What is Franchising? - Ask the Pro

hey guys how's it going Robert Sissel here director of production for Grant Cardone TV and this week we've got another episode of ask the pro and I have a very special guest Hossein cast my of franchise creators is joining us in studio today's local here in Miami we're going to be talking about franchising what is franchising what you can do with it why it's a good investment and how he can help you get started in that frit who is saying thank you so much for coming thanks for having me so so so you're in the franchising industry but tell me where did you start where did things begin and how do we get to where we are now so um I come from the corporate world and I left the corporate world and started my own business back in 2005 I started the company locally in Miami and I decided to franchise it soon probably about six months into it and I went into the franchise world in back in 2005 this company grew from one location in to 175 locations in 11 countries worldwide in just a short five years in 2010 I sold that company got bought out and I retired as most people do at that stage but I decided to come back and help others build a business and build it into a level very similar to mine so I came back and I help companies franchise their business and actually reach that American dream okay okay so what for our audience what is franchising very basic what is it so franchising is basically a way to grow your business with other people's money that's what I like to call it so there's two ways to grow your business you haven't you have an opportunity to grow your business on your own organically that means opening a second third or fourth location doing so requires a lot of your own time a lot of your own money a lot of your own resources so everybody's limited in all of those categories right even if you have the money you only have certain amount of time the other problem you have is that every time you open the second third or fourth location you have to manage that location somehow you can only be in so many places at the same time what does that mean that means you have to hire a manager to manage your second your third or your fourth location the problem is that that manager doesn't have a vested interest in your business he doesn't really care about it as much as you do the worst thing that can happen if he screws up at work you're going to fire him oh he gets another job so your brand is depended and it's in the hands of a person that has absolutely no vested interest in your business so franchising solves all of those problems it allows someone to come to you and say okay I'm really interested in what you've done here I want to mimic this I want to open a location just like this in my city in my neighborhood so they go and they go ahead and bear all the costs so that you don't have to dish out a dime of your own money as a matter of fact they pay you what's called a franchise fee up front that fee is somewhere between twenty to fifty thousand dollars so you're gaining that initial cash so instead of dishing out your own money you sit back and you get that money so now that's helping you with your finances in order to grow your own business right so then they're they'll go out and open a location they hire the employees they fund the place all on their own and as they grow the place obviously you now have a person that does have a vested interest in the business if they have everything to lose just like you do so they care about it they care about their business they show up every single day they work like you do they think about it all day and all night like most business owners do and therefore the brand does well so as the brand does well it's going to improve your own popularity of your own brand and so forth and so on of course with franchising they did the biggest advantage is that royalty income that comes in which is that residual income that as an owner you're actually gaining so every dollar that they make they're going to give you a that back to you now that percentage is anywhere between 5% typically depending on if you are in food business that's on revenue per month on revenue and gross income Gertz incorrect so you know all the way to 10 even higher percentage on a on a on a on a and that and the royalty is usually paid on a weekly or a monthly basis okay so that that is the umbrella what's called franchising so it's a group of people that are working together under one brand under one trademark with a common set of goals got it so somebody creates a business they invest all this time all this energy all this hard work and an investor can come by and say hey I really like what you've done here's five hundred thousand dollars I want to open up another location can you explain that little process right there they just go and they say I want to franchise what happens in there right so an investor comes in likes and typically investors come in from actually visiting your site so let's assume you have a restaurant the visitor the investor is probably a visitor at your at your restaurant is a customer at your restaurant they like the food they like the ambiance they like what you've done they like the the dynamics of the restaurant itself so they want to open this very restaurant at their own City or their own neighborhood so they come in and they pay you a fee up front then they'll go off and work with a commercial real real estate individual to find the location that's suitable to open a business like this when they find the location then they're responsible to follow your guidelines in order to build the place into what's acceptable to your standards whether you're using a particular floor or whether you're using a particular color on the walls where you buy the furniture where you buy the equipment they did the decoration and everything has to go with your standards so they follow your guidelines in order to build the place up once the place is built up then they have to follow your guidelines in how to operate the location what services what products they need to provide to their customers in that location all of that has to be approved by you and has to follow your guidelines those guidelines are quickly mandated in a document called the operations manual that manual is developed by the owner in this case a franchisor so that franchisee always has a guideline to follow in order to build their business