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In this episode, we chat with franchising guru Jon Ostenson and dive deep into the thriving world of non-food franchising.

Jon shares his extraordinary journey from finance whiz to franchise expert, emphasizing the power of a franchise system’s support and success rates eclipsing independent startups.

With insights on strategic investment choices, financing savvy, and the mastery of assembling ‘A’ teams, Jon illuminates pathways to profitable entrepreneurship.

For everyone dreaming of business ownership, this episode offers a blueprint for success directly from a mastermind in franchising. If you’re ready to level up your entrepreneurial game, Jon’s wisdom is your launching pad.

Exploring Alternative Investments in Real Estate: “90% of our clients end up purchasing something that was never on their radar. So it is so much fun when the slight bulb moments have. And I’ve had doctors buy installation businesses.” — Jon Ostenson

Top Takeaways

1. **Leverage Your Corporate Experience**: Utilize the skills and work ethic developed in the corporate world as they are valuable assets when transitioning to entrepreneurship or franchise ownership.

2. **The Power of Franchising**: Franchises provide a systematic approach to business ownership with the support of a proven business model, substantially increasing the chances of success.

3. **Diverse Opportunities in Franchising**: Franchising isn’t just about food; there are vast opportunities in non-food industries, and these can sometimes offer quicker returns on investment and higher margins.

4. **Success Rates and Pitfalls**: While franchisees boast a high success rate, common reasons for failure include not adhering to the system, overly entrepreneurial spirits causing disruptions, and resistance to coaching.

5. **Value of Mastermind Groups**: Engaging with peer groups for support and shared learning can significantly enhance an entrepreneur’s journey and lead to better decision-making.

6. **The Significance of Mentorship**: Having mentors and seeking professional advice is crucial in navigating the complexities of the franchising world and avoiding common pitfalls.

7. **The Role of Strategic Partnerships**: Success in consultancy and franchising can be amplified through strategic partnerships, leveraging networks instead of relying solely on a large team.

8. **Financing Franchise Investments**: Understanding the various financing options, such as SBA loans and ROBS programs, is critical for entrepreneurs looking to purchase a franchise.

9. **Importance of Team Building**: Investing in top talent and building a strong team right from the start can benefit the business immensely, driving growth and ensuring operational excellence.

10. **Long-Term Planning and Balance**: Entrepreneurs should have a clear endgame in mind, focusing not only on building successful businesses but also on maintaining a good work-life balance and preparing for eventual transition to roles in mentorship or charitable endeavors.

Memorable Moments

07:38 Finance student keeps options open, gains experience.

14:54 Observation about family and business, entrepreneurial success.

20:03 Existing businesses pose inherent risks, rethink paradigms.

23:24 Franchisees can succeed with the right support.

24:50 Private equity invests in franchising for growth.

29:46 The value of franchise vs. entrepreneurship.

33:29 Exploring opportunities for active or silent involvement.

36:19 Many clients buy multiple units and territories.

41:36 Transitioning to part-time work, focusing on family.

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Transcript

Glenn Harper [00:00:00]:

Hello, everyone. Welcome to another edition of the Empowering Entrepreneurs podcast. I'm Glenn Harper.

Julie Smith [00:00:04]:

Julie Smith.

Glenn Harper [00:00:05]:

How are you doing, Julie? You don't have any coffee over there.

Julie Smith [00:00:07]:

I know. I'm going cold turkey off of it, but That's that's not good. You know, we did one thing to an accountant we should never do in tax season, and that's change up the mics.

Glenn Harper [00:00:16]:

Oh my god. I'm all out of sorts, but I'll figure

Julie Smith [00:00:17]:

it out.

Glenn Harper [00:00:18]:

I'm trying to do what I did last week, and it's getting me all uncomfortable, but I'll figure it out. Well, we have a great guest today. I'll do my best to introduce this guy. So, his name is John Austinson, an owner and founder of FranBidge Consulting and the best selling author of Non Food Franchising. How great is that that we have another entrepreneur who has taken the path of identifying wannabe entrepreneurs and helping them achieve their own dream as owning their own small business. John provides them with the blueprint, strategy, and support to catapult them in accelerating their dream of becoming an entrepreneur, a reality. His mission is to make franchisees understand the options that franchisors have available to them and do fast track their entrepreneurial journey. Over 20 years experience, John makes the process truly seamless for an entrepreneur to jump on into the pond from the high dive.

Glenn Harper [00:01:04]:

His passion is contagious as his real life experience on both sides of the franchising tables provide him priceless knowledge for that. He's joining to share with all the who will listen. Hey, John. How are you doing?

Jon Ostenson [00:01:15]:

Hey. Glad you finally wrapped that up. No. Appreciate the warm the appreciate the warm intro. Good to be with you guys.

Glenn Harper [00:01:21]:

I'm exhausting after reading that. No. It's great. Well, I appreciate you being on the show, and I you know, it's funny, just hearing you talk a little bit. I detect a slight SEC accent. Don't you know that that pigeonholes you to only clients south of the Mason Dixon line?

Jon Ostenson [00:01:35]:

We we we serve clients. We've done placements year to date, several in Connecticut and in Massachusetts and all the way over to California and state of Washington. So we don't discriminate based on geography, but based here in Atlanta. You're you're correct.

Glenn Harper [00:01:48]:

Awesome. My extensive research shows that, you're from, Snap Finger, Georgia. Is that true? Are you near there? No? It's a suburb of Atlanta. I thought you might be from there. It sounded cool.

Jon Ostenson [00:01:59]:

Live in we live in Buckhead here in the city.

Glenn Harper [00:02:02]:

Oh, in Buckhead? Oh, nice. Nice. Have you always, grown up there? Is that where you grew up from?

Jon Ostenson [00:02:07]:

For the most part, moved from California when I was a young child, but, you know, spent most of my formative years here in the Atlanta area. Went to the University of Georgia both for undergrad as well as getting my MBA. And, yeah, this is definitely home.

Glenn Harper [00:02:20]:

Gotcha. What was the rationale for how old were you when you moved from California?

