#1479 Alex Smereczniak | How To Make Millions By Quitting Your Job

Alex Smereczniak is a serial entrepreneur and the co-founder and CEO of Franzy, a platform revolutionizing franchise discovery and acquisition. In this conversation, we talk about how you can own your own business, the success rate of franchises, timeline, risks, negotiating tips, impact on the US economy, and why you should use Franzy. ======================== BitcoinOS is bringing Bitcoin into a new era. For the first time, Bitcoiners can access real DeFi across the entire crypto ecosystem, powered by revolutionary zero-knowledge technology. No more trusting sketchy bridges or giving up security. BitcoinOS reunites all of crypto around the chain where it all began. Follow BitcoinOS on twitter @BTC_OS and Be early to Bitcoin again. ======================= Polkadot is a scalable, secure, and decentralized blockchain technology aimed at creating Web3. Created by Gavin Wood, co-founder of Ethereum, Polkadot empowers users to build decentralized applications with ease. Backed by industry leaders, making it a preferred choice for big names, Polkadot stands out as a leading choice for investors seeking a reliable, future-proof solution in the growing world of Web3 technology. Learn more at https://polkadot.com/. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Ever since President Trump was elected, everyone has got their eyes on small-cap stocks in the public markets and small businesses in the private market. These businesses benefit when there's lower interest rates and there's a pro-business president in the White House. And so Alex is here to explain a brand-new business that he is launching to help everyday

• 0:47Anthony Pompliano?

  Americans get into a better financial position by owning their own business, but without taking the risk of starting something completely from scratch. And so I'm super excited about this. I think you guys will really enjoy it. Here's my conversation with Alex Smirznak.

• 1:00Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:24Anthony Pompliano?

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• 2:10Anthony Pompliano?

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• 2:52Anthony Pompliano?

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• 3:32Anthony Pompliano?

  All right, Alex, so let's start with just, I don't think many people understand how important it is for personal freedom, financial liberty and independence these small businesses are in America. How do you think about the small business? Maybe we could talk about like, how much money are these people making? And then what is their day look like compared to maybe working a nine to five or inside of some sort of corporate environment?

• 3:53Speaker 02

  Yeah, so I think the first thing I would say off the bat is that franchising represents 8% of our country's GDP. It's a massive amount of our economy and it is the, I think, perfect embodiment of the American dream. I mean, it's, you get to run your own business. You don't have to go into a nine to five that you hate. And so there is a ton of revenue generated 800 billion a year in franchising in the United States alone. So this massive market that gives people that chance to be their own boss, chase their dreams and again, be liberated from, from the nine to five. So depending on the concept that you get into, it could range from There's some where you can buy a bucket and a mop, basically, and go sell

• 4:35Speaker 02

  commercial cleaning, all the way up to groups that own hundreds of Jimmy Johns, McDonald's, and are generating tens of millions of dollars in EBITDA.

• 4:43Anthony Pompliano?

  And a lot of these people in these local communities, they're rich, right? Like, I think people are like, oh, I want to go build a tech startup. Oh, I want to go to, you know, work in high finance, whatever. Like, most of the wealthy people, growing up in North Carolina, they owned franchises, they owned local businesses, like, those were the rich people. It wasn't tech entrepreneurs or kind of people who worked in investment banking or anything.

• 5:06Speaker 02

  I mean, franchising is one of the backbones of, I think, our economy of America. It gives you the chance to, again, make, make your own money, replace your income if you want to, and then have the upside to do, to do even more than that. And so, you know, our story and what we got into was realizing that, you know, whether it's a laundromat, it's, you know, a fro yo place, there's, again, there's something for everyone that they can jump into, whether it's a service business, a retail business, or they can replace their income, or so much more than that.

• 5:37Anthony Pompliano?

  Talk about the success rate, because I think that's the most interesting thing, right, is you and I have known each other for a long time. I invested in your last business, which has gone very, very well. For those that don't know, I own a laundromat, thanks to Alex. I'm in the laundry business, thanks to Alex and Dan and his whole team.

• 5:55Anthony Pompliano?

  But the success rate of franchises is way higher than starting a business from scratch. So what are those numbers?

