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How to Scale Commercial Real Estate


Mar 16, 2022

How to find the perfect franchise for you?

We often hear real estate, stock market, and cryptocurrency as the alternatives to the regular 9-to-5 to earn money and grow our wealth. However, not often do we hear people say that they want to explore franchising businesses, and that’s what Lance Graulich wants to change.

A franchising expert, Lance also helps independent business owners to scale their businesses through this model. He drops by in our podcast to talk about the benefits of franchising in general and if there are franchising opportunities in the real estate space. 

[00:01 - 03:52] Opening Segment

  • Lance Graulich has been exposed to different investment opportunities
    • Why did he choose the franchising business model? 
  • How should a business be grown?
    • Listen to Lance’s suggestion

[03:53 - 08:37] How to Select the Business to Franchise

  •  You can be a semi-absentee or absentee owner with a franchise
    • Here’s how
  • How to select the right franchise for yourself according to Lance
  • Mindset and skillset are both needed to start a franchise
    • What is the ratio between them?

[08:38 - 17:37] How to Start a Business Franchise

  • Are you looking for franchisees for your business?
    • Here’s how Lance is connecting potential franchisees with businesses
  • Lance explains how you can 10x your EBITDA or cash flow through franchising
  • The 3 elements that franchisees need to start a business franchise
  • Are there franchising opportunities in the real estate space?
    • Listen to Lance

[17:38 - 18:32] Closing Segment

  • Reach out to Lance
    • See links below 
  • Final words

 

Tweetable Quotes

“At the end of the day, I point people in the right direction of successful franchises, and there's a step in selecting the right franchise for yourself. That is so powerful, we call it validation.” - Lance Graulich

“Franchising is successful because it takes typically an idea that's already existed and just perfected it.” - Lance Graulich

“...once you're set-up [in your business franchise]…your valuation, as you add franchisees, you could be worth 10 times your EBITDA or 10 times your cash flow. ” - Lance Graulich

 

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Email lance@franmore.com to connect with Lance or follow him on LinkedIn. How to find the perfect franchise for you? Check out ION Franchising to know how!

 

Listen to Lance on his podcast, Eye On Franchising, to know more about business franchising.

Connect with me:

 

I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.  

 

Facebook

 

LinkedIn

 

Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!

 

Email me → sam@brickeninvestmentgroup.com




Want to read the full show notes of the episode? Check it out below:




Lance Graulich  00:00

If your business is a very specialized restaurant, you probably want to fill up the region or area of the country you're at first or in first, before you, let's say, run across the country and go to California or New York, depending on where you are. That's why a lot of restaurant brands grow pretty with some pretty good geographic integrity. So we start to identify growth trajectory and all that.

 

Intro  00:23

Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.

 

Sam Wilson  00:35

Lance Graulich helps people find their perfect franchise business and he also sets up independent businesses to franchise. Lance. Welcome to the show. 

 

Lance Graulich  00:45

Well, thanks, Sam. Happy to be here.

 

Sam Wilson  00:46

Hey, man, the pleasure is mine. There are three questions I asked every guest that comes on the show. In 90 seconds or less. Can you tell us where did you start? Where are you now? And how did you get there?

 

Lance Graulich  00:55

So where I started, born in Brooklyn, New York, the accent comes out just like that. Interestingly, I was I had a Polish immigrant grandfather that nobody could ever understand. He was the business owner. You know, I call it the trifecta. When you have, you know, owning a business, owning real estate, maybe investment firm, and then you got Wall Street. Those are the three major sort of Capstone investments. So grandpa, Izzy was the supermarket owner, and then grandpa Hyman he was a real estate attorney and played real-life monopoly. My mom and I were just talking about it the other day, he did all these syndications in the 50s, right, and big-time, throughout Brooklyn, he worked with Fred Trump, Donald Trump's dad, funny enough. And then you had my dad whose firm was the largest over-the-counter trading house on Wall Street. So I got a taste growing up of all the investment vehicles and opportunities. And, you know, I ended up on Wall Street with dad and quickly got into the franchise space. So but I'll skip ahead to where am I now? I'm a franchise broker. As you said, I find people their perfect business and educate people on the space that most people know nothing about or there's so many misconceptions. Maybe it scared them away. So franchise broker, I have my own podcast called Eye On Franchising, and let's see the last How did I get there? Let's see. I've owned franchises. When I left Wall Street, I joined an uncle who was a tech guy, and we built a $225 million a year Fridays Franchise Group, a lot of restaurants in the late 80s. I'm old, I'm 55 already. So fast forward, I own franchises like Wingstop and Krispy Kreme in different states and did really well. And I was a high-performing franchisee of those brands, president of franchise advisory councils. So I got there just based on experience, had a lot of brands as I was doing operations consulting because I love helping people. And a lot of people start to ask me, well, can you help me sell franchises? It seems like I can't really find somebody that knows my brand. And you're already on the inside of the company. Why don't you sell us and I'm from Brooklyn, I could sell anything. So here I am. 

