Steve Gordon: Welcome to the Unstoppable CEO Podcast. I’m your host, Steve Gordon, and today we got a fantastic episode for you. I think this is particularly timely given all that is going on with the economy. And so I think it’s gonna be very useful for folks who are maybe looking around wondering if what they’re doing right now is what they should be doing, and maybe there are other options. So, today I’m talking with my friend and my client, Giuseppe Grammatico, the franchise guide. Giuseppe is a franchise veteran who really does a lot of work with executives to help them find financial and time freedom through franchise ownership. He also works with entrepreneurs who are looking to maybe start an add-on business. And he’s been through every part of the franchise cycle and so really has a good handle on it. He was a successful corporate refugee. He worked his way out of that and into a life where he had more freedom and did that through franchising. He’s been a franchisor, a master franchisor, master franchisee, and recently sold his franchise and is now working with folks who are looking to maybe invest in a franchise or at least are curious about it, and kind of helping them along that path and guiding them as they do. So, Giuseppe, I’m excited to sit down and talk with you. Normally, we’re talking behind the scenes, but great to have you here on the podcast.
Giuseppe Grammatico: Thanks, Steve. I appreciate it. Very excited for today.
Steve: Yeah. So tell us a little bit about your background beyond just what’s in the bio. How did you get to this stage of being a franchise expert?
How Giuseppe Became The Franchise Guide
Giuseppe: Yes. So I worked in corporate America and worked in the family business at the same time we, my family owned the restaurant. And working through corporate America just felt unfulfilled work. A lot of hours, two and a half-hour commute each way. Ready to start a family and just felt like I wasn’t going anywhere. I just wasn’t happy with work. I was in sales. And the more I brought in, it seemed as if I made even less money as they would constantly change commission schedules and bonus plans and things like that. So just wasn’t happy. Speaking with my wife, we decided to look at another route. I did try interviewing in other places and just I said you know what, other jobs, maybe a shorter commute really wasn’t going to get me to where I want to be. So we decided on business ownership, restaurants, being in that part of the industry. Nothing against restaurants but a lot of hours, weekends and holidays.
You know, I took a step back and worked with a business coach where we kind of figured out I was looking for a business already set up. A business in a box, systems that work, that kind of thing. So, that led me to franchising. And filled out a form online. Just, there was a lot less information out there back in 2005, 2006 and filled out an online submission, online form and was contacted by a franchise consultant. And after working with that consultant, we had taken a look at franchises. And I invested in my first and second one back in 2007. So since then, it’s been obviously, night and day. Really enjoy, get to spend a lot more time with my family. We now have two children. So just very happy with the decision and wouldn’t trade anything for it.
Steve: You know, you said a couple of really important things in there. And the first one was that you sat down with a business coach. And it sounds like you went through kind of a discovery process. And I think that’s always important. There’s no substitute for getting outside input. You know, same reason all the athletes that are very successful have coaches. You know, the old joke that, you know, Tiger Woods has a swing coach because he can’t see his backswing I think is relevant. And I know I’ve always magnified my progress when I’ve worked with a coach or somebody like that, who was really, didn’t have a dog in the hunt. They were just giving me their kind of unvarnished take on things. And so I think that’s important. The other thing you said, though, is that, through that process, you kind of realized that you wanted a business in a box instead of maybe to start fresh, you know, with a blank slate like a lot of people do. Talk a little bit about that and maybe the difference between the two approaches and what led you to go the franchise route?
Business in a Box
Giuseppe: Great question. So I always like to take a step back and say it’s not that one is better than the other, it’s all about specifically the better match for you is, you know, what exactly you were looking for. So I don’t see myself as that creative person to create logos and brands and all the product and services that a company offers. I wanted something more in place because I definitely had this sales capability and the work ethic and I just, I wanted all that done for me. I didn’t want the burden of having to figure everything out. Even things, you know, you don’t even think about like job postings. You know, what does the ideal company setup look like? Who are the vendors that we’re going to be doing business with? You know, I don’t enjoy that part. I wanted that all done for me. And I also wanted the ongoing support. You know, you start a business from scratch, you’re on your own. You know, you can hire coaches and things like that. But with the franchisor, I just, I felt like I was going to get that ongoing support. I had a point person if I had any questions or concerns and was trained by that person, and just had a lot of the connections and everything put together for you. So, things to consider when looking at entrepreneurship, it’s either kind of one or the other. But I, that was just a better fit for me. So anyone listening in and exploring entrepreneurship, definitely take a step back and figure out, you know, of the two, which is more appealing to you.
