Jenny Sutter is a Market President for FranNet, franchise consulting. Jenny works with people who are considering business ownership identify franchise ownership opportunities that meet their criteria. You can think of her as a franchise matchmaker...
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Ronald Skelton 0:06
Hello, and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.
Hello, and welcome to the how to exit podcast. Today I'm here with Jenny Sutter. She is the Market President for FranNet. I want to thank you for having, uh, being on the show today. And we're I'm excited what we're going to talk about, and it's something we haven't talked about on the show yet. So thank you for being here today.
Jenny Sutter 0:47
Yeah, thanks for having me.
Ronald Skelton 0:48
Cool. So I'm gonna start with you, where I start with everybody. Kind of how did you get into this space? What is your origin story? You know, by franchising?
Jenny Sutter 0:58
Yeah, so I actually,uhm, you know, I went to college, got my business degree with a with a focus in marketing. And I actually used my degree. Right out of college, I, I started working for a restaurant corporation. National restaurant chain, as their, as a marketing manager for them. Did that for about three and a half years. It was a great, you know, right out of college job, honestly. And then after that, I went on to doing marketing for a med spa chain. So I went from burgers to laser hair removal, which, you know, but marketing is marketing. So I did that for gosh, I was with that company for just over 12 years. So I was with them for quite a long time. During that duration of being, you know, in the corporate world, I got married, I had kids and my lifestyle just changed. The things I wanted in life, the way my day looked, I wanted it to change. I was traveling a lot, I was working late, and I didn't really have time to, you know, go to my kids, little school parades or, you know, be the classroom mom that I want it to be. So I realized I really needed change, I was getting really burnt out. So when I thought about that, I thought, okay, you know, what has changed look like I could get another job somewhere. But honestly, that would look exactly the same, just different color coming in a wallpaper on the walls. So I didn't want to do that. I could start my own business. And that wasn't something I really was interested in doing. I with my marketing background, being a marketing consultant just seemed like it wouldn't be a better lifestyle for me, quite frankly. And then I thought, well, I could you know, what about a franchise, because I was familiar with franchises. Both the Med Spa chain and the restaurant chain that I was with, were both franchises. And so I was on the other end of franchising, I was on the support side of franchise. So I knew at the franchise that if you follow the system, it can work. And so I thought, Well, why don't I just turn a whole new leaf and do something completely different? And, you know, search out franchises. So I did, I started looking for different franchise opportunities that were out there, I did what most people do, and I googled the best franchise in, I'm in the the Tampa Bay area. So I googled best franchises in Tampa Bay, and lots of things popped up. So I quickly got pretty overwhelmed. Started researching some opportunities that were out there that didn't make a whole lot of sense for me, based on what I did want my lifestyle to look like. And luckily I did find a franchise consultant to help me and navigate through, you know, what, what opportunities are out there that exist in the franchise world that are available that are within my investment range that would you know, check my boxes for my lifestyle goals. And so started researching different franchises working with her. Turns out she was retiring, and FranNet is a franchise. So FranNet was one of the franchise opportunities she did present to me and I guess you probably know the end of the story there. That's how I am where I am now. Being a franchise consultant, I now help people who are in a similar place as me looking for franchise opportunities. Find, find the options that are out there that makes sense for them.
Ronald Skelton 4:28
You know, a lot of the mentors and stuff we that we use in the acquisition entrepreneur, entrepreneur space, they kind of lean against, like away from franchises. They say, No, no, no, don't do that do that. But what I found and this is reason why I agreed to and wanted you on the show is what I found is a lot of the people that do these courses, we talked about this a little bit before the show. They just don't have operational experience. They've never, it might have been a great employee for a while and maybe they, actually helped us document some systems and processes but they've never had, like a p&l responsibility of profit and loss responsibility at a company. They've never had, like ownership of something like that. And for one thing, I think this this is, you know, one of the things the coaches and the mentors will say is like, find companies have great systems and processes. Well, you got that. If I find systems that have, you know, a proven, you know market, you know, use of that. So a lot of it checks a lot of the boxes. And you don't necessarily have to, you know, this is one of the myths that's probably out there, right? You don't have to necessarily buy one that's like, and build a building to start your own. Right, there are, there's a market for ones that exist, owners are retiring, doing something else and are for sale. So I wanted to chat about some of that, like, what is different from just buying your mom and pop, you know, construction company, and buying a franchise?
Jenny Sutter 6:03
Well, for one with a franchise, like you mentioned, you know, they have systems and structure in place. So they are a proven process for, you know, getting into business and staying into business. They've already, they've already made the mistakes. They've already, you know, figured out which POS system that needs to be involved or CRM system that needs to be involved, the technology stack, without having to do a lot of trial and error there. They've already, they have coaches that they you know, and mentors that they have for you so that if you do have a question about something or can't figure out how to navigate something, you know, you have a resource to reach out to, there's training that they provide to you. So there's, you know, it's a, I don't want to say it's as simple as a business in a box. But there's a lot of resources that you have, you know, at your disposal, disposal with a franchise, and they give you that pathway for getting into business and staying in business, if you should go the route of buying an existing one. Or if you are to kind of start one from ground up.
