E199: Franchising: Unveiling the Wealth-Building Power of Franchising with Ralph Yarusso

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Ralph Yarusso. And we're going to talk about franchising and the benefits of buying a franchise, and how to grow well through the franchising model. There's a lot of unknowns there. Thank you for being on the show today.

A lot of people don't understand the concept of franchising and how you can do just more than one store and how you can buy them and sell them and how you can truly create wealth. So, I'm looking forward to getting into this conversation, Ralph. Thank you for being here.

[00:00:29] Ralph Yarusso: My pleasure. Thanks for having me.

[00:00:31] Ronald Skelton: We always start off with the, the bio, like, your background. Kind of how do you ended up here? The standing joke is you were born. Now you ended up on a podcastabout buying and selling companies. Can you kind of explain the gap in between there?

[00:00:43] Ralph Yarusso: Yeah, sure. I'd be happy to. Yeah, so, outta high school I actually joined the Air Force. And was fortunate enough to, test out and, and become a C 1 41 air crew member. So, flew in the Air Force C-141's for about nine years. It was, uh, just a incredible experience and opportunity for a young guy.

And you know, I really, I really enjoyed that. I got to see the world essentially. After exiting the Air Force, I did four years active duty and five years of reservist. After my four years of active duty, I went to school, got my certification with the FAA for flight control, flight dispatch. Got a job at LaGuardia and, was working there and things were humming along. But then, was looking at the probability of having to move to Houston.

My wife was pregnant with our first baby at the time, and it just made sense for us to, maybe explore some other opportunities. So we, we started studying some franchise opportunities. Had an opportunity to, uh, to look at a Meineke franchise at the time. And we decided to take the plunge and join that car care chain back, uh, this was all the way back in 1985. 

And took advantage of my military,honorable discharge. Was able to get, you know, nice discount on my franchise license fee. And I was off and running. I ended up as a Meineke franchisee when my first store, we opened in 85 and continued growing that, uh, in a second store in 88.

Um, over a 23 year span, I ended up owning 15 of them, across two states. We expanded out to Colorado where I opened most of my stores, had 13 in Colorado. Along the way I was able to buy dirt and build buildings or buy buildings and grow that net wealth, like you mentioned earlier. It did real well and, and, made store managers, owners, made family members, owners, and really enjoyed that, that entire history as an entrepreneur.

Growing and coming out of the military candidly, Ronald, I'm not a mechanic. I'm like the last guy you want working on your car. And here I am, you know, Meineke franchisee owning all these businesses. But you know, the franchise model, and this is systemically, you know, they train people in how to run a business.

If you're working on cars and you own a car franchise, you're probably not following the model the right way. You need to be recruiting people, you know, most McDonald's owners aren't flipping burgers. I can assure you. So, I was able to build teams and provide good customer service. And I think that that's why I enjoyed the success than I did.

And it worked out very, very well for me. After I exited I was then recruited and moved into some corporate executive roles. Mostly as Chief Operating Officer for three different brands. Both in the automotive and fitness space. And did that for another 15 years. So, um, now what? So now I coach and mentor, uh, and specifically do a lot of work with veterans as well.

And in their journey to become business owners and franchisees holding their hand, I wish I had a mentor back in the day when I got started. It would have obviously circumvented a lot of aggravation, a lot of learning, trial by fire. But I, I, uh, I really enjoy what I do because I'm passionate about helping, helping folks in that journey and making sure that they don't make those mistakes along the way.

[00:04:10] Ronald Skelton: For those of your new, my listeners out there, if you're new out there, I'm an Air Force veteran also. So a lot of people may or may have already heard that throughout the shows, or if you're new here, you haven't heard that. So, I love the idea of helping veterans get into the franchising model.

I'm 52, I got into buying and selling companies through the hard way, right? I failed at more companies and I succeeded at, you know, starting. And there's something to be said about the franchise model, because anybody that knows that when you start a business, there's a lot of things you have to figure out, right?

You have to figure out product market fit. Does the customer, does the consumer base out there really even care about what you're selling? Then you got to, do you have a market? Then you got to figure out your pricing. What pricing works and what's the sweet spot in the pricing model that keeps you profitable or keeps you the most profitable you can, but still does a good service for the customers. There's all these different things. And then when you step into a franchise model, most of that, if not all of it's figured out for you. It's just done and it's a proven, there's a proven product market fit.

There's a proven, a lot of these franchises will even analyze where you're going to put the location to make sure it's, you know, fits the model and they'll tell you, they'll be able to tell you, hey, that's a, that's not a great location for one. Or hey, that's a perfect spot. There's just so much more support in this structure.

Can you share with us some of the different support structures that these franchise models have that's different from starting something on their own?

[00:05:34] Ralph Yarusso: Sure. I'm happy to. There's a few cliches out there. The first one being the franchisor does all the blocking and tackling for you. The next one being you're in business for yourself, but not by yourself. And there's a lot of truth to that. When you think about owning a business, you want to be able to work on it and not necessarily in it. 

Having a franchisor behind you providing research and development on technology, marketing, advertising, operational training, P and L review, all of these different aspects of owning a business. You don't have that when you're an independent operator. You're 80 percent more likely to fail as an independent operator than you would be as a franchisee.

Now, you know, a lot of people say, well, I got to pay royalties. You're paying for a product and a service. And at the end of the day those franchisors are trulyconcerned and want to be assured that you're, you have every opportunity for success. They use a lot of sayings like we give you the toolbox, but as the franchisee you need to be able to open it and use the tools. So, you know following this system of operation, it's already laid out. The hardest thing is people that try and reinvent the wheel because you don't need to. You know, it's okay to tweak it, and put your personal flair on certain things.

But when it comes to product, you know, customer service,it's all right there for you. So, yeah. And that's one of the reasons why veterans is so attractive to franchisors because they understand SOPs, standard operating procedures for the acronym. They have the discipline to follow those models, uh, take orders, if you will. And be more entrepreneurial.

