Podcast 223. Find and Start the Right Franchise with Bob Bernotas

Average Joe Finances:
0:00

Hey, welcome back to the Average Joe Finances Podcast. I'm your host, Mike Cavaggioni, and today's guest is Bob Bernata. So Bob, super excited to have you on. We're going to talk about some franchising really excited about it and I hope to learn a lot from you. So welcome to the show.

Bob Bernotas:
0:15

Thank you, Mike. Really appreciate it. Glad to be here.

Average Joe Finances:
0:19

Absolutely. I'm glad to have you here. So I want to start this podcast off the same way I start every episode. And we want to know more about you. So if you could share a little bit about yourself, share your story, how you got into franchising, but tell us. Who is Bob Bernotas?

Bob Bernotas:
0:35

Oh my goodness. Bob Bernotas is a father of five. I have four daughters. My oldest daughter works for me. She sits in the office adjacent from mine. She's 25 years old right now. So I'm trying to build a legacy. With a number of my children as well, but my background is in franchising. I've been in franchising hate to admit at this point, but since 1986, when I got into my first franchise concept back in my twenties the first one I got into was called West coast video. If you remember the video industry, the VHS rental industry and I think, it happened to that industry. It's not around any longer, but I got out of it. I wouldn't say it's the ideal time, but I got out of it early enough where I didn't take too much of a beating, but it did fairly well for a long time with it own multiple franchise concepts, three different franchise concepts and multiple units with each that I built over the years and sold. I'm currently a franchise investor. So I do believe in franchising. I get high on my own supply, so to speak. And I also was CEO of a national chain back in the day. I have a, I have an extensive background in franchising, love that model and love what it can do for people.

Average Joe Finances:
1:46

All right. Awesome. So Bob, as you were going, I was taking some notes on a couple of things and you got started in franchising back in 86. I don't even want to tell you how old I was because I don't want to offend you, but man, you've been doing this for a while, right? So obviously you've got the experience, right? That's what I'm trying to get at. Okay. That's what I'm trying to get at here. But yeah, so you had mentioned though that you're still franchising, just investing, right? And my question is, because, I, I know people that have franchise, businesses that they've that they bought and started up or whatever and they're doing right. But what do you mean by franchise investing?

Bob Bernotas:
2:22

I don't have time to acquire a franchise and operate the franchise so I look for people who potentially want to be, want to operate at least on a part time, could be full time, could be part time, that I have a real comfort level with. And plus I like whatever the concept happens to be that they may be interested in that I'm showing them and they're in a good market. And if everything lines up properly, I may very well invest with and have them operate the business, more and more franchise. Companies have developed semi passive models , and give you a quick history lesson in franchising. If you go back 2030 years ago, there were very few of these concepts that offered semi passive models unless they were something like QSR restaurant or boutique fitness, whereby you can start it. You can put a manager in place. They operate it for you. You start a 2nd, 1 put a manager in place. They operate it for you. But more and more of these concepts have now developed a platform to support franchisees on a passive basis. And more and more of these concepts have become, or I should say, more and more of these concepts are service oriented businesses. It could be something home service related. It could be a company does windows, company does roofing, a company does flooring, company that does window cleaning. It could be anything having to do with the home.

Average Joe Finances:
3:44

One of my buddies does one with insulation.

Bob Bernotas:
3:47

Love it. Which one? I love it. Great brand. I've placed many people with it. It's a fantastic brand. So perfect example, but Koala has a platform like. These other service brands has a platform to support franchisees on a part time basis. They have a national call center and so forth. They just develop the tools necessary to allow you to do it on a part time basis from day one. Because so many people, many of my clients, most of my clients are actually coming from corporate America and they have a full time job. Many of them make a lot of money. They're not going to, they can be C suite, whatever. They're not going to walk away from that money, but often, they want to start building an off ramp because despite the money they're making your corporate America, they might be working 60, 70 hours a week. And they know they can't maintain that pace forever. So they're looking for something as a gradual on ramp off ramp in some cases, an immediate off ramp into the world of franchising. And that's really why. I, these types of concepts or this platform, this semi passive platform was developed.