Ronald Skelton 7:06
You know, the other thing is, is a lot of people think well, the reason that, you know, and I get I get some of the extent why the mentors and coaches say stay away. But it's because, I get it, I don't necessarily know if I agree with it. One of the interesting things is, is that there's this misconception out there that you can't grow through acquisition. And that's a big strategy, they teach by your competitors, by your suppliers and that stuff, the suppliers would probably be out in the franchise, but you can certainly buy out other similar and franchises in this space. So you talk about, like, what are the different growth strategies? Is it buy in multiple locations? What are what are the growth strategies available to somebody who's wanting to do acquisition, entrepreneurship, but starting to franchising because it has a lot of those boxes checked?
Jenny Sutter 8:00
Yeah, so there's a couple of different ways that people grow, utilizing, you know, franchise to grow. First and foremost, there are franchises where you know, you there's high growth opportunity. So think of, you know, kind of some, you know, you know, first to market franchise is that are out there, where are the growth opportunity is huge, and you buy multiple territories or multiple units. So you can grow with the same existing franchise, and, you know, having multiple, multiple units, and then that's way, you know, to build your business and growth opportunity. Another way is to buy multiple different kinds of franchises. So it's not uncommon for people that, you know, are in, let's say, a home services franchise, to then invest in a different home services franchise, because now they have crossover clientele, and they can, you know, cross market to each other. So it's a, it's a, you know, it's a complementary business opportunity. So there's different ways different growth strategies, depends on the availability in the market for that particular franchise, of course, but, you know, there most people, depending on the kind of franchise don't always invest in just a single unit, they invest in multiples. If that's what they're looking for is growth.
Ronald Skelton 9:16
You know, there's also the opportunity to grow through having systems or processes to run your business a different way. The one I'm thinking of in mind is I had a guy who presented to me a franchise I didn't know as a franchise were presented, I probably would have not listened as far as I did. My, my fallacy, not you know, my bad, but it was a mobile tire repair. The reason, the only reason I knew it existed is I had a blowout, and when I towed my truck to the farm, which is 27 miles away from anything out there in Oklahoma. Anyway, when I towed it to the farm, that I guess I had damaged the back rear wheel also. So not only did I have one flat, which I had spare for it, it was just too late the want to change it. They had a blowout that like, one o'clock in the morning. It's like, I'm just calling the tow truck, take this home. I'm gonna go home and lay down. And so I go outside and there's two flat tires. I'm like, okay, now what I do. So I started calling around my mobile mechanic, you know, guy, I have come fixed my car, you know, I'm too busy to go drop my cars off the shop, I make them come to me and fix it there. So I have a mobile mechanic. So I call him and I say, Hey, could you come out and bring, you know, bring a couple jackson, jacksons and he's come all the way up to my farm. And this was going to get expensive. I said, pull off two of my tires, take them into town, and get him fixed and bring them back, put them back on. He says, You know, I have a buddy who owns a mobile tire repair. He actually has a truck and he, you tell him the size of tires, he just brings the tires and brings them on to put them on the farm and he's done. So when he did that, I was like, I was really you know, kind of intrigued. And I said, you know, if you ever think to sell this thing I'd like to, I'd like to talk to you. It's kind of cool. And he goes, Well, I'm not the owner, but the owners are wanting to retire. They bought this recently and decided that they wanted to just did, they don't want to do it. So I ended up talking to him found out it was a franchise. And so I kind of backed it, it was only doing about 100k a year.
Jenny Sutter 11:07
Ronald Skelton 11:07
That's a job. And so but I talked to him and I went down, and I don't think that ever got sold to you know, to who I presented it to. But I had there were two guys I know that had a shop where they did tire repair. I said hey, man, you gotta you gotta just buy into this franchise, because you're local. And sometimes people call you. You know, I know you get calls all the time, hey, can you send somebody out or something. You should buy this franchise, get two or three vans, do everything here, but also have the ability for the upscale seller services like hey, you know, you want us to come out to your place or your your work and change your tires, we can do that too. And that would be a brilliant growth strategy. So I think there's some stuff inside of there. If you look at him, like, if you had a think of another one. I'm in the real estate space home services, right? If I like, I have friends right now he's, you know, they have a ton of Airbnb's. You know, buying a Molly maid franchise, probably not a bad idea for him, right? He's constantly happened to have something clean, like, you know, spur of the moment. And that's the biggest problem he has is cleaners not showing up in that little gap he has before in booking, you know, so he ends up he has to go out and clean his own places. So what about, what about those type of growth strategies? Have you ever helped people that before?
Jenny Sutter 12:27
Yeah, I mean, definitely, that's, you know, so in the franchise world, especially with a home service, usually you are investing in a territory. So you know, maybe it's a county series of zip codes, a number of house number, you know, households that meet your criteria, but you usually have, you know, a territory. And so that your first growth strategy is, of course, to maximize that territory, because, you know, so that might mean multiple vehicles. So let's say at home service, residential cleaning service, like a Molly maid, or home clean heroes, or one of those, you know, you're going to want multiple vehicles on the road. So that's your initial growth strategy is to, you know, market enough to saturate your initial territory in order to grow your business. And then your secondary growth strategy is to invest in multiple territories. So now you just continue to have more and more vehicles on the road, you're maximizing your marketing spend, and you're maximizing your, you know, the the employees because you're able to tap into the same employees to do different jobs. So that's, you know, kind of, that's the kind of growth strategy that a lot of people look at is, you know, starting with one growing that and expanding beyond there so that you can tap into the resources that are already existing.
