The Underrated Business Model That Creates More Millionaires Than the NFL | Entrepreneurship | How We Profit | E3 | Part 1

Starting a business from scratch is not the only path to entrepreneurship, and Alex Smereczniak learned that through franchising. After building and exiting his first franchise business, he saw how confusing, outdated, and commission-driven the franchise-buying process could be. Spotting those gaps led him to build Franzy, a data-driven marketplace that helps aspiring entrepreneurs buy franchises with more transparency. In part 1 of this How We Profit episode, Alex breaks down the realities of raising capital for an unsexy business, why franchising creates more millionaires than most people realize, how he sold 118 franchise locations in a year, and the lessons he learned from scaling. In this episode, Hala and Alex will discuss: (00:00) Introduction (02:26) Franzy: The Zillow of Franchising (06:49) Why Franchising Creates More Millionaires (12:30) Starting a Business vs Buying a Franchise (16:08) Is Franchising Really Passive Income? (19:09) Alex’s Franchising Journey (35:13) Raising Millions for Unsexy Businesses (39:24) Stepping Down as CEO: The Real Story (45:42) The Cost of Starting Franzy (56:10) Using Data to Create Entrepreneurs (58:32) Franzy’s Revenue, Marketing, and Operations Alex Smereczniak is the co-founder and CEO of Franzy, an AI-driven franchise discovery platform that helps aspiring business owners find and evaluate franchise opportunities. Before Franzy, he co-founded 2ULaundry and LaundroLab, a tech-enabled laundry delivery and laundromat franchise business. He has experience building marketplace businesses, raising venture capital, and scaling franchise systems. Sponsored By: Indeed - Get a $75 sponsored job credit to boost your job's visibility at Indeed.com/profiting Shopify - Start your $1/month trial at Shopify.com/profiting. Quo - Run your business communications the smart way. Try Quo for free, plus get 20% off your first 6 months when you go to quo.com/profiting Remitly - Transfer money internationally across 100+ currencies with no hidden fees. Download the Remitly app or visit remitly.com to get started. Use code BUSINESS to get a $100 bonus after you send $300 or more. New customers only. Prolon - Reset your body with Prolon’s five-day plant-based program. Go to ProlonLife.com/PROFITING for 15% off sitewide plus a $40 bonus gift when you subscribe to their 5-Day Program. Northwest Registered Agent - Get a complete business identity with Northwest. Visit northwestregisteredagent.com/YAPFree and start using free resources to build something amazing. Cash App - If you’ve been curious about bitcoin but haven’t made the jump yet, Cash App makes it easy. Sign up at https://click.cash.app/ui6m/qmgmlraz For a limited time, new customers can get $10 added to their balance. Just use code CASHAPP10 when you sign up, and—don’t forget this part—send at least $5 to a friend in the first two weeks. Terms apply. Cash App is a financial services platform, not a bank. Banking services provided by Cash App’s bank partner(s). Bitcoin services provided by Block, Inc. brand. For additional information, see the Bitcoin disclosures at cash.app/legal/podcast Resources Mentioned: Alex’s Platform, Franzy: https://franzy.com/ Alex’s Instagram: instagram.com/alexfromfranzy/ Alex’s Twitter: x.com/AlexfromFranzy Alex’s LinkedIn: linkedin.com/in/alex-smereczniak-40310329 HWP with Alex Part 2 - https://youngandprofiting.co/HWP_E4 Active Deals - youngandprofiting.com/deals Key YAP Links Reviews - ratethispodcast.com/yap YouTube - youtube.com/c/YoungandProfiting Newsletter - youngandprofiting.co/newsletter LinkedIn - linkedin.com/in/htaha/ Instagram - instagram.com/yapwithhala/ Social + Podcast Services: yapmedia.com Transcripts - youngandprofiting.com/episodes-new Disclaimer: This episode is a paid partnership with Franzy. Sponsored content helps support our podcast and continue bringing valuable insights to our audience. Entrepreneurship, Entrepreneurship Podcast, Business, Business Podcast, Self Improvement, Self-Improvement, Personal Development, Starting a Business, Strategy, Investing, Sales, Selling, Psychology, Productivity, Entrepreneurs, AI, Artificial Intelligence, Technology, Marketing, Negotiation, Money, Finance, Side Hustle, Startup, Mental Health, Career, Leadership, Mindset, Health, Growth Mindset, Online Business, Solopreneur, Networking

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Hala Taha?

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• 0:45Hala Taha?

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• 1:08Speaker 01

  It's not Apple, it's not Google, it's not Nvidia. McDonald's has minted more millionaires than the entire history of NFL players combined.

• 1:18Hala Taha?

  Wow.

• 1:19Speaker 01

  So there's been about 50-plus thousand millionaires created from the franchise business model.

• 1:25Hala Taha?

  Today's guest is Alex Smiersnack. He's the co-founder and CEO of Francy, a marketplace platform that helps people find and buy franchise businesses.

• 1:35Speaker 01

  There is no better time than now to start investing in ownership, whether that's real estate or a business, whether it's franchise or not. AI is going to displace 30-ish percent of white-collar jobs in the next five to 10 years, and this is the time to make yourself not replaceable.

• 1:53Hala Taha?

  I'm sure so many listeners, they think they need to have a sexy business that they feel passionate about. What do you say to that?

• 1:59Speaker 01

  My last company was a laundry business. I'm not going to sit here and lie to you and say I was passionate about laundry. I think people listening, it's you'll develop that passion. The more you put reps in, the more you get out of it, the more you put into it.

• 2:12Hala Taha?

  I bootstrap my company, but I have friends that are VC backed and a lot of them that are in industries that aren't AI are really struggling now to raise money. So what advice do you have for them in terms of like things to focus on?

• 2:24Speaker 01

  If you are going to raise money, this idea of seed strapping, this hybrid of bootstrapping plus raising small chunks of cash, like we're actually doing that for Francy. You raised a million bucks initially and then two and a half. We're about to close another $2 million round now. So it's these like micro rounds.

• 2:38Hala Taha?

  Yeah, nothing too crazy.

• 2:39Speaker 01

  You're still getting good valuation increases each time. So that's one piece of advice. The second is-

• 2:45Hala Taha?

  Alex, welcome to Young and Profiting Podcast.

• 2:48Speaker 01

  Thanks for having me. Excited to be here. I know it's a quick in and out, but I love the state of Texas and the city of Austin. So thanks for having me.

• 2:55Hala Taha?

  I'm so glad that you're able to fly out here and tell your story. So you're joining us on one of the first episodes of the How We Profit series, which is a new series that really just like unpacks how businesses make money. And for you, you've got your own business, but then you also help people buy franchises. And so this is going to be a two-part episode where we really go into your different businesses that you've started, how they've worked, how you've made money off of them, how you raised money, like all the things. And then we'll go into franchise case studies and talk about different franchises that we can buy and what are the opportunities and the pitfalls that we need to be aware of.

• 3:34Speaker 01

  Perfect. Yeah, there's, there's thousands of concepts out there and we've got all of them at our disposal, at our fingertips. So happy to break any number of businesses down.

• 3:42Hala Taha?

  So Alex is actually the CEO and founder of a company called Francy, which is known as the Zillow of franchising. So tell us, what does that mean?

• 3:54Speaker 01

  I guess the long story short-

• 3:57Speaker 01

  We built our own franchise or previously it was a laundromat concept called Laundry Lab. There's actually locations here in Austin and all over the country now. And through that process, we realized how people buy businesses is kind of broken. It's not super transparent. There's a lot of fake listings on platforms like BizBuySell. And similar what Zillow did to us looking at houses, whether it's a vacation home or a first home or you're moving, they democratized our access to all the housing data. We can now go to Zillow and say, hey, I'm looking here. Here's my price point, number of rooms. So we've done the same with buying franchise businesses specifically. So Hala can be like, I'm in Austin. I've got 200K to invest, 100K to invest. Here's what I'm good at. Here's what I'm not good at, all these parameters.

• 4:40Speaker 01

  And then our AI matching algorithm starts to pair you with concepts and you can kind of like thumbs down, talk to advisors and coaches for free, one-on-one about would this be a good fit for you? Can you afford it? Is there availability in your market? So similar what Zillow's done for retail, we've done for business buying.

• 4:58Hala Taha?

