Franchise Investing with Alex Smereczniak: Building Wealth Through Business Ownership

Franchise investing offers entrepreneurs, business owners, and real estate investors an alternative way to build wealth through established business models. Rather than starting a company entirely from scratch, investors can purchase a franchise that provides operational systems, brand recognition, training, and ongoing support. For professionals looking to diversify their income beyond traditional investments, franchise ownership can offer another path toward entrepreneurship and long-term financial growth.

In this episode of Lifetime Cash Flow Through Real Estate Investing, Alex Smereczniak shares his journey from acquiring a small college laundry business to building a multimillion-dollar company and launching a franchise investment marketplace. He explains how franchise investing works, what separates successful franchise businesses from struggling brands, and how investors can evaluate opportunities before committing capital. His experience provides valuable lessons for anyone interested in business acquisitions, entrepreneurship, and income diversification.

Who Is Alex Smereczniak?

Alex Smereczniak is an entrepreneur, franchise industry expert, and co-founder and CEO of Franzy, a technology platform designed to help individuals discover and evaluate franchise investment opportunities. He began his entrepreneurial journey at Wake Forest University, where he purchased a laundry delivery business at just 18 years old using partnerships and seller financing. After working at Ernst & Young, he co-founded 2ULaundry, a laundry delivery company that raised $33 million in venture capital and expanded into approximately 18 to 19 cities. His experience building the LaundroLab franchise, which sold 118 franchise locations in 14 months, eventually inspired him to create Franzy and make franchise investing more accessible through technology, financial transparency, and personalized guidance.

Why Franchise Investing Appeals to Entrepreneurs and Real Estate Investors

Franchise investing provides an opportunity to enter business ownership with an established operating model instead of developing every system independently. Franchise owners typically receive access to brand standards, marketing strategies, operational procedures, and training programs designed to help them operate their businesses. These resources can be particularly attractive to professionals who have investment capital but limited experience launching and managing a company.

Alex explains that franchising is not a separate asset class but a business model that operates across numerous industries. Opportunities exist in food service, hospitality, health and wellness, education, home services, and other sectors. This flexibility allows investors to explore businesses that align with their financial resources, professional strengths, and desired level of involvement.

For multifamily real estate investors, franchise ownership introduces a different approach to building income and business equity. While real estate investments often focus on rental income, property appreciation, and operational improvements, franchise investing involves acquiring and operating a business within an established system. Both strategies require careful financial analysis, management oversight, and an understanding of the risks associated with ownership.

How Alex Smereczniak Built a Scalable Franchise Business

Alex’s introduction to entrepreneurship began when he and two partners purchased a college laundry delivery business for approximately $30,000. With only $11,000 available upfront, they negotiated a seller-financed arrangement that allowed them to pay the remaining purchase price through a percentage of future revenue. The experience taught him practical lessons about business valuation, cash flow, negotiations, and operating a company.

After college, Alex launched 2ULaundry in Charlotte, North Carolina, with the goal of bringing on-demand laundry services to households nationwide. The company initially operated as a technology marketplace that connected customers with existing laundromats. However, as demand increased, Alex discovered that many independent laundromats lacked the employees, infrastructure, and operational capabilities necessary to handle large volumes of additional business.

To solve the problem, the company began operating its own laundromats, including converting a former McDonald’s location into a 6,500-square-foot laundry facility. The location generated more than $1 million in walk-in revenue while also processing substantial delivery volume. Although the model demonstrated significant revenue potential, expanding company-owned locations required considerable capital.

Alex and his team eventually developed LaundroLab, a franchise model that allowed independent owners to fund and operate new locations while following established systems and operational standards. The company sold 118 franchise locations in just 14 months, demonstrating how franchising could support expansion without requiring the parent company to finance every new location.

Franchise Investing vs. Starting an Independent Business

One of the central discussions in the episode focuses on the differences between franchise investing and starting an independent business. Alex emphasizes that entrepreneurship involves considerable uncertainty, particularly when founders must develop their own products, operational systems, marketing strategies, and customer acquisition processes.

Franchising can reduce some of that uncertainty by providing a tested framework for operating a business. Rather than determining every process independently, franchise owners can follow an established model while receiving guidance from the franchisor. However, the strength of that support varies significantly between brands, and purchasing a franchise does not guarantee profitability.

Alex discusses several potential advantages of franchise investing:

• Established operating systems: Franchise owners receive business procedures, training, and operational guidance that can simplify the startup process.

• Brand recognition and marketing support: Established franchises may benefit from existing customer awareness and coordinated marketing strategies.

• Purchasing power: Larger franchise networks may negotiate better supplier pricing than independent businesses.

• Business financing opportunities: Certain franchise investments may qualify for SBA financing, depending on the borrower, business, and lender requirements.

• Scalability: Investors may have opportunities to expand into multiple franchise locations after establishing a successful initial operation.

Alex also discusses business failure rates and the potential advantages of established franchise systems. While he cites figures suggesting franchises may experience lower failure rates than independent businesses, actual results depend on the franchise brand, industry, market conditions, and operator performance. Investors should evaluate the financial performance of individual franchise systems rather than assuming that every franchise carries the same level of risk.

How to Evaluate Franchise Investment Opportunities

Successful franchise investing begins with understanding the financial and operational characteristics of the business being purchased. Alex explains that investors should evaluate more than the popularity of a brand or the projected revenue of a location. They must also determine whether the franchisor’s incentives align with the long-term profitability of its franchise owners.

He discusses how certain franchise brands have struggled because of excessive expansion, high supplier costs, and business models that prioritize franchisor revenue over franchisee profitability. For example, opening too many locations within the same market can create competition between franchisees and reduce individual store performance. Similarly, requiring owners to purchase supplies at inflated prices can weaken operating margins.

Before purchasing a franchise, investors should investigate several important factors:

1. Financial performance: Review available revenue information, operating expenses, profit margins, and the capital required to launch the business.

2. Franchisee satisfaction: Speak directly with existing franchise owners about their experiences, challenges, profitability, and willingness to invest again.

3. Market demand: Evaluate customer demand, local competition, and whether the market can support additional franchise locations.

4. Franchisor support: Understand the training, marketing assistance, operational guidance, and ongoing resources provided by the franchise company.

5. Growth strategy: Determine whether the franchisor prioritizes sustainable franchisee profitability or simply opening additional locations.

Alex strongly recommends speaking with existing franchisees before making an investment decision. These conversations can reveal operational challenges, unexpected expenses, and important details that may not be immediately apparent in promotional materials. Like multifamily real estate due diligence, franchise evaluation requires investors to verify assumptions and understand the economics before committing capital.

Using AI to Identify Franchise Investment Opportunities

Alex’s experience with franchise development exposed another challenge in the industry: finding the right franchise opportunity can be difficult when investors have limited access to reliable information. Traditional franchise brokers often represent a relatively small selection of brands and may receive substantial commissions when buyers purchase a franchise.

Alex explains that his previous franchise company paid brokers commissions equivalent to approximately 60% of the initial franchise fee. He recognized that this compensation structure could create incentives for brokers to recommend brands offering larger commissions rather than opportunities best suited to the buyer.

To address these challenges, Alex co-founded Franzy, a technology platform that combines franchise research, artificial intelligence, and personalized guidance. The platform features approximately 4,000 franchise brands and helps prospective buyers narrow their options based on financial circumstances, risk tolerance, operational strengths, and personal preferences.

Its AI-driven recommendation process allows investors to compare opportunities and refine their selections as they provide additional information. Franzy also offers access to franchisee interviews and optional one-on-one coaching to help buyers evaluate potential investments. According to Alex, the service is free for prospective franchise buyers, with participating franchise brands paying the platform.

