Kim Daly 0:00
In a franchise, you’re not on an island by yourself, you are in this collaboration, you’re partners with a franchisor, you have the collective intelligence of all of the neighboring franchisees who are not competitive. Well, we are competitive because we’re all humans, right? We all like to be Rookie of the Year and the number one franchisee, but reality is, when I do good, I can share that with you because you and you’ll do good and are, you know, we’re all shareholders in the same brand here, right? So it benefits everybody to share and be collective. But that’s just a more abundant feeling for people. Then coming to the idea of owning a business and having no frame of reference and then trying to figure out what they need to know in order to buy this business and then to take it over successfully.
Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant we are here to learn from the experts.
J Darrin Gross 1:05
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is a podcast focused on commercial real estate investment and risk management strategies. Weekly, we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Kim Daly, she has spent the last 20 years helping people achieve financial freedom by enabling them to find the perfect franchise opportunity. She is recognized as one of America’s top franchise consultants. And she is an international best selling co author of franchising, freedom, and the founder of and the founder and the host of Kim daily TV. And in just a minute, we’re going to speak with Kim about franchises, and all the opportunities they possess.
But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you want to see on track of our guests are Be sure to check out our YouTube channel. You can find us on YouTube and commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest, Kim, welcome to CRE PN Radio.
Kim Daly 2:39
Thanks, Darrin. I’m happy to be here today.
J Darrin Gross 2:42
Well, I’m really looking forward to our conversation today. Before we get started, if you could take just a minute and share with the listeners a little bit about your background.
Kim Daly 2:51
Yeah, so I’m a franchise consultant, I have been helping people realize their dreams of diversifying income streams, leaving corporate America behind and finding a life that they own and control through the proven systems of a franchise for nearly 20 years. I’ve been self employed since I was 25 years old. It’s all I’ve ever known. And I love and am very passionate about helping other people to sort of have that same freedom.
J Darrin Gross 3:21
Awesome, awesome. So let’s start with just a guess maybe like, Can you define what a franchise is?
Kim Daly 3:30
Sure, yeah. So many people think that they know what a franchise is because they eat at Chick fil A, or they you know, they drive what they what they the gym they go to, but when they think about like, well, what is a franchise as an investor? So it’s a totally valid question. So a franchise is the way for the average person without an MBA, no prior business experience to come to the idea of owning a business by buying down the learning curve. Because you’re partnering yourself with people who’ve already figured it out for the price of a franchise fee, they’re gonna hand you a proven business plan and all of the tools to training technology marketing support, so that you can get up there kind of buy up the ramp speed and get into the business and statistically you’re buying down. So you’re buying down the learning curve. And that also you’re buying success because you probably have heard the statistic that 90% of startup businesses fail before their fifth anniversary and that is not a statistic that’s owned in franchising. In fact, most of the businesses that I work with a few 100 that I work with out of the 1000s that are out there have statistics that are like 90% succeed 90% or greater, are successful.
J Darrin Gross 4:50
Now that’s clearly a Delta you’d rather be on the the winning side of 90 versus 90 There. That’s That’s good. So, a, like you said somebody with no prior experience can can my into an opportunity. I’m just kind of curious, the, you know, if I was to go and say, Okay, I got a great idea for whatever I mean, you could sandwich or I mean, I think that is probably one of the more common franchises or some sort of an eating type establishment. How how, you know, you mentioned the failure rate versus the success rate. But can you differentiate between the two is to what, you know, the the opportunity would look like for somebody that’s thinking about just, you know, they make a good sandwich, they’re gonna go it on their own versus, can I’m gonna, my buy a franchise and go that route?