  Really cool. And I can't wait to go super deep on like how to actually find your fit. I know you've got five different steps. And like you mentioned, you've got an AI tool in your platform that helps you and everything. So that's super cool. Who are the main players involved in Francy?

• 5:13Speaker 01

  So it's a marketplace setup for sure. And the hardest part about marketplaces is this thing called the cold start problem. If you don't have supply or things to look at and buy, demand and buyers don't want to come. And if you don't have buyers, supply doesn't really want to spend the time or the money to be listed. And so what we did is we pulled thousands of what are called FDDs, franchise disclosure documents to create listings of the 4,000 franchise brands that are out there. So now we have supply. And the demand side is just prospective franchisees, whether it's the corporate escapee who wants to go be their own boss and do their own thing. And they're looking for the first time all the way up to, we have guys that have 100 plus locations already. And they're looking for the 110th to buy a chicken concept they want to add to their portfolio,

• 5:58Speaker 01

  a fitness concept they want to add to their portfolio. So if you're looking for a business, whether it's the first or 100th time, Francy has those listings and those opportunities.

• 6:07Hala Taha?

  Got it. So you actually didn't need to like do contracts with all the brands. You just have the information available and tell them like the steps they need to take to apply and basically vet the opportunities? That's what you're doing?

• 6:19Speaker 01

  Yep. So we'll pull all that data in, in that document. It's called an FDD, franchise disclosure document. They are required by law to have this document. It has audited financials in it, how many locations are open and closed. But it's a 200-page legal document and it's as exciting as it sounds to read. So we've cleaned it up, made it sexier to look at pictures and who's the executive team? And who are they? And how much money can I make if I do this? What would it cost me to get into? So we've cleaned all that up and then we layer third-party data in. So testimonials from existing franchisees. So you get validation. How you would finance this, lending information. And so it's all in one, you know, stop shop for you to figure out what you could be good at,

• 7:02Speaker 01

  what could be a good fit, how you'd buy it, how you'd finance it, et cetera, from all these different data sources.

• 7:09Hala Taha?

  Why do you think this is such a great opportunity right now with so many layoffs happening and AI, you know, potentially taking over people's jobs? Why do you think that this is a really great opportunity for people?

• 7:21Speaker 01

  Yeah, so I think we've entered what I'm calling the bet-on-yourself economy. There is no better time than now to start investing in ownership, whether that's real estate or a business, whether it's franchise or not. I think AI is going to displace 30-ish percent of white-collar jobs in the next five to 10 years. And this is the time to make yourself not replaceable. And so I, I think the timing couldn't be better for people to go out and take that bet. And franchising is just one of many paths that you can take to do that. But I think it's a de-risked path. It's 8% of our country's GDP. And franchising has about an 80% success rate over a five-year period, compared to a 50% success rate for independent businesses. So you're stacking the deck a little bit.

• 8:06Speaker 01

  You're getting a proven playbook. And then you're surrounded by a peer of other franchisees and a franchisor support system.

• 8:13Hala Taha?

  I heard a quote from you that you've been saying quite often, how franchising has made more millionaires than NFL players combined, or something like that. What's the quote?

• 8:23Speaker 01

  Yeah, so franchising has minted more millionaires than the entire history of NFL players combined. So there's been about 50 plus thousand millionaires created from the franchise business model versus about 23,000 millionaires made playing football in the NFL. And so to me, I share that because it's the NFL seems like this highly unobtainable thing for the average, I mean, most people.

• 8:47Hala Taha?

  Yeah.

• 8:47Speaker 01

  But here comes franchising that's minted more wealthy, successful people financially than this very unobtainable, hard thing to do. And so it puts into perspective that just about anyone can go do it. You don't have to have a ton of money. You can borrow SBA. That's what's great about America and the country we're in is there's all these programs to finance people that want to be entrepreneurial. It's the backbone of our country and what we do. And so I like this path to be as accessible. And that's what our mission at Franz is to make it more attainable for the average person.

• 9:20Hala Taha?

  Yeah.

• 9:21Speaker 01

  The other thing that's wild that I read the other week is The Economist had an article, it was just like last Tuesday, and the title was franchising has quietly created more wealth than anything else in America. It was something like that.

• 9:33Hala Taha?

  Wow.

• 9:34Speaker 01

  And so The Economist, everyone's always sending me this article now like, hey, you kind of said this thing.

• 9:37Hala Taha?

  Yeah.

• 9:38Speaker 01

  And I was like, yeah, see, I told you The Economist is on it now. But they had a line in that article that said, it's highly plausible that McDonald's has minted more millionaires than any other company in the history of mankind.

• 9:51Hala Taha?

  Wow.

• 9:51Speaker 01

  And I was like, I had to read it twice. Because if you think about that, it's not Apple, it's not Google, it's not Nvidia. McDonald's has minted more millionaires than any other, any other company.

• 10:03Hala Taha?

  I think that's a lesson in itself, that it doesn't have to be sexy, right? Like, it doesn't have to be a sexy business. I'm sure so many listeners listening in want to be millionaires. They're not millionaires yet. And they think that they need to have a sexy business that they feel passionate about and that they need to have passion to start a business and to really love what they do. What do you say to that?

• 10:27Speaker 01

  I think passion can be discovered and like built. It doesn't have to be this thing that's innate or you're just born with. They're like, oh, I loved music growing up, so that's my passion. So I should go do something in music. Sure, that's one way, but my last company was a laundry business. I'm not going to sit here and lie to you and say I was passionate about laundry. And I had some traumatic story as a kid that made me want to go do this. No, I mean, there was nothing like that. It was really, for me, the pace at which I was learning things was way faster than when I was in corporate. I used to work for Ernst & Young. The learning was way faster, the challenge was more exciting. I was a million times more fulfilled. And that's what it was for me. It could have been laundry, it could have been this widget, it could have been food, it could have been tech.

• 11:11Speaker 01

  I mean, it didn't really matter. Sure, there's some things I just don't want to do because it's boring to me personally, or whatever it may be. But I think people listening, it's you'll develop that passion the more you put reps in, the more you get out of it, the more you put into it. Just find something that I think overlaps with your skill set. I think that part is important.

• 11:34Hala Taha?

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• 12:16Hala Taha?

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• 12:42Hala Taha?

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• 13:26Hala Taha?

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• 13:52Hala Taha?

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• 14:36Hala Taha?

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• 14:49Hala Taha?

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• 15:33Hala Taha?

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• 16:17Speaker 01

  Yeah, that's a great question. So, one thing I saw in a Gallup poll was 67, 68% of Americans have expressed a strong desire to be entrepreneurial or be a business owner. But the reality is only 5% actually ever go do it. So I start to question, like, why is there this huge desire, but people aren't actually doing it? And I think it ties into the question you just asked, and that's... A lot of people think they need to have this completely original idea. They have to be the next Facebook, the next Uber. And the reality is those are called unicorns for reasons because they're mythical creatures and rarely ever happen. But for the vast majority, you can go do very well owning an unsexy business or the

• 16:59Speaker 01

  local sign shop, or the local cleaning franchise, or the restaurant. I mean, there's so many things you can do. It doesn't have to be this original idea. And franchising has carved this path that I think gets overlooked often, where there's a proven playbook, there's all this training, there's supply chain support, branding and marketing support. I mean, all these things that you get, you're starting on square three instead of square one within a franchise system. And for the vast majority of people, that's what they need and that's what they want. They don't want to have to do it all from zero, or alone, or with this original idea. And so to answer your question, I think as a franchisee, you have to be willing to work hard for sure, but you don't need to have the complete raw creativity to go from zero to something.

• 17:44Speaker 01

  You can start thirty, you know, three steps ahead. For those listening that are hyper entrepreneurial, who do need to do that and don't like to be at all told what to do, franchising wouldn't be for them because there is a system you have to follow and it works. Like, if you are good at doing the work and still being creative, but also following a playbook, franchising is perfect.

• 18:06Hala Taha?

  Yeah, so if you're creative and like to put out offers and change things, you can't really have a franchise, right?