Jon Ostenson [00:02:25]:

My father was in law school out of Pepperdine. So once he finished that, we moved to Atlanta. So I was actually born in Jackson, Mississippi, then we moved to Malibu, not your usual progression, and then to Atlanta.

Glenn Harper [00:02:36]:

Oh, wow. You know, it's funny when, we've see how people end up where they end up, like, what are the things that makes them wanna be an entrepreneur and things of that nature. And one of the things that we were looking at here when I was checking you out a little bit is, you did end up in University of Georgia, but you went to Providence Christian Academy for high school. It was that, you know, didn't want to do the public school, you went to a private school, is that with parents' influence? Or is that where you wanted to go? Or how'd that turn out that way?

Jon Ostenson [00:03:03]:

No. It's definitely the parents' influence, but, you know, I appreciate it. I had a great friend group, and it allowed me to play basketball, whereas, you know, some of the larger public schools, they may not have had that same opportunity to to get the playing time. So things that matter to you, you know, when you're 16, 17 years old. But, no, it definitely set us up well. I was right for the bigger school, at University of Georgia. So, but, no, very thankful for the for the upbringing we had.

Glenn Harper [00:03:25]:

I would've taken you more for a rugby player, but, you know, it's hard to tell. Do you so your dad was an attorney. Did he work for a big firm or did he have his own firm, or did he have the entrepreneurial drive that catapulted you this way, or is that just something you just kinda fell into?

Jon Ostenson [00:03:42]:

Well, he he had his own firm. It was a one man band for the most part, and he did not have the entrepreneurial drive. So that was the problem. It didn't marry the 2. And so think many people should be in business ownership. I think most people have it in them, but I think oftentimes you need that playbook in that system. That's what you did not have. So no, we were very, middle class, maybe even lower middle class, you know, but that also created a desire in me to have different money conversations in my family as, you know, as we grew older than, than those that I was exposed to as a child.

Jon Ostenson [00:04:14]:

So, definitely created some of the edge, but, no, you know, I took the safe route or what would be perceived as a safe route. Worked in corporate America at someone else's whim. Right? So it's really not safe. But had a great run-in the corporate world. Worked in India for a while with Accenture and then with Carter's, Ashutosh Bighaush, based here in Atlanta and helped build, that company. And, you know, could have done that forever, but had that desire, like so many of your listeners, to do something more entrepreneurial and kind of fell into franchising. It wasn't on my radar. You know, I thought of franchising as being associated with fast food.

Jon Ostenson [00:04:44]:

I didn't realize there are all these other industries, but, had the opportunity to step in as president of Shelf Genie franchise system, which was an Inc 500 company, really fast growing. And I supported franchise owners all across North America. That's when I had that light bulb moment that franchising provides a better path to business ownership for a wide variety of backgrounds. I really fell in love with the model, and that's kinda spun into what I do today.

Glenn Harper [00:05:06]:

So when you're at, University of Georgia, how did you pick the big school that was just at home? You didn't wanna go away to college? You just wanna kinda stay close to home, or how did that how did that work out?

Jon Ostenson [00:05:16]:

Yeah. Beautiful thing called the Hope Scholarship, which was really originated here in Georgia. And so for everyone that had a certain GPA, regardless of income or any other factors, in the state of Georgia, then you could get free tuition at the state university and just about went to Georgia Tech, but at the last minute, I realized there were, more attractive people at the University of Georgia.

Glenn Harper [00:05:37]:

Let's put

Jon Ostenson [00:05:37]:

it that way.

Glenn Harper [00:05:38]:

And then never looked back.

Jon Ostenson [00:05:39]:

Things that matter when you're 17, 18. Right?

Glenn Harper [00:05:42]:

Well, you had, you not only got your, you know, you got your, degree in finance and an MBA, both with some extra Latin honors attached to them. Do you feel like that acceleration of that and and taking it, getting great grades and that was from your high school, experience with the Christian school where they just taught you how to study or how to learn or how to excel? What where do you think why did that drive come to make all the magnums, all those things in, in both degrees in college? That's pretty hard to do. Yeah. You know,

Jon Ostenson [00:06:10]:

again, I think there was this inner desire of, you know, I wanna have I wanna be successful as I define successful at the time. Now I realize success is a whole lot of other things as well, you know, as I raise a family. But, yeah, I wanted to make sure that we were secure, financially early on. And so I think that was a big driver even into my grades early on in how I worked hard in school, but, you know, I was blessed that some things in school came more naturally to me. It was always a good test taker, so I never had to work as hard, but, you know

Glenn Harper [00:06:40]:

You're one of those guys. Alright.

Jon Ostenson [00:06:41]:

There are things I'm good at, things I'm not as good at, but, you know, fortunately, I kinda figured out the school, the school hacks along the way.

Glenn Harper [00:06:47]:

I looked at your bio there and it said that you started off action in accounting, but it was too hard so you went to finance. Is that true or is that not true?

Jon Ostenson [00:06:56]:

Not that it was too hard. It was

Glenn Harper [00:06:57]:

I'm kidding.

Jon Ostenson [00:06:59]:

I I like to look be more forward looking than backward looking. That was kind of how I thought about it again in my 18 year old mindset.

Glenn Harper [00:07:05]:

Alright. Good. Oh, wait. That was a standard joke. The, accounts were started off being engineers who couldn't hack it, and then, and the accounts that couldn't hack it went became finance and then the people that couldn't do finance went into marketing. But that was just a standing joke at

Julie Smith [00:07:21]:

marketing. Okay.

Glenn Harper [00:07:21]:

Right. There see, I rest my case. No, no. That's good. It just wonder how you pick, you know, the major you picked and why you wanted to do that. I mean, did you wanna go I mean, Accenture is, you know, they're a global powerhouse in consulting. They'll hire just anybody who can think outside the box. And is that what you were trying to do?