For investors accustomed to using technology and data to evaluate multifamily properties, this approach introduces similar research capabilities to franchise investing. It also reinforces the importance of matching an investment opportunity with an individual’s financial objectives, capabilities, and willingness to manage business operations.

Financing Franchise Investments With SBA Loans and Retirement Funds

Financing is another important consideration for investors exploring franchise ownership. Alex explains that franchise investing does not always require buyers to fund the entire acquisition or startup cost with personal savings. Depending on the business and the investor’s financial qualifications, financing options may make certain opportunities more accessible.

One option discussed is financing through the Small Business Administration’s loan programs. Alex notes that some franchise businesses, particularly in home services, may require less than $150,000 in total startup capital. He explains that certain SBA-financed transactions may involve equity contributions starting around 10%, although other transactions can require 20% to 30% or more.

For example, a $150,000 franchise investment with a 20% equity contribution would require approximately $30,000 upfront, with the remaining amount potentially financed through a qualifying loan. Actual financing terms depend on lender underwriting, borrower qualifications, eligible expenses, and applicable SBA requirements.

Alex also introduces Rollovers as Business Startups, commonly known as ROBS. This arrangement can allow eligible individuals to use certain retirement funds to finance a business without triggering the taxes and early withdrawal penalties associated with a conventional retirement distribution, provided the transaction is properly structured and maintained.

Although these financing strategies can provide access to business ownership, investors must consider debt obligations, working capital requirements, retirement savings exposure, and the possibility of business losses. Consulting qualified lending, tax, and legal professionals is an important part of evaluating these options.

Building Long-Term Wealth Through Franchise Investing and Business Ownership

Throughout the conversation, Alex emphasizes that building a successful business requires understanding personal strengths and recognizing when professional management or specialized expertise is necessary. His own career evolved from operating a technology startup to managing physical laundromats, developing a franchise network, and eventually creating a technology platform for franchise investors.

After years of managing the operational demands of his laundry businesses, Alex recognized that his greatest strengths were building teams, developing software, and driving sales. He eventually brought in additional leadership to manage day-to-day operations, allowing him to focus on opportunities better aligned with his abilities.

This lesson is particularly relevant for real estate investors considering business ownership. Just as multifamily investors must determine whether to manage properties themselves or hire professional property managers, franchise investors must evaluate their desired level of operational involvement. Some franchise models require active daily management, while others may support management structures that allow owners to focus on oversight and strategic growth.

Ultimately, franchise investing offers another potential path for entrepreneurs and investors interested in income diversification, business equity, and long-term wealth creation. Alex Smereczniak’s experience demonstrates the importance of selecting the right business model, conducting thorough due diligence, securing appropriate financing, and building teams capable of supporting sustainable growth.

If you want to hear the full conversation with Alex Smereczniak and learn more about franchise investing, evaluating franchise opportunities, and financing business ownership, watch the podcast video or read the complete transcript below.

Franchise Investing FAQ

What Is Franchise Investing?

Franchise investing involves purchasing the rights to operate a business using an established company’s brand, operating systems, and business model. Investors typically pay an initial franchise fee and ongoing royalties in exchange for training, marketing support, and operational guidance. Alex Smereczniak explains that franchise investing allows entrepreneurs to enter business ownership without developing an entirely new company from scratch.

How Does Franchise Investing Work?

Franchise investing works by allowing an individual, known as a franchisee, to operate a business under an established franchisor’s brand and operating standards. The franchisee provides the investment capital and manages the business while receiving access to the franchisor’s systems, training, and support. Alex Smereczniak explains that this structure can help entrepreneurs expand into industries such as food service, home services, hospitality, education, and health and wellness.

Is Franchise Investing a Good Way to Build Wealth?

Franchise investing can provide opportunities to build wealth through business ownership, operating profits, and potential business appreciation. Successful franchise owners may expand into multiple locations, creating additional revenue streams and increasing the value of their businesses. However, Alex Smereczniak emphasizes that investors must carefully evaluate financial performance, operating expenses, market demand, and franchisor support before purchasing a franchise.

How Much Money Do You Need to Start Franchise Investing?

The amount of money required for franchise investing depends on the brand, industry, location, and business model. Alex Smereczniak explains that initial franchise fees can range from approximately $10,000 to $80,000, although investors must also account for equipment, real estate, construction, and working capital. Some home service franchises may require less than $150,000 in total startup capital, making them potentially accessible to investors with more limited resources.

Can You Use an SBA Loan for Franchise Investing?

Yes, eligible franchise investments may qualify for financing through Small Business Administration loan programs. Alex Smereczniak explains that some franchise buyers may need to contribute approximately 10% to 30% of the total investment, depending on the transaction and their financial qualifications. SBA financing can help entrepreneurs acquire or launch franchise businesses without providing the entire investment amount upfront. Loan approval and down payment requirements depend on the lender, borrower qualifications, and applicable SBA rules.

Can You Use Retirement Funds to Buy a Franchise?

Certain investors may be able to use retirement savings to finance franchise investing through a Rollovers as Business Startups arrangement, commonly called ROBS. Alex Smereczniak discusses how this strategy can allow eligible individuals to invest qualifying retirement funds into a business without the usual early withdrawal penalties when properly structured. However, ROBS arrangements involve specific tax and compliance requirements and can place retirement savings at risk. Investors should consult qualified financial and tax professionals before pursuing this financing strategy.

What Are the Risks of Franchise Investing?

Franchise investing involves risks such as high startup costs, ongoing royalty payments, operating expenses, market competition, and potential business failure. Alex Smereczniak highlights examples of franchise systems that struggled because of excessive expansion, unfavorable supplier pricing, and insufficient attention to franchisee profitability. Investors should carefully review financial disclosures, speak with existing franchise owners, and evaluate whether the franchisor’s business model supports sustainable long-term operations.

How Do You Evaluate a Franchise Before Investing?

Evaluating a franchise investment requires reviewing its financial performance, startup costs, operating expenses, market demand, and franchisor support. Alex Smereczniak recommends speaking directly with existing franchisees to understand their experiences, financial challenges, and satisfaction with the business. Investors should also examine the Franchise Disclosure Document, assess local competition, and determine whether the business aligns with their financial goals and management capabilities.

What Is the Difference Between Franchise Investing and Real Estate Investing?

Franchise investing focuses on owning and operating a business under an established brand, while real estate investing generally involves acquiring properties to generate rental income, appreciation, or other financial returns. Multifamily real estate investors often focus on property operations, occupancy, rental income, and asset management. Franchise investors must evaluate business operations, customer demand, employee management, and franchisor relationships. Both investment strategies require due diligence, financial planning, and effective management to pursue long-term profitability.

Can Franchise Investing Generate Passive Income?

Franchise investing may provide opportunities for semi-absentee ownership when a business has experienced managers and reliable operational systems. However, many franchises require substantial involvement from their owners, particularly during startup and early growth. Alex Smereczniak emphasizes the importance of understanding personal strengths and building effective management teams. Investors seeking passive income should carefully evaluate the operational responsibilities associated with each franchise opportunity rather than assuming that franchise ownership is automatically passive.

How Can AI Help Investors Find Franchise Opportunities?

Artificial intelligence can help investors identify franchise opportunities that match their financial resources, risk tolerance, professional experience, and business interests. Alex Smereczniak explains that his platform, Franzy, uses AI-driven recommendations to help prospective buyers explore approximately 4,000 franchise brands. The platform also provides franchise research resources, franchisee interviews, and optional personalized coaching to support investment decisions.

What Should First-Time Franchise Investors Look For?

First-time franchise investors should look for established operating systems, transparent financial information, comprehensive training, and strong franchisor support. Alex Smereczniak recommends evaluating whether the franchise company prioritizes the profitability and long-term success of its franchisees. Investors should also consider startup costs, financing options, local market demand, and the time required to operate the business. Choosing a franchise that aligns with personal strengths and financial objectives can help investors make more informed ownership decisions.

