It takes a great mind to see the true potential of hard manual labor! A lot of us work our butts off in blue-collar jobs so that we can pay for (and then graduate from) college, in hopes of earning big bucks as white-collar workers. Somehow, we think that one type of job is better than the other. Just like we believe hard work BEATS talent any time of day. While there are certain truths to both ideas, what we really fail to recognize is that it’s not about “which is better”… It’s about taking the best out of these concepts and mashing them together to form a whole new “better” option! The brilliant minds of Josh Skolnick and Zach Beutler created a business where blue-collar and white-collar best practices are leveraged by entrepreneurs, and hard work MEETS talent, in order to achieve the financial freedom you desire! Josh is a serial entrepreneur who began a successful landscaping business in his youth. In 2008, he founded Monster Tree Service and grew it into a multi-million-dollar franchise. He also grew Redbox+ into a nationally recognized brand with over 305 territories. Zachery Beutler began his career in franchising as a young, ambitious franchisee with Nebraska-based Complete Nutrition, later becoming a multi-unit franchisee of Color World House Painting, Inc. He went on to take up a variety of roles in franchise development with 5 different brands and as Chief Development Officer of Redbox+. Josh joined forces with Zach to create the service-based parent company Horsepower Brands, which acquires and operates home service franchisors and vendors with 7 brands currently in its portfolio. The duo are on a mission to develop a mix of 25 home service and vendor brands to north of a billion dollars in annual revenue by 2025. At the end of the day, the single concept that stands above the rest is having strong work ethics – doing the right thing at the right time –a major contributor to the successes of businesses under Horsepower Brands! Tune in to our Podcast to learn more about everything you WANT and NEED on franchising, investment, financing processes and options. This is Eye On Franchising, where we share our vision for your franchise future. Lance Graulich https://ionfranchising.com/ Eye On Franchising
It takes a great mind to see the true potential of hard manual labor!
A lot of us work our butts off in blue-collar jobs so that we can pay for (and then graduate from) college, in hopes of earning big bucks as white-collar workers.
Somehow, we think that one type of job is better than the other.
Just like we believe hard work BEATS talent any time of day.
While there are certain truths to both ideas, what we really fail to recognize is that it’s not about “which is better”…
It’s about taking the best out of these concepts and mashing them together to form a whole new “better” option!
The brilliant minds of Josh Skolnick and Zach Beutler created a business where blue-collar and white-collar best practices are leveraged by entrepreneurs, and hard work MEETS talent, in order to achieve the financial freedom you desire!
Josh is a serial entrepreneur who began a successful landscaping business in his youth. In 2008, he founded Monster Tree Service and grew it into a multi-million-dollar franchise. He also grew Redbox+ into a nationally recognized brand with over 305 territories.
Zachery Beutler began his career in franchising as a young, ambitious franchisee with Nebraska-based Complete Nutrition, later becoming a multi-unit franchisee of Color World House Painting, Inc. He went on to take up a variety of roles in franchise development with 5 different brands and as Chief Development Officer of Redbox+.
Josh joined forces with Zach to create the service-based parent company Horsepower Brands, which acquires and operates home service franchisors and vendors with 7 brands currently in its portfolio. The duo are on a mission to develop a mix of 25 home service and vendor brands to north of a billion dollars in annual revenue by 2025.
At the end of the day, the single concept that stands above the rest is having strong work ethics – doing the right thing at the right time –a major contributor to the successes of businesses under Horsepower Brands!
Tune in to our Podcast to learn more about everything you WANT and NEED on franchising, investment, financing processes and options.
This is Eye On Franchising, where we share our vision for your franchise future.
SUMMARY KEYWORDS
franchisees, business, franchise, people, brands, franchisor, zack, josh, build, zach, buy, franchising, grow, locations, lance, launched, big, ftd, type, leads
SPEAKERS
Lance, Josh, Zach
Lance 00:02
Welcome to Eye on Franchising. Are you looking for business opportunities? Well, you are in the right place. We represent over 650 franchises and business opportunities. We will help you find your perfect franchise for free. We even have a free assessment on our website that will help us determine the best businesses for you based on your investment level, mindset, skillset, and life experiences. This is Eye on franchising, where we share our vision for your franchise’s future. I'm your host Lance Graulich.
Each week, we will speak to fascinating folks from the world of franchising, franchisors and founders, franchise funders and franchisees, are you looking to find your perfect franchise? Or perhaps you are an independent business owner looking to grow and scale your business by setting up a franchise? Either way, our team can help you. Eye on franchising where you will learn the A to Z's of a franchise.
Hello, everyone and welcome back to another great episode of Eye on franchising. I'm your host, Lance Graulich. And let me tell you about today, these guys, these guys invited me to their corporate office, Omaha, Nebraska recently, thankfully, it wasn't middle winter, I would have gone anyway, because I really, really wanted to see these guys in this amazing team. They're sort of Legends at this point to me, because I've never met them. And all I've heard are these amazing stories. So I got to experience this firsthand. So these are world-class entrepreneurs. The thing franchise brands at a record pace, these blue-collar millionaires, I said it blue-collar millionaires know exactly what it takes to build emerging brands and household names across the country. They have seven brands now and expanding by 2025. Their goal is to be north of a billion dollars in revenue. And I'm very proud to introduce my latest and newest friends Josh Skolnick and Zach Beutler, Founders of horsepower brands. Hey, guys!
Josh 02:10
Thanks for having us, Lance.