Average Joe Finances:
4:55

Yeah that's fantastic because it's a way for that, if somebody's pretty busy with their day job, they're nine to five, but they want to get into something different. It's something that they could be a little bit more hands off with and not, have to go all in right away. And I think that's a very good point. Another friend of mine. Who has one with he also is part of a franchise with a junk removal service, right? He's doing it while he's still active duty in the Navy. And I was like, dude, that is amazing. I was like, how are you doing this right now? And he, he basically told me like, Hey, it was basically a business in a box and I hired the drivers and, and I just put it all together and I run it on the backend. And I'm like, Okay. And he's like, you know, and I do a lot of the stuff on the back end myself, the paperwork, the, all the, crunching all the numbers, working all the invoices and everything. But he's like, I'm getting ready to hire an assistant. That's going to do all of that. He's like, I just wanted to wait till I was cash flowing a little bit more so I can afford to have the assistant and then be completely passive. And I'm like, Oh. All right, man. That's fantastic. So yeah, I, I definitely see where that can be very lucrative for somebody that, that wants to get into something like that, but what about let's say there's somebody that they left their nine to five, they're done. They don't want to go back to corporate America. They want to get into a franchise that they can go fold, hands on be operational. What would that look like for somebody that wants to do that? Just give everything up and go full, full throttle into their business.

Bob Bernotas:
6:19

Honestly, Mike, it looks the same. Because the same companies that offer a semi passive model, anybody can jump into full time. They just, over time, they develop the additional tools to, but there's plenty of franchises also that want you to jump into it on a full time, at least for the first year or two. Everything eventually becomes passive over time, unless it's a linear model. What I'm doing right now in consulting, if I do this, I make money. If I stop doing it, I stop making money. But with most franchises, it's all about leveraging other people and leveraging the systems that the franchise company is setting up with you. What I am so attracted to, and let me back up a lot of my, of my clients, they also are real estate investors and we always have this conversation and I'm watching so many real estate investors now switch over to franchise investing. You are trading some of your time, but let's say you're a real estate investor and you're doing it residentially and you have a few properties and you're managing the properties and usually in that situation, when I have found most real estate investors, they are they're treading water in terms of cash flow. It's a long term play. It's a 15, maybe 20 year play. They're building equity in the properties and event and if you bought before cobit, you're in a good place buying after covid maybe not so much. But from a cash flow standpoint, it's not exactly fantastic unless You're buying these outright or putting a lot of money down. What I love about franchising is you are trading some of your time, but with a semi passive concept, it might be between 10 and 20 hours a week, but your returns are infinitely better. Your friend you mentioned owns a Koala insulation. Great concept. I'm sure he's doing really well with it.

Average Joe Finances:
8:07

Oh yeah. He's expanded. He's got 10 areas now. It's insane. You started off with one and now he's he's taking over the Midwest up there.

Bob Bernotas:
8:15

Yeah. Yeah. And I see this happen all the time with my clients and ones that are, that have jumped into it and we're formerly real estate investors they're reallocating funds. They're selling off properties and buying franchises in order to expand with franchises just because the rate of return. The ROI is so much so superior. If you're willing to trade some of your time for that, but not only that, from an equity standpoint, franchises building equity, the right franchise, of course, you can get into the wrong franchise. But if you work with somebody who knows what you're doing and you find the right franchise, you're building equity at a very rapid rate. Typically, you're going to see franchises, you build a franchise and you decide, Hey, I want to sell the franchise. Usually you're going to see somewhere between a two to five multiple of earnings depending upon the model. So if you build, you buy something like Maybe for 200, 000, you start to build it and, and let's say in a couple, three years you're driving a million dollar top line, million and a quarter top line and a quarter million dollar bottom line. What's that business worth? Typically, it's going to be worth somewhere between 3 quarters of a million to about a million dollars, that concept that you may have spent 200, 000 for. If it's the right concept. And that's 1 of the reasons why I like these service oriented businesses more so than brick and mortar retail. If you look at something like crumble cookie very popular concept or orange theory, you're talking about 7800K to open either 1 of those concepts. But if you open a 2nd, one 7800K. You open a 3rd one 7800K.. What I like about the service concepts is that you can buy, let's say, one like a koala. Maybe it's 150, 200 K, but a 2nd territory might be 40 grand. A 3rd territory might be 30 grand. So you're scaling so economically and then you just scale into those territories over time. If that makes sense.

Average Joe Finances:
10:11

Yeah, no, that makes perfect sense to that. wHen you look at it from just the the equity standpoint now, at the same time, you're expanding by getting these areas or expanding your business still under one umbrella versus opening up new locations, but you may have to open new physical locations depending on how far out your area goes. So that's, yeah that's pretty amazing. And I, I look at what my buddy did has done with that and from his initial investment to what he's cash flowing right now is already night and day. Like he's already made his money back and then some in just like two years of doing this.