Steve: Yeah, I think that’s a key point. You know, I talk to entrepreneurs and business owners all the time and a lot of times, just by the nature of, you know, the way we do our marketing, we, you know, we’ll attract, in addition to very experienced and successful entrepreneurs, we’ll attract people who are just starting out. And, you know, and I never mind that. I get questions from people all the time and I’m always excited to answer those. And for some of those people, it’s really clear that, you know, they would be better inside of an existing system rather than trying to create it. And I think for a lot of people, when they sit down and think about having to create an offer, and, you know, a mechanism to sell it and to market it and to deliver and all that stuff, you know, sometimes I think they just end up spinning. And I think a lot of folks tend to discount the option of owning a franchise. And it’s really interesting because when I talk to people about it, and maybe you’ve had this experience, you probably have had this experience. You talk to people about it all the time. When I talk to people about franchising, the thing that always seems to come to mind is, you know, the fast food restaurant version of franchising, but that isn’t anywhere close to being the extent of it, is it?
Giuseppe: No, no, it’s not there. There’s literally over 4000 franchise companies in the United States, and it becomes overwhelming. So there are tons of options. I myself when I started my search back in 2005, 2006, I did not realize the extent that there are literally franchises in every single industry. So lots of options out there. You know, going to your point, not to gloss a subject here, but the biggest thing I get, or the biggest thing I hear is, well, franchising, you know, to invest in a franchise, it’s very expensive. I have to pay a franchise fee. And I always take a step back and say, Well, if you start a business, there’s always going to be fees in place such as paying attorneys and coaches, and people involved in helping you build out the system and the product or service. So there’s a lot of trial and error.
So you never really know what that number will look like. In a franchise, you pay a flat franchise fee, which is essentially a license, you know, for the right to run that franchise. And the trial and error, all the mistakes, everything behind the scenes is already done for you. So the franchisor has figured it all out, they do have a proven system and model. Yes, there is a franchise fee, but you know what that amount is. But, you know, versus starting from scratch where you don’t know how long it may take. So maybe you end up paying a little bit less but it takes you two or three years to put the business model together. And I don’t know about you, but I talked to people looking to start their own business and those two to three years end up never happening. They just kind of give up on their dream of owning or starting a business and it just kind of falls to the wayside. And it’s one of those dreams from Oh, yeah, I was looking at a business but we never had the chance to actually follow through. And that’s what I see, you know, on a daily basis, people just are not following through on that. So I know it kind of went off in a different area there but that’s what I see. And that’s one of the questions I get on a daily basis.
Steve: Well, I think that’s important. I mean, I just, as you’re describing that I’m thinking about, you know, I’m a decade into this current business, and it took about eight years to really figure out what the business model needed to be. And, you know, we tried a lot. It’s not that we didn’t make money in those eight years. We did okay, but really figuring out what the business model was, what the value proposition really was, you know, and who we wanted to be a hero to. I mean, getting all of that kind of, triangulating that is the business. And, you know, and it’s not always easy to get there. And often, the thing that I see a lot of people get into is they say, Okay, well, I’m gonna start a business doing this because I really love it. And that’s great, but passion is a really bad decision maker for you, you know?
And so the thing that I think makes people successful in any kind of business and really differentiates the ones that are wildly successful versus the ones that aren’t is that the ones who are really successful fall in love with the process of building a business, and they can do it with, you know, a garbage company and a consulting company at the same time because for them, the game is I’m building a business. And I think that’s the kind of the mindset to take and so with that is the frame now, it doesn’t matter if it’s a franchise business or your own business, and maybe you build one of each at some point, you know? But I think it’s worth kind of understanding why you’re, you know, why you’re getting into it and having that built-in system can be a huge shortcut, you know? Just, I guess it depends on where you want to invest. Do you want to invest blood, sweat and tears or a few dollars?
Paying Franchise Fees Often Saves You Money in the Long Term
Giuseppe: Right. Yeah, absolutely. And saving a couple thousand dollars because you did it on your own, but it took you several years, you look at the last opportunity there. So, you know, another thing to your point with passion and finding your why. Yes, finding your why is by far the most important. What is your why? From there, then we will take a look at, you know, skill sets, interests and things like that and we kind of create a franchise model for you and then find franchises that match that. But be very careful with the passion piece. And the passion piece is, there’s a story and I can’t name any specific names, but an individual had come in years ago, you know, spoken with a consultant a different company, and had a passion for golf and could not change his mind. He got into a golfing franchise and failed miserably.