00:00:31:25 – 00:00:50:08
Rod Khleif
Welcome back to lifetime cash flow through real estate investing. I’m Rod Khleif and I’m thrilled you’re here. And we have a different type of an interview today because, you know, I’ve been trying different asset classes in real estate talking about that. Senior housing is a big one for me right now. I’m actually doing a senior housing boot camp here in short order, a virtual one, because I love it so much.

00:00:50:14 – 00:01:12:24
Rod Khleif
The asset class and my students now own a few thousand units, and I own a bunch of Alf’s already and love that. But you know, we’re trying different things business development, business purchasing. So today I’ve got Alex Nick here, and he’s the founder or co-founder and CEO of Franzi, which is a platform that they call the Zillow of franchising.

00:01:12:27 – 00:01:31:29
Rod Khleif
And I believe in franchising. You know, I’ve built 32 businesses so far in my lifetime. And, you know, you know, I don’t call them failures when they fail. I call them seminars. And several of those businesses with tens of millions of dollars. Most, however, were spectacular flaming seminars. And had I bought franchises, that may not have been the case.

00:01:32:00 – 00:01:35:14
Rod Khleif
So I totally believe in this concept. Welcome to the show, Brother Rod.

00:01:35:14 – 00:01:37:03
Alex Smereczniak
Thanks for having me to be here.

00:01:37:09 – 00:01:43:10
Rod Khleif
So tell your story. I know you’ve done some of your own franchising. Let’s hear it.

00:01:43:11 – 00:02:04:14
Alex Smereczniak
Yeah. So I’m originally from the cold, cold north. I’m from Minnesota. And ended up down in North Carolina for college. So I took this very traditional path. I went to high school and I think I drank the code that everyone else drinks in life where it’s like get good grades in high school to get into a good college, you get good grades there and then go work at a fortune 500 and do that for 40 years and die, you know.

00:02:04:18 – 00:02:21:18
Rod Khleif
Let me stop you there for a second. My dad worked for Continental Airlines for 36 years. He loved that company. In fact, you could tell a continental plane because they had the golden tail, and he would make us put our hands over our hearts when one of those flew by. He worked for him for 36 years. He got laid off.

00:02:21:21 – 00:02:29:22
Rod Khleif
The only job security is between your freaking brain, between your ears, and, you know. And that’s why I love what you’re doing here. Anyway, sorry to interrupt, but I.

00:02:29:24 – 00:02:45:26
Alex Smereczniak
Tell people all the time to a salary or a job isn’t as safe either, because your your income is not diversified. It’s one source. And that’s one of the riskiest things you can do. But yeah. So I you know, I grew up believing that that’s the path that it’s what I’m supposed to do. And when I was at a Wake Forest University, that’s where I went to college.

00:02:45:26 – 00:03:02:19
Alex Smereczniak
I studied finance, but I got into this laundry and dry cleaning delivery business my freshman year. I was 18 years old. I worked for them as a way to make some side cash my freshman year, and they were graduating seniors that started the business. And I said, are you going to sell it? You’re going to shut it down.

00:03:02:19 – 00:03:17:26
Alex Smereczniak
What are you going to do? Like we’re going to sell it. It’s like how much they said $30,000. And my 18 year old jaw hit the floor. I was like, that’s the most money in the world. I have three grand saved up, maybe. And they’re like, well, if you figure it out, put a deal together. Well, you know, we’ll hear the offer, otherwise someone else will buy it.

00:03:18:02 – 00:03:32:06
Alex Smereczniak
So I found two partners. We got to 11 grand. Still not enough. And then we started knocking on the business school professor’s doors. Well, and we were in the business school. You had to wait till you were a junior to do that. But they saw we were eager and bright eyed and bushy tailed and like. All right, we’ll help you figure this out.

00:03:32:08 – 00:03:50:06
Alex Smereczniak
Do you know what seller financing is? And we’re like, no. What’s that? Teach us? Do you know what a discounted cash flow analysis is? No. What does that teach us? So they help us put the model together to value the business. And then we went back and said, hey, we got 11 grand, but we’ll do x percent of revenue the next two years while we run it, and we should probably make more than 30 grand of if we do a good job.

00:03:50:06 – 00:04:08:21
Alex Smereczniak
And here’s the plan. We have to do a good job. And so we bought this business at 18. We ate X the revenue. The first year they got way more than 30 grand out of us. But I learned more doing that than any class I’ve ever taken in my life. I would be my financial modeling classes, dude.

00:04:08:22 – 00:04:21:10
Rod Khleif
Most professors in business school have never built a business. They’ve never owned a business. I mean, hello. You know, you’re going to go work out. You want a fat person to be your trainer or you want somebody buff, right? You know, I mean, it’s the same thing. So. Yeah.

00:04:21:15 – 00:04:48:06
Alex Smereczniak
So I mean, it was it was incredible. I mean, we I read in the classes and they’re like, how many passengers can we fit in a delta? 747 and I’d be like, how many bags of laundry can we fit into the van? I would change the problem set to, to fit my business. And so I, I only not only did I make some money along the way doing it, I learned more through the classes as well because I’d be thinking about how could this, you know, be useful for the business that I’m in versus this theoretical textbook example?

00:04:48:07 – 00:04:51:14
Alex Smereczniak
And so it made the learning experience on both ends just way better.

00:04:51:15 – 00:04:55:06
Rod Khleif
Oh yeah. Sounds like it. Because you’re you’re. Yeah. No, I can totally see the dynamic there.

00:04:55:09 – 00:05:08:28
Alex Smereczniak
Loved it. I was I was addicted to it. And I had fun. You know, like I think a lot of college kids do, but I was just I found this thing that I was like, I can’t believe work can be this enjoyable, because my life before that was working at a sporting goods store, at a ski resort, and I was like, this sucks.

00:05:09:02 – 00:05:14:02
Rod Khleif
Listen, if you’re not, if you don’t, if you’re not working your own diem, you’re building somebody else’s dream, right? Yeah.

00:05:14:05 – 00:05:22:19
Alex Smereczniak
So that I got that small taste of that. And so we when we graduated, I wanted to go to Chapel Hill and Duke and let’s expand this thing to other colleges nationwide.

00:05:22:24 – 00:05:28:09
Rod Khleif
And this was inside the college. You were doing the laundry. This was all forest, almost like Facebook ish. Okay.

00:05:28:10 – 00:05:45:13
Alex Smereczniak
Love is a subscription model. Your mom and dad would sign up at the beginning of the year because they were worried about Susie or Timmy, like going off, and I mean the business. Did you know 2 to $300,000 in revenue a school year, but like 80% margin because it was subscription? So we go to, you know, we go to graduate.

00:05:45:13 – 00:05:59:16
Alex Smereczniak
I want to expand it. My partner is like, I got to go do investment banking in New York. I got I got to go do marketing for Coca Cola. And I was I don’t want to be the the asshole that holds them back from this, like, dream job. So we sold it. And I went and worked for the man, even though I told myself I wasn’t going.

00:05:59:16 – 00:06:00:08
Rod Khleif
To know.

00:06:00:10 – 00:06:06:08
Alex Smereczniak
So I was a I was at Ernst and Young for a year and a half. Love the people. Learned a lot.

00:06:06:10 – 00:06:06:22
Rod Khleif
Oh, yeah.

00:06:06:23 – 00:06:14:16
Alex Smereczniak
Hated the work. It was just so mundane and like, oh, let’s go into Wells Fargo and like, roll out this risk policy and I just.

00:06:14:17 – 00:06:16:00
Rod Khleif
Please shoot me. Yeah, okay.

