Nov 15, 2020
Franchise Business from A to Smash My Trash w/ Jon Ostenson
- BRT S01 EP41 11-15-2020
Things We Learned This Week:
Guest: Jon Ostenson w/ Franbridge Capital
Jon discusses the Franchise industry on multiple levels; from being a broker, to purchasing a franchise, to investing and also the operation side of running your own. He also gives numerous examples of opportunities in franchising. How much does it cost, the buy in process, and realizing franchises are more than just food opps.
Franchising is an industry ripe for both active and passive investments, representing over $2 trillion in annual sales across dozens of sectors. Franchising continues to grow due to demographics, innovative new models, and the proposition for candidates to build businesses with an established brand, support system, and track record.
Franchises is Business in a Box, but you still need people and business skills. Franchises have a high survival rate (upwards of 90%) vs a Startup (5%).
Investing in franchises provides Franbridge Capital with clarity into the performance of other owners within a given company via the Item 19 section of the system’s Franchise Disclosure Documents. This allows FBC with good insights in predicting future returns. Additionally, candidates typically invest their own capital alongside FBC, providing added incentive for future success.
Jon Ostenson is the founder and investor in multiple start-ups, including several in the franchise space. Jon is affiliated with the FCC, partnering with 400 high growth franchise brands. Jon co-founded 10Xfive, which served as both a marketing agency, technology developer, and support provider for multiple franchise businesses. Jon previously served as the President of Services for ShelfGenie, a national franchise company. Jon began his career as a consultant with Accenture PLC, including a six-month stint in India. Jon is the author of “The Franchise Path” and is a frequent contributor to publications such as “The Franchise Journal” and “The Franchise Times”.
What Business Are You In? - McDonalds is a Real Estate Company
Replay Clip from 2/9/20, where Matt talks about the biggest franchise of all, and what their real business model is. McDonalds has built an business empire thru Real Estate, not burgers.
The Dollar Menu is designed to get customers in the door. McDonalds loses $ when people purchase from the dollar menu, it is a Customer Acquisition Cost (CAC). This is also called a ‘Loss Leader’, selling a product at a low cost to get customers. McDonalds then makes money when people buy more, and off return business.
McDonalds is one of the biggest Real Estate companies in the world. The stock is valued on the $37 Billion in Real Estate they own. They make money as a landlord, because the franchisee is their tenant.
The Founder – business movie biography of Ray Kroc. Kroc started as a milk shake salesmen to the McDonalds brothers in California, then went on to create the franchise system we know today. The first President of McDonalds Franchise (Harry Sonneborn) helped Kroc create the real estate model that the franchise was base on, and used to scale to a billion $ company. Internally McDonalds used the Brother’s Speedee Service System created pre-Kroc.
The Question ‘What Business Are You In?’ comes from business consultant Peter Drucker. Business owners need to understand what problem or service they really offer their customers.
Ie – Starbucks is in the Customer Experience business, not coffee, but the atmosphere of drinking the coffee
Full Show: Here
Jon Ostenson return to BRT in 12/2021
The Franchise Model – Acquiring a Proven Business Model vs Building a Startup
Franchises provide a revenue stream and future exit strategy, as a business owner builds an asset that can sell at a better multiple
Startup vs. acquiring an established business - startups have a high failure rate, and the established business has a track record, marketing model & team with plan and providers
Full Show: Here
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