Many people purchase franchises and are able to turn them into multi-million dollar assets. Learn how you can do the same.Sign Up to Watch
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-What's up, guys? My name is Daniel McKenna. I'm the executive producer here at Thrive15. And in my spare time, I'm a shopping cart wrangler. They're not getting away from me. I'm the best. And today we're sitting down with Clay Clark and Terry Powell, talking about creating an asset through franchising. Terry is the godfather of franchising. Don't know who Terry is? Check this out. Specifically, if you own or are going to own a franchise-- maybe you don't want to do that the rest of your life. I don't know. Maybe you do.
But if you don't, you probably want to create that franchise into an asset that you can sell for a higher return later. And Terry's going to talk to us about how you actually would even go about doing that and how to start a business. At Thrive15, we believe that knowledge without application is meaningless. Meaning, if you don't do something about it, about what you've learned here today, today's lesson is going to be more meaningless than claiming that you are a vegetarian except for on Tuesdays.
-Hey, Clay. I'm great. How you doing, buddy?
-I'm doing well. You know, I've had just a-- North Carolina's beautiful. I've never been to Charlotte before. And I'm just amazed by all the trees downtown here. It is gorgeous.
-It is a nice area.
-Well today, though, we're talking about creating an asset through franchising along with how to start a business. And this idea is a little bit interesting I think for a lot of people. Because when you think about creating an asset, very few people stop and take a timeout and think about their current job and whether they're creating an asset at this current job-- whether they're creating something that has value later. But before we deep dive into that, I want to give people just a little bit of a context as to how many years you've spent in this industry and a little bit about what you do today. Can you tell us how many years you've been involved in franchising and what exactly you do today?
-Yeah. I've been in franchising for a little over 30 years. And the primary concept that we worked in that 30 years is a company called the Entrepreneur Source, which is a network of franchise coaches that work with people seeking to discover whether franchise ownership might be a viable solution to building an asset base for themselves.
-You've seen a lot of people go from rags to riches, or somebody who put everything they had into starting a franchise or buying a franchise, and you've seen a lot of these people become millionaires. You've seen it firsthand. As far as this concept, what kind of potential does somebody have to create a million dollar asset for themselves by buying a franchise?
TERRY POWELL: Oh, it's very likely that you can create an asset that would be a million asset. Considering that 52% percent of all franchise units are owned by multi unit operators, the potential for going extremely beyond that million dollar asset is quite high.
-What kind of revenue does somebody have to do on an annual basis to generate a million dollar value business? What do they have to do?
-Depends on the industry they're in and how those industries are valued from a resale standpoint. But anytime you have a predictable volume of history and you've got a business that's got clientele that someone can come into and start at that point rather than starting at the beginning, it creates a very high asset value for what we call a resale value. And that's not unusual in a franchise. And you're going to have other assets associated with that franchise, such as the equipment and such as some of the fixtures and furnishings and the leases that'll be transferred. All those things have an asset value.
-I'll just give you an example for the thrivers watching this who are learning how to start a business. There's a gentleman that I met kind of peripheral. He's not a very, very close friend of mine. Kind of an acquaintance. Nice guy though. And what he's he's done is, he has this habit of buying franchises from a franchisee who's maybe a little disgruntled, not following the system. He buys them. And he fixes them up. Implements the system, and sells them for a million bucks. And he's done this a couple times.
And I thought, what an interesting business model this guy had. But he was able to do it because he says, hey, the brand has value as long as there's customers, and revenue-- but if you're working a typical corporate job, you can't just work at your job for a few years and say, I'm going to sell this job to Larry. And then Larry can't just buy that job from you. So I mean--
-It's a big differentiator.
-It's huge. Now Terry, if I'm somebody who's unaware of what the word asset means, I'm going to go ahead and kind of break it down for anybody watching this who doesn't maybe know what this term means exactly. An asset is defined as "a resource with economic value that an individual, corporation, or country owns or controls with the expectation it will provide benefit." Terry, what are some of the things that you see franchise owners do that can absolutely kill, destroy, the value of their franchise?
Say they bought a great franchise. It's well known. It's known for being successful. But they bought it. What are some things that we want to be careful and make sure we don't do that can jut kill the value of the franchise asset?
-That's a great question. The key to developing a high value asset is to maximize all the elements of the franchise model to be working for you. Because franchise models create lots of synergies and multipliers. And multipliers are like compound interest. The system does the heavy lifting for you, but it also works for your business to continue drive multipliers. So the more you're in sync with having the system work for you, the higher the asset value.
Now we talk a lot about income, lifestyle, wealth, and equity. The equity that you develop in business ownership is that asset. That's what you can either pass it onto your children as an inheritance, or it can be part of your estate. Or you can sell that asset.
-Why is it so important, if I'm working at a job right now, that I take a timeout for just a second to ask myself, am I building an asset? What happens if I don't? And why is it so important for me to really think about that?
-Well, I'm a firm believer that the reason 75% of the adult population has an ongoing consistent strong to very strong desire to be self sufficient is because we were really never designed or wired to be working in the kind of environment you are for an employment. At least 75% of us weren't. So most of us are functioning in that role for the wrong reasons. And when you add to the factor that there's no asset appreciation, it makes sense that you have to ask yourself, why am I doing this?