that's basically how it works very good very good so so for you why did you get involved in franchising what was it about it that held your interest and you said you know what that's the industry I want to go into so for my own personal need it all started because I the business that I started was a child safety business so we were actually providing children identification services in schools and daycares throughout the Miami region I wanted to grow that business I didn't start that business to have only one location that wasn't my dream the ultimate dream was to have this service available to all schools and all daycares throughout the country and even they even worldwide the problem I had was exactly what I mentioned earlier and that is the people that I wanted to to work with me as managers to operate my second or third location or fourth location where people that I didn't trust these are ordinary people that are out there right in my particular business there were children involved so I wanted to make sure that the business was run exactly the way I wanted and that's when I started researching and I said there's no way this can be done organically they cannot grow the way businesses normally grow right liability is another issue that with franchising a lot of that is stopped between franchisor and franchisee in other words you don't bear all of that liability by yourself so being a children business being an individual person that was building a brand to go nationwide the only solution that came to mind at the time was franchising because it removed all of those obstacles it allowed me to go to cities or countries even and do these services in those places and I could be sleeping comfortable knowing that someone who had a vested interest in my business was actually out there doing the same thing I like that so what what what are the standards or the qualifications that you look for for an investor to go into a franchise so it all depends on the franchisor so let's first talk about you know how a bet it depends on the business of the franchise so if the franchise is developed if I imagine if it's a restaurant if it's a restaurant it may look for people that have restaurant experience if it's a healthcare a joint for example energy urgent care center they may be looking for people that have health care experience fitness you know we have franchised many fitness companies in the fitness industry you know you want to make sure that the franchisees that are investing in your business have some of some sort of a fitness background or passion now there are many cases where an investor who has really little knowledge about that industry is buying into that franchise and in that scenario they have to hire a manager who is passionate about that business that manager basically becomes married to that investor and he or she is the one that's going to be running the place very very closely alongside them they're the owner okay that's excellent so so you you have a business called franchise creators and from my knowledge of what you guys do you buy invest and build franchises why don't you talk a little bit about what it is your business does so franchise creator has a two basic components to it the main thing that we do is we work with businesses these are businesses that have one two three four or even bigger locations we have franchised businesses that's that that came to us when they had already 50 locations but typically typical businesses that come to us have less than 10 locations these businesses come to us and they're looking for a way to expand their business and go nationwide and/or go globally through franchising so we work with those businesses in order to turn their operation from a regular business into a franchise operation you can sell a franchise without meeting certain standards set aside by the Federal Trade Commission franchising is regulated by the FTC so you have to meet certain guidelines in order to be able to offer franchises to public so that's exactly what we do we work with these with these companies in order to build a franchise platform turn their business from an ordinary business to a franchise business ready to expand in that region so that includes a number of things that have to be done for the business for a through Z it's a it's an arm work is basically a comprehensive service that includes everything so that you as a business owner can continue doing what you do best do your daily operation like you've done and in order to grow your business and continue to pay the bills and bring you know bring bread to the table we on the other hand in the background take usually about 90 days to turn your business into a franchise business in a button and we require very very little work from the from the business owners we do everything on our own so that the business owner can continue doing what they do best up once the the franchise operation is ready in other words once that business now is a franchise meeting those standards required by the Federal Trade Commission we now switch hats and we become a marketing and sales company offering those franchises to individuals out there that are looking for a new business a new business opportunity and we therefore help those business owners expand their locations throughout the country so if we first franchise your missiles it your franchise it and then we find investors exactly look I've got this awesome gym if you're interested you know what's it typical like for an investor what's a typical investment to get started in franchising so well I mean you're talking about a business owner that wants to franchise their business you're educating me you're educating the audience okay somebody doesn't know what's a good level of investment to start at so a business owner that wants to turn their business into a franchise operation is looking anywhere you know around forty to fifty thousand dollars to turn their business into a franchise operation once it is a franchise then you know that amount could be higher depending on the type of a business depending on how complex the franchises if it's in the healthcare is more expensive if it's a you know in some industries it's a little bit less expensive so that is pretty much the average out there now once that franchise is available then like I said is we now switch hats and we become a b2c company providing our services to consumers sure and those