227. Extra Income Starting A Franchise With Liz Leonard

This episode is for you if you have been thinking about making some extra income by starting a franchise business. 

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Liz Leonard is an esteemed Franchise Advisor, owner of multiple businesses, author of Your Franchise Fast Pass: Your Guide to Finding Your Ideal Business, and renowned speaker. She is dedicated to helping individuals find opportunities to build their wealth and achieve entrepreneurial success, and the best part is: there is no charge for her amazing services. 

Things we talked about in this episode: 

• Who is the right fit for franchise busineses
• The types of opportunities available for women
• The investment amount you are looking at. 
• And so much more…

FULL EPISODE TRANSCRIPT

Hello, hello, beautiful souls. Welcome back to another episode. And I’m really excited to have today’s chat because today’s episode is for you if you are a high achieving entrepreneur who’s looking for a different maybe a different type of income stream. And that’s where my expert comes in today. Liz Leonard.

She is amazing. She is an esteemed franchise advisor, owner of multiple businesses, author of your franchise, Fast Pass, and renowned speaker. So after leaving corporate America, she pursued a path of entrepreneurship grew several successful businesses, and she sold these businesses as well before pivoting to franchise ownership.

So we’re here today to talk about franchises. Welcome to the show, Liz.

Thank you so much for having me. I appreciate it.

Awesome. So we were just having a little tiny conversation before I hit the record button that as an entrepreneur, we wear so many hats, and it’s okay, just not at the same time, but we could do a lot, right?

Absolutely.

Balance. Very important and orchestrating businesses and people and investments and building wealth. It’s a lot to think about in our world.

Yeah, but when it comes to balance, for me, it’s really more about choosing priority. So if right now, what’s on top of your priority, choose that, right. And if at the moment, if you choose to start a franchise, this episode is your priority.

So let’s go back and start from the beginning, Liz, who would you think a franchise business is good for?

Many different people, I would start with people that are in career transition, that maybe have been aged out of their job, that is a reality in our world. Most of my clients are men and couples, investors, partnerpreneurs is kind of my fun name for the two partners, which I have many of those families that want to build a legacy. I have a lot of couples that their children have graduated from college.

So they’ve gone from student to young adult and thinking, could we do a business together? So we’ve actually done that as well. And then I think there are people that just want to plan their exit strategy for corporate America, they want to know there’s recurring revenue at the end of this road.

And so if they can start planning that now planting the seeds and doing the research and exploring options, that’s definitely an opportunity as well. So we have a lot of different people.

Yeah. And I think when we think of franchise, we think of really big corporations that charge millions of dollars to own a franchise, where in reality, there are also a lot more franchises that have a lower entry fee. Am I correct?

Oh, you are. It’s the best kept secret in franchising. And you’re right, everybody’s mind naturally goes to food.

That’s I think, just in terms of our culture, what we think about food, fitness, haircare, those are really the big anchor stores for franchising. But now there is something called home service brands. And those are really essential service brands.

And if we kind of back up in time, and you look at COVID, and everybody was not traveling, they were home, they were investing in passive income through real estate. So that particular, you know, pandemic, if you will, catapulted these essential service brands. So anything to do with a piece of real estate, your home, your office building, it doesn’t matter what it is, all requires something to be warrantied, installed, repaired from floor to ceiling, and interior, exterior, there’s a franchise out there.

And if there’s hundreds of them, so I won’t list them all today. But my husband and I actually own one. It’s a great example.

We have a kitchen remodeling franchise, but we really specialize in refacing and redooring to kind of save money for people and conserve on the cabinet boxes. If they’re good quality, we can keep them and give them a fresh look. And it’s a much more, you know, moderate price, but anything that you could think of, and a lot of people see these vehicles on the highway, and you’re in California, correct?

So you know, there’s a lot of these vehicles on the highway. And what we find is not everybody’s handy mechanical. And so they outsource everything.

So they pick up the phone, and they call. So whether it’s, you know, trash removal, whether it’s landscaping, painting, roofing, security, flooring, glass, it just goes on and on. So those are a lower entry point.

Those are usually under $250,000. And the best part, low overhead, lower investment, which you already mentioned, and stronger margins. So those are three beautiful things.

And we do have a lot of brick and mortar brands as well. But that has to be usually a better fit for a high level investor that’s looking for a semi-absentee model. I will note most of the home service brands, the business model has been designed for an owner operator.

But there are, I would say, probably 20 or 30 brands that I have in my inventory of 700 brands that would allow them to put a manager in it and run it. So I have a very robust inventory. Having a large inventory is not always, you know, great.

It’s a lot of work to research these companies and get to know everybody. Some of them are young, some of them are old. But we have a little bit of everything for everyone.

Talking about everyone, you mentioned most of your clients are men, and a lot of them are married couple ownership. How about, would it be possible to franchise a brand for a single woman?

Absolutely. I do have, we interviewed eight franchisees in the book, which I know we’re going to talk about at the end. So I have a couple ladies in there that really had the motivation, motivation drives success, and they wanted to do their own thing.