-So if you're working in a job right now, and you don't own the job or you're not an investor in the job or you have no upside if the job's done well, we're just asking you take a moment to think about it, and think about whether you're truly on the path to creating an asset and something of wealth for yourself, as opposed to just working at the job.
-If I'm somebody watching this, and I don't own a business, could you explain to me the difference of what it means to work for a check as opposed to work to create a business of value, and what sort of differences you see in the lifestyles of people, and just the energy level and what that really means?
-Yeah. Having been blessed to be part of that, you know, thousands and thousands of times, and be on the receiving side of what the transformation is like, I actually did coaching myself for the first 14 years of the business before I franchised it. Today, I still get letters and cards and phone calls and Christmas cards from those individuals that I empowered to make that transition from employment to take control of their destiny. And sharing with me some of the results of that.
So the difference is huge. You know, in today's employment environment, it's actually far greater than ever before. And people that are employed are asking that question more and more frequently, because the, you know, the battered career syndrome is really taking its toll on most people in that environment.
-I find that, too, when-- once there's an entrepreneur who finds a business model that could help them get to their goals, these people have boundless energy, regardless of their age. I've seen this a lot. I mean, it's like these people that are tireless, and they found a franchise or a business that just is helping them get to their goal. And it doesn't matter how old they get, they just seem to have that energy. Do you see this a lot?
-Absolutely. You can have a job. Anybody can have a job. You can have a career, which is better than having a job, you know. Or you can have a business, which is great. But if you have a calling around that business, that's that passion you see, when they really have that energy and they're really driving. Which is what I've seen the transformation be in so many of our clients over the years who have taken that step.
-Have you seen examples in your-- first hand, of people that started with very little money who have now become millionaires through franchising?
-I mean, do you see this often?
-Yeah. Actually, interestingly, 23% of all of our clients actually end up in a-- I'm sorry-- 23% of our clients end up purchasing multiple units right out of the gate instead of starting with one.
-And the history of franchising, as far as millionaires and beyond, those who do multiple units or area development types of agreements are more likely to grow to that million and multi-million dollar asset value in a shorter period of time.
-The book "The Millionaire Next Door," which I reference often, but it's so great because it's a study on how people get wealthy. And what it shows in that book, and there's a lot of statistics, but it's well over half. It's like-- and in the book, it's got some very specific data.
But just as a general concept, it doesn't really matter what research you look at. About 3/4 of the millionaires across our country are self-employed in some capacity. And I think it's important that we know that. That you really give yourself a lot better chance to move up that ladder when you're in control of your own destiny. So that's absolutely huge.
Terry, I have to ask this final question here for you. Why are you so passionate about helping people create an asset through the model of franchising? What is it? I mean, 30 years you've been helping people. Why are you so passionate about helping people create an asset?
-Well, there's a number of reasons. First, lots of people go into business for the wrong reasons. And they shift from working for what they refer to as their idiot boss to working for themselves who becomes the idiot.
-And makes those kinds of mistakes. And basically ends up buying themselves a job becoming a technician. And I've had this passion for a long time to allow people to see that the business is really a vehicle to accomplish it. They talk about their dream. The dream isn't the business model.
-It's not about finding the dream business. The dream is what you're going to do as a byproduct of having that vehicle that accomplishes income, lifestyle, wealth, and equity.
-I know I was guilty of that at one point. I remember I was so excited to own a business. It was almost like that itself was the promised land. But then when you realize that that's the promised land, you maybe didn't have a big dream there. But the goal is to own a business that can help you get to your life goals, to help you achieve those goals.
-So you can have a dream lifestyle, income, wealth, and equity, and use that business the right way. And so many people make mistakes about choosing a business around their perception or around their background or experience, and they hold themselves back. And we've used the analogy before of, you know, doing the same thing over and over, but expecting the results to be different. Why would you go into a business and invest, and not change things that allows the results to be different?
-For somebody who's been trapped in working for dollars, working, you know, and exchanging time for money rat race for years and years and years, this concept of even having a business asset that allows them to live an ideal lifestyle is probably foreign. Can you maybe just describe just briefly what you mean by lifestyle? What does that mean to have a business that allows you live that lifestyle? What are you even referencing?
-Well, in any business cycle, income is the first thing you'll be able to achieve. And that comes pretty quickly in a franchise. But now, you'll have enough income that you'll have the opportunity to change your lifestyle for you and your family. So you'll be able to aspire to have a lifestyle that'll be at a different level than you expected you could or that you've dreamed about having. So that you get to now reap some of the rewards and benefits of investing in yourself and investing into an asset that has a higher return.
-And then you go to wealth and equity as the business matures. You'll make more money than your lifestyle and your income will be able to utilize. That excess money now gets to be put into wealth factors that you'll do. Other investments, and you'll diversify even greater. And then you'll have equity that's developed by all that wealth and that franchise business.
-It's amazing. You make it sound so simple, and I know you've helped people achieve big results. And so I appreciate you taking the time to share with us how to do this.
-Terry, I appreciate you more than you know. Thank you for being here.
-Good being here, Clay. Appreciate it.
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