• 6:02Speaker 02

  Yep. So, over the first two years in the franchise industry, the success rate is 95% compared to an independent business. If you and I just start a car wash together randomly, or a restaurant randomly together, it is 75%, so a pretty big swing. The five-year success rate is even more astounding. For franchises, it's an 85% success rate compared to half of businesses failing that just start independently. So you have this community of people that are backing you within franchising. You have a franchisor that has capital, has resources, has a team supporting you, and you're truly not going at it alone, like a lot of independent operators would be. So you immediately have this playbook, and I think that's where a lot of... You know, people who want to, you know, break away, who have the dream to go start their own

• 6:47Speaker 02

  thing, but they're scared, they don't have the confidence, they're not sure where to start. Franchising is a really, really good business model to go and take that risk, but a calculated, safer risk.

• 6:58Anthony Pompliano?

  One of the things that's interesting to me is when you go and do something, it's all about both the money you make and the time you invest, right? Most of the people who are listening to this are Bitcoin investors, and so they really think about time, they have long time horizons, they think about their kind of proof of work, what is the thing they spend their time doing, what is the economic return that they get? And so in these franchise businesses, what is kind of the range in terms of how much money you see? And obviously, it depends on what the franchise is, the location, all that. But are we talking about people making like no money, all the way up to like $10 million a year from a location? Or like, what's that range look like? And then also, how much time do you see people investing in this? Is this something where you can kind of hire a manager and they can run this, you know, once you're up and running and kind of got it going well?

• 7:41Anthony Pompliano?

  Or is this something where these people are working the cash register and they're basically running a small business?

• 7:45Speaker 02

  And the answer, you know, fortunately, is that it is unique and there is such a wide range again. So there are some people that are making 50K a year in EBITDA, there's some that are making 100 million plus in EBITDA that own massive amounts of locations. And same thing with the time commitment, some out of the gate are very manager friendly, where you could hire a, you know, pretty reasonably salaried, salaried person to run the whole business for you and you get one, two, three open and you now have this mini empire in your, in your city or geography. I'd say most businesses though, the first year, you have to be involved, you have to, if you want to be different, if you want to be in that top 10% quartile of operators, of cash flow, et cetera, you need to be involved in the business, learn it that first year

• 8:29Speaker 02

  so that you know what to look for in a good manager, you know your business. But after year one, most franchises, I can't think of one that wouldn't require this or would need more than a year, you can hire a manager, you know, you can become an owner more passive at that point, or start working on your second and third and fourth and beyond.

• 8:47Anthony Pompliano?

  Okay. And then when somebody starts down this path, what are the things they need to pay attention to in terms of finding a good franchise that they want to go work with, but also the right one for them?

• 8:59Speaker 02

  Yeah, so this is a big reason we, you know, we're working on this platform, Francy, is there isn't a lot of good resources right now. I've talked to hundreds of prospects. People are dying to get into a business, but they're Googling things, you know, random brokers are coming up, or just no information at all. It's an ad for a Chick-fil-A franchise because their SEO team has dominated the, you know, the search. And so there hasn't been a good series of resources. And so with the platform, you can start to, you know, do a curated search on, I have this much to invest. I'm in this geography and I know I don't want a food concept because food and food inventory scares me and I want, you know, something else entirely. And so then we curate and serve up a list. The more that we learn about you, the more, you know, accurate that curated list gets.

• 9:45Speaker 02

  And so as you find the thing that you want, we provide, you know, the lending, the financing, connect you to commercial real estate folks, all of that stuff in one spot. Versus the alternative today, which is go through a broker, try to guess, come into a few dead ends and ultimately kind of stick with what's comfortable, which a lot of people might be staying in the nine to five.

• 10:06Anthony Pompliano?

  Now, you and I know a lot about franchising because you built a business that did not start out in franchising, but you began to franchise a bunch of models. I think you sold over a hundred different franchises to various investors across the country. Talk a little bit about that experience of kind of understanding it from, hey, you were the franchisor, right? And you were the one who was going out and kind of pitching people to come and, and work with you guys. And now you're kind of flipping around almost and helping from the other side.

• 10:31Speaker 02

  Yep. Yeah, so I knew nothing about franchising in 2020. I mean, COVID happened. Our business was all corporate owned locations. We own a location together in Charlotte. And we realized to scale this the way that we want to, at the level we want to, we need to open hundreds of laundromats. So either someone needs to, we need to raise hundreds of millions of dollars, or we need to find another way. And franchising is a great way for entrepreneurs to scale as a franchisor. It's a great way to make money as a franchisee. And so we got into the world of franchising. The advice that we kept getting was you're not in the laundromat business anymore. You're in the franchise business. And I didn't know what that meant until, you know, six months in. And I realized we are a completely different business now. We have to provide pretty sophisticated training to our franchisees.