Ronald Skelton 13:46
I just thought of something. What about a franchise that starts out? Do you get any franchises out there? They're young franchises, what I what I'm thinking of. They've got six or eight locations. And, you know, the reason I'm thinking about this is during the marketing roll up last year, we were working on one of the marketing agencies had franchised that had eight, seven or eight locations. And as part of what we were doing, we were gonna actually just acquired a whole bunch, right, with the master franchise. I forget what that called. Is that what it's called the like,
Jenny Sutter 14:17
Yeah, it's usually called a master franchise.
Ronald Skelton 14:19
Okay. So we're gonna acquire them and then he owns some of the locations he bought them back. And but do you come across that where you know, a franchisor started, they got six or eight locations, and now they're considered selling the whole package?
Jenny Sutter 14:34
Oh, yeah. So there's, there's different ways to invest in a franchise and some franchise organizations have what's called a master franchise or an area developer. That's another another way. Where they'll sell an entire market, let's say. So again, I'm in Tampa, they might sell the Tampa market as an Area Development master franchise deal. The goal of that master franchise owner is to then find other franchisees underneath him to, you know, make, let's say Tampa, for instance, can hold seven or eight different franchise locations or territories, whatever that is underneath them to find, you know, different franchisees underneath them. So they're making a piece of the pie, right, they're making a percentage of the percentage. So that's one way that that, you know, that's one option in franchising is to be kind of an empire builder, or to own multiple as a master to own the multiples and then sell off the multiples once they're already up and running, because then it becomes more of a resale. It's a thriving business, hopefully, and so it becomes something that is more resellable. So two different ways as a master franchise that people go about doing that.
Ronald Skelton 15:44
What about buying? I think more of what I was looking for is buying the franchise, the franchise or right, the actual parent company that, you know. Like, that's what we were doing. He wasn't we weren't buying a master franchise in that realm that you were talking about. We were buying their franchise, the parent company, yeah. Right. And then, you know, looking to, like, own the offices and actually use the offices to upsell other marketing services from all these other companies we're acquiring. So do you get, do you come across that very often where, you know, somebody started to franchise their business? They've got so many, maybe 10, 15 different locations, but the franchise or is willing to sell the entire company?
Jenny Sutter 16:28
Sure. I mean, private equity comes in, VC companies come in. There are a lot of franchise organizations that are under umbrellas, right. So I don't know if you're familiar with neighbourly, for instance, it's probably the biggest one has a lot of home services franchise. I mean, they have probably 15 to 20 different franchise organizations underneath them. How do they do that? They buy out other, you know, companies that have started to franchise and say, hey, we'll buy your franchise, because it makes sense to bring in under our umbrella complement it, and we're going to systematize it in the way that we've done it with everything else. So yeah, to answer your question, yeah, we see that and it comes in a variety of different ways. Usually, it's a bigger franchise organization that's buying a smaller one, or, you know, private equity comes in quite a bit too with franchises.
Ronald Skelton 17:16
So most of my listeners, including myself, we operate in a space, it's just below that private equity line, right. So the private equity and in there kind of crawling into our space right now. But usually, private equity is kind of interested in companies doing revenue 25 Million and above, and EBITDA at least two to 3 million, you know. Some, most of them are that five to 10 million or more. So we operate a lot of the people I've talked to, and a lot of people listening on the show, operate in that load, that layer just below it for the for the sole purpose, and to be honest, a 100% honest with the intent that within two or three years, we'll be in their range. And then if we want to sell we can sell at a higher multiple to them. Right? So there's an arbitrage game, you can play inside of this world. A lot of people don't know that, you know, once you hit a certain number, the multiple what the value of the company does it go up a little bit, it goes up another multiple, so you might sell a, you know, a sub $1 million profitable company. in profits. EBITDA, or seller discretionary earnings for 3x of that multiple. And if you can get it over 10 million, the PE starts coming in, you might sell it for 10, you're not 10, maybe eight, nine, sometimes 10 or 11. If it's like certain very, very limited industries. So now you've you significantly increased your value. Let's talk about, let's talk about the franchise side of this. What, how do you help a guy like myself? What would, what would you ask me if you're trying to figure out what type of franchise fits me?
Jenny Sutter 18:44
Yeah. So I actually, I take my clients through a process, because if they're not willing to follow my process, they're probably not going to be willing to follow a franchise process. So that's kind of step one. Number one.
Ronald Skelton 18:57
'Cause I don't like following other people's very well. So, you got me. You got me.