[00:07:14] Ronald Skelton: It's a lot more well known now because of Gita Wickman's work in the book Traction and the EOS system that they put out. That, for a long time it's always existed. There are entrepreneurs which tend to be create, want to be creative. They're visionaries, they want to create something, and there are operators.

And this is just, you know, what I've seen for self observation, even outside of the EOS system. But, every good business I've ever seen, it's actually grown and scaled and had multiple locations. I can walk in there within 30 to 40 minutes of walking in the front door. I can tell you who the entrepreneur is, who's the visionary that had the idea and then who the real operator is.

There's somebody in that, sometimes it's the wife, sometimes it's the office manager, but somebody is the hyper organized, get everything done, put systems of processes together, the repeatable. Your average entrepreneur doesn't repeat anything. So, the reason I bring this up is I think there's a lot of guys, especially if you've been in the military more than a couple of years, you're trained to be great operators.

So to step into a franchise, you don't have to be that visionary. You don't have to create a new idea. You don't have to solve new problems all the time. You just have to be a really good operator. Whereas myself, I'm a hundred percent entrepreneur. Every time I get a good business, I have to hunt out and hire a good operator.

Because if you ask me to do the same thing four times in a row, the first time I'll nail it, I'll get it good. And from that, there's a declining, you know, um, accuracy and declining, because I get really bored with things really fast. So I think that this is a perfect opportunity for anybody who is very systematic organized or, especially in, you're trained in that in the military, right. 

I did, I probably would have been a better franchise owner coming straight out of the Air Force than I am now that I've been out for 25, 30 years and went back to my old ways. But, um, talk about the, you call it, is it vet friends? I'm going to butcher that name. You're actually part of France, France vet or something like that. VetFran.

[00:09:11] Ralph Yarusso: VetFran, is a committee that's part of the foundation. The educational foundation, which is, the International Franchise Association. So, so VetFran is an organization that,and you don't have to be a veteran to be a member of it. And if you like to visit, just go to vetfran.Org. 

And it's real easy to navigate around through that website to see what they offer and do. But essentially their advocacy for veterans, their educations for veterans, and they also, encourage franchisors to provide special programs for veterans to get into business. Kind of a thank you for your service to the country A lot of veterans, especially since 9 11 have extended, i'm sorry a lot of franchisors have extended those veteran programs, the first responders as well. Firemen, police even medical workers after covid. So VetFran is essentially, is a conduit for folks to explore veteran opportunities, have that mentorship,and also encourage. Especially encourage the franchisors to provide programs for, for veterans to, to find their pathway into franchising.

[00:10:25] Ronald Skelton: It's interesting. One of the, one of the reasons I got into this space is like I said, I'm 52. I just turned 52 a couple of weeks ago, but I'm old enough now where I don't want to play the game of, okay, I've got a good startup idea. My wife's trying to get me to help her do a startup right now. She wants, of all things she wants, we live a very interesting lifestyle.

She wants me to help her buy a, a themed food truck. And I was like, that's a lot of work. So, we'll get into that maybe another, 

[00:10:51] Ralph Yarusso: There's a, there's a couple of franchises that offer that. So,

[00:10:54] Ronald Skelton: Yeah, maybe, maybe I'll chat with you afterwards and see what's out there. Because,yeah, so a themed food truck where we are, there will be, one of the main reasons is, about 5, 6 years ago we actually changed our lifestyle to be a mobile lifestyle. 

This studio I'm sitting in can be picked up and taken with me. It's a 10 foot by 10 foot mobile studio. And then our house is a tiny home. 360 or 380. It's a small, tiny home and we can take it with us. And we've lived in Texas and Oklahoma and now in California and we move where we want to go. And, the food truck would be a business that we could take and if we, wherever we want to go, we can go set it up. 

So she thinks that fits the model. I don't think she, and she has a degree in hospitality management and restaurant management. That's what her bachelor's degree is in. So it's not like she's unknowledgeable in the subject. But, um, I see it as a lot more, I think it's a lot more work than she expects. That said, talk about the growth opportunities inside of building wealth inside of franchising.

A lot of people think that they're going to be capped at one location. Like I meet constantly, with this show, with the business networking thing that we do for acquisition entrepreneurs and stuff. And most of them view franchising as a very limiting model. Let's dispel that myth. How can we create true wealth through a franchising model?

[00:12:11] Ralph Yarusso: Well, obviously the more successful a business is, the more wealth you, you gain or the more valuable that business becomes. Many of these franchises are selling anywhere from three to five times a multiple of earnings. So, there's that growth opportunity. Multiple unit ownership and multiple brand ownership is also a real popular growth aspect.

They call it mumbos. Multiple unit, multiple business owner, where, um, you know, it's very common. Especially in the food space where you, you own a taco bell and you also own a Kentucky fried chicken. I know folks, um, I have a friend of mine who owns a Grease Monkey, Quick Lube, and also a Hardee's restaurant.

I mean, it's, it's very possible. so building that wealth and, and growing that, that footprint is very feasible. Especially when you can do it with multiple brands. But there's also another caveat to that and that's real estate. Many franchisors like McDonald's, for example, they're in the real estate business.

They're not really in the hamburger business. But there's a lot of franchise models out there that offer brick and model, brick and mortar models that allow you to, you know, buy a piece of dirt, build a building or buy an existing and convert it and run that business out of that, out of that building. And at some point in time, and I'm really fortunate to be one of those folks, I invested. And in lieu of paying rent, I paid a mortgage.

The business paid that mortgage down to zero. Now I own some commercial buildings and I sell the businesses at a nice multiple. And I've got an asset that's going to pay me a rental income in perpetuity. So,I don't know where that myth came about, but I can tell you that there are a lot of very, very wealthy ex franchisees. As well as current franchisees, but folks that have exited the model and enjoyed some really great exit strategies.