The model wasn’t in line with what he was looking for. He just got into it because he loves golfing. And if you think about it, if that’s your job, 24 seven golfing, it kind of starts to, you start to lose interest because now you’re getting involved with customers and retail and so many other things. I mean, he was really a guy that wanted to manage managers. Instead, he was managing you know, employees seven days a week constantly having people calling out sick and things like that. So that passion ended up into a failed business and really just doesn’t enjoy golfing anymore. So don’t just simply look at something you’re truly interested in. Look at, you know, what’s your why. If it’s spending more time with your family, having the flexibility to go on vacation, have the business run on autopilot, that kind of stuff but, you know, make a short list of some interests. I can assist there and help you put that into a model and then we’ll look at the franchises available. So just be careful of the passion piece, but go always back, regardless if business ownership or franchise ownership isn’t the right thing. Go back to your why. I think if you have that and you write it down and are constantly reviewing it, you can put it up on your wall or on your desk, I don’t think you can go wrong.
Steve: Yeah, I think that’s great advice. So for anybody that might be listening that might be thinking, well, I don’t even know where to begin with trying to figure out if a franchise is right. What’s the process that you take somebody through, kind of from beginning to end for them to figure out A, is franchising the right move for them and B, how to narrow down to the right one?
Giuseppe: Yeah, so we have a, we coined the process the Franchise Freedom Podcast, excuse me, Process. Excuse me. We’re getting tongue twisted there. And so we always love to schedule a 20-minute intro call just to find out, 100% find out about the individual. What are they looking for? What’s their why? You know, why are we speaking today? We have a 20-minute intro call to figure out if we’re a good fit. If we feel that a particular candidate is a good fit for franchise ownership, if we do decide, we always send out a very brief questionnaire just to find out a little bit more about that person. And some of the questions do require a little bit of thinking. Our second call is a consultation. It’s typically about an hour. And we go through specifically what that business looks like. We look at all the characteristics and attributes from, you know, going to a retail location to staying, waking up, going into your office, maybe a bedroom, and running the business from home. And so we explore that, dig a little bit deeper and answer any questions.
We do go over how to research franchises as well, how to review their documents. But prior to that, we create a franchise model. You know, what does that ideal business look like? We always send that out immediately to make sure that we’re 100% accurate with what their ideal business looks like before even listing any franchise names. And on the, kind of the fourth step is, let’s take a look at two or three franchise companies that match your model, which is based off of all our previous calls and emails. And let’s start exploring what, we’ll make introductions, we’ll explain why we felt like they’re a good match and then the candidate will get a call from the franchise company directly and schedule that intro call. It’s almost kind of starting the process over as an intro right fit call on, you know, interview process to make sure you feel that they’re a good fit and they feel you’re a good fit. So it’s basically a two-way street.
So we walk you through the entire process, we make the referral and we were going to be working you side by side. So If you are having additional questions, don’t understand the document, we are there to work with you. If you truly feel it’s not a good fit, we’ll help you explore other areas, maybe tweak your model as to, you know, specifically what type of business you’re looking for. And when and if you invest in a franchise, we continue working with you, whether that be to refer you a merchant service person or a company, excuse me, or an accountant, or payroll service. We’re here to help in every step of the way. So before, during and after we’re always with you. Best part, there’s no fee or contracts for our services. We’re paid directly from the franchise company, just similar to an executive recruiter.
Steve: So, I mean, you’ve got really quite a comprehensive process that you take folks through. What are some of the surprises or insights that people tend to have as they go through the process?
Insider Insights Into the Process of Starting a Franchise
Giuseppe: Surprises are, you know, they, there’s a lot of we call them in our business preconceived notions. So a lot of people will come in kind of going back to earlier that they’ll, they don’t realize that there are many, that many franchise companies in that many industries. And they’ll also come in thinking that in many cases that to own a franchise, you need millions of dollars, which is simply just not the case. They will, what they will find out that the franchise investigation once you investigate one company, you know, you obviously are going to use the same questions and ask company two and company three. So, the contracts read similarly, very similar, they’re going to be asking the same questions. There’s going to be a lot of validation speaking with the franchisees. But that’s, you know, to answer your question, that’s what I’m getting quite a bit of is the, you know, that it’s very expensive, that we didn’t realize the industries.