Bob Bernotas:
10:46

Yep, and that's with those and that again, that's a service oriented brand. And that's typically what I see. But to your point, what I also find interesting you again, you look at a brick and mortar retail type concept that requires, again, the crumble cookie. You open 1. If you would open a 2nd, one, you have another location for the 3rd, one, you have another location. Now, all of a sudden, you're at, 2 and a half million dollars invested in it. Whereas most of these service oriented concepts, you can have 1 centrally located facility and it may just be an office. It may be a little bit of flex space. It may be a, a small warehouse with an office. In it, and if it's centrally located, you can develop multiple territories, but that's your home base and you don't have the build out. Typically with build out in office or in a warehouse it's very minimal. You're signing short term leases, as opposed to maybe a 5 or 10 year lease. When you go into brick and mortar retail, brick and mortar retail has become so expensive. So that drives up the cost precipitously.

Average Joe Finances:
11:45

Yeah, no, that's a great point. That's a fantastic point because, it's all those little back end expenses, I think that'll catch up to somebody and catch you off guard. Cause you might just be looking at what the cost is to open up the franchise Oh yeah, I could open up an orange theory for 700, 000. Yeah. Okay. What about the property? What about where are you going to put it? That's not included in the cost. That's just the franchise cost. Yeah it's a lot of little things that, that you wind up looking at something that you thought was 700, 000, but really cost you about. 2 million to put it all together depending on where you're opening it. Now, if it was out here in Hawaii, it'll probably be that much because real estate out here is very expensive.

Bob Bernotas:
12:20

Yes, it is. They're there. They're there.

Average Joe Finances:
12:22

Okay. Awesome. Now, with what you do as a franchise investor, now you've been doing this for quite some time. What would you say are some of the best options you've seen for folks that want to Get into a franchise, like some of the best part time to build that passive income , strategies that you've seen.

Bob Bernotas:
12:44

I'm not going to name specific brands, but I

Average Joe Finances:
12:47

know mostly like the service industry, right?

Bob Bernotas:
12:50

Yeah. I'll give you an example. There's a concept that's out there right now that I've placed a lot of my clients in, and I have a lot of clients that are currently in process with them and what's important to also know, Mike, is you got to know what's behind it. Cause everything this spoken mirrors, if you go online and you start searching franchises, you don't know what you're getting. You're getting exactly what they want to show you. So knowing what's behind it, knowing what the unit economics of the brand looks like, knowing what the true opening cost of the brand looks like is important. But to your point, I'll give you one example, and there's a concept that I've showed a lot of my clients recently, and a number of them have jumped into it, does phenomenally well, and it's just a B2B concept, but you can operate it out of you can operate it out of a container basically, but it's these temporary walls. Meaning so when a commercial contractor has a job, they get a job and they're going to do a renovation in a school, a hospital, a restaurant, whatever it happens to be. Typically, they're going in and they're going to put up. They're going to section off. The area where they're going to work because the business wants to stay open while the work is going on or a mall. You see this happen all the time and they have to build walls and they build drywall sticks and drywall. Problem is, those building materials have become increasingly expensive since COVID. Plus, it takes time to put them up. Plus, it takes time to rip them down when it's all over. The concept, newer franchise that has been introduced these walls go up as a franchisee. Basically, you are your people. Let's save a couple of people that are installing these walls. They go up. Typically in 2 days, they go down. Typically in 2 days. It's a rental concept. I like it specifically because it was very similar to the video rental. Business that I had, and I also had tanning salons again, which is a rental type thing. You're buying equipment and you're renting time in those. So those tend to be really lucrative concepts. The unit economics on the one that I'm mentioning is, it's phenomenal. It's hard to fathom because when you mentioned this to a lot of people , I can't wrap my head around it, but when you see the unit economics behind it and how simple it is to operate it, because you're just really, you're going to store these things in like a container or in a, a rental space and you have a vehicle, maybe a Sprinter van or a small truck that takes them around and you do the installs, but just big upsides to things that you never would think that even existed.

Average Joe Finances:
15:14

Yeah, I know that, that sounds pretty lucrative. oKay. So I want to ask you something. I've had somebody else come on and talk franchises with me before, and I'm curious to what your answer is going to be on this, but why go with a franchise versus starting your own business? What are some of the advantages of doing the franchise versus a startup?

