A looming recession seems to be in everyone’s lips. What could this mean for you as a franchise owner? Christian Dadulak joins us on the show to share his take on this. Christian is known for his matchmaking skills as a franchise consultant. He owns the franchise consulting firm called The Franchise Guys, which is a part of one of the top franchise consulting networks in the world in IFPG. Christian is widely respected for his plethora of knowledge in the franchise space and the brands that he represents to his clients. Christian is most certainly a student of business and franchising, but what is not as known is his curiosity for the economy and history. Specifically, he has been studying the recent trends towards a recession and how they stack up to in previous decades. His worldview of franchising and business gives him a very unique educated opinion about the current landscape for franchising and that is why I was so excited to have him on the show. Listen in to hear about Christian’s passion for franchise matchmaking, his journey to partner up with IFPG, his view on the current state of the economy, and how he thinks that could impact business ownership given history. You definitely don’t want to miss this episode.
Our guest is a very talented franchise consultant. He has helped many brands scale across the country, including LIME Painting, but he has a particular knack for talking about the economy. Christian Dadulak with The Franchise Guys, welcome to the show.
Thanks, Nick. I’m excited to be here. Last time, you were on my podcast, and now I get to be on yours. I’m excited about it.
The tables have turned. It seems like the economy is turning as well. I’m excited to dive into it and talk to you about it on the show and help our audience level up. Before we get into that, many people have thoughts about franchising. Most of the time, it is not necessarily accurate. A lot of folks view franchises as Burger King or McDonald’s.
It is not always thought that franchising is in a business like painting, window installation, or floor coatings. Many other services brought to customers all across the country are delivered through franchising. Not everybody raises their hand or grows up saying, “I’m going to get into the franchise space.” Franchising has a way of pulling us in. I’m curious, Christian. How did franchising find you?
It is something that I like to ask people because it is true that franchising finds us. We don’t necessarily find franchising. For several years, I have been a financial advisor working with small business owners, helping them with retirement planning, helping their employees, and working with individuals. Through that realm, I met a buddy of mine.
He and his brother owned a company that was not a bonafide franchise, but it was a licensing agreement. He said, “If you have extra time during the day, maybe an extra 10 to 15 hours a week, we are looking to help grow our business. We will provide you with all the leads. You educate people about the licensing opportunity. If they like it, they can move forward.” I said, “Sure. There are periods throughout the day when I might have extra time between prospecting and other appointments. Let’s do it.”
I started to get some good traction doing that. I helped a lot of people move forward with that licensing opportunity. At a certain point, I started making more money doing that than I was with being a financial advisor. I said, “Maybe there’s something to this.” I started that in 2019. COVID hit in 2020. That type of business was impacted. Many people were nervous about getting into that specific type of business. It required office space. There is no build-out or anything. It was a body contouring business, fat loss, and skin tightening type of business. A lot of people were uneasy with that type of business. At least they were sitting on it.
I started to look around. I remember somebody called me. This is where franchising found me in an indirect way. One of the leads we got wasn’t the lead directly, but it was a business broker looking for a business on their behalf. I had heard of business brokers. I had never considered being a business broker, but at that point, I thought, “That sounds interesting being a business broker. What do they do exactly? Is that something that I should be looking into? Why are there people that are doing this? How much money can you make?” I started looking into that.
I found Transworld and started looking into that. I saw in their moniker that they helped with business sales, franchise consulting, and franchising their business. I thought, “What the heck is that? I never heard of that.” I have always been interested in franchising. I like the franchise model. I have seen the movie The Founder. I have read half of Franchising for Dummies. I thought, “This sounds interesting.”
I started looking around at how to be a franchise consultant. I found IFPG, the International Franchise Professionals Group. At the time, it was two years in a row that they had been ranked by Entrepreneur Magazine as the number one consulting network for franchise consultants. I thought, “That has some credence to it.”
I have talked to some other consulting groups, but ultimately felt like, in terms of culture, opportunity, and the sheer numbers behind it, that IFPG was the right fit. I moved forward, became a consultant, started learning, dove in, and became a student of the industry and the craft. Things started happening quickly. I have been able to help a lot of people get into business, which has been a huge pleasure and an honor of mine.