00:06:16:00 – 00:06:32:01
Alex Smereczniak
I just did not like it. So I wasn’t sure if I was going to be there for a while or not. And there’s a funny story there. I had interned for my junior to senior year, and one of the guys that I was friends with, you know, worked there. He’s a year or two older than I was.

00:06:32:03 – 00:06:32:21
Rod Khleif
Where was this?

00:06:32:21 – 00:06:33:26
Alex Smereczniak
This was at you. I still.

00:06:33:27 – 00:06:34:26
Rod Khleif
Oh, earnest and young.

00:06:34:27 – 00:06:52:00
Alex Smereczniak
Yes, I interned there. And they’re talking about giving me a full time offer or not to come back after I graduate. And I did a really good job during my internship. I, you know, completed my projects. Managers loved me. But there was one guy on the hiring panel. I was like, I don’t think we should hire him. And I found out later I was like, well, why?

00:06:52:00 – 00:07:01:23
Alex Smereczniak
Why was he? He likes me. He went to awake. Why didn’t he? Why did he say that? He’s like, he said that if we hire Alex, we’re going to spend two years of money training him and investing in him, and he’s going to leave to.

00:07:01:23 – 00:07:04:04
Rod Khleif
Go start. He saw he saw your he saw your drive.

00:07:04:05 – 00:07:05:11
Alex Smereczniak
And I was offended.

00:07:05:18 – 00:07:07:10
Rod Khleif
Insightful. Yeah.

00:07:07:11 – 00:07:11:01
Alex Smereczniak
I said I’m going to stay. I want to become a partner here. I’m going to climb this lavender, do this thing.

00:07:11:02 – 00:07:12:12
Rod Khleif
And you saw something in you.

00:07:12:13 – 00:07:15:21
Alex Smereczniak
And he nailed it all of a sudden, dot two years, I left.

00:07:15:24 – 00:07:17:13
Rod Khleif
Where did franchising come in all this?

00:07:17:14 – 00:07:38:25
Alex Smereczniak
Yeah. So I I’ll speed it up a little bit. So after I left the UI, it was to go start another laundry and dry cleaning delivery business. But instead of college campuses I thought, why not do this nationwide at this time? You saw Uber, you know, really taking off. This was in 2014, 2015 Instacart shipped WAG Rover. Everyone wants everything delivered, Uber Eats, all this stuff is taken off.

00:07:38:25 – 00:07:42:17
Alex Smereczniak
And I thought, well, laundry is terrible and time consuming.

00:07:42:18 – 00:07:43:16
Rod Khleif
And consistent.

00:07:43:17 – 00:07:51:13
Alex Smereczniak
Busy families and it never ends. So like, why don’t we solve that and deliver? We’ll pick it up and do it all for you, not just for college kids. So we launched this in Charlotte.

00:07:51:16 – 00:07:51:25
Rod Khleif
What was.

00:07:51:25 – 00:07:53:17
Alex Smereczniak
It called? Two you laundry.

00:07:53:18 – 00:07:54:07
Rod Khleif
Two laundry.

00:07:54:08 – 00:07:55:12
Alex Smereczniak
Terrible name. In hindsight.

00:07:55:15 – 00:07:56:15
Rod Khleif
It says it says it all.

00:07:56:17 – 00:07:59:15
Alex Smereczniak
Everyone would call it you two laundry mean.

00:07:59:16 – 00:08:07:13
Rod Khleif
It says it. It says what you’re doing. It’s descriptive, which is not necessarily a bad thing. It was the frenzy. I guess that kind of comes close to it.

00:08:07:13 – 00:08:22:03
Alex Smereczniak
Was the number two, and we had it shaped like a clothing hanger in the logo. We thought we were so clever. Right. And we’re 24 at the time. Very little money. We’d made some money from the college, you know, laundry thing, but we had five guys living in a three bedroom apartment. When we started, this.

00:08:22:03 – 00:08:23:27
Rod Khleif
Business was like a computer startup.

00:08:23:29 – 00:08:27:04
Alex Smereczniak
My mattress, my co-founders mattress, and then a guy that, you know, he.

00:08:27:04 – 00:08:27:21
Rod Khleif
Was.

00:08:27:23 – 00:08:31:23
Alex Smereczniak
He was kind of struggling from our hometown, like, just come along, you can be our driver or something. We’ll figure it out.

00:08:31:25 – 00:08:33:27
Rod Khleif
Did you roll it out in one city? I assumed to start.

00:08:33:29 – 00:08:52:29
Alex Smereczniak
Started Justin, Charlotte. And then long story short, I stayed for eight years. Wow. We raised 33 million in venture capital. Wow. Expanded to 1819 cities or so. And eventually we hit this as startups. Do you hit all these kind of roadblocks? And you think that it’s going to be this straight line, but you don’t have to dig.

00:08:52:29 – 00:08:55:05
Rod Khleif
Into the business is a straight line. Yeah, yeah.

00:08:55:05 – 00:09:08:17
Alex Smereczniak
We learned that, you know, early on. And one of the the walls we hit was there isn’t a supply chain that can do all this volume that we’re doing. We thought we could just outsource to mom and pop laundromat, just like the restaurant. You know, the food delivery companies just go to.

00:09:08:19 – 00:09:11:12
Rod Khleif
Yeah. Because you weren’t actually doing the work. You were outsourcing it.

00:09:11:13 – 00:09:12:27
Alex Smereczniak
Got a marketplace that sat in.

00:09:12:27 – 00:09:14:02
Rod Khleif
The middleman, basically.

00:09:14:03 – 00:09:32:04
Alex Smereczniak
Just like DoorDash does. Well, we’re just going to do the same thing. And the issue that we had was, well, a restaurant is already making all this, you know, fried chicken or fried rice or whatever. And they’re, you know, they’re just getting more orders from a DoorDash. We thought, oh, laundromats. Same thing. Well, what we got wrong was laundromats are a passive self-service type of business.

00:09:32:04 – 00:09:33:23
Alex Smereczniak
The owner is more of a a real estate.

00:09:33:23 – 00:09:35:06
Rod Khleif
Or they don’t want to do the actual work.

00:09:35:08 – 00:09:52:17
Alex Smereczniak
They don’t have a team of employees there. Most of them are unattended. If they do have an employee, it’s 1 or 2. So we said, hey rod, we’re going to triple your revenue, but you got to process all that. And all they heard was you’re in a triple my revenue. I’ll figure it out. And so they start hiring people and they shift from a landlord type of role to an operator.

00:09:52:21 – 00:09:53:15
Alex Smereczniak
And you can guess.

00:09:53:15 – 00:09:55:05
Rod Khleif
What the problems that show up with that.

00:09:55:06 – 00:09:57:01
Alex Smereczniak
Most of these guys are operators.

00:09:57:02 – 00:09:57:21
Rod Khleif
Yeah. Wow.

00:09:57:25 – 00:10:14:26
Alex Smereczniak
And so we started losing people’s clothes, and they were like, this isn’t gonna scale. This is what it’s like with four laundromats. What’s it like with 40 or 400? So we started hiring our own teams to go into other people’s laundromats during underutilized hours. Laundromats are busy Monday through Friday.

00:10:14:28 – 00:10:17:22
Rod Khleif
Oh, my God, the brain damage is so with that, I can’t even imagine.

00:10:17:23 – 00:10:23:03
Alex Smereczniak
I think I was young, so I would be in the laundromat at three in the morning. You’re managing the team?

00:10:23:05 – 00:10:25:20
Rod Khleif
How long did you do that before you realized enough’s enough?

00:10:25:22 – 00:10:26:13
Alex Smereczniak
Ten months.

00:10:26:14 – 00:10:27:25
Rod Khleif
Okay. Yeah.