Lance 02:13
Wonderful, wonderful. So, Josh, let's start with you. You have a heck of history in franchising, starting in the lawn care business, the landscaping business if you will. So why don't you share a little bit about your background and what brought you to franchising in the first place?
Josh 02:31
Yeah, so my entrepreneurial journey began around 910 years old pushing mowing lawns in the local neighborhood where I grew up in eastern Pennsylvania. And I built that business through middle school high school and had full-time employees through high school, believe it or not, shortly after graduating high school in 2002, I continued to grow and expand my business before ultimately finding myself in the tree care industry by accident. In 2008, I had an opportunity to grow what many would believe to be an 800-pound gorilla within the tree care industry in eastern Pennsylvania, New Jersey, Delaware, sort of that tri-state area, if you're from the East Coast, you would know it as and I built the business up at such a rapid pace and was often asked by people is this a franchise because it's got great systems processes and everything you do looks feels and smells like a franchise-type business. It wasn't but it really tipped my hat to start to really investigate the opportunity. So I ended up going out and interviewing several consultants that help people franchise their businesses, and I was told by everyone, that this is not a franchisable industry or business. And I strongly encourage you to go on the path of opening corporate locations. But being an entrepreneur and extremely determined, I decided I was not going to take their advice. I was going to go across the grain, and I was going to do it anyway. 2012 I launched my first franchise business with Monster tree service and quickly awarded 28 franchise units found out I didn't know how to train franchisees. I didn't know what infrastructure truly looked like to build a successful franchise system. So I ultimately ended up pausing development around 2014 and 2015 time, invested over $2 million in two years of time to make sure all those initial 28 franchisees were very successful and got what they needed out of the business around 2017 When I relaunched development, that's when Zach and I were introduced. We at that time teamed up together and awarded over 100 franchise units the first year working together I found that we just really finished each other's sentences we thought a lot we had the same values and both came from blue-collar households where we learned probably the most valuable thing we could from our parents and that was a strong work ethic and just did things the right way together. So we built a monster tree when I acquired the red box in 2018. We grew and scaled that at a rapid pace. And after exiting those two investments and sitting on a tremendous amount of cash, we launched horsepower brand As with a mission to grow to 25 businesses by 2025. And as you said, Lance, you've been to our corporate office in Omaha, it is extremely impressive that listeners listening to these types of podcasts or any media that's out there on the web about us through a simple Google search doesn't even touch the tip of the iceberg on what we're actually doing, as an organization to grow, develop and support franchisees, and more importantly, these legacy brands that we're growing across the country at a record pace that will be neighborhood household names that you will see in every neighborhood across North America over the coming years.
Lance 05:35
I love it. What an introduction right there. So let me toss it to Mr. Beutler, Zach, what say you? Let's give us your history.
Zach 05:44
Yeah, I grew up in a small town in Nebraska, a small farming community. As Josh said, he grew up in a blue-collar household. My dad and grandpa had a livestock auction barn with sold cattle every Tuesday. And I remember going in him to cut the hay bales and sweeping and do all kinds of stuff that even from when I was I think six or seven. So like Josh said, the work ethic that we received, as far as our values, Nick is something that we really aligned with is that something we both were on the phone late at night with each other. We were both constantly thinking about the business. But after high school, I went to college in Lincoln, Nebraska and I started working at a nutrition store that had not yet begun franchising. And my second day or third day on the job. Everybody in the store quit and I became the manager by default. And it turns out, I was good at that. And shortly after they began franchising, and I was running the top location as an 18-year-old kid. And I said, Well, I want to go do this, I want to be a franchisee. So I was one of the first franchisees I packed my bags and moved to Tallahassee, Florida where I didn't know a soul, and opened my first franchise when I was 20 years old. And the story behind that is I had saved up enough money that 25,000 bucks and I got the founder, the founder of that business to cosign an SBA loan for me went down there, it was great. I did one point 4,000,001st year open. Within eight months, I had a second location that did about a little under a million bucks the first year. And then from the first day I opened my first store to three years I had seven locations do 8 million in revenue. And I was 23 years old. What I didn't know at the time was I didn't have the business acumen I didn't have the real experience. And it all came crashing down. I lost everything and filed for bankruptcy at a complete start over. And there was another franchisee who had 10 locations that really needed the sales and marketing help with his business. And that was really what I was good at. And so I'll never forget I negotiated a $22,000 annual salary for equity and future locations. And I knew that together we were going to build a build that quickly. And we went from 10 locations to 68 locations in three years and got built that beast up to 40 million in revenue. We were the largest franchisee by quite a bit we owned, I think, almost 40% of the franchise system. And did that for about a decade. After that, I saw I realized that that industry was about to be disrupted because I already had the failure once. I think that allowed me to see that ahead of time and I sold my equity fairly well. And then I got into franchise development. And that's where I met Josh and what's important to me because it's because I did have I was the franchisee that did fail. It was important to me that things were done, right. And there are a lot of things in franchising that aren't done right or that aren't done with the franchisee’s best interest in mind. And that's where Josh was the only franchisor that I knew that stopped development, invested more money, and hired all these people to build this facility and knew that you could do it, there's a certain way that you need to do this, to have long term success. And we really hit it off. many late nights at the dinner table together via phone where our wives are sitting next to each other. We're like, God, I wonder who's married here. Me or Josh Zack?