[00:14:11] Ronald Skelton: And there's some really prolific, one of the probably top acquisition entrepreneurs on the planet is somebody most people wouldn't see as one, right? It's Shaquille O'Neal, right? Shaquille O'Neal is an incredible acquisition entrepreneur,former basketball player, but he,I think he's in the total of 400 or plus, you know, businesses.

And the majority of them are some former and other franchises. Krispy Kreme donuts. I think he has some Papa John pizza places. He definitely has some, one of the two more, not Kentucky fried chicken, but one of the other chicken franchises. He just, he owns a lot,

[00:14:43] Ralph Yarusso: He started his own actually. It's called big chicken.

[00:14:45] Ronald Skelton: Does he? I say he has, he has.

[00:14:47] Ralph Yarusso: Is so wrong the same way. He do breezes on the same thing.

[00:14:51] Ronald Skelton: So, and a lot of these guys, they don't get that, there's a real reason about that. and the other side of it, a lot of people, I'm trying to think how I'd put this. One of the guys I talked to said, he's really not an entrepreneur. So he calls me and says, Hey, I want to, I really want to get an acquisition entrepreneur ship.

He came out of the military. And I said, well, cool. Tell me, tell me about your, your ability to start a business. What do you know? What do you know about finances? He goes, I just don't want to work for anybody else. I was like, cool. But what do you know about running and operating a business?

And he's like, I'll figure it all out. It's like, that's awesome. But what do you know? Where's your starting point? And, so we were chatting for a little bit. So I just told the guy, I said, really ought to probably look at franchising. He said, why? I said, because you don't have the, entrepreneurs that get into this, they have one of two things. 

They just, they can't work for somebody else, like he can't. He's like, he just doesn't believe he could be, a good employee. He's just, he's done with that. I said, the second thing is they have a real problem in the world they want to solve. And it jumps sometimes when problem, one problem, one doesn't work we always find another problem to solve in the world. And, because you don't have that, you don't have this burning problem that you think the world needs solved, I would recommend you go the franchising route. And the reason is, is because, this is going to get real hard.

When you started a business, there's going to be times where it's just not working. And the only reason that, you know, the entrepreneur stick with these things is we truly believe in our, our solution for the problem in the world we're trying to solve. When we plow through it, we figure it out. Sometimes we win, sometimes we don't. But for these entrepreneurs who don't have a cause already, this is a brilliant way for them to go.

And the other thing is he goes, well, I don't want to, I don't want to start new. Like, that's one of the reasons I didn't want to,a franchise doesn't sound good. Cause I don't want to go buy a piece of land, hang up a, uh, a money key or a Jiffy loop sign and be the, you know. That's actually, you don't have to, franchises sell all the time.

You can buy an existing business that's up and running. But have this, and it's got profit and it's got employees and everything's already figured out, but the owner's retiring out of it. It happens to be a franchise where you got the support, right? That is very possible, that you don't, you don't necessarily have to be the guy that scouts a location, builds a building and does all the stuff that you're worried about.

There's plenty of them out there that are for sale that,you still have to go to, you know, buy your franchise license. You still have to go through their training and you still get their support, but you're acquiring something that's up and running. 

[00:17:06] Ralph Yarusso: Yeah. A couple of comments on that. First of all, with respect to,after I sold my franchises and, what's next? Before I got recruited to be a Chief Operating Officer for a franchise, my wife was like, well, you know everything about business now. So you don't need to, why don't we just open up another business and not do a franchise.

I would like, I would never do that. For all the reasons that we mentioned before, I want the support, the operations, the training, the marketing. I want that team of people essentially supporting me so I can focus on the business. So that's just to kind of expand on where you were going with before on that.

But yeah, with respect to buying a business, there's a couple of different ways you need to look at that, Ron. And, I always like, you know, everybody's heard of the SWOT analysis. Strengths, weaknesses, opportunities, and threats. And that's really, I encourage anybody that's looking at doing a resale to try and, exercise that drill.

When I look at them, a lot of folks are trying to, you know, I want to buy a really high performing store. You're going to pay a lot for it and you better be have a plan on how you're going to make it better because you're going to be adding debt service. Then there was those distress sales.

When I came to Colorado, I had an opportunity to buy three locations at one time. The franchisee was going through a divorce. It was a sticky situation. I got here and I visited the stores. And Ron, I'm telling you, they were a mess. I walked in the first door and they had a backseat of a station wagon is what customer sat on in the waiting room while they were waiting for their car to be fixed.

They were, they needed to be painted. The employees had no uniforms, they, no inventory. It was distressed. And purely an asset sale. Now, a lot of people would have turned around and walked right out and said, this is disgusting. I'm really not interested in it. But I looked at it and said, this is beautiful because I can, very quickly in my mind, do a SWOT analysis and I can see the strengths, the location. There is this employees and staff, and I can see the weaknesses, the culture. Everything about what their operation, I could fix all of that stuff really quickly.

So what do you grow net wealth more quickly? Buying a high volume unit that's doing very, very well, and you're paying top dollar for it? Or an opportunity to fix something that may be broken? I quadruple sales in six months in those locations. It was easy. You know, I put inventory, I put people in uniforms.

I changed the culture very, very quickly. Made it a family type environment for the folks to work in. The worst part about that whole story is that, the guy that sold the businesses, his name was Ralph. And my name was Ralph. So I had to basically say, this is the old, new and improved Ralph running these businesses now.

But,the franchisor was ecstatic because obviously I took those stores, turned them around, it was a distressed market. And I was often running and developing that Denver market. So I grew net wealth very, very quickly that way. So is it, you have to be, very, have a good peripheral and how you're looking at these businesses and the opportunities that they offer.

[00:20:13] Ronald Skelton: I can see where that's a, there's a difference between that and buying a distressed turnaround business in the, non franchise world. And that's because you have a proven system, you know what uniform to put them in. You knew what the marketing should be. You knew what the lobby should look like. You knew what the painting scheme should look like, right?