00:10:27:28 – 00:10:42:22
Alex Smereczniak
But it taught us the process of, like, how do we clean? Let’s build technology to make this easier to facilitate. And that’s where we got the idea of, well, why don’t we, you know, we’re putting so much volume to these locations, why don’t we own our own laundromats? So then we start getting into real estate and buying laundromats.

00:10:42:22 – 00:10:53:17
Alex Smereczniak
Our first real estate deal that I ever did, I was 26 years old, was with McDonald’s Corporation. It was a corporate owned store. It wasn’t a franchise location. So we’re dealing with Chicago like we’re we’re.

00:10:53:17 – 00:10:54:23
Rod Khleif
Dealing with shutting it down.

00:10:54:24 – 00:11:06:01
Alex Smereczniak
They a light rail came into Charlotte that blocked some visibility in McDonald’s. Is McDonald’s right? They just moved right across the light rail. They didn’t care to, you know, let the store go and just move a brand new and right across from.

00:11:06:01 – 00:11:11:25
Rod Khleif
The you took over that facility or put it into that into an existing. Did you keep the same the the arches and all that shit.

00:11:12:02 – 00:11:16:27
Alex Smereczniak
So it’s funny, it was one of the old McDonald’s that had the huge glass windows with the play place, the giant.

00:11:16:27 – 00:11:18:03
Rod Khleif
Plate and the ones.

00:11:18:03 – 00:11:38:29
Alex Smereczniak
Yeah. And so we turned this McDonald’s into a 6500 square foot laundromat. Massive. Probably one of the biggest laundromats in Charlotte, North Carolina. And the idea was that seven days a week, it would be open to the public. You know, walk in, you know, lower income household customers. But then Monday through Friday when a laundromat is not as busy, I mean, people aren’t washing their clothes at 10 a.m. on a Wednesday.

00:11:39:01 – 00:11:46:26
Alex Smereczniak
We do all the delivery volume then. So we shut these roll up doors down and you know, partition off 20% of the store for walk ins and then 80% was set up like.

00:11:46:28 – 00:11:47:23
Rod Khleif
And it was working.

00:11:47:24 – 00:12:00:18
Alex Smereczniak
It was fantastic. I mean, that that laundry, I was doing a million plus and, you know, walk in revenue. And then we layered millions of dollars in delivery volume on one of the most, you know, highest revenue generating laundromats, I think, in the country.

00:12:00:20 – 00:12:01:04
Rod Khleif
Yeah.

00:12:01:08 – 00:12:16:00
Alex Smereczniak
And so, like, we need to do more of these. We need to do a hundred of these. But the problem is these things cost a million plus to build. We aren’t bankable yet at that scale. We’re not going to use venture capital to go build a bunch of physical, terrible use of equity, right? So what do we do?

00:12:16:03 – 00:12:30:07
Alex Smereczniak
And we’re like, well, what if we franchise the brick and mortar part? And that solves the issue we had with the traditional laundromat owner. We get to handpick the operator. They know what they’re getting into, or it’s both a walking, you know, revenue generating business plus a delivery business. So they know they’re going to manage a team of people.

00:12:30:13 – 00:12:36:29
Alex Smereczniak
We get to design the spec of the store, the layout. We’re very much involved in some level of control. But.

00:12:36:29 – 00:12:45:00
Rod Khleif
Then we have guidance and metrics and, and all these things that are necessary in, in, in minimizing failure.

00:12:45:04 – 00:13:03:07
Alex Smereczniak
1,000%. And we avoid the issue we have with the, the independent operator, where, Ron, I’m not kidding. We would go into some of these independent laundromats, and we’re bringing them five, ten, $15,000 a month. They didn’t have. And they would say, hey, Alex, you know, I got to start charging another 50 bucks a month. Your team’s using too much of the toilet paper.

00:13:03:13 – 00:13:07:29
Alex Smereczniak
And I was like, Steve, come on. Like, you’re missing the, you know, the forest.

00:13:07:29 – 00:13:09:28
Rod Khleif
For the trees. And. Yeah, that you get that.

00:13:10:01 – 00:13:13:29
Alex Smereczniak
So we, we, we started franchising and built around. That’s where the long answer.

00:13:14:01 – 00:13:15:02
Rod Khleif
Is that laundry lab.

00:13:15:03 – 00:13:16:21
Alex Smereczniak
So that’s laundry lab. That’s the franchise.

00:13:16:22 – 00:13:17:20
Rod Khleif
Is it still around or.

00:13:17:23 – 00:13:23:14
Alex Smereczniak
Yeah it is. So we sold 118 locations in 14 months. We knew nothing about franchising.

00:13:23:18 – 00:13:24:22
Rod Khleif
That’s amazing.

00:13:24:25 – 00:13:31:16
Alex Smereczniak
We’ve Dan, my co-founder and I have always been good about knowing what we don’t know, which is a lot.

00:13:31:19 – 00:13:32:27
Rod Khleif
Just the same. Yeah.

00:13:32:29 – 00:13:43:25
Alex Smereczniak
So we’ll always raise our hand. Like that guy knows a lot about franchising. Let’s go learn as much as we can. Have him help us consult with us. And so we had a bunch of individuals rallied behind us putting the franchise playbook together and.

00:13:43:27 – 00:13:46:22
Rod Khleif
The experts in the franchise space. So you learn from them.

00:13:46:23 – 00:13:47:08
Alex Smereczniak
You learn from.

00:13:47:08 – 00:13:50:00
Rod Khleif
Them, and you still have laundry lab. You’re still you’re still running it.

00:13:50:00 – 00:14:03:21
Alex Smereczniak
Yep. So I, I hired a CEO eventually in 2023. I had about of kind of like personal stuff, but my dad was diagnosed with cancer. My wife found out she wasn’t a. Us do.

00:14:03:21 – 00:14:04:21
Rod Khleif
It from the jab.

00:14:04:22 – 00:14:06:20
Alex Smereczniak
He, he had bladder cancer.

00:14:06:21 – 00:14:12:24
Rod Khleif
Got it from the jab. Really? Oh, yeah. She got cancer from the jab. She’s okay now. Cancer free, thank God. But, yeah, really, I’m sorry to hear about your dad.

00:14:12:24 – 00:14:17:06
Alex Smereczniak
But he’s a he’s on the other end of it, too. Like cancer free today. I had to go get checked every three months.

00:14:17:08 – 00:14:27:17
Rod Khleif
I ever met him, man. I’m telling you, if you if you know somebody that’s got cancer, for God’s sakes, research ivermectin and all it is, it is miraculous. Anyway, we diverged there for.

00:14:27:17 – 00:14:40:16
Alex Smereczniak
A minute. So I had that happen. My Co at the business, 47 years old, randomly had a heart attack and passed away. And just like that was right around the time my dad stuff was going on. So like all these emotional, you know, things happening. And then.

00:14:40:16 – 00:14:41:15
Rod Khleif
I read the wife to.

00:14:41:16 – 00:14:52:09
Alex Smereczniak
Then my wife found out she wasn’t a US citizen after thinking she was her whole life. Voted in multiple presidential elections, interned for a Republican congressman in North Carolina, and like.

00:14:52:11 – 00:14:53:18
Rod Khleif
She had deported or what?

00:14:53:20 – 00:15:01:23
Alex Smereczniak
No, she didn’t get the port, but she just it paused hers and lives for 2 or 3 years like so. That was another thing to deal with, navigate.

00:15:01:27 – 00:15:02:24
Rod Khleif
A lot of a lot of drama.

00:15:02:25 – 00:15:15:00
Alex Smereczniak
A lot of shit going on. And so I, I go to our board, I’m like, hey, this is happening. And they’re like, why didn’t you say something six months ago? And I was like, I thought, you know, I figured I could power my way through it, but I’m just I’m having a hard time with all these things happening.

