In today’s episode, we sit down with Giuseppe Grammatico– a franchise veteran who has worked on every side of franchising. From owning franchises to working with franchise owners to helping others use franchising as a way to escape the corporate grind… he’s done it all.
“And, after all those years, I just felt like I wasn’t moving anywhere,” says Giuseppe, when asked about how he got started in franchising. Giuseppe then moves on to talk about how he knew a traditional business model wasn’t for him.
We’ll chat with our guest about the big differences between owning your own business versus owning a franchise, why someone should choose to franchise, and…
- How the franchise model works
- What options are out there for someone who wants to own a franchise but not operate one
- What you should look for in a franchise
- How to research for opportunities
- And more
Mentioned in this episode:
Adam Lean: In this episode, we’re going to talk about franchises. We’re going to talk to a franchise veteran about how someone can find financial and time freedom through franchise ownership. This is P is for Profit.
Adam: Welcome to P is for Profit. My name is Adam Lean and I, along with the rest of the team at The CFO Project are passionate about helping business owners improve the profitability of their business. My guest today is Giuseppe Grammatico and he’s a successful corporate refugee, which is interesting, we’ll get into that, who has worked on every side of franchising from owning franchises to working with franchisors to helping others use franchising as a way to escape the corporate grind. Giuseppe, welcome to the show.
Giuseppe Grammatico: Thanks, Adam. I really appreciate it. I’ve been looking forward to this call.
Adam: Yeah. So I’m excited to jump in and learn more about you and what you mean by corporate refugee and franchising. So tell us who you are and what got you started with helping others with franchising.
What Led Giuseppe to Franchise Consulting?
Giuseppe: Yeah, no, I appreciate that. So yeah, I am, you know, I’ve worked on Wall Street for many years, also at the same time working the family business. We had a restaurant. And after all those years just felt like I wasn’t moving anywhere. You know, I was downsized three times. I went through three mergers. And just was just not happy with the direction I was going in. Love business ownership love the whole idea that my parents, you know, we had that restaurant, things were going well, but I just knew that business wasn’t right for me.
And eventually, that led me into, just via research, franchise ownership. I wanted a franchise that I can completely run with and have that system built for me. So from there going back about 14, 15 years now, started my research, opened up my first as well as my second franchise all int that same year and things have been going really well.
I’ve enjoyed it so much that I said you know what, there’s a much easier way to go about finding a franchise and, you know, my second business, second career we’ll call it, has been in franchise consulting. And I just, right now we focus on helping corporate executives find and invest in franchises both to replace their job and or as a side business. So, you know, kind of like to make the process much easier as I tell everyone And best of all, it’s a free service that we offer to anyone that may be interested across the country.
Adam: Got it, okay. So you’ve had experience with owning a business with the restaurant concept. So, you know, a non-franchise business. And then, of course, you’ve also owned franchises. So what’s the big differences between owning your own business outright versus owning a franchise?
Franchise vs Non-Franchise
Giuseppe: Right. So I get the question a lot, I’ll take a step back, which is better and I and I always tell everyone one is not better than the other. It’s basically what you are looking for. So the major difference is how you want to go about the business. So there are certain people that just, they want to design everything from the logo to if it’s a restaurant to the menus and, you know, they want to control the process.
They want to create everything from the ground up. And those are for the most part people that may not be the best fit for franchising, such as the restaurant we had. You know, people looking at a franchise are people that just kind of want the opposite. They want everything figured out for them. They want the systems in place and the brand and the vendor is set up so that they’re coming right in and they have a leg up over someone starting from scratch where everything is kind of set up for them.
So when I get the question which is better, it’s what you’re specifically looking for. In my case with the franchise, everything was set up. So we were out and running right after the first week of training. You know, we landed our first contract, which was great just because I didn’t have to spend the months, you know, even on simple things like accounting systems. That was all set up for you. So, one major advantage of, or a few major advantages of franchising.
Adam: Yeah, that makes sense. Just curious, what was your first franchise?
Giuseppe: We were in the commercial maintenance and cleaning space. So we own a few franchises here in New Jersey, part of a national company and, which was a great starting point. And I noticed that a lot of the people that were looking into franchise ownership I, you know, it’s, we were offering that one option.