To where if you step into, I commonly tell people, unless you've turned around four or five companies, buying a turnaround is a bad idea, right? In the normal world, because you've got to figure all that stuff out, right? You've got to, you don't have any national brand to lean back on to where buying a franchise, I kind of see the light at the end of the tunnel here.

There's a national image people expect when they walk in that door and they're not getting it. There's a disconnect. You get to restore that. To where if you buy a single operator location, there's a brand that it's built up over time and you got to overcome it. So I think there's a real opportunity in buying distressed franchises that doesn't exist in buying distressed single operation companies.

[00:21:17] Ralph Yarusso: You just have to have a plan. And that's part of the opportunities part of the SWOT analysis. What are the opportunities, what's the plan, how are we going to do that, and really understanding the threats. You know, what's, and people look at threats. They typically gravitate towards, what's the competition. But threats could be road construction. Municipality changes you know, um, uh, hourly, hourly wages. There's a lot of threats that need to be considered when you're, when you're making a purchase like this, that you need to explore when you're buying a business.

[00:21:48] Ronald Skelton: And there's different levels inside of this, right? I have a friend who, he owned, uh, a Homevestors franchise in Tulsa, Oklahoma. And then, one day I asked him, I said, how come when everybody else starts a franchise, like somebody started one in Oklahoma city, they work for him for four or five months and, or maybe even longer, maybe a year. They would come down and they would work from him and his Tulsa office.

He goes, why own the master franchise for the state? So anytime somebody wants to come here, the way they did, they would set up that they would buy theirs they go to corporate training and then they come do a OJT with him and he helps them get up and running. But he gets a portion of their royalty and he oversees them and that he can drive down there and help them anytime they want.

A lot of these franchises have that. They have regional or statewide, uh, master franchise licenses. Tell me a little bit about what you know in that realm.

[00:22:35] Ralph Yarusso: Yeah. They're, uh, area developer agreements. They're attractive. I'll tell you, you work really hard because you essentially become, like the franchise business consultant for all of those sub franchise, franchisees. So, it's great for a young guy, but I think it takes away a little bit of the entrepreneurial aspect of owning everything yourself.

So you got a lot of partners and you're reliant on them. And if they struggle, you struggle. It's not a bad model. I know there are a lot of the foods, the sub shops,offer those kinds of models. They'll take a district manager and give them ownership in five different locations.

And now he's got some sweat equity that he can work off of. I say he, but he or she, and it doesn't really matter. The opportunity is there. It's a great for folks that are maybe don't have the capital to get in, but, have that opportunity to get into business and grow it, grow net wealth.

[00:23:29] Ronald Skelton: So, let's talk a little bit about the business underlying because I know it varies from, I'm sure the Meineke franchise varies from a restaurant, food chains, and stuff like that. But, what did, I look for things where the profit margin is so high. It's ridiculous. So that if I screw it up, there's a lot of room for me to mess up, right. 

I know I fluctuate. So I'm, when I look at business, the reason why I own newsletters and I own blogs and when the wife's talking about wanting to own a food truck, there are certain food trucks that have high profit margins, right. Things that, you know, there are certain ones that don't. The average food truck profit margin across the board is 6. 5%. 

I'm not interested in that. But there's a few of them out there that run, 40, 50, 60 percent profit margin. And it's typically, funnel cakes and weird stuff. That's like the food cost is really low and your biggest expense is labor. Let's talk about across the board, what franchises out there have the best profit margins? How profitable can one of these franchises be?

I know like a McDonald's works franchise and some of these gas stations. They make pretty good cash per year, but if somebody was had a target, right, they're living in an area where the, like I'm living in California. To live here comfortably, probably need about 200, $250, 000 a year for a salary between, a family of four.

How many franchises would I need to buy to clear that type of net profit? And, you know.

[00:24:46] Ralph Yarusso: It's a great question. It's a loaded question. You know, for sure. I find that the lowest risk, opportunities that have great margins are the mobile type brands. So it's a little counterintuitive to what I said earlier, where you have the best opportunity to grow net wealth by having brick and mortaropportunities because you can, you own real estate. And that's a whole different investment model, right.

But, there's a franchise out there, you mentioned food truck called Donut Envy. They've got a great model. It's not the cheapest one to get into, but great margins because, they've got that,donut in a bag and coffee model that works really well. It's a mobile truck.

They have a taco truck. Capital Tacos is another one where, you know, it's a food truck. And they are, they are profitable and, and highly profitable. But you are an operator. You know, those models are not necessarily employee based, and it really depends on you as a franchise investor.

Do you want to run an organization and build an empire? Or do you want to be, you know, more of a mom and pop franchisee where you're an owner operator and working in your store every day. And both models are fine. I can tell you that when I started, I started as an owner operator of working every day, literally seven days a week.

Learning the business and delivering that customer expectation. And then added a second store. Well, guess what? Now I need two store managers and I'm bouncing back and forth between locations. But the food, the home service brands where, the, there's a couple of, believe it or not, there's a, there's a, uh, a franchise that just does grout repair. Sir Grout, it's a franchise, you know, where they go in and they clean grout and they replace grout in bathrooms. Highly, highly profitable model.

Power washing homes. There's some, there's a, there's a couple of businesses out there that do gutters as well. The gutter trucks, they actually fabricate right on their truck. So again, not a brick and mortar franchise, but they do fabrication model. And when you can fabricate, you're eliminating a middleman rather than going out to buy a gutter and install it.

You're basically manufacturing right on site. So, you know, those kinds of service, services are really profitable. Back in the day when Meineke was Meineke Discount Mufflers, before, they got involved with car care and before exhaust systems went to stainless steel, we had pipe ending machines.

And we were buying straight pipe for, I want to say about $7 for a 10 foot stick. And we were making tailpipes and selling those for 40 and $50 a piece with that same, you know.

[00:27:26] Ronald Skelton: I remember,

[00:27:27] Ralph Yarusso: $7 stick. Yeah. So

think of that Oh my God.