• 18:12Speaker 01

  Some you can. So the way I describe franchising is like a buffet and there's these extreme ends. On one end, you have Chick-fil-A, where you're buying a job. It's a very profitable job. I think the average Chick-fil-A franchisee makes six to 700K a year for one location, but they are only allowed to own one. Very rarely does Chick-fil-A allow you to do two. And you have to be in there 30, 40 hours a week as the owner. You can't just hire a manager and go to the beach. Eventually, you get more freedom and flexibility, but Chick-fil-A on the extreme end is you're buying a high-paying job. On the low end, you've got these emerging brands in franchising where Hala and Alex just started a fitness studio in Austin. We got a cult-like following. We want to start franchising, but we maybe only have two or three locations open.

• 18:56Speaker 01

  They're taking a huge bet on us. We're taking a big bet on those people. But we don't have all the systems perfected and laid out. And so our first franchisees are very much going to be building those systems with us, being more entrepreneurial, having more of a say. And so on that end of the spectrum, there's more risk, but there's more territory upside. You probably get in for a cheaper price, maybe a break on royalties. And you get to be more entrepreneurial and have a say in what's going on. And then there's everything in between. There really is this massive spectrum of, you know, where are you on the risk scale? Where are you on the financial capability scale? Where are you on what you're good at and your skill set and your background? And then our job is to help you figure out where do those things all align?

• 19:37Hala Taha?

  You know, something that was so interesting to me when I was looking at these franchises, like, I've been accumulating wealth, so I'm thinking about like, I want to buy some commercial real estate. I want to buy just real estate in general. And then when I was like, learning about this, I was like, well, maybe I'll just buy a franchise. But then I was reading that it's really not very passive. Like, there's really very few passive opportunities. Tell us why. I mean, when I think about franchising, sometimes I think like, oh, you just buy a place, you get a manager, and then it just runs to get a playbook, right?

• 20:08Speaker 01

  So that's one of the biggest misconceptions in franchising is a lot of people think it's like buying a stock in the stock market.

• 20:14Hala Taha?

  Yeah.

• 20:15Speaker 01

  You know, it's mailbox money. It is not. It is. It is. You're running a business, just like you and I are running our own businesses. It is a full-time job and then some, you know. Eventually, it can become passive. The first year or two is not, I think, just like any other business you're starting up, even though you're starting on square three, you still got to get to square seven, eight, nine, or 10. And by the time you get there, you absolutely can become passive. I know a lot of franchisees who started with one. They're now up to 10, 15. One guy I know started seven years ago. He's up to 120 locations now.

• 20:48Hala Taha?

  Wow.

• 20:49Speaker 01

  And so you can imagine, his or he's got thousands of employees. And so there's a second line of defense, a third line of defense, a fourth line of defense, and he can go to the beach and travel here and do whatever he wants, whenever he wants, but it took him seven years to get there. And then it's passive. So he can get there, the answer to those upfront, none of it's really passive. And if you have a broker telling you, or some sort of franchise coach, et cetera, telling you, oh, it's semi-absentee, that is a very big red flag. There are some passive concepts, but very, very, very few. Almost all of them are going to take some level of work. And if you're well capitalized, sure, you can maybe get out of the day to day faster because you can afford to hire a GM sooner and burn some cash essentially.

• 21:34Speaker 01

  But for the most part, you're going to have to roll up your sleeves and get after it.

• 21:37Hala Taha?

  Do you think it's doable, like sometimes for me? I'm crazy because I always like to start businesses and stuff. So like, I want to start like my own Pilates studio, my own spa. But then I was like, oh, well, maybe I can do a franchise Pilates studio as like a side hustle. But you, you think you need like full.

• 21:56Speaker 01

  I think if you brought, depending on the, how you financed it, you could hire a GM and an operating partner and say, hey, me and my, one of my partners on a separate venture are doing this in Minnesota with a bagel concept. Neither one of us can be day to day, 40, 50 hours a week necessarily. So we're bringing on an operating partner who will give equity to, who wouldn't have had the capital otherwise to own these locations. So this is a once in a lifetime opportunity for them, but they will take that day to day load off of my partner and I so that we can be more passive.

• 22:28Hala Taha?

  Got it.

• 22:29Speaker 01

  So you could do that because you could say, hey, I'm going to find someone, I have enough capital to finance all these locations.

• 22:33Hala Taha?

  Yeah.

• 22:34Speaker 01

  And then put them in place.

• 22:35Hala Taha?

  Give them some equity so they act like an owner.

• 22:36Speaker 01

  Yes.

• 23:02Hala Taha?

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• 23:39Hala Taha?

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• 25:05Hala Taha?

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• 25:50Hala Taha?

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• 26:34Hala Taha?

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• 27:18Hala Taha?

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• 27:29Hala Taha?

  Okay, so let's talk about your story for a little bit. I wanna, I wanna go backwards because you've been working for a long time. You've been an entrepreneur for a really long time and you have a really cute story about entrepreneurship in college. So why don't you tell us about your first experience with laundry again? And how you, you know, started that business and actually it was a really cool way of how you acquired that business through seller financing. So I'm really interested in that as well.

• 27:54Speaker 01

  Yeah, so I, I'm from Minnesota. I ended up going to school in North Carolina, which is where I live now. I went to Wake Forest, studied finance, was gonna go do the investment banking thing in New York. And then my freshman year, I worked for this student run. It started out as a student, like project, the classroom project. And I worked for this group that did laundry and dry cleaning delivery. And I fell in love with it, not again, the laundry piece, but I was like, you guys are learning a ton. You're making money. You guys are like 21 years old and you're doing all this. This is so cool. Are you gonna sell it when you graduate? And they're like, yeah, this was just kind of like a resume builder for us. I wanna buy it. What are you gonna sell it for? And they're like $30,000. My jaw hit the floor.

• 28:35Hala Taha?

  You're like, how are we gonna afford this?

• 28:37Speaker 01

  This is the most money I've ever heard of because at the time, like I had, I don't know, maybe a thousand or two thousand. I'm 18 years old. And I was like, all right, I'll figure it out. I have like one or two grands saved up. Like you're not even close. And then I found two partners. We got to nine or 10K. So I'm like, shit, we're still short. And so then we started knocking on doors at the business school. We're like, maybe these finance professors can help us. And we weren't even in the business school yet. And thankfully, these professors were so giving with their time and wanted to help us. And they're like, well, have you thought about seller financing? Have you, have you run a discounted cash flow analysis yet to see if this is even the value?

• 29:10Hala Taha?

  You're like, no, what are you talking about?

• 29:13Speaker 01

  You'll learn about this in two years. I was like, no, we need to learn now because we're gonna do this. So we ended up figuring out the true value of the business. And then we said, oh, we could do seller financing where we give them a percentage of the revenue that we generate over the course of the two or three years that we'll run it. Because then we'll probably sell it when we graduate, just like they did. And we want the next group of students to have the same experience we had. And so that's exactly what we did. We went to them and said, hey, we can give you this 10, 11 grand in cash. And then can we give you another 20% of revenue over the next few years? And, you know, we did some math together and they're like, yeah, this is pretty interesting. Of course, we knocked it out of the park.

• 29:46Hala Taha?

  Oh, great.

• 29:47Speaker 01

  So we. You know, it took the business from forty, fifty K school year in revenue to like two twenty. So they got a great deal with the seller financing.

• 29:56Hala Taha?

  That's amazing.

• 29:56Speaker 01

  We were like, crap, maybe we should have figured something else out.

• 29:58Hala Taha?

  Yeah, captained or something.

• 30:00Speaker 01

  But hey, lesson learned and.

• 30:02Hala Taha?

  Yeah.

• 30:02Speaker 01

  Um, it opened my eyes though to just, there's a whole other path. I think we're all so conditioned to get good grades in middle school, to then get good grades in high school. So you can get into a good college, get good grades again, and then go work for a Fortune 500 company and do that for forty years and then die, you know? It's like, there's gotta be more to life than this. And that little laundry thing in college completely changed the trajectory of my life.

• 30:29Hala Taha?

  One thing led to another after that experience. So you had a lot of learning lessons from that. You were able to, um, like really maximize the amount of revenue that you guys got from it. So what were some of the key lessons in terms of like customer acquisition that you learned?

• 30:46Speaker 01

  Yes, so we were on campus, we're the exclusive provider. I think Wake loved it because it was a story for them to look what our students are doing.

• 30:53Hala Taha?

  And it's called like Wake Wash or something, so you branded it, yeah.