Bob Bernotas:
15:35

Look, there's a lot of franchises. Honestly, Mike, I wouldn't go anywhere near. So maybe there's not that much of a difference, but with the better franchise companies the success rate is infinitely higher than starting your own business. There was a study done by the chamber of commerce a number of years back and they basically tracked a whole bunch of independent mom and pop stores that all opened or businesses that all opened around the same time, they tracked them for a five year period. cOncurrently, they tracked a whole bunch of franchises, different types of franchises that all opened roughly around the same time for that same concurrent five year period. At the end of five years, the independent businesses, 48 percent were still up and operating. Okay, the rest have failed. Roughly half failed. With the franchises, 97 percent were still operating. In general, the success rate with franchises is infinitely higher than a mom and pop type of business that you might open. The other thing that I would suggest is that, look, there's a learning curve that you're going to go through and that learning curve, if you're on your own, trying to put something together, that learning curve can virtually go on forever. A franchise, you're buying already a preexisting learning curve you're buying power as well. Now, that learning curve, maybe the franchise companies only been operating for 5 years. Does sound like a long time, but if it's 5 years times 100 franchises all that data is flowing up to the franchise company. So the better companies are creating, as you said earlier, that business in a box that you're just not going to find, trying to open something on your own and trying to figure it all out on your own and potentially making lots of mistakes that could be deadly mistakes.

Average Joe Finances:
17:20

Yeah, that was actually something I was going to ask you about like when it comes to the experience that you have with opening a franchise, the fact that there's so many other businesses. Under that umbrella that have already, saw their own success or saw some of their own failures and just, lessons learned and stuff that all gets pulled together and can be given to the new franchisee. So I, yeah I think that's very interesting. But. It's also one of those, you get what you paid for type things because you could take that same 200, 000 and start your own business, but you have nothing else besides what you're doing yourself versus taking that 200, 000, starting a franchise or opening up a franchise business and you already have the tools in place and people that you can reach out to. So is that another thing that you've seen too? What does the support system look like for a lot of these newer franchises?

Bob Bernotas:
18:16

Some of the franchises again I wouldn't recommend, but there's some really good cons.

Average Joe Finances:
18:21

Of course, I'm going to preface this with every question I ask you is about franchises that you would recommend.

Bob Bernotas:
18:25

Okay. I typically I'll work with the top 10, 15 percent in any given category of a franchising, but to support tools that these companies have available. Number one, you have access to a lot of information. You have access to other franchisees, you have access to to groups that work together. Maybe you'll have a local group that you work with franchisees, but you could potentially reach out to any franchisee around the country and ask them, Hey, how are you? How are you able to do this? And all this data is flowing up to the franchise company and typically this information is being imparted to the to all new franchisees coming into the system. Hit me with that question again, Mike. I want to make sure I'm answering it completely.

Average Joe Finances:
19:10

Oh, yeah, that, that answers it. I'm looking for what some of the, some of those advantages are that you have opening up a franchise versus, starting your own business and just what that kind of looks like, With the top companies that you work with. So you mentioned that you're going to have access to more information that you have access to the other franchisees, to ask them what's worked for them and things like that. And do you notice or some of the ones that you work with, did they ever do like any type of, national conferences and get togethers to Hey, here's what some of our, top franchisees in our industry, here's what they're doing. Here's what our top performers are doing and here's how, they got their type deal. Like to share that with everybody else.

Bob Bernotas:
19:53

All the better franchise companies are in fact doing that, but it's it goes so far beyond that in that they will have regional councils where you'll get together with other franchisees in your region. Plus they'll have conference calls to go on a regular basis. And you'll be able to ask questions on the conference call, share best practices and so forth. Another big advantage is the buying power. So again, it's always posed to me, wow, I have to pay this franchise fee of 50 or 60, 000. I just saved that money and put that into, yeah, but you don't have the buying power. Okay. If that company has 500 franchises, they're buying materials or services, whatever is needed for a franchise way less than you can buy as a mom and pop trying to develop those relationships with vendors. So there's so much more than goes into it than just, Hey, am I going to hang my own shingle or am I going to go for it? And honestly, over the years I've gone both routes. I've opened a couple of independent companies, one failed, one made it. I've opened, I've never failed with a franchise, but my success level with the franchises were infinitely higher as well. So I love franchising as a model as long as you connect with the right franchise companies know what to look for, which ones have the things that are going to make you more successful. Then the next company and what they all really boil down to is the unit economics. How well are these franchises going to do? Because you can cover up for a lot of sins. If these things are making a lot of money, I often run into clients who are specifically looking for some category of franchising. I term these people ideologues for lack of a better term in that, Hey, somebody may, they have a dog. They love their dog. So they want to be in something pet related, not always the best choice. So on the other end of the spectrum, I work with a lot of clients who simply say, Bob, show me the best financial opportunities in franchising. If I'm given that latitude, I love working in that space. Okay. Semi absentee, best financial opportunities. That's exactly what I will show a client because first and foremost, you have to be successful because if you get into something that's your passion and you don't do as well financially as you would have hoped, you can learn to hate your passion.

