctors that may have not have a business background. They say, Hey, how about I start out with a franchise system, learn business 1 0 1 and best practices, and then if I do start something else down the road in a different industry, I have a lot of this discipline and framework that I can deploy, um, at that time.
Reed Goossen (25:02):
Love it. Absolutely. What’s the, uh, as you come in the show, what’s the sort of goal for your company coming here into 2023 and beyond? Are you seeing some choppy waters in your industries? Are people getting a little bit nervous about deploying capital into franchisees, you know, in 2023 as, as you know, the Fed keeps raising interest rates?
Jon Ostenson (25:19):
Great question. So, and I certainly, I go to all the financial presentations, I follow the talking heads. I’m kind of, you know, I think we’re all talking about a category one recession in the back half the year. Not category five, but category one. I, I think it is the most predictive recession in US history, but we’ve been talking about this for about 10 years now. Um, that being said, you know, I I would’ve anticipated maybe a little bit more, you know, questioning, but I really haven’t seen it so far, um, on the ground level. And again, I think there’s so much cash on the sidelines and I know you see this as well, and when you have inflation, you know, people, it is kind of burning the hole in people’s pocket that they need to deploy it somehow. And when they play the long game and think ahead, and maybe we go through a small recession, but then we’re gonna come out on the other side, you know, how do you put that money to work?
Jon Ostenson (26:07):
How do you position yourselves now in a lot of where you want to be down the road? So I’ve actually been pleasantly surprised. I really haven’t seen a lot of concern out there. And I think in most local markets, people are still, I mean, nearly every client I talk to say, Hey, my market’s growing, people are moving in. I don’t know where all these people are moving from. Maybe , you know, you you believe it’s New York and California like to say on the news, but we’re doing so much business in Southern California and in Long Island and the, you know, Manhattan, we’re not seeing it.
Reed Goossen (26:34):
Right? Right. No, it’s, it’s, it’s, it’s in incre it’s the resilience of the US economy, I think. And you gotta can’t, you can’t, uh, poo that at all. And I think, I think it’s such a big beast. It’s the number one economy in the, in the, in the globe. So it’s, uh, it’s, it’s, it’s so interesting. I could talk to you for days and days and days. There’s one, I’ve always had this thing, I’m, I’m a structural engineer, right? I know I’ve got this. I don’t know why. I’ve really have, uh, I’ve been drawn to building stuff outta concrete, right? I less love concrete. Even even when I was laboring, when I was a young kid, I wanna own a concrete company. I don’t know how to own a concrete company, but like, I reckon I could go out and that would be good business to just own one.
Reed Goossen (27:12):
And I, I remember traveling to Mexico just recently and I was in Bahe and I was driving past all these little, what looked like mom and pop concrete, you know, plants. And I was like, I bet you could go buy six or seven of these in the, in the, in the area and you could somehow package ’em all up and sell ’em to borrow or sell ’em to the big, the big companies. But like, I dunno, con like the, the, the, the unsexy businesses, the blue collar businesses are, you are right, they’re always gonna sort of be around, uh, the hoop and uh, we’ll have to maybe chat a little bit offline, but it’s, I’ve, I’ve always had that as like, yeah, this concrete or shed building or, you know, something really kind of like, as you said, fragmented that you could come in and just, no, you have to be a big player, but just, you know, pick up a couple, sell ’em off, do it again. I’ve
Jon Ostenson (27:54):
Got a great, I’ve got a great one for you. I’m sending you after the show. It’s, it’s an a asphalt in concrete parking lots. They work with national accounts, they do all the line striping of parking spaces and wayfinders. It’s the riches and the niches. Absolutely.
Reed Goossen (28:06):
Love it. Love it mate. Well, at the end of the show, we love to dive into the top five investing tips. You ready to get into it?
Jon Ostenson (28:10):
Let’s do it,
Reed Goossen (28:11):
Mate. What, tell me prac question number one, what’s the daily habit you practice to keep on track towards your goals?
Jon Ostenson (28:18):
Yeah, w wake up early and I track everything. Um, I’m a metrics driven guy and so, you know, I, I start my day looking at the numbers and uh, you know, and I prioritize, you know, get my head straight, you know, I’d like to read the bible or read a few other things, kind of get, get going, but then I jump right in before I take the kids to school. And so it starts with a strong morning routine. Um, but for me it all comes back to the numbers and you know what, what gets track gets improved.
Reed Goossen (28:44):
Yeah, that’s right. I I what’s, what was the saying? If you, if you can’t track it, it doesn’t, if you can’t measure it, it doesn’t get solved. And what is it, you don’t track it. And you, I know I’ve got a lot of KPIs in my business as well, and if you don’t track it, you can’t then control it. So that’s, that’s the que that’s what I was looking for. Question number two is, who’s been the most influential person in your career to date?
Jon Ostenson (29:03):
Yeah, it, so I had the opportunity in the corporate world, a work for a guy named Joe Pacifco who was president of the large public company. I was kind of his right hand chief of staff and, you know, to understand how he led a large organization, how he thought about the business and the things he spent his time on and things he didn’t spend his time on. You know, he’s very focused and so I think there are a lot of disciplines, uh, that, that really influenced me. Um, learned some lessons. He wasn’t perfect and, you know, made a few mistakes along the way that were pretty big ones, uh, in hindsight. But, um, but al also just a ton of respect for him and I think he kind of guided my way of thinking as far as business
Reed Goossen (29:35):
Goes. Awesome, awesome. Question number three is, in what tool in your business can you not run the business business without, I wanna say tool? It could be a physical tool, like a journal or your phone, or it could be a piece of software that you just can’t run that business without. What is it?