Josh 08:56
Well, you know it's funny. Romance. Zack used to always tell people the first time he met me he flew into Philadelphia and came to I just bought a new office building. We were in the process of building a brand new shop facility on a 13-acre site that I own. bought this beautiful office building is getting, you know, revamped or remodeled, and Zach's like, tells, you know, someone else at a time is just kind of out of his mind. We haven't even awarded the first franchise yet.
Zach 09:25
Like he just finished volume development, but even has an FTD Yeah.
Josh 09:29
We didn't even have the FTD updated yet. It's like he's like he just finished pausing development for two years to work with the franchisees and just invested all this cash, and he's still investing and we didn't even sell the first one yet. Why don't we make sure this thing works? And I'm like, Oh, I know. It works like after what we worked on for the last two years to dial this thing in. We're gonna take off like a rocket ship. And sure enough, we did.
Lance 09:49
That's what we call vision.
Josh 09:52
Vision and confidence.
Lance 09:55
I love Zach, that's a heck of a story. So you know Look, you guys are doing big things. Now I had an amazing time visiting your corporate office and hearing about all your brands, you know, why don't you guys walk us through the concepts that you're that you got now and you're sprinting to 2025 with that lofty goal that I'm sure you will be achieving.
Josh 10:19
So I can share with you the brands and add like Zach to kind of elaborate on some of the service verticals that we have. So our franchise brands today that we offer, the foundational brand we launched with was Mighty Dog roofing grew to 216 franchise units in the first 12 months of development. Today sitting you know, right around 250 franchise units as of May 2022. That brand continues to grow just crazy first-year average revenues with the franchisees soon to be the largest residential and commercial roofing contractor in North America. We have blingo which is our outdoor and holiday lighting brand we do outdoor permanent lighting, and holiday lighting, along with event lighting, as well for weddings, bar mitzvahs, graduations, and whatever type of outdoor events people have. We've got heroes lawn care, which is a brand that focuses on really three main service lines. The first one is lawn care, the fertilization and disease control of turf, along with irrigation. And lastly, in that one, we've got pet waste removal. So really three businesses almost into one driving a huge value for absentee owners. With a fast scaling business. We've got iPhone, which is focused on spray foam insulation, we offer all forms of insulation, not just spray foam, we do batt insulation we do blow in. But we are the efficiency experts within the insulation space across North America. Again, that one's growing at a rapid pace, recently launched in the last three to four months, and is seeing explosive growth, the corporate location and the existing franchisees that were involved when we acquired that are seeing record growth within their locations as well. And I think as we see home energy prices, we see what happened to fuel prices over the last 30 to 60 days with the war in Ukraine. This is something that is going to be more prevalent to homeowners that are going to want to insulate their homes to really cut down on their energy bills. And then the last franchise was right now that we've got launch, and we've got others that have been acquired that will be launching third and fourth quarter, and some others that are already acquired and slated for early next year in 2023. But the last one is Gatsby glass, which is a business that is focused on frameless shower doors, mirrors, and more. So we do not only the frameless shower doors, we do mirrors within bathrooms, and public spaces, as well as glass enclosures you think of glass walls in offices, storefronts, and things of that nature. If it has anything to do with glass, we go ahead and take care of it. But a big part of Lance that I think really interests a lot of people in a way that we're really maintaining accountability and the growth of our businesses is that we're not just focused on being a franchisor. We put our money in our mouths as far as knowing that vendors are a huge extension of the success of any franchisor. We've worked with dozens of vendors over the years some that were great, and some that were not so great. So for us in our business venture and making sure we get the most out of our franchisees from the level of success. We've launched many vendor verticals that support our franchisees. So I think Zack can really hit on those vendor verticals that we've got currently. And then more importantly, what we're doing with horsepower nation. Love it.
Zach 13:28
No, absolutely. I think it's important to note in franchising less than 5% of franchises or brands or franchise ORS get beyond 100 active territories. So to get beyond 100 active is very rare, but the IFA says it takes on average 10 years to do so. So we're a little bit unique. We've now four times in a row, we've grown brands from inception to beyond 100 active territories and 12 months. So with that type of growth, it's very difficult for one or multiple vendors to keep up with our growth just because they have to add so much capital as far as other staff inventory, etc. So we found that a lot of times its necessary number one just for our growth to vertically integrate and either buy or create our own verticals such as marketing call center, etc. But the bigger part besides that is that in franchising, I've sat in every seat I've been the franchisee I've been the franchisee that failed. I've been the part-time guy, the manager, the development guy, the franchisor what you see from all angles is that there's a lot of I don't want to call it corruption but a lot of law there's a loss of focus on the franchisee profitability for these vendors that just prey on franchisees and their ability to make money. And we looked at that and when that's just number one, it's not working and they're not getting results and B they're charging way too much money. So we made a decision that where we can we want to vertically integrate different verticals that can help our franchisees a get better is also the same one. And the first one that we made a decision to was franchise rocket. So we made a decision to acquire the digital marketing agency that we're working with. Josh and I have worked with the biggest, the best of the biggest within franchise marketing. We've worked with four or five other companies, and it was always the same. They're always the best at everything, and not accountable for anything. And we just got sick of that. So we made an acquisition of the company that we thought was the right fit. And we created a level of accountability within that organization and added over 100 different employees. And what really allowed us to pull back the curtain to determine what it really costs to generate a lead on Google on PPC HomeAdvisor? How can we speed up that process and make it more accountable, which obviously works in both the franchisee’s best interest as well as ours? And that's probably to date the most important vertical that we've added because it's made, it's allowed us to change the game within franchise marketing. And with that, we don't charge commissions. It's a flat fee model. The more you spend, the more that goes out into the marketplace, which I believe we're the only ones that do it that way.