00:15:15:02 – 00:15:28:26
Alex Smereczniak
And so, like, go take, you know, three months sabbatical and just be with your dad, be with your wife, figure this stuff out. So I do that during that time, I really think about what am I good at? What am I not good at? I’ve been doing this for eight years now. Know my blessing. It was.

00:15:28:27 – 00:15:30:20
Rod Khleif
I need to stop.

00:15:30:21 – 00:15:39:21
Alex Smereczniak
And recalibrate. And if you think about the story I just shared, this started out as a tech company, a marketplace, a platform that turned into one that has trucks washing.

00:15:39:23 – 00:15:56:29
Rod Khleif
And that’s the way it works, man. That’s the way it works. It’s crazy how that works in businesses. I started this podcast just to add value and I my first I’m sorry to interrupt, but just triggering memories for me. You know, I started this thing and I used to tell people, if you listen to my early episodes, I’m never going to sell you anything.

00:15:56:29 – 00:16:16:24
Rod Khleif
I just want to add value to you. Now, I’m a freaking liar because I sell everything, but I never plan to. You know? You want to make God laugh. You tell them your plans. But. But it’s crazy how these things morph into other things, you know? But for me, it morphed into I wrote a book, bestselling book. Then I started doing courses and coaching and and, you know, and.

00:16:16:27 – 00:16:18:16
Rod Khleif
Yeah, anyway, crazy.

00:16:18:17 – 00:16:23:00
Alex Smereczniak
You would have you ask, you know, 16 year old you is this what you’d be doing right now?

00:16:23:01 – 00:16:24:22
Rod Khleif
Oh, yeah. No way. No, no.

00:16:24:25 – 00:16:27:06
Alex Smereczniak
Same thing. I’d never thought I’d be doing franchise stuff.

00:16:27:12 – 00:16:39:04
Rod Khleif
So. So you you. So you had an epiphany. You had it. You had a epiphany, and you realize you you, you you want to focus on your strengths and what and what are those strengths?

00:16:39:06 – 00:16:50:13
Alex Smereczniak
I’m good at, you know, building teams, software and sales like, I let’s build an incredible product and let’s go put it to market quickly and get it out. I am not good at deep, deep operations and physical.

00:16:50:15 – 00:17:14:19
Rod Khleif
You don’t enjoy it. Yeah. Same here. Same here. Same here. You know, I’m I’m about getting something started, getting it going and proving it, but not running it. And it’s the same exact. Funny. I was thinking about that today actually. That exact same dynamic for me, but, so. So you came up with this concept of putting together a platform that lists all or most of the franchise opportunities out there?

00:17:14:19 – 00:17:15:07
Rod Khleif
Is that what it is?

00:17:15:08 – 00:17:16:11
Alex Smereczniak
Yeah. So one of the things.

00:17:16:11 – 00:17:22:02
Rod Khleif
That I saw, the franchises access to it or whatever, is that how is it? Sorry. How’s it monetized?

00:17:22:03 – 00:17:36:15
Alex Smereczniak
So we yeah, I guess origin story quick is when we were selling the laundromat franchises. We worked through these these business brokers, franchise brokers specifically. And we were paying them a 60% commission. Six zero. Wow. And my dad was in sales for 37 years.

00:17:36:15 – 00:17:39:06
Rod Khleif
My brother 60% on the on the purchase price.

00:17:39:07 – 00:17:42:27
Alex Smereczniak
On the franchise fee. So a lot of these brands like McDonald’s 35.

00:17:42:29 – 00:17:47:28
Rod Khleif
They help you set it up and get your franchise going. They take 60% of the fee. Holy crap.

00:17:47:29 – 00:17:52:13
Alex Smereczniak
Which, if you think about McDonald’s, doesn’t need it as much. But a lot of these brands that are in franchising are not McDonald’s.

00:17:52:13 – 00:17:53:05
Rod Khleif
And they they need.

00:17:53:05 – 00:18:08:20
Alex Smereczniak
The revenue. They need the franchise fee to reinvest in you and training and marketing and operations and all these other things. And so when 60% goes out the door, I saw these brands just like hemorrhaging cash and having to go raise private equity. And I was like, why? Why are we all doing this? And they’re like, well, we need to grow our system.

00:18:08:20 – 00:18:14:26
Alex Smereczniak
And we’re so focused on our corporate locations and the franchisees that we have to help operate. We just would rather outsource this.

00:18:15:03 – 00:18:15:14
Rod Khleif
The sales.

00:18:15:14 – 00:18:17:11
Alex Smereczniak
Part, but they don’t realize is most.

00:18:17:12 – 00:18:28:01
Rod Khleif
But just to stop you for a minute, just so people understand what what they’re outsourcing, is someone out there selling franchises for them and taking a 60% of not even.

00:18:28:01 – 00:18:30:23
Alex Smereczniak
A full sales process, just the top of the funnel, really.

00:18:30:24 – 00:18:32:01
Rod Khleif
It’s just introduction.

00:18:32:02 – 00:18:35:21
Alex Smereczniak
Introduction to warm you up. All right. Yep. Rod’s serious. He’s got.

00:18:35:21 – 00:18:41:21
Rod Khleif
The money and they throw him over this business. You’re gonna love this business. Let me set up a call with somebody in the team for you. Yes. Wow.

00:18:41:24 – 00:18:42:19
Alex Smereczniak
60%.

00:18:42:20 – 00:18:42:26
Rod Khleif
Oh.

00:18:42:26 – 00:19:00:13
Alex Smereczniak
That’s bullshit. So I looked at the sales process. Let’s say it’s ten steps. They were doing 2 or 3 of the steps, and the brand still is doing 70%, but giving up 60% of the value. And I was like, this can’t be right. And then I learned most franchise brands are not profitable as a whole until they get to 60 or 70 locations open.

00:19:00:15 – 00:19:05:13
Alex Smereczniak
Interesting. Off of the royalty stream. They’re not royalty break even until. So they they need the franchise. There’s a reason.

00:19:05:13 – 00:19:06:10
Rod Khleif
For this. They need the franchise.

00:19:06:10 – 00:19:09:26
Alex Smereczniak
To reinvest. And so I saw that I was like, this is.

00:19:09:29 – 00:19:13:09
Rod Khleif
So let me stop you there for the franchise fees. What’s the range from? From what to.

00:19:13:11 – 00:19:25:19
Alex Smereczniak
What on the low end? I’ve seen 10-K where it’s like you’re buying a bucket and a mop and you’re a commercial cleaning franchise all the way up to, you know, 70, 80 K for the right to get into the business. You then of course have to build the the location.

00:19:25:20 – 00:19:45:03
Rod Khleif
That’s just the franchise fee. But then you got to pay for a location, build it out. You know, I know, I know subway killed it with their franchising. I knew a guy’s partners that had 5 or 6 subways and, and, you know, and, and then, you know, I mean, McDonald’s pretty much memorialized franchising, as it were. But,

00:19:45:05 – 00:19:48:12
Rod Khleif
Okay. So anyway, I’m sorry I interrupted. Okay.

00:19:48:13 – 00:20:16:02
Alex Smereczniak
So I so I see this problem. Are these brands, all of us would go to these conferences and I hate that we have to do it. This like everyone hated it. Right. But it was this necessary evil. And I thought, maybe there’s a way technology can solve this where we democratize access to the data. We put all the brands out there so that an individual can do their own research and do their own searching and, you know, maybe need this broker who’s helping you vet some of these concepts because we’ve just shown you up front what the bankruptcy rate is, what the closure rate is, what the average revenue is, average cost, just like.