 

Sam Wilson  03:11

That is fantastic. Lance, there's so many directions, I could take this podcast today, I would say let me just throw out my conclusion. And you can tell me if I'm right or wrong. And that is that every business, whether we're real estate investors, or running a Wingstop, or whatever it is, should be organized in growing in such a way that someone else can take the same model and wash rinse repeat it no matter who they are.

 

Lance Graulich  03:37

Absolutely 100%. It's all about systems. It's all about procedures. And you know, the marketing these days, the Internet change the world, you know, used to be the Yellow Pages. Now, it's all about your social proof and social media. But the answer your question is absolutely.

 

Sam Wilson  03:53

What are some things, and yes, you mentioned systems and procedures and that kind of a catch-all phrase, what are some things that really happen or that prevent someone from really pushing, you know, kind of breaking through that wall that holds so many back or at least to get to a certain level of success and go no further? 

 

Lance Graulich  04:11

Yeah, well, on the individual basis, I mean, there's a lot of independent business owners that, you know, they're stifled with their growth, either don't want to spend their own capital any longer and they feel like they've made it. Maybe they're making enough money. And it is a little bit harder. There is an, let's just say another level of effort that's required to continue to grow and scale your empire. But some people don't think that franchising could be right for them. And the crazy part about franchising is there's a franchise opportunity in every imaginable category. I represent over 700 franchise brands. And we're talking every category I mean, the real estate category alone is huge from property management. I'm setting up a mortgage franchise as we speak, but you know, let's flip it around to folks that are maybe real estate investors that are your regulars listening to your show. There are quite a few people, everybody's heard about diversification and multiple streams of income. And you can be a semi-absentee owner or even an absentee owner with a franchise. And that's where the systems and procedures come in because you have an opportunity to, you know, not necessarily be that trailblazer, that pioneer to create this model, it's already been perfected. And I know I get to understand my clientele and what it is they're looking for or not looking for.

 

Sam Wilson  05:36

Yeah. And I think that's a great point is that you get to step into something that's already created. I mean, the hard part in business, I don't think is necessarily correct me, if I'm wrong, going out and making the money. It is standardizing the process is standardizing I mean, all of the backend stuff that goes into actually making it work and getting the employee manuals and getting, I mean, that's the stuff that will just kill you. I mean, most of us are, you know, what, what book was it where he said that there were technicians having an entrepreneurial seizure? You know, book I'm talking about? 

 

Lance Graulich  06:07

Yeah, I don't know. Is it E-Myth?

 

Sam Wilson  06:09

I mean, that sounds about right. But yeah, 

 

Lance Graulich  06:12

No, you're 100% right, though. A lot of entrepreneurs, you know, your ego is not your amigo. And a lot of people let their ego step in the way, you know, I'm going to create my own business. Well, at the end of the day, there aren't that many great original ideas. And franchising is proof that, you know, you could reinvent the hamburger segment or the pizza segment, or do property management differently because you have the ultimate technology, and you've spent the money and the time. So at the end of the day, I point people in the right direction of successful franchises, and there's a step in selecting the right franchise for yourself. That is so powerful, we call it validation, where you have an opportunity to talk to existing franchisees. So if I'm talking to a real estate investor, you know, I'll think for a moment, right, which is my best brand, or brands for real estate investors, knowing that when they get to validation, they're going to talk to other people that maybe were real estate investors that, you know, found another opportunity to build wealth or generational wealth through this particular franchise. I mean, I know a guy that retired from the corporate world, he's a good friend of mine, he owns 20 franchise hair salon, and he's done real estate. He's done all kinds of things over the years. And he was just looking, look, I'm gonna get an SBA loan of $200,000, I'm gonna leverage my money. If I can get my money back in two and a half years, and I can grow something and make a half a million a year, I'll be happy. Well, he knows it's about a million and a half dollars a year off 20 franchise hair salons. It all started with a $200,000 SBA loan. He worked hard in the beginning. But here's the funny part. He doesn't know how to cut hair, right? And he doesn't even have hair. He's not even a client. But at the end of the day, that's what is so amazing about franchising, you don't have to know how to cook to be a McDonald's franchisee you know, it's just about following the template. People always say, and this is absolutely true. Mindset’s probably 80% of being able to make money, get out of your own way. And then maybe you know, 20% is skill set, you know, are you good communicator? Can you follow a plan? Are you going to be able to adapt to a company culture where you're interacting with existing franchisees? And, you know, the best practices you learn from existing franchisees is pretty powerful, not just the actual system that's laid out before you.

