We often speak about real estate on this show. But what about investing in a business, specifically franchises? We’re not talking about opening another food restaurant. We’re talking about businesses that can be profitable in the first year. Could a franchise be your ticket to financial freedom, despite the current economy?
We have our repeat guest expert on this subject, Kim Daly, who will share what you need to know about franchises right now, and how to know if it’s the right strategy for you.
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Should You Look At Investing In Franchises Right Now With Kim Daly?
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I’ve brought on a repeat guest with us. He’s part of our own network as well. He is someone I’ve referred and trusted my clients with, Kim Daly. If you guys haven’t gone that far back in our episodes, Kim is the matchmaker for franchisers. I’m not talking about your Krispy Kremes or other Crumbl Cookies that are in my own backyard here in Utah. We’re talking about the actual franchises that could be as boring as heck, but make you good money, which in my mind is not boring. Kim’s been doing this for twenty-plus years. He had been matchmaking people with great businesses. He’s helping people create almost this semi-active, semi-passive type of stream of income.
I want to bring her back on because the last time we had her on was in 2020 during that period of time, which was fun. Now, we want to talk to her again and get an update on what’s going on. Is it good to be able to buy a franchise? What about these mom-and-pop types of shops? It seems they might be struggling. Is that the answer? When is it good to do that versus buying a franchise? Kim, welcome back.
Thank you, Chris. What a nice introduction. I’m so blessed to be a part of your world.
You’ve been amazing.
I love how much you care about your people. I care about my people. You care about your people. That’s why we attract each other. I love it.
Obviously, birds of a feather flock together. You’re pretty awesome. You like me, so you got to be awesome.
I do. I love your show.
We haven’t gone back a couple of hundred episodes to your last one. Tell us a little bit about your story and how you came about this business.
As you mentioned, I’ve been a franchise consultant for over twenty years now. I’m one of America’s top franchise consultants, which means I’m blessed to help a lot of people say yes to the dream to own a franchise business. I’m an author. I have a YouTube channel now. My kids laugh at me when I’m like, “I’m a podcaster and an influencer on YouTube.” They’d give me the big eye roll, Chris.
I’m sure they do. They’re like, “No, you’re not doing enough Minecraft videos, mom.”
“You think you’re a cool mom, but you’re so not cool.” I’m trying to help as many people as I can to learn about franchising. I started out as a medical school student, and I literally answered a classified ad in the newspaper for a franchise consulting company right out of college. It changed the course of my life, or I thought. When I was young, the one thing I always wanted to be was a motivational speaker. I woke up sometime in a hotel in Dallas, Texas, getting ready to host a live event before the pandemic.
That’s how I used to find people that wanted to work with me. I thought to myself, “Look at me. Everything worked out exactly the way that I wanted it to when I was fifteen. I’m like a motivational speaker right now about to help people get motivated to maybe change their life and buy a franchise business.” It’s funny how life works out the way that you want it to.
It’s not what we expect, but it’s perfect.
It is so perfect. I was born for this business of franchise consulting. What is that? I didn’t even know what it was when I was little, but it’s my heart, my skills, my personality, and what I love to wake up and do every day. I don’t work. This is fun.
Tell us more about the franchises that you connect to people with. When I went through it, and we even narrowed it down to four options, I was even having a hard time trying to pick between 2 or 3. Tell people more about what this is because it’s not like the typical stuff you think about where you’re going to McDonald’s University. This is not like another restaurant franchise. This is much different.
It could be that. I’m just not the consultant for you if you like food. There are faster, easier, and better ways to make money than in food-based businesses. Like Chris mentioned in the beginning, sometimes the more boring businesses are the ways that people get rich. I take people through the consultation process and learn about what your priorities are and what you’re using the business for.
Sometimes the most boring businesses are the ways that people really get rich. Click To TweetThe franchise business itself is there as a vehicle to create an outcome in your life personally, professionally, and financially. I’m infinitely more interested in what you want out of the business than I am and what the business does. We take the pressure off of the widget and focus on the outcome. Most people I meet want to make as much money as they can with as little time commitment to the business as possible, at least long-term. That’s what we call semi-absentee ownership in a business.
That’s where my focus is for the people that are saying that, but then there are other W-2 employees who are like, “I’m ready to quit that, but I don’t want to retire. I want to put in the full-time effort.” We have full-time ownership options as well. I tend to be the girl that loves to focus on low-fixed-cost businesses, businesses that don’t require big brick and mortar build-out. It’s not always. I love fitness, too, so that always has a brick and mortar build-out.