Jon Ostenson [00:07:38]:

Yeah. You know, I wanted to keep my options open. I'd say that was my biggest thing early on, so I felt like finance lent itself to a lot of different career paths, and I didn't know what I wanted to do, you know, early on and recognize that. So I was, I was just, for whatever reason, always cognizant of not pigeonholing myself. And so, in school, you know, I knew I wanted to come back and get an advanced degree at some point. You know, I thought consulting would set me up well for that. And, yeah, with Accenture, I went over to India for 6 months and had, you know, only 2 years out of undergrad and just, you know, had quite an experience and really grew up quickly and, you know, was very blessed to get exposed to a lot of senior leadership in different consulting roles, as well as when I moved over to Carter's and actually worked for the president of a public company. I was his right hand and, you know, it really influenced the way I think about things even today.

Glenn Harper [00:08:30]:

Do you think that, you know, when you, changed and went to Carter's, do you think that, you know, you're a part of a big machine, a little tiny piece sent in a foreign country just absorbing like a sponge and then you come over here and you're in cartage where you're right handed, you're getting to see the inner workings of how corporate America works. That had to be just a really cool pro peel pull back the curtain and see what's behind there. Right?

Jon Ostenson [00:08:54]:

Oh, yeah. No. We were managing the quarterly earnings. I actually read the earnings call script every quarter, but you know, at the time it was sexy. I was flying on a little airplane around the country, meeting with investors, you know, along with the senior leadership. And so, I was definitely the peon in the room, but, you know, that exposure was very helpful. And, you know, we went through some tough things as a company, you know, some investigations, that the government brought in around Sarbanes Oxley and how accounting was being done. So kinda living through that and surviving and being exposed to that taught me a lot as well.

Julie Smith [00:09:23]:

So you talk about how this light bulb went on at some point, and you talk about it later after Carter's. But do you think that at some point, if you, you know, were self aware enough that it actually happened before that, maybe it was even in your childhood. Again, I don't I don't know what you did, but, you know, maybe you sold painted rocks or you you know, did you do any of those things that kind of would lend your thought process to the entrepreneur?

Jon Ostenson [00:09:47]:

100%. No. I mowed grass. You know, that was my thing, the the landscaping side. But, you know, when I look back at college, you know, I I had a bunch of jobs at any given time that I was working, but it was usually working for somebody. And that's kind of how I was taught, even though my father was on his own, was go the safe route, work for someone else. And, it's fascinating. The clients I get to work with today, a lot of them have that mindset of, you know, hey, we've been grinding for years now, and now we're in our late thirties or mid forties or early fifties.

Jon Ostenson [00:10:15]:

And we're poking our head up saying, Hey, I'm tired of building someone else's empire. I'm ready to build my own. I just don't know how to connect the dots and how to take those next steps. So that's kind of where I lean in. And now I definitely think to your question, you know, a lot of that derived from just kinda how I was wired and how I thought about things growing up.

Glenn Harper [00:10:32]:

So when you you basically opened up a few franchises on your own and you had a global empire at Atlanta, Minneapolis, and Miami. And then you're at some point, you're like, wait a minute. I don't actually wanna own a franchise. I wanna teach the people how to do it. Why did that transition happen?

Jon Ostenson [00:10:50]:

Oh, I still own the franchise.

Glenn Harper [00:10:51]:

Oh, do you still have?

Jon Ostenson [00:10:52]:

Okay. Oh, yeah. I'm still involved, but I've got good people running them. Yeah. Good people running them. So I love what I enjoy spending my time. I'm very fortunate I'm in a position where it's how do I want to spend my time on a daily basis right now? What do I want to do? I love helping others be able to do the same thing that I did. And, so we work with over 600 different franchise companies, really all of those that are in growth mode.

Jon Ostenson [00:11:13]:

It's what I call non food franchising. So and I actually wrote a book titled Non Food Franchising, which I'm happy to share with all of your listeners if they come out to our website. But I, I think the stereotype around franchising was, it's all fast food. People say Subway, Chick fil A, McDonald's, but there are all these other industries, whether it be home and property services or whether it be health and wellness or, seniors, kids, pets, these categories that are cash flowing, understandable, aren't going to go out of style. AI and Amazon aren't going to disrupt these anytime soon. And, that's where probably 95% of my clients gravitate versus food. We need the food guys. We love them.

Jon Ostenson [00:11:52]:

I just believe there are easier ways to make money.

Glenn Harper [00:11:55]:

Question on on the franchise, on non food, what is the success rate out of a 100 people that join up on one of your clients that you have, the 500 companies you rep? What is the success rate success rate on a 100 of them that start the franchise and do the thing and do the whole thing, pay the royalties, get the training, and do all the thing. How many of those are still around after, say, 5 years of the 100?

Jon Ostenson [00:12:20]:

90 yeah. Probably in the 90 ish ballpark. And it's really interesting when you dissect, let's say, the roughly 10 or so that did not work out. What was the common denominator? Are there any common threads? Occasionally it's the franchise system. More oftentimes it's the individual that they came in, thought they were the smartest guy in the room, which in franchising, you don't wanna be the smartest guy in the room. That's why you come in. You bring your skill sets. You bring your background, but you're building, you know, on this proven machine.

Jon Ostenson [00:12:47]:

And so a lot of times they would come in and try to do things their own way and I would talk with the franchisors and say, Hey, can you coach them? They're like, We've coached them as much as we can, but ultimately, either they fall in line or they go do their own thing. So, usually it's that's the common denominator is that they aren't open to following the system. Maybe they're too entrepreneurial for their own good. You know, occasionally, there's other circumstances, but I'd say that's the most common one.

Glenn Harper [00:13:12]:

It's funny because, like you said, it the entrepreneurial spirit, they're all psychos, all entrepreneurs. I'm 1, you're 1, Joe we're all I mean, we don't fit in anywhere unless we're entrepreneurial people, right? And they just really wanna do it their own way. They don't wanna be told, and they swear that they think they can do it better than a proven system. And so, it just creates this like thing that they go against each other, and I and I was just curious how many that is because that's probably the person that might try 10 different things, and they're never gonna make it because they just can't commit to 1. Is that what you see when you when they go away?

