we're we're an advisor to the franchisees as well as franchisors if you're making a lot of money abroad don't just go all in in the us as it's a super competitive market i don't see many opportunities that you can't that you that you can't that you can just invest and make like an amazing return you gotta roll up your sleeves welcome to the zero to profitable franchise podcast the best place for you to come to figure out the right franchise to buy and how to get and stay profitable my name is tark johnson and i've bought grown and sold multiple franchises and got myself free from corporate america and now i'm on a mission to help you do that too here you'll find some of the most in-depth profitable franchise secrets tangible strategies and specific mindsets to help you create your dream life through franchising all right in this episode we're going to talk about secret data that you can get access to when buying a franchise so i had the pleasure of interviewing a fellow franchise youtuber patrick findaro of vetted biz vetted biz is the leading provider of franchise prospecting and research data and solutions patrick manages a 20-plus person team focused on communicating key franchise data and market research to the world patrick also co-owns and runs visa franchise where he helps high net worth individuals navigate the process of coming to the united states on a visa where you need to buy or invest in a business so patrick personally pulled back the curtains and showed me the behind the scenes on the insane data that his team goes through great lengths to mine so that people like you who want to buy a franchise can make good decisions and make strong strategic decisions by seeing the numbers simply put better data means better decisions better decisions means more money and a better quality of life so make sure you watch this until the end now if you want to buy a franchise in the next 12 months or less you should check out my free franchise masterclass at buyaprofitablefranchise. com if you want to work with me and my team on finding or buying a franchise or resale business then you can go to tarekjjohnson. comconsulting we're happy to see if we can help with that said let's jump into episode number 12 of the zero to profitable franchise podcast all right guys well uh well welcome to today's episode we have uh patrick here and i'm i'm super excited to talk to you kind of a spur of the moment podcast we just finished chit chatting for about an hour we probably should hit record on that but thanks for thanks for joining today man oh yeah really appreciate having me on yeah absolutely um i was really fascinated by you explaining to me you know what you do in the franchise world and i think we realize that we have a lot of core beliefs and similarities but so can you just tell everyone what your businesses are and what you do if they haven't seen you already no yeah definitely um so just a little brief background i i mentioned we we both have an experience in in finance and banking uh i didn't last as long as you there i just worked at uh jpmorgan a couple years and then um moved to miami my brother graduated from georgetown university um had a close friend that was working at burger king corporate so my brother moved down to miami started working for the parent company at burger king and i was working at a fund that would lend money to multi-unit franchisees this is going back to 2013.
and my brother jack and i were like there's this investor visa program and it seems like franchising could be a good fit for these folks that are moving to the u. s they haven't done business yet in the u. s they could have perhaps a soft landing through franchising so that spurred um the company visa franchise um where we've kind of cemented ourselves as a leader for helping foreign nationals move to the u.
s investing in a franchise and they typically get the e-2 investor visa so someone can invest 80 100 000 dollars if they're going to work full time in the business there and have two three employees and get us residency obviously there's if they want to get a green card it's gonna be a lot more money uh it could be eight hundred thousand dollars an 10 employees but that's how we kind of entered into this uh space franchising and about two and a half years ago we're like we have a ton of data we've helped hundreds of these foreign nationals why don't we help americans and we thought we could do it through just on a more syndicated level where not being an advisor to all these individuals that americans that are invested in franchises but just providing the data and content um so that an american can find analyze a franchise and giving them the tools to at least start the journey and evaluate what franchises are good bad and that that spurred vettedbiz. com yeah that's amazing and you were showing me a sneak peek at the back end of vettedbiz. com which is very very insightful i absolutely love it i can't wait to um to be able to have access so you know just for for those of you watching if um you know if you're looking at a franchise definitely go check out vettedbiz.