What I love in a brick and mortar scenario is I love businesses that have fixed costs in brick and mortar, especially those wrapped in a membership where you have predictable, scalable revenue. When you talk to people that are super stressed out over their business inevitably, it’s because they have a lot of fixed expenses and no predictable way to bring in cashflow. That’s no good.
Low fixed cost is where it’s at, meaning nobody’s walking in, but I’m not bleeding to keep my doors open again, “How am I going to cover those costs?” That’s the sweet spot. It happens to be a lot in service, any kind of service, like service for the homeowner, for a business, from senior care to home construction-type services to anything in the home.
It’s absolutely skyrocketed during the pandemic and is still skyrocketing. That’s been my sweet spot for twenty years, and it turned out to be the most amazing blessing in 2020. The vast majority of people that I work with were in franchise businesses that could still operate even during the pandemic. They are God’s little angels.
You might want to know this too. We share a client together where they opened a laundromat here in Salt Lake City. They got that up and running. He was talking about that on this show several months ago.
I am the queen of laundry. Again, boring business, but I work a lot with people. We’re looking for diversification in their real estate portfolios, but they’re not looking for full-time effort. While laundromat is one of those examples where it’s an extreme trade-off of money for time, in a business, we’re always trading money for time.
When you have those bigger cash outlays, and this is not an absolute statement, but it works out this way, more money into a franchise does not correlate to a greater potential to earn. That is a myth. More money into the franchise correlates to the time commitment. Usually, the more money in, the lower the time commitment by the owner.
Flip that to a home-based business, low investment, but that’s going to be a big investment of owner time commitment. My laundromat is one of those in that extreme sweet spot of big capital investment to build it and get all that equipment in it. Great depreciation, but very minimal time commitment by the owner to get it running and operate it on an ongoing basis.
Tell us some other examples, even recently. What are some of the franchises you’re starting to see come up? Are you seeing any trends right now happening currently?
Coming out of the pandemic, there’s a lot of focus on wellness. I’m known in the industry for fitness. Fitness franchisors are always like, “Kim, how do we get to lead?” It’s always about leadership. The widget of the business did not keep the door open or reopen the door in 2020. What did? Strong leadership. Leadership was always the reason to invest in a franchise. It always was. It always will be.
Look at the franchises that are known as the number one consultant placing people into. There are 3 or 4 different companies that I consistently use. It has nothing to do with the widgets and everything to do with their world-class leadership. If you want to be out there on your own buying a small mom-and-pop business, you don’t need leadership. Do that on your own.
If you’re in it to figure every problem out for yourself, that’s not a franchise. If you invest in a franchise, there’s an expectation that those leaders are there. They’re adapting the business. They’re keeping it relevant to the competition. They’re growing the model and increasing the revenue potential. That’s why you buy a franchise, for that support. If the support isn’t there, what is the value?
That’s always been my focus. It doesn’t matter what the widget is. I love the wellness space right now. Things like IV drips and cryotherapy, those things are coming on strong and showing strong potential. Those are big capital investments. I’d say it’s more semi-absentee than more semi-passive. A laundromat would be my passive. That’s probably 15 to 20 hours a week with paying a good general manager to run your studio.
In the home services space, the two biggest industries that grew during 2020 were puppies and pools. Everybody got a puppy and a pool, or one or the other. Think about all the services that go, “I got a pool. Now I need a fence. Now I need landscaping. If I have landscaping, I probably need irrigation. If I got a puppy, I might need a poop scoop company that scoops the poop in my backyard. I might need a mobile grooming service to groom the dog.”
There were so many landscape lighting and mosquito spraying, all the backyards that blossomed during the pandemic. Think of all the ancillary services, like pool cleaning services. When I’m talking to people, I’ll talk a lot about, “Do you want to be the person that builds the pool? It’s not a one-time big cash hit. You’re building a sales organization. Do you want to have a pool cleaning company where you sell only one time? Assuming you do a good job, it becomes an annuity. The mosquito spraying business is even simpler.”
It’s those conversations I’m having with people. It’s being the owner that you want to be. When you are in it, what do you want to be focused on, driving sales or managing teams of people? Do you want to have a tax advantage? Oftentimes, I meet people that are selling properties or selling a chain of Planet Fitness. They’re coming into a big cash event. They need a better place than the market to park that money, and they’re looking at the franchise.