Jenny Sutter 19:02
Yup. They're not for everyone, that's for sure. So I you know, I do take them through a series of steps. You know, first and foremost being we, FranNet specifically has a proprietary profiling tool that we use. It's much like you know, disc or Myers Briggs in the sense of it's honing in on you know, you know, kind of who you are what makes you tick specifically for FranNet it's, you know, what value systems do you have what motivates you, what leadership style workstyle. So there's, you know, an assessment that I have my clients take, it does not come out with, oh, here's the, you know, perfect franchises for Ron. No, it's not going to do that, but it does get me some insight into what what drives them. So that's kind of step number one. Next step being we do sit down and have you know, pretty a pretty in depth deep dive, you know, a conversation you know, everything revolved around lifestyle goals, money, everything, you know, stuff Just you know, what are your goals in the short term? Where do you want to be, you know, 20 years from now? And what does retirement look like to you? What is your exit plan look like? And, you know, or, you know, I'm also going to talk to you about what kinds of industries do you like? What kinds of things do you want to avoid? What do you want your day to look like? How many hours? Do you want to contribute into the business? Employees? What do you want your employees to look like? You know, are you are they skilled, unskilled, part time, full time salary, our, you know, hourly, some people don't even know or they don't care. And that's fine. But some people are very specific about what they're looking for. So I do a deep dive conversation. We call it building a business model, that helps me then come back to my clients with here's these options that are there available in whatever area that you're in, because that's another part of the equation too is how much can I afford? And is it even available? Because just because you see it, you know, as soon as you see it, usually it's not available, put it that way. You know, I get a lot of folks that are like, Oh, I've never heard of that franchise before. And I'm like, Well, if you've heard of it, it's probably not available. So you know, I help kind of navigate through what's available. And, you know, by by just deep diving into what their wants and needs are.
Ronald Skelton 21:18
Awesome. So you said something important during there, but you know, the type of people you want to work around. A lot of people overstep that. And it was one of my guests on there, he had a really deep story, and I'll give you the synopsis of or there's a high level overview of it. Wall Street type, banker type, suit, tie a three piece suit, you know, really formal tie, buys a semi retires, buys a moving company, and if you think about in most big cities, who works for moving companies. Typically, its ex cons, to be honest. You know, they pass a background check, barely. And but it's, it's a very laborous, manual labor job. And this particular one was, it was a group of people who, that's what they hired. Basically, they did they had a program, they work with parole officers, and they hired parolees. Well the Wall Street Type gets in there, and he cannot, he's used to managing and, oh you know, he buys his franchise moves their office, because it was, it was a warehouse looking thing. With two one that has this beautiful like big conference table of (inaudible), he shows up in his suit and tie and tries to have meetings with all these workers. And they pretty much to be honest, they ran over him and ate him alive, he ended up coming back to the broker a few years, like within a year or so and sold it back. It just wasn't, it's really important that you can manage the culture that the company provides. Right? Or is used to. I turned away an engineering company in Texas, after learning that the manager that run it forever, manages by kicking, screaming, kicking trash can screaming and yelling at everybody. I don't do that. I don't know how to hire people that do that. And anybody that has been working there, he's like, my employees have been here for 15 years. Anybody that works there that long needs it. And it's not a culture I could support or know how to manage. So I just couldn't go any further. So it's really important that, I'm interested, how does that play in in franchise? You know, if you're buying into a franchise, and you're not very good with managing, I'd say teens and youth and stuff, what are other, what other culture of things, co urts-, I can't speak today. Cultural things come into play when you're thinking about different types of franchises?
Jenny Sutter 23:47
Well, lots of different aspects. So like, you know, employees, cultural, you know, who are you willing to manage? What does that looked like? You know, really asking them something, most people have not thought about that. You know, when I asked them, you know, what kinds of employees you're looking for, like, what do you mean? And so we talked about that. Like, can you imagine yourself managing high school kids or managing senior citizens or, you know, managing people that have a different skill set than you do. You know, or unskilled versus skilled. You know, like, how do you really think about that a little bit, and, you know, not to mention, how many employees are you comfortable with? You know, if you're not, you know, comfortable with, you know, lots of employees, then that's going to that kind of the business that you're looking for is different than one that requires a lot of employees. So definitely employees come into that play. I also think it's important to understand the culture of the franchise organization that you're now going to align yourself with. I think that's very important. So when you're going through the research process of is this franchise make any sense for me? Not only are you interviewing them, they're interviewing you. So the great franchises they have no problems raising their hand saying, you know what, I don't think you're a good fit for organization. I actually admire that when they, when they do it because it means that they're building a certain kind of culture. But as you know, from a, from a potential, you know, candidate franchisee standpoint, interview them on on what their culture is you got to talk to their leadership and do you feel similar to what their values are and their views on things. Talk to other franchise owners, I don't ever let my clients move forward with a franchise without talking to people who are actually doing it day in and day out. Do, how do you feel about them? Do you feel similar to them? So I think, you know, that's one great thing with a franchise is you do have that opportunity to kind of vet the culture of the company up front. Now you're gonna create your own culture, too, right? It is your business, your franchise, but it is important that it comes from top down as well.
Ronald Skelton 25:52
Got it. So let's talk a little bit about, we talked about the culture there and like the people you're going to be managing the stuff. I think there's a least I have this preconceived notion that, you know, the franchises do things the way the franchises do them. And it's a cookie cutter, and you have to do it exactly that way. I know there are some very strict ones, right? I know somebody who has a friend of the friend, their part time job, is there a kind of a secret shopper. They work for franchise companies, and they travel from store to store and check things that are not in compliance. So like they, they have like gigs with subway and some of the ones like that, and they'll show up. And if you got different art on the walls, you your violation of the culture or there rules. Are there other franchises that are kind of just pretty, a lot more wide open than that?