Average Joe Finances:
22:20

Oh, yeah, absolutely. So actually, Bob, I want to ask you, like, how do you actually approach that when you have clients that come to you and they say okay, I, I love my dog. I love my cat. I want to do something working with animals. How would you break it down to them to let them know Hey, I understand your passion. And if you get into this, they're You know the potential for you to make cash, more cash would be over here. But if you got into this is what this looks like. How do you break it down to them to make them understand, that it might not be a good fit for them?

Bob Bernotas:
22:52

Honestly, Mike I'm direct with that and I will just tell them, I'll post a question to them. Do you want to make money? If making money is important to you, you may want to not, look, there's some good, not to knock on the pet industry, some really good pet franchises, the ones that do well tend to be a really expensive concepts, million, million and a half, 2 million concepts aNd there's some really good other pet franchise that they do fine. If someone comes to me and they're willing to be open minded and say, Bob, just show me here's what I have to work with. I don't want to exceed a quarter million dollars in total cost to open this franchise. I have 75 K that I can put into it. That's 1 example. It could be millions, but as an example, 75 K, 250 total all in cost. Don't want to exceed it then I'm going to show them concepts that have the best financial opportunity that would fit within those parameters. I also, if they need financing, I work with the top franchise lending sources out there. Rare that I can't get somebody financed if they have decent credit. And there's lots of different instruments for that as well.

Average Joe Finances:
23:59

Yeah. Bob, I'm glad you brought that up because that's something I wanted to ask you. Cause as you were talking about, you're like, yeah, somebody comes to you and say, they say, Hey, I've got 75K liquid to put into this. But I don't want to spend more than a quarter of a million. So that was something I was going to ask you. So are there different ways to get financing to meet that 250, 000 and beyond for if you need a commercial space for this particular franchise or anything like that? Sure. So like you had mentioned the financing, but what about the other side of that let's say you do need a space, and you need a commercial space. Do you have resources to help somebody find the space or also fund and finance the space as well?

Bob Bernotas:
24:34

Yeah, franchise companies, the better franchise companies will assist you with finding space, whether it's retail space, whether it's commercial, industrial space, whatever it happens to be, they all have real, the better ones, again, have real estate departments, and they will work with you to help you identify the locations. Then as far as financing go, there's so many different instruments that can be potentially used as an example. The rates are going up now, but it's still not a bad choice. SBA loans. SBA loans. If you don't, if you don't exceed 350 K, it's not recourse. You're not pledging, your house isn't at risk. Your assets aren't at risk. Do you sign personally? Yes, but you're not coming here after your house or assets. SO SBA's possibility 10 year term. So it's, even though the rates have gotten higher, the term is 10 years and you can always pay it off in 2 years or 3 years or 4 years without penalty. There's something called a 401k rollover, even hefty accounts out there don't know what it is, but you're rolling funds from a 401k or an IRA into a business without taxation, without penalty, without interest. Okay. So there's a few different ways we could potentially go. And i,

Average Joe Finances:
25:46

That's very interesting. I didn't, yeah, that's, I didn't know you can actually roll that over into, are you talking about like rolling it over into paying off the loan? iF somebody has an SBA loan and they're rolling it over to pay off the loan for the business or they're rolling it over to fund their business.

Bob Bernotas:
26:00

They're rolling it up. You could roll it over to pay off a loan, but typically you're rolling it over to fund your business. And to be able to do it without taxation, as long as it has to be done in a certain way and there's entities out there that I can introduce clients to that will help them. They'll help them do that and show them how to set that up and make sure they stay in compliance, filing the proper paperwork and so forth. But my clients that have a substantial 401k and they can, if they control it, if they're not employed by that employer anymore, or if they're of a certain age they can, or if it's in an IRA, they can roll it into a roll it into a business.

Average Joe Finances:
26:38

Oh, so this could be done with a 401k or an IRA. So the 401k, they obviously can't be working with that company anymore, but, oh that's very interesting. I had no idea you can do that. So obviously you need to get a CPA to help you with something like that. But that is that's pretty amazing that you can actually, because if you think about it, you think about your 401k, you think about your IRA, you think about what your rate of return is on that. If you were to take that money and put it into a franchise where you're seeing, 100 percent rate of return, for a lot of these within two years, that's what I've seen my friends do. They got their money back in two years or less. That's a hundred percent rate of return. So that's amazing right there. So that,

Bob Bernotas:
27:18

what was your friend's investment? What was your friend's investment in that?