[00:27:30] Ronald Skelton: When you say Meineke, I still think muffler, muffler repair, because, you know, I'm old enough.My 78 Rally Sport Camaro, I remember going in and having the, the system replaced, right? so I had a friend that

[00:27:40] Ralph Yarusso: money, a lot of money in custom exhaust work.

[00:27:42] Ronald Skelton: Yeah, I had a friend at Meineke and,one of the local ones, I'm going to get him in trouble now, but it's been 50, 40, 30, 40 years now. It's been in the, 88, 89, I guess it would have been the timeframe, right? But he custom made one. He sent a straight pipe right through a muffler for me. So it looked like it had mufflers on it, but it was straight pipe from my Rally Sport Camaro.

So, yeah, it looks, if you crawl underneath it, you looked underneath it, it looked found, but man, it was louder than normal. So, uh, he do custom work for a lot of us.

He went straight from my head or straight through the, you know, bent it like it all, it fit all where it fit. But when it came it goes to the muffler, he just, he bought, we bought some off the shelf mufflers and went straight through them. 

[00:28:18] Ralph Yarusso: There's an, a, there's a good example, Ronald. What you were, you were talking about before with being part of a franchise model. If you were a mom and pop, muffler shop, you probably went out of business, but because you're part of a franchise like Meineke, when the exhaust business evaporated because of stainless steel, they transitioned over to Meineke Car Care Center.

And now they're introducing brakes and oil changes and other services. Now they were actually do deep, automotive repairs, which is probably not a model that I would be attracted to today. But they were nimble and they had the R and D team at the corporate office that enabled them to prepare to move the chain to a different direction and pivot to something that, was able to keep them sustainable. So they completely changed their business model and fortunately didn't become blockbuster.

[00:29:03] Ronald Skelton: Right. That's a benefit of that too. I mean, cause they get, when they move, they can actually move to the other profitable mufflers. When they did mufflers are probably one of the most profitable things they could have done. And then like, okay, mufflers are going away. What do we need? Well, brakes would probably be good and profitable.

We're exchanging labor. Um, you know, oil changes, you know. I'm not into car care at all, but I, you know, owning energy fuel would probably be something I wouldn't mind doing it. I don't want to work fifty, sixty hours a week. And as long as it's something I can get the training and within the first year I can have somebody else there. I'd be interested in something like that. Right? Because I know,

[00:29:35] Ralph Yarusso: Oh, you can, you can see my shirt, victory lane, quick, quick oil change, you know. I still, that's one of the franchises that I highly promote. It's a great, the great margins in those, but again, it is a real estate model as well.

[00:29:47] Ronald Skelton: Yeah, and I'm a real estate guy by previous trade, but, mostly on the residential side. So I think it's a brilliant model, to use and leverage. And, a lot of people don't get this too that, you know, if you want, you can leverage that model out too. You can choose and pick which locations you want to continue to own the real estate.

And then I teach something and have people a whole team around what's called a sale lease back. You could actually sell these back some of those locations to expand your growth. If you like, you know, you pick the locations that mean the most to you so you have a real estate holding in your longterm portfolio.

But if you needed some cash to buy another franchise or something like that, there's some creative ways where you could secure that real estate. Put it with an investor that would work with you on a sale lease back and then pull a premium price off the market for it and redeploy that cash. 

[00:30:36] Ralph Yarusso: That's right.

[00:30:37] Ronald Skelton: Let's talk about the, what's the variety inside? And I know the answer to this, but I want people to hear it. The variety inside of franchising models and franchising opportunities. For instance, I'll give you one. I never thought of this, but I, I worked so much even in my previous plan. I had my real estate portfolio in my real estate investment company.

Everything I did was mobile. I had mobile mechanics come to my house. For one, I blew two tires of, weirdest thing I blew two tires. I blew, one of them blew out on the way home. I got it changed when I got there. By the time I woke up in the morning, I had nails in two other tires. So I lost three tires overnight basically.

I called around and found a mobile tire repair place. And they brought new tires on it, had the tire changing device in the truck. And they pulled, you know, uh, multiple tires off of it. You know, pulled the tire off the rim.

Cause it was, they were pretty, pretty messed up. And, replace tires for me right there, on there on our farm. So I just, I think there's such an opportunity. Talk about the different variety that there is of franchises out there.

[00:31:36] Ralph Yarusso: Sure. Yeah. So, uh, like that mobile tire changing, they work really well in conjunction with a home base. So they get dispatched. But it's really hard to do the volume you need to make any money. Because how many of those jobs a day can you do driving from site to site? Not a lot. So you just don't get the volume.

But the variety out there is, unbelievable. I mean, even as long as I've been in franchising, I'm astonished every day. There's a franchise out there right now that does crime scene cleanup and hoarder cleanup. And, um, there's a franchise that I visited most recently. That does orthotics and prosthetics.

And who knew that that was a franchise opportunity? American Family Care, the Urgent Care Centers, that's a franchise. So, you know, it's not just the Taco Bells of the world and the Meineke and, and Victory Lanes of the world, it's just about every industry, every business that you could possibly think of this, probably a franchise model for it.

That's why, working with a franchise consultant is so important because when you start that journey looking for a franchise business model, what do you want to buy? What do you passionate about? How can we leverage your previous work experience into something that translates over to something that you can use in the franchise model.

It could be accounting. It could be customer, you know, home care, senior care, child care, pet care. It's amazing and you know, the pet care ones, the mobile pet care ones also highly profitable. But they also have the, the camp bow wows and dog topias of the world. But highly expensive to get into.

But yeah, the variety is so far, it's infinite almost.

[00:33:21] Ronald Skelton: What's the price you've mentioned that a couple of times, highly expensive to get into. So that's a very subjective term, right? Highly expensive to you might be different than the highly expensive to some of the people listening to the show. So what's the price range that people are looking at to get into a proven, not a brand new one, because I know there's some brand new ones that are pretty low cost. But a decent proven franchise model, what's the price range for somebody would be looking to get into?