Jenny Sutter 26:43
Oh, yeah, they come in all spectrums, honestly. There are definitely the, you know, hyper strict, you know, it's their way or the highway, like, you know, everything down to the tee, the big N is one of those, right? Like you, you know, you're not going to be you know, having different art on the walls. Short of them, you know, pre approving it, because it's within their brand, and they've created it. But then there's other franchise organizations that aren't as strict that way because it doesn't matter either to who their end consumer is, or, you know, they want the owners that franchise owners to take on more responsibility and feel more at home with their business. So it really there's a spectrum of them, which is part of which is part of the vetting process, by the way that we I talk through with my clients, like, you know, how how, you know, compliant can you be or do you want to be, and if you're not a very compliant person that isn't, you know, something that you're willing to do, then you're gonna need a looser system, you know, maybe a newer franchise, where you can help with, you know, kind of creating the kind of culture that you like to, but if they are a super compliant person, that can be a little bit of a red flag too, because they do need to run a business after all. And so, but I would know, if they're, you know, somebody, you know, I find them to be a super compliant person to be they knew need a really strict system. So that again, that's part of the vetting system, it is part of the process, when you're looking at franchise organizations and vetting them against each other of what makes what's a fit for you, you have to find the right fit.
Ronald Skelton 28:14
So, me owning a McDonald's franchise and me thinking you know, would never work because I'm the kind of guy that goes, Oh, you're willing to give me grandma's recipe? I've got a fryer and you got some chicken? Where's that? Let's try that, right? And there's you just can't do that with most of them. Right? There's there's just boundaries inside of there. That's okay. Talk about, a lot of people think that the franchise owner comes into play and dictates prices when you sell and stuff. How did, how does it work when you decide I'm ready to retire? You want to sell a franchise now. Is there like, do you have to go back through the franchise? I know the franchise has to approve the new buyer, but explain that process because I know nothing about it. So
Jenny Sutter 28:57
Yeah, you know, ironically, that can be that's very widely varied as well. From franchise to franchise. You're exactly right, one of the you know, the criteria is that the franchise organization would need to approve whoever the buyer is. So there that's definitely comes into play. But it's, other than that, sometimes they want the franchise organization will want you to go through them in order to resell the business. Sometimes they're like you're on your own tell us when you have a buyer and but there always is going to be some transferable things that are going to need to happen when you're reselling a franchise. So that means that the new buyer is going to have to pay some sort of franchise fee most likely. And if there are kind of the, the brokers in the group involved, maybe they have to pay a broker, you know that that you know as well. So that can come into play but it is much like selling any other business with the exception of there is that extra layer of the franchise organization being involved needing that approval. How they, you know, what, whether the franchise will be involved in the sale, you know, highly involved or not involved at all is really up to the franchise organization. And that highly varies.
Ronald Skelton 30:13
So there's no, what is the word I'm looking for? There's nobody, there's nobody gonna say, okay, you've got a McDonald's, McDonald's is a bad example clear, expensive and very controlling. But it's the first thing that comes to my mind. So you have a McDonald's franchise and in Tulsa, Oklahoma, right. And you're ready to sell it and McDonald's isn't going to come to you and go, well, McDonald's franchises sell for $1.5 million in Tulsa, Oklahoma. That's your price. Right? They don't do I mean, that they gonna, is there a,
Jenny Sutter 30:40
Not unless it's in their agreement. But usually, yeah, usually, that's not going to be that, you know, part of it. Again, different franchises are different. You know, so and then there's also some franchises where they are more profit share than they are, you know, a sellable business. So keep that in mind, too. So like the Chick Fil A's of the world, you can't sell that business. It's not, it's not, it's not a sellable business. When you when you own a Chick fil A, you know, they, they own it, essentially, and you're making a profit share from it. So when you're ready to retire, you essentially have to walk away and Chick fil A is responsible for finding the new owner.
Ronald Skelton 31:21
You can't buy one either. You got to know whether to serve Chick fil A for a couple of years or earn your way into their,
Jenny Sutter 31:26
Oh, yeah, it's a, talk about culture, right like that. That is a very culture heavy organization for a reason. And it shows right but it isn't your typical franchise where anyone in the world can buy one and, you know, it's soup, you know, there, there's lots of availability, it's, it's a different beast, for sure.
Ronald Skelton 31:47
So I usually ask people, like, tell me something that you wish you had known that, you know, now you wish you'd known before you started, but I want to switch that question around just a little bit on you. What is something you know now that you you help owners with now that you learned because you just it wasn't like day one, they didn't tell you, Hey, this is you gotta get this information from the owner, you know, or the seller or the buyer. But after, you know, after some time, now you're like, wait a second, I need this, this and this, because it works better if I have it. Is there anything in that in your space now that's kind of acquired knowledge that, that anybody considering going down your path would need to know?