Lance 16:07
I love that, by the way.
Zach 16:10
I very much dislike marketing people because there's like I said, they're always the best at everything, but not accountable for anything. The second was we had some issues with a call center, they were more of an answering service, and they didn't quite know the industry, the brand. The time to answer the phone just wasn't up to par. We've tried several. And we made a decision that we already have the customer base. While we have the capital, we can find the right intellectual capital to run those organizations and help us build them. So we created powerhouse call solutions. And that company answers all the phone calls for our franchisees and classifies every lead appropriately, which means that we have one process for qualifying every lead. Do we also know we can actually integrate that technology to know what is the lead cost? What are the appointment costs? What is the actual job cost from an advertising perspective? For our blingo brand, there were not one or two different distributors that could support purchasing all the lights that we needed to do. So we made a decision to create our own where we've we have lights for Christmas, we've imported over $10 million worth of lights from Asia. And that's really the only way that business really works. We almost walked away from the blink of opportunity because we walk in on their board. It's at 395 unserviceable leads, and I looked at Josh I know what's an unserviceable lead? sounds kind of silly. And they said Well, those are the people that really wanted service, but we didn't have any more product. And I'm like, Get out of here. So we solve that problem. We also have recruit z which is a recruiting company specifically for franchisees and franchisors that helps franchisees find all of their people, which in this day and age is invaluable. We have z books, that's a company that does all of the accounting and bookkeeping services for our franchise concepts, along with several of them we also do the payroll for Mr. Anything, Josh?
Josh 18:02
No, no, I think you're good. Zach, the big thing that when you think about like the call centerpiece, some of our business models give us the ability to not only answer phones and schedule appointments for our franchisees but also do virtual sales. So like blingo, we have virtual designers where we actually have designers on staff that will sell jobs for our franchisees without ever having to visit a homeowner’s home or business. Because of the level of technology that we're using. You look at our heroes lawn care business, we use technology to be able to provide pricing right over the phone. Most of our franchisees won't even have salespeople because all of their sales are taking place virtually coming through powerhouse call solution. So all of these service vendors. Service verticals are really thought about in the sense of how can we drive better value growth and scale into each one of our franchisee’s units. But today, you think about horsepower brands is in business now call it 18 months, a year and a half. We have Levin businesses that are up and operating under our umbrella, and about half a dozen other acquisitions that are complete. So you think about the deployment of capital and resources to infrastructure that has been built to not only launch 11 businesses in 18 months but have six more in the wings ready to go. So when you hear that lofty goal, that would be lofty for many of 25 by 25. You go to yourself, why did these? Why are these guys gonna even wait till 2025 But we're going to be there in a very short period of time and you'll learn quickly as you have about us, Lance, we set goals, we just smash them and then we set new ones and we just keep on going. It's all about that winning ego and those core values that we set.
Lance 19:50
I have no doubt and, you know, everybody builds confidence by achieving certain stairstep type goals. You guys have already killed it. Most people franchising industry, everybody in the franchise industry would love to have accomplished what you've accomplished so far. And it's only going to get bigger and better. Zach, how often do you go back to thinking? Remember that crazy guy, Josh that had this building? And how many years ago? Was that? And what's he doing and look where you've come now.
Zach 20:19
No one probably could celebrate more of the wins for sure. But I think I think that's built into our core values. Now, when we're, there's a winner, you can't build a franchise model the traditional way anymore, where if you look back at how it was done previously, the last 30 years, it was a mom and pop location that thought that their model was repeatable. They went out, got an FTD sold the first franchises to their friends and family, and then slowly built it up. But they launched it with the support that the people that ran their corporate location were the people that supported franchisees. Yep, we've, I've realized in development that you look at the big companies and really experienced dinosaurs in the industry. They've never launched a franchise brand. In today's age, how you advertise to customers is completely different, and they don't know how to do it. And that's why we're the only ones that are going out successfully making acquisitions of brands that have less than three territories and growing them beyond 100 active territories, I think we're actually the only ones that have actually done that. And so that's where I think you have to front-load a lot of infrastructures to get the right type of franchisees and to make them successful.
Lance 21:32
Yeah, so guys, you know, you've had a lot of great stuff. I mean, it's, it's an absolutely amazing story. And as a franchise, bro, or I'm, I'm very proud to refer people to your brands on a regular basis. And, you know, in all my years as a franchisee of multiple Restaurant Brands, I've learned that the two biggest complaints that franchisees have, when they're not doing well, are marketing, and overall support. You guys have also realized that, and literally just invested in that infrastructure, to almost I mean, there are no guarantees in life, because you could bring the right person into any one of your brands, they still have to work. But let's talk a little bit about that. I mean, look, you guys are putting your money where your mouth is, you're buying inventory for Blanco, you've done all kinds of other things. Are you guys allowed to talk about that permit thing you do for people? Is that confidential, Do you want to talk about that?
Zach 22:30
We acquired a national permitting database, so we get every approved permit by county in the country, we've got that built into an automated program that really directly targets not just the property owner, but also the contractor or builder. So for some of our brands, we can feed them leads immediately put those leads into a funnel, and then develop that funnel to get them leads that that database was over $180,000. But when we have five to six brands, and we'll keep adding we can afford to really bring that across multiple concepts and make it affordable.