• 30:56Speaker 01

  So the school would write about it in their magazines, like, look, three Wake students are running this business, four Wake students. And, um, that was like our primary source of distribution. They gave us a booth at freshman orientation. And most of our customers were freshmen because they're going off away from home for the first time. The parents, especially the moms were like, little Timmy and Susan, they can't do their laundry on their own. So we'd have this booth that, I don't know in hindsight, why they gave us such prime real estate. But it was get your meal plan, get your parking pass.

• 31:29Hala Taha?

  That's amazing.

• 31:30Speaker 01

  Here's the Wake Wash booth, which laundry was included in room and board. So it's not like they needed to do this. And so the parents are coming down, signing up for all these things, checkbooks out. And then I was there like the Sham Wow guy, like step right up. It's the premier laundry service on campus. And the parents, they're laughing because they, you guys are ridiculous. And they would shell out, you know, there's a subscription model. So they'd pay eight hundred bucks for the whole school year, five hundred for, I think a semester. And then there's weekly and bi-weekly options that, you know, increased or decreased the price. And in that one or two week window, we did like a hundred and sixty K in revenue. And I just remember being like, oh my gosh, this is.

• 32:08Hala Taha?

  Yeah.

• 32:09Speaker 01

  So much fun, like every business is this easy, which made me, uh. I had false expectations on everything I've done since because I was like, oh yeah, every business should do 150K in its first week of being open.

• 32:20Hala Taha?

  Yeah.

• 32:21Speaker 01

  Not the case. But so learned a lot about distribution and partnerships for sure. The university partnership completely changed it for us. Learned a lot about operations, learned a lot about customer service. You know, laundry is very personal. Things are going to go wrong. How do you handle it? And then learned a lot about picking the right partners too. We had four partners at first and we kind of did it out of convenience. Like we're all friends and you hear that cliche like, don't get into business with friends and family. And I actually disagree with that, but I do think you can't make the mistake that I did early on, which was don't do it just because they're friends and family. But if they are friends and family that have complementary skillsets to you, then it's like the best thing ever. Because you have this deep trust for each other.

• 33:05Speaker 01

  You can have hard conversations with each other. Yes, there's high emotions, but if you're good at ops and I'm good at marketing and we already have that relationship, it's so powerful. It is the best thing ever.

• 33:16Hala Taha?

  Nothing's better than working with your best friends.

• 33:19Speaker 01

  It's so much fun.

• 33:20Hala Taha?

  You started your company, all your companies with your best friend from like sixth grade or something, right?

• 33:26Speaker 01

  Yes. So the college one was fraternity brothers. But then when we sold that when we graduated, I went and did corporate for, I made it a year and a half. I gotta go do this crazy entrepreneur stuff again. But start up another laundry business when you saw all the Uber for X things popping up. So Instacart, Shipt, Wag, Rover, Uber Eats, DoorDash. Like someone's going to do this for laundry and dry cleaning. And so I'd called up Dan Daquisto. He's been my best friend since sixth grade, but not because he was my best friend. He was at startups in Minneapolis. So he understood the grind and the culture and how hard it is and the work-life balance, not being super balanced.

• 34:07Hala Taha?

  Yeah.

• 34:08Speaker 01

  But he also was really good at marketing and sales. And my background was at the time especially was just way more numbers, finance, operations. And I was like, I need someone like you and you need someone like me. And we love each other. We care about each other. We trust each other. We have shared values. We should do. This.

• 34:24Hala Taha?

  Mm hmm.

• 34:24Speaker 01

  And we're twenty two, twenty three. And he quits his job. He breaks up with his girlfriend at the time, who's now his wife. So it all worked out.

• 34:32Hala Taha?

  Oh, good.

• 34:33Speaker 01

  Breaks the lease on his apartment and packs the car and drives straight. He did it straight, didn't even stop down to Charlotte and like, let's just figure this out. We had no idea what it was gonna look like, but it ended up being the most fun, stressful, challenging, fulfilling thing, you know, we've ever done.

• 34:52Hala Taha?

  And that was your first franchise. So you took your experience from laundry from college and you're like, I want to make this a franchise. Why did you, did you set out to make it a franchise initially?

• 35:04Speaker 01

  I got excited about what Uber was doing to this like sleepy boy like, oh, taxis have always been around, let's go make them better. And in the same vein, do good for society, we're reducing drunk driving and all this other, you know, all this, you know, negative stuff that Uber was tackling. And how they went about it is questionable and they could have probably done some things better. But I saw just the impact you could have by building a huge, national venture scale business. And I'd always wanted to do that. And so I thought laundry is something that everyone does. It's the most hated household chore in the country. What if we like Uber, you know, Uberized laundry? And so it started out as a marketplace business again, where we would pair existing laundromats and dry cleaners with those that wanted their laundry and dry cleaning picked up from their door, done for them, returned the next day.

• 35:49Speaker 01

  Kind of like what we did in college. And it worked really well in Charlotte. We thought it'd be busy professionals, which it was some of, but very quickly we learned just because we're not our ideal customer profile doesn't mean someone else isn't going to present themselves as the perfect customer for this business. And for us, that was mom. It was mostly women making the purchasing decision, ages, you know, late thirties to, to early fifties. And they would, we'd get calls, some moms audibly crying on the phone. You have no idea, this is the bane of my existence. I come home from work, there's a pile sitting there. I do one load and by the time I'm done with one, there's a whole other mountain again. And she's constantly stressing me out. And we're like, we got you, we can do your laundry for you.

• 36:32Speaker 01

  And so we, the goal was to build this national brand where we paired, you know, existing, your demand with, with existing supply. And boy, were we wrong. We were so wrong. Uh, the issue that we had was, you know, compared to an Uber Eats or a, um, a food delivery businesses. All these restaurants are already making meals. Delivery is just enabling them to do more for people that aren't going to step foot in the restaurant. So we thought, oh, that should work for dry cleaning and laundry. It did work for dry cleaning because they had these big plants that do the volume for the drop stores already. And so they just said, yeah, bring us more volume. We'll do it. Great. On the laundry piece, what we would do in our washers and drawers at home. There had never been a need for mass volume, individualized laundry before.

• 37:15Speaker 01

  And so we would go to these mom and pop laundromat owners and say, hey, well, double or triple your revenue. But we need you to do all this volume. And they're like, yeah, yeah, yeah, we'll figure it out.

• 37:24Hala Taha?

  And they couldn't handle it.

• 37:25Speaker 01

  Because if you think about a laundromat, it's a passive self-service business that people come into, put quarters into the machine. The owner doesn't have any employees most of the time. And if they do, it's maybe one, maybe two. We now needed them to have 15 employees per location to be good at operations, tracking errors, you know, fixing quality issues. They are not good at that. They're landlords essentially. And so we ran into the issue of messing people's stuff up, mixing your clothes with mine. We're like, if this is what it's like with five locations, what's it going to be like with 500 or 5,000? This doesn't scale.

• 37:59Hala Taha?

  Yeah.

• 37:59Speaker 01

  And so then we started going overnight into existing people's laundromats. So we were in our mid twenties at three in the morning at these kind of sketchy laundromats, producing all of this delivery volume. And that perfected our process. We built technology around it. And then it became, we can't be doing this in other people's hole in the wall laundromats.

• 38:20Hala Taha?

  Especially for like quality, right? And just standardization of everything.

• 38:24Speaker 01

  And just the quality of, you know, life for our employees, like they're working in these tight spaces and, you know, they're storing things in this, you know, shed in the back of the laundromat. It was just like, this isn't, this isn't going to scale either, even though the process now scales and the tech scales. The infrastructure does it now. So now what do we do? So we partnered with Electrolux. They're one of the largest appliance manufacturers in the world. They own brands like Frigidaire and, um, others. North American headquarters happened to be in Charlotte. So talk about right place, right time, stars aligning. And so we had approached them and they said, yeah, we've been tracking you. We love the business and what you're doing. And we showed them our numbers and like, you should just open your own store. You're going to be more than profitable day one. We'll finance it because the issue we had was we didn't want to use venture capital to buy

• 39:09Speaker 01

  washers and dryers.

• 39:10Hala Taha?

  Okay.