Jon Ostenson [00:13:48]:

Yeah. A lot of idea people and, you know, we're gonna build the next app or tech startup. But I mean, when you look at the success rate of those, 90 out of a 100 are not still in business. You know, what I find really interesting, Glenn, is there's 2 types of entrepreneurs. You know, those existing business owners, let's say those, that have been there, they've already built a business. One kind is too entrepreneurial. They can never fall in line with the franchise system. The other kind says, hey, I know all the work that it took to build what I've built.

Jon Ostenson [00:14:16]:

I love the fact that I can step in and essentially start on 3rd base where most things have been figured out for me already. It's all about putting good people in place and going and executing the plan. So what I find is people fall into one of those two camps that they're already an existing business owner.

Glenn Harper [00:14:30]:

It seems like the shortcut of owning a franchise is literally accelerates the whole thing for the entrepreneur. They don't have to figure it all out. They literally can just plug and play, gotta pay a little vig, but that's okay. I mean, how hard can that be? So that this is an interesting thing. We don't think we've had many entrepreneurs on this podcast that's done, that are doing some kind of franchise model that's usually just their own thing that they figure out. So this is a definitely an alternative.

Julie Smith [00:14:54]:

Well, and just an observation and you started with this in the beginning is, you know, you said my dad was a lawyer. He was on his own, but he wasn't good at running his business. I bet he was a phenomenal lawyer though. And it's funny that you went to the corporate route, like, to the t of, you know, like, I believe I've I've bought into the system, the process is what we're doing, how we're doing it, to make the switch then to franchising, which is kind of the same thing in essence. And then to go out on your own and to teach the game plan, to me, is like the full circle of like what your father was actually seeking, you know, in in maybe his early days or whatever. But in the corporate world, there's definitely systems and processes. And if there's something that you could take away from that time that you were at Carter's or, you know, Accenture or wherever you were that you think propelled you into being a successful entrepreneur? What do you think that is?

Jon Ostenson [00:15:47]:

I think it it sounds cliche, but it'd be hard work. I mean, it's pushing yourself to, you know, when I was the vice president of sales at Carter's, there were 2 other vice presidents, so our numbers were always being compared. So there's kind of that competitive streak that you tapped into that makes you raise your game. And so, you know, not everyone could be entirely on their own without a franchise system, you know, which I am in my consulting business now, but I'm very self motivated. I'm data driven. You know, I love being innovative in how I, you know, lead generation or how I educate clients. I love being able to help people, but I'd say probably the work ethic and the expectations, in the corporate world help propel me to, you know, be able to be self motivated and not just, you know, not just follow a system, but let's excel and let's be the best.

Glenn Harper [00:16:34]:

You know, it's it's funny. Most entrepreneurs that we deal with in our real world and then also on the show here and just talking with people across the country, you know, you start a business because you wanna do business. You wanna do the thing that you're gonna do. And then eventually, you realize you can only so big and do so much because you're just tapped out. You don't have those resources. And then you go and make that conversion to building a business where you're now an owner investor. Well, and that's why I thought you had gotten rid of those other ones that you built, and now you're just focused on the consulting. Well, here, you're living the American dream where you built these companies, they're operating a kind of independent, you're kinda just touching them, and now you're bored.

Glenn Harper [00:17:12]:

So what do you do? You start up another business and you're gonna go teach other people how to do it, which is I mean, that's the dream of every entrepreneur that we've seen generally is after they get things running, now they have all this knowledge, what do you do with it? And and it sounds like you're plugging it right back in, help other people do it. Do you feel like that's a real an accurate statement?

Jon Ostenson [00:17:30]:

Yeah. Yeah. And and I wouldn't have the credibility unless I've been there and done that. And I think having been on the franchisor side of the table too just brings an added perspective. So no love helping my clients, but I mean, I invest in a lot of real estate of different, you know, asset classes, a lot of pulp and markets. Franchising's a piece of my portfolio. And I think we're seeing unprecedented levels of interest right now because, you know, there's more cash on the sidelines than ever. A lot of people are coming out of COVID, which kind of feels like distant memory, but they're saying, Hey, I'm questioning the path I'm on.

Jon Ostenson [00:17:59]:

I'm ready to go build my own thing. We also see a lot of real estate investors that are moving over as well. You know, I'd say probably 2 thirds of our clients invest in real estate, but there aren't too many good deals to be had. There's low inventory, high interest rates, and they're saying, where else can I get a tax advantaged alternative investment? Yeah, that might be a little more hands on, but I'm okay with that. And so love help modeling to your point, what can be done and then helping others connect the dots. 90% of our clients end up purchasing something that was never on their radar. So it is so much fun when the slight bulb moments have. And I've had doctors buy installation businesses.

Jon Ostenson [00:18:35]:

I've had attorneys, buy, you know, healthcare related businesses. You know, mental health to men's health, you know, senior care. I think I did 12 placements in senior care last year. Quite a variety of backgrounds, a a lot of different backgrounds getting involved. And so yeah, I love getting the word out there. Our biggest challenge right now is a good opportunity to move really fast in good markets. And so we're constantly working our relationships. I was fortunate to, I believe, place more candidates than anyone else in the country last year through a lot of hard work, but also through a lot of, you know, relationship building with these franchise brands and helping our clients get positioned.

Glenn Harper [00:19:14]:

High five on that one. So, question for you. On these opportunities, how many are an existing franchise that the owner wants out and they wanna sell to somebody because it's already a turnkey? And how many of these are brand new market entering enter entering the area and they gotta start from scratch? On a typical of a 100, how many go in each ratio?

Jon Ostenson [00:19:39]:

Yeah. Probably 5 to 10% of them would be, existing, what we call resales. Yeah. Close to 90% would be ex new market. And there's a couple of reasons for that. One I would say, you know, if it's a good operation, very few people are selling right now. In fact, when you look at the resale market, even outside of franchising, listings are down because the multiples were higher a few years ago than they are now. So you have a lot of people, we all probably, probably baby boomers still be selling one day.