• 11:16Speaker 02

  Marketing support for multiple locations and different personalities and geographies. Operational support or bulk, you know, purchasing and negotiating equipment deals on behalf of our franchisees in that instance. And it does shift a lot from, hey, an operating entity that runs laundromats to now this full suite of, you know, support tools and systems for franchisees. So it is drastically different. And when we got into the franchise sales process, that's when, you know, my eyes really lit up is you've got 4,000 franchise brands in the country, 3,000 of which are considered emerging brands, meaning they're less than 100 locations open. And so this isn't your McDonald's, Wendy's, you know, Chick Fil A's, but it is the 75% majority of these brands.

• 12:02Speaker 02

  They do not have the resources to have sophisticated marketing, training, et cetera. And so they're leveraging a lot of kind of pay to play or, you know, paid on success consultants and contractors. And especially on the sales side, they're, you know, they're working with brokers and what are called FSOs, franchise sales organizations. The FSO essentially acts as your external third party sales arm. They've got the laundra lab polo on or the franchisor polo on the email. And they're working with, you know, prospects to make sure it's a good fit mutually for everyone involved. And they're doing a lot of work, but they get paid a, you know, 30 to 50% commission of the franchise fee. Again, as an emerging brand, you and I started Jim, we don't, we might not have a sales team. We don't have the resources to do that.

• 12:46Speaker 02

  This, this is a beneficial thing for that, that situation. But then there's the first like two to three steps of the development of the franchise sales process and that is discovery. It's finding the right brand, educating yourself on franchising, making sure it's a good fit, making sure it's available, and then making sure that you're qualified. That's where franchise brokers come in. And the thing that kind of felt misaligned for me, at least as a franchisor, was these brokers will take a 60% commission in most cases of that franchise fee. And so I was seeing our FSO team making 30 to 50%, but doing a ton of work and acting as though they're a full-time team member of ours. And then I'd see brokers come in with a handful of phone calls and educating

• 13:29Speaker 02

  their clients and taking again the lion's share of that commission. And that's where I thought there has to be a productized way or more modernized way to make the brand and the prospect both better off in the driver's seat.

• 13:43Anthony Pompliano?

  How does the product work right now?

• 13:45Speaker 02

  Yeah, so you'd come to, similar to Zillow, what they did to MLS and real estate and what Expedia has done to travel. You can go to this website and you can say, hey, I'm in New York City, I'm in Charlotte, North Carolina, wherever you are, I've got 200K to invest. I know that I'm passionate about these things. I have this much time to give. I have this much experience managing employees. And then we're leveraging a mixture of AI, but just also this massive robust data set that we've built to curate and recommend brands to you that are truly the best fit. So one of the things that a broker does is supposed to match you with brands and they do do a good job of this. One of the areas where it's misaligned again is they might only be showing you brands that have paid to play in the background. And this is never legally disclosed to you because there's

• 14:28Speaker 02

  no licensure requirements, which is crazy. You have to have a real estate license to sell a home, half a million dollar home, but you need no license to sell a million dollar business. And so our product is taking away some of that misalignment and truly curating things that fit your financial readiness, your operational experience, your hobbies and interests, and then what your life goals are. So we're taking that information, we curate the list, we then give you research tools to compare the ones that come up across multiple concepts. We partner with lenders to get you pre-qualified and get you financing. We partner with CPAs, business formation, startups and entities, all the things that you need, basically a one-stop shop to buy a business. And then we introduce you to

• 15:12Speaker 02

  those brands once you're ready and we know that you're qualified and you run through their process, which They have well-defined, they have internal sales teams where they're working with an FSO. And that's where you truly build the relationship and the rapport. And our goal is to then, you know, put more of that franchise fee back into the franchisor's pockets. Cause if they have that money, it's ultimately going to lead to more franchisees success. Cause they now have the resources to build a proper training program, build proper marketing, build all the resources you need to, to support those franchisees in being successful.

• 15:41Anthony Pompliano?

  What is the pitch for the franchisor to come onto this platform? It's that, hey, we're going to help you find great qualified franchisees.

• 15:47Speaker 02

  It has been one of the easiest conversations I've ever had because it's, it's no money upfront for them. It's not a monthly subscription. It's not a SaaS product. They only have to pay if, you know, if we are successful in finding them a qualified prospect that becomes a franchisee.