com because there's some really powerful uh data and analytics there that i think would benefit you but something that we didn't just talk about in the last hour so was that uh so i sold my so i sold a couple of years ago i sold our california location i sold it to an e2 buyer okay that's funny what's funny is he wind up he wind up so when i sold my my my stores um i represented myself in the in the transaction um so i learned a lot made a lot of mistakes and why like i just saved a client like 10 12 grand uh he was buying a resale he already knew what he was looking at when he came to me he just wanted help with kind of due diligence making sure it's very fit but just on the way we allocated goodwill and um in the equipment along with the fact that there was language in the purchase agreement around him having to pay sales tax on the equipment i saved him like 10 grand just like that um earn your keep yeah or in the keep man but um so i had this guy reach out to me for my florida store he found out i had one in california and then he's like you know what i'm actually we would rather go to california and he wind up buying my california store but it was actually pretty complex to you know for having never sold a business representing myself and then with the e2 yeah i mean oh man that's kind of that's how we cement ourselves in this space where we're an advisor to the franchisees as well as franchisors because there's a lot of education and and it's not they're coming in with cash which is great there's no sba loan no 401k rollover but the e2 visa could take two weeks to get approved or it could take a year depending on the consulate and are you escrowing the full amount are you putting 20k good faith non-refundable deposit there's a lot of ways to structure an investment uh whether it's a franchise resell or a new franchise investment and a lot of it's just like getting creative and seeing kind of what's a good fit for for both sides yeah yeah for sure well i think i think this would be you know probably a pretty good kind of segment to keep running on which is e2 because it's a you know it's a fascinating topic and and i actually have a couple of uh clients right now that are they're all from canada they're all from canada it's a big wave and yeah there's a big wave yeah with everything going on there but um you know for for people that may be watching that you know don't know what an e2 is and you just explained it a little better or kind of interested in looking at a you know um an e2 and coming to the states what's like what's like the biggest couple of mistakes that you see people make during that kind of e2 process or as they're embarking on that journey great question so in the initial process is looking at things not looking at the numbers and like not having a plan going into it and assessing what you want out of the business at visa franchise a lot of our clients are really high net worth so five mil uh net income net worth they're making over a quarter million 500k a year so you have to be much more selective with your time when you have that type of uh net worth or income coming in and it becomes that much more critical finding a franchise that it's not gonna drain your time and could be potentially semi-absentee because you have all this other money coming in from your operating business in canada that you can you have a key employee for and you know keep that keep that income stream don't just shut off that income stream if you're making a lot of money abroad don't just go all in in the u. s as it's a super competitive market so i'd say that's a big thing what do you want um if you're if you're not making as much money and you're making 50k 100k the opportunity cost is less than if you're making significant income or if you're just worth a lot of money um so really understanding kind of what the opportunity what you want and what your background is and what exists in the united states i don't see many opportunities that you can't that you that you can't that you can just invest and make like an amazing return you gotta roll up your sleeves i think a lot of e2 visa investors less so from canada where there's the anglo-saxon you know business culture uh clients in the uk australia u. s kind of similar business culture um but from other countries it's a lot of work and if you're not willing to put in the work 40 50 60 hours a week for the first 24 18 months at least there's a good chance it's not going to work so that's a big thing where you got to be ready to really put it in the work as this is the most competitive market capital is cheap anyone can get an sba loan six percent roll over your retirement there's a there's a issues with getting great managers in place that are really good operators money is not a problem right now in the u.
s and abroad and i had a prospective client in my office yesterday that does business throughout the middle east capitals king so the us capital is not king it's it's knowledge it's hard work it's a very different operating environment than um many countries throughout the world i would say coming down from canada it's going to be a smoother transition yeah yeah for sure i mean that's a it's such a interesting niche market that you're that you're in and you know i thought it was cool in our conversation that you know we really discovered that you know the franchise world can be a dirty world out there there's there's a lot of uh skeletons in the closet yeah right yeah i was mentioning like we dig in so i love i feel like my job's a little bit like an investigative uh journalist just like digging into these franchise disclosure documents and like seeing what good and bad things we can we can find out but some franchisors get pissed and i mentioned last week we got a cease and desist letter because i mentioned some hidden fees that were buried into the fdd and weren't disclosed in their marketing materials so there's just a lot of people getting compensated on the cell and it's kind of the same way like with real estate everyone's saying real estate's an amazing investment the mortgage broker the title agent the real estate the real estate broker everyone's like do it you know it's it's a very secure investment but they're all making money if you move forward if you don't move forward and you decide to invest elsewhere they're not making money so there's definitely a big agency issue in the franchise world where these franchise fees are are significant 20 to 60 k for a single unit and when you have multi-units and international development agreements hundreds of