Lance 23:09
Yeah, you got you guys are not afraid to invest in your infrastructure, and certainly continue to add value to all these tools that the franchisees get access to. So let's talk you know, with all your years in franchising, I talk to people on a regular basis doesn't matter whether they're a corporate attorney that's looking to start their own job, or, you know, somebody 30 years old that's had, you know, super-aggressive, great work ethic, blue-collar, whatever, depending on everybody's background, there's still a mindset issue a lot of times, Lance, I don't want to lose my money, what brand is best for me. So give us your sort of tips and advice. Number one, what have you seen over the years? Who is that person that is successful in a franchise? To what do you guys look for? What do you look for?
Josh 23:56
I think Zach can hit on the avatar here. But initially, what I think is important to what we always tell people, when someone's going out on an adventure with, you know, either on their own to look for a business or with a consultant like yourself, to help them really navigate that path. Some of the things that Zack mentioned earlier with what we're doing and how launching a franchise and running a franchise is not like running a traditional business or the way that businesses were launched before it's changed so much. So as a franchise buyer, you really need to be thinking about, you know, how invested is the franchisor really in their business? Or are they just looking for a path to scale their mom and pop business on a national level because nine out of 10 franchise brands are just that they're just looking for a way to quickly grow and scale their business and they're gonna learn along the way with you as the franchisee and build the plane as it's flying, so to say? So, everyone's number one fear and getting in the business is obviously it's a lot of money. I always say oftentimes Buying a business and we educate our teams on this in the level of support that needs to provide, it is often the largest personal purchase the average person will ever make in their lifetime, outside of buying a home or potentially putting children through college. And so when you think about that, it is a major decision, we know what we're doing. And so we're going to put our best foot forward and we're going to invest, we're going to pivot where we need to pivot, we're going to admit fault when we've done something wrong, and do the right thing to correct it. But what I think a lot of people get caught up in is, is the widget of the business. And so Lance, you know, the famous quote by Zack Butler, we're the widget that gets you to your why. But with that being said, People focus too much on the business, there is nothing sexy about the brands that we offer, with the exception of the fact that they get you to have the most important things that you're looking to get out of business or return on investment and a return on your time. We're not awarding franchises to people with industry experience in industries we're in, they're leveraging on us as the experts, and we surround ourselves with that intellectual capital, the hundreds of people that are working in our organization, we're up to about 250 employees across all of our brands today that are either at the horsepower level, the vendor level, or the corporate level at each one of our franchise or brands. And so, you know, with that being said, we know exactly what it takes. And I think anyone and every franchise buyer should be concerned about am I going to get that return on my investment in time. And so really digging back and pulling back the layers of the onion to understand what's the franchisor really providing to me. One thing I can tell you, Lance is that in all the years I've been doing this, as well as that with the level of attention, and detail support, we provide your franchisees we've never had a franchisee pick up the phone and call us to ask us, what are they getting for the fees that they've paid us. Because we sometimes it's more on the other side of I don't know how you guys can even make money with everything that you do for me, or upfront people making a comment to us going, this seems almost too easy with everything that you guys provide at horsepower brands. And don't get me wrong, we're only 50% of the equation and will never take any level of credit for the success of our franchise, our franchisees achieved in their business because they've gone out and deployed everything that we've provided to them, follow the system taking the support, and really went out and grown their business. But that's all about that awards process through the franchise development phase of getting into business with us that I think Zack can really hit on what our ideal candidate looks like and what we see in the right buyers coming through the process that has really helped us to build these successful systems. Because at the end of the day, you can listen to the two of us talk, you can meet people within our organization and go like you're singing our praises. Now Lance to everyone you talk to about what we've been able to build the core values, we've created the culture of all the buzzword bullshit that people hone in on. But at the end of the day, this is about executing, it's a servant style of leadership, it's about executing on the feedback. And it's having no arrogance in anything that you're doing. Because we listen to the people that are around us. Our franchisees are brilliant individuals that bring us some of the greatest ideas that we then go out and execute within our business. And so it's not us that has created this amazing organization. It's everybody around us. But I think it'd be important for Zach to hit on the avatar and really what we're looking for in the right candidates.
Lance 28:42
Yeah, perfect, great stuff.
