Ideal Siding Franchise Radio Show Interview

Speaker A: Hi folks, John Henning here with the franchise radio show. And today we're joined by Alex Philippuch, the founder, CEO and owner of Ideal Siding. Alex, thank you so much for joining us.

Speaker B: Thank you John. Pleasure to be here.

Speaker A: Yeah, thank you so much. So we're going to jump into the business side here in just a few minutes but if anybody's listening to any of my episodes they know that I like to kind of get to know the person personally a little bit. I think that that really helps folks connect with someone that they want to be connected with. So without going into business, could you just run us through a little bit about who you are, where you're from? Tell us, tell us about Alex.

Speaker B: Sure. Uh, I was born in Belarus, uh, in a fairly small town, third uh, world country. So it was a rough, rough childhood. Um then I got a government scholarship to study in Poland. I picked uh, one of the best technical universities in Europe. Uh, did bachelor's in computer science that did master's in finance, uh studied in Denmark in Copenhagen, then went to work in states in Colorado and then moved uh, to Canada to Vancouver. So it's a little bit of ah, moving around but I was looking for a place to stay uh, and I visited a lot of places um, and ended up in uh, Vancouver B.C.

Speaker A: excellent. Thank you so much. Now how did you get to where you are today through that journey? You own and operate Ideal Siding as a company, um, as a franchise company that's uh, you know, in the U. S. Canada, maybe elsewhere as well. We'll cover that in a minute. But how did you get to what you're doing today? And then walk us through kind of the, what led up to getting into franchising as well.

Speaker B: Sure. Um, I, I was always in digital marketing. I was working at PayPal in Europe, um, um, helping with marketing for non million users there. Um and then uh, when I moved to Canada I was helping people build websites, do all types of marketing. That led to building lead generation company where it was revenue share performance based marketing which means that we didn't charge any upfront things for marketing. Uh we would spend our money to build the website, do everything, advertise and then when we bring clients to the customer we will charge percentage of the revenue. So construction company Special loved it because they uh, were already um, had some negative experience with marketing companies when they would pay for 6 months, 12 months and results were not their satisfaction. Uh so our model worked really well and um, I was um, it started with me helping a friend in church. Um, uh, he was a sliding seller. I was trying to find clients for him. Uh in particular how I got into siding niche. And um, we got so many clients that we were giving it to five companies locally. And then we started to do the same in other cities. And three four years later we became the largest liquidation company in siding. Um after that I built publishing company um with 140 people working for us. And at some point I um, was looking for next big kind of business to build. And I thought what if we build the largest sun renovation company because there is no national brand, um there is no reliable company that can handle plans across different markets. So my initial idea was just to build 50 locations because I had leads, I knew exactly the business, I knew how to do it. It's not capital intensive. So I thought I'll just be opening one by one and it might take a while but I'll open 50 locations and each of them will be doing 1 to 2 million and I'll be around 50200 million business. And that was the plan. And I went to, I met a couple of very smart people in franchising and some of them owned a lot of franchise businesses uh their franchisees and some didn't. And I was always curious why how do you build this enterprise value and what are the main reasons. So I went to Brian Scudamore and said the founder uh of One Heart Go Junk because he works like uh 10 minute drive from our office and ask him um, why didn't you just own big chunk of your locations? This way your enterprise value will not be based on the profit of the franchisor but will be profit of big group of riches. And at that time he was I think around 300 million instant revenue so you can build fairly large company. And uh, he explained me uh all the pros and cons of running multiple occasions versus being Francisor. Uh and uh, I'm very um grateful for that meeting because uh, I don't think that many people would be uh very helpful in this. And he um, was very open and explained a lot of things that probably saved me years of my life. Uh so after that meeting I decided that franchising uh is the better route. Then I started calling other, any franchise people I could find, you know bankers that finance franchises and consultants and uh operations uh manual people like everyone I could find. And I was asking why nobody's doing um franchise and siding space or at that time roofing space or window space. There were very very few cases. It was 2000 um 17 I think. So at that time there were very, very few companies in that space. And almost everyone told me that it's very hard to convince construction people to pay your royalties. Uh, uh, it's very hard to actually build value the long term, and so on and so forth. Um, so only one person out of everyone I called said that under a particular circumstances actually might work. So we hired that person.

Speaker A: They didn't know that they were interviewing. Right, yeah.

Speaker B: Uh, and then we started, uh, with one location, test location. Then I opened three other test location, other markets. Um, that again, everyone told us it would never work. Um, but after we proved that those four work, we started franchising in Canada. And then two years later we started in states. So our goal was always to scale across, um, at least 300, 400 markets. But, um, the uh, path was that we will test systems in Canada and then move to states, which is much more competitive market. Um, but at least we'll be much better prepared. And then I just drove to Seattle and open signing company with, with um, another franchisee from Vancouver. And we just got on the car, drove open the company, started operations, um, to learn how, like what, what's different, how do we, how, how, how can we be successful in states? And for, and right now we have 84 locations. Most of them are in states. Uh, so it's been quite a ride over the last, uh, couple of years.

Speaker A: That's a great story, man. I'll tell you, Brian's a great resource for the industry as well. So I've talked with him in the past couple of times and uh, great resource and I think you're right. I'm not sure how many folks would have, would share that much information with you. So kudos to you for researching and getting into franchising that way because as you can imagine, most founders and, and operators and owners of franchising are kind of, kind of accidental franchisors in the beginning. Right. You know, it seems like you took a really, really intentional approach to doing the research. I also, a couple of things I picked up there and that is that uh, you said, okay, this is the way that I think I want to go. Now let's go prove that it works. So we start here with one. And then something that many franchisors don't do is go to another market and replicate. And then you went one step above that and said, not only another city within our country, but let's, let's go to another country which has different rules and regulations and competitive scenarios in place. And let's, let's prove that it works there. And you know, you said a few years. I'm assuming you really mean like a two, three, four year period here. Right. Okay, so when you think about that, how many other franchisors, kind of rhetorical question, how many other franchisors put that much intentional research and money and effort into it and then are at 84 or 83 franchises today in a few years? It just doesn't, it doesn't normally work that way. Right.

Speaker B: Yeah, I think, uh, you know, in franchising it's, it's not, uh, it's a get rich slow, uh, scheme. So it does take longer than people expect. Like every business takes longer than you expect, but franchise or business takes way longer than you expect. Yeah. So if you don't do enough research, you will be wasting four, five, six, seven years of your life. Um, it's a big chunk. So it's better to do research before doing it, for sure.

Speaker A: Get rich slow. I don't think I've ever heard that one before. So as a franchise Herb, I mean really, when you obviously, you know this, but you think about, okay, I had to start up, improve the concept and then replicate and prove that it works there and then another country, and then go out and find franchisees and help them ramp up. So that, and I'll make an assumption, you charge a percentage of royalty so that when they get to scale, you're actually now as the franchise are actually bringing in revenue and then obviously in any business, take out expenses, you know, all of those things to get to that final destination of actually putting $1 of profit in your, in your hands. So kudos to you man. I really, really appreciate you sharing that story with us. I love it. I love it. Let's, uh, let's talk a little bit about, um, you went through a couple of things already. How many units, how long you've been in business. Let's talk through a high level overview of your business model. Like, obviously you're in the siding business, but what does that mean? You know, I know you're not doing this, but are you selling siding? Are you removing it? Are you installing it? Like, who are the customers and what is your, what is your end user? You know, what's the franchisee doing? Right.

Speaker B: We serve a kind of number of categories of clients. Um, the most common one is, uh, is a couple in their 50s, 60s, when they are, uh, their kids are out and they are just looking to stay in their home that they got used to. They know neighbors, they, they love it, but uh, they kind of got tired of painting it or doing the upkeep or it just doesn't look good. And then we come, we remove the old siding, we put brand new rain screen system or depending on the location, depending on the code that they have, getting uh, up to current building standards. Um, and then uh, we create design for them so they know how it looks. And there are a lot of different styles, colors, types of materials. And then we uh, install what they chose, um, and give uh, them real good warranty. And typically what we install doesn't need to be painted for like 20 years. Uh, so they save a lot of money on upkeep. And uh, typically one of the main reasons is that they say, you know what, me doing some painting on the house was okay 10 years ago, but I'm getting older, I don't want to be on the ladder on the third floor in five years. So I want to do something about it now so I don't have a uh, injury in five years. And that's, that's one of the main kind of reasons why people hire us. And then we take everything from design till final solution when everything is done. Um, so we, we kind of project manage, we take, we make sure it's, it's was done properly, make sure that materials that we order are good quality and so on, so forth.

Speaker A: That's great man. No, I appreciate you sharing that information. Let's, let's talk about the competitive landscape that's out there. What really separates you from the competition? I mean obviously there's a lot of siding companies out there. Right. So what, what separates uh, you, what makes you different than other companies?

Speaker B: Yeah. When we started in Vancouver we had 200 companies. We opened yellow pages and kind of looked through all the companies that offer sighting services and there were 200 companies and we became number one in Vancouver. So um, every market we go to we know that it's just a matter of time until we will be number one. Uh, what we do different is uh, we offer. We have in house designers, uh, typically signing companies just don't have enough budget to hire, you know, in house designers. And we, and because we keep it on the franchisor side, so franchisees uh, pay it with their royalties really. Um, and uh, it's dispersed between multiple franchisees. This cost is fairly minimal. So uh, they have this advantage of getting professional designer that typically would cost like 2, $3,000 for color consultation and things like this. We do it all for free. Uh, and then when we install siding we uh, give 25 year workmanship. Warranty. Our largest competitor, the largest siding company in the United states is giving one year warranty. We give 25 years.

Speaker A: Wow.

Speaker B: So there's a big difference. And then we um, build the business model that is extremely low overhead. Like that wasn't, that was our intention from day one. Uh, because some of the clients that I was selling uh, leads to before I saw which are doing well, which not doing well. And I saw a pattern where the companies go to about 5 million, they start struggling, they go bankrupt, sell them or they go back to like 2 million. And I was always curious on how do you move past that and why. And we build a really great model that you can build very large business but it will not have the same pain points as the business that's um, normal business with 5 million or 8 million. Um, so because of that we can price match any company. So we are very competitive on pricing. We have the best warranty and we do free designs for customers with they can have like 20 options of what, what can be done. And it's not uh, we have some software that can generate designs but, or AI but um, uh, the um, manual designer, uh, professional designer still is way better than any uh, you can find right now.

Speaker A: Sure.

Speaker B: Uh, maybe at some point in the future we'll switch to fully but right now it's still far, far from what we want to achieve.

Speaker A: You know that makes a lot of sense. I love how you went through and found those pain points of those companies that were scaling. Right. So you know you could, you and I could go out and you know in, in a week we could tear off the old siding and put on new siding. But what you're talking about isn't the necessarily the activity of the physical part of doing it which I'm sure you have, you know all of that stuff available too. But that's what every siding company has. What you're talking about is the things that allow you to grow, scale, manage the teams and, or how that works with you know, using different uh, companies to do the installation, that type of stuff. So you're allowing your franchisee to be able to scale and have the back end resource. I also really like the idea of the um, the distributed cost across the franchisees of that design because I think, you know, I think I might have mentioned in our emails that or if I didn't I was in the army for nine years and before that I actually worked at a siding company. So I installed.

Speaker B: Wow. Yeah.

Speaker A: So I, I actually know the day to Day. And I was obviously much younger back then. But, um, and I'm, I'm your customer today, right? 50, just over 50, you know, don't want to get up on the ladder and paint the, paint the wall outside. So I get what you're saying there, but that scalability and having those things that the independent or local companies just don't even have access to and, or you know, wouldn't even necessarily think of offering because I would imagine, and just correct me if I'm wrong, a lot of those folks are basing what they're selling based on price. Right. Availability and price. And you know, it's really about providing a value to the customer. Like think about it, right. And I know you know this, but if I'm the average customer and I'm thinking, man, what would this look like in gray? And what would it look like in darker gray and lighter gray and green? And what. My house happens to be in a really light shade of green because we live in the woods and that's what we wanted. Right. Had, had they not had some form of system. We had no system. There was no. We basically had swatches or samples or whatever, you know, a piece 12 inches long to kind of get a feel for what it might look like. But we didn't know what it was going to look like until the whole front was done. You know what I mean? So.

Speaker B: Oh yeah.

Speaker A: Huge benefit for, you know, if you're great at lead generation and you've got the systems down and you can kind of, you not kind of, you can show the customer what their home's going to look like. And I'm assuming that's what you mean by design, right? You're, you're able to the customer what your home would look like in different colors and styles of siding, right? Yeah.

Speaker B: Yes. It can be going from. I have no idea what I want. Mhm. Going through particular stage by stage conversation that at the end the designer creates a design for you and says, is it it? And you say either oh my God, yes, or it's no, no, no, I want this or that. And then you kind of change it and then you create a feature wall. But uh, all our major competitors, they charge almost double of what we charge. Just just to give you, give you an idea. We, we have fairly good business in terms of profit and loss. Um, but the companies that we compete against are charging almost double. It's not like 20%, 30%, it's almost double. So I just call it kind of more not a mature market because it still happens. And uh, those comp. Some of those companies are in billions in terms on sales. Like it's, it's, it's a big uh, big competitors. But if you look at mature markets, for example painting, there's a one franchise that dominates the market. Really. Like the one that I would hire if I were painting my house. Which is uh, sort of Pro S. Pro.

Speaker A: Yeah. Right.

Speaker B: And why we don't need to create something thinking that oh, we'll just figure out how to be a leader. We just look at the leaders. Sarah, Pro is the leader in painting. Are they twice more expensive than others? No. They're uh, competitive on pricing. Like they're maybe 5, 10% more expensive than average company, but not that by much. They are professional, they have very good support system. As a result, they're over a billion dollar painting company. There's, they're not, they're not uh, taking advantage of their French disease. They're very focused on making sure franchise are successful.

Speaker A: Right.

Speaker B: That's it. Like this is, this is all you need. You take for example cabinets and we have California closets.

Speaker A: Mhm.

Speaker B: And if I had, you know, enough money and enough um, I mean large house where I need closets all over the place. Does the company with hire, um, I would not even look at other, other businesses. They could potentially charge double. But they don't. Again, they keep pricing 10, 20% more than other companies. They provide uh, amazing value. And this is what we are focusing too. We, we just realized how do we create different value proposition items on physics level, like what can be done so for example, with large competitors and small competitors. With large competitors, our siding price, material price is, will be almost the same. With small competitors, our material price will be significantly less because we have national accounts with everyone.

Speaker A: Sure.

Speaker B: Labor price with large guys will be less because we found a way how to actually work with the best crews, how to keep them busy. And part of it is because we specialize in one thing. We don't. We, we can keep this one or two or three crews busy back to back, which large companies typically don't do because they have like different types of projects and they're just switching different crews or trying to do three different things with one crew. And even though the crew can do it, but they will be fast on one thing and slow on other things. As a result they will make less money than the things that they're doing fast, which is what they specialize in. So we kind of created the Uber within the signing industry where we take crew that specialize in metal for metal project. You live in this neighborhood, we'll give a project in this neighborhood. So when we call cruise, typically we are number one choice for them to um, go and work. So we didn't think about how to do it. We just look at top companies in the space and just try to find ways why they're so successful. And the secret is there is no secret.

Speaker A: I love it. You just follow success. Right. So you utilize what's already working out there across other industries and from the bigger competitors of course. And probably even you might have picked up some things from smaller competitors over the years as well. I mean. You know.

Speaker B: Oh, uh, yeah.

Speaker A: You know some people are, are good at certain things. I like how you've put it all together. And I think some of my next questions are really going to show some additional things of what I'm about to ask you. But you know we talk about the differentiation from the competition. Um, I want to skip forward just, just real quick. How many employees, actual employees, work at the franchise location? I think I know the answer, but I want our listeners to hear this. How many folks am I hiring? How does the, the employee side of this business work?

Speaker B: That's part of the being building uh, a flexible model. We want to scale really fast when there is a boom and slow down when there is a bust in the market. And every market is cyclical, uh, in terms of season and in terms of economy, in terms of other things. Um, so when franchisee starts there are zero employees.

Speaker A: Right.

Speaker B: Even franchisee is not an employee of the company, uh, of their company. Uh, in most cases, I mean it's their decision but in most cases that's how it's structured. And then as they go to stage two, when they start building management team, typically it's 1099 people and they get paid really well.

Speaker A: Mhm.

Speaker B: They can expense their expenses that they have, you know, running the, the role that they have. Right. Uh, and uh, it's a win win for everyone. They get more money, we get better alignment in terms of performance and results of the company. Uh, and um, um over time some FR might have more uh, employed people. But we took call center through the franchisor side so so they don't need to have admin person full time. We specifically tell them not to get offices because showrooms don't work in our business at all.

Speaker A: Right.

Speaker B: Uh, if they think of a person they want to hire, we can hire this person as a franchisor. And this is what most franchisors right now don't do they don't create costs at the franchisor side. They want to maximize profit on the franchise side. But as a result someone has to incur this cost and in this case it's franchisees.

Speaker A: Right.

Speaker B: If you look at again I'm just coming back to those two brands but just if you look at S pro support system and, and California clauses, they have massive amount of people working in Francisor site. Mhm. Their pro profitability of franchisor is quite fairly minimal. But this is why they're so successful. Mhm. You get so much support that you don't need to hire those people locally. Um, and it's done of course on much bigger scale. Um, but the concept is the same. Do you play three year game where you want to maximize profit to sell the company or do you play long term game where you actually want to be a leader in the particular niche?

Speaker A: Yeah. And, and along the way you've got wildly successful franchisees that are making the money that they need to make to be successful. So I can absolutely see the difference and I applaud you for, for taking that approach. It's, you're, you're building a company, not a business. Right. You're looking at that long term, you know, relationship driven with the franchisees. Success. Um, I love it. I love it man. I, I mean let's, let's jump into a little bit about the, the startup uh, cost for the franchise. What if I'm interested, uh, you know I come to the table and say uh Alex, I'm interested in your franchise. You know, how much does it cost? Because that's kind of a generic question that most buyers ask. What's uh, what is it? What, what do they need to bring to you to qualify financially?

Speaker B: So the, the cost uh, based on our FDD is between 77, 000 and 118 000. Um, most um, of our franchisees are kind of below a hundred thousand. That includes the um, working capital uh, for the few uh, first few months. The way we structure projects is that it's always cash flow positive on each project. So you actually don't finance the project, uh, that you do the starting project. But um, it's not guaranteed. Some people takes longer for them to get up to speed with the sales because their sales skills are not that good. Uh, or it takes longer because the market is more competitive than the average. Uh, but this is what we see. Uh, in most cases some people started the business and the project that they do fund the business. Some have to add additional Capital, uh, over the first 12 months or so to keep going. Uh, but I really wanted to put in our fdd, our uh, our money, um, back point or our breakeven point and all lawyers told me, no, sorry, you cannot. States will registration. States will not approve it. But I believe that because we have this low, um, low investment initially. Like we are okay with people buying one territory. Uh, right now most companies don't allow it, um, which results is just in a bigger amount of money that the person needs to invest which delays the money back period. Right. Um, but, uh, we have probably one of the lowest investments and then start, uh, is very fast because we start doing lead generation when they sign the contract and by the time they finish training, they already have leads, already have meetings. So, um, again, I would love to kind of share the numbers, but I'll get in trouble. But realistically, first full year we see franchisees doing close to 900,000 in revenue and over 200,000, um, owner discretionary earnings.

Speaker A: Right.

Speaker B: Um, so that definitely gives you money back on the initial investment. And we're very focused on that, that people get their money back fast and uh, then they don't have the stress of, oh my God, how can I pay this loan? Um, and so on, so forth. Uh, and then we help them to build from there because we have again, we have in house recruiting, we have in house hr, uh, to help them to build their management team and then start scaling business from there.

Speaker A: Yeah, we're going to get into, uh, you know, how the training works here next. But I love the idea of what you said there about from when they come on board. And we're going to talk about what that timeline looks like in a few minutes too. But come on board. The phrase you said was by the time they're done training, we're already generating leads like no one else out there in any m. In any franchise, much less in your. In your category. That home services category that I know of and I've, I've done about 700 of these interviews. Nobody else structures it that way. There's folks that, companies that help with marketing and companies that help with call centers and you know, they help with certain things. But I really like the way that you structured that. Obviously franchisee, you know, results may vary, you know, reference the information, talk to existing franchise owners, all of that type of stuff for, for clarity. But I really like the way that you have it structured where they can hit the ground sprinting, not even running.

Speaker B: Right.

Speaker A: Yeah, that's great. How does the uh, training Work. Let's say that okay, we're, we're partnering up. I want to be a franchise partner. I'm ready to sign and, and pay that initial franchise fee and schedule my training. How does the training work? Are you training me on how to close deals, run the business? Like what does the training look like and how does it work?

Speaker B: We typically tell candidates that are about to sign is to take a vacation before you start this business. Because once you start, when you start training it, you know, it doesn't stop, uh, in most cases. So um, we have a uh, two week training, uh, that is all online. We try to move as many pieces online as we can and then uh, one week training in the office where they do things that cannot be done online. So they shadow people, they um, uh, create their proposals and everything that is guide with guidance of people uh, that are training them. And uh, we are, we're giving all the information on day one for them to know everything about the business and every, about every single stage. But we try to focus on what is needed today because when, when people start thinking saying okay, but how do I motivate uh, my general manager? It's like well you're, you need to have revenue to motivate your general manager. In order to do revenue you need to actually know what you're talking about. So let's dive in, into product knowledge. And first uh stage is a lot of product knowledge and um, uh, um what type of customers we deal with, what's the different strategies and how to bring different value proposition, different people. Uh, what I learned is that if we take a smart person, um, which typically half our people are either MBA or some master degree, like we have a lot of smart people, um, ah, as franchisees and when they start they have no idea about siding, right? And we know that it takes about two weeks to learn everything about siding in theory. So you're, you're dangerous enough and then it takes about six months and about a hundred meetings to actually learn the practice. Again not the full practice but again enough to be dangerous. And this is what we are telling them. You know, we focus on things that they will need in the first month or two and then slowly they get into next phase. And next phase. What we love doing is we create masterminds and then they join one of the masterminds. So people at the similar stage and as they progress from one stage to another, uh, they are doing it with other people around them. So they kind of learn from each other. As you probably know. Frenchie Z's listen much better if another French Z says something than something. Um, so we have all the documents and everything, but uh, realistically they uh, really listen when other people in their shoes are at the similar stage. And this is what we try to organize around them.

Speaker A: You know, Alex, that's a really unique training structure. I'll tell you again, I might even say this a couple more times today, but there's uh, most franchisors, as you probably know, go through a, uh, you know, one week of pre training on online and then a week in person and then maybe another week after, after that initial in person. But that, that in person training is oftentimes like drinking from a fire hose and trying to train them on everything within that one week period. And it sounds like what you're saying is focus on what's important today. And over time we'll get to the next most important thing that you'll need when you need it. Like if, if it pops up, we're here to help. And that's great. We already know how to do that. But, but chances are, you know, there's this process in place, like for example, the general manager. Until you actually hire a general manager, you don't really need to know how to motivate the general manager. Like we know how.

Speaker B: Exactly. Yeah.

Speaker A: But you know, it's the same with the other, you know, aspects of the business that is extremely unique. As I'm sure you probably know. There's not many that I know of franchisors that do that type there. Okay, here's the week. Take everything. And then the flip side is they're not saying this, but we know this is what happens. Retain 20%, right?

Speaker B: Yeah.

Speaker A: And then out in the market. And what if that 20 they retained isn't the right 20? Now they're, now they're not sure. Like, you know, how much networking do I need to do? How do I set my pricing in this neighborhood versus that neighborhood or whatever it is they. But I really like the uh, the focus on the important thing that's important today. Focus on what's important. Right?

Speaker B: That's a. Yeah, it's a, it's a, it's a. As just um, in time approach.

Speaker A: Yeah, that's, that's a great way to explain it.

Speaker B: Yeah, yeah, it's the best way. And it, it's kind of tricky for a lot of companies when they train, for example, 20 people at the same time, they cannot just do it. So we train maximum, uh, three people. Uh, so this, this way we can actually go directly and go one on one lot of those instances and um, help one person with one thing, another person, another thing. So again what we do is not the most um, common way of doing things. But when we look at examples, we don't look at companies that are doing it in a different way today. We are looking at companies that are already the leaders and how they do it today. Those companies that are the leaders in their space.

Speaker A: I love it. Let's talk a little bit about that person, uh, the franchise owner. What type of person or personality or skill set makes an ideal fit for your franchise owner? We have all different types of franchise owners in franchising and you know, everybody has a little bit different personality but in wave that magic wand. And what is an ideal type of person for you as a franchise owner?

Speaker B: We don't accept construction people. So we're on setting company. We believe that construction people in many cases are not very good at building businesses.

Speaker A: Mhm.

Speaker B: We take people with skills that are needed to build a service business which is leading, uh, people managing people, planning um, ahead financial literacy, um, and desire to help people which in service business you cannot do anything without it.

Speaker A: Right.

Speaker B: And people that are planning long term, this is not their, you know, six months plan. This is their own term plan when they build a bigger, bigger business. Our uh, approach is do we believe this person can build number one company in their market or not? And if they don't, it's just not a good fit for us.

Speaker A: Right.

Speaker B: If they are, then we will do our best to help them to build the number one company.

Speaker A: Ah, that's a great way to look at it. Yeah.

Speaker B: I'm sorry, there is no magic formula in terms of profile. Uh, uh, I've, I've talked to guys that, that been in the franchise industry, you know, same as you, for decades. Uh, and they say that yeah, we spend a lot of time and money to find this perfect candidate, uh, patterns and portrait. And we realized that uh, in most cases it's just you know, grit and uh, how this, how this person uh, handles stress and do they have capacity to lead people? And that's pretty much it. And sometimes you get very surprised. You um, award a franchise to someone that you think well I have no idea how you'll be able to do it, but based on everything that you told us, you should be able to do it. And this person is amazing. And then you have another person who is like, oh my God, this is like the perfect person. And then they call you two days later saying great news, I just hired manager to run my business. And I was like, well, I don't think you'll be that successful because if it was that easy, we would just go on Indeed. And hire 50 managers and we would not need franchisees.

Speaker A: Right? I say that all the time. Yeah, Yeah, I agree 100%. That's a really good way to put it. Alex, I love your approach on, uh, not just answering that question, but, you know, knowing who you're looking for, but keeping it to those things that, that make, you know, generally speaking, like if you took 100 franchisees, there's always going to be a top 10%. A bottom 10% doesn't mean they're better or worse. It just means there's always going to be a percentage. And then focusing on those things that, that, that you feel, um, make a good franchisee. But then there's always those anomalies. I mean, I've been in franchising almost two decades and there's been scenarios where this is going to be a great franchise owner and the, they were okay. And then other folks that were like, yeah, you know, it's like, ah, it's a true decision. You're like, okay, we're willing to take the chance. Let's make sure we put in what we need to put in to help this person. And they end up being a rock star. Right. So, um, something you mentioned is how they handle stress and how they lead people. Because owning a business can be stressful and no matter what you do and then leading people is a critically important part. I, I believe people don't leave companies and people don't buy franchises because of what they offer. I believe people join and leave companies and join franchise companies because of the people. That's, that's a true belief of mine that, uh, in the culture and the people and who they want to surround themselves with. And I believe that that's us. Numbers are important. They have to be there. Okay. If the unit economics don't work, it doesn't matter how good the team is, but having a good team and joining that and, or including hiring, leading, that's just a personal belief that I have. If you put all the rest of it aside, I do believe that's also one of the biggest differentiators in most companies as well is the people. Right, John?

Speaker B: I can mathematically prove that you're right.

Speaker A: Yeah. Yeah.

Speaker B: And the biggest example would be if that was just about numbers. Uh, private equity companies will never be buying franchisor companies.

Speaker A: That's right.

Speaker B: They'll be just launching them. They have enough money to launch a hundred different brands. And those that tried to do it failed, most of them.

Speaker A: Right.

Speaker B: Or did fairly mediocre results. And uh, as a result a lot of them are buying French resources that are successful and those French doors that are successful are actually have great people leading the company.

Speaker A: Agreed 100%.

Speaker B: So it's, it's, it's, it's a belief but it has a very, very um, a lot of data to prove that is actually a good, the axiom, like the proper uh, statement, the correct statement.

Speaker A: Well that you validated what I've always believed. I never really thought about it that way from what you just said because it was almost like saying uh, if you hire the manager, if that were the success model, then we would have just done it. Same thing with PE is if that were the way to structure it and do it, that is the way that they would be doing it. Right, right.

Speaker B: So, and, and it's something that I struggled initially because I thought how can I compete with companies that have billions of dollars?

Speaker A: Right, right.

Speaker B: Why would, why would the uh, franchisee ever go to us versus the other company? And then I realized the reasons and now, now, now I'm sure we're better. But

Speaker A: let's talk a little bit about the day in the life of a franchise owner. I'm um, I'm on board. I'm um, um, I'm completed in my section of training that I need for right now. I um, I'm launching the business. I've got leads, you know, that are coming in. I'm generating some. As a franchise owner, you're helping me generate some, uh, what is that normal day? Although normal is a quoted word of course. What does that average day look like for a franchise owner?

Speaker B: So when they just start, they typically focus more on sales and lesson operations because they don't have operations to run. Uh, after about six months it gets more balanced. And if you talk about balance, but they're still the one only person that running the business is typically they have on average maybe one meeting sales meeting a day that they spend a, uh, couple of hours to drive there, you know, talk to the client, drive back, um, send a quote, uh, and then another hour or two to do follow ups or maybe answer requests, then another hour to order materials for projects that they want that they're planning to do, another couple of hours to visit, uh, one or two projects that they're having on the go. Uh, they, you know, drive and check if everything is there, if crew needs anything, if the customer is Happy, all of those things. So it's uh, about 40 ah, percent project management, 40% sales and then 20% admin, uh where they you know, send everything to bookkeeper, um, make sure their insurance is and know didn't expire. Things like this.

Speaker A: That's a really concise setup uh there that you have on knowing what the franchise owner is doing. And I liked how you explained how you know it works through for this period during this period and what it looks like in the future as well. Because I do think that some folks evaluate looking at owning a business as this kind of this set in stone like this is what I want to do every day. Where in reality as a business owner what you're doing today may change over time based on the growth of the business. Right.

Speaker B: Yeah. You, you said before that business may, you know, might be stressful. Can be stressful. It will be stressful. It will be difficult. It's a hundred percent guarantee. Doesn't matter what business you start. Doesn't matter if it's a franchise. It's way more work initially and you get way more results if you're successful. It's a higher risk, uh, time spent, leverage time spent on an activity. So um, it, I, I just, I don't know how to emphasize it but every person that is buying franchise need to prepare for the most hard working year of their life. The first 12 months I think. Otherwise it doesn't work.

Speaker A: Yeah, right. You, you definitely emphasize, I agree 100. I think that they need to be all in committed not just financially but from an effort standpoint and you know the rewards will, will come back to them. But if it's the uh, you know, kind of the, the ramp time they, they need, you know, if you, if you pay peanuts, you'll get monkeys when you hire people and when you, when you put in the right amount of time and effort in the results will, will be returned. Right. So yeah.

Speaker B: And, and, and then you of hear from neighbor who sold the company for a million dollars and you think well if it's that easy, why no, nobody's doing it. Well that's because it's difficult. Yeah. But that's because this person sold it for a million or 2 million and this is why they bought this car and this is why they went on this vacation. Like there is a reason why people start businesses and it's not to do less or it's not to avoid stress. Like those are not. Yeah, that's, that's not the um, the reason. Uh, there's a uh, in Ukraine before they had army that you have to go to for 25 years to, to be in the army, like with Star and everything a long time ago. But, um, all of them went to army knowing that after those 25 years, they get the best life possible. Like they get huge pension and all the rights and everything they want to get. And it was like, you know, a couple of centuries ago. But, um, the, the reason why they go, went to arming was not that they wanted to fight. I mean, they were okay to fight, but they were going there to get this result. And business is the same. You go there to get freedom, to get funds, to get more, uh, time with family. But in order to get this, you need to go through the army phase, the 25 year phase.

Speaker A: Yeah, you gotta, you gotta pay your dues. Right. You've got to be willing to put in that time, money and effort. And you know, when I, when I'm talking with folks in franchising, I always talk with them. Uh, I say that I sell the outcome, not the, the business. Right. It's. What, what is the franchising to me is a vehicle. Right. It's to get us.

Speaker B: Exactly.

Speaker A: It's a journey. And they should, at some point, I do believe that you, they should at least somewhat enjoy what they're doing. It's, it's would be. Enjoyed it. Right?

Speaker B: Yeah. Yeah.

Speaker A: He's gonna, it's, it's not going to be better if you dislike it, of course.

Speaker B: Uh, oh, for sure.

Speaker A: Logical. But it's that journey, the vehicle, whatever you want to call it, to get to the outcome that you're looking for. Right?

Speaker B: Yeah.

Speaker A: Great. Let's, uh, talk a little bit about what the journey looks like to learn about your franchise company. I've got just a couple more questions here for you as we finish up. What is that process look like? Okay, I'm interested. Alex, tell me more. What does that journey look like for me to learn about your franchise company?

Speaker B: Well, people can go on our website, idealcying.com, click, you know, start a franchise and apply. That's the first step. Then one of our team members will get a hold of them and share, uh, all the details. Uh, and then we have Discovery Day. When they learn about the company, I typically go on this call, answer any questions they might have, then they do due diligence, talk to other franchisees, um, review the FDD and so on, so forth. And then we decide if it's a good fit for us. They decide if you're a good fit for them. We, we Decided they're good fit for, for us. Um, and after that we started business.

Speaker A: That sounds pretty straightforward. I like how you're, you're very intentional about all of this. One thing I wanted to bring up was something we had chatted about previously. I want to make sure that our folks understand what this side of it looks like. So I want to give you an opportunity. Something we traded information on was the average ticket price in this business. So there's a lot of different types of businesses out there and some of them need, you know, high volume, lots of customers, and other ones are at the other end of the spectrum. You made mention of a number that I want to bring up. It's an $18,000 number. What, how does that fit into your business? What does that mean?

Speaker B: So average project that we do, uh, is, is uh, 18 over $18,000. Uh, in states. It's actually higher in Canada because we started earlier, but over time it goes up. Um, so projects that we do are expensive projects. So it's uh, you don't need to do that many uh, to have, you need to do about four months to have a million dollar business.

Speaker A: Right.

Speaker B: And it's not a one day project of course, but you uh, don't need to deal with as many clients. Like over the year you need to deal with 50 clients. That's it,

Speaker A: that's.

Speaker B: And then, and then you have, if you want to build bigger business, you need, you know, another location with another 50 clients. But um, we're in, and we're moving towards commercial right now where we start doing renovations on low, uh, rises, commercial buildings, um, retirement communities. And there the check is even higher. So we expect it to, to drastically grow as we shift more of our work to commercial side. So when people are looking at our franchise, they need to understand that they will be selling high ticket items. It's not as, as easy as to go and say, hey, I'll uh, I'll wash your car, give me 10 bucks. So it's a completely different business. You're asking people, people for average 18,000. Some could be a hundred thousand, it could be a $1,000 repair. But some projects could be a hundred thousand. So people do a lot of due diligence on the company. So we build it the way that we want people to succeed. But because it's a high ticket item, it takes longer for people to get to the point where people trust them with their money to build their confidence, to build competence and also uh, to have enough um, projects done in the market. Things like this, you Know, it makes

Speaker A: a lot of sense though and it would seem logical that they'd be really able to relate to this as they're going through and learning about your company. It's, it's a big commitment. It's, it's a large investment. It's uh, no matter who you are, a hundred thousand dollars is a lot of money. So they're making, they're gonna just like their clients are going to be making, doing their due diligence on is this the right company that I want to, you know, do this work on my home? Which is kind of, you know, something I'm going to have. It's an asset that I'm going to have for a long time as a homeowner. You know, that, that makes a lot of sense. It's not like you know, say uh, and these companies do great but it's not like a power washing job where they're you know, a few hundred dollars or cleaning out the gutters or whatever it is. It's a fairly big decision for that homeowner.

Speaker B: Exactly. And what we want to achieve is the person who represents our company is Trustworthy to give 30,000 or 40,000 or 18,000, uh, door chuck. So um, it's uh, it's. We, we've seen what works for dozens in terms of who's doing sales and wine, so on, so forth. So we have kind of proven path on how to achieve it. But it's something that there's a big benefit that you don't deal with as many clients as other companies. Sure. But on the flip side you need, you need to get the people that uh, as your team to people that uh, will be good enough for them to be trusted with so much money.

Speaker A: That's great. I mean that really puts it into perspective on who they're going to be working with, what they're going to be doing every day, what the investment side is, how they're, what the process looks like to go, looks like to go through to make the right decision with you. Um, how can, and we'll share this info in down under the episode as well. But how do you want folks to reach out to you? What's the best way for folks to learn a little more and to, to get in contact with you as a company?

Speaker B: Well, they can go on to our website, idealsighting.com and then apply there. Uh, just go to Starter Franchise and, and fill out the form. Uh, they, they can read all the information, kind of initial information on the website and then uh, one of our team Members will hear more details when they uh, fill out the form.

Speaker A: Excellent. And I'll make sure to include that. I'll get it from you. And we'll, we'll include everything down the bottom there as well. Anything else you want to share as we finish up a recap or anything I missed in, in the questions you want to make sure listeners can get, uh, info on.

Speaker B: You know, I would just share that for those people who are looking to buy a franchise, just, uh, do your research and um, um, as you would do with job offer or anything else, do your research, compare different brands, see what works best for you. And uh, uh, it's okay to spend extra, uh, couple of weeks or months on research rather than getting into the business and then having second thoughts after six months. Because you will have second thoughts. It doesn't matter what business you choose, but the more research you do initially, the better peace of mind you have that when it gets tough. You know what, I did research. This is the best for me, so it will help you later on once you already started the business.

Speaker A: That's great advice and I couldn't reinforce uh, it even more. You know, operators are not standing by in franchising. Do your research, talk to the right people, get to know the teams and make sure it's the right fit in both directions. And I really believe that that coupled with communication and a good system in operation is really the, the reason for success in franchising. Right. So Alex, thank you so much, buddy. It's been great talking with you here today, folks. Uh, make sure when you talk with Alex and his team, you let them know you listen to this interview. It'll help them as well as they know that you've already heard some of the ins and the outs of how this all works. Um, Alex, thank you so much for your time, buddy. I really appreciate it.

Speaker B: Thank you. John was great talking to you.