thousands of dollars at play just for selling uh the license to operate yeah yeah it's uh there's kind of really a massive conflict of interest and it's you know you have all these um [Music] you know brokers out there where the only way they make money um is on the back end of a deal and and unfortunately a lot of them don't necessarily have the same ethics that you and i may have in wanting to protect people's interests because it's you know you you have a company uh empowering individuals vetted biz in getting the data and the information so that they're empowered and educated and have the tools to make a decision that's in their best interest like you're trying to protect them and uh there's really not many people out there doing that so what for you what what spurred the desire to i don't want to say be the robin hood of of the industry but uh but really want to protect the consumer i think it's just it's a better long term for us and it's selfishly it's better long term for us so you know where we vetted biz we decided a long time ago not to give leads to franchisors not to get compensated by franchise wars like all the other franchise portals that was not in our best interest short term but long term we could get a lot more site traffic and grow a much bigger community and be a more valuable more profitable business sharing all the information on not just franchisors that are paying us but on the 7 000 or so franchisors that have you know uh sought out franchisees over the past five years so it's kind of long for us selfishly it makes more long-term business sense and then you know in terms of the the franchise ecosystem i think it's a net positive where right now a franchise investment and a business investment they have the same risk there's the same failure rate a franchise is not safer however if you isolate the top 10 of franchises that's gonna be a lot safer than that you know the average or potentially even the top 10 percent of business opportunities out there so it's really going down um to what the best opportunities are and looking at you know the failure rate and what those key metrics are so we can take the emotions a bit out of this huge life decision of investing in a franchise or not investing and that's great do your startup but you can investigate a franchise and discard it relatively fast it shouldn't take that much time yeah yeah that's a good point and i you know from my perspective i i seem to see that that a lot of people they don't have the proper tools and education to really do the proper due diligence so what happens is they linger for a while like they sit in that like no man's land or should i do it should i not do it and you know what drives me crazy i wonder i'm curious on your perspective on this um you know the way we operate our businesses is very different so i wonder if you come across this but when people reach out to me and they're like i found this one franchise and i love it and this is what i want to buy and i'm ready to like pull the trigger i'm like well one number one why are you reaching out to me because i'm gonna tell i'm gonna teach you how to rip it apart yes um to make sure that it even is viable but two it drives me crazy a little bit because they're not looking at anything else and comparing and contrasting to figure out what truly meets my needs the best it's like they're focused on the vehicle as opposed to the destination yeah do you see that does that drive you crazy yeah no it's it's like the reasons people go into franchising still the number one is being your own boss and it's like being your own boss is sweet but like the first two years kind of suck being your own boss when you're not making much money yeah and like are you ready for that and yeah potentially you break even super fast and you start making like real cash but um you know it's kind of glorifying why people going and going to franchise and then yeah the final destination and that that route there uh there's a big uh there's a big difference i guess on kind of the expectations yeah yeah for sure well you made a very generous offer earlier which was to allow me to access to your site to be able to start using your data and i'm excited to start using that with uh with my clients to really help them make a better decision and um you know because there's a lot you and i we were talking about you know really the you know franchisee choosing the right business and then you know actually getting successful and profitable which is you know why i named this podcast the zero2 profitable franchise podcast because i allow my clients still access to continue to work with me through once they've bought their franchise it's the dreams not to buy a franchise the dream is to buy and then get your franchise profitable and i think that's one of the frustrating things for me in the in the traditional broker community which is they don't seem to really it's like well we sold you a franchise goodbye what happens from here is all good yeah it's kind of like imagine like a real estate broker that's also the property manager that's going to have more credibility because they're selling you the property and they're going to be the ones managing that finding the tenant uh dealing with like the plumber issues so they don't want to sell they're not selling you a lemon because they're they're stuck with you for a while and that's their business to manage the property so i do love that you have that ongoing relationship and of course you know people go into franchise franchising so they're not they're in business for themselves if i'm not by themselves and you have the network of franchisees and you know the franchisor but you can't tell your franchise or any everything or other franchisees but they can go to you and say hey this is what i'm dealing with um what would you know what what's your been your experience can you share some of your experience of you've had two juice franchises and you've had to hire employees train employees fire employees the franchisor's not really helping that much with the training so i definitely do see the value on kind of the ongoing support and then probably a checkup with you after 18 months and it's like hey do i continue with this brand open up a second location do i go on to something else um yeah i see huge value there yeah um in terms of kind of to jump around a little bit in terms of the the visa space right because that's a big niche and category of you that you work in yeah how right now with with covid and some of the different uh kind of municipalities abroad what does