And for the people that may have not, you know, maybe they thought it was just not the best fit. I got into consulting because now we have hundreds of options now. So if one option maintenance wasn’t the best fit, we can now explore, you know, insurance with water and smoke mitigation or various food concepts. So that’s why I got into the consulting side.
Adam: Okay. So we talked about the fact that one of the benefits of franchises that everything is set up for you. I mean, all the systems and sort of a proven concept, if you will. But what are the if somebody is listening, they’re trying to decide, well, should I go a franchise route or should I start my own business? Or should I buy an existing business? What are the other benefits? Why would somebody want to choose a franchise concept over continuing with their existing business or buying an existing business?
Giuseppe: Great question. So the best way to answer that is, you know, a business is a business, whether it’s a franchise or not. And, you know, there are, believe it or not there are businesses that I know of that have converted their business into a franchise just due to the many benefits. Not only will franchising offer you that business in a box and that system and how to run the business, but there are just so many other advantages.
Some of those additional advantages are, depending on the business if you’re, that you’re in you may be in a painting service or a flooring company that will come to your home and offer various types of flooring. There are huge economies of scale. With economies of scale, a lot of these national brands will be able to offer a much bigger discount. So whatever you’re purchasing, it’s going to be much less obvious so, you know, decreasing your cost of goods.
You know, exposure marketing, things like that a lot of franchise concepts, and not all but many are bringing their call centers in house and the past many have outsourced and they lack that control. So they are bringing, you know, those call centers in house and the advantage that gives to the franchisee to the franchise owner is that all the calls in many cases are going directly to that call center, you know, not even going to your office. It’s going directly to the call center.
That call center will take those calls, they will schedule the appointments for you so you’re waking up the next day with a calendar full of, you know, your scheduled full. And they will also upsell so that if, you know, they called you for a flooring job, they may upsell and say well we also, you know, the same company will also do maintenance. So should you have a hardwood floor and they had scratches they can handle that. So, you know, so you have those major advantages as well. Just the relationships with the vendors is huge.
Going on with vendors helping you find manpower. So going back to a painting or flooring, I just give those two common examples. Being part of a national franchise, they will even help you find the manpower, help you find the subcontractors or employees depending on the type of franchise and how you’re running your business, helping you find that manpower. So, you know, those are a few of the major advantages but economies of scale, the manpower, having those vendor relationships, you know, being able to buy the product so much cheaper.
And just the infrastructure itself, you know, when you purchase or invest in a franchise, it’s not just the initial setup and the support and systems you’re getting, but you’re getting ongoing support. So, you know, every month you’re paying a royalty so that royalty is going towards questions you have. So if you need additional support, you know, why isn’t my business growing? Or the sales aren’t where they need to be, or I’m looking at exploring X, Y and Z, the franchisor’s job is to assist you because ultimately their goal is to, you know, to have you be extremely successful since you are representing their brand.
So, they will be, you know, in with you every step of the way to help you out. And, you know, I kind of last example, and there’s many more if we had much more time I could go with every single one. But the other major advantages that as part of a franchise system, you’re also networking with all the other franchise owners across the country. So you’re going to have franchise owners that are brand new in the system, some may have five or 10 plus years in the system and every timeframe in between.
So you can go back to them and get some advice as to what’s working. You know, what’s the best part of the franchise? You know, what’s working best in your, you know, in your territory? So, you know, kind of a brainstorming session, exchange of ideas. Every franchisee is going to be open to your call because it’s to everyone’s benefit. So that alone is one major advantage of having that network of it could be several dozen through hundreds of franchisees you can kind of, you know, exchange ideas with.
Adam: Yeah, now that makes sense. Theoretically, they’re not your competitors, because they’re in different markets. Because I mean, I am assuming that most franchisors, you know, protect your market that your territory that you buy. And so these people that you’re getting, you’re giving them help, they’re giving you help, you’re all working for the, they’re all experiencing the same things. Might as well help each other. And you have a built-in network. That makes sense.
Giuseppe: Yeah, absolutely. Every, it’s in the best interest. There’s no competition because it’s, you have a territory. And quite frankly the larger the franchise gets a lot more they can do with national branding because if they do have franchises across the country in every state, in every market, that’s going to increase their ad spend to get some nice, instead of local and regional exposure you’re getting now national exposure which benefits everyone, you know, to the point where like a company like Subway is just everyone knows of Subway or McDonald’s. You know, the bigger the company gets everyone will be very familiar with your brand.