Kim Daly 5:55
Okay, fantastic question. So I, so if you those listening to the show, if you hop over to my channel at Kim daily.tv, I have so many videos that address this very topic from so many different angles. So that’s on YouTube, if you go to YouTube, and you type in Kim Daly or Kim daly.tv, it’ll come right up. So the difference between entrepreneurship and investing in a franchise, it is absolutely different. So the entrepreneur is, you know, out there with an idea. But then in order to bring that idea to market has to stop and create a marketing plan, so they have to clearly define their customer avatar, then they have to figure out how to attract that customer, what what messaging, what is the coloring of my brand, like, what’s going to attract this person to me, they have to figure out where to spend that the where to place those advertising, that advertising and then also how much money to it’s going to take to get enough of those customers coming in or calling you to produce a positively cash flowing business. And it’s normally when you look at that statistic that 90% of small businesses fail. It’s not because people don’t have good ideas. It’s because they run out of money. Because there’s so much trial and error in trying to bring something to market. Entrepreneurs are dreamers. And I love that listen, if we never had entrepreneurs, we wouldn’t have any new franchises. Every franchise business starts out as an entrepreneurial venture. So we have to have entrepreneurs. But the idea is that let somebody else go and throw all that mud at the wall. And, you know, try to figure it all out, because that’s the hardest part, the easiest people to sell the value proposition of a franchise or former entrepreneurs 100% Because it’s all that trial and error and toil and sweat you’re in takes years, and you may never make any money. Now over here on the franchising side, you’re paying a franchise fee, which the daily coach calls the cost of entry, that franchise fee opens the gate to Disneyland, it opens the gate and buys you instant access to all the ready made tools. So the proven business plan, initial training, vendors technology, ongoing support, a clearly defined customer avatar and a clearly defined path to building a profitable business. All you have to do is execute on the plan. So I can take an owner, someone from corporate America, even if they want to keep their full time job, because franchising has the infrastructure built into it. You don’t have to always be full time, the entrepreneur is working full time and full time. Right? Yeah, full time in it full time on it. The franchisee can keep their full time job and work the business part time or as a side hustle with a manager working in it. And then they as the owner, CEO get to work on it. And so I can take that owner who may have the dream to build job replacement income, right, three, four or $500,000 a year, and maybe that’s three to five locations or particular franchise. And in less than three to five years, he or she could have all of those locations up and running. The entrepreneur over here is probably still trying to figure out how to get one location going while they’re working in it. Never taking a vacation. So you know franchising is going to afford the investor so much more from the beginning in terms of time and quality of life and hopefully less stress because you’re in business for yourself but not by yourself. There are all these other people out there who can support you answer your questions, you know, cheer you on when it’s getting hard. And it’s just that collaboration to that just makes it better. That makes it more fun.
J Darrin Gross 9:52
Yeah, no, I can totally see the at least the support when the things are not working. Have somebody that you can turn to the can help you Right the ship or do something different or to, you know, try this or whatever, as opposed to just, you know, like sort of basically running out of money, I could see that being a big, big, big, big reason why so many entrepreneurs fail. I’m curious, you know, if somebody who has has an idea and they want to, they want to go into a franchise, are there ways to determine which one is a better opportunity for you? I mean, you can you can you weigh the opportunity between two like franchises, or how does one go about that?