• 16:05Speaker 02

  And so they're all, you know, very eager and excited to try it because we are a more affordable, tech-forward, robust, full-service offering than what they're working with today at a cheaper price point.

• 16:17Anthony Pompliano?

  And as people come into this platform, what is like the time? Right. I think a lot of people, so, okay, somebody's listening to this right now. They say, hey, I think I want to be in the franchise business. I got the cash. I got the interest. I got time to do it, whatever. I go, I look, how long is it going to take until I'm actually up and operational? Can you walk through that timeline of, you know, I get on the website right now. When am I in business?

• 16:39Speaker 02

  Yep. So all the way to the beginning, let's say you have a terrible day at work one day. And you're like, you know what? This is the year I buy a business.

• 16:45Anthony Pompliano?

  That's probably how it starts.

• 16:46Speaker 02

  You go to Google franchise opportunities to buy in 2024 or 2025. And what ends up happening is Chick-fil-A comes up, McDonald's comes up because they've got massive in-house SEO teams again. And so they come up first. There's a few articles that'll show up next, but there's no, there's no natural landing spot to go. There isn't a lot of helpful resources. You might end up finding your way to a broker at that point. Which again, there's a lot of brokers I know that are phenomenally helpful. There's others that, again, you have to do your, your homework, just like you would in any purchasing process.

• 17:19Speaker 02

  But for Franz, let's say that comes up now this time, you know, as we, as we launch, you can start doing your research, you figure out what you can afford, you get pre-qualified from a lender. This could take a day to do this part if you're really eager and ready to go. This could be you passively looking for six to 12 months. But once you find that brand, the average sales cycle is about 90 to 120 days. That's once you connect with the brand, you know, you can afford it, you know, it's available, you know, you like it, you're interested. It takes the, the 90 to 120 days because you are doing research, you're talking to existing franchisees of that brand. It's called brand validation. You're going through what's called a business overview call and then a UEM, a unit economic

• 18:00Speaker 02

  model call is next to see down to the detail, what's the average price for paying employees at these locations? What's the average cost of, you know, Froyo mix? If it's a Froyo franchise, you're doing all that detailed model research. Then you're talking to existing franchisees. Then you do what's called a discovery day. It's where you fly out in person, you meet the whole team that's going to support you, you see the business in action. And that's kind of the go or no go. Are we, you know, we've been dating for a little while now, are we getting married or are we calling it off? If you decide to become a franchisee, if it's a retail business, that could take another six to, you know, 12, six to 18 months for some concepts to find the right site. It's the most important decision you make in a retail concept is finding that perfect site.

• 18:43Speaker 02

  And if it's a service-based business, you could be up and running in, you know, two months. It's just training at that point and getting familiar with the business and getting your team built out if you have to build a team and getting it off the ground.

• 18:55Anthony Pompliano?

  What are the biggest risks to going the franchise route versus another route?

• 18:59Speaker 02

  Yeah, so I think the biggest risks are if it's a retail-based one, it's picking the wrong location and the customer base isn't there or that area evolves so much that the customer base is no longer there because you can't, it's hard, you can't move the box, right? If you've got all sorts of equipment and construction costs into it, you're basically starting over again. So I think on a retail franchise, you have to get the site right, which is why that process takes so long is you, you have to be very analytical. And again, this is where franchisors help you if you're scared of this part. Franchisors have a team, have resources. Sources to make sure that that part's de-risked. If it's a territory-based concept, like let's say home services, fencing, gutters, moving, et cetera. It's kind of like any other business, competition coming in.

• 19:42Speaker 02

  There is some risk if you get too early with a franchisor that they aren't fully set up yet. They don't have the resources and the team, et cetera, to support you fully. There's some risk there, but then it just becomes the same risk of almost you doing it on your own. Only this case, you do have some people still supporting you and helping you. So competition, franchisors that are too early. And then just changing kind of consumer sentiment or demand in that area.

• 20:09Anthony Pompliano?

  How much of this is buying new ones versus buying existing ones, right? And are there pros and cons or how do you think about, you know, if I've never run a franchise before, which one should I be leaning towards or how would I evaluate that?