Jenny Sutter 32:24
Well, I think, um, I think first and foremost, from my, from my client side, you know. I for, I go straight into, you know, the capital. You know, how much capital how well capitalized are they? How comfortable are they with the investments? So, you know, really understanding what is their funding source? Are they self funding? Are they getting loans? What does that look like? What could they be, you know, approved for? So that, you know, I didn't write, you know, when I first started doing this, I, you know, it's kind of tricky to talk to people about money. So that was, was intimidating to me. But now I kind of go, I go right for that night, you know, we talk about what's their money source? Because it is an investment either way you look at it. So that is one thing. We all know that probably businesses, the biggest reason businesses fail is because they're undercapitalized. Right, so that that part I want my clients to really feel good about that they have enough capital. And then, um, you know, one other thing that I really, it is, we are kind of already talked about it, but really betting the culture of the of the franchise organization and talking to those other franchisees that are out there and asking them, would they do this again? You know, how happy are you with the franchise organization? How happy are you with the systems that they have? You know, so really making sure that that's not a step that skipped from, you know, my client side and really pushing them to, you know, talk to as many opera, you know, franchisees as they can, as long as they're available to talk to them.
Ronald Skelton 33:59
What are the myths in the market in your space about franchising and your profession, do you think there's just really want to debunk? There's got to be something out there that just really bugged you that people think in general about franchising.
Jenny Sutter 34:12
Well, I think, um, well, I think the number one thing is a lot of people immediately with the franchise, they do think of, you know, McDonald's, french fries, doughnuts, you know, coffee. And there are while there are a lot of restaurant franchises, there are a lot of other types of franchises out there too, and most in a lot of different industries. So that's, you know, probably the biggest myth is just educating people on what opportunities are out there. And then I think, um, you know, that the second one is that they're expensive, and I'm putting my air quotes around that right because yes, there is a different level of investment when it comes to a franchise because there's an initial franchise fee that has to be paid. There's ongoing royalties that have to be paid. So you're, you know your p&l in the long term is going to look different. However, if I was going to open a, let's say, a haircutting place, right? So I'm going to open Jenny's haircutting place or I'm going to open up Supercuts, right? All things being equal, the investment level isn't going to be that different. If you really think about it, there's going to be that initial franchise fee with the Super cuts, but they probably have a lot of buying power on all of the equipment that goes into those, you know, the all the chairs and the scissors and the shampoo. So there's a lot of buying power there. So all things being equal because of the level that Supercuts advertises and the employees that they employ. If I were to do the same thing, my investment level is going to be relatively the same amount of money as a Supercuts. It's the long term of that paying those royalties that is different. For sure. So I think those are probably the two biggest things is, you know, that they're super expensive, and that, that they're just, you know, restaurants.
Ronald Skelton 36:04
Now, some franchises, correct me if I'm wrong, but some franchises even have a financing option within them to some extent. So, so now you have another additional source of funding, you can fund it yourself. You can fund it through like an SBA loan. I'm pretty sure you, 90% sure you can you can buy an SBA loans, right.
Jenny Sutter 36:26
Oh, yeah, there's differen,t there's a couple of different types of SBA loans, depending on the level of investment in that type of business. So there's those funding sources. There's also a, you know, this is pretty common for, for franchise, for franchises right now is it's called the Rob's program rollover for business startup. Where folks who can utilize their 401 k or IRA as an investment into their business. There's, you know, it's a way to do it kind of tax free, penalty free and using that money. There's some different tax implications to it to where it's not for everyone and shouldn't always be done. But that's the way that a lot of folks are investing in their business is using money that they've already saved up that's there's, so they don't have to borrow. So yeah, there's different funding sources, for sure.
Ronald Skelton 37:11
Awesome. So, um, I've asked a lot of questions, what have I missed here? So like, if you were in my shoes, what questions would you have asked?
Jenny Sutter 37:21
Gosh, um, you know, I get asked a lot, what are the most popular franchises? Right? Because, you know, that's what everyone wants to know. What's gonna make me the most money? And, you know, as far as what's going to make me the most money, you know, there that comes in a lot of varieties of, you know, shades of how much effort are you putting in? How much investment are you putting it in, putting into it? So that's up to due diligence with the franchise organization as to how much money you can make. How many locations you might need, whatever that is. So, you know, that's, you know, but then as far as what ones are the most popular? I wouldn't say there is it because of the nature of what I do where I'm like matching people to the right franchise versus just, you know, hey, what about this one? What about this one? I will tell you that I think there's some industries that are more popular now than maybe ever used to be, or at least it's the trends that I'm seeing. So Home Services, which we've been talking about Home Services is probably when I first started doing this home services was the type of industry where people were kind of like, oh, you know, a maid service? I don't know about that, you know, it's a, it's not an attractive thing to some people. Were now they're like, heck, yeah, everyone needs to be either house clean, they didn't close down during COVID. You know, whatever that is. So I think residential services really has, you know, I'm getting a lot more demand for that. I think also, a pet franchises. Pets have also never been more popular, you can't go into a Home Depot without, you know, seeing a couple of different dogs in different shopping carts. So pet industry franchises are very popular. Kids, anything for kids, people will spend as much money, you know, that they can for their kids. So kids businesses are very popular. And I would also say fitness, is also a very popular industry. Because people you know, are very fitness minded, and you know, especially coming out of COVID Health minded fitness minded. It can you know, fitness can be something that people can be super passionate about, too. So those are kind of some trends that I'm seeing.
