Business
The Secrets to Franchise Success with Erik Varn Horn Summary: What are some of the most critical things that contribute to a franchise’s success? Is it the brand? The system? Or a reliable franchisor? Erik is a multi-brand, multi-unit franchisee and a highly sought after franchise consultant. His franchisee experience includes Liberty Tax, Sola Salon, Club Pilates and YogaSix. Erik is also a successful real estate investor and has interests in commercial developments, hotels, and luxury apartments. In this episode, Erik joins us to explain what makes a successful franchise operation tick. He shares how he manages to operate multiple franchise operations remotely as he travels the world to pursue his other interests and passions. Erik reveals how you can find opportunities within the franchising world, and then implement systems and processes that help you profitably scale up. This show will be particularly interesting to entrepreneurs and professionals who are looking to augment and even replace their main source of income. We hope you enjoy this show! Key Takeaways: 02:07 – How Erik kickstarted his real estate business 02:07 – Desperate for funds, Erik starts a lawn-mowing business 03:06 – How Erik cracked his first real estate deal 05:00 – Funding his first franchise with the profits from his first deal 09:20 – Erik ventures into the franchise business 09:20 – Buys a Liberty tax franchise inspite of having zero experience in taxation 10:55 – Should you invest in a franchise with a seasonal business cycle? 11:50 – Scaling up business in Austin to 42 stores 12:57 – Mistakes that Erik made in his first year 13:35 – Can a “fix and flip” model work for the franchise industry? 15:18 – Can you be completely hands-off while managing a franchise? 15:46 – How Erik sold off his salon franchise business in Orange County to a PE firm 20:35 – Scaling up the business 21:02 – As a franchisor for the roofing industry 21:22 – Conducting Masterminds to help others grow and scale 22:04 – Manages a Facebook community to facilitate peer to peer interaction 24:23 – Feasible franchise options for real estate investors 25:50 – Resources to find opportunities 29:16 – Can you passively scale up a franchise? 30:10 – The right BRAND and right PEOPLE 30:34 – Who is the right person to manage your franchise? 31:12 – How can you find him/her? 31:48 – Should you give away some equity in your business to your manager? Erik shares his own personal experience 34:00 – How are employee contracts typically structured? 36:49 – Why did Quiznos fold up their operations? 40:53 – How to conduct due diligence and locate a lucrative franchise opportunity 42:53 – Erik recommends asking broad questions rather than specific ones 43:47 – Minimum investment required to buy a franchise 44:32 – Minimum network requirements 45:53 – Typical cost breakdown 47:30 – Should you consider investing in an owner-operator franchise? 51:11 – According to Erik, which sector provides some of the best franchising opportunities 52:08 – How getting in early can prove to be incredibly lucrative 54:43 – Erik shares why he doesn’t give much importance to the total royalty percentage 56:56 – Managing Remotely 59:00 – Empowering managers to take decisions independently 01:01:40 – His biggest challenge 01:03:33 – Collaboration between the franchisor and franchisee can help improve systems and processes 01:10:00 – Staying on the top of your finances 01:11:22 – Erik prefers daily reporting 01:13:45 – Erik’s real estate investments 01:13:45 – His foray into commercial development 01:15:22 – Also invests in hotels and luxury apartments 01:18:43 – Reveals he is looking to invest in mobile homes and storage units 01:19:54 – Networking tips to connect with influencers and like-minded people 01:26:56 – One resource/app that Erik uses on a regular basis 01:28:28 – One thing that Erik wishes he could have done differently Quotes: “I realized that I did not need to find the money to invest in real estate. I just needed to find the deal”. “The best thing to invest in is real estate and businesses”. “As an entrepreneur, you are always looking to grow something bigger and better”. “A good franchisor is looking at doing things that can help the franchise, and doing these things at a scale that the franchisee cannot” “When you are looking at a brand, system trumps product all day long” “If you are always doing stuff, you are not solving problems. And I want to be a problem solver”. “I think the best franchisors have this open environment where franchisees can come to them” “The franchisor gets better because of the franchisee”. “I treat everyone how I expect to be treated”. Resources: Founder’s Club Oliver Graf Erik’s LinkedIn Franchise Secrets Otter.ai