Zach 28:44
Yeah, I think that there are four. So I've added over 1500 placements in franchise development. And looking back, you can clearly tell towards the end of the process, who's going to be successful, there are very, there are very specific things that happen. And I think that there are four major people characteristics and make average and top performers. There's one that's specific to us. But the first one is, that you have to be optimistic, there has to be a solution to every problem. Because if there isn't, then you're not looking for solutions, you're only looking for problems. And focus creates wealth. And where you put your focus, you will get a return on that focus. So if you focus it on areas that are a very poor return on your time, as Josh just said, it will really hurt. So we want people that the glass is gonna be half full. I think that's when you look at the top performers that are always that way. They're also better to work with, you know, there's one of my favorite books that sitting right behind me is the energy bus. We don't want the energy vampires around here. Yep. Emotional intelligence. You have to be able to understand who you are, and what your strengths and weaknesses are. So Josh and I are both visionaries. We chase them Every squirrel we like, we like shiny objects. We're the idea, guys, we're typically a little bit more unorganized. But we're we were we're hard workers. So we make up for it. But we will know well enough that if we put if we pair ourselves with more of an integrator personality, we can do fantastic things together. And a lot of times people can't, they put themselves in a role that they think they can do, but they really can. So high performers have great emotional intelligence, they know what they're good at and what they're not good at. People management experience is second to none, I think you're, you're starting a business. And you can only have a successful business based on people. If you don't have people in your business, and you're successful, and you have a job. And so you have to be able to manage and lead teams. And if you've never done that before, I don't care how where you went to school, I don't care how many books you've read, there's only one way to get that type of experience. And that's to get it the hard way. And the last is you have to have life experience in the business. Without that there's no way to have grit, you can't have success without suffering. And people that don't have the life experience in business or corporate America or reporting to someone or being accountable or having to fight problems. There's just no way that you're going to be able to handle it emotionally. Because owning a business is still not easy. And then the bonus one there for us specifically is our concepts are built for people that want big businesses, we're not here to sell a job. Our concepts are not made that way. They're made for people that want to build big businesses. So we want people that are empire builders, we want them to say, I want to do something big, I'm hungry, I'm motivated, I'm willing to put the money in, put the time in. But I want something big. That's the opportunity for us as a franchisor. There's a better return on our investment and the return on our time. By having concepts that produce more in revenue and provide better opportunities for franchisees.
Lance 31:51
You guys are dropping so much great information. I know people are paying attention to it. I went back to a couple of things. As you guys certainly know. And Zack, you came from Franchise development and you know, typical folks looking at opportunities looking to start a business don't know if a franchise is right for them. You guys are so right. People come to me all the time and say, so what do you got for restaurants? What do you get? I heard homecare is hot. What do you get for homecare? And you know me, I'll I always ask the same questions. Well, you know, those are great, great industries, food, and beverage restaurants are one of the most popular because people think it's a sexy business. The reality is, Are you open mic? Can I show you a business as Zack? What's your quote again, with the with? What's that widget quote?
Zach 32:47
Horsepower brands are the widget that gets you to your why business and what it does is irrelevant. You're buying a business for a purpose. And it's typically you want freedom, or you want money. I mean, it's one of those two things. If it provides those things, then what are we really talking about?
Lance 33:06
That's exactly right. And my last five deals that I did over the course just all recently, they're all different brands, and none of the people, not one of them expected to end up investing in the brand they ended up investing in. So they were open-minded and I love that you guys are creating the empire builders. So, we walked through all the concepts thus far, and we walk through the verticals. Give me some of your secret sauce here additional secret sauce, for those listening. Know, when it comes to mindset in general, people are scared whether somebody's 50 years old and we're probably their whole life, you know, what are the things they need to look at within the process? Say specifically to you guys in your experience, for example, you have an FTD to review. You have 23 items, especially item 19 To give you some relief that holy cow, I'm not going to lose my money. Okay, according to this, there are some good sales here. And then you obviously have validations. Talk a little bit, Zack, if you want to go first, I'm sure Josh will add some tidbits as well. I want to talk about the process that people can expect with horsepower.
Zach 34:18
Well, I want to point out that I believe that if people are evaluating a franchise opportunity, it's most likely an emerging brand or the territory would not be available. Let's be honest. Exactly. So when you're looking at emerging brands, I think that there are five key areas that you need to investigate. The first one is capital. What type of access to capital does the brand have and where does it come from? Who has it and how much? The FTD does not state that the franchise agreement does not have how much access to capital the brand has, because they don't keep it in their bank account unless they're foolish. So you want to understand that because then 50% of franchise owners do fail because of The lack of a cap. The second is experience, as I kind of stated before, if a franchisor has never been a franchisor before, they don't know what they're doing, they've never, they've never done it before. And so most of the franchise, or, as we just talked about, have never watched a business in this day and age, and they built their business 20 years ago. And they didn't have to use SEO and PPC, and, and on all these new forms of advertising that are hard. And so it's a lot harder to launch a business now than it was 20 years ago, from an advertising perspective, they just don't know how to do that. But third is data and technology. I built out a lot of different franchise brands, right? They had no idea. They're no process for the franchisee to calculate their average digit. Or they would have to do an Excel pivot table, the franchisee would figure out some of their numbers, which does not work. So how do you get your data as a franchisee? And then what technological advantage do you have against your competitors? The next is customer acquisition, which I again, I'm not a big fan of marketing people, even though I guess you could probably call us for now. But I have sat through a lot of presentations of franchises or brands and someone asks How do you drive leads and they say, We do digital marketing. And we have a great local networking plan, which means that they don't have anything. So we want to know, what's the specific way? What's your specific strategy for generating leads for franchisees? How does it work? Who manages it? What's the cost, etc. And then the last, which is probably the most important to me personally, is I think it's over 90% of franchisees are first-time business owners. You just can't give someone a 250-page operations manual that they're not going to read and send them on their merry way to run a business. So what type of entrepreneurial support does the franchisor give you to be a better business owner, person, leader, etc. To succeed? Because if they're not doing that, then they just don't get it.
Lance 37:00
And I don't think it was mentioned yet, Zach, you guys have what you call success coaches that are responsible for all new franchisees fresh out of training, right?
Zach 37:10
That's correct, we follow EOS or Entrepreneurial Operating System. So when a franchisee starts with us, they get a scorecard of older measurables they get an accountability chart of who they're supposed to hire, and what they're specifically accountable for. And then we take them through a six-hour focused course with traction, which is all about holding people accountable for monitoring numbers week over the week and how to run an effective meeting. And it basically gives them a foundation of how to run a business without having blinders on.