• 39:10Speaker 01

  Terrible use of capital. And we weren't bankable yet because we were two 25 year olds in a business that was kind of mostly losing money or breaking even. So we weren't bankable. And so Electrolux said, we'll be the bank. We'll finance the whole first location. We believe in you guys. You already have enough revenue to make it work. And we bought an old McDonald's. It was the first building we bought, 6,500 square feet. I'm negotiating with McDonald's corporate at 25 years old. And McDonald's is like one of the largest real estate companies in the world. And of course we had mentors in my ear being like, say this, change this clause. And McDonald's is like, what? How did you, what? It was such a fun, like cool first experience.

• 39:51Speaker 01

  But then we built this hybrid facility that is open to the public for walk-in laundry seven days a week. But Monday through Friday, most people aren't doing laundry at 2:00 PM on a Tuesday. They're working. And so that's when we would shut down half of the store and do all of our delivery volume for the more kind of affluent, higher income customer. And so now you have two customer bases being cleaned out of the same asset base and same infrastructure. And it really worked. And that's where the question of how do we open 100 of these came, you know, popped up.

• 40:22Hala Taha?

  So that's the one that turned into our franchise. So it was the Laundro Lab? Is that how you say it? So then what did you do with the other business? You just shut it down?

• 40:31Speaker 01

  So the idea was the whole thing is working in unison. It's kind of like we've, we've built McDonald's, the infrastructure, plus the delivery engine, like DoorDash or Uber Eats.

• 40:41Hala Taha?

  Yep.

• 40:41Speaker 01

  We've done the same with the Laundromat and the delivery mechanism we've built and all the process and tech. So like, we need more physical locations now. How do we do this? It's going to be a hundred million dollars to go at the speed and pace we want to go. Or what if we franchise the brick and mortar and then layer the delivery piece on top?

• 41:01Hala Taha?

  Got it.

• 41:02Speaker 01

  Just like Uber Eats, but now this time around, instead of having legacy owners in small thousand to two thousand square foot spaces, we get to hand select the franchisee. They know upfront the intention is for us to do delivery as well as just walk in. So everyone's on the same page that they're going to have to be operators, not landlords. And we get to have control over the size of the store, the equipment mix, the layout, all the stuff that we need. But we get to partner with others now who can bring their capital in and allow us to build many more locations faster.

• 41:30Hala Taha?

  Cool. So L'Andro Lab is the franchise portion. 2U Laundry is the app that delivers. And you were the CEO of that app.

• 41:40Speaker 01

  Yep.

• 41:41Hala Taha?

  And that app just like funnels to different L'Andro Labs, basically, to do the deliveries? Really interesting. Now, let's talk about raising money for an unsexy business.

• 41:51Speaker 01

  Oh, my gosh. Yeah, that was like, early on, it was, it was kind of sexy, like, oh, a delivery app. Because there was a delivery app for everything.

• 41:58Hala Taha?

  Yeah, delivery apps were hot.

• 42:00Speaker 01

  Like, dog walking, flower delivery, and there was like, on-demand massage zeal, I think it was the name of it. They'd come to like, a corporate office building and do massages at where I was like, wow, this is wild. Everything was getting Uberized. And so that space was kind of hot for a little bit. And so we rode a little bit of that wave, but I think we missed it by a year or two as well. And so then when we started vertically integrating and building physical stores, it was a little tricky to raise capital because it's like, what are you? Are you a franchise retail thing? Are you a tech delivery thing? And we're like, we're kind of both. The ecosystem fits in. So we'd have to have different conversations with different types of investors to really get them there. And eventually, when we started franchising, you know, we had just raised $6 million right

• 42:45Speaker 01

  before COVID had happened. And that was to go, we're going to do a corporate own at that point. We're like, let's just go and see how far we can go with just corporate locations. COVID happens, our board is like, we should shut things down, or shut markets down that we just launched because they're not going to be profitable for a year. And the foresight that they had, it was January of, I guess, what would that have been, 2020? They're like, whatever is happening in Asia is gonna happen here eventually. Like, we're gonna have stay-at-home orders. There's gonna be no weddings and all these things. And I remember the guy on our board saying this, and I was like, it makes so much sense, but the rest of society is just pretending like, ah, it's over there. We're gonna be fine. Like, no one responded. And sure enough, come April, is when the NBA went to the bubble and all that. That's when we, as a society, started responding.

• 43:30Speaker 01

  But we were talking about this in January. I was like, it took three or four months for like, our government and the rest of it. But anyway, a lot of learning at that moment. So we shut down the nonprofitable parts, and that's when we really developed the franchise concept. We ended up selling 118 locations in 12 months. People wanted laundromats, they're sexy, boring businesses. And off of that, we ended up raising about a $20 million Series B. And that became more private equity. And hey, you guys have a trajectory here. You have a pipeline of stores to open. Plus, you have this interesting venture tech piece on top. And we liked the whole thing combined. But it was not easy. I mean, many rounds of capital where we had two weeks left of cash before we weren't gonna,

• 44:14Speaker 01

  you know, be able to make payroll or entirely run out of money. And it's a roller coaster.

• 44:19Hala Taha?

  Yeah, it is. I bootstrapped my company, but I have friends that are VC-backed. And a lot of them that are in industries that aren't AI at this point are really struggling now to raise money. So what advice do you have for them in terms of like, things to focus on instead of the industry that they're in?

• 44:37Speaker 01

  Yes, I think if it's a non-AI thing that you're building, I would try to bootstrap as much as you can now. And it's easy to say that, hard to do that, but it's easier to actually execute that today than it's ever been. Our software team that's building what we're building today is a fifth, maybe even a tenth of the size of what it would have needed to be three to five years ago. So you can just do so much more with so much less with all these different AI tools. So I would encourage people to like, really get creative and scrappy. I'm like, what do you actually need to build? And can you do it? With Claude Code and with these off the shelf tools and how far can you get? And maybe hire one engineer that can use these tools instead of three or four or five, which requires you to raise money and get on that treadmill.

• 45:22Speaker 01

  So that's one piece of advice. The second is if you are going to raise money, this idea of seed strapping is like this hybrid of bootstrapping plus raising small chunks of cash. Like, we're actually doing that for Francy. You raised a million bucks initially and then two and a half. We're about to close another $2 million round now. So it's these like micro rounds.

• 45:39Hala Taha?

  Yeah, nothing too crazy.

• 45:40Speaker 01

  You're still getting good valuation increases each time, but we're not going to raise the $20 million round and now you have to spend it and the expectation is to grow.

• 45:47Hala Taha?

  Three X.

• 45:48Speaker 01

  Yeah. So that's the advice too, is like be super thoughtful about the cap table and how you raise money and who you raise it from and even more deliberate and intentional than you would have had to be historically.

• 46:00Hala Taha?

  So you started Francy, you decided to also step down as CEO. And tell me the real reason why. Was it because you wanted to start something different and do something more exciting? Or was it because you felt like you weren't the right person to scale Landro Labs?

• 46:19Speaker 01

  It was a combination of things for sure. So in 2022, and I'm an open book about everything. So in 2022, we raised the 20 million. And then in early 23, my dad was diagnosed with cancer. He's good, he's cancer free now.

• 46:33Hala Taha?

  Oh, great.

• 46:34Speaker 01

  He has to track it every couple of months to go get tested. But they live in Minnesota. They had me when they were older, I have two older brothers. So my dad's 74, I'm 34. And I had already been thinking about, all right, I go home two, maybe three times a year. He's 74, average life expectancy is 85. So 10 times two or three is like, I got 20 to 30 more times with my dad.

• 46:56Hala Taha?

  I think about that all the time.

• 46:58Speaker 01

  All the time. And I read this article right before he got diagnosed with cancer and it had you enter your age, their age, how far apart you lived.

• 47:04Hala Taha?

  How many times see him?

• 47:05Speaker 01

  It spit out baseballs for some reason. It's like baseball's infographic and mine had like 24 baseballs and I was like, what? Like, this can't be right. I was like, so then I made a very intentional effort. I was like, I'm going to double that or triple that. I'm going to go home more, I'm going to have them come down more. And then he got sick. That really weighed on me. My wife found out that she was not a US citizen after believing she was one her whole life. And so that created.

• 47:28Hala Taha?

  Oh, my gosh.

• 47:28Speaker 01

  That created a wrinkle and, you know, it was a really challenging thing. My COO had a heart attack and passed away unfortunately. And I ruptured my Achilles all within a three to four month window.