[00:33:49] Ralph Yarusso: So we'll look at pet care for a moment. So you can do a mobile dog training franchise. And you can get into that for a hundred, $150, 000. You can own a doggie daycare center that needs 5, 000 square feet. And by the time you do all the build out, you could be north of a million bucks. So, and not own the real estate.

So, so that's where the disparity lies. So when I look, when I'm talking to an investor, what are you comfortable with, as far as, you know, your investment choice here. You want to be more conservative and, you know, have a less expensive franchise to invest in. I put the, I mentioned to you earlier about an army, uh, veteran that I put in a mobile automotive detailing franchise called Grizzly Automotive Detailing. 

The guys that run that company are all army veterans. So it was a natural introduction for me. But he didn't really have the money to invest a whole heck of a lot to get into business, but he had enough to get involved with them. So that's why I made that introduction.

It wasn't something that he was thinking about. He was thinking more about an apparel type franchise, you know, uh, shirt production and that kind of stuff. But after the introduction and after he did Discovery Day and did his due diligence, he moved forward and bought a franchise down in, in Florida.

So, it really works on a lot of different fronts. So I know that's kind of a long answer. I hope I answered your question the right way.

[00:35:19] Ronald Skelton: I think you did a, it's just, it depends on the situation. And it ranges from, probably there are some out there that are in the five, high five figures and then all the way up to like, if you want to think, if you want to open a McDonald's, you got to have a couple million dollars, right? There, theirs probably the most expensive.

[00:35:33] Ralph Yarusso: Yeah, Chick fil-A is way up there. There are some brands that, if you have a lot of furniture, fixtures and equipment you're buying, you know, and a lot of the, the automotive in the world, the restaurants you're buying ovens, you're buying lifts and machinery.An alignment rack nowadays costs, you know, a hundred thousand plus.

So when you get an alignment on your car and you're griping about spending 79 bucks for an alignment, understand that there's a lot of money invested to be able to do that alignment the right way with the right technology.

[00:36:02] Ronald Skelton: Yeah. It takes them a long time to replace it. A couple hundred grand worth of equipment with 79 bucks per, per visit. The model is incredibly diverse. I love that. Pretty much anybody that comes to you, with, varied background and skills, there's just so many different things you can put in front of them.

So I don't think that there's ever going to be a situation where somebody comes to you and goes, there's just not a franchise model that will fit something I'm good at. What are some of the better and hotter things growing right now? You've been doing this for long enough. I've got another question I'll ask you here in a minute, but what are some of the, like, if you got the money, this is the franchise to be in. They're growing like mad, the stores are doing really well. Like for me, I've seen these bubble teas popping up everywhere. And I looked at the model, they're basically making powder and water into something they sell for four or five bucks. It's gotta be extremely high profit margin, right. But they're popping up so much now there's two or three on every, and if you go to a big city, there's two or three on every city block. 

[00:36:59] Ralph Yarusso: Yeah. There's there's a couple of brands out there that are franchise models for mental health and they seem to be really hot. People are really, gobbling them up. One brand is pretty much sold out in the entire country. Another brand is, going because of the other one being sold out the other one's going really fast. 

Even the, the men's health one, there's a brand out there called Game Day. Where, you know,the men's health opportunities for low T levels and things like that seem to be really popular. These IV bars where people go in and get, IV hookups for nutrients and for vitamins and whatnot.

They seem to be getting more and more popular. I think that, uh, some of the real estate models where you're doing real estate management are also very, very attractive to, to franchisees. There's some expense reduction analysis franchise models that are out there. I like them a lot because they're home based.

The franchisor does all the analytics. And the franchisee basically works as a representative of their company. Where they'll go into a company and say, Hey, I see you running this company here. If I can save you money on your monthly expenses,it doesn't cost anything to run the analytics, but if I can save you money, we share in that, in that savings.

And that's a very low investment, high profit. In fact, one of those brands that I know of that, that franchise model sold. And now this is a New York, but he sold for 4. 75 million on a flip. So, and this is a brand that costs less than a hundred grand to get into. So, you know, they're out there.

[00:38:34] Ronald Skelton: Some of those, I'm very familiar with those. Actually, I looked at those. I have a friend who does one in that realm, cost segregation. You know what that is? So they do, Research and Development Tax. They basically look at your business and he doesn't do the work. He's a sales guy. The problem I see with his model and the model of the cost segregation is, it's such a unknown topic.

It's a tough sell for him. A lot of people think that, he goes and he just, he's had, he's been doing it for years. He's getting, he gets them done, but it's just not an easy sell for him. Even like when he goes to the CPAs and stuff and explains what he does because they don't know it and they don't do it all the time.

They think there's up with it. The whole, the other model you were talking about where they save money on, they analyze all the errors and stuff in the, electric bills and they auditall the bills and stuff, and they find errors and clean that up. I've always thought that, I looked at those and the reason I didn't do it, and it still hasn't been this.

It was a fallacy I had 10 years ago I looked at that. And, when I was in between starting businesses, I almost bought one. And I said, you know what, with computers getting the way they are, that's all going to go away. All these errors are going to eventually going to go away. And it's not true. They're still there. So I'm curious as to,do you see,is that a continuing operation?

It's kind of like the IV parts. That sound, that intrigues me, because I think it's very, basically you've got a good location, but as far as equipment and stuff, it's gotta be low cost. The cost of goods sold is really low. You're buying, you know, vitamins and,saline basically, or whatever the solution that's been put in.

It's like water, right? Filt-, filtered water. That said, liability might be high cause you can blow somebody's vein out or do something weird. I'm really, I'm historically hard to poke. So when I go, when I go to the local vampires, when I go to the VA, I call them the local vampires cause they draw more blood than any doctor I've ever seen.