Josh 37:43
And you want to think things I think it's important to on top of that Lance, one of the things that we do is we know that there's an 8020 rule 80% of our franchisees will do very well in business, and then we're going to have that bottom 20% that are just, you know, struggling a little bit need extra support extra attention to really further train them, potentially evaluate individuals working in a business might be in the wrong seat, wrong people wrong seat and make some changes. So we actually do something that not many other franchisors that I've ever talked to offer. And it's a low performers action plan where we actually have a 12-week structured low performers action plan that someone goes on to for three months. So once we identify them as somebody being in the bottom 20% Because as Zach always says, I believe in no person left behind. So no, no man or woman gets left behind in this, everyone has to get a return on their investment. And so what it allows us to do is when we people would say, Well, man, it's a lot of investment of time and capital and resources to do that. But you know what happens? It pushes everybody to stay in the top 80% rising tides raise all boats, and the entire system grows. The reason why you see explosive year-over-year growth. And each one of our franchise opportunities is because we are driving results in the unit level economics and making sure that everybody is achieving their goals to get to where they want to go. I always warn people to be careful what they tell me they want to do in business because once you tell me you want to grow a $3 million business $5 million business $10 million business. Those are the marching orders I give to the operations team to say hey, Lance said he wants to grow a $5 million business. Well, you know what they're gonna do, they're gonna push you, support you, and layout the plan for you to build a $5 million business. And when you're not good when you're not on pace, they're gonna have to care for rotational conversation to let you know where you've messed up what you need to change the adjustments you need to make you visit our office you spent 60 minutes diving into the backend dashboards that we build that are proprietary to horsepower brands. We give the data and analytics to our franchisee every which way to Sunday, there's no hiding there's nothing but accountability and being a franchisee within our organization, and our success coaches have access To that, and our teams will develop you to be extremely successful within business.
Lance 40:05
I love how you guys the overall attitudes, Josh, that you and Zack have and the entire team is, we don't care if it's never been done before. We're going to find it, we're going to build it, we're going to create it. When I got to see what you did with iPhone, the whole disruption, if you will, what you're doing for the foam world of foam insulation? What do you mean, everybody just has a trailer? This doesn't make any sense? Why don't you build a truck and do something state of the art? Well, nobody's done that before. Well, we can do it not a problem. I frickin love that.
Josh 40:42
They either go,nobody's done this, or that's too expensive. And I always tell the story of when I was in the tree business people would tell me all the time, oh, I do as much revenue as you are be as big as you if I had all that nice, fancy equipment. And my response is always you can't afford not to have the equipment, it's the tools of the trade, you got to have the right tools to be able to get the job done. That's what we've done with iPhone, there's plenty of ways that we could skin the cat differently to try to make that investment lower, cheaper, whatever it is, but I hate that word cheap, because that's all you're gonna get, you're gonna get something that doesn't have long term residual value, like a more expensive truck-mounted unit. And that took a lot of time, energy, and planning, and more importantly, research months and months of research to put together the amazing equipment that we've got now that we offer in that brand.
Lance 41:32
Well, to two final pieces I want to cover before we wrap up, I want to talk about your validation process because clearly, you have a lot of happy franchisees. Some of the brands are certainly newer than others. But how does that validation process work? Because it's something that brokers and consultants like myself and my friend, we talked about a lot, because that gives people a lot of peace of mind that, hey, there's people within this culture that are franchisees that invested their money, just like I'm thinking about doing. And I need to make sure that I fit here. So how do you do that? Let's talk about that process a little bit. Zack, you want to take that one?
Zach 42:11
Yeah, so we've created a process whereas as a candidate coming through looking at a brand. If that brand has plenty of franchisees that are open, then you're gonna talk to you're gonna have the chance to talk to as many franchisees as you typically want. Now, because we create brands from scratch, a lot of times there isn't a lot of validation. But there's still validation with franchisees that bought in at the same time with other concepts. And they can attest to here's what I experienced, here's what it was like, here's what they did for me, here's how they go above and beyond here were how they exceeded my expectations, etc. So if you're a franchisee look, or if you're a candidate looking at a franchise brand, and you can talk to franchisees of that specific brand, as well as others that are owned by the same company, and you're hearing consistent messaging, it gives you the confidence to make, make the decision on if this is right for you.
Lance 43:01
I love it. That's perfect. And the other piece I want to talk about is, you know, there are so many people that get nervous that they're leaving their corporate job, how do they make the leap? You know, do they have to be an owner-operator? Well, you guys have so many things dialed in. As you already said, you don't want somebody to leave their corporate job and be a full-time owner-operator, this thing. To describe that process a little bit in all your years of doing this as to how that's done and put people at ease a little bit.
Josh 43:34
Well keep in mind to be a semi-absentee owner in any one of our businesses, or really any franchise opportunity versus an owner-operator is the fact that you have to make sure that you're with a franchisor that knows what they're doing that provides a level of system and support to your general manager and the rest of your team to help you manage your business in your absence. Semi absentee is a loosely used word in our opinion because sometimes people mistake semi-absentee for absence. And they think they don't have to do anything. When people ask me the question, what's your idea of semi-absentee I tell them 10 to 15 hours a week. If you're not willing to put 10 or 15 hours a week into the business, then you shouldn't just be buying this for tax purposes, because it takes time when you're launching any business to get to the point where your team works you as the owner really out of a job in the sense of being more absent versus semi-absentee. But I think Zach's got some great things on this piece that he can really hit on that would really be valuable.