Kim Daly 10:38
Like, that was a planted question. But guys, it really wasn’t there. And this is exactly why the daily coach has a business. So most of the people who think about franchising, number one, they think about food, just like you did, right. But like most of the people who are executives in corporate America, or investors in real estate are saying, I have no interest in owning a subway. So they dismiss franchising, because they think that that’s what franchising is, and then they come over here to the daily coach, and they’re so refreshed to learn that as America’s top franchise consultant, I literally place more people into franchise businesses than almost any other consultant out there. Buy, you have to beg me to show you food. I never plays anybody into food. So I There are just easier, faster, better ways to make money. There are so many businesses out there that exists as franchises that you probably don’t even realize are franchises. So when people come to me whether they think they know what they want, or they’re saying, I think I want to own a business, but I don’t know what my options are. This is where our conversation began. So I offer a free service that helps people figure out what would be what is the right business for me, by looking at their background, their interests, their skills, their finances, like what you can afford, and ultimately dhahran their goals. So like, before we start talking about any specific brands, I want to zoom out from the moment we’re in. And I ask people like, what are you trying to achieve? Because the business is just the pass through vehicle, right, that drives your life from where you are today to where you want to end up. So I’m infinitely more interested in where they want to end up and what they want to achieve through this business, like personal or professional growth? Or is it just financial? And that comes into play with do you invest in other things like real estate? Or are you a W two employee? Or, you know, what is your whole portfolio look like? And how much of that you know, financial gain? Are you looking at this business producing? So it helps people get clarity around what they’re going to use the business for? And people start saying, oh, okay, so it’s less about the business in more about me. And I say yes, exactly. The business at the end of the day, does it really matter? I challenge people everyday Dare and I’ll say, look, if I show you a business, like I have this amazing business that paints, lines in parking, lots. Franchising paints lie. Ever think of all the parking lots you see, every day, somebody has to paint the lines. It’s a mom and pop dominated industry. It’s b2b, reoccurring revenue, simple business, you know, simple equipment, small team of people, crazy, crazy big margins, semi absentee ownership, so you don’t even have to leave your job or be in the thing full time. So, so people come to me, and they, they they come like thinking it’s all about passion for the widget. And I say no, a franchise is like I said, it’s the vehicle. And ultimately, when you invest in a franchise, what’s infinitely more important than the widget? Is the people behind the widget, because that widget as it is today has to keep growing and changing and adapting to the market. They the competition, the Times post COVID time. So if it’s always about the leadership in a franchise, I’m making a connection for people to the people behind the brand. But ultimately, that’s what I do on a day to day basis is offer this free service that matches people to the right franchises for them. And then I coached them through the process so that they know they’re asking the right questions, talking to the right people, if they need financing, we go through the legal documents. So I’m the resource for how to invest in a franchise and I do all of that for free because I get paid by the franchisors so I’m like a recruiter, if you will, if you back end it in the franchisor. I do all the dirty work for them. advertisers, they’re like, hey, you need to prequalify people to find the motivated, you know, excited people to, to get people’s mindset in the right place so that by the time they get to the franchisor, that franchisor knows they have somebody that maybe they can make a match with. And this whole process is sort of like courtship leading to a marriage. Right? So it’s all I the daily coach calls it a blind date, you started a blind date, we’re gonna get into this courtship and hopefully lead to your wedding day where I kiss you off to the franchisor. Yeah.
J Darrin Gross 15:33
Hey, I’m curious. You know, we talked about like, all the support and stuff and the 90% success rate of a franchise? Can you speak to a guess on the backside of that? So let’s say you buy a franchise, you’re, you know, you’re wildly successful. And now it’s time to be done, sell, go, go do whatever you want to do without having to worry about work, whatever. Can you talk about the valuation of a franchise versus a, an entrepreneur, one off? Similar type? You know,
Kim Daly 16:15
Another great question. Yep. And I think backing up a lot of people think that you don’t even own like, it’s not really my business and a 100% Is your business. It’s your business to be successful, it are your business to fail and right. Franchising is not foolproof, even with all the support all the support, mechanisms, and training and everything involved, franchisees franchisees still fail, because they have to wake up and execute the system, right? But yes, it’s your business to build and it’s your business to sell. So when you’re ready to sell, you should be able to apply some multiple to your EBITDA, and go off into the sunset, like Darrin said, but that multiple will depend on the industry or in the economy at the time of sale. But the greatest thing about a franchise resale is the buyer looking at your business? Typical, typically, franchise businesses sell for higher multiples than their mom and pop counterparts. So there’s a couple reasons for that. The first one being that the buyer looking at your business doesn’t just have to take your word that this is how your books, look, there’s all this validation out there from all the other franchisees, right, who can tell their story. So when I when I’m working with a franchise resale, I’ll have my candidate first pretend like they’re going to buy brand new. And I want you to go on and I want you to interview the top performing franchise owners in the system to see when somebody is building this at its maximum capacity today. How does it look? How does it sound? What are they focused on? How many hours does does it take them? What kind of money are they making? Because how do you have any perspective when you’re just looking at a resale? How do you know like, Where does this business fit into the bell curve. So by going out to the top