One of them was laid off. The other one worked for Procter & Gamble and had really moved up through the ranks. And she and her husband obviously operate the business, but she wanted to build her own wealth.

And, you know, working for somebody is great. You build a hefty retirement account, but when you leave, you don’t have a lot to show for it. So there are a lot of people and a lot of women that I meet that are investing in real estate.

And so if you think about real estate and the conversation we just had about the buildings and what they need, there are a lot of opportunities out there. So property management is a great example. Very simple.

We have a couple of brands in that space. And if you’re investing in passive income and building rental properties, you’re going to need somebody to manage it depending on where you live and if you’re working a job or traveling or family demands. So yeah, there’s a lot of options out there for single women.

I like the keyword passive. We all want passive income because we don’t want our business to run us. Definitely not.

My podcast is all about running your business and growing your business, growing extra income without burnout. So I really like it when you say you can have a manager come in and manage for you, right? Because that’s what we actually want from entrepreneurship is the freedom not to be working from the day to day.

Absolutely. Most of the franchise companies that, you know, a lot of the candidates are interviewing with, so to speak, and researching and exploring, they actually learn a little bit about the business model and the franchisors will tell them, we do not want you working in it. We want you working on it.

You need to hire the right team. You need to do the right recruiting, be smart about it, have enough working capital. We also help a lot of people with the funding pieces, which is another whole probably separate conversation.

But if you’re going to be looking at kind of a semi-absentee model, which means maybe 20 hours a week overseeing your manager and your financials and your KPI dashboard, you’re going to need working capital, right? Because you need to hire a team. So we send people out to get pre-qualified, which gives them kind of confidence.

And it’s just great prep work to know what you can afford.

So you mentioned the semi-absentee model, you still have to work about approximately 20 hours a week. Does that hour get less if you already start running the business?

I think 20 is a great kind of general analogy to give. There are a lot of businesses that will say 7 to 10, but for today’s podcast, I want to play it safe because when you’re launching a new business, everybody listening knows there’s a lot of work on the front end. And we call it heavy lifting is just the term that I use.

And once you get the heavy lifting done, the manager goes to training with you. All cylinders are running smoothly. You probably can back off, but that’s going to be really an owner decision.

And really that trust that you have in the manager, the ability of that person to make decisions that you would want them to make. So it’s kind of a personal decision on the hours that you want to contribute to the business. But I know the franchisors will definitely have some examples.

And then you get to interview franchisees across the country, which is one of the best parts. We call it validation. So you actually can kind of try it before you buy it.

So to speak, you get to interview them and say, how many hours are you putting in? So on year two, what were you putting in? What are you putting in year five?

You can ask them about your year over year growth. So there’s a lot of great opportunities there to actually get the inside scoop on everything that they’re wondering about before they sign an agreement.

I guess that is part of the beauty of franchising because the model is already tested and tried before you so that you actually can interview these businesses and get really an idea versus where you’re starting a business from the ground up.

Absolutely. I’ve done both, by the way.

And they’re both hard. So I think that franchising is about partnership and aligning yourself with the right systems. And as you’ve already mentioned, technology plays a really big role in every business now.

And it’s changed over the years. And if you’re looking to be an entrepreneur and open your own business, you have to really consider all of those startup costs. And so many people that I are thinking about opening their own business and buying an existing business.

But I tell them that I would compare and contrast. I would look at both. What do you have to lose?

So exploring different opportunities will give you different data points. And you’ll also get financial information from the franchisees. So it’s definitely a research project from start to finish.

And it does take about six to eight weeks to explore companies. We always have people look multiple brands.

You know, I’ve seen these ads before at the franchise conferences that you can start a franchise as low as even $10,000. Would you say those smaller businesses are ideal?

I would say no. The first one that comes to mind would be vending machines for that particular low investment. And what are you buying for that amount of money?

I don’t have a lot of those brands with that low of an investment. I would say any of the service brands 150 might be a threshold. We have some coaching and training opportunities as well.

For a lot of people that are at the end of their career want to leverage, you know, everything they’ve done. But those are definitely a lower investment. But those signs always alarm me to be honest.

And it’s alarming because I don’t think that they’re real. I mean, if you were to ask me, do I have a franchise in my inventory of 700 brands that you could get for 10 grand? I don’t.

The answer is no. And the return on the investment. So if you invest 10 grand, what are you going to get?

I mean, you know, businesses require people and systems, operations, accounting, finance, all of these things, you have to put money in. And I mean, I’ve done it. So you have to think about if you put 10 grand in, what are you going to get for return on your investment, you know, you have to be able to create cash flow.

And cash flow is something that people want to build and sell. You know, most people get into franchising to have a 10 year agreement or a seven year agreement with the partnership. And then they build this cash flow, they have a great brand that’s recognized across the country, and then they exit and sell it.

So all of that working capital that was initiated and funded for your business is going to pay off long term.

Thank you. And talking about exits, you actually also exited.

So the first two businesses, just to clarify, we’re not franchises, but I will tell you why I entered into the franchise world. My first business, I had a corporate career in senior health care. So I’ve been a W two employee for many, many years when our girls were young.