• 20:22Speaker 02

  So it kind of depends again. So with Franzie, we're starting with brand new de novo units. The reason being is every franchise has to fill out what's called an FDD, a franchise disclosure document. It's required by the FTC. Those have audited financials in it, audited startup costs. So you know that everything's been validated by some sort of audit process and a government kind of regulatory process. So we like that because there's no risk of the information that we have being off. Whereas other platforms that exist today, it's kind of a cesspool. There's random stuff like I can go create a listing right now with completely fake information. And there's no vetting really on these platforms. So from a Franzie and a platform perspective, we're starting with new.

• 21:07Speaker 02

  Our goal is to get to a point where we're doing resales of existing franchises. We're doing resales of other offline independent businesses, not too dissimilar to what acquire.com is doing now with SaaS businesses. But today, 15,000 brand new franchise locations open every year. I'd say. About 10,000 or so new or existing units sell every year. And so you have a mixture of both. It just depends if you want to get going quicker and you have the capital to buy existing, or if you want to land and expand into a new city, new concept, and you want that upside of, I want to own 10 of these units someday. Going new is usually a faster, cheaper way to do that.

• 21:46Anthony Pompliano?

  And then, how should people think about when negotiating with these franchisors? What are the tips and tricks? Right, like one of the things I always tell technology founders is every time you get a bill from the lawyer, it's negotiable, right? And many entrepreneurs know that because they've been in business before and they've, you know, kind of experienced it. But for the first time entrepreneurs are always like, wait, what? I just thought you get the bill and you got to pay it. Like, no, it's negotiable, right? Like go and talk about it. And so what are some of those types of tips and tricks for negotiating originally with the franchisor? Things that are kind of levers people can pull to make sure they get a good deal?

• 22:23Speaker 02

  So the first piece of advice is get a good franchise attorney to look at it. It's not going to cost you an arm and a leg. It is reasonable. And the franchise disclosure document is a 200-page legal document that is incredibly onerous and complicated.

• 22:39Speaker 02

  And so first get a franchise attorney because other attorneys are going to look at this. And if they don't know franchising, they're going to rip it apart because it is so brand friendly. It is very franchisor friendly. But part of that is because the power of a franchise business is that whole system, that whole network. And they might need you to order from a certain vendor. They might need you to follow a certain process for a very specific reason because it ultimately protects your brand, the whole brand. And they've trialed and aired, you know, their way into that process. And it prevents new people coming in saying, well, I want to do it this way instead, even though they've already tried that way seven times and it hurt the brand. And, and so it comes off as very one-sided at first. And I think only franchise attorneys understand, hey, some of these things need to be this way because it protects the whole system long-term.

• 23:25Speaker 02

  So it's just one explanation and one tip. But to your point, everything is negotiable, especially with early brands where the risk that you're taking on as a franchisee is higher. You can negotiate deferred royalties. So, you know, most of franchising works this way. They take 6% to 10% of the top line revenue as their, as their royalty fee. Early brands will give concessions on, hey, it's zero until you are a year in or until you're profitable, and then we go to 3% from there, and then we go to 6. But if you don't ask for it, you might not get that. So make sure that you're negotiating your royalties. You can negotiate your training being accredited and not having to pay an extra fee for training or travel. You can negotiate certain marketing programs with brands as well.

• 24:07Speaker 02

  So definitely negotiate those things as far as royalty, other one-time costs or payments for training, marketing, et cetera. But then also just be cognizant that the franchise system is set up this way intentionally to protect the whole system.

• 24:22Anthony Pompliano?

  And what are some of the success stories that you guys have seen on the franchise side? Like, you guys sold over 100 franchises, I think, in laundry business. What were the things that those people did starting out? Was it just like they're focused on a full-time? Were there certain things that came with a team? Did they allocate more money than what was originally required? What were just kind of the commonalities of the people who've been super successful?

• 24:46Speaker 02

  The main theme, I'd say, is good partners. I think like any business, whether it's a franchise or not, we have, we understand all of our pros and our strengths and our weaknesses. And so the ones that had a very high level and degree of self-awareness, but also empathy and just understanding what they're good at, what we're good at, what we're not good at, what they're not good at, it worked really well because we had this very dynamic, flexible, fluid partnership. The individuals are really obsessed and focused a lot on their site selection. Again, the site matters so much because we were a retail concept, have done really well. And then the last, and I think probably most important thing is that first year, there was no ego and people were in the business every day. They did whatever it took.