performing people, maybe talking to a few average performing people and getting a sense of what the difference is like million dollar stores versus $600,000 stores. And then you look at the resale business when you’re looking at the books and let’s say the guy’s books are 300,000, you either know that this guy’s not maximizing his opportunity, or you got to try to figure out like, why typically, its owner created not location, or all the other things that people want to make it about. But that’s where your conversation can now begin. And so then you can go back to the franchisor, as you’re evaluating this resale and ask questions around that. How did you feel this franchisee was performing? Like why are his numbers so low? Is that why he’s selling? Right? Those are sort of fear based questions, but every resale is going to start right there. Right. But the great thing for you as the guy selling the business or gal is that your your buyer can do all of this due diligence without you. Right, and so by the time they come to look at your business, they’re so much more educated. They know what makes a good territory, because they’ve talked to top performing people, they know what the potential in the businesses, and so they’re going to be willing to pay more money for that when they figure out the opportunity that’s left on the table. And then also because in a franchise, you’re not on an island by yourself, you are in this collaboration, you’re partners with a franchisor you have the collective intelligence of all of the neighboring franchisees who are not competitive. Well, we are competitive because we’re all humans, right? We all like to be Rookie of the Year and the number one franchisee But reality is when I do good, I can share that with you because you and you’ll do good and our you know, we’re all shareholders in the same brand here right? So it benefits everybody to share and be collective. But that’s just it. A more abundant feeling for people, then coming to the idea of owning a business and having no frame of reference and then trying to figure out what they need to know in order to buy this business, and then to take it over successfully.
J Darrin Gross 20:13
Right? No, absolutely. I saw something here. I don’t remember what I was watching the other day, they were talking about just the the want kind of the hunger out there for reoccurring revenue streams, which I would think that the, the franchise model speaks to, I mean, you’ve got, you know, you have a system that created to make sales, reoccurring sales, and just kind of the thirst out there for for those types of businesses. I would think that the demand is, is rather strong right now.
Kim Daly 20:47
Recurring revenue is always a thing, right? I mean, doesn’t add as one who’s been in a non reoccurring revenue business for nearly 20 years here at branch choice. So I am like a franchisee of a company that helps people invest in franchises. So when I say that, that’s what that means. So I live the life of a franchisee every day for the last 20 years. So I walk my talk, I’m not just saying oh, you go do it. I’m actually doing it too. I pay royalties. I’m trained by corporate office, all of that. The My business is pay when someone buys a franchise, Kim Kim gets a commission or Kim gets a consultant face. So it’s always about finding the next person and getting the next person through the through the process. But if I had started a mosquito spraying franchise years ago, right, we’re residential cleaning company. Like that’s the best one because those girls come to my house. So listen to this story. When I moved here in 2012, I hired them aids, that’s a franchise. I don’t like the word but that’s their word. So they come to my house every so they sold me one time. In 2012. They come to my house every Monday morning, clean my house. And Bill my credit card $135 a week. Who want who doesn’t want that business? Yeah, there are challenging parts to recurring revenue. Good service organizations usually require a lot more employees, like my organization has no employees. I’m it right. But the downside to that is if I’m not here, I’m not making any money. Right? When the President or the owner of the maids franchise goes on vacation, the teams can still go out and clean. Right? So there’s, there’s pros and cons to everything. But the characteristics of the business are just appealing to different investors. Right. And it depends on what you’re using the business for. So that’s part of again, when people come to me, this is how I get them thinking less focus on what the business does more focused on the role that you play as an owner and the time commitment that will require a view? And are you the kind? Are you looking to be a leader and a manager to create jobs in your local community to say I feel good for you? Or do you look at people as a headache? Would you rather have a smaller team of people and be scaling your business using equipment, like a tree cutting franchise or mosquito spraying franchise, or maybe scaling your business using real estate? Right, like a gym or a massage, envy or subway? So there’s all different ways to look at how to scale a business. And there’s all different characteristics of characteristics of businesses that appeal to people, you know, we talk about like, where in the lifecycle Do you want to insert yourself? Do you want to be coming in at the pioneering at the front end of a new brand? So seven or eight years later, when the whole world wakes up? And everybody, you know, everybody woke up one morning and wanted an orange theory? I don’t know if you know that brand. But like, there was a moment where I felt like every single candidate was asking me, How do I get an orange theory? And I’m like, That ship sailed like seven or eight years ago, right? But the time the customers start asking, Hey, is there a location? I mean, they’re asking because they’re a they’re a customer of the company. Typically, in fast growing brands, those markets are completely sold out. So you can get in on the pioneering side and then get the carve up the market and have the best territories but you’ve got to be a little bit pioneering. You can’t be the most risk averse person because there isn’t going to be any validation from other franchise owners there isn’t going to be as much proof and as much data, right? Or do you like buying into something like Supercuts or Mako or the lawn doctor? These like pillars in franchising that are been around for 50 plus years, and they have hundreds of franchise owners that you can validate? What does your business look like at six months, one year, 10 years. So there’s an investment strategy for every type of buyer. And it’s my job to help get people thinking like this and to figure out these characteristics and then offer up the opportunities that match those kinds of characteristics.