And also, you know, we assist everyone with funding options. We’ll put them in touch with some of the companies that we have close relationships with. And once they speak with these funding companies, you know, some may just say I don’t have enough for the franchise. I only have 10 or $20,000 in savings, that’s not enough to start a business. But they won’t realize, or they didn’t realize that you’re able to utilize retirement assets and potentially use a traditional IRA or a Roth IRA, or, you know, our various retirement vehicles to fund the, you know, the business. So our funding partners as well do not charge a fee to go through and give the options. They only charge a fee if you decide to move forward. So that opens up the doors as it has opened up doors for many of the people I work with saying wow, I didn’t realize I can use retirement. You know, my investment level has just increased now that I have access to that money. So those are just, you know, a few of the things that come up, you know, on a weekly basis.
Steve: And so once somebody gets in, I mean, a lot of the people you work with, you know, they’re making the transition out of kind of the corporate world, and they’re moving in, you know, into a franchise. Do you ever see anybody that sort of does that in parallel where they’re in a corporate job and they’ve got their franchise kind of simultaneously?
Giuseppe: Yes, absolutely. So we call that semi-absentee ownership. And that can range from 5, 10 hours to 15, 20 hours depending on the business. Not all franchises are built for that. And that’s part of what we do in the background. We know which franchises offer that type of ownership. Some franchises only offer, you know, where the owner-operator, the owner of the company has to be involved full-time day to day. But other companies are built so that you can hire a general manager. In some cases, they’ll actually assist in interviewing that general manager to figure out that they’re the right fit. Training will be based on, training that general manager and then how the owner, you know, what their involvement or what their role is going to be in the business. So we do call that semi-absentee.
That is extremely popular for people looking to keep their job and maybe their benefits, either ongoing or maybe for the first year while they ease into the business. There’s no right or wrong, it’s simply preference. But there are many franchises that offer it and many don’t, that do not. So I do all that investigating kind of behind the scenes along with territories, you know, what territories are available in that market if there are any resales. But a very good question. I’m glad you brought that up and definitely can help in that area as it’s been very popular.
Steve: I would imagine that kind of semi-absentee setup is the way a lot of business owners maybe built their own business but they want to take some profits off the table. I know a lot of you know, a lot of folks invest in real estate, you know, to move money out of the business and diversify. But I also know a lot of entrepreneurs who buy other businesses, as you know, as an investment and I would imagine the semi-absentee approach would be probably the preferred method there.
The Ins and Outs of Semi-Absentee Franchise Ownership
Giuseppe: Yes, it’s, you know, we talked about investment vehicles and it’s just one of the vehicles that you can get into. And owning it semi-absentee frees you up so that you can be involved in other businesses such as real estate or expand your territory or buy additional franchises. So it definitely, you know, gives you more flexibility. But with that flexibility, I always tell everyone, anyone who’s looking to explore that route, very important to find that right fit on the general manager making sure obviously, they’re compensated, there’s some, that they’re compensated on performance, you know, whether that be percentage of profits, percentage of ownership, in many cases, you know, you work up to X amount of years and you’re able to gain some percentage in the just, you know, entire business.
So those are definitely some ways because you are going to rely very heavily on that person. And, you know, typically, when you’re looking at semi-absentee ownership and you’re working directly with the franchisor, just expect your investment range to be a little bit higher, because if you aren’t, if you’re going to have the general manager working full time, just, you have to just factor in that salary, that additional salary in your mix. So when you’re doing your first 12 months, what it’s going to cost and your investment range. Just make sure to factor that in. Some people forget to do that. And once that’s all in place, you know, you find that right person, you get them trained, and, you know, you train yourself. In a perfect world, general managers would stay there for life, but in the event there is some turnover which hey, that’s inevitable, right? It’s gonna happen at some point. You want to make sure that, you know, you’ve been trained in every step of the way that you also have other people that you can go to in the event. If there is turnover that, you know, you do have other people you can lean on and potentially hire to replace that general manager.