• 47:42Hala Taha?

  Geez.

• 47:42Speaker 01

  And so I tried to hang on. I was like, I've been through hard stuff. You can do hard things. You can, I was like trying to be tough.

• 47:48Hala Taha?

  Yeah.

• 47:48Speaker 01

  And I just found myself eventually for no reason crying, like almost, well, I guess for reasons.

• 47:54Hala Taha?

  Yeah.

• 47:55Speaker 01

  But every day, like I could drop a pencil and that would like set me off. I just like, I give up. I can't do this. Like the pencil just fell like every, I was like, all right, I think I'm depressed or something.

• 48:05Hala Taha?

  Yeah, something's different.

• 48:06Speaker 01

  So I went to our board. I just said, look, this is a competitive sport. We're at the height of opening stores and everything going on. This, you know, the worst time to have someone with as much personal stuff happening, going on as I have, trying to lead this thing. I was like, I tried the last six months, but I'm clearly not in the right space to do this. And they're like, why didn't you say, like their response was, why didn't you say anything sooner? You're a hundred percent right. Like you're human. You need to take time. You need to take a break, regardless of what's happening in the company. And so the lesson for me there was like, if things are getting tough, talk to your partners, talk to your board. They're not going to punish you. They're there to help. And so I went and took a three or four month sabbatical

• 48:47Speaker 01

  and did a lot of thinking during that time and just realized the business is drastically different than what it was when I started. I thought this was Uber for X, a tech company.

• 48:54Hala Taha?

  Yeah.

• 48:55Speaker 01

  And now it's one with trucks and washers and dryers and physical laundromats. And I don't think I'm the guy, and I don't know if I want to be the guy that takes us from thirty physical laundromats to three hundred or, you know, a thousand. And we should go hire a CEO that has some level of retail experience and understands logistically intensive businesses, because that's what this has become. So we did a CEO search. We found him. He's great. It allowed me, you know, part of the answer is also, yeah, I've had this idea for Franzy and it was sitting there. But it gave me the space to go think about that. And like, what am I going to do next? What did I like about the business we had built? What did I not like? And can I go find or come up with the next thing that has those characteristics of things that I'm good at, not, you know, and not the things that I'm not good at?

• 49:37Hala Taha?

  Yeah. So you came up with Franzy. What were the first steps that you took to validate the idea?

• 49:44Speaker 01

  Yeah, so I had been thinking about it for years and I joke with people that starting a business is almost like getting a tattoo and hear me out. This will make sense in a second. My brother gave me this advice. I only have like one or two. And he was like, think about the idea of what you would get and then wait a year. And if in a year you still want to go do it, you must really care about this tattoo and think it's so important and whatever else. So then do it, but don't do it on an impulse. Don't do it that week, that month, whatever, wait a year. And I think starting a business is similar. I think you may have this idea because you had a hard day at work or you saw some problem. But it might actually be that someone else is doing it or that you were just upset that day about that thing. And it wasn't actually that big of a deal a week later. So I tell people to give it six to 12 months.

• 50:26Speaker 01

  And if you're still thinking about it, then go and start to take the leap. I felt that way about Franzi. I've been thinking about it for years and I kept seeing the pain point over and over. I kept seeing all the misalignment, people buying businesses they shouldn't have been. And so to validate it initially, we just went and talked to a bunch of brands. And so like, hey, we're thinking about doing it this way instead of a 60% commission. It'll be a flat rate. It'll be this open marketplace. What do you think? And the brands all loved it because it didn't cost me anything. I'm not paying per lead. I hate paying per lead because it's 40 bucks a lead and I have to sift through 400 of them. So I'm now, you know, all this money in and time now to sift through mediocre to crappy leads just to find one deal. So like, I like that. So brands loved it. The big question mark was would prospective franchisees find value in this?

• 51:11Speaker 01

  And the proxy for us was they're all using brokers. So like, we still provide that level of service. So we know they're going to value that. They want access to data, which they don't have really. There's all these Google searches. There's data that shows that that exists. So they clearly want stuff that isn't really there. And more and more, I think just in society, people want self-serve options. Like think about Zillow. We like to go.

• 51:32Hala Taha?

  Yep. It's like a pastime.

• 51:34Speaker 01

  Yeah, exactly.

• 51:35Hala Taha?

  You would just do it for fun if they're not even looking.

• 51:37Speaker 01

  Person goes like once a week to Zillow. It was something like that. Don't hold me to that. I remember reading that and being like, really? They're just like online shopping, dreaming about houses and stuff.

• 51:46Hala Taha?

  I have friends that just like look up an address on Zillow because they're curious of what it's sold for and.

• 51:51Speaker 01

  All the time. And so our thought was like, if that's true for houses and cars and why not businesses? So we went and did like a very light version of the site. We pulled some data in and we just, we put it out in the Charlotte market. We did some LinkedIn posts and. People started going, started getting a couple thousand a month in traffic, 10,000. We're up to 60, 70,000 unique visitors a month now and

• 52:13Hala Taha?

  That's awesome.

• 52:13Speaker 01

  Helping a lot of people become entrepreneurs either for the first time or the 20th time. You know, they're buying their 20th thing.

• 52:20Hala Taha?

  Talk to me about how much it took to start, Francie. How much money did it take? You mentioned that you didn't have such a big development team. You started it in 2025?

• 52:30Speaker 01

  No, we started working on it late summer of 24.

• 52:32Hala Taha?

  Okay, so like AI was like just coming out like I don't know how much was out there with AI. So how much money did you end up spending to like build this platform?

• 52:42Speaker 01

  So I remember in the first thing was like find a good co-founder again. I don't want to do anything on my own for a number of reasons. It's way more fun to me to do it with someone else.

• 52:49Hala Taha?

  Yeah.

• 52:50Speaker 01

  And that complementary skill set, I think, just speeds everything up. So found my co-founder quicker than I thought. In my head, I was like, I'm gonna give myself, you know, six months. I just left this business that I built and I'm gonna take some time off.

• 53:02Hala Taha?

  Yeah.

• 53:02Speaker 01

  And sure enough, the stars aligned. It was a guy I've known forever in Charlotte, very complementary to me. And he was transitioning too. So I was like, all right, maybe we do this six months sooner than I thought. So found him and we were like, we're each just gonna put like 20K into this. And honestly, that'll probably get us far enough to get an MVP built. There were a lot of AI

• 53:20Hala Taha?

  Okay, there were.

• 53:21Speaker 01

  Coding tools at the point, not as sophisticated, as good as they are now, but still pretty good. And so we used some of those tools plus offshore developers at first. Like, let's just get a basic thing out to see. So we were only in like 20 or 30 grand to get our MVP out. And then we started getting enough traction, they were like, let's raise money. Cause I'd talked to a few of our old investors and two of them were like, we love the idea. It's way more scalable than what you were doing last time. You're now a veteran, not really, but in their eyes, like your second time around, you have some of the battle wounds and scars. It'll make you better faster, et cetera.

• 53:56Speaker 01

  And they like sight unseen, we're like, we'll put a million dollars in. And I was like, we don't even know like

• 54:00Hala Taha?

  Yeah, we don't need a million dollars.

• 54:02Speaker 01

  And I was like, all right, well, this is a huge market opportunity. It's big, let's take it. And we off to the races. We started cruising from there.

• 54:12Speaker 01

  When you get that money, you spend it, right? And so the joke that I've heard from other entrepreneurs and investors is regardless of whether you raise a million dollars or fifty million dollars, you're going to spend it in eighteen to twenty-six months.

• 54:24Hala Taha?

  Yeah.

• 54:25Speaker 01

  Like you'll find, like, not that you want to find ways, but like, opportunities will come up. We could acquire this company, we could build this feature that we were going to wait on. And so these things come, you have to be disciplined to say no to a lot of it, but good opportunities do come up. And if you have the war chest to capitalize on it, that's kind of the whole point. And so we did that the first year, officially launched, uh, February of twenty twenty-five. And it's been one of the fastest, like, most exhilarating things I've been a part of. I've heard other entrepreneurs tell me about lightning in a bottle, and I feel like we've

• 54:56Hala Taha?