J Darrin Gross 24:55
Gotcha. Let me ask you from like Atlanta, landlords perspective, you’ve got a vacancy. And can you make the case why a franchise would be a better opportunity as a tenant? As opposed to you know, a an entrepreneurs startup?
Kim Daly 25:21
Well, here’s what I’ll say. Like, are you asking me about like, is franchising better than a real estate investment?
J Darrin Gross 25:27
No, no, no, no, I’m talking about a landlord with a real retail landlord has a vacancy in a strip mall. Okay. And is there is there a perception from a landlord standpoint that a, I mean, I’m assuming in a recognized brand with the proven everything we’ve talked about would be more appealing than just a, you know, somebody that’s gonna wing it and hope that they’ve got the, you know, they can they can make fun of you.
Kim Daly 25:55
Yeah, because 90% of startup businesses fail that landlord seeking a much greater chance if they’re looking at renting their space to, you know, let’s just say super cutscenes. I just said that and Supercuts has a 98% success rate over 30 years of history. Supercuts is bringing people with a minimum net worth of a half a million dollars. He Supercuts is making sure that the people they award a franchise to have liquid cash of 200,000. Most of them have a full time job in addition to these qualifications so Supercuts, because if you look at Supercuts, Supercuts wants to be next to the front door of Walmart. Supercuts is a billion dollar company, they don’t even leave their real estate to their franchisees, like they don’t want this first time business owner trying to like negotiate terms with the person who like owns the property that a Walmart sits on, right? They’re gonna go billion dollar company to billion dollar company, so they’re going to negotiate that lease for their franchisees, but then other franchises leave it to their franchisees and so yes, the landlord is probably going to be a lot more aggressive with tenant improvement money or free free rent or just concessions to bring in that franchisee because statistically, the franchise is just more proven than the person who maybe this is their first time owning a business and they love the idea of baking pies. And so they’re going to open a little pie shop. The guy roll
J Darrin Gross 27:22
Yeah, no, the the guess just to have again, another level of support at the franchise to help you determine a proper location, you know, to to be successful as was a huge win for the franchise owner or the buyer of a franchise. That’s, that’s great.