Average Joe Finances:
27:22

In what?

Bob Bernotas:
27:22

In Koala.

Average Joe Finances:
27:24

Oh, well, he's got 10 areas now. I,

Bob Bernotas:
27:27

Oh, yeah. Okay. So his initial,

Average Joe Finances:
27:29

I don't know what it, I think his initial was like 140 ish or something like that. He made it back really quick. Then my other buddy he's got the junk removal service. And he's already. Right now for this year, what he's going to net in profit is already more than halfway paying what he put into this business for the truck, for the franchise fee, everything. And I'm like, Holy crap, dude, that's amazing. But yeah, the fact, that's a powerful tool though, that you can actually roll over your 401k and IRA. And you think about that rate of return you can get versus leaving it. In the stock market or an index funds or ETS which are safe and pretty strong things to invest with, invest in, if you want to get a nice retirement in, 20, 30, 40 years, where you can get that same return in a couple of years with a franchise, at least what it sounds like to me. So that's pretty amazing. As long as you let's see why a lot of real estate investors are making that shift.

Bob Bernotas:
28:28

Yes, I'm it's a seismic shift at this point. So many of my clients that are in real estate now have shifted so much funds over to franchising.

Average Joe Finances:
28:37

Yeah, that's pretty. That's pretty amazing. Yeah. So now I'd like to know a little bit about. What you actually do when it comes to helping people, get into a franchise, right? Because obviously, that's what you do, right? You help, you, you pair people up with the right franchise for them. Now, what does this look like if somebody comes to you and says, Hey, Bob, this is what I want to do. I don't really care what space I get into. I've got this much money to put into it. This is the kind of rate of return I'm looking at. This is the market I'm in. What kind of questions are you asking them to make sure you place them in that right fit? That's going to get them that rate of return that they're looking for.

Bob Bernotas:
29:16

Yeah the 1st thing I do is I spend some time to get to know them. I'll ask him to complete a confidential questionnaire. It's going to take him about 20, 30 minutes to do, but that gives me the initial information I need on them to start doing my job properly. That'll be followed by a consultation. I'll spend maybe an hour or so with them reviewing the confidential questionnaire and I'll have lots and lots of questions for him. I take all the information that they share with me in the confidential questionnaire and the information they gave me during the consultation and I build what I call a profile. Usually it's, I put it in writing, it's usually two or three pages, but basically it's a profile of who they are and what's going to drive them and what potentially could be good fits for them. I use that to start matching them with franchise concepts that I think will be a good fit. I may start out behind the scenes with looking at a hundred different franchises. I do my territory checks depending upon where they are in the country. Often the territory check is going to cut at least half of them out. Okay, it's already going to be sold in their market. Could be more. That's why I do that many to begin with. But then I'll try to whittle the list down further on their behalf and by the time we do the next the next call, the next zoom call, which will last about 75 minutes to an hour, I'll probably have it down to about a half dozen concepts that I think will be excellent fits for them. On that zoom call. We'll review those concepts. I'll answer any questions that they have about them. I'll give you, I'll give them my opinion on those at the end of the call. I'll say, Mike, let's try to pair this list down further. Maybe to the top 2, possibly 3. To dive into more deeply, we don't want to try to look at too many at a time. It will be overwhelming for you. Once they've identified 2 or 3, they like the best. You can always come back to the others. Let's start with these 2 or 3. Then we take a deeper dive into those and learn about them. The process when I engage with with a client generally is going to run somewhere between 8 to 12 to 16 weeks could be longer. Sometimes we're starting and stopping and so forth, but typically that's the time frame. And hopefully we can find something that's going to be a good fit. My service is actually free to the candidates that I work, work with. My industry is very similar to the real estate industry. Franchise companies compensate me for bringing qualified candidates to them. I will never put somebody in front of a franchise company unless they check all the boxes that the franchise companies are looking for. And if you compare that to the way most people are looking for franchises, they go online. Incredibly frustrated, but to go online, you're looking at a million different franchises out there. They're reaching out to some. Some will get back to them, some won't some they're going to be qualified for, some are not going to be qualified for franchise companies. 95 percent of the people coming to those franchise companies end up not being qualified. So the franchise companies waste a lot of time. So they prefer to work with a qualified consultant like myself.