Steve: Yeah, you know, it’s interesting, I’ve always thought of approaching franchising, you know, from the investor’s perspective. It’s almost a little bit like playing Monopoly, but instead of building hotels and houses and all of that, you’re, you know, you’re going into a franchise, figuring out that system, sort of mastering that business system, you know, and what it takes to own it and operate the economic engine at a high level. And then it’s just a matter of, you know, continuing to reinvest profits and expanding your reach and you’ve got sort of this little blueprint where you’re stamping them out one after another after another. Which to me is a really powerful way to build a business, to get you In the ideal situation, it gets you working on the business much more than working in the business, which I know a lot of people struggle with when they’re building their own. And, frankly, I struggle with that sometimes too, with, you know, with ours. So, you know, but that’s what everybody always is trying to do is get in a position where they’re in a business where they can work on it more than in it.
Giuseppe: Right. And you, and when having that conversation with the franchisor and letting them know the type of ownership, they want to ensure that you’re successful, right? I mean, the more money you make, the more royalty the franchisor will make. You’re happy. You’ll recommend other people looking to own the franchise. You may end up expanding your franchise. The franchise is your partner. You know, that’s basically what they are. They are there to ensure you’re successful. In this day and age, the pandemic and everything going on, you know, franchisors are also offering concessions and working with you, some flexibility. For example, you know, and not all I should say, but some have allowed you to say, Okay, let’s invest in the franchise. Maybe wait a few months for, just to lock in your territory.
And let’s wait a few months. Let’s see how things go and then open up maybe later in the year. And there’s been a lot of flexibility. Some have reduced or waived royalty payments over the next few months. Once again, not all. There are few that have offered that. So even with SBA lending via the SBA, we’re at this point and depending on when this show airs, there’s been some changes and updates, but at one point the SBA was looking to make the first six months payments for you. That’s interest and principal, completely forgiven. So I know that’s out of the franchisor’s hands, but, you know, there are incentives there to, you know, own that business. So franchisors are there to help as much as they can. And also in these times, they’ve been pivoting. They’ve been kind of adjusting how they do business. And how they do that is, you know, we have a business that is in, what do we call it, tutoring. And it’s face to face tutoring and they’ve kind of beefed up their technology, their online platform and video conferencing so that all the tutors can now continue to video conference without missing a beat and just do that via the internet.
There are others such as painting services and blinds and window coverings and things of that nature where instead of going to people’s homes, there they are having the customer download an app where they take a few pictures and the franchisee is able to give a quote without even stepping foot in the homeowners home. And, you know, once everything has been agreed on and accepted, homeowner leaves for the day and they go and install the flooring or the windows. So the franchisor, given how many franchisees they have, you know, have that structure to go in and make sure that it’s working for all the franchisees. They do have the negotiating power to buy items at a discount. So you definitely have the economies of scale. So, a lot of advantages, a lot of changes, and you’re seeing the strength. And you’re seeing also who are the stronger franchisors given what’s going on in, you know, with the pandemic.
Steve: Yeah. Well, I know there’ll be a lot of people looking for new opportunities, whether that’s new opportunity out of necessity or new opportunity because they’re being opportunistic and taking advantage of, you know, a dynamic situation. There’s always opportunity. And I believe that wholeheartedly. It never goes away, it just moves. I appreciate you coming on and sharing all of your wisdom with us and sharing these ideas. This is a topic we haven’t covered before, but I think it’s timely and, you know, in I know there are going to be people looking at opportunities and different approaches for kind of, you know, expanding their empire in the world. So this is a, I think, a great look at a different way to do that. So, Giuseppe, thanks for sharing with us today. So where can people find out more? I know you’ve got a really great podcast, and I say it’s really great because our team produces it. And you’ve got a book. Where can people go and find all those great resources?
Giuseppe: Yes, and it is a great podcast, so we’re definitely both biased. But yes, you could definitely check it out. So if you go to directly to my website, GG, my initials, ggthefranchiseguide.com And you’ll, once you log on there is just a lot of resources on there. You can click on podcasts, listen to some past episodes. I will be actually launching a book, Franchise Freedom, shortly. That will be on the website as well as we have a 25-minute webinar and video that just completely goes through the entire process of entrepreneurship, franchise ownership. So definitely take a look at the site. On that site, you’ll have my email if you want to get on my calendar, definitely, you know, click on contacts or calendar and I’d love to set up a 20-minute intro call with you. As I mentioned, there’s no fees. It’s 20 minutes and I guarantee you’ll learn something from that call. So definitely look forward to speaking with you. If you just had ever the interest, the itch to know or thought about business ownership, give me a call. Would love to love to chat.
Steve: Awesome. Well, thanks again for being here, Giuseppe.
Giuseppe: Great, Steve. Thanks again. I appreciate it.