consumers that are buying these franchises depending on the franchise can look to spend and that's a pretty wide range range Robert it could be anywhere between a hundred fifty thousand eighty thousand a hundred thousand depending on the investment all the way to north of a million dollars so if you're looking to buy a fitness center you know you're looking to spend probably twenty to thirty thousand dollars in franchise fee and then another a hundred thousand one hundred and fifty thousand dollars on the build-out of the place the equipment and so forth and so on which totals up to be about a couple hundred thousand dollars if you're looking for a health care of course it's more expensive because the equipment the digital x-rays and everything else that you need so that it's just varies significantly so so entrepreneurs that are after that maybe have three hundred thousand four hundred thousand you know and they're a little like man I'm not sure what I need to do with my money what can I do this is another alternative that exists out there for investing it really is how safe is it like like as far as like return of investment like if I come in and I say hey here's 400 grand you know how safe is that to put money into and to get money out of it that's actually a very good question Robert and and here's the deal the deal is Fran the reason people are going the franchise route they did so so instead of us can open businesses on our own yeah but instead of opening a business on your own why would you buy your franchise why would you buy a French why would you pay for a franchise fee and every other day royalties and everything else and the US Chamber of Commerce actually puts out a very very interesting graph that basically says that if you open a business on your own as it consumed as a business owner you open a business on your own the chances of your business staying open only a year later is 50 percent yeah now if you go five years out you only have a 25% chance that you're going to be open in other words 75% of businesses that open today will be gone five years from now yes now when you look at franchises 93% or somewhere north of 90 percent of franchises are still in business five years out so in other words if you want to start a restaurant on your own a burger joint or an ice-cream place or a fitness center on your own you might as well pay the franchise fee pay the royalties and go in with someone who's done this before someone that has made all the mistakes so that you don't have to make those mistakes it's all about the mistakes mistakes are costly people can't afford those costs and therefore they crumble they go out so the fear the platform we are the platform yes you're the guys that made the mistakes and now you're like okay we don't do this this is how you want to do exactly this is the proven track-record okay exactly totally exactly so so I would also go back to the last question you asked about the range of franchises that are available so so there are also home based franchise opportunities that we offer companies that we have franchised and now we're offering those franchises that are only starting at twenty twenty-five thousand dollars you can get into a business on your own for less than 30 grand so those are those businesses are also available so depending on what you like where you stand and what type of business you want to open if you want if you're a you know if you're a type of guy that wants to be more on the streets and and visit different businesses we have a business for you if your type of guide that you know generation after generation have been in food and restaurant and hospitality we have a business for you if you're a type of guide that likes to you know place vending machines in various locations we have a business for you on and on and on so the depending on what you like we have a certain business for you and again you could go as low as twenty twenty-five thousand dollars to get in business for yourself it's amazing absolutely incredible well guys that's everything I've got for you today Hussein just shared some really interesting stuff some takeaways that I got out of it was a build the business or get involved with somebody's actually made the mistakes are ready like Hussein his company it's a good investment there's a return that exists it HAP and it's there and dude check it out franchising grants actually mentioned it and how to become a millionaire in the millionaire webinar it's another Avenue which is why we brought Hussein in just to kind of talk about this other type of investment that exists out there hosting where's a good place for people to find out more information about what you guys do absolutely so our website is franchise creator com again it's franchise creator com and one more thing I want to say is that our business itself is a franchise opportunity as well so that if you're interested in owning a business like ours in other words reaching out to local businesses and see if their franchise will work with them and to turn them into a franchise operation we're offering that opportunity as well so that you can have an office in your own city or location and be able to do exactly what we do and work with businesses and turn them into multi-million dollar franchise operations that's also available once again or you can go to our website at franchise creator com I'm using I'm listed in the link below Hussain thank you so much thank you I really appreciate it guys every week grant and I bring an expert in their industry the pro to share a little bit of knowledge about what they do every day so that you can gain a little bit of knowledge and do something big with your life stay tuned next week when either grant or I will bring another guest on ask the pro thank you so much have a great one you you

Channel: Grant Cardone

Views: 45,971

Rating: 4.853435 out of 5

Keywords: Franchise fee, robert syslo jr, Franchisee, franchise, franchising, grantcardone, Franchise Disclosure Document, franchise creators, why to franchise, Master franchise, the franchising expert, how to get wealthy, Royalty fee, how to increase income, hossein kasmai, what is a franchise, how to franchise, how to buy a franchise, how to franchise a business, kasmai, yt:cc=on, how to create a franchise, grant cardone, hossein kasmai franchising, hossein

Id: p9BcY3ctyLY

Length: 19min 49sec (1189 seconds)

Published: Mon Oct 24 2016