Ronald Skelton 39:34
Awesome. Are there any franchises out there you think, you know, we were just, you know, somebody handed you I don't know what the number is a million bucks. I may hand you a million bucks right now and said you can't spend it on anything but you got to go buy a business and you have to buy the one that that makes the most money for you and just, you know, I'm gonna expect my money back in, you know, I don't know, three years, five years, whatever the number is, and you get to keep everything above this. What, what would you what would you look at? What is the, what's out there, man if you're thinking if I had the money, I get one of those too.
Jenny Sutter 40:09
Gosh, I think I would diversify. Honestly. I would, I would, you know, I would put, you know, my money and a few different kinds because, I mean, you don't, you don't want to put all your eggs in one basket. So there's several. I would, I would I think I would go with pets, I'll be honest with you. I think some pet businesses are really they have super high growth potential. I think it's actually an underserved market, you know, think of, you know, pet boarding and doggy daycare, even though you feel like there's a lot of them out there. It's pretty underserved. So I would do something probably with pets. I probably would also do some sort of service, something that doesn't require me to have a brick and mortar. So some sort of residential, you know, service, whether it's, you know, pool cleaning, or painting something along those lines. So, I would say somewhere, you know, and maybe you know, a third option being you know, I also liked the beauty space. I came from from beauty, and there's people will spend so much money on, on their beauty whether it's eyelashes, eyebrows, facials, so I think the beauty space is always something that I would, I would put my dollar on as well.
Ronald Skelton 41:21
Yeah, recession be damn. No, no, there's not a woman on this planet they're gonna let her their eyebrows connect. (inauduble). That's good. There's a, there's a segway for us. What, I honestly, there's a very good chance we're heading into a recession damn near depression phase here. What, they're just, I don't think there's anything like I don't believe there's anything such thing as a passive business like passive income. I think everything requires a little bit of work. Even my real estate portfolio requires my assistance. But, you know, inside of that, what's there's not in that same respect, there's not anything out there I think that's recess-, recession proof. Now, there's a lot of industries that are recession resistance. What, what opportunities you think right now that will fare farewell throughout any, any upcoming economy?
Jenny Sutter 42:13
Well, I think, you know, always business services and businesses that are in need, no matter what doesn't go. It doesn't matter the demographics, doesn't matter if there's a recession. So HVAC, plumbing, I think, you know, those are going to be you know, big ones, you know, restoration companies. You I mean, I'm sorry, but if you get a, you know, you have mold in your house, or you get a leak there, there's no you can't skirt that. So I think those are ones that people are going to kind of be highly sought after, during a, you know, kind of a recession time or just businesses that are super more recession proof. Things that aren't, you know, going to be a frivolous sprint, spend, if you will. So there's, there's franchises out there that are, that are for that.
Ronald Skelton 42:59
Yeah, so if you think about it, like, so, those would be great. I honestly think that like nobody's on this set the sweltering heat, they're going to die, right? Especially the heat waves or happens with the Midwest right now. So there are AC, goes up, my buddy, actually, a good friend of mine, his name's Tim. He owns a heating air company. He puts out signs around town when it's hot, like this is your wife's hot fix your AC number, right? But it works people call him. There are so there's that side of it, right things that are like I'm gonna get this working, whether I've been whether he's economy's good or bad. There's also the passion side of things. I'm taking, I'm looking around LA coffee. People who are passionate about their coffee are going to figure out a way to get their branded coffee no matter what else goes on. People you know, it might decline a little bit like I said, Not recession proof but recession resistant. You know, I guarantee if you come out with a new best lower, I don't care what the economy is like bass fishermen, we're gonna buy it if you can prove it works. Resistance. There's this, there's a there's a segment of different industries that are insanely passionate about what they do. Golf, right? There are people on this planet, no matter what the economy is doing. If they're still taking a breath in and out, they're gonna buy the you know, golf balls, and they're insanely loyal, right? They go to the golf shop, and they don't have their brand of that particular item, they'll go to three more shops before they buy something different. So I think there's some space in there that's cushion some safety around it, you can still buy something right now and do that with the economy,
Jenny Sutter 44:31
I think pet, I actually think pets is one that falls into that category. People are extremely passionate about their pets and if a pet needs to be groomed and they can't do it themselves, you know, that's it's a necessity. You know, or you know, if they're working and they don't want to leave their dog at home. They need the doggy daycare. So I think pets actually falls into that category as well. You wouldn't think so. But it really does.
Ronald Skelton 44:53
It probably doesn't this fact that people treat, like we just, we just, right before we moved here to California our dog passed of being around for 19 and a half years. He's just outlived his little half Chihuahua, half Beagle, my buddy. Little, little bitty thing, but he's just, he just he lived a full life. But we treat, he was one of the family members. I mean, it literally was one of the family members. So people, they connect that way. So their animals are just part of their family. So I can believe in, in any economy. I would say I'd be a little worry, worrisome of luxury items. Gourmet pet food, you know, doggy treat bakeries. I'd be a little worried about that, because people will refrain and use another product when money's tight. But they're not going to.
Jenny Sutter 45:45
Yeah, I think if you sell gourmet pet food, you need to have another revenue stream. Because people will, I mean, if their dog's diet is sensitive, they will continue to need to buy the, you know, high end pet food, but it's better if you also have another revenue stream within the location. Whether it's you know, boarding, daycare, grooming, whatever, washing. So yeah, I'm in agreement with you that some of the luxury things people pull away from so kind of even within the same business being a little bit diversified.