Adam: Let me ask you this, from the franchisor’s point of view, so that corporate headquarters, why would they, let’s take a sandwich franchise. I mean, there’s plenty of them out there. You mentioned Subway, Jimmy John’s Jersey Mike’s. Why would the franchisor, rather why would they sell it to an individual franchisee rather than just owning the store themselves and hiring people for this store and keeping all the profit?
Why Franchisors Sell Their Business Rather Than Keep All The Operations and Profits
Giuseppe: Right. Yeah, that’s you know, that’s one strategy is not better than the other. It’s based off of, it’s kind of like when people call me up and say I want to expand and I want to either open up a few more stores or I’m thinking about franchising. You know, I always go back to what’s your overall goal as to, you know, how do you want to expand?
You know, obviously owning a few restaurants or owning 100 via franchise your, you know, your role is going to change a little bit. But for the most part, it’s for the, from the franchisor’s viewpoint via the corporation, it’s a quick way or a quicker way to expand across the country. Obviously, it’s less exposure because every franchisee, what I mean by a financial exposure, I should say, because every franchisee is going to be investing a franchise fee which is essentially a fee to have access to the license to the system.
But, you know, from the franchisor standpoint, they can expand rapidly across the country and, quite frankly, every franchise owner has a vested interest versus opening them, you know, opening up the restaurants or the locations across the country where you have, you know, possibly employees running it, you’re having the franchisee that has the vested interest, so they have some skin in the game, quite frankly. So, you know, that obviously, they’re not going to let their investment fall to the wayside.
They’re going to do whatever it takes to be successful and profitable. So the, you know, the franchisor will, you know, charge that fee, franchisee will pay that. There’s obviously a build-out if it’s a specific location or there’s going to be marketing investments for building out the marketing strategy across the local market. But just a, you know, one very popular way of expanding that business and, you know, ever franchisee is an extension of the brand. So obviously they, you know, the franchise owner wants the franchisee to be successful.
They’re there every step of the way and the franchisee, or the I should say the franchisor, the corporation loves when the franchisee wants to expand. So if they’re doing really well, nothing makes them happier than the franchisee coming back saying I want to open up another location or I want to pick up some additional territory because they know they’re doing really well and they prefer having those, you know, the existing franchisees expand in their markets.
So just a really efficient way to grow your company, but not the only option. And as I mentioned, going back to what I originally said, franchising isn’t for every business. You know, once you do become a franchise, you know your business obviously you want to improve your brand but you’re kind of shifting your day to day into coaching and supporting your existing franchisees making sure they follow the system, getting and listening to all their feedback to make sure that they’re successful and doing well.
Adam: Yeah, that makes sense. What if somebody is interested in owning a franchise but they don’t want to be an operator? So in other words, they, you know, they don’t want to be the store manager or the chief salesperson. They want to own as an investment, if you will, franchises rather than be the boots on the ground day to day operator. Is that even a thing?
Franchise Ownership as a Passive Investment
Giuseppe: Yes, absolutely. So, we have investors approaching us where they’re looking, you know, a private equity group, They’re looking to invest in multiple brands in their market. Or to give you the, you know, another example, the corporate executive that we just recently had, had someone approached us, corporate executive that wants to keep his job and kinda have a side business.
But instead of figuring out what that side business is going to be wanted a little bit more structure. So that is definitely a possibility. We call it more of a semi-absentee franchise. And basically as going back to a couple questions back as far as, you know, every franchise is not built the same. Not all franchises are meant to be run that way.
So not, I wouldn’t say every franchise is the right fit for it, but that’s part of our job. Our job is to find what franchises available in your market that could be run as a semi-absentee, and semi-absentee is gonna vary. It could be five or 10 hours a week or it may be a little bit more, but essentially you’re having a business run by a general manager. So typically, the franchise owner is going to be involved in the training so that they know the business. Their general manager will be trained at the same time. So any event, there’s obviously turnover.
The franchise owner definitely wants to be part of that training, you know, part of that experience, know what’s going on. So, but that’s very, very common. A lot of people will either want to just keep their job for that security and have that side business and others will, you know, want to keep their job and have that business and then decide after the first year if they want to be full time in the business. So just to reiterate, not every franchise, you know, will allow that or it’s not a great fit, but we do have, you know, well over a dozen franchise companies that we work with that are great fits for that semi-absentee ownership.