  Yeah, it's, I mean, it's such a cool idea, like, learning about it, it makes me be like, oh, like, I want to go research franchises and options and just like, it's just a really cool way to actually standardize the way that people buy franchises. Then it's a real problem because brokers will sometimes lean into the opportunity that they'll make the most money on, not, not necessarily what is the best fit for the customers. So there was a real problem that you were solving.

• 55:24Speaker 01

  It is insane, honestly, like, I'm, I'll stay off my soapbox for

• 55:28Hala Taha?

  Go on your soapbox, that's why you're here.

• 55:31Speaker 01

  Not for too long, but we, when we were selling the laundromats, we worked with brokers. And the more I got into how it worked, the more I was like, how is this legal? Um, you know, to buy a house, or just, I'm sorry, to, you know, help someone buy or sell a house, you have to be licensed, you have to, uh, disclose how much you make, what percentage, uh, you have to do coursework, there's all these, you know, things that be registered in that state. To buy and sell a franchise or help someone to buy and sell a franchise, boom, you and I are legitimate now, we're business brokers, we can go sell whoever's listening, you know, a concept. And so that's a big problem because it attracts bad actors, because there's no hurdle, there's, there's a barrier to entry is zero. And you're helping people make, I would say, just as big of, maybe not as big, but

• 56:16Speaker 01

  close to as big of a decision as buying a home. It is a multi-hundred thousand dollar decision, sometimes half a million, sometimes multiple millions of dollars. And so you're working with this person who's not licensed, not legally required to tell you how much they make and how they make money. And so the incentives are very misaligned, but you as a, you know, the person working with them think, oh, this person has my back. Why wouldn't they? It's the ethical thing to do. And it's probably like buying a house and they, you know, probably are regulated like that. They're not, which is crazy and I, I hope regulation comes. I'm not usually a huge proponent of regulation. In this case, it needs it. But then they also make a 60% commission on the franchise fee. I know a ton of salespeople. I've never heard of a commission that high.

• 56:59Hala Taha?

  Very, very high. Yeah. It's usually 15, 20%, 30.

• 57:03Speaker 01

  And so like that high commission without regulation. Again, it's a perfect storm of attracting bad actors. There's a lot of great business brokers. I don't want to trash the whole model. There's a lot of really good, ethical, super helpful, you know, very moral, morally aligned people, et cetera. But for every one of those, there's 10 bad ones because of the, the Wild West nature of it. And so we looked at the opportunity to say, hey, we can build Francy and let capitalism do its thing. And bulldoze a path through the brokers and say, we'll charge a flat fee. So it's super aligned with the individual and the brand. Cause we don't care which brand it is, we get paid the same amount of money. So we have no incentive to say, hey, Hala, this brand is way better for you because their franchise fee is 60K. And this other brand that actually is a better fit for you, the franchise fee is 30K.

• 57:47Speaker 01

  As a broker, I make twice as much money by pushing this one in front of you. That's a huge incentive. We're not talking about a couple of thousand more dollars. We're talking about tens of thousands of dollars more. And so we said, hey, it's a flat fee. So we rip out that incentive. We also disclose like a real estate agent would upfront. Here's how we make money. Here's how much so that you know is the prospect. And we also explained to them how the broker world works traditionally. Like, wow, I can't believe that was allowed. And, and then the brands love it because they're also paying less overall. And again, it's aligned. They, the best brand has to win and that's how it should be. It shouldn't be the brand that pays to play the most.

• 58:22Hala Taha?

  So you are contracting with the brands.

• 58:25Speaker 01

  Brands do pay us the platform fee.

• 58:27Hala Taha?

  So you're also trying to recruit brands, right? All the time?

• 58:30Speaker 01

  So we have 4,000 on the platform, which is the whole universe. Because we have those documents. But then we have what are called verified brands. So it's like a purple checkmark or a blue checkmark on Instagram. So we've vetted them at that point. They've claimed their profile. Like you and I can claim our houses on Zillow. And so it's the same way. It's free for them to do. It doesn't cost them anything. They can update the data, though, once they claim it. They can see leads coming in. And so our incentive to the brand is we have all these eyeballs looking at, you know, your concept. They want to come talk to you.

• 58:59Hala Taha?

  Yeah.

• 59:00Speaker 01

  We gatekeep a little bit like, hey, you know, they can go direct to the brand from the platform from there. But the brands really want to come on because we've built all these tools that make their sales team more efficient.

• 59:09Hala Taha?

  Yeah.

• 59:10Speaker 01

  More insights and then prospects. So they're getting all this free education, support, handholding, access to the best lenders, the best rates, entity formation, CPAs, attorneys, et cetera.

• 59:19Hala Taha?

  Yeah.

• 59:20Speaker 01

  So it just makes it easier for them. They don't really, they don't pay anything for it.

• 59:22Hala Taha?

  There's so much to unpack in what you just said. So why don't we start with how you make money on the transaction?

• 59:31Speaker 01

  Yep.

• 59:31Hala Taha?

  So brands don't pay you, but you're-

• 59:33Speaker 01

  Only if a deal is completed.

• 59:35Hala Taha?

  So they only pay you when a transaction actually happens and you get some sort of a fee that's transparent to everyone?

• 59:41Speaker 01

  Yes. So we call it a platform success fee and it's typically 20 to 25K. So there's a little bit of variance depending on the brand's franchise fee. Because we don't want them, if it's a very low fee, to be unprofitable on a deal. So we'll give a little wiggle room, but it's not this flat percentage. So we'll kind of put them into buckets. If your franchise fee is zero to 40K, it's X.

• 1:00:02Hala Taha?

  And what's a franchise fee?

• 1:00:04Speaker 01

  So if you and I were to go buy Jersey Mikes together.

• 1:00:07Hala Taha?

  Okay.

• 1:00:07Speaker 01

  They might say, hey, you guys get the rights to three in Austin. To preserve or reserve those rights for us, we're paying a franchise fee. We're saying, all right, for three of them, it's 40K for one territory. And they usually scale down as you buy more. So 40K for one, 30K for the second, 25K for the third.

• 1:00:23Hala Taha?

  But that's not how much it costs to open up a franchise. That's just like the cost of getting the brand.

• 1:00:28Speaker 01

  Yeah.

• 1:00:28Hala Taha?

  Okay. It's basically your- It's just a ticket.

• 1:00:30Speaker 01

  Your ticket in line. We now, if we buy those three Jersey Mikes territories, we pay our, call it 100K to reserve that right. That's our zip code or that's our 10-mile radius that only we can develop a Jersey Mikes. And no one else can ever do that. We own the rights to that now. We then have to go pay however many hundreds of thousands to develop and build the Jersey Mikes and, you know. Get the store, you know, footprint ready, et cetera. So the franchise fee, and every franchise has it, is basically your right to develop that territory or that market.

• 1:01:04Hala Taha?

  Got it. So you charge a flat fee depending on how much their franchise fee is? And that's the only time that you monetize in the transaction?

• 1:01:12Speaker 01

  Yeah, with the brand. Now, let's say, in that same example, you and I go and we're like, we need a million dollars to go do this, to develop these locations. We have hundreds of lenders that some love food, some hate food, some like fitness, some hate fitness. We pair you with the right lender, and if we borrow that million, Franzie makes another a hundred to 200 basis points.

• 1:01:32Hala Taha?

  So you're also adding like additional services that they're gonna need anyway? So you can be like an all-in-one platform, and then you're monetizing on those additional services? Is there any other services that you're kind of baking in?

• 1:01:42Speaker 01

  So CPA, so you need to form an entity and get your standard chart of accounts done. So entity formation and getting your books ready.

• 1:01:49Hala Taha?

  Okay.

• 1:01:50Speaker 01

  We refer attorneys, but they can't pay referral fees. That's just us being the one-stop shop and wanting to be value-accretive. Brands will pay us kind of sponsorship. So we do a ton of our own content as well. We have a podcast. We've got a bunch of educational content we put out, short form, long form, YouTube series, et cetera. And so brands will pay us sponsorships as well to do commercials in those things. Or to be referenced more often in my LinkedIn posts and things like that.

• 1:02:17Hala Taha?

  Do you think there's a world in which brands will start to pay you to get like featured in your app or promoted? Or do you feel like that would be bad for incentives?