Ronald Skelton 46:16
Okay. So let's see here. I feel like I'm missing something really cool here. We talked a lot about like, what would you ask somebody who's thinking about buying a franchise? Do you help people sell their franchises?
Jenny Sutter 46:32
Well, in a way I do. So yes, there's definitely some what we call resales, franchise resales. That we bring into our inventory, we know about them, because I do quite often have people that I'm working with that are like, I already want an already existing business, it's already, you know, cash flowing, I don't want to have to build it from scratch. So I definitely, you know, if we know about those franchise resales, then I can kind of connect the dots there just like I would any other franchise. They have, you know, a franchise development person that I can connect them with. They're going to bet them, they're then going to introduce them to the owner. So I do in a roundabout way, but most of my clients are gonna end up going with a franchise, that's, you know, they're gonna build from ground up in whatever market that they want it to be in. So, yeah, a little a combination of both. But I have also had franchise organizations come to me, and it's not ones that we normally work with, because with Brent, within FranNet, there were a network of franchises, we don't work with every single franchise for lots of reasons, but, but if I can help them, I will, you know, because I, if I have a client, and they're looking for something that I might not have, or feel like I have in my inventory, I would much rather they be happy. And you know, I'll give their information to whoever I can that makes sense.
Ronald Skelton 48:02
Okay, um, what's your favorite success story? I mean, you've got we've been doing this for a little while now. So what's the, what's your favorite, I did this and now they're flourishing type of success story?
Jenny Sutter 48:13
Yeah, so my favorite success story is, is actually gosh, I have a couple but, but my favorite one is I have a gentleman who he was in the corporate world. He did, actually, he did kind of PR for banking, and for different financial institutions, and got laid off from his job. That tends to be a common trend and people I work with. They're in a transitional period of time. He lived in Colorado and decided nope, I want to, I want to move down to Florida. But he didn't have a job. And so he got in, he knew he didn't actually want to get another job. He realized, you know, through getting laid off that he just didn't, he he wanted to control his destiny. So he, I worked with him. We talked about, you know, took them through my process. He didn't have a ton of money. But he had, you know, a nice, you know, between his severance and then his 401k he had, you know, a good amount to be sustainable because we also talked about his lifestyle, like what do you need to pay your bills. And so turns out, he ended up investing in a custom window coverings franchise, which was perfect, because it was him solo, and he has a business partner that you know, so it's just the two of them that are running this business from, you know, their home. They you know, and now they you know, go and help people in Florida we have a lot of custom windows. So they help people with figuring out what the best solution to their window coverings is. And he's thriving. Within, within the first year of him buying into that business, he expanded into another territory, you know. So that, that was such a that's a fun to see him succeed like that. As somebody who, you know, he never owned a business ever, and, but he was able to just, you know, dig right in and, and doing really well. And he's living the lifestyle that he wants to live. He's able to go on the vacations that he wants to go on to, and he creates his day, whoever he wants it to look, because he can make appointments when it worked for him. So I love that that aspect of how he got up and running, and that I was able to help them do that.
Ronald Skelton 50:25
Awesome. That's great. So Jenny, how would people reach out to you? We've got your LinkedIn profile, so that people who are just listening on the podcast, I want to say that out loud here in a second. But is there any other way you'd rather people like, what's the, what's your favorite way for people to get a hold of you?
Jenny Sutter 50:42
Um, well, I mean, it's a little curious about a little bit more education and kind of the process that I take my clients through. The website, the FranNet website. So frannet.com. If you, you know, frannet.com backslash, my name, Jenny Sutter, you'll get directly to where you know, a little bit more information on me. So that's great. from an educational standpoint. Directly reaching out to me, LinkedIn is a perfect source because you can again, kind of see the posts that I put out there the education I put out there as well as message me. So that would be another great way for people to, to contact me.
Ronald Skelton 51:19
So that's linkedin/in/jenny-sutter. So it's,
Jenny Sutter 51:25
Yup. Or dash.
Ronald Skelton 51:26
Dash, hyphen. Yeah. Dash, the dash Sutter. There you go. So and I just want to know, if people can get a hold of you there. Our favorite last questionand we are heading to the top of the hour here. Favorite questions always at the end here is what can me or my audience do to help you?
Jenny Sutter 51:42
Well, I think, you know, just keeping an, an ear out for anyone who's maybe looking to diversify. They might already own a business, and maybe they don't want to start another business from scratch or buy another business that they have to, you know, kind of, you know, clean up, I guess. So if they're looking for diversification, maybe a franchise is an opportunity to do that. Understanding what what types of franchises are out there. So just really keeping an ear out for, for folks who are willing to keep an open mind that a franchise might be an option for them.
Ronald Skelton 52:12
Awesome. Well, I appreciate you being on the show today. I want to thank you for being here. And we should probably wrap this up.
Jenny Sutter 52:19
Yeah. Thank you so much for having me. I really appreciate it.
Ronald Skelton 52:22
Okay, hang on just for a second after the show. And that's show guys. Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150. That's 918-641-4150. Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you. Again that number is 918-641-4150. Call our hotline leave us some information. Thank you. The investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that additional peer to peer mastermind introduce first in Napoleon Hills famous book Thinking Grow Rich. With accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think is possible, I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind.