Financing a Franchise (with Gregory Mohr)

ℹ️ Introduction

In this episode of the Frugalpreneur podcast, host Sarah St. John explores the world of franchising with guest Gregory Mohr, author of the best-selling book, "Real Freedom." Gregory shares his journey into franchising, from his humble beginnings at Taco Bell to becoming a franchise consultant. He delves into the different types of franchises, the financing options available, and the due diligence procedures to consider when selecting a franchise. Listeners are in for a treat as they uncover the wealth of information Gregory provides about the franchising industry and how individuals can make the most informed decisions when considering this path for their entrepreneurial ventures.

💡 Guest bio

Gregory Mohr began his career in franchising in the late seventies, starting out in a Taco Bell restaurant in Woodland, California. Unbeknownst to him, he was actually working for a master franchiser for Taco Bell, and he quickly worked his way up to become a manager and oversaw the growth of multiple restaurants in the Sacramento area. This early experience laid the foundation for his successful career in the franchising industry.

❇️ Key topics and bullets

Primary Topic: Introduction to Franchising

- Gregory Mohr's background and experience in franchising

- Transition from corporate career to franchise consulting

- Overview of franchise industry, types of franchises, and franchising process

Primary Topic: Types of Franchises

- Service industry franchises

- Examples: senior care, tutoring, home services, cleaning businesses

- Options for working from home depending on the type of service

- Brick and mortar retail franchises

- Examples: automotive, fitness, health and wellness, food

- Higher initial investment due to location, build-out, and other costs

- Considerations for location-based businesses and scalability

Primary Topic: Financing a Franchise

- Using retirement funds for franchise investment

- Procedure for using 401k or IRA rollover to finance a franchise

- Associated fees and processes for setting up a C corporation

- Traditional financing options

- Debt financing through SBA loans

- Importance of credit score for obtaining traditional financing

- Role of franchise funding organizations in facilitating investment

Primary Topic: Selecting a Franchise

- Due diligence process

- Assessment of personal skill set and comparison with franchise's requirements

- Understanding the franchise's culture and expectations for franchisees

- Importance of getting to know industry experts, franchise attorneys, and existing franchisees to evaluate the business

- Considering risk factors in selecting a franchise

- Evaluating established franchises with a large number of franchisees

- Assessing potential of emerging franchises with a smaller number of franchisees

- Importance of personal belief in the franchisor and the team's growth potential

Primary Topic: Building Wealth through Franchising

- Pros and cons of franchising

- Recognition that franchising is not suitable for everyone

- Comparison of franchise model with starting an independent business

- Considerations for paying franchise fees and royalties

- Turning an existing business into a franchise

- Factors to consider for franchising an already successful business

- Reproducibility of the business in different locations and industries

Primary Topic: Mistakes to Avoid in Selecting a Franchise

- Identifying franchise fads

- Evaluating available funding options

- Getting to know the industry and seeking expert advice

- Consulting with existing franchisees to understand the business

Primary Topic: Working with Franchise Expert Gregory Mohr

- How to connect with Gregory Mohr

- The process of reaching out and scheduling a consultation

- Engagement with potential clients and providing franchise information and options

📚 Timestamped overview

00:00 Struggle led to finding smooth franchise solution.

05:01 Franchise offers support and playbook, self-run independence.

07:16 Service franchises: low investment, work from home.

11:07 Franchise offers training and guidance for growth.

12:24 Franchises must be reproducible in many states.

17:33 401k, IRA rollover, C corporation, stock purchase.

20:19 Matching skills, culture, and expectations in franchising.

23:43 Gratitude for discussion on franchising business.

❓ Questions

1. How did Gregory Mohr's background in the fast food industry and his degree in electrical engineering and physics contribute to his success in franchising?

2. What are the advantages and disadvantages of starting a franchise compared to starting your own business?

3. How can aspiring entrepreneurs determine if franchising is the right path for them?

4. What are the key mistakes to avoid when selecting a franchise, and how can potential franchisees conduct due diligence on their options?

5. Can you explain the different types of franchises, such as brick and mortar retail and service industry franchises, and provide examples of each?

6. What are the funding options for anyone interested in starting a franchise, and what are the costs and benefits associated with using a four zero one k to finance a franchise?

7. How do franchisees determine which franchise would be a good match for their skill set and personal goals?

8. What are the considerations for turning your own business into a franchise, and what types of businesses are most suitable for this transition?

9. What steps can individuals take to reach out to a franchise consultant like Gregory Mohr, and what can they expect from the consultation process?

10. How does the longevity and success rate of a franchise influence the decision-making process for potential franchisees, and how do emerging franchises differ from established ones in terms of risk and potential for personalized service?

Resources

https://www.franchisemaven.com/

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