Jon Ostenson [00:20:03]:

A lot of them are sitting there right now because they're not pleased with the multiples they'd be able to get. And so oftentimes it is new markets, because of the inventory of what we see out there is just not as attractive. But also part of that is people think, oh, de risk it if it's an existing business, you know. To me, there's also some inherent risk to an existing business and that you're paying a premium banking on the fact that your employees are gonna be there on day 2 after the exit, that your same customers aren't gonna move away because they're loyal to the previous owner and some of that depends on the industry. You know, but you have to come in and steer the ship and build a slightly different culture to put your thumbprints on it. Whenever you have a change in ownership, things happen. So to me, if you can pay a lower price, come in, be a part of it from the beginning, earn the employees respect because you were involved in the business at least early on, sets you up in a better way. So often as the people rethink that paradigm of what risk is, the light bulb gets off for them.

Glenn Harper [00:21:03]:

There's like the the two paths. You know, most entrepreneurs entrepreneurs, they either have kind of their real job and they dabble on the side and they eventually, the lines cross and they get out and do it. And then some people just go cold turkey and just jump right into it. Here, you know, having those systems and controls, I assume somebody's crunching some major data and analytics of what franchise is gonna work, what what demographic and how that looks. How often because entrepreneurs like, when do I get my money back? How when do I start making money? If you're buying a typical franchise, non food, what's the typical length of time brand new, dropping in a new market? How long does it take usually for their turning a profit and making a return on their investment? Is that a 6 month thing, a 6 year thing? How long does that take?

Jon Ostenson [00:21:50]:

Yeah. There are different ways of looking at it. I'd say a lot of the service based businesses that don't require that customer facing retail component, oftentimes it could be in that 6 to 9 month range, you know, that that you've turned positive and you start paying yourself back and it may be be at that 12 or 15 point mark where you've, you know, essentially paid yourself back to that initial investment. Now you're building a business that's gonna have exit value. So in a way that should and you get the tax benefits. It's what I call the trifecta cash flow exit plus, you know, the tax benefits along the way. But, you know, I'll just give an illustration. That might be helpful.

Jon Ostenson [00:22:24]:

So we had 9 clients buy into a property services business last year. It was in the gutter industry. When you look at the FDD, the franchise disclosure document for this franchise system, your average investments around 200,000, 250. Let's call it 250. We'll round up all in. And then their franchisees are averaging 1 and a half 1000000 of revenue per year at about a 25% margin. So call that 375 to the bottom line on an initial investment of 2.50. So it doesn't take, you know, that's probably in year 2 that you get up to that run rate, but you've paid yourself back.

Jon Ostenson [00:23:08]:

You're building an asset that you can sell. You're giving a heck of a return.

Glenn Harper [00:23:13]:

Oh, that I don't I'm not good at math, but that that seems like a pretty good deal.

Julie Smith [00:23:17]:

It's only because you don't have your 10 key.

Glenn Harper [00:23:19]:

If I have my tank, he would

Julie Smith [00:23:20]:

He would have been saying all the numbers, and you he would have been like Yeah.

Glenn Harper [00:23:23]:

Yeah. You're right. See

Julie Smith [00:23:23]:

it now.

Glenn Harper [00:23:24]:

John John did it correctly. When when you do, you know, the the franchise or, you know, the I think a big misconception, at least what I've seen from clients and over the years of doing this forever, is that the franchisee sometimes believes that the franchise or does not want them to be successful, like they're just always gonna squeeze them, and I I don't think that's true. I think you gotta get in bed with the right franchisor, but this they can't let one fail because it screws up their whole model. So they their hat what is the missing link there of an entrepreneur that feels like they're being slighted or like they got taken advantage of, they paid too much upfront, they're squeezing on the vig, on the royalties, like and they can't make it work. How do you change the mindset to, like, wait, dude. They really want you to succeed. What what is that disconnect?

Jon Ostenson [00:24:13]:

Yeah. I think, again, the the context there is oftentimes you hear about McDonald's or Subway where the corporations requiring all their franchisees to totally re redo the interior. So I'd say it's a little more common in food, but just like any industry out there, you're gonna have good players and you're gonna have not so good players. That's where we help our clients find the good players that are really best in their franchisees that provide the next level of support. You know, the, the better the franchisee does, the better the franchisor does, not only from a cash flows team point, because they're probably gonna sell it to private equity down the line. Mhmm. All the private equity deals I've been seeing, like Princeton Equity is a good example, they've been scooping up franchise brands. They're investing in those systems.

Jon Ostenson [00:24:50]:

They're bringing strategic capital to the table, investing, growing the system, making it more valuable for the franchisee. So, and private equity loves, loves, loves franchising, you know, for many reasons. So, I mean, the franchisors that we work with, they they're business partners for their franchisee. When I was a franchisor, if I was squeezing my franchisees, I would have kids all across North America that were upset with me. I'm trying to keep them playing nice, and that's not a fun place to be. So the franchisor wants to keep their franchisees happy and directly that they get a higher royalty stream, the franchisee makes more money. So, it is an alignment of interest and to me, it's a coach on the sidelines. You know, you've got a coach that's on your team, you've got a playbook to go execute, you've got large marketing data, so you can optimize your marketing pretty fast.

Jon Ostenson [00:25:38]:

They're doing a lot of the heavy lifting for you on that front end on the lead generation side in most cases. You're able to buy in bulk and you get a higher exit value on average in a given industry in a franchise business versus non franchise. There's been studies to show that.

Julie Smith [00:25:53]:

So I have a question. I'm gonna dive more deeper into your consulting gig that you have. Is it just you, or how big is your team?

Jon Ostenson [00:26:00]:

Yeah. Great question. So we act as a larger team, but it is lean. So I've led a company before that had 40 employees. I realized what I enjoy doing and what I don't enjoy doing. What I enjoy doing is working with clients, and so I've strategically kept it lean. We've got a lot of people that have said, Hey, can we come work at Frambridge? I'm like, not right now at least. I'm very pleased with how we got, so I've got one and a half people on my payroll outside of myself.