They don’t want to reinvent the wheel. They want to buy into something proven, buy down that learning curve, mitigate the startup risk, and be partnered with people who figured it out. They can be taught, coached, and get to that money-making event that much faster. That’s why the wealth in a franchise is created faster because you have the potential to scale a lot faster. It’s because you’re not spinning your wheels and figuring everything out. You’re executing, strategizing, and growing.
That brings me to my next question. I’ve noticed this little trend lately where people are saying, “Buy these mom-and-pop type of businesses. They’re cheap, but you can make lots of money.” What do you think about that? First, are they right? Secondly, who’s that more meant for versus maybe a franchise?
My answer to this would be this. I’m not here to push everybody into a franchise. Franchising isn’t right for everybody, and I’m going to make a strong case for it. Super entrepreneurial people sometimes feel boxed in, especially if they’re in the wrong franchise where the leadership feels too overwhelming. I’m a super entrepreneur. My dad will tell you I was the boss since the time I was two years old.
It was not even funny to him at 23 when I had my first job and I’m not working for somebody. By 25, I stopped working for other people. I’ve been self-employed for over 25 years of my life. I’m very entrepreneurial, but I’ve been a very happy and successful franchisee of my franchise called FranChoice. There’s enough structure, but there’s enough freedom.
When you’re out there looking for a franchise, there’s so much more that goes into the selection of that franchise than, “My community needs this,” or “I love this ice cream, so I want to buy that.” Those are not even reasons in my mind. How would you know how much leadership there is or isn’t? You work with someone like me for free who has these relationships and understands the inner workings of the franchise so I can properly match you.
Is a mom-and-pop business that’s for sale the right thing for somebody? It could be. If you’re thinking about that, it might benefit you to work with someone like me to explore what would be the advantage in even starting brand new, or even taking over an existing franchise where there are systems and processes.
One of the greatest values of a franchise that’s for sale and that you may come in and look at is you don’t have to take that owner’s word for it. There are all these other franchisees out there running the business model who can validate to you what their earnings are and how the business should look. This guy that’s selling the business may be like, “I’m a top performer.” If you go out there and you validate with 3 or 5 other people who double or triple their revenue, in your mind, you might be top performing, but you can better value what you’re buying and maybe make a more fair value price.
Plus, when you buy an established business, you are jumping in and you’re going to be drinking from a fire hose because things are happening. Maybe it’s a new business. Maybe you know something about it, but maybe you don’t. In a franchise, you’re not thrown in the middle of it and be like, “Good luck.” You’re going to have the training from the franchisors if you’re brand new. You’re going to get all that support.
National vendors for the buying power and learning how to buy, all the things that an existing owner who’s had a business for years may totally take for granted because they’ve been doing it so long that it’s like they’ve forgotten what they know. They’re telling you, “It’s simple.” How much of that mom-and-pop business is built around that owner’s center of influence?
You don’t have those worries when you look at franchising, whether you’re stepping in to buy an established for-sale franchise or even starting brand new. I’m commissioned to start new franchises. Franchisors pay me, it’s why it’s a free service, to help them grow new locations. I’m not a business broker. I can’t help you buy an established brand unless I’m looking for a particular business and they’re like, “We have a resale right there in Austin, Texas. Would you guys want to resale?”
Existing businesses also create big price tags if they’re good. Oftentimes, I can show people that they could start brand new. Once you get educated on how you can scale a business, there are franchises that will take you from $0 to $1 million in revenue in your first 12 months. Most of the time, it’s a limiting belief. People think, “I have to buy an established business because I want to have cashflow. I don’t have time to wait for it.”
What if you could start from scratch, spend a whole lot less money, build that, and be the one selling it for a multiple in 5 or 7 years, versus the one stepping in, hoping that in 5 to 7 years, you recovered the money you put in to buy this positively cashflowing business? It all comes back to your goals, what you’re trying to accomplish, me educating you on the value of a franchise compared to whatever else you’re looking at, and then you decide for yourself. There’s an investor out there for every investment.
That’s what I was thinking too. Either of these models, whether you’re trying to revitalize it or you’re buying at the height, whatever it might be, it’s usually the flailing ones that people are talking about. To revitalize that requires a lot of time and energy. Even though I’m a business owner and I know how to do business, which I’ve been in business for twenty-plus years, still, I don’t know if that’s enough pain that I want to go through.
