Cliff Nonnenmacher with Franocity

Intro: Coming to you live from the Business RadioX studio. It’s Franchise Marketing Radio. Ready to revolutionize your franchise with AI? Franchise now empowers franchises with advanced AI solutions, automatic processes, and enhanced marketing strategies. From personalized customer interactions to predictive analytics, we help you harness AI to drive growth and efficiency. Transform your franchise with the power of AI. Visit Franchise Now to learn more and take your business into the future. Now here’s your host.

Rob Gandley: Welcome back, everybody to Franchise Marketing Radio, where we spotlight brands, leaders, game changers that are shaping the future of franchising. Today is no different. My guest is a powerhouse in franchise consulting and the franchise consulting world. He’s been on both sides of the table as a multi-unit franchisee. As a franchisor executive and now as the founder and CEO of Franocity. And basically, he is redefining how candidates find their perfect franchise fit and how franchisors recruit high performance owners. He’s been featured in The Wall Street Journal, The New York Times, CBS, moneywatch. Cliff Nonnenmacher, welcome to the show. Good to have you.

Cliff Nonnenmacher: Yeah, man, thanks for having me. I’m happy to be on. Well, no, you got well known, well known show in our industry that I’ve never been on, so I’m really happy to be here.

Rob Gandley: Very cool, I appreciate that. Well, I’m trying to keep making it known, so make sure you’re sharing it out there if you enjoy the conversation. I usually wait till the end, but I wanted to say that. So it’s great to have you listen. One of my favorite questions to start with is always. And for those listening that just kind of sit on the fence for a while about, you know, starting a business, you’re not only helping people get into franchising and start a career as an entrepreneur, but you are one. And so you had to do that thing. So tell me a little bit of how this all started and how did you wind up where you are today?

Cliff Nonnenmacher: Yeah, I appreciate that. I mean, a lot of my clients are not, let’s say, lifelong entrepreneurs. They were in corporate America. I happen to be I was born a business person. Quite frankly, I knew as early as you can know what you want to do that I wanted to be self-employed. I started at a very young age, raking golf balls out of country club ponds and selling them and cleaning them and doing all random things. I actually started literally right out of high school. Uber Eats before Uber Eats even existed. So 1990, 1991 I created a food delivery company on Marco Island, which is three miles by six miles, and I delivered food using cell phone, pager technology and then ultimately cell phones. I say ultimately cell phones, because in 1990, 1991, you were between a dollar and $2 a minute to use a cell phone, and it was the size of a of a of a handbag. It was large. It was right. But but I actually had it. Believe it or not, my little island had a tower on it. So I don’t know if you know Marco Island. It’s just south of Naples, Florida. Yeah, you look like you know it. Okay, so I did that for years. I delivered hundreds of deliveries a day, I do believe, and I’ve said this publicly, that I’m the first subcontractor for McDonald’s in the US.

Cliff Nonnenmacher: I had a dedicated cash register just to me, uh, to that’s how many deliveries we were doing. Approximately 100 a day just for McDonald’s. We were doing 300 total. We deliver for Little Caesars. I made Domino’s Pizza change owners, I think 3 or 4 times while I was doing it, because remember, their whole value proposition is delivery. Well, when I was delivering, that’s not a value prop anymore. Remember John’s commercial today is, uh, remember, uh, grab a bucket. Remember the commercial with, hey, we’re speedy. Grab a bucket. The guy throwing a house fire and the and the firemen are like, hey, grab a bucket, grab a bucket. Well, guess what? With Uber Eats, there’s no more value proposition in delivering. So I started doing it 1990, 1991, started delivering auto parts, delivering prescription drugs. And then I got involved in the water sport industry because I was delivering to all the hotels and the Hilton and the Hilton Grand Vacation asked me to put in bids for parasail boats, beach concessions. So I started doing that. For years I had operations on the new Jersey, uh, the Jersey shore, which would be Long Beach Island, LBI. I had operations in Marco Island Hilton, and I had operations at the Hilton Grand Vacation and rented fleets of jet skis, catamarans, you name it, sold sundries. Uh, I mean, literally everything that you could possibly do at a beach.

Cliff Nonnenmacher: Parasailing was one of our big, uh, operations because it’s just more involved. That evolved into making money at a young age, which evolved into trading, which took me into investment banking. And then from investment banking, I had an experience in corporate America. That’s my real first experience in corporate America. I’m now 25. Um, I’m in a group. We’re managing around 250 million. I’m with a group of guys called Comprehensive Wealth Management that operated within Salomon Smith Barney. Today is Morgan Stanley. And, uh, I had a moment with a boss, and it was kind of a weird moment where I asked him for a printer on our side of the building and said, if you want one, you buy it. So I bought it. It cost me $250 to buy a cartridge for it. So I figured out how to refill the cartridge for really pennies on the dollar. And then and then I found a company in Australia that reverse engineered printer consumables. The inks replicated anti-coagulation agents anti-corrosive agents. Gents chip resetting technology, where you put a little device on a chip on a cartridge and it would reset head, faking the printer into believing it was an OEM original original equipment manufacturer. Right. And I ended up buying the rights with a partnership to the entire state of New York and Connecticut.

Cliff Nonnenmacher: So I began my my my entrance into franchising began as a master for the state of New York and Connecticut. And then, of course, I owned my own locations. And then I scaled 36 locations and then sold it, moved to Florida and did it over again and started buying failing. Now my now my focus shift with my my now business partner Justin. My focus now shifts to buying blood in the street. I want to buy failure. Right? Because being an investment banker, listening to, let’s say, Warren Buffett, you buy when there’s blood in the street and you sell the bugles. So I’m like, you know what? I’m going to start looking for really fundamentally sound Franchise concepts that are bleeding, and I will pay them pennies on the dollar. I’m going to turn them around and I’ll sell them for a multiple. And that’s what we did. My business partner and I started buying gyms and then we bought restoration companies, water, fire, mold and biohazard, and we continue to scale from there. And then at that moment, Rob, we looked at each other and said, do you realize that we are buying businesses from people who had no business owning them to begin with? They think about that. It’s actually profound. And it was a moment in our career where we realized people do not have any adherence to due diligence.

Cliff Nonnenmacher: They lack discipline as investors. They are highly emotional and illogical. And and I say this not to be sarcastic, but it’s a it’s a term that I’ve come up with, which is this most people are broadly ignorant and narrowly intelligent. They’re really good at what they do, but outside of that, they’re kind of clueless. And I use the term ignorant, being uninformed, not stupid, right? So if you actually break down what I’m saying, it’s not to be mean. Most people are broadly ignorant, broadly uninformed. Right? And narrowly intelligent. And that’s what we learned. And then we realized we’re going to become we’re going to create a consulting company. We are not going to have commission breath, and we are going to advise people properly on how to navigate this process, even if it includes talking them out of it and saying, you are not a fit, you’re not a fit. And we we do that more. Unfortunately, I guess it’s the upside of being wealthy. We do that more than talking people into it is talking people out of it and saying, look, you’re not a fit. Like you don’t even have a voicemail recording. I mean, how do you you don’t even not only do you not have a voicemail recording, your spouse’s phone says voicemail is not even set up. Like, how are you? How are you? How are you doing this?

Rob Gandley: Yeah. How do you live that way in this world?

Cliff Nonnenmacher: Seriously, I it always blows my mind when someone wants to become a business owner and I’ll call them up, either a voicemail full or the subscriber you’re calling doesn’t even have a voicemail set up. And I’m like, what kind of business owner is this? Anyway.

Rob Gandley: That’s that’s classic.

Cliff Nonnenmacher: That’s my cliff note version of my journey. Rob.

Rob Gandley: That’s an amazing journey. Worth, uh, worth the answer. Thank you for for that. It’s amazing. I think I remember early on I told you my journey started in the 2000, and I think one of the concepts, I remember being very familiar with those concepts that would replace the inks and how powerful that was. Fairly new then. But, I mean, you sound like you might have been the first, like hooked up with the first group.

Cliff Nonnenmacher: I was.

Rob Gandley: But anyway, it was big.

Cliff Nonnenmacher: Then tip of the spear. Yeah, I was I was a very early adopter of that technology because I, I personally I like to invest in two things solutions to problems and good feelings. My Paris up boats, my jet skis, my all that stuff. Like that’s all good feelings. You’re on vacation. Spend, spend, spend and enjoy life, right? And then there are solutions to problems, which is I literally just spent $100 on a black inkjet cartridge. It’s like, can this really be worth $100? And the answer is no. It’s like it’s like 90% water. Yeah. I don’t know if you know this. If you ever extrapolate black ink or or toner or, you know, uh, cyan, magenta and yellow inks, if you actually extrapolate them, you’re paying more for an inkjet cartridge than Chanel number five. Dude. It’s crazy.

Rob Gandley: It’s ridiculous.

Cliff Nonnenmacher: It is.

Rob Gandley: Ridiculous. Why? They just kind of arbitrarily set that market right. Those manufacturers are smart guys. They they wanted to make sure they had a nice little cash stream in there. Thus the problem. And you solved it. Love capitalism. Um, but, uh, yeah. So so you said something at the end of the last part of your answer that I think is kind of tease up my next question, and I want you to kind of I want you to share a little bit of what makes you guys unique at, you know, the way you approach, uh, the process, both from a franchisor angle. So when you’re talking with a franchise brand, your approach when you’re talking to them, this is why it’s important. And then when you’re talking to a candidate, as you said, your approach is unique for them and it revolves around the fit, right? It’s getting the right people in the right position. And so how does that work and how do you explain your unique process?

Cliff Nonnenmacher: Yeah, I would explain it. I think experience matters. And I think that our industry has a very low barrier to entry, where you could just say that you were a displaced, you know, corporate executive, and now you’re going to become a consultant and begin advising people on how to buy a business, when in fact, you’ve never owned a business yourself. You’re not entrepreneurial. You’re really don’t understand investing, right? So when you really unpack all of that. You’re like, wow, that person really isn’t qualified per se, to advise me on how to create wealth or how to create a legacy for my children or grandchildren, or really understanding even how to put the deal together. Rob, with my investment banking background. Right. Which was really extensive, and my entrepreneurial background and the fact that I’ve owned about 12 companies to date and currently have investments in two, uh, both in the food and beverage space. It’s it’s just a force multiplying effect for our clients. Like, wait a minute, man, this is great. You’re talking at a level that I haven’t even heard from other consultants. And all you do is ask questions. It’s seek to understand before being understood. Like you just keep asking questions to understand. What are my investment objectives? Why am I here? Do I have a working spouse? Do I have cashflow? What’s my financial situation? What’s my risk tolerance? Right? I mean, it’s so important. Where do you live? Where do you want to operate? What are the demographics of that community? Let’s look at discretionary spending. Nobody’s doing what we’re doing. Risk mitigation strategies, exit strategies, liquidity events. How many little birds do you have chirping in the nest versus being an empty nester investor? These are these are game changing questions that the average person unfortunately is not asking.

Cliff Nonnenmacher: Here’s a perfect example right before today just meeting with you. It’s a perfect example. I met with a guy and he’s like, yeah, no, man, I, I’ve already spoke to like three consultants. I’m good. I’m like, well, you haven’t spoken to me yet, so let’s discuss what you’re trying to do. So he goes into he’s like, I already know what I’m doing. I’m buying this pressure washing brand. It was presented to me by a broker. I mean, really cool. They do some bizdev, they generate leads. I go, who’s involved in this business? Tell me, let’s just level set for a minute. He goes, oh, it’s me and three other guys. I go, so it’s four people. He goes, no, no, no, it’s three people. I go, okay, it’s three investors. And do you guys want to make a living? He’s like, you know, he laughs at me. I go, what is your earnings history? What what lifestyle are you accustomed to? He goes, all of us make 150 minimum a year. I go, okay, so the three. Yeah. You just went off camera. So the three of you are going to pool your resources. You’re going to invest in the lowest barrier to entry business called pressure washing okay. Which is a commoditized business mainly based on price, which means low price wins. Low price wins equals low margin equals good luck. And he’s like, Holy shit, I go, why don’t you be disciplined and say this as a starting discipline? Uh, as an investor, we are only going to look at businesses with a $1 million minimum item, 19 in the home services space like that right there is.

Cliff Nonnenmacher: I know to you, it may seem deceptively simple to you because you’re in our industry and you’re like, there’s nothing there’s no revelation there, Rob, To the average investor, that’s the difference between failure and creating wealth. Was that little bit of advice to say time out, slow down, stop talking about brands, and let’s start talking about you and what you want and what you like and what you need to earn. And it was like, I can’t even believe it’s like, I’m so glad I took your call. We had a very lengthy conversation after that about what’s trending in the United States, what he should and should not be looking at, and why. I like certain things and don’t. So experience, right? We live in a time now where millennials want to graduate college and be CEO. Like that’s what the time we live in. There is so much to be said for experience. I love a gray haired doctor. I love someone with battle scars, I love wisdom, I love life experiences and. And what’s that worth? You know, to me it’s it’s invaluable when you’re getting advice from someone that actually knows what they’re doing and is going to keep you and your family out of trouble. Yeah. So, Rob, I could do. I could make an episode out of the value that we add. I have a ton of experience negotiating commercial leases. And when it comes to brick and mortar brands, I could tell you that there is a gaping hole in brick and mortar lease negotiation in our industry. It’s actually disgusting. It’s disgusting. I go ahead.

Rob Gandley: Go ahead. No, I was just going to comment on, on I, I you had said a little earlier that, you know, it’s probably pretty obvious to me, right. Kind of thing. And I’m thinking, no, man, it the way I always I think math, the simple idea of understanding math and then being honest, like you said, you got three people that need to make a certain amount or would guess that you’d be more comfortable making and not the same amount. If you’re going to start a business, there’d better be some serious motivation there, because making the same amount will never get you through. Not in my experience, if that’s the goal. So like just understanding the math, and then you’re saying, okay, then that’s pretty straightforward. When you look at it that way, then you need $1 million business that that is, you know, and here’s an industry that is typical for that. And so brilliant the way you frame that because it was true. And honestly, you could fight that if you want. Uh, but you’re not going to you’re not going to be satisfied in the end. The broker that was brilliant.

Cliff Nonnenmacher: Yeah. The broker is getting fired, right. The other broker is now fired, and it’s like they’re going to hitch their wagon on our firm, and we’re going to take them, hopefully to the finish line and advise them prudently and be good stewards. And I oh, I’m not a fiduciary, as you know, but I always act like a fiduciary because as an investment banker, I don’t know any other world to live in, but to behave like a fiduciary when you’re dealing with other people’s money, investments and advice. So that’s kind of how we act.

Rob Gandley: And it’s one of those rules that was invented for, you know, to to protect people doing the wrong thing. It’s not like you shouldn’t do that anyway. Like you the way what that means is you’re just really good at your job and you’re helping think for your clients. And and I would say, you know, no, I don’t when I interview or meet people in your space doing what you do. Not many have that background what you’re talking about.

Cliff Nonnenmacher: No, I agree with you and I’m happy to be able to share our story. Thank you.

Rob Gandley: And I do have a finance degree from from my undergrad. And so I did I did think about that pathway. I should have known you. I should have gone your route. I’m more like like your DNA. Not not a guy that sits around in front of a computer all day and I just go to Wall Street.

Cliff Nonnenmacher: You’re a beast. You’re the jack of all trades, man. You’re involved in everything.

Rob Gandley: Yeah, yeah, that’s that’s how I. That’s why I’m an entrepreneur, right? Anyway, you start to figure yourself out as you get older, and it does take some wisdom to actually get it right. So anyways, um, alright, so wanted to get your feedback, you know, you know, my background a little bit just in talking to me briefly is in technology and obviously a lot’s been going on in technology. It just seems to be, you know, propelling and increasing in momentum, whether we’re talking AI or get into all kinds of other technologies that could be disruptive. Um, and so and technology itself has been kind of a thing to think about in the 2000. Right. It was sort of, you know, building a little momentum. Maybe you’re thinking you need a website by the 20 tens, maybe some of the brands that we better get websites for the franchisees and so forth. Right. And then social media comes and mobile comes. And tell me about AI from your point of view, like you’re and, you know, as an investor, as a business owner, from every perspective you can think of, how do you properly filter the noise? How do you know where to focus that? Because we know it’s happening. We know that you got to be innovative, but how do you do it right? And what are you looking for when you look at a brand when you when you think of that.

Cliff Nonnenmacher: Okay, so I love AI. Let’s start there as a blanket statement I love AI. It’s game changing technology. But I’m not going to be clueless to the fact that it’s going to displace hundreds of millions of jobs across the planet. There’s no doubt about it. Um, I am now using. So our industry uses a term unskilled labor. You’ve heard this term a million times. Unskilled labor. It’s used everywhere. I actually use the term skilled labor. And I’ve been using it for years. And people get caught off guard when I say de-skilled and they’re like, you mean unskilled? And I’m like, no, I mean de-skilled unskilled labor doesn’t mean that it’ll be replaced by AI or a humanoid or a robot. D skilled labor means exactly that. I’m buying into a franchise. Let’s say the head count is five. D skilled employees. That means in the future. The future is now. I have the opportunity to replace five employees with AI automation. Routine task. Humanoids. Uh, Tesla. Uh, Optimus bots. Et cetera. Et cetera. There’s a big difference between between saying, well, I trim trees. Right. That’s unskilled labor. So you have a guy that climbs up a tree, uses a chainsaw, and he’s.

Cliff Nonnenmacher: And he chops it down. I don’t see a runway in the next five years where Optimus is doing that. I just don’t see that happening yet. Right. So there are there are businesses that I look at where I truly feel that when you buy it within the next 36 to 60 months, you are going to grab operational efficiencies by replacing people with AI. Look, it’s another reason why we have a president that wants to bring all the jobs back. You know why he’s doing it? Because he knows no human beings are going to be doing most of the work. He knows it. That’s why he’s not worried about paying 14,000 for an iPhone, because it’s never going to happen. See that that that what’s happening right now and it’s not a political discussion. I don’t want to go there. But that move right there tells you that there is no expectation of human beings filling in those roles on manufacturing. They know it’s going to be automated, they absolutely know it. And we’re going to start to see that automation in franchising. Look at outbound, look at scheduling. You could do scheduling. Oh come on. They they speak.

Rob Gandley: Obvious.

Cliff Nonnenmacher: Yeah. Rob they speak 120 languages. I mean can you imagine dialing the phone. And I say Rob, it’s Cliff. Hey, by the way, do you speak? Do you speak? Fill in the blank and you go I speak 128 languages. Please let me know which one you want to speak. That’s where we’re at. Scheduling confirmation. Basic things like giving an estimate, all this stuff. Now you’ve got. Instead of guys climbing on a roof, you have drones doing it. So there’s all sorts of efficiencies that are coming. Here’s what I tend to look at with my clients. I tend to look at businesses, Rob, that I believe have at least a ten year runway and anything involving the use of a tool, a tool held in a hand with some type of hand. Dexterity. Right, like HVAC, HVAC. I don’t see that being replaced. And I always refer to an optimist bot because I think he’s really close to having that thing pull up, and I really do. I think Elon, with his optimist, is very close to having a Tesla vehicle pull up in front of your house in Colorado and fix something in your house. I really do, I think we’re we’re we’re kissing the reality of that. So I’m looking for tools, HVAC, things that are more involved require some, you know, maybe some human, you know, involvement and decision making, uh, reasoning skills, communicating with the homeowner. I do like anything beauty, vanity, anti-aging. I love that category. I love anything involving, uh, the humanization of pets and animals. 150 $60 billion market cap. Whether it’s grooming, boarding, you know, training, daycare I. The silver tsunami I’ve heard on your show a million times.

Cliff Nonnenmacher: We all know what’s happening. I’m. I’m aging your agent. We’re all aging. But guess what? Our parents are older, and they need these services right now. And you and I will need them later. And again, there’s an industry that will. I guarantee you, I guarantee you that this age as well, there will be a humanoid that will show up to my house in the future to make sure that I’ve taken my medication to deal with a wound vac, to make sure that I’m getting up and I’m doing physical therapy or rehab. It’ll be a humanoid, no doubt. We don’t have the workforce today to deal with this issue. You don’t have caregivers, CNAs, Lpns RN’s. People don’t want to be doctors. They don’t want to become CPAs anymore. They’re all being replaced by AI. I mean, it’s it’s this is just happening. People don’t want to. They always want to, like, straddle the fence with this AI stuff and build like both arguments. It’s going to be okay. It’s not going it. It’s going to be very different world. And I think it’ll be the first time that we are living in a deflationary environment. Because products and services are cheap. They’re cheap. It’ll deflate. The kids will be able to buy a house, kids will be able to buy cars. They you know, it won’t be this whole story about $9 eggs, like all that stuff is going to change. So I think we’re at the peak of inflation. And I think as we introduce AI, robotics and humanoids and and oh, we didn’t even talk about quantum computing. And I won’t even go there.

Speaker4: No, no.

Rob Gandley: We have to come back.

Cliff Nonnenmacher: That’s exactly, exactly. So mind boggling is my prediction. Deflationary is my prediction. Focus on five categories. Anything involving the use of tools, anything involving the war on men. I put it in the same category. I call it the feminization of men in America. They can’t use tools. They have low t low sperm. Right. So disaster franchises, backfill solutions, anything involving the silver tsunami, anything involving the humanization of pets and animals, anything involving anti-aging, biohacking, peptides and testosterone therapy, and anything involving youth enrichment. I’m all in. I’m going along, and I think you have a ten year runway before you’re disrupted.

Rob Gandley: Yeah, that was beautiful. Thank you. I think we need to write. Write some notes down if you’re listening. Summarize this bad boy. Uh, but that that that really does sum it up. I’m. I’m paying attention to what you’re saying, and I it resonates with me 100%. It’s very much about relationships. When we think about, like when we think about franchising. And I’m going to ask you a follow up question here in a second. But when we think about franchising, it really is about this person, this idea that you want to do more right with your life. There’s a purpose. You have something you want to create, right? Something inside you. I feel like the future is you’re not going to have a choice. You’re going to have to figure that out. You. Because. Because you won’t have to do the work that. Is that the kind of work that most of us don’t want to do to make the world work, right? There’s all these types of roles we have to make the world work. Doing things that a lot of us don’t want to do so those things can be replaced. That seems obvious. The real question is what would be someone’s purpose? What would be the thing they do with the extra time? Or if there is a new economic structure where there’s money coming in and now you have more time, what will you invest in? Well, we still are people and our fundamental needs won’t be any different. That’s right. So we’ll have time to give back to that. Whatever that looks like. It will be an entrepreneur’s Paradise because it will require some great creativity. But we’ll have it. We’ll have the resource. So I’m excited, but it is a little unknown. I don’t know what it’ll look like, you know, but I wouldn’t hold on to those certain jobs. I always think, why would you want that job anyway? You know?

Cliff Nonnenmacher: Oh, totally. Yeah. I had a guy want to a tax accounting Franchise to put in class C space in a strip mall. And I’m like, man, you know? That like, that profession’s dead. It’s dead. Yeah. Like, I mean, TurboTax was just the beginning. The final nail in the coffin is going to be quantum computing meets a humanoid. Says, I could do your taxes and save you more money. Do it. Do it perfectly the first time. Like, literally perfectly accounting is a. And that’s why no one wants to get in the profession. It needs to be perfect. You I could I could misquote a word. I could misquote something. I could make a mistake right now on this call. Right. And then I could recover from it. It’s not a big deal. And it doesn’t hurt anybody. Accounting it like it needs to tick and tie back one plus one equals two. It needs to balance out. Accounting is a grueling profession. I have the utmost respect for people that enter that profession. But it is not an easy profession. And unfortunately, everything we’re talking about today is the first time in history that technology is not attacking a blue collar worker on an assembly line. It’s going after the smartest people in our society doctors, lawyers, CPAs. And I feel bad if you’re a teacher and I feel bad if you’re a professor. I mean, because I’m telling you, you’ve outlived your usefulness for about five years already. Honestly?

Rob Gandley: Yeah. It’s, uh. I love how I learned today. I I’ve always been a self learner, obviously, like yourself. And, you know, you kind of, you kind of learn things and figure things out as you go. And the internet created this opportunity in our lifetimes. Right. I got out of school, uh, in the early 90s. I won’t say exactly, uh, say 92. I’ll just date myself. That’s fine. But there was no real. Oh, there you go. So? So, like, there was no official internet. Really? Uh, when I left school, we weren’t using it like we were using, you know, computer processors to write papers and print them. And so here you go. As soon as I get out, we’re we’re now in this world of wireless and the internet emerges. And it was just it was for for someone who wants to learn and evolve. It was beautiful, right? And now I takes that to a level I can’t even. It’s amazing to me how much I can learn in such a short period of time really will benefit all those that know things. So people are our age, really have an advantage if they open their mind to it.

Rob Gandley: That’s what I share. I agree with you is that because it makes you smarter and but you got to kind of bring your own smartness to it still, and that helps create even better results. But anyway, big fan of it, but I wanted to circle back uh, to because you guys really you said earlier, you know, just because you’re a corporate executive doesn’t mean that maybe it’s still not a fit, right? There are some attributes, and I know for me, I learned it the hard way because I did get into the corporate world. I was in tech. I enjoyed that, but at the same time it was still a corporate job and I was in sales and a lot of those types of positions. So it was more of a do it yourself thing, but it’s not the same as business ownership. So it took me some time to kind of figure that out. Tell me when you’re getting to know a corporate executive or someone coming from that space, what do you try to find in themselves? What do you help them kind of see so that they know they can make the right decision?

Cliff Nonnenmacher: This this is probably one of the most popular questions. I’m sure you would agree on anything involving franchising and business ownership. The flip side to this would be how do you know how to hire people? Right. It’s always about people because it’s business people, product process. You just described business. So when I and I’ve listened to a lot of these podcasts, Rob, and it’s interesting that everyone really has the same answer. Follow a system. You got to be coachable. You have to be all these things. I’m going to tell you something I learned years ago reading a great book by Jack Welch, who I’m a huge fan of. Uh, Jack Welch has probably groomed and created more CEOs than any single person in corporate America history. He’s a beast. I love his teachings. I love his era and the way he ran his companies. This this is interesting. And I think the audience will will benefit, you know, from from this conversation. People have asked him, what do you look for when you hire someone? He goes, it’s simple. I look for the 4E1P principle. The first E is do you have energy? Do you know how many IT executives I speak to on a daily basis that can’t even finish a sentence? And they have sweaty palms just talking to me because they really don’t like talking to people, right? Yeah. They’re making a buck 50. Writing code for Amazon.

Cliff Nonnenmacher: They have zero energy. Zero. When you have zero energy, it brings me to the next e. How do you energize your staff if you’re low energy? So you need to be energized. You have to have the ability to energize others. You have to be able to execute. That’s the coach ability. That’s the follow the model piece. You got to execute, execute flawlessly. Here’s the blueprint. Here’s the roadmap. Follow it. Don’t change it right. Next is edge. Can we live in a time where we have silenced the intelligent? To not offend the stupid? You have to have edge. You have to be able to make difficult decisions. You have to be able to tell someone what if they’re not coming to work on time? If they’re not doing the right job, you have to be able to make difficult, edgy decisions in business. And last is P for passion. People, employees and others follow passionate people that speak with conviction they want. They will follow you off of a cliff and you to be a good leader, to be a good franchisee. It actually drives me nuts to listen to podcasts where industry professionals you need to be coachable. You need to follow a proven system. It’s like it’s like hiring a consultant. What was that famous quote? Even a broken clock is right twice a day. That’s like the broken clock thing, right?

Speaker4: I love it. You gotta.

Cliff Nonnenmacher: Be coachable. Yeah. It’s like, no, you got to have energy. You have to energize your employees. You have to be able to execute flawlessly. You have to have edge. You got to make difficult decisions sometimes, and you got to be passionate. To me, that’s everything that that’s. I wish I created it, I didn’t. It comes straight out of the book winning by Jack Welch, and I’ve lived my life by it.

Rob Gandley: I think he is probably, at least in my lifetime. He probably was the most famous CEO, and I know a lot has evolved. Now we’re getting older. But when I was a young guy, you know, he was the guy.

Speaker4: So yeah, I know amazing about him. Yeah, yeah, I know.

Rob Gandley: And I but my goodness, like, I don’t think you need to hear anything else than what you just said. And the question would be that first one, if you don’t have the energy, maybe. Why? Why is that right? And that answer tells you if you can move forward. Because you got to change that, that one thing. And if you can’t change that, maybe you’re not interested enough. Maybe you’re not willing to take the risk. But you got to know, will you have that energy? And will you have that energy when you’re faced with the adversity of starting a business right the day to day.

Cliff Nonnenmacher: Do you know how many times we we will refer a client to a brand? The brand will call us back. Hey, listen, I just spoke to Blank man. Not a fit. What happened? Really? Low energy. No questions. It seems like complete disinterest. Okay, you just heard what I said. Ready? We call the client. How did that call go with brand A? Great. Wait a second, I. I never understood this quote. These two stories can’t be true until you get in this business, right?

Speaker4: Yeah. So.

Cliff Nonnenmacher: So I’m like, wait, so you think it went great? Oh, I thought we had a great call. I scheduled my next call for next week I can’t wait. Listen, they think you have no energy. You have no enthusiasm. You ask no questions. Now we’ve got to coach this guy. And the. But here’s a here’s a lesson to everybody. The buyer’s attitude is wait a minute, I’m the buyer. Like, if I want to buy their franchise, I’ll buy it. I’m like, no, no, this is a mutual evaluation process. You’re looking at the brand, and the brand is looking at you. You’re looking for fit. The brand’s looking for fit. And so far they want to close your file and never talk to you again. Right. So when I tell you how often we have this conversation, it’s often because the people live in this consumer attitude where the customer is always right, the customer is always right, okay, that doesn’t exist in buying a franchise. It’s their brand, and they want to award a franchise to the most qualified person. So jack up your energy levels, show some enthusiasm, do some homework, do some research, and ask some really good questions to show them that you have a relative degree of business acumen and you can manage this thing. And it’s amazing how many people just go into this like I’m the consumer. He who has the gold rules. Wrong. Wrong answer. Yeah, man.

Rob Gandley: Totally totally wrong. And and and I’d still question why. Why are you there? Like, it’s hard for me. I always joke when I’m on the show. I’m, like, usually by the end of the show, if I’m ready to buy the brand, you know what I mean? Like that’s normal. I feel like this is an awesome business model. Like, I love talking to the CEO or whoever it might be because they’re fired up about their brand. I mean, you got to figure out, why aren’t you there? I just and I know the coaching can still be necessary for a lot of folks. That’ll be fine. But, man, you should almost have it out of the gate. And certainly you’re not going to affect anyone around you. And that’s a very difficult thing. In sales. It’s all about confidence. And as you said, you know, until someone proves until someone does make a mistake, most will listen and believe in you. Right. If you are confident and you can have that energy. Right. At least give you the chance to go a little deeper with with your conversation.

Speaker4: True. I used to tell my team.

Cliff Nonnenmacher: All the time, the prospect can’t get any more excited than you. It’s impossible. You set the tone. You’re setting the energy level. They know when you really like a brand and you really know what you’re talking about. And the prospect also knows when you don’t like a brand and you have no interest in it, and you’re uncomfortable presenting it so the prospect can’t get any more excited or disinterested than you. The the the friend dev director sets the tone. The broker sets the tone on the brand presentation. So I completely agree with you.

Rob Gandley: That’s so cool. Um, that’s what it’s all about. That’s why I’m in this business. I like energy. I need either need to get it or give it, but I do like to be around it. Um, so so with that thought in mind, you know, when you think about emerging franchisors and there’s probably a loose definition of that, I would say under 100 units, let’s.

Speaker4: Say.

Rob Gandley: You know, certainly there’s the kind that just getting started and that’s a certain equation. But what just keeping it however you want to answer in terms of emerging, but what do the emerging brands have to think about with sales and marketing to ensure they’re doing what we’re saying? They’re finding the right fit. They’re building the brand early on, right to get the right momentum. But what how do you advise franchisors when they’re hiring you to kind of partner with them? What are you looking for to make sure it’s someone you want to recommend and, and how do you kind of deal with these emerging guys that might be somewhat new, uh, to to what they’re doing?

Cliff Nonnenmacher: Are you talking about acquiring customers or acquiring franchisees?

Rob Gandley: Franchisees? Like when when you’re talking about franchise expansion and getting more franchisees. And they’re kind of in that, that that phase where they’re not quite all the way. They have to keep bringing in franchisees to keep things running. They’re not they’re not, uh, sufficient with just operational, uh, revenues. Right. So they have to recruit. And so there’s a little bit of a pressure there, right? And so but they have to. So what do you advise them on and what are you looking for before they’re in your portfolio. You know.

Speaker4: Yeah. I mean.

Cliff Nonnenmacher: Right. I’m not under a hundred. I’m okay with. I, I have concerns with brands with less than 20. I think that, you know, there’s huge flags there. Most brands will never as you know, most brands will never see 100 locations operating in their lifetime. Um, a lot of brands will never see it. Like, ever. There’s just too much attrition. They’re just on a treadmill. It’s it’s five in. It’s seven out. Right. So a lot of brands will never get there. But if a brand has 20 locations, let’s say, and they’re scattered about the US. So we have different markets, different demographics, different climates, and we have proof of concept, which is another thing I’m looking for, which is proof of concept telling me you have a great brand and, uh, you know, Southern California with household income of 250 and a surrounding five mile radius, that that’s not exactly proof of concept that’s going to work anywhere in America. And I see these brands popping out. It’s like, yeah, we operate. We’re doing 2.5 million with massages in California. Yeah, put that in Illinois and you’ll drop down to 600,000, you know. So it’s like these certain markets, they just are not replicable across the United States. So I’m looking for brands with with tight leadership. I’m looking for brands that get it. And you know when someone gets it you could have a couple of conversations. And you know that these people are in franchising for the right reasons. And many people become franchises for the wrong reasons. You have to have an undying devotion to not only the brand, but to people who put up their life savings to buy it.

Cliff Nonnenmacher: Right. It’s you should be sleepless at night when you have franchisees that are failing, literally sleepless. If you’re not, you don’t care enough because. Because here’s the difference. Franchisors that obsess over their royalty collection and top line, they need to pivot and start obsessing over the bottom line of the franchisees. And that becomes the self-fulfilling prophecy. And that’s when, you know franchisors get it. When it’s less promotions, less driving revenue. Revenue is great. Bottom line is better, right? I don’t need to do 10 million a year and net 100 grand, right. Give me a million with a 20% net and I’m happy as hell. So a lot of these brands just keep driving. It’s like you’re not focusing on efficiencies and all that stuff, which means you don’t have a tight ops department. You really don’t know what business you’re in. You only own one corporate store. You’re still not in the trenches. I love brands that eat what they cook, which means they own and operate the business that they’re selling. Nothing drives me crazy. Then when I meet a franchisor and I’m like, well, well, my place is 6000ft². Feet. Okay. What are you telling franchisees to do? A thousand. What is your revenue? We’re doing 2 million at a 6000ft². Right. And it’s like, what are they doing? Well, they’re doing for 4 or 500, but they’re ramping up. I don’t like brands where you’re selling something that isn’t what you created and doesn’t resemble how you’re making 2 million.

Speaker4: Yeah.

Cliff Nonnenmacher: I don’t like weak financials yet. And in this case, never. Um, I don’t like weak financials. I think a lot of new franchisors, uh, they’re not properly capitalized. Some of them are worse capitalized than franchisees that are coming in. The financials are audited. It’s on full display in the FD. And they’re weak. And they need to really go out. And someone needs to educate them on you’re going to need to get some cash and do a funding round, uh, because you don’t have enough money to add the infrastructure you need to add. As David Barr quite rightly says, you are in franchise hell from 0 to 100 locations. It is a very difficult place to be as a franchisor, and you better be properly capitalized to get through that, uh, that growth phase, right, where royalty collection starts to catch up. So, I mean, there’s a lot of things that we unpack just the, the executive team, the ops team, the training. And you want to know something, Rob, where we get really the best information is a term you’ve heard called trust but verify. So I’ll trust the executive team. But I’m going to verify everything they say with their franchisees and find out is this system healthy. There’s only 20 people to call in this example. Are these 20 people happy? Are they validating? Are they recommending people buy this franchise? Validation calls are some of the most powerful due diligence calls you could ever make. When you exit the franchisor, the system will tell you with blinding clarity and honesty how healthy the system really is. And I love that.

Rob Gandley: Absolutely. And that’s one of the challenges, right? Um, and that’s why what you said earlier is so blunt and so obvious and so right. And that is, if you’re in that, you’re in that stuck mode where, okay, there’s some mistakes and maybe some of your franchisees didn’t perform as well over the last however long that was. You have to invest in the business, right? To get over that hump. You have to innovate. You have to put the investment in and show the network that you’re doing it, and then tell the new candidates that’s what you’re about and move forward. Right? You can’t get away from that. Right? Because it is so obvious if things are going in the wrong direction. It’s very it’s very much amplified to anybody that’s coming, coming towards you. And it becomes very hard. But it just comes down to, you know, and I’ve been involved with brands that have turned themselves around because they invested. And, uh, that’s the bottom line. You just got to make it better. And if it wasn’t perfect, you can say, well, we weren’t perfect. We’re going to make it better. But you can’t just stay. If you do, then you’re one of the ones you’re mentioning. And that’s that’s good advice to be able to sort and sift the right ones for your candidates.

Cliff Nonnenmacher: So have you interviewed John Ritchie? Have you interviewed John Ritchie from Fran? Fran Worth?

Rob Gandley: I don’t I don’t know if I did I don’t know if I have.

Cliff Nonnenmacher: He said something years ago at a convention I was at, he was a panelist. And he said in my corporate office, I have a picture of every franchisee wrapped around the perimeter of the wall. He goes, and it breaks my heart. If I ever have to take one of those pictures down. And the way he said it, it was genuine. He obsesses over the success of his franchisees. It was eye opening to me and it’s like, that’s the attitude. If you want to become a franchisor, you want to get in this business. That’s the attitude you have to have. That really stuck with me. John is a great guy, great company, has surrounded himself with great people. Um, you should have him on your show. He’d do a great interview.

Rob Gandley: I’d love to. I’d love to. Sounds like he’d be. He’d be, uh. Again. Just enjoy the conversation. Um, but most of the guys I do interview, it is in their heart, like they’re one of the best upsides of becoming a franchise brand. A franchisor is the the the gift of helping other people change their life and do that thing, that gift that we just talked about coming from the corporate world into business ownership. That is a big deal for folks, right? Not to just talk about the financial side, but it’s a big deal and what they’re trying to do with their life. And so the franchisor should love that. And it should be one of their favorite things is when they see successes and breakthroughs and and yeah. And it pains them to take a picture down. So very cool. So as we wrap things up, I appreciate you. And I told you we’d keep things to an hour. We could probably talk for hours. So do enjoy it and we’ll have more of these. Um, but I wanted to kind of talk about your podcast, and I know that, uh, you know, you have some interesting guests on the show, and it’s, uh, I want to make sure I get the name Pursuit of Profit. Right? That’s right. And I wanted to just kind of say, you know, out of all the guests you’ve had, is there anything that you just picked up and thought, man, I love that. It was one of those. Anything you could think of that you want to leave with our audience? Uh, that just kind of. I’m sure there’s a lot of them, but.