Adam: Okay, yeah, that makes sense. So, you know, obviously, one of the benefits that you’ve mentioned that you help people with as a franchise consultant is help them find the right franchise for them because like you mentioned, there’s so many varied, you know, so many options out there. But what should somebody who’s interested in owning a franchise, what should they look for in a franchise? Because I mean, there has to be some bad franchises out there, as well as some great ones. What should they look for in a franchise?
What to Look for in a Franchise Opportunity
Giuseppe: Yeah, so I kind of, I tell everyone to start in reverse. So don’t even look at the franchise. When I speak with individuals looking at franchising, we don’t bring up brands, we don’t even bring up product or services. We start in reverse. We reverse engineer the process. First off, we like to figure out either if you’re working with me or you’re starting your journey on your own, figuring out, you know, what’s your why.
What is your reason for wanting to own a business? You know, once you figure that and we spend some time with each of our candidates figuring out if business ownership is the right fit, and then we go into franchise versus non-franchise and we talked about some of the, you know, the pros and cons And not so much pros and cons but specifically what you are looking for if franchise ownership is the right fit. And I’ll be honest, it isn’t the right fit for everyone.
Some people I tell them, Hey, you know, you may want to just stay with a non-franchise business based off of what you’re looking for. And in many cases, the franchise is the perfect fit. So once we get past business ownership is the right fit and yes, franchising is definitely, you know, the direction I recommend you moving forward with, we take a look at, okay, what does that ideal business look like? So we kind of, you know, start with a blank slate. I always tell all of my candidates to be honest.
And as silly as that sounds, you know, what I mean by honest is, don’t tell me what you want me to hear or don’t pick a business or tell me, answer my questions because you feel like that will make you the most money and be most successful. I just tell everyone, forget about, money aside, product service all that aside, you know, let’s kind of have that blank canvas in front of you. And what is the business look like? So we start out with, you know, do you envision yourself staying in your pajamas when you wake, you know, when you wake up in the morning and log into a computer and you run your business solely from your home office?
Or you’re doing business over the phone? Or do you envision yourself waking up, you know, get, you know, taking a shower, getting ready for work and sticking that key in the door and opening up a retail location. So we kind of just want to envision what the physical business looks like, feels like. You know, once you decide, so that kind of, you figure out if home base versus retail, you know, is a better fit for you.
And then we go into the, you know, the hours. Do you want a business that works between the hours of nine to five or do you not care if the business is running 24 seven? And then we go into a long list of employees. Do you prefer to manage a few managers or do you not mind managing people making minimum wage with higher turnovers? You know, and that represents certain industries and certain businesses. So, we go down a list. We have, so that’s basically the business characteristics and attributes.
We have 10 plus, we discussed a 10 minimum, but we have as many as 20 attributes of the business. So, after all, that’s said and done, okay, I have all these attributes, these characteristics of the business, we create a model. So if you’re doing this on your own, you would kind of jot down, okay, this is the type of business I want. After putting that model and putting that list together, I take a look and put together a short list of two or three franchise companies. Those two or three things franchise companies are based off of that model. To your point, not every franchise is built the same.
I’ve actually partnered with a company by the name of Franchoice. They are the premier franchise consulting company. And Franchoice will prescreen quite a few of the franchise companies out there, they’re well over 4000. So it just becomes extremely overwhelming. And what I do is, you know, taking a look at that list of pre-screened companies. I will contact the franchise company, they take our calls, just because they work very closely with us because they are looking for qualified candidates. And what would be my qualified, people that are, that matched the model.
You know, if they’re not allowing semi-absentee ownership, we’re not going to bring those people to that model obviously. And that meet the financial requirements. We will check the territory, making sure, you know, we’re doing all this research, but let’s make sure that there’s actual territory and retail locations available for that franchise. So we do all that work on behalf of the franchise. So, by the time I create the model and, you know, show each candidate, you know, refer them to two or three companies, I’ve done all the back work for them that takes several hours of research and phone calls.
As I mentioned, we have direct relationships with these franchise companies. So, you know, we can contact them, you know, do some territory checks if we know that there’s a resale opportunity available, we can bring those, you know, that discussion and bring those options up to the candidate. So, a lot goes on. But, you know, as I mentioned, you know, if you’re doing the research on your own, you’re doing the same types of research, you’re going through the process.