I would have to love that business to want to take it over, versus a franchise where you get that support. For me, it’s good. I have that support. I have the ability to be able to connect with different people in the organization and be able to have my own business but not be in it by myself. I know that’s what you mean that people stay in network marketing and that’s why they do network marketing. They’re like, “Yes, but you’re not alone. You get people to help train you.” You do the same thing with a franchise as well, but you own it.
You’re in business for yourself but not by yourself, exactly. A lot of these mom-and-pop businesses may be for sale because the owners couldn’t figure out how to adapt to the pandemic. They just haven’t recovered from that. 2020 was a year for every business to adapt or die. My adaptation was KimDaly.tv, which is literally the greatest thing I’ve ever done in my entire life. I used to travel around the country and host live events. That’s how people found out about me and worked with me. I did that for eighteen years.
Now, I never have to travel again because I can get in front of the camera and make videos. It’s way more fun. I can be super creative and talk to way more people than I could ever meet one city by one city. It was adapt or die. In my franchise experience during the pandemic, none of the franchisors I work with went out of business, even my fitness ones.
The number one fitness franchisor in the world with the most world-class leadership has had zero permanent failures due to 2020, even in states like California. That is an unbelievable statistic. They have no failures ever in every single day they open up over 2,500 clubs in the US. That’s leadership. If you are looking at these mom-and-pop businesses and they’re on a fire sale, maybe it’s because they didn’t adapt.
A lot of that’s what happens. Entrepreneurs are so busy trying to make ends meet day-to-day. They’re not growing and preparing for future opportunities. I’ll take the locksmithing industry as one that I’ve watched for twenty years. We literally started working with a company called Pop-A-Lock. They started in the ’70s popping locks. Remember in your car when you literally had to lift up the lock? They would break the window and pop the lock. If that was their business model today, they’d be sunk.
This particular franchisor was adapting the keyless entry and the key fobs. They got into that business, started advancing the technology, and started building relationships with commercial properties as they saw that we were going to become keyless. They wanted to be driving the technology for that keyless entry. This franchise secures more federal buildings in the United States today their franchisees do than any other security company. It’s a franchise that started out popping locks.
That’s leadership. They adapted, overcome, grown, changed, and been driving the technology. Those mom-and-pop locksmiths now work for the franchisees because the franchises have the technology. They can still be in the locksmithing world, but it’s a totally different world in 2022 than it was even in 1990. That’s why you buy a franchise. Not that you want to be involved for twenty years. I would never encourage the build to sell in ten years. The idea, “Is it a fad? Is it going to go out of style? How am I going to change with the times?” You don’t have to worry about it if you’re partnered with the right people. If you buy a mom-and-pop business, not just the day-to-day, but all of that future growth is on you.
You don’t have to worry about changing with the times if you’re partnered with the right people. Click To TweetWhat she just said is intangible right there. It’s not just about, “Can I buy this business cheaply? Can I make good money off of it? Where are the returns? What’s the math?” Beyond the math, which adds the best to the math is, “What kind of leadership do you have with you? What kind of ability do you have to be able to adapt and change?” especially as times do change now more than ever.
Kim, I appreciate you being on today. This is awesome. You can reach out to Kim. I definitely recommend it, especially if you’re looking for an option of looking to create a new business. Whether it’s using an existing business or a brand-new one, either way, definitely talk to Kim about that. Great stuff there. Kim, again, thank you for being on.
My pleasure. Thank you.
Everybody else, if this spoke to you, go check it out. If you felt inspired and you need to take action, don’t just read this and move along with your life and let that inspiration go away. The best way for inspiration to become real results in your life is to take action on it. Go and do that now. Go and make it a wonderful and prosperous week. See you later.
Important Links
- Apple Podcasts – Money Ripples
- Kim Daly
- FranChoice
- KimDaly.tv
About Kim Daly
Kim Daly has spent the last 20 years helping people achieve financial freedom by enabling them to find the perfect franchise opportunities. Her skill for matching a client’s background, interests, skills, finances and life goals to the ideal opportunity has made her one of the top franchise consultants in the country. Today, we are here to gain insights into what can seem like a daunting process – deciding on the perfect franchise to enable you to gain financial freedom.