• 25:29Speaker 02

  Jason Williams gave me this feedback, I remember, one time. He's like, "I go clean the bathroom every Thursday and I make sure the whole team sees me." They had that kind of attitude of like, "I don't care what the job is, I'm gonna do it, and I'm gonna do it with a smile on my face because it's a learning opportunity. It's a way for me to understand this business and earn your way into it." There isn't a shortcut, and franchising is no different, even though it's de-risked. You still have to put in the hours. You still got to roll up your sleeves. You got to understand the business at least, at least in the first year.

• 25:56Anthony Pompliano?

  How impactful can this be for the US economy, right? You know, Trump just got elected as a president. I think people are very excited about lower interest rates. They're pouring capital into small, small cap stocks. I think that small businesses are kind of the private market version of that. What do you guys kind of see as the outlook for these types of businesses? And then what's the impact on the economy?

• 26:17Speaker 02

  I think it's huge. Again, today it's already eight, eight percent of the GDP and it's growing at, you know, double digit percentages year over year. It is a massive booming, you know, part of our economy because it represents hotels, food, services, business, you name it. Franchising probably touches it in some capacity. And again, it gives that springboard for people that don't have this completely original idea or the capital or the, the resources from a partnership perspective. It gives them a safer environment, de-risked environment to become an entrepreneur, to become a business owner. And so I think the timing lines up perfectly. I mean, with the, the, the outcome of this election, we have a very pro-business president in the White House now.

• 26:58Speaker 02

  I think rates are going to continue to come down. There's going to be more favorable policy for business owners and operators. And I think franchising is poised to take advantage of that. You also have what's called the silver tsunami. All the baby boomers retiring, there's going to be 10 to 15 trillion dollars in assets that are transferred to the next generation. And so you have this group of individuals flush with, flush with cash, ready to either invest in crypto, in equities, or in becoming their own bosses and buying their own businesses. And a huge chunk of that, that group is going to become franchisees. It, I think it's, it's the perfect timing for all of this. And on top of it, I think there's new asset classes being developed. We're talking about doing it with Franzie is maybe you want exposure to franchising as an asset class, but you don't want to operate it at all.

• 27:43Speaker 02

  It's just out of the cards for you. But could you, you know, own 10% of a, a group that owns, you know, 50 Jimmy Johns? And we fractionalize and syndicate, you know, basically deals and we handpick the best operators based on the data that we've been collecting on individuals and brands on our platform. And handpick the best operators with the right concept and then go raise, you know, the multimillion dollars that's needed to open those locations from private investors.

• 28:08Anthony Pompliano?

  When you're building this, what are things that you've done on the platform that are explicitly linked to your experience on the franchisor side? Like, what are some of the things that, yes, there aren't platforms that specifically do this, but you mentioned the fee, like these other brokers are taking outrageous fees. So you've switched that. What are the other things that you think you've done that align yourself, right? Somebody's watching this like, okay, cool. You got some opportunities on here, but like, how do I know you're on my side, right? How do I know that you're actually looking out for me?

• 28:37Speaker 02

  Yep, because I think for any platform to work, you have to reduce friction on both, both the supply and the demand side, and then create incremental value. If you don't do either of those things, the platform's dead in the water. So on the supply side, we're having so much luck because, hey, there's no commitment. There's no initiation fee, which a lot of broker networks do. So the brands are excited to come on because it's, again, low friction. We only get paid if there's incremental value for them. So they get prospects. It's free for the prospect forever. You have this incredibly rich data set. You have all these tools, this one stop shop to buy, buy a business. So another differentiator for us is this pre-qualification. We're partnering with lenders that love franchising, that are familiar with it. You know, especially if it's an SBA-approved franchise, it makes the process that much quicker.

• 29:19Speaker 02

  And so inserting them into this process early on, you now know what you can afford quickly versus wasting all this time, spending all this time. So that's a big element. Talking to a coach is another element that we have on the platform to make sure that you are getting into the right concept. And so our whole revenue model and how we pay our team internally as well is not a percentage of the commission because that naturally creates bias, right? If there's a franchise fee, it's 80K versus one that has a 30K franchise fee. Brokers are going to naturally want to sell the 80K one because if they're getting 50% of that fee, it's double what they would have made on the other one. So we take a flat dollar amount for everything and we pay our team a flat dollar amount as well. So it doesn't matter what the brand is. It's truly what's the right fit for Anthony.