Kim Daly 27:43
Yeah, if your business relies on a location, I mean, that’s going to make or break you. So I mean, there are franchises that by demographic data like unbelievable amounts of data and they can physically score like scientifically score a location and they can look at that location and how its scored compared to their number one tear, you know, location today and show this new franchise owner like look, we know this location is going to work because demographically psychographically it looks just like this guy that over here grossing $2 million dollars. So there it helps the incoming buyer get confident, but yeah, absolutely. It’s going in alone in trying to find figure out what makes a good location. I mean, these franchisors today have highly sophisticated tools and techniques. They know okay, we need a shopping plaza with 60,000 cars passing by a day or angered by a Whole Foods or you know, our customer goes to Starbucks. We want to be next to Starbucks and how do you even find those leases those spots may be rented before the for for lease sign even hits the window, but these franchisors work with the CBRE is the best commercial realtors in the country or have their own internal realtors that are go ahead of their there are companies that like I mentioned to Mako Mako sister company Meineke. Meineke has an internal real estate department that goes out in scours markets, looking for bends, you know, different Mom and Pop auto body shops or car shops that are going out of business. And they’ll hold that lease because they have so much money. They can hold that lease waiting for a franchise owner. So they’re like, oh, you know, you can I bring somebody in who lives in you know, Parkersburg, West Virginia. And then I thought we already have a location if he’s qualified, we can step right in and move right in and we can just retrofitted so like this is a that would greatly buy down the time to getting a business open, right? Because finding that location and constructing that store. It’s time consuming and very costly. And when you have people that are going ahead of you and doing these kinds of activities are in it with you, and can tell you from the beginning Look, don’t think this is going to happen. overnights help set expectations. This on average is an eight month process. So block saddle up and slow down. We got your back, you know so those kind of things can drive entrepreneurs crazy if they have no idea what to expect.
J Darrin Gross 30:19
That’s that’s interesting that the real estate arm of these franchises that you know whether they go out negotiate lease or like you said even just lock up the space for for a potential, you know future franchisee that’s meant such a huge huge, you know asset to have in your, on your team to have somebody that’s looking out for you and has all the demographics and all that stuff figured out already. So that you’re at least you’re starting off in a, you know, chance to be successful as opposed to hoping that traffic will come
Kim Daly 30:53
Hope, is not a strategy.
J Darrin Gross 30:57
Yeah, exactly. Hey, Kim, if we could, I’d like to shift gears here for a second. As I mentioned to you before, by day, I’m an insurance broker. And I work with my clients to assess risk and determine what to do with a risk. And there’s three strategies we typically look at her we consider when we’re trying to assess risk, we first look to see if there’s a way we can avoid the risk. If that’s not an option, then we look to see if we can minimize the risk. And when we can either avoid or minimize the risk, then we look to see if there’s a way we can transfer the risk. And that’s what an insurance policy is. And I like to ask my guests, if they can look at their own situation. It could be their clients, investors, tenants, the market municipalities, however, you’d like to frame the question, but to take a look at your situation, and identify what you consider to be the biggest risk. And for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. And if you’re willing, I’d like to ask you, Kim Daly, what is the BIGGEST RISK?
Kim Daly 32:14
So I help people take one of the BIGGEST RISK with most of their life savings for most of them that they will ever take, saying yes to their dreams to own a business. And I do this every single day. So I am very acquainted with the conversation about risk. I think the biggest risk is regret. I think that if you have the dream in your heart to do something that is out of the box that is unordinary that is extra ordinary, and you don’t take the risk, you will regret it more than if you do do it. Even if it doesn’t work out. The BIGGEST RISK has to be regret.
J Darrin Gross 33:01
No, true true. Very true. Kim, where can the listeners go if they would like to learn more or connect with you?
Kim Daly 33:12
Well, as I’ve already mentioned, Darrin absolutely got to check out KimDaly.tv. So before 2020 I used to travel the country hosting live events when I could no longer get people together face to face. I turned the camera on and started building my YouTube channel. And we’re just about at our one year mark. It has been the greatest single thing I’ve ever done professionally. I am having more fun. So absolutely. Please humor me. Go to KimDaly.TV. There are hundreds of videos on all things investing, franchising, mindset coaching, business coaching, check it out. And then from there, it’ll lead you back to my website, which is thedalycoach.com And that’s my last name D A L Y the daly coach dot com.
J Darrin Gross 33:59
Got it. Kim, I can’t say thanks enough for taking the time to talk. I’ve enjoyed it. Learned a lot, and I look forward to doing it again soon.
Kim Daly 34:08
Thank you so much. Darrin, I enjoy being your guest.
J Darrin Gross 34:11
All right. For our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow. That’s all we’ve got this week. Until next time, thanks for listening to Commercial Real Estate Pro Networks. CRE PN Radio.
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