Obviously, you know, making sure that the franchise is viable, that’s going to be part of the due diligence process when you’re speaking, you know, after, you know, narrowing it down to two or three companies, speaking directly with them, taking a look at their Franchise Disclosure Document, what we call an FTD, which is their contract and figuring out if they are a good fit. Speaking, you know, you’re going to be speaking directly with franchise owners. I have a whole process I work with and recommend with my candidates as far as their due diligence, but you want to make sure that franchisees are happy at the end of the day.
Adam: Yeah, and I want to reiterate that all of that, that you just talked about is free to the potential franchisee.
Giuseppe: Yes, yes. We, it’s a free service. I get the question all the time. It does not make a difference as far as your investment if you have went directly to the franchise company or through us. Similar to a real estate or executive recruiting model where we are, you know, we are paid a referral fee directly from the franchise company. So there is no catch to the service. We are compensated from the franchisors are getting any, you know, anywhere from 100 to thousands of franchise requests on a weekly basis.
And it’s just impossible for them to, you know, they don’t have the manpower to be able to contact every single person contacting them, you know, inquiring about the franchise. So that is why franchisors, you know, utilize our services because we sit down and truly qualify the candidates because we know that their entrepreneurship, you know, business owner quality, franchising was the right fit. And you know, they truly fit the model, that specific franchise. They meet the financial requirements, they are either looking to be a semi-absentee or owner-operator. And so that’s why they utilize our service.
So to reiterate, no difference as far as investment from the franchisee standpoint, so it’s just a major advantage to anyone, you know, looking at franchise ownership. And by the way, I didn’t mention this in the beginning, I have utilized the services of a franchise consultant. Over, about 15 years ago was our initial conversation and right after that conversation in those meetings and investing in a franchise, I knew this is what I also wanted to get into. I truly wanted to help people make one of the biggest financial decisions they can ever make.
Adam: If somebody’s listening and they’re interested in either learning more, or just starting the inquiry process about finding a franchise, what is their next step?
Giuseppe: So I encourage anyone to go directly to our website. There is just a wealth of information on there and the website is GG, so my, my initials, the franchise guide.com. So ggthefranchiseguide.com. You can go on there, we have a podcast, so you can listen to some really good interviews and learn a little bit more about franchising. You can schedule a, you know, a phone call with me.
We call it our right fit intro call. If you just had the thought of franchising and just wanted to get some additional information, I encourage you to take advantage of that. We also have some other information including a presentation on the benefits of franchise ownership. So definitely check out the website and explore and send me an email should you have any questions.
Adam: Excellent. So we’ll put that in the show notes ggthefranchiseguide.com. And you also have a podcast as well.
Giuseppe: Yes. Yeah. So that’s on the website. So it’s ggthefranchiseguide.com/podcast. So actually, we did an interview, you know, a podcast I should say about a month or so ago that is on the website, where we explore, you know, the benefits of hiring a financial person or a company to take a look at your financials. Especially when you’re in the process of owning multiple franchises. It’s a major advantage.
So to anyone listening, definitely give a call to add them. If you are exploring franchise ownership and are in the process of expanding and owning multiple franchises, there’s definitely some major advantages of, you know, hiring Adam’ s team and not having a CFO on the payroll, which gets to be extremely expensive. But yeah, on the podcast, we’re interviewing people that we recommend contacting as well, such as attorneys and accountants and other franchise companies.
So just a wealth of information. I wish there were more podcasts available out there. It’s all free. You can explore, take a look and email me with any questions. Or if you’d like to be a guest, definitely send, go on the website, send me an email. We’d love to chat. And if you do have any specific questions, or if there’s a podcast you’d like recorded, let us know and we’ll be more than glad to record that for you.
Adam: Excellent. Well, yeah, Giuseppe, thank you so much for being here today. This is great information.
Giuseppe: Great, Adam. I appreciate the invite and looking forward to speaking again.
Adam: Yeah. So if you would like to see if Giuseppe can help you, you know, with exploring franchises, please reach out. Again we’ll put his website in the show notes. Thank you so much for listening. And remember the goal of your business should be to make more profit than last year and turn that profit into cash that you get to keep. For P is for Profit, this is Adam Lean.