that look like in terms of the impact on individuals looking to come to states is it delaying it like how is that impacting them so yeah it used to be very straightforward our client process engage us work two to three months find the right franchise bring in our franchise attorney speak to franchisees validation uh one month prepare the e2 visa petition one to three months to get the e-2 visa in the passport and they're moving to the u. s so what's changed is that one to three months we're seeing that's anywhere two weeks to a year so depending on your nationality if you're canadian you can book out an appointment right now i think it's seven eight months so it's gonna take a while but you you or your spouse can be hitting refresh and seeing if anyone cancels and you grab an appointment in a month grab an appointment in two months so there's little tricks to get the the visa appointment faster and um it's not good to say consul shopping but if you and your spouse have different citizenships and you have residency in one country two countries you can see what a us consulate might be processing e-2 visas faster than others and apply at that consulate yeah interesting and in terms of you know because the that e-2 process from my understanding there's a there's a lot of up front leg work that needs to be done in terms of preparing so when you guys are working with clients is there something that they should be doing before they even get to you to put themselves in a position to expedite the process and if so what can they do yeah no big thing for visa franchise vetted biz has been amazing for our business where the client experience is is much better for for for them for us educate yourself vetted biz we're not getting paid by the franchise war we list the data as it as it is uh just use information with uh provided by vetted biz um and there's other information providers that i think have good nuggets of knowledge um for biz by cell looking for existing franchise resells it's good to browse around um a lot of the data is not itself reported by the seller and you're not going to really understand what it actually looks like until you sign an nda and then have your accountant do a due diligence but it gives you a rough idea of what's available in the market so i think spending hours on on websites like ourselves vetted biz. com biz by cell um looking at some of the um the media in the space that's not just hype so there's a few like rush franchise times does pretty good content um however they it's also pay to play with you'll get emails with franchisors that are just sponsoring um webinars so like kind of take that information with a grand assault but look at their editorials look at what they're reporting on um restaurant business online is another one there are some good industry journals but you have to there you have to like basically understand how they're monetizing and if they're monetizing a certain sponsored posts or not um when you're when you're reviewing you know potential opportunities yeah i think that's great great advice and insight well we're gonna we're gonna wrap up a little bit because i know that you have a you have an appointment to uh to get to but um you know before before we do what like what overall i mean i know that you you know you have the data analytics that you provide through vetted biz but overall you know if if someone's looking to buy a franchise like if you could provide kind of a a simplified piece of advice on how they bet how they look after their best interest and protect themselves like what would you say that is overall like from a pretty tactical standpoint so in terms of like what data points to look at or what questions asked franchisees or franchisors just overall i mean it doesn't have to be too granular but like what could they do as a as an overall strategy you know to really make sure they protect themselves whether they're working with the broker or not just having the right metrics and benchmarks so what's the failure rate how many franchises are closing in the last year last three years what percent of the franchise system is that the average is 11 so three year failure rate for two thousand plus franchises is eleven percent so if the franchise has a five percent failure rate that's pretty good they're doing some things well there's gonna be closures maybe someone doesn't the owner of the the the property is not uh is gonna tear down the the real estate and just it's not a good fit to find a new space there's reasons businesses fail um and then also the franchise for sale rate also the churn rate um how many people are looking to get out of the system the average for all franchises is six percent so pretty low most people are staying in the franchise system over a three year period however as um as i mentioned there are some franchises that it's significantly uh higher where the uh the rate is like 40 50 where every three years half the people are gone um you showed me that that was crazy sorry i said you showed me that one that was crazy yeah and then also the big names like uh subway subway closed like 7 000 locations over the last four or five years so these big iconic names generally it's better they make more money um abroad they've already tapped out the u.
s market so they have to really be growing um you know abroad and and other markets so i think that's a big thing where understand you know the comparables and i always tell people talk when you talk to the franchisor and talk to at least five franchisees try to talk to uh some former franchisees that left the system and it's three things how long did it take to open how long did it take to break even so you're not putting any more money in the business and then how long did it take to make substantial income substantial income means different things of different people but at least 5k how long did it take to make 5k 5 000 from that business on a pretty consistent basis and if you can't if you can't get those answers with like a decent um a decent uh certainty then maybe there's another franchise uh that you should you should uh look at that those are some really great nuggets i i love those um yeah really really good really powerful i think that's great advice uh for people looking to buy a franchise so well patrick's a fellow youtuber he has a youtube channel um where can everyone go go check you out your content as well as uh the resources you provide definitely the easiest is vettedbiz. com and i didn't mention this but i want to give the first 10 people that write me an email at patrick vettedbiz.