• 30:03Speaker 02

  That's for iteration one. That's for this initial product we're launching here in the next couple of weeks. For future iterations, I think we are opening up opportunities that are really hard to come by for a massive subset of the US population. And those are your guys that have run three McDonald's their whole lives. They've run five Jimmy John's. They've been in the trenches, managing a team of hourly employees, but they still don't have enough capital to be that owner and have equity. Franz is going to create this, this new segment that I don't think exists fully today to say, hey, we're going to pair you operator with the capital. And you've now earned yourself 20 to 50% of sweat equity because these, you know, capital partners, they don't want to operate and they're willing to give up some of that ownership.

• 30:44Speaker 02

  To get the best operators possible, making this thing turnkey for them as, as stress free as possible.

• 30:49Anthony Pompliano?

  It's almost like a talent component to it as well, that over time you think you can build out and really kind of help people find the right partners. On top of finding the right franchise.

• 30:57Speaker 02

  I, I am very bullish on that part because that laundry lab, again, firsthand experience, we had some phenomenal operators come through. They would have been, you know, some of the best operators in our system today. They just didn't have the net worth or liquidity requirements and telling them no is one of the most painful things. You could experience because you could see it in the passion. You could see how skilled they were. They just didn't have the money and we didn't have the money to back them personally as we, we, you know, we would have. So I think there's an element where Franz can also eventually start backing and handpicking our own operators as well as syndicating those deals. And conversely, on the capital side, I can't tell you how many people I've met that said, I want exposure to franchising, but I don't want to go through the process and training and marketing and dealing with all that.

• 31:36Speaker 02

  And so this idea of kind of what you've seen in, in, in real estate before and just, you know, syndicating and doing fractional shares of a franchise business. It doesn't exist today. I don't know why it doesn't exist today.

• 31:48Anthony Pompliano?

  What's been the most fun part so far?

• 31:51Speaker 02

  The second time around just feels like a video game on, on, on, you know, with a cheat code. You know, you've got the network built out already.

• 32:01Speaker 02

  I know a lot of people in franchising. We have got a lot of great investors, mentors, et cetera, that were there lined up, ready to go. So everything's just faster. Everything goes faster. You've, you've made all these mistakes the first, you know, eight years on this first thing that you're not going to make again on the, on the next one.

• 32:18Speaker 02

  And what I personally get really excited about is enabling this generation or this group of entrepreneurs. Part of our core net or mission is we want to create and empower 1 million entrepreneurs. And you can attest to this. I mean, I have not had a more fulfilling experience, better self-learning, growth, et cetera, than I have been an entrepreneur. It's the best thing I think anyone could ever do. If you really want to push yourself and continue to grow and challenge yourself. I learned more doing a laundry business in college than any class I did at that college, not because the classes were bad, but because nothing can replicate hands-on, get in the trenches, learn marketing, learn operations, fail, try something else. And I think Franz is going to be a platform that helps a lot

• 33:03Speaker 02

  of people get comfortable doing that.

• 33:04Anthony Pompliano?

  I love it. Where can we send people to find it?

• 33:07Speaker 02

  Do what?

• 33:08Anthony Pompliano?

  Where can we send people to find the platform?

• 33:09Speaker 02

  So the website is www.franzy.com. F R A N Z Y. And again, we've got a ton of data, a ton of resources, 3,000 brands worth of information, all at your fingertips, ready to go, you know, be explored.

• 33:24Anthony Pompliano?

  The name, obviously Fran is franchise, but where does Z Y come from?

• 33:28Speaker 02

  Yep. So the honest answer is it was a two-syllable name that had a domain available.

• 33:33Anthony Pompliano?

  That's a good answer, though. That's a great answer.

• 33:36Speaker 02

  So it was, it was available, it was affordable. It, you know, has the nod to franchising, easy to remember, easy to say.

• 33:43Anthony Pompliano?

  Franz, everyone will remember it at one point.

• 33:46Speaker 02

  I'm hoping that people are at the bar and, you know, people are complaining about, you know, I'm ready to leave my job. I don't know where to start. And so I was like, dude, you gotta go check out Franz. They've got businesses, you know, listing for days and you can talk to a coach and they've got financing, they've got everything.

• 33:59Anthony Pompliano?

  Somebody watching this right now is going to do it this weekend. And when they do, I want you to take a video of you telling your friend, go check out Franz and you send it to me and I'll post it. If somebody sends me the video. All right. Thank you so much for doing this. We'll do it again in the future.

• 34:12Speaker 02

  Yep. Thank you for having me.