Cliff Nonnenmacher: There is a lot of them going through my head. There. There are some standouts, you know, where, uh, I don’t interview franchisees. I interview, uh, founders or C-suite franchisors. If a franchisee comes on the show, they have to be like ten X-ing the item 19 earnings claim. Okay, so you got a visual. I have an opportunity to bring this couple on the show. I am I’m blown away by these two. They’re with express personnel, as you know, probably one of the best multi-billion dollar staffing franchises. These folks are doing 70 million a year. 70. And I have both of them on camera on the show. They are as. And I say this respectfully. They’re as ordinary right as you can get. It’s not like. Yeah, that’s because they’re from Goldman. Oh, that’s because they went to Wharton. Oh, that. No. These are regular people that that evaluated some franchise concepts. She she was already in staffing. She actually met her husband because he was an employer. And she would bring him donuts and stuff like that. And it’s like, how did you scale the business? And it’s like, the franchisor covers our payroll for 90 days. A lot of people don’t know this. It’s one of the reasons why most people in staffing fail. They can’t front the payroll to their entire organization and then carry the account receivables, waiting for the money to come in from the law firm. The accounting firm, the engineering firm. Well guess what? Express personnel fronts all of your payroll for 90 days so that you could get your invoices out. Yeah, that. And it’s like with that, we were able to scale our little business.

Cliff Nonnenmacher: I want to say there in Michigan, it was either Michigan or Illinois, uh, 70 million. And here here’s the assumption I go, I go clearly you’re number one in the system. They go, no, we’re not. We’re number two. I’m like, get the I go, get out of here. They go, yeah, there’s actually someone bigger than us. So people investors come in. I don’t want to pay more than 6% royalty. You’re looking at this all wrong. Price is only an issue. In the absence of value, I will pay a 30% royalty. If you could get me to 70 million a year as a regular husband and wife team, grinding it out somewhere in middle America. Come on. This is the greatest business methodology ever invented to create wealth. It is the single greatest model to collapse time and to create wealth without inventing anything. Nothing. You’ve invented nothing. You go from your corporate America job. Hate it. Boss Underpays you two hour commute round trip, you slip into a franchise. You have all the answers to the test and start scaling it. It’s the best. This is the best life ever. It is. It is the best life and best business methodology ever devised. And I echo your comments on capitalism and franchising and free market. I mean, come on. And I love my I quote and I know I people listen to me like you say this all the time, but it’s the truth. Ralph Waldo Emerson said, if you think becoming a millionaire in America is difficult, you haven’t tried. Period.

Rob Gandley: Yeah. And I love his quotes. Um, but, you know, to me, franchising is like America, right? It’s the American dream. It’s the middle class. It’s the, you know, uh, really most of the most of the economic output is from small business, right? We think it’s big corporate, but it really isn’t. It’s it’s the small business and franchising such a big chunk of that. But I can’t think of another way to get into business that actually works, right? Where you’re things like that, where they say, we know cash flow will be a problem in this business model. If we can solve that problem, give a 90 day float, solve that little innovation. I don’t know if that was from the very beginning. It doesn’t matter. But the point is, it’s innovative. But they knew that would be the stumbling block. That’s the beauty of franchising. And I always say it not only the innovative business models where they already know what problems you have to solve, but it’s also the network of people around you. And I know you’ve probably you’ve been in a lot of groups, a lot of business people. You’ve learned from a lot of people. It’s not free to get coaching or to be in a mastermind, or to learn from another guy that does similar things or can help you to be in a network like that with that kind of talent and to learn from it. Again, that’s what it takes to be a business owner. That’s what it takes to be successful. A lot of it is just baked into franchising, which I like because I like that people have a great shot. Again, if you haven’t tried, if you if you think it’s hard, you haven’t tried. So and work with a guy like Cliff because you do need to find the right model because it can be extremely hard. But if you do find the right one, there’s no better way than franchising, that’s for sure.

Cliff Nonnenmacher: I agree.

Rob Gandley: So all right, well, I want you to just if you could share with the audience, uh, how to get hold of you, how to get a hold of your brand, if they’re interested, uh, in taking this journey.

Cliff Nonnenmacher: Yeah. You could reach me at go to our website. Com f r a n o I t y. Com and I’m Cliff Nonnemacher. I co-founded it with my business partner, Justin Guevara. Um, and if you want to just play in traffic and listen to different shows. The pursuit of profit. It’s similar to what you’re doing, and I think this is an outstanding show. And I went through a lot of your episodes. Uh, you have phenomenal guests on and I think this this this is a great you do a great job on this show, which is one of the reasons why I wanted to be on it. I think it’s excellent. So I appreciate you letting me plug my show. And I hope people do reach out because we could definitely help you navigate this process. I don’t know if we mentioned Rob, the services are free. Nobody believes free. So I do say it twice. We work. We represent the buyer for free. We’re paid by the seller at the seller’s expense. So the services are free. You’re not obligated to anything. And, uh. And I would not do this alone. It’s 4000 brands in this country. Many of them are not worth buying. You know, align yourself with a professional advisor to help you navigate it.

Rob Gandley: Exactly. It is the best industry in the world, but you still got to navigate. There’s there’s certain we we explained it earlier. So that’s right. I highly recommend it. I really appreciate you being on the show. I echo what you said. It was very. It’s fascinating. And whenever I walk away from conversations smarter and I absolutely did, this time in a big way. I appreciate you, man. Thanks for the work that you’re doing and thanks for giving back, because you could probably do a lot of things and you decided to kind of invest. And that’s why don’t be confused with the word free, because the value of talking with a guy like you is it’s not usually accessible. So take advantage. If you get a chance to talk with Cliff and his team. I appreciate you being on the show.

Cliff Nonnenmacher: Thank you Rob.

Rob Gandley: You got it. And so thanks to our audience again, if you found it, if you found the episode helpful, please share it and we’ll talk again soon. Thanks for tuning in. Bye for now.