Average Joe Finances:
32:22

Awesome. That's great. And I really appreciate you showing me like, and explaining each one of those steps that you take to find the qualified candidates, but also find the right franchise for them. It's pretty much, like playing matchmaker, and that's exactly what you're doing, you're finding the right fit. But like being a real estate agent, you don't get paid until the deal closes. Correct. Yeah it also. Is important that you're talking to somebody that's taking it very seriously, which is why I assume the questionnaire is something that you use to weed out, somebody who's just like a tire kicker versus someone who's okay, I want to buy the car.

Bob Bernotas:
32:56

Yeah, my time is money. I don't want to spend a lot of time. Somebody has no intention really of doing it, but if they're qualified financially, which we can ascertain pretty quickly, they have a desire to be their own boss, so to speak, start building a legacy, start building equity in the business of their own, then I'll be happy to work with them. And again, the franchise companies compensate me for bringing qualified people to them if they go forward.

Average Joe Finances:
33:25

All right, Bob. Yeah that's fantastic. It's good to get down into the weeds and see what you do behind the scenes, because, for people that are listening right now and they're like, maybe franchising is something I want to get into. And then they hear that and they're like okay, I need to make sure I'm serious before I even think about dipping my toe into the water. I want to make sure that if I dip my toe into the water, I'm committing to dive in. So that, I think that's another important thing too. I like to use analogies. Sorry. I'm all over the place with that. That's great. But yeah, Bob. Okay. So this is, this has been great. I'd like to transition this into something that I call the final round. It's where I'm going to ask you the same 4 questions. I ask everybody that comes on the show and it gives us a good idea of how Bob is under a little bit of pressure. So if you're ready to go,

Bob Bernotas:
34:07

are there right and wrong answers?

Average Joe Finances:
34:10

No, there is no such thing as a right or wrong answer to these questions.

Bob Bernotas:
34:13

Okay.

Average Joe Finances:
34:13

So

Bob Bernotas:
34:14

Fire away.

Average Joe Finances:
34:15

Bob, the first question of the final round for you is what's the biggest mistake you've ever made when it comes to your finances, investing real estate, or just business.

Bob Bernotas:
34:26

Oh my goodness. I'll give you one of the biggest mistakes because I've made plenty of big mistakes, but I back in the day when I first got into my first franchise was West Coast Video and I was opening a number of them in the Philadelphia market and I lost my mind, went up to New York and I opened the first one in Queens and I built the building and I brought a contractor up from Philadelphia to do it. It turns out he just didn't know the ropes in New York, and it turned into an absolute debacle and what it should have cost me, it cost ended up costing me 2.5 times as much to build that building and get that unit open. So that was an expensive lesson.

Average Joe Finances:
35:08

Okay. Yeah, definitely. I appreciate your, transparency there and sharing that.

Bob Bernotas:
35:13

Stupidity, you mean?

Average Joe Finances:
35:13

No, definitely transparency. All right. So Bob, the next question, and these kind of tie into each other. But what is something that you've learned that you wish you knew when you first got started?

Bob Bernotas:
35:24

Oh, my goodness, I wish I knew. Look, I've made some mistakes in terms of identifying the type of franchise. I want to be involved and not the knock the video industry, not to knock the tanning industry. The 1st, 2 concepts that I got into, but I think I would have taken it in a different direction. I wish I had a mentor or an expert, someone who could have guided me through that process, steered me in the right direction, because otherwise you're throwing darts, at least I was in my situation, it fortunately worked out pretty good for me, but it could have worked out a heck of a lot better when in retrospect, when I looked back and looked at some of the concepts that I passed up on when I could have gotten involved in, but I just didn't know enough about it.

Average Joe Finances:
36:09

Sure. Yeah, that, that makes perfect sense. And, it's one of the things I talk about a lot on here too is having the right person be your mentor. And how important that is to have somebody that you can lean on. So definitely appreciate that answer as well. Bob the next question is, do you have any tips or tricks that you would recommend to someone that is just getting started out today?

Bob Bernotas:
36:32

Yeah, I would. Be very cautious about going online and searching for franchises. That way, if your intent is to find a franchise concept, if you have an advisor, a trusted advisor, you can certainly go to them. Be aware. Be aware that many. Be it accountant, be it a lawyer, they're not necessarily franchise experts, but they may be able to give you some, some direction. I would look for someone who's a franchise expert. Do your due diligence, find the right person. There's plenty of people out there that call themselves franchise experts and maybe with a group that provided some training to them, some organization, and they spent two weeks learning about franchising, they're given a certificate saying now you're a franchise expert. And they knew nothing about franchising. So really look, dive in, look at what the advisor's background is, how long or how much of a experience do they have in franchising? How many businesses have they owned? Do they really know what the heck they're talking about?