You can't go to the VA without getting six or eight vials of blood pulled from you. They have to stick me two or three times most of the time just because I'm just hard to stick. So I can see the difference inside of that model as to, is it a trend though? I would go buy an IV bar if I thought it'd be around for 25 years and people are still gonna want the IV treatments.

There's been many a times where I wish there was one nearby here because I'm dehydrated. I know it, I've been sick for a couple days. And it's just like, I don't want to go to the ER until I'm next. I got to sit there for six hours to get an IV, but I would pay a hundred bucks to somebody to, just, I know I'm dehydrated.

[00:40:47] Ralph Yarusso: I just know it. I can tell by, you know, I'm dizzy when I stand up and stuff. I'll just go get an IV somewhere, but there's this, I look for it. There's not one nearby. Yeah. Those are recurring revenue models. So you become a member. So you go in once a week or whatever, you pay a monthly fee. So, yeah, so they're, they're pretty interesting. The problem with that, with a lot of those is occupancy costs, because you need to have the right location. And, you need to understand the, the metrics of the unit economics for the business.

So if you've got a, a 10 or a 15% dedicated budget for occupancy cost. And your rent is, is $10,000 a month. Well you better be doing a hundred thousand dollars a month in sales to hit that 10, 10% rent rate. So that's where, you know,you just gotta be careful with some of those brands.

[00:41:37] Ronald Skelton: I used to visit a mobile dentist. The dentist would come to our, when I, this is back in 97. When I worked for Lockheed Martin, the mobile dentist was a big, fancy RV. And you walk inside of it and you had two dental chairs. Him and another dentist worked out of this big, fancy converted RV. I think the IV bar could be the same thing.

You could take one of these limousine party shuttle buses that have all the limousine seating that's really high end. And go park somewhere and say, and just have a Facebook app that says, here's a GPS location for today. And people stop by and just kind of centrally park yourselves in different locations.

They need to lose the rent. You lose all that. And, I think there's a model behind that. That's a, that's something I might look into. 

[00:42:17] Ralph Yarusso: Yeah. I mean, you know, a lot of those require a nurse practitioner or registered nurse to do that. Especially if you're doing Botox and that kind of stuff. So it limits the audience of folks that can purchase that kind of franchise. Or I don't, I don't wanna say it limits the audience, but you have to know, you need to know that you need to hire those kind of folks that can do that kind of stuff.

[00:42:36] Ronald Skelton: Same way with, I think that mental health one, right? You'd have to hire, psychiatrist or psychologist, you know, clinicians. Somebody who's got a license to practice mental health. But you know, a lot of the businesses we look at are the same way, right? We look at things like, elder care. I think there's probably a lot of franchises in the older care, memory care facilities.

There you have to have like, you know, most of the time the operator isn't a licensed clinician that does memory care. They just, they own the real estate. They hire in all the people. I interviewed a guy, came out yesterday, actually, or a day before yesterday. He buys those elder care facilities and stuff.

He's raised over, he has $100 million fund where he does multiple acquisitions per month. He owns them across multiple states. He's not a memory care guy, but you know, he owns and he's not a drug rehab guy, but he owns, veterans homes and, and that type of stuff. I think that there's an opportunity for any of this.

I mean, tell me, correct me if I'm wrong, but there's franchise opportunities in all those areas, right?

[00:43:31] Ralph Yarusso: Of course. Senior care is one of the most popular nowadays. I mean, 10, 000 people a day turn 65. And I've probably got 10 different senior care brands in my inventory. I've got over 500 brands in my inventory of franchises, but the senior care one,very, very popular. And a lot of them, they sell out their territories as well.

Yeah. So, so that's a very, very popular model.

[00:43:57] Ronald Skelton: You know, when you move from being the Meineke operator to doing what you're doing now, one of the ways I would have thought about, like my mind would go, if I had your experience, I would look for companies like, like, and now we're acquiring manufacturing companies and stuff like that. I'm on a, I'm on a advisory role in a franchise. I'm not a franchise rollup, but, um, manufacturing rollup. And, I think there's an opportunity to look out there for companies that are ripe for being franchised. Did you consider that at all? Like there's companies out there where they've got two or three locations already.

Their systems, they're really well vetted. Their system, the processors out. And what's, the only thing they haven't done is pull the trigger, do the you know, state franchising board paperwork. And do all the, hundreds, it's not cheap. It's a hundreds of thousands of dollars to, to license themselves as a franchise to start moving themselves to that model.

Did you consider that when you moved from owning the franchises to doing what you're doing now?

[00:44:53] Ralph Yarusso: Not really, but what I have done is counseled folks that want to do that. I mean, I've been working one on one with one, in particular, I had a an hour session with them yesterday. They have a new franchise. They filed their franchise disclosure document with the Federal Trade Commission, and they are launched officially.

They don't have any franchises yet, but the, the concept is, aircraft detailing. So, yeah. So they work, side by side with FBOs. It's a mobile brand. So, you know, they run out of their vans and they dispatch to local airports. And, they, a lot of these private jets need to be detailed. No different than getting your car detailed.

They've already got a proven business model. They've been in place for 20 years and now they decided to expand it into franchising. So I, I have consulted with them and help them along the way to get to that point. All the way up to and including attending the International Franchise Association convention last month in Phoenix.

And they attended, they loved it, and they're on their way. So yeah, as far as investing in it, I just haven't really thought about it. I'm at that point in my career with seven grandchildren. They seem to be my main focus, to be honest with you.

[00:46:08] Ronald Skelton: I got it. I got it. One of the reasons I don't like want to buy something where I have to pull 60, 70 hour work weeks myself is I have an eight year old and a 13 year old. My 13th year old just got into basketball. I don't miss a game. My daughter, on Tuesday, I guess it was, we took my son to a thing to check out some boxing.

He really liked it. My daughter wanted to join in and like now my daughter, you know, eight year old daughter doing boxing. Which is cool. I'm, I'm cool with that. But I want to be there if they've got a match or they're, say they get good at that and they're going to get in the ring. I want to be on the, on the ringside cheering on.