 

Sam Wilson  08:38

Right, yeah, that's absolutely intriguing. I think that's one part of your skillset, obviously, is connecting potential franchisees with the franchisor. But then the other side of your business that I think is really interesting is the taking a non-existing franchise and helping someone figure out how to franchise that business? Can you talk to us a little bit about that?

 

Lance Graulich  09:00

Yeah. So what I do in the first call with folks, and I probably, I mean, last week, I probably had 10 calls just on setting an independent business up to franchise, I had a guy with the dry cleaners got 18 dry cleaners real estate investor. But as we all know, everybody listening to this call, and you certainly know yourself is when your cup runneth over, you have capital, there's only so much real estate that you can get your hands on. And if you're lucky enough to get your hands on more, that's wonderful. But everybody keeps their eyes open for well, what's the next thing? You know, there are a couple of stocks I want to buy. How's the market these days? But when it comes to franchising, I listen to what people's story is, because the story you know, the sizzle sells the stake. Well, the story becomes really important. How did this brand get started? Who is the person behind this brand? Is the owner of this brand, somebody that's likable that can be that cheerleader that can teach other people about this particular brand and being able to do the exact same thing. If the brand is based in Indianapolis, can this brand do well, in Memphis? Is there any kind of proof of concept already, to this particular brand? There are some brands like Dunkin Donuts, think about it. As successful as they have been in Massachusetts or in Boston where they were born, you know, they've struggled in their West Coast expansion over the years. Maybe it's because other coffee and donut brands are more established? Who knows? But they've had some unique problems. But at the end of the day, I listened for who are the people behind the brand that could be one person. But are you willing to assemble a team as you grow? The beauty, Sam, of franchise setup and growing through franchising? Once you sell a franchise, there's not really a mystery, you know, if it's a brick and mortar franchise, like a restaurant, it's going to take the franchisee time to find a location, it's going to take them time to do construction. So you don't have to grow and scale your team immediately unless, of course, you sold five franchises, you only expected to sell two. And you know, you add somebody to support them. But at the end of the day, do you have a unique idea? Do you have something proprietary? I always ask people, regardless of whether you're a restaurant or not, what's your secret sauce, like the mortgage franchise that we're setting up now, their secret sauce, let me tell you, they're already selling courses, teaching people how to start their own mortgage business in their respective area. They were already doing it and having a tremendous amount of success. And they immediately proved to me that they got something proprietary based on the years of experience, they already have a team of 35 in their office, and they're ready to show people across the country how to do it. So at the end of the day, what people also don't realize and business owners don't realize is yes, it's a few bucks to set up a franchise system. Franchising is regulated by the federal government federal trade commission. But once you're set-up, boy, your valuation, as you add franchisees, you could be worth 10 times your EBITDA or 10 times your cash flow. That adds up very quickly. I know quite a few people that you know, worth 20, 30, 40, 50,a lot more than that. $50 million-plus right from franchise.

 

Sam Wilson  12:25

Right. That's really, really intriguing, I guess, let’s run the tape back a little bit because, you know, you said early on systems and processes. Tell me what do you, someone comes to you and they say, “Hey, I want a franchise.” You look at the business, you say, “Hey, man, your SOPs aren't in order. This isn't an order. That's not an order. You're not there yet.” Where do you send them? 