Jon Ostenson (29:48):
Yeah, well I love all things Google and G-drive and, and everything is tied in, but you know, the, the one that I’ve been sharing with people, it just puts me whether some people aren’t using it yet is Calendly, you know, for your calendar, it just, hey, it gives you all the control and yet it doesn’t, it limits that back and forth. And so, um, yeah, my, my assistant and I use that all the time with our clients.
Reed Goossen (30:06):
Yeah, I know, just booking on this show, you would’ve to use calendar to get on here. So massive, massive time waste going back and forth trying to determine which day of the week works best for your clients. So pick a time, I’ll be on there. Let’s go. Love it. Uh, question number four is in one sentence, what has been the biggest failure in your career and what’d you learn from that failure?
Jon Ostenson (30:23):
Yeah, we became, so I had a startup that did not work and uh, we became too custom. We built it up to about a four or 5 million business as a marketing agency and a call center. And we became too custom for our clients to the point that, uh, we let them really drive the train and not us. And we have about 40 employees and I ultimately made the tough decision to wind the business down. We didn’t have a sexy exit, you know, it wasn’t one of those things, but, but in hindsight, I am proud of how we wounded down. We found homes for our people, homes for our clients. We handled it very, we well in, in a tough, tough situation, but we built up a business that really wasn’t profitable. It was just, it was right there teetering. And uh, I saw the riding on the wall and had to make a tough call, but it came down to being overly custom and letting the clients drive the train instead of us.
Reed Goossen (31:08):
Right. Alright, last question mate. Where can people reach you? Continue the conversation that’ll be in your sphere, where do they go?
Jon Ostenson (31:13):
Yeah, come out to franbridgeconsulting.com, that’s franbridgeconsulting.com and sign up for our monthly newsletter. We put out some great content and I will then have my assistant also reach out, uh, with links to download our new book called Non-Food Franchising. And uh, would love to get a free copy to all of you, either audio or uh, PDF and uh, certainly if you go out to Amazon, you can buy it and all profits go to a great non-profit, um, as well that we support. So, uh, yeah, we would love to connect and if there’s interest, uh, let my assistant know and we’ll jump on a call as
Reed Goossen (31:44):
Well. Awesome stuff, mate. Well look, I wanna just wrap up and summarize what I took away from today’s show. I think the, the such an interesting niche and for all our listeners who tune in, think about real estate, there’s another path here and that’s the purpose of investing in the us It’s called this way because we want us meet people like yourself who are looking at different niches in other businesses. Gutters, concreting, line striping, you know, home services, very fracted fragmented businesses that us on the real estate side. If you can read a p and l and you know how to market properly and you know how to add value in a multi-family deal, you’ll know how to add value in a business. It’s very similar stuff, you know, with just the widget is different in our business, it’s heads and beds and other businesses it might be different, you know, selling uh, lawns care services to different people and just trying to be more professional in the way in which you approach it.
Reed Goossen (32:32):
Uh, I do love how you’ve stuck away from food. I do think that is really, really key and I would love to get my hands on your book and to read a little bit more more about it. Um, but I think the biggest thing is, is it around people think, I think, and I’ve always had the, you know, as an entrepreneur, I’m like, I don’t wanna do a franchise. I wanna go build it myself. You know, like, but I think there is a value there to not having to reinvent the wheel. Uh, and if you can sort of have your cake and eat it too, why not go out and build a portfolio of franchises to then sell it off as a portfolio to someone else? Cause that could be a value add in that in itself, right? And you can do acro across multiple different products and you could then go and say, Hey, Mr. Big private equity company, I’ve built, you know, three different verticals here with three different industries and I’ve got 10 franchising is in each boom. Here you go and exit for a big number. So, and have great cashflow along the way. I think that’s the, the best, the best part about it. Um, did I leave anything at my French, uh, in that summary?
Jon Ostenson (33:23):
No, I think that’s outstanding and I will just echo what you said. Private equity loves franchising so much. Private e equity all around franchising these days. Mainly the franchise were level, but sometimes the, the franchisees. So, uh, you know, the smart money is running this direction and uh, yeah, I would love to engage with the of your listeners.
Reed Goossen (33:38):
Awesome stuff, mate. Well look, I wanna thank you again so much for jumping on today’s show. Enjoy the rest of your week and we’ll catch up very, very soon.
Jon Ostenson (33:44):
Sounds great. Thanks so much.
Reed Goossen (33:46):
Well there have another cracking episode jampacked with some incredible advice from Jon, really if you do. Oh, if you are interested to learn more about franchisees, go to franbridgeconsulting.com. The consulting is in there, but it’s Fran Bridge. Um, it’s Jon Ostenson, Ostenson and it is non-food franchising. If you’re all listening, uh, or wanting to get your hands on his book and reach out to him, uh, I wanna thank you all again for taking some time add day to tune in to continue to grow your financial iq cause that’s we’re all about here on this show. If you do like the show, the easiest way to give back is to give it a five star review on iTunes. All the show, the length from today’s show will be up on website @reedgoossens.com. And we’re gonna do this all again next week. Be bold, be brave, and go give life a crack.