Average Joe Finances:
37:36

Yeah. Okay. That's that's a great advice right there. Great tip for anybody that's starting out, making sure that you have the right person in your corner, right? Just because they're an expert in, doing your taxes and working out your finances does not necessarily mean they know what they're talking about when it comes to franchises, And that's why I think it's always important that, at least for me, like my network, I always like to say that I know a guy, right? If there's something in a particular field, I know a guy, I know somebody I can talk to that specializes in that specific thing, right? Just lawyers, you can use a lawyer from any walk of life to draw you up a power of attorney or a will or whatever it is, but there are lawyers that specialize in that there are lawyers that specialize in real estate, there are lawyers that specialize in immigration, whatever it is that you need a lawyer for, they specialize in that particular focus. So I think

Bob Bernotas:
38:24

franchising to your point there's lawyers to specialize in franchising. I always recommend don't ever use a lawyer. That's a non franchise attorney to review an FDD and franchise agreement for you. It's going to, in the long run, it's going to end up costing you more because first they have to learn franchise law, which most of them have no idea what it's about and understand the real nuance of it before they can really advise you properly.

Average Joe Finances:
38:47

They're going to say yeah, we could take care of that. And what they're going to be doing is actually going reading their manuals and Googling things. And, this You got to watch out for that. So yeah, definitely appreciate that as well. Okay, Bob, the final question of the final round. Do you have a favorite business investing or real estate related book or podcast?

Bob Bernotas:
39:08

E-Myth, uh, which really addresses franchising. There's the E-Myth and E-Myth Revisited. A lot of the same things were covered in the E-Myth Revisited. So if somebody was going to get one of those books, I'd suggest the E-Myth Revisited. But it really gives you some great insight into the world of franchising.

Average Joe Finances:
39:28

Okay. Yeah. Great recommendation. I've actually heard this recommendation before. So that one's definitely on my list. I'm going to get my original tuned. Definitely going to read that., Bob, that is it for the final round. Pat yourself on the back. You survived. Fantastic job. But Hey. That's not it, though. I do have another question for you. And this is going to be the most important question of this entire interview, right? Because you've dropped a lot of golden nuggets. You've given us some fantastic information. I Feel like somebody that's listening to this episode today has a good surface view of whether or not a franchise might be a good idea for them or not. And with that being said, for the ones that want to move forward in that, and they want to find more information about you, do you have a website you could share with us or any social media profiles people could follow and check you out?

Bob Bernotas:
40:16

Sure. The easiest thing you can do is just go to my website. It's franchisewithbob. com. Again, franchisewithbob. com. Lots of information on there. You can connect with me directly and we can potentially set up an initial 30 minute call and just take temperature and see if it makes sense for us to work together, but you'll find lots of resources and information on the website.

Average Joe Finances:
40:39

Awesome. franchisewithbob.com. That doesn't seem too hard to type out, but I will make sure that's in the show notes. So it's easier for my listeners to copy and paste or click away. The only thing I ask is that you don't do it if you're driving right now. So Bob, this has been absolutely phenomenal. I do want to ask you something else though, before we, we close things out. And that is, do you have any final thoughts for our listeners today?

Bob Bernotas:
41:04

I would well, first of all, thank you really appreciate the opportunity to be on your podcast. Very impressed by how you handle it. I would I'd be just if you're considering any type of investment, if you're into real estate investing, if you're thinking about starting a business, if you're just downright sick of corporate America and you want to start developing an off ramp and develop some additional income so you can eventually step away from corporate America, consider franchising. Franchising, I think, is the best investment opportunity that exists today.

Average Joe Finances:
41:40

Awesome, Bob, thank you so much for that. And thank you so much for your kind compliment on on the podcast itself and this interview, it was absolutely phenomenal. I thought you were a fantastic guest as well. There was no me having to try to pry information out of you. You were an open book and both me and my listeners genuinely appreciate that. So again, thank you so much for taking the time out of your busy schedule today to chat with me and my listeners. I really appreciate it.

Bob Bernotas:
42:08

Thank you, Mike. And thanks for the opportunity.

Average Joe Finances:
42:10

Absolutely. And Hey, I also want to thank all of my listeners for joining me and our special guest, Bob Bernatos on the Average Joe Finances podcast. Go leave us a five star review and tell us what you liked about today's episode with Bob. Aloha from Hawaii and have a great rest of your day.