I want to be cheer daddy. I don't want to be, oh, I've got this big business thing going on. I can't come to your game. My dad was that way and I'm just not interested in it. That said, I also want to be an entrepreneur. I want to grow wealth and leave something to the kids. So I'm always looking for the balance of what can I get my hands on and work with and have great operators in there.

And I'm just the oversight, right? And I think that model's fairly alive inside of the franchising model. Especially if you buy existing units that need to be turned around, right? Yeah, you got to put your feet on the ground for a little while and get it up and smoothed out, get the right business owner in, but you've proven the model where there's no way you could have managed personally.

Been the GM for 15 or 20, units. You had to put good people in the right spot and then oversee that. That's how you did what you did. So, there's a lot more opportunity in this space than people give the franchising world community or what do you want to call it, credit for.

Let's talk a little bit about the opportunity for, the veterans, right? Because I, I want to get the word out to all my fellow veterans who, maybe you're having a hard time working for other people, right? They're not systemized enough. They don't have enough organization. A lot of these times we get hired as veterans onto startups and stuff, and it's a little chaotic for us.

I think this franchising opportunity is, could be a goldmine for a lot of these guys. Talk about what's out there and how the Vet Fran and the other organizations can help give them the skills they need. Because I know you guys have educational opportunities also.

[00:48:05] Ralph Yarusso: Sure. Yeah. Again,vetfran.Org is a great place to start. Many franchisors that are members of VetFran offer significant discounts and opportunities for veterans to get started. And a lot of them are also extending those opportunities to their spouses. So, if the veteran is deceased or, unable to buy the franchise because of another job situation, the spouse can, can, uh, can take advantage of those,those benefits.The discounts can be applied to, not just from a discount on the franchise fee, but there are many vendors.

So I've worked with, you know, different suppliers like ExxonMobil and Chevron. And those kinds of automotive suppliers that will actually extend discounts out to veterans as well, because everybody wants to be part of that. Franchisors are really attracted to veterans. Veterans make up about 7 percent of the population in the country, but make up 14 percent of the population of franchisees in the country. 

So franchisors are highly attracted to veterans. Veterans, again, understanding system of operations and having a discipline to follow that, that system, makes them very attractive for franchisors.

[00:49:27] Ronald Skelton: Awesome. Awesome. And then, it doesn't matter where you live, right? All 50 states. Is a franchising model of common for the expats that are out there. We do have people listen to us all around the world. Is franchising something that's common in other places too, or is it just pretty much an American thing?

[00:49:41] Ralph Yarusso: No, it's common around the world. There's a lot of international type franchise brands that are out there and that are available. Sure.

[00:49:48] Ronald Skelton: Okay. So I know we have a lot of listeners in Australia. We got a lot of listeners in the UK. I get guests all the time on here from UK and Dubai and other places. So, people come on the show. So just wanted to, you know, not alienate all those guys. I'm sure that if you're a veteran of that country, if you're a vet, if you were in the UK or in the, in your veterans, there's probably organizations the same that we have here.

It won't be a,

[00:50:12] Ralph Yarusso: I know the Canadian, the Canadian Franchise Association has a VetFran program as well.

[00:50:17] Ronald Skelton: Yeah. So, for all my international friends there, these same opportunities exist for you. So, how do people reach out to you? What is the best way to get a hold of you? And start looking at, where did somebody start like, you know, I want to, I kind of want to get started in this. I need to do some research.

What's the best way for them to kind of start dipping their toes in to do, I want to be a franchise owner. Where should they start?

[00:50:37] Ralph Yarusso: Well, my company is Atticus Franchise consulting.com. That's a great place to start. You can just click right, right on there and, uh, connect with me and schedule an appointment on my calendar right there. It'll also list all of the over 500 franchises and industries that are in my inventory. I'm part of International Franchise Professionals Group, so which, which is a company that aggregates franchise consultants like myself and franchisors to be part of their network. 

So it makes it a lot easier from us, from a education standpoint, training standpoint, all of the government things that you need to comply with as well. My cell phone, happy to give it 303 587 6373. Call me, text me. And of course my email address is ralph@AtticusFranchiseConsulting. com as well.

[00:51:29] Ronald Skelton: I'll be sure to put those in the show notes too for those you guys are listening. So you can go back and pull up the show notes and underneath the, underneath this video or on the podcast channel and that you're listening to, it'll be down in there. So I'll make sure those get there. Give us two or three takeaways.

If somebody could remember only two or three different things from today's conversation, what would you want them to remember about franchising and the opportunity it presents?

[00:51:53] Ralph Yarusso: Well, the three things that, that stall a franchisee in moving forward, are funding, fear and spouse. So you need to have your spouse highly engaged in what you're doing. Don't present that to your spouse and tell him or her, Hey, I decided to buy a franchise at the last minute. Funding, make sure you're working with the right franchise consultant to lead you in the right direction.

Maybe you're using 401k rollover money. Maybe you're, using a HELOC, but they know who the preferred SBA lenders are to work with. Making sure that, that and then the fear, the fear of the trepidation that people have. Not knowing what they're getting themselves into. Understanding the franchisee validation process. Working with a consultant is, saves a lot of that, um, trepidation, if you will. Gives them the opportunity to, have somebody hold their hand and mentor them.

I don't sell franchises. And most consultants don't. What we do is teach people how to buy them and make sure that they're, focused on something that they're passionate about, that they can see themselves in. Whether it's managing people or running it themselves. So having that intimate knowledge in that relationship with your client is really critically important as you help them in that journey.

[00:53:06] Ronald Skelton: Awesome. Awesome. Well, I want to thank you for being here. I think we've covered the topic fairly well. We'll call that a show. And hang out for just a few minutes afterwards. Thank you.

[00:53:16] Ralph Yarusso: Okay, you bet.