00:20:16:06 – 00:20:29:28
Rod Khleif
Let’s talk about that for a second. So guys and you know the stats more than I do I mean I’ve seen them but I’ve forgotten I don’t want to miss state them. But most businesses regular businesses start ups what percent fail and what period of time.

00:20:30:05 – 00:20:32:15
Alex Smereczniak
Yeah. So over a five year period.

00:20:32:19 – 00:20:34:20
Rod Khleif
It’s 90% isn’t it. It’s huge.

00:20:34:21 – 00:20:39:09
Alex Smereczniak
It’s massive. Yeah. Over a five year period, 50% will fail.

00:20:39:10 – 00:20:40:10
Rod Khleif
In franchises.

00:20:40:12 – 00:20:41:16
Alex Smereczniak
In independent businesses.

00:20:41:16 – 00:20:42:16
Rod Khleif
It’s independent okay.

00:20:42:18 – 00:20:43:19
Alex Smereczniak
Independent.

00:20:43:21 – 00:20:44:07
Rod Khleif
But over ten.

00:20:44:07 – 00:20:45:02
Alex Smereczniak
Years 90 plus.

00:20:45:09 – 00:20:54:15
Rod Khleif
90% or ten years 90% fail. I knew there was a 90 in there somewhere. So over five years, half of them fail. Over nine, ten years, 90% fail. What’s the difference with franchises?

00:20:54:15 – 00:21:05:12
Alex Smereczniak
So for a franchise over a five year period, 25 to 15% fail. Okay. So you have you have a one and a half time better chance, you know, with a franchise with a franchise.

00:21:05:13 – 00:21:29:11
Rod Khleif
And guys, obviously if you don’t know what a franchise is, they will give you your operating. They’ll give you your business plan. They’ll tell you what to do. They’ll spec everything. They’ll tell you where to market. And they’ll very often they’ll sell you products or pieces of it and they make profit on it. Obviously, you know, in the food business, they probably supply the food, Starbucks supplies, the whatever, you know, and, and, and, but they’re giving you the whole business model.

00:21:29:19 – 00:21:41:01
Rod Khleif
They’re giving you the business plan, and that’s huge. And then they’re monitoring it with you, coaching you, training you all that. And that’s the benefit of this versus just going cold and trying to start something. Yeah.

00:21:41:03 – 00:21:51:17
Alex Smereczniak
I think that the thing that the light bulb for me that went off was I love entrepreneurship. Like you’re saying, you’re here till you’re addicted to it. Like once you’re in it there’s nothing better. It’s hard and it’s challenging and stressful. And I got gray hairs and you got great hairs.

00:21:51:17 – 00:21:52:15
Rod Khleif
Everyone’s a lot more than.

00:21:52:15 – 00:22:13:27
Alex Smereczniak
You, but it’s it’s super fulfilling. Right. And the average American is not going to go start Tesla or Facebook. And everyone I think thinks they need to do that. I look at franchising. It’s not an asset class. It is a business model. Yeah it is. And it spans food. It spans hospitality. Hilton and Mariota franchises. It spans health and wellness F45 Orange Theory.

00:22:13:27 – 00:22:19:25
Alex Smereczniak
These are franchises spans early childhood education the Goddard school math there’s all these you know there’s a franchise.

00:22:19:27 – 00:22:40:13
Rod Khleif
Home health care I mean you know you name it I mean there’s probably a franchise for starting podcasts for somebody. I mean, there’s there’s there’s you name it. And, and and if I was going to start a business, I would absolutely look at franchises first to see if there was an opportunity there because it just it enhances your your chances of success.

00:22:40:15 – 00:22:47:08
Rod Khleif
I mean, why reinvent the wheel, the wheels already made? Now you’re going to pay a small franchise fee, but it’s not it’s not debilitating in most cases, no.

00:22:47:09 – 00:22:51:05
Alex Smereczniak
And the good model and this is our job is something you find the right fit for you. The good ones.

00:22:51:10 – 00:22:53:09
Rod Khleif
The what do you mean you play a role in that.

00:22:53:09 – 00:23:11:02
Alex Smereczniak
So in in the marketplace we will give you free one on one coaching if you want support and vetting. And so we use two things the Zillow like approach. But then there’s this AI component that says hey rod, tell us all these things about you. What is your risk tolerance? We ask questions, are you going to jump off the bridge to, you know, with your friend to go swimming in the thing below?

00:23:11:10 – 00:23:16:27
Alex Smereczniak
Are you, you know, financially sound or what does that picture look like? What are you good at operationally?

00:23:17:03 – 00:23:22:02
Rod Khleif
So you do a whole questionnaire process through AI through, and then AI maybe points you in the direction of six.

00:23:22:04 – 00:23:33:00
Alex Smereczniak
The 4000 brands we have on the platform and narrows it down to Rod’s top 20 or so. And then it’s kind of comes up, thumbs down. You can say what you like and don’t like, and the more you feed us, the smarter this thing gets about what’s unique to you.

00:23:33:03 – 00:23:37:18
Rod Khleif
And then so in the platform does it have, you know, videos and pictures and.

00:23:37:22 – 00:23:42:03
Alex Smereczniak
Podcasts with franchisees of that brand so you can hear it, okay. You can hear their perspective.

00:23:42:04 – 00:23:54:00
Rod Khleif
You can really do a deeper dive into this than probably than probably even dealing with a broker. Candidly, what an awesome resource man. That’s and it’s frenzy. Frenzy. What? Com yep I love it. No.

00:23:54:03 – 00:23:58:27
Alex Smereczniak
If you want coaching we give it we give like that broker a human like you know resource if you want it.

00:23:58:28 – 00:24:02:08
Rod Khleif
Now who pays for it. The the person looking or the or the franchise.

00:24:02:15 – 00:24:04:21
Alex Smereczniak
Both. All free to you as the buyer.

00:24:04:22 – 00:24:05:02
Rod Khleif
Wow.

00:24:05:05 – 00:24:06:21
Alex Smereczniak
Our goal is we want to champion like.

00:24:06:23 – 00:24:09:19
Rod Khleif
Every franchise franchisees pay for it. Well that’s smart.

00:24:09:20 – 00:24:10:10
Alex Smereczniak
The brand pays.

00:24:10:13 – 00:24:19:00
Rod Khleif
The brand instead of a brand. Franchisee. Is the person. Franchisees franchise or is the brand got it? Franchise or gives receives? Got it. Okay.

00:24:19:04 – 00:24:24:29
Alex Smereczniak
And instead of 60%, we take a flat dollar amount. So that was one issue I had was 60% if.

00:24:25:04 – 00:24:26:05
Rod Khleif
From the franchise or.

00:24:26:06 – 00:24:40:16
Alex Smereczniak
From the franchise or. But think about this. The old traditional model, if you if a broker took 60% and the franchise fee of one brand is 100 K. Yeah, and it’s 50 K for another one, which one do you think the broker is going to put in front of you all the time. Right. They make twice as much.

00:24:40:19 – 00:24:52:28
Rod Khleif
It’s the same way with the real estate broker. But they’re going to show you the expensive house. I’m looking at condos Friday and he sent me a whole bunch of high price was like, dude, I don’t want to go that high. Well and you know, he he cut it off at the bottom. I’m like, no, I want to go to the bottom, okay.

00:24:52:29 – 00:24:54:24
Rod Khleif
And it’s the same freaking thing. Yeah.

00:24:54:27 – 00:25:02:00
Alex Smereczniak
So like and this is what’s happening in franchising on top of it. They’re not showing you the whole universe of property of opportunities.

00:25:02:03 – 00:25:18:05
Rod Khleif
Well, they probably haven’t done enough research on you to make sure. And and in their brain, they’re not they’re going to send you to people they, they’ve done business with before that they understand more and all that. The human the human component in that is not effective. I can see how yours is much more effective.