Zach 44:43
So yeah, I think I've built over 10 brands now Lance, and here's what I've seen is that the people that buy a business as a semi-absentee owner, have still never owned a business, and that and whoever they put in charge typically doesn't have that much structure. You're and when you're working in the corporate world that that structure is given to you. And there's accountability they've given by the organization. Now you're the person that has to enforce that. And I go back to traction or ELS, that's 100%. What traction does is it creates a measurable for every employee and creates a process of how to manage people. And that's one of the biggest things that we did. But we took it a step further when you're on a semi-absentee owner, you have to have a full-time GM. And that full-time GM is who we spend time with, not you as the owner. Not that we exclude the owner from an activity, but you can't hide anything from the GM, that's the person that is running your business. And that's the person that we relay the information to give the training to etc. And that is a big change that in every other every one of the other concepts, it was always well, do you want your GM to have access to this? Or do you want your GM to get this type of email? And they said, Well, you know, I'll forward it to them, which never really happens. So we're a transparent organization. And we want to make sure that we're transparent when we take people's money, we want to make sure that we can give them not just the return on investment, but the return on their time. And as Josh stated, there's no business out there that you can start and launch without 10 to 15 hours a week minimum. But with the right people, you can build a very big business that allows you the flexibility and freedom to do what you want. I think that's the bigger reason why people want businesses, they don't want to go on at eight o'clock to work. Sometimes they want to go to their kid’s ballgame, they want to go fishing on the way they want to go fishing on that Wednesday afternoon, and having the business is what gives you the flexibility and the freedom to do them.
Lance 46:34
Yeah, absolutely. And one thing we probably did not touch on at all is financing. Because you guys have had such tremendous success in your past and present. You know, there's plenty of finance, plenty of lenders that want to help your franchisees. So clearly, you have some good relationships. I want to talk a little bit about financing, Zach.
Zach 46:55
Yeah, we have, we have several SBA lenders that we have long-term relationships with that have no organization, track record, etc. We've gotten pretty good rates. One of the things that we do with all of our brands, Lance, is we have what's called a buyback guarantee, we'll buy back 100% of the equipment assets in your inventory within the first year at fair market value for any reason. And because the SBA knows that, that's something that allows them to get funding a lot easier. On top of that, we have relationships with two other companies that help with retirement rollovers, etc. So our ability to get funding is extremely high.
Lance 47:33
So there was that whole guarantee within a year, we'll basically buy that buy back all the assets.
Zach 47:40
I think that was my idea. But Josh is already doing it without realizing it is that he had some franchisees that, why not one of the gentlemen, his wife had brain cancer, and he just didn't have it in him to run the business. And Josh said I'll buy back the equipment at fair market value. And we'll want brands of this and all the best. And I think when we were working on the monster tree, that happened five or six times where there were certain things where Josh says, You know what all I bet all of your equipment if you don't want to do this, and we'll part ways and so we just made it part of our process where now we are French's development process is dialed in and to get the right candidates, our marketing is dialed in, we get the leads, we have the recruiting that helps find the people to work in the locations. And one of our most recent achievements that we're extremely proud of is with Redbox plus, we awarded 300 franchise locations in three years open every single location that had zero closures, which honestly I don't think happens often.
Lance 48:40
What a track record, Zach, final word, and then I'll throw it to Josh for his final word for today.
Zach 48:47
So my final word is this. owning a business is hard, is scary, but there's something that gets deep inside this fulfillment that you get when you've built that business that is second only to having children in my mind. Like the pride that I have for my family that the business that growing up in the business they gave me is just tremendous. And by building that business, even if you get it and lost everything, I personally think that you've at least tried it and to be able to even sniff it that success. That feeling that you get is unlike anything that I can explain.
Lance 49:23
And track record would be it would be hard to lose it all based on your track record but you know if it's the right candidate, so thank you for that Zach. Mr. Josh, your final thoughts?
Josh 49:35
For me really two things, and Zach's heard this many times but I hate people that fall into this should have could have would have a category. And I think all too many people are just looking for the right time to do something. And there's never going to be the right time. You've just got to believe in yourself. You've got to see something that you believe that you can be successful with. trust the people that you're surrounding yourself with and go for it. I heard the other day, that I was on a five-and-a-half-hour drive last Sunday home from one of my weekend homes. And I was listening to a podcast and somebody made the comment that the biggest mistake that people in America make in wanting to do something is that they're always looking for the built staircase. And they overlook that as long as you can see the first step that you need to take in anything, just finished building the staircase yourself. The first step is right there in front of you. And you just got to be willing to take it and then build the second step and the third step and the fourth step, and you build the entire staircase. And that's what I think a lot of people get hung up on if they're looking for the perfect scenario. They're looking for all the stars to align. And you've got to be willing to take some risks, and it's what you do that's truly going to build your financial future within the business.
Lance 50:56
I love it. What a great way to end it Josh and Zach horsepower brands. Thank you, guys, so much for being here. Talk to you soon.
Thank you.
Thank you very much for listening today. Please like follow and subscribe so you don't miss anything here at eye on franchising. Visit our website at eyeonfranchising.com e y e o n franchising.com and complete our free assessments so we can assist you in finding your perfect franchise. This is Lance Graulich. Until next time,