• 1:02:25Speaker 01

  I think if it's done tastefully, because what I want to avoid is the same thing that happens with the brokers, where it's kind of this like pay-to-play thing. And so, almost like a paid Google ad, where it's very clear in a Google search, it's like, "Paid, paid, paid, sponsored." If it's like that, I think it's like, oh, this brand paid to be here.

• 1:02:40Hala Taha?

  Yeah.

• 1:02:40Speaker 01

  It's not necessarily what Franzie is saying is the best brand. Because we want to be very clear on... You know, remaining unbiased and objective about it.

• 1:02:50Hala Taha?

  Yeah, something that's really cool is all the data that you're collecting about all these franchises. And that's how people are actually further vetting the opportunities, right? So how are you getting that info? Is that just like the available data? Or are you collecting it in some way?

• 1:03:04Speaker 01

  It's a combination of honestly like four or five things. So these FDDs, we have 26,000 of them going back five or six years. Each year, a brand has to do a new FDD. And that's franchise disclosure document. And so we can see the trend of the stores they've opened, closed, shut down, which is important. And so if you look at one in isolation, it tells a little bit of a story. But it's a dot on a, you know, you've heard that story before. You know, lines tell stories, a dot, you know, is less useful. And so we start to put and plot where did revenue go each year? Where did stores open or close or shut down go? And we start to surface those insights to people on the platform. So the FDDs is a huge source.

• 1:03:45Speaker 01

  Brands, when they claim their, their, their brand on Francy, they give us a ton of additional information. So that is another source. We pull in other third party data, like traffic patterns and Google my business reviews. We have millions of reviews that we've surfaced to say, hey, in this market, this brand, this is the perception of the local consumer. Because you as someone buying it, you might love the team and you might have heard from your friend in New Jersey that this concept is great. But in this market, maybe the, you know, Chick-fil-A is just dominating. So like Raising Canes isn't going to make sense there.

• 1:04:16Hala Taha?

  So are people actually buying like a franchise in a specific city with a specific location already? Or are they just buying the rights to start one up themselves?

• 1:04:26Speaker 01

  Both. So we have de novo, de novo developments, so net new development where they're buying the rights. Because maybe the brand isn't there yet or they haven't sold out that territory. We also have resales where. Let's use you and I and Jersey mics again. Like, we've been doing it for 10 years. We're like, we're sick of the sandwich business. Let's sell it. And so now we list our Jersey mics on Francy as a resale. And now vetted buyers are coming in. They can't see all of our data until we've, on the Francy platform, have determined it's a serious buyer because we don't want yours and I's sensitive data

• 1:04:54Hala Taha?

  Yeah.

• 1:04:54Speaker 01

  out there unless it's a serious person. And that's a newer thing we're developing. It's very manual today, but the goal is over time to have just as robust of a resale marketplace as we have a net new territory.

• 1:05:10Hala Taha?

  It's really cool. So you start, you launched it in 2025. How many transactions have you made so far?

• 1:05:15Speaker 01

  Yep, so we've done just under 100, which is like the main metric that we care about because in our, when we close a deal, we call it, you know, like a new entrepreneur made.

• 1:05:24Hala Taha?

  Oh, cool.

• 1:05:25Speaker 01

  And that's the, that's what I love. Like, again, it's changed my life. It is the most fulfilling thing I've ever done. And so when we have someone else do it and you can see how excited they are and like they're scared and they're nervous as they should be because they're about to embark on this wild journey. But that gives me like those warm fuzzies of like, all right, someone's going to go

• 1:05:42Hala Taha?

  Yeah.

• 1:05:42Speaker 01

  chase their dream now and build something. And I know how much they're going to learn. I know how hard it's going to be and I know how fulfilling it's going to be.

• 1:05:48Hala Taha?

  So do you have a way to connect with the franchisee after the fact to kind of understand how things have went and improve your process?

• 1:05:55Speaker 01

  Yep, so we follow up every like three, six, nine months just to see how they're doing. We're starting to work on software and AI tools to be with them the rest of the relationship. So right now, if you think about franzy.com today, it's, it's the buy bucket. It's resales, it's existing or net new, it's lending, it's CPAs, it's attorneys, it's all that stuff. Soon as they buy, it's kind of like, oh, our relationship's over.

• 1:06:17Hala Taha?

  Yeah.

• 1:06:17Speaker 01

  Kind of, we check in like we do. But we want to be with you to make you a better operator now because there's a lot of terrible software that's not franchise specific or purpose built. And so we're starting to develop this AI intelligence layer. It's a single pane of glass is what we call it, where we're connected to all your other systems and serve up every day daily recommendations for you and your team to better drive profitability in your business. So then we'll be with you the whole journey. And then when you go to sell, we know everything about your business. You just hit list. And it goes back onto the marketplace. So that is something that we're working on confidentially. You can share this, but

• 1:06:53Hala Taha?

  Yeah.

• 1:06:53Speaker 01

  We're planning to go to market in September with that tool. Very excited about it.

• 1:06:57Hala Taha?

  That's exciting.

• 1:06:58Speaker 01

  Then we will be with you the whole way. But for now, we're just checking in every three, six, nine months. And some of the stories are phenomenal. One guy quit his job in, he was from New Jersey, moved to, I think it was Waco, to do an artificial turf business. And is already like, he's on pace to do over a million dollars in his first year.

• 1:07:16Hala Taha?

  Amazing.

• 1:07:17Speaker 01

  And he just is like, he's getting into content now, which like, if you met the guy when we first met him, he's like, not like that kind of like, he's, I was like that, you know, as well. I still kind of am. It's kind of quiet, reserved, calculated. Now he's like, all right, guys, like I can make your backyard super safe, kid friendly, pet friendly. And he's like doing it and it's working and he's got some.

• 1:07:35Hala Taha?

  He's a Shamwell guy now?

• 1:07:36Speaker 01

  Yeah, exactly. He's got Cowboys players signing up and like he's, couldn't be happier. Like that feels selfishly really good.

• 1:07:44Hala Taha?

  Yeah, that's awesome.

• 1:07:45Speaker 01

  Be like, hey, we were a part of that. And knock on wood, I think we might go on Good Morning America later this year.

• 1:07:51Hala Taha?

  Amazing.

• 1:07:52Speaker 01

  Because they want to have stories like that where, because we talked to them about a year ago. And they're like, yeah, you're just getting started. They're like, come back and let's do a story when someone's like taken the leap, quit their job. Now they're a year or two in and they're like on top of the world. And you know, there's a good success story.

• 1:08:07Hala Taha?

  There's so much opportunity and it's so interesting. And we're going to have a part two of this episode where we're going to go into some case studies. And artificial turf is going to be one of them because there's really low overhead, but lots of upside. And so there's so many cool opportunities for people.

• 1:08:22Speaker 01

  I had no idea. I used, I think I told you at the beginning, I used to be a franchise hater. I think a lot of people are, and you think, oh, it's just McDonald's, it's Subway, or it's these like snake oil salesman type concepts that like aren't working. And you know, you shouldn't pay attention to. And so I used to write franchising off and the more I've gotten into it and the more I've seen how much wealth has been created, how much happiness and fulfillment's been created. And how the average person again, isn't going to go start Uber. Like, I love this. If you find the right fit that complements your skillset, that you can afford and that your risk tolerance aligns with, like, sky's the limit. You're in full control and it's, I think it's what a lot of us want is freedom and control over what we do.

• 1:09:01Hala Taha?

  Yeah, as somebody who loves to start businesses, for me, it's like so tempting to want to start some sort of a franchise.

• 1:09:08Speaker 01

  We'll, we'll get you into one.

• 1:09:10Hala Taha?

  Yeah, I feel like I should. And that's a wrap for part one of my conversation with Alex. The biggest lesson so far in this conversation is that you don't always need to invent a brand new idea to build wealth. Sometimes the opportunity is in seeing where an existing industry is broken, then using better systems, better data, and better incentives to make it work. But we're not done yet. In part two, Alex is going to walk us through the five things every entrepreneur needs to consider before buying a franchise. We'll also break down real franchise opportunities, including spray tanning, Pilates studios, coffee shops, home services, and so much more. And trust me, you're going to be surprised. So if you ever thought, could franchising be my path to entrepreneurship? You do not want to miss part two.

• 1:09:55Hala Taha?

  I'm Hala Taha, and this is How We Profit Wednesdays.