And then when the girls were four and seven, now they’re 21 and 24. But we didn’t have an accredited center with education in terms of placing them every day while mom was at work. I was working at the hospital at the time and the demand was there and I recognized demand and I got fired up about it.

And I said to my husband, we should open an accredited child care center. There’s nothing here in our community. And lo and behold, we did.

We opened in a recession. And I will share that a lot of people ask me about recession resistant. I get that all the time.

I would say that the child care industry was recession resistant. I lived it. And moms had to go back to work and they needed to go get obviously a W two job or a 1099 job.

So we built that, we sold it. We did hire somebody in California who had actually built 14 schools. And the analogy that I want to share with people is we hired an expert to walk beside me to help me launch that business.

I could not fail. Our SBA loan was $1.2 million. House on the line, everything.

I quit my job. So we built it, we sold it. And having the systems to implement into that business, I didn’t have to start every little thing.

And so when we sold it, we kind of stumbled upon a self storage business that was passive. And we thought, oh, we need another business. What are we going to do?

So we looked into franchising. And then I met somebody just like me. And I was probably a little bit of a challenge as a candidate because I wanted zero employees, which again, can be a whole nother conversation about how to build a business with employees.

But I learned really by boots on the ground, how to manage 22 women and 140 children in a 10,000 square foot building, but it went really well. And so when we found Kitchen Tune Up, it fit my husband. It fit my husband to a tee with his skillset and our investment level in our market.

So that’s why I’m really passionate about it is there is a business out there for everybody. And if we can match people based on skills, which we give people a skills assessment, we also look at their market very closely. We meet the spouse we meet, sometimes I meet the whole family.

And so we really want to spend time on this matching process. And it just takes time to get to know each other. It’s fun.

Yeah, it does sound fun.

Would you say it’s a lot easier to get SBA loan because you’re working with a more known brand?

Not necessarily, I think SBA funding and we’ve had two of them, we had one for the child care center, and we had one for the self storage business, they were both about a million. And it’s really based on your credit score, and debt ratio, and all of those personal items. I think an experienced brand probably helps with confidence, and it helps with peace of mind.

I think SBA may or may not approve an emerging brand that doesn’t have a lot of units open because there’s no track record yet. But obviously, if you think about franchising, every business starts out new. Some have corporate locations, though, so they’ve already tested and trialed everything.

So that’s always something that people are learning and exploring when they meet with the brands too, they get to understand that they’ve had five to seven corporate units of testing through the year. So I think it’s more of a personalized approach, but we send everybody to have a phone call, it’s free. And it also is a reality check that, oh, I’m thinking about really doing this.

And I’m thinking about an SBA loan, and now I need to find a business.

Thank you so much. And I think this would give a lot of people more curiosity and confidence to look into the franchise model, which has been around for years, right?

A very long time.

Okay, so as you mentioned, you had so many businesses, and throughout this process, when you hit a bump, what do you do to reset yourself?

Yeah, that is a loaded question. I think everybody listening to the call has been there might even be there today. I like to get out in nature.

I like to take a break, I need to hit the reset button, step away from email and all the pings that we’re getting all day long. I love walking my dog, I love being on the ocean. So I’m a nature girl.

And it really does help me reset and vacations. I’m a big supporter of vacations. It’s like the only way to turn it off.

But I think having a good support team also helps to not get to that burnout stage. And asking for help and enfranchising many companies have business coaches to help. So when you get stuck, and we all do ask for help.

Perfect. Is there a favorite quote you go by in life? The one that I’d like to share, because I don’t know if everybody’s familiar with it.

I almost put it in my book, but I didn’t. But the entrepreneurs credo, what all business owners want. I think everybody I won’t read it, it is long, but I encourage everybody to just take a look at the entrepreneurs credo.

And it does go back in history. It’s a wonderful, wonderful, very short, but I won’t read it by Thomas Paine. So take a look at the entrepreneurs credo, it speaks to all of us, and everything of what we’re trying to accomplish, what we’re trying to do is succeed and build wealth for our own family.

Perfect. Well, your book is called franchise fast pass your guide to finding your ideal business. And I know it’s out on Amazon, where else can we connect with you?

I have a very dedicated website for the book, it is franchise fastpass book.com pretty simple to remember, and people can submit their names kind of get on the VIP list. The book actually just rolled out this week, we have a lot of work to do to get this marketed, but it’s built as a tool and a resource. I’m an educator.

And so there’s a lot of great pieces of information that will help people be proactive and really understand the research that they’re going to need to do to make an informed decision. And I will help them do all of that. And there’s no charge to work with me, which is, I know, amazing for people listening, but I paid a finder’s fee by the company, like a high level recruiter, once we kind of get through the process of elimination and finding the right brand.

Wow, isn’t that amazing? Okay, well, thank you for being with us, Liz. And all your information will be listed in the show notes below.

Thank you so much for having me.

I’m happy to talk with anybody who wants to explore franchising. It’s a fun world. It’s a big world.