Jon Ostenson [00:26:26]:

And then I've got but I'm able to get leverage from this network of strategic partnerships. So I've got multiple funding partners. I've got franchise attorneys. I've got a marketing group. I've got a recruiting group. All of these work together and carry a lot of that support for my clients on my behalf. The end of the day, you know, buck stops with me, but I've been able to keep it lean under this model.

Julie Smith [00:26:50]:

So my next question is, when are you gonna franchise this gig out?

Jon Ostenson [00:26:55]:

That is a great question. I I've considered that. It's not keep it between us. It's not public knowledge, but I have considered that there are multiple options I could go from an expansion standpoint, and that's one of them that still under consideration, not anytime soon. But

Glenn Harper [00:27:11]:

We'll we'll censor this this podcast so nobody can hear it. We'll bleep this out. But I

Julie Smith [00:27:16]:

mean, your mind just naturally goes there. Like, you have the systems processes. You have the social proof to be market proof to be able to go do it. And you're doing something correctly. You've built a team and a network around yourself to be able to go do this. That's not just you as you just, you know, said. So to me, that's just naturally the next step.

Glenn Harper [00:27:35]:

But I don't think he wants to share all his, key

Julie Smith [00:27:37]:

details on his vision. We have an energy going where I'm like, I can see it. And, you know, my mind's 20 steps ahead and you're yeah.

Jon Ostenson [00:27:45]:

So no. I'm impressed. And that's the first time on a podcast I've been asked that question. So kudos on kind of the strategic thinking there. That was, yeah. That I have sketched out what that would look like. And right now, things are going really well. So I think I struggle with why change when things are going

Julie Smith [00:28:01]:

really well.

Glenn Harper [00:28:02]:

So and I guess and, again, you don't I don't I'm not asking to give an intimate details, but, you know, if you're standing up, owning a franchise, and and collecting that mailbox money annuity every month and you're doing the consulting gig where you're kinda brokering deals and setting it up. And I don't think you're just matching a buy and sell. I think you're probably helping them set up and become successful as well. Right? I'm sure it's an ongoing engagement of some sort. Right?

Jon Ostenson [00:28:27]:

You you know, I pass the baton to the along the their journey, helping them in their exploration of different opportunities. But then once they pull the trigger, I pass Sabaton to the franchise owner, and they've got a support team to

Julie Smith [00:28:48]:

support. Wait. That's your next venture.

Jon Ostenson [00:28:50]:

That being said, I love having touch bases with clients after that, and I'm always here as a resource to them. But the heavy lifting at that point is done by the franchise owner.

Julie Smith [00:28:58]:

But I think in I know I'm interrupting you.

Glenn Harper [00:29:00]:

Go ahead. Go ahead.

Julie Smith [00:29:01]:

As an entrepreneur, you get into this, you know, franchisee and you're going down this path. To me, the next thing would to be that person's cheerleader mentor, kind of not inside the franchise, but

Glenn Harper [00:29:12]:

kind of outside it just to continue to give them.

Julie Smith [00:29:13]:

Because that's what entrepreneurship is

Jon Ostenson [00:29:22]:

I I think I need to bring you on to the team, Julie. I think go for it.

Glenn Harper [00:29:26]:

I feel like

Jon Ostenson [00:29:27]:

no. I do have a guy that, who's built a very successful $35,000,000 a year, franchise business across several different brands, you know, client of mine. And he will coach some of our clients doing exactly what you said. So again, you're thinking the right way, Julie. I I like it.

Julie Smith [00:29:43]:

Glenn hates it. I'm always like, I have these ideas.

Glenn Harper [00:29:46]:

I I was on the same path and I'm and that and that was the impetus of the question because if as you're setting these people up, they have, like, the the brick and mortar and the franchise way to do it, but they don't have the entrepreneurial spirit way which you bring to the table. So like Yeah. They're paying a royalty to the franchisor, but what about paying something to John? Isn't he getting a vig on this? And you could be, like, you know, the silent partner to give him the shortcuts and and just talk him up because, again, like, Julie, it's there's nobody to help. Even though you have a franchise out there, they're just telling you what to do, but they're not in your shoes living it. They they might have done it, but they're not in the in the grind and they need somebody that can come in and, hey, bud, it's gonna be okay.

Julie Smith [00:30:25]:

Or even sometimes I think people in sorry, I'm full of business ideas for you and that's Is

Glenn Harper [00:30:30]:

there caffeine in that tea though?

Julie Smith [00:30:31]:

There's no caffeine. Is, you know, to be the bad cop, I think entrepreneurs struggle with having that bad cop moments. Right? They wanna be the good cops inside of those inside of their teams that I think there's there's something something's there. It's rattling around in here. And I know I know you're gonna jump on it and capitalize on it as well. But, you know, to Glenn's point, to take that a step further, do you help, your clients with their exit strategy down the road?

Jon Ostenson [00:30:58]:

Yeah. Once they're ready to sell, then then typically, they they bring me back in. And, you know, it's entirely free for our clients to work with us. Hey. I'm essentially a real estate broker, but for franchises, we get a referral fee on the back end. None of that gets passed on to clients. So it's nice that we have this very fluid relationship. You know, we I am in talks with some consulting firms and business coaching firms that could potentially fill that gap up, coaching them once they, you know, start becoming a business owner.

Jon Ostenson [00:31:25]:

Again, I could do that. There's about 20 things that I want to do.

Glenn Harper [00:31:29]:

At least.

Jon Ostenson [00:31:29]:

I I just what has helped build my practice and made me successful and where I feel I offer these clients the most value is staying in my lane and doing what I do. But I have to push against it every day. But one other thing, Julie, that I'd mention is the idea of mastermind groups. Mhmm. You know, I'm a member of the Entrepreneur's Organization. Over the past 6 years, that's been a huge asset to me. Just getting that exposure to other business owners. You get encouraged by them, you get ideas.

Jon Ostenson [00:31:55]:

There's another, mastermind I'm a part of now called the Wellspring as well. And, you know, you can't do too many masterminds, but, you know, trying to get a peer group that makes you better, oftentimes not just in business, but in your family life and your health and your, you know, finances and how you invest. I'm a big, big supporter of Masterminds as well as a big supporter of coaching.