00:25:18:06 – 00:25:20:28
Alex Smereczniak
Well, human being can’t memorize 4000. Exactly. And how they.

00:25:20:28 – 00:25:24:01
Rod Khleif
Feel and go through the nuances that that your AI will go through.

00:25:24:06 – 00:25:38:00
Alex Smereczniak
Our goal is to add the human to say, hey, how are you going to finance this? Like some of the more deep strategic things on how you’re going to structure this, is this emotionally aligned with the things that AI is maybe not, as, you know, accurate on? Yeah. Plus people just want to buy from people. And so we can give you a resource.

00:25:38:05 – 00:25:58:26
Rod Khleif
No, that’s, that’s, that’s a, that’s a, that’s a definitely a value add as well. If you’ve got a human component involved. Now I love it. I don’t usually push things as hard as I’m pushing this. But I really like what you’re offering for people. So if you’re not if you’re not going to come to one of my freaking real estate bootcamps and learn how to buy apartments or senior housing then and then, but you want to do a side hustle.

00:25:58:26 – 00:26:16:28
Rod Khleif
So this is a great solution, in my opinion, for that. Because because again, you get the business model, you know, and just like I teach you the business model, if you’re going to do real estate, this is the business and it’s going to greatly minimize your chance of failure, as evidenced by, you know, the the stats that that Alex just threw out here.

00:26:17:03 – 00:26:39:22
Rod Khleif
So I love it, man. I am absolutely love what you’ve done. And and that’s why I wanted you on the show. And I believe I believe in what you’re doing. So yeah. Definitely a value add. So it’s franzi.com. Yep. All right. Well, guys, I will check it out. I’m I’m certainly you know, I’ve always said if there were two of me, one would be buying businesses.

00:26:39:22 – 00:26:58:00
Rod Khleif
But this would be the alternative here. Building building franchise businesses. So what’s what are some of the horror stories with franchises? Let’s go there because it’s not all positive. There have been some franchises that I know that people have sued the franchise orders. They haven’t, they haven’t they’ve they’ve lied to them. They’ve misrepresented things. So it talk about a little bit of that.

00:26:58:02 – 00:27:15:21
Alex Smereczniak
Yeah. So some of the horrors subway is sometimes a good example. It started out really good. And then they got greedy as a as a as a brand. And they started selling way too many locations that cannibalize each other. Because if you think about a franchise, they make money on revenue. Sure. And so they want more locations open even if they cannibalize.

00:27:15:24 – 00:27:35:04
Alex Smereczniak
But a good brand will understand that short term, short term gain to give up long term sustainability. And Subway’s kind of getting crushed. Recently, the other sandwich shops, Jersey Mike’s and Jimmy John’s, are blowing them out of the water. One product is, I think, a little bit better, but also is yeah, they’re just prioritizing their franchisees profitability because they know in the long run that’ll that’ll pay them off.

00:27:35:04 – 00:27:41:04
Alex Smereczniak
So so examples like that, you have to make sure the franchise is truly aligned with the franchisee and is.

00:27:41:06 – 00:27:44:07
Rod Khleif
Supporting, validating, encouraging training.

00:27:44:15 – 00:28:16:02
Alex Smereczniak
And things like, again, franchising is a business model. Just because you’re working with McDonald’s or Rod and Al’s hamburger stand, our food costs should be in some typical range that’s common for restaurants and food. Yeah, so Quiznos is another horror story. The reason Quiznos blew up and then failed is Quiznos also got greedy. They said, well, we can make some more money, you know, hiking up the price of the meat and the bread beyond what’s reasonable, they went to a point where the food costs were 35%, way out of the range, way out.

00:28:16:04 – 00:28:31:26
Alex Smereczniak
And franchising works if there’s a win, win win. So if you think about McDonald’s, they’ve got farms in Argentina where they’re getting all the, you know, the beef and they’re able to sell it to franchisee for, let’s say $0.25 a pound. That is always going to be better than what you and I could get for Rod and Al’s hamburger stamp.

00:28:32:01 – 00:28:44:28
Alex Smereczniak
You know, we’re maybe at $1.25, so we save a buck on every pound of meat we consume, and that alone probably makes up the 6% we give them off the top. And so that’s a situation where McDonald’s is making some money. We’re making money. Everyone is making money.

00:28:44:28 – 00:28:46:22
Rod Khleif
This is they see the light. So they yeah.

00:28:46:25 – 00:28:59:01
Alex Smereczniak
You need to look. You need to know enough to ask those questions and to dig into the financials a bit to say, hey, is this brand doing what they’re saying they’re going to do? And the best way to do that is to talk to other franchisees. So anyone listening looking at.

00:28:59:04 – 00:28:59:23
Rod Khleif
That makes sense.

00:28:59:24 – 00:29:16:08
Alex Smereczniak
Go talk to franchisees. We have tons of podcasts where we interview franchisees on the show called The Exit Plan. They’ve done it, they’ve lived it. They’ll tell you if they’ll do it again or not. So that’s my advice. There are horror stories. You got to look. You got to look for them. Just like there’s horror stories in real estate to get a better deal, a bad property.

00:29:16:11 – 00:29:19:22
Alex Smereczniak
Sure. This isn’t any different. It’s just a different business model.

00:29:19:24 – 00:29:28:26
Rod Khleif
Okay, so if someone is thinking about doing a franchise, you know, maybe they don’t have a ton of money. Maybe they can go out there and raise money, get an SBA loan because you can get SBA loans for this stuff.

00:29:28:27 – 00:29:30:17
Alex Smereczniak
They love franchising.

00:29:30:18 – 00:29:36:10
Rod Khleif
There you go. So SBA loves them. And what what what are the what are some of the parameters around an SBA loan. What’s the down payment typically.

00:29:36:11 – 00:29:55:08
Alex Smereczniak
Yep. So you got to put at a minimum 10%. Sometimes 20 to 30 depends on the deal. And you’re kind of financial backing okay. So a lot of these franchise businesses home services are less than 150 K to get into. So if you need to put 10 to 20% down, you only need 3015 to 30 K and cash to go become an entrepreneur because you can borrow the rest.

00:29:55:11 – 00:30:16:27
Alex Smereczniak
SBA likes franchising for all the reasons we talked about the lower failure rate, more data points to see who’s successful and who’s not. Right. And then there’s this thing called a robs rollover. Have you heard of that? No. You can access your retirement funds penalty free. No tax penalty early. As long as you’re investing in a business that you’re going to run an operator, be an owner.

00:30:16:29 – 00:30:20:28
Rod Khleif
Rollover so it doesn’t have to go into a Roth IRA. It can be in your four one K.

00:30:20:29 – 00:30:24:11
Alex Smereczniak
Yeah, you can you can act. Typically everyone’s worried because there’s penalties and.

00:30:24:13 – 00:30:26:18
Rod Khleif
Early penalties. If it’s a business you’re running.

00:30:26:18 – 00:30:28:01
Alex Smereczniak
As long as you’re investing in something that.

00:30:28:01 – 00:30:28:25
Rod Khleif
You’re just roll over.

00:30:28:26 – 00:30:32:14
Alex Smereczniak
And it stands for rollover of a business startup.

00:30:32:15 – 00:30:51:15
Rod Khleif
Wow. Love it. Love it. When you hear roll ups where people are buying these businesses and rolling them up and selling them to venture to private equity. But, well, listen, I’ve gotten a lot of value out of this, and I know my my peeps did. So I appreciate you coming down here, brother, from Charlotte and coming on the show and adding some value.

00:30:51:16 – 00:30:52:21
Alex Smereczniak
Yeah. Thanks for having me on.

00:30:52:22 – 00:30:53:20
Rod Khleif
Absolutely.