 

Lance Graulich  12:46

Yeah, well, we can help them through a lot of this because basically, look, we're not technical whizzes at every single business period, however, we are franchise whizzes. There's three elements that we help people with in the setup. The first is that, Franchise Disclosure Document, which is regulated by the federal government. There's 23 items to it, it all starts with this strategic business plan to kind of uncover, once we press go, and we get a deposit, and put this thing in place. It's a four-month process. So we start uncovering every element of the business and understanding the strategy. For example, if your business is a very specialized restaurant, you probably want to fill up the region or area of the country, you're at first or in first, before you, let's say, run across the country and go to California or New York, depending on where you are. That's why a lot of Restaurant Brands grow pre with some pretty good geographic integrity. So we start to identify growth trajectory and all that. The second element is the franchise agreement, which is the contract that franchisees sign in order to be part of the franchise system. And then the third component to your point is the operations manual, you need an operations manual. So some people have that pretty well thought through or thought out, we just advise them where we help them. We let them know what they might be missing. But usually, on the technical side, they have it all together. Perhaps people have not thought of how to market maybe they're doing the marketing because they're already successful, but they haven't really put that to paper. Well, this is a four-month process. We can help anybody develop all this within the four-month period. So as far as the ops manual, there are quite a few franchise attorneys and groups. We do it all where you know, in some instances, they will send you somewhere else and say, “Yeah, you're not ready.” But there's quite a few people that I talk to are not ready, just because maybe they're too busy. Maybe they're not willing to dedicate the time to do this. But for the most part, if you can make a profit a nice enough profit that a franchisee could buy into your brand and they're part of the country and pay a royalty, the royalty is the ongoing fee which 4%, 7% It just depends on the type of business, that's how a franchise brand actually makes money is from the royalty.

 

Sam Wilson  15:06

Hmm. Right? Yeah, exactly. And then of course, you know that out of that royalty that they have to then provide backend support and a lot of the things that go absolutely with the reasons that someone else signed up to be a franchisee. That's really, really intriguing. When you think about real estate and commercial real estate in particular, is there anything that comes to mind you say, “Man, there are opportunities in that as it pertains to franchising?”

 

Lance Graulich  15:30

Yeah, I mean, there's opportunities for everything. I mean, years ago, some of the franchise attorney friends of mine, you know, we were talking medical and we're franchising has been in real estate forever. There's a lot of real estate-type franchises, you know, but medical is a big deal. I mean, I have some orthopedic surgeons started a regeneration center, became one of the hottest franchises out there. And by the way, it's perfect for real estate investors. It's a one-day-a-week business, you don't have to be a doctor to own it. You just hire a medical director, just like you people would do it with a med spa. So in the world of real estate, I mean, in the world of franchising, Sam, almost anything can be a franchise. You know, franchising is successful because it takes typically an idea that's already existed, and just perfected it. Waste Management, for example, picking up trash, dumpster rentals, it's been around for years, I probably have four amazing brands that do that. They didn't invent it, right? They put the marketing to it, they put the procedures to it. They just want investors like your listeners. And in fact, I'm working with a buddy of mine, that's an attorney, who you know, young guy in Atlanta with his business partner, they're falling in love with these dumpster businesses, hey, I got to do that. People no matter what if, they get their trash picked up. And you know, so just an example. But in the world of real estate, I have brands from property management, to have multiple very successful property management brands come to think of it. And home inspections. I have a brand called Hommati. Hommati is going to be on my podcast coming up soon. But Hommati is all about drone footage, and virtual all kinds of crazy using tech to your advantage to sell real estate. So a lot of fun stuff, virtual tours, all the photography, so anything relating to real estate can be a franchise.

 

Sam Wilson  17:21

Man, I love it. Lance, thanks for taking the time to jump on today and really talk about franchising, kind of the nuances of businesses and how they can prepare themselves for it. Things to look out for kind of got to hear both sides of the franchising equation there. So that was tons of fun. I learned a whole bunch from you. If our listeners want to get in touch with you or learn more about you what is the best way to do that?

 

Lance Graulich  17:43

Well, thank you, Sam. So on my website ION franchising.com. I-O-N, franchising dot com. I actually have a free assessment. It helps me determine and you based on your mindset skill set life experiences, what franchises could be best for you, and this contact sheet there as well. But please reach out. ION Franchising. That's also my podcast.

 

Sam Wilson  18:04

Thank you so much, Lance. Appreciate it. Have a good day.

 

Lance Graulich  18:06

My pleasure, Sam.

 

Sam Wilson  18:07

Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners, as well as rank higher on those directories. So I appreciate you listening. Thanks so much and hope to catch you on the next episode.