Glenn Harper [00:32:17]:

I think one of the takeaways here, if I can gonna try to summarize this. On your entrepreneurial journey, you know, if you don't have somebody helping you, a team or mentor, it's it's very lonely and you gotta go through the desert before you finally figure it out. And and a lot of these things that are out there, you can get the shortcut. And then as an entrepreneur, most of them, everything's an opportunity. Everything. There's no there's no obstacles. There's always an opportunity. And the key is you can't do everything, but if you finish what you start and get it set up, then you can pass the baton and go get the next thing.

Glenn Harper [00:32:49]:

But if you try to do a 100 things at once, you'll never get any of them done. So it's a very thing to standpoint and I think you're doing that.

Julie Smith [00:32:55]:

Sorry.

Glenn Harper [00:32:57]:

No, no. It's good. Oh, hello, earthquake. No. I don't think that's a negative because I think these things rattle around, and when the time comes, you'll execute on it. But it just it hasn't hit right. And that's why I was going back to the original thing is you're doing this, You know, if if you're successful enough in your in your journey where you have a great business where you can just, kinda owner owner where you're just an investor, where you're getting paid, you have this free time to flex and do these other things. And I don't think you're probably doing the brokering because you make a ton of money at it.

Glenn Harper [00:33:29]:

I'm sure you do very well on it, but that's probably not the reason why. It's just fun to be involved. And again, those opportunities of how you become a silent partner, you can be a vocal partner, the exit, and there's all kind of things you can do. But just trying to figure out which one you wanna do and how and that's what I was trying to get at is like, do you think there's gonna be a time where you're gonna be like, when you see these deals come across, go, you know what? I don't wanna consult on this one. I wanna own that franchise. This one's for me, and I'm gonna go buy this one. Does that happen quite often?

Jon Ostenson [00:33:59]:

Yeah. The one in South Florida that I just got into this past fall. You know, I helped the franchise or create an investor model, which is very rare rare in franchising, but it's one where, you know, you could really be entirely passive, and the franchisor actually runs the business for you like they would run a corporate store. And so I helped him create this. I placed a whole lot of clients with him. And I said, wait a minute, I wanna do this too. So, yeah, I absolutely, yeah, jump in, in there other cases of that as well. The one in Minneapolis would be another good case, whereas one it's a concrete and asphalt paving and line striping business.

Jon Ostenson [00:34:30]:

B2B they work with, you know, they have parking lots, essentially, you know, all these landlords have parking lots, Great niche business, and, you know, I'd seen clients be successful with that. I said, yeah, I wanna be a part of it. So when I was given the opportunity to come in with a very passive role, I said, absolutely.

Julie Smith [00:34:47]:

So as you reflect back on your journey, do you think you can specifically think of a mentor that you had that had a lasting impression that you are where you are, maybe not because of that person, but they really helped lead you?

Jon Ostenson [00:35:01]:

Yeah. I'd say 2 come to mind. Actually, 3. 1 of them, high school basketball coach pushed us harder than he said we're the hardest working team in the state of Georgia. We had a B to compete with some of the large public schools we're playing, and we did very well. So I think the work ethic and the discipline side there, a guy named Cole Forsyth who, had, you know, has been incredibly successful at a younger age in real estate, very, very well. And, you know, just kind of learning how he stewards his resources and gives back and, you know, doesn't get caught up in, in the wealth he's accumulated. That's been a huge impact on me.

Jon Ostenson [00:35:37]:

And then the third one would be Alan Young, who was the founder of Shelf Genie. So I came in as president, ran the operations. Alan, you know, really taught me franchise and, you know, gave me that opportunity. And, he and I are actually still partnered on a couple of franchises today, outside of that. So, those would be the 3 that I would point to.

Glenn Harper [00:35:58]:

Do you feel like, you know, when you look at these people that wanna become a franchisee, how many of them will out of a 100, again, just know you know your data guys, you might know this, that they go, okay, I'm gonna just do this one franchise and that's all I'm gonna do and I'm good. How many of them end up going do multiple things?

Jon Ostenson [00:36:19]:

Yeah. I'd say 2 thirds of our clients will buy a multiple units or territories of a brand out of the gate. And so, that gives them path to kind of scale and protects, you know, some land for them. Quite a few clients, you know, even if they buy 3 out of the gate will come back and buy another one, you know, buy another location. I've had quite a few clients that come back and buy additional brands. So, you know, I have a client recently in outside of Philadelphia, and he's a C level executive, but for smaller company, travels a lot. And he'd bought a, fencing business with us last year. And, about 9 months later said, Hey, I've got a great general manager in place.

Jon Ostenson [00:36:56]:

What's next? What do you have? You know, what what's hot? Introduced him to, several companies. The one he ended up going with was a temporary wall business where they put containment walls around, you know, renovations are happening or, you know, projects, whether it be in hospitals or airports. Exactly. Retail, hotels. You never think about these, but someone has to put them there. And it's almost like an equipment rental business where you get this annuity every month from a rental standpoint. But he just fell in love with walls and, pulled the trigger on that. So, you we just had a client last week, youth soccer.

Jon Ostenson [00:37:29]:

He's He's coming back to buy another brand that's offered by that franchisor in a different sport. So I love the variety.

Glenn Harper [00:37:35]:

See, it it's the craziest thing. Every day, I'm amazed at my real job that I do, you know, extensively in tax season, but the fact that I can't I'm amazed at what people make money at and what they do. Like, you don't think about any of this stuff as a normal person and that all these opportunities are out there. If one is trying to, how does one get a hold of you to say, hey, I'm looking to do this. Who do you rep? Like, is there a is there a place they can go to kind of look down those opportunities and see which is there?

Julie Smith [00:38:07]:

He's definitely got a web site.

Glenn Harper [00:38:09]:

Well, I well, maybe. You never know. He might he's on the down low. Remember? We're not even putting this out there.