To your point about Transworld, they do such a great job with their search engine optimization. They are always ranking at the top. IFPG is one of the top franchise consulting firms in the world. It is neat that that was your first experience. When you are looking into franchise brokerage and helping folks get into franchising that is looking into business opportunities, what a great way to start and get launched in franchising. What are you doing nowadays?
I still do franchise consulting. I’m fully committed to doing that. Dan Claps, who is a mutual friend of both of ours, we cohost The Franchise Founders Podcast, where we will talk to franchise founders like yourself. You have been on it and other people from the franchise space. We get their takes on all things franchising, how to be a better franchisor, if you are thinking about becoming a franchise, franchising your business, and if you want to buy a franchise. These are resources for everyone that is curious and wants to learn more about franchising. We had a franchise consulting. Who knows? Maybe sometime in the near future, I will be buying a franchise sometime soon because I feel like that is where my heart is taking me.
How long have you been feeling that way?
Maybe in the last several months. If I’m being completely candid, I love what I do as a consultant. I’m never going to stop that. You also have to realize that it is like being a real estate agent. You can sell a house, but there is no future value. There is a shelf life to your income. It could be a nice referral fee that you get but, at the end of the day, I want something that is self-perpetuating, something where you are building an asset, something you can sell someday, and something that can run without me.
As much as I love consulting and I can do this until the day that I die because it is so much fun and there is much impact, it would be exciting to go on an adventure where I’m not only building something for myself and an asset, but I have the ability to mentor people directly that are in my business, see them grow, create opportunities for them, create local jobs, and create something that doesn’t necessarily need me to run. That is why I get excited for people about franchising because I help them to understand.
A lot of people, when they think about franchising, they think this is buying a job. Sometimes it can be, but in many cases, you can build something special here. It doesn’t have to rely on you a 100% forever. If you want to sell it someday, you can do that. There is so much opportunity that comes from it. I feel like you can only help people buy franchises for so long before you almost think, “I’m telling them how great it is. I should put my money where my mouth is.”
Follow suit and enjoy all the benefits you mentioned. Many times, franchising, from a franchise owner standpoint, is viewed as, “Which opportunity is best for me?” In many cases, it is assumed that, “It should even be my passion.” There are many businesses out there that are non-sexy businesses that are recession resistant.
We have seen that coming off the back end of COVID, all these supply chain issues, social unrest, and election year. We are coming up on the recession. Some businesses are prone to the cyclical nature of all those different changes in the economy. That is not necessarily about your passion. There is a lot more that goes into owning a franchise business.
The point I’m making is that it is about where a franchise owner’s thought process ends until they meet somebody like yourself and can educate them on some of the things I mentioned but get to and educate potential franchise owners on the fact that you are building an asset that has value. You can sell this business for a multiple of EBITDA at the end of your tenure for owning the business. Not only that, but it is also paying you a dividend annually. You have this annuity that, year over year, is paying you a dividend.
Granted, all of that is not guaranteed. At the end of the day, you have to execute the process. That is going to give you the best opportunity to realize that possibility, annual dividends, and exit. You have this upfront cost. Many times, that is viewed as a sunk cost. Keep this in mind. On the back end, you are also getting an exit for the business.
I always like to share that with new franchise owners as they are building their business plan and evaluating the short-term and the long-term. Start creating that long-term perspective. I feel like many times, franchise owners are short-term-minded, from year 1 to year 2, but it is years 3 and 5. This is a ten-year deal here. Creating that long-term vision helps ground. That is the other side of what you are good at, which is matchmaking. Being a matchmaker and helping folks get into business ownership, what are some do’s and don’ts of finding the best franchise business for me if I’m looking to be a franchise owner?
I love what you said about being a matchmaker because what I tell people all the time to help them understand what I do a little bit more is I will say, “I’m like Match.com for franchising. If you want to be a little bit cruder, I’m like Tinder.” I’m helping to match you with the right franchise for you because people will ask, “What is the best franchise to buy? What is the hottest franchise?” I can tell you the ones selling like hotcakes, but does that mean that is necessarily the best opportunity for you? Does it even necessarily mean that it is a good opportunity? No.
It is better to almost walk into the conversation as a completely blank slate. I’m not coming in there with any particular industry in mind. I’m not coming in there with a specific franchise in mind. If you are, what the heck do you need someone like me for if you already know what business you want to invest in and start? I say walk in as a blank canvas. Come in with no expectations and with an open mind.
I will ask candidates I work with all the time, “Are you open to hearing about opportunities that you wouldn’t have thought about and, at first glance, you might feel a little cringe about?” Maybe it is some window-cleaning thing. They were like, “That doesn’t sound fun to me at all.” I tell them to table those concerns and initial reactions. You are going to have an initial gut reaction.
At some point in our life, we always had something where maybe it was a person or an experience that we thought wasn’t going to be fun but ended up being a blast. There are all these things where our initial perception was wrong. That is why I tell people, “Let’s reverse engineer the process. What do you want your life to look like? How involved do you want to be in the business? Do you want to leave your job? Are you looking to get out of your job? Are you looking to try to keep that job but have something on the side that is semi-absentee?”
There are lots of implications that come with that. You are going to need more money. You are going to need to be a strong manager and a delegator. Let’s talk about your skills. What industry are you from? I don’t think necessarily the industry, but what is your background? What are your skillsets? Are you good with people? Do you have people skills? That is necessary regardless of the opportunity. If you are the one dealing with the customer directly, you need to be the person that is good with that customer and can make them feel special and comfortable. You are communicating things properly and thoroughly. If you are not the one that is on the front lines, you know how to build the right team and lead people effectively. That requires people skills. You need to have that.
Depending on the opportunity, maybe they want someone that is more sales focused or has more of a sales aptitude. They want someone that has a lot of business acumen. Everyone should know how to read a P&L, but maybe sometimes you need to know that going in more than other opportunities. You need to know logistics and understand that. Usually, it is a combination of all of these things, but sometimes, some opportunities require that more than others.
It comes down to preference. Would you prefer something that is you and solo? Do you want to build a team? Do you want a small team? Do you want a big team? Do you want your customer to be the general public and the consumer? Do you want it to be other businesses? Do you want it to be a mix of the two? There are all these things to think about. Do I want a business that has recurring revenue? Do I want something that is a one-time job but it is a large job, and that could help me to cashflow quicker? There are all these different things to take into consideration. A lot of it comes from personal preference.
I’m always thinking about what it keeps the end in mind. If I want to sell this someday, how am I going to get the best valuation and the highest multiple? A lot of the time that is recurring revenue. There are many different types of businesses. For some people, if they don’t have as much of a runway, because oftentimes recurring revenue from selling $100 a month subscription, that is going to take a long time to build that customer base.
If you need to start taking income from the business relatively quickly, you should not have to do that if you are going to buy a business. You need to give yourself runway. Even if you do need to take something, take as little as you can. The business has enough breathing room to continue to grow and grow at a fast clip. These are all things to keep in mind, in my opinion. What do I want? Do I want a high ticket sale one time? Do I want recurring revenue? Is there a way to have both? What support is the franchise providing? Marketing and lead generation, I find important. Most people want to know where I am getting my customers.
Without going off on a tangent, all of these things are critical. When I’m matchmaking somebody, these are things I’m asking them, “What does your wishlist look like?” Once we know what that wishlist is, let me go and search the over 600 options I have in my inventory in 70 different industries. Let’s whittle down to a few options that I think could be a good fit based on what you have shared with me. I’m not asking you to go in a certain type of direction. I’m saying keep an open mind. Let’s start investigating. I leave the decision up to you. I’m going to be your tour guide throughout the process.
You concluded there with a couple of buzzwords, the matchmaking. You are building a wishlist and having a tour guide along the way of building that wishlist. That wishlist is tailored for a lot of different things that ultimately relate to business ownership and what is best for you. I’m curious. You have been chatting about matchmaking, entrepreneurship, and building this asset through franchising. Are there ever opportunities where you tell somebody that franchise ownership is not for them? That is the first part of this question. The second part of the question is, what are some strong attributes of a good franchise owner? The backend of you telling somebody that franchise ownership is not for them.
I would rather somebody not move forward with buying a franchise than buy something that is not the right fit for them, especially if business ownership is not the right fit for them. One clear thing that many franchise