Jon Ostenson [00:38:13]:

Come out to our website, FrambridgeConsultingdot com. We don't put a list out there for multiple reasons. One, certain franchises aren't gonna be the right fit for people, so why get them excited about something that I know is not gonna be the right fit? And more oftentimes it's not right for their market or, or it's not either not right for the market or it's sold out in their market. And so there's a lot of science that goes into the, the, the art behind this. And, you know, I don't wanna get people excited and, and spin their wheels on something that's never gonna materialize. You know, if it's sold out here in Atlanta, we're sold out on a bunch of things. And so it's like, why put those in front of my clients? So yeah. Anyway, but come out to our website, reenbridgeconsulting.com, share your email address.

Jon Ostenson [00:38:53]:

My assistant will reach out. We'll share a copy of our book, Non Food Franchising with you. We'll, you know, did multiple digital download versions. And, you know, if you're that's a great primer, but if you're ready to take the next step and get it on a call and talk more, I'd be more than happy to jump on call with any of your listeners. And when we talk about your situation of what could make sense and what the path forward looks like.

Glenn Harper [00:39:12]:

Before you do that question

Julie Smith [00:39:13]:

Well, I have I have several questions

Glenn Harper [00:39:14]:

we haven't got to. You mentioned that on some of these franchisors, do they offer the financing opportunity where they'll finance it for you? Or do you these guys all gotta have private money or go to a bank? How does that work?

Jon Ostenson [00:39:27]:

Great question. So I would say that franchise worth funding is more of an exception. There are a few that do. Most oftentimes, and I'd say, certainly, there's some very large deals happening, but a lot of what our clients are getting into when you look at the franchise fee, the start up cost, and a couple of months of working capital, they're probably in the range of 150,000 to 300,000. Quite a few businesses, I'd say 80% of our clients are falling into that category. Some of our clients will use cash. Most of our clients will put in like 50,000 in cash plus use an SBA loan. That's very common.

Jon Ostenson [00:39:57]:

Banks love franchises, because of the predictability. And so that's very common. You can also roll over an old IRA or 4 1 k through what's called the ROBS program. That's very common in franchising. For some reason, HELOCs or other means as well.

Glenn Harper [00:40:11]:

Got it.

Julie Smith [00:40:12]:

So I think you have a lot of experience in this and I think our listeners sometimes struggle with this. But when it comes to building a team, what would be your number one advice to our listeners in regards to

Jon Ostenson [00:40:25]:

that? Yeah. Go for the a players. Don't spin your wheels on b and c players. Life's too short, and it's not fair to them either. So I I've learned surround yourself with the best talent, pay a little more if you have to, and that investment upfront is gonna be worth it.

Julie Smith [00:40:40]:

And so what these are these are my list of questions that I like to have, but he's been interviewing as if he's, you know, gonna be a franchise owner. So what Maybe. What is your superpower? What do you bring to the table that no one else has?

Jon Ostenson [00:40:55]:

Yeah. I think creative ways of, doing things. Some I've kinda got a blend of left brain and right brain. I've got the left brain, the finance side, but then, I think where I differentiate myself into my superpower is just some innovative ways of how I run my process that I take clients through, or, you know, being contrarian and writing a book called Non Food Franchising. I'm cutting out half the market,

Glenn Harper [00:41:16]:

probably one

Jon Ostenson [00:41:16]:

of the smartest moves ever made. And so I think just coming up with ideas that maybe others haven't thought of or haven't seen, is what I enjoy doing, and I feel like I've got some skill sets up.

Julie Smith [00:41:27]:

And I have one last question even though I've already sent you down a path with multiple angles. But what is your end game?

Jon Ostenson [00:41:36]:

End game. You know, very thankful that we're we're in a very good position where I couldn't step away and and play with my kids all day every day. But, you know, I'm 44, turning 45 this year. My plan is to likely work for another 5 years, give or take 2 or 3 years. I wouldn't be surprised if at 47, 48, I kind of step more away from the day to day and do this a little more part time. And, you know, there are a lot of charitable causes that my wife and I can get behind and would love to do more of that, do more mentoring. You know, kids are only young for a period of time, so they're trying to invest as much as I can in them. But, you know, it's a good work life balance right now, and, you you know, we we'll see how the next next couple years go.

Julie Smith [00:42:15]:

I personally don't think you have an end game. You can be part time all you want, but you're not gonna be able to shut that brain down no matter what you do. So good luck.

Jon Ostenson [00:42:22]:

Cool. Cool. You read me great, Julie.

Glenn Harper [00:42:25]:

You're fitting the profile so well. I we're looking for a Mercedes dealership in Atlanta. Is there any available? I'm I'm I'm heard it's a great market. Is that true? Yeah. No. Absolutely. You guys are full full than a kettlebell.

Jon Ostenson [00:42:38]:

We'll put a bakery next to it, maybe a car wash. Whatever you want.

Glenn Harper [00:42:42]:

All cash. It'd be great. No. Well, I tell you, John, it's been a pleasure you having on having you on the show. I think our listeners are gonna get a lot of nuggets because it's a different model than they're used to of just kind of figuring on their own, the franchisee and or is a whole different kind of way to get there. So hopefully, listeners, you got some good nuggets out of here to create some more questions.

Julie Smith [00:43:00]:

Can you, give us your plug again just at the end for everyone to have? Yeah.

Jon Ostenson [00:43:05]:

Come out to Franbridgeconsulting.com. franbridgeconsulting.com. Share your email address. My system will reach out with links where you can download, free copies of our book, non food franchising. Now if you wanna buy it and buy the physical copy, just go out to Amazon or anywhere else, and, all profits go to, Hope International, which is a non profit that we that we really believe in and have gone behind. You know, but if you'd like to take a next step when she reaches out, just let her know. And, you know, we'll set up a call and, yeah, I would love to help and follow me on LinkedIn as well. I try to put some good content out there on a daily basis, and, we'll go from there.

Glenn Harper [00:43:40]:

Well, John, I really appreciate you, being on the show and another successful edition of Empowering Entrepreneurs podcast. I'm Glenn Harper.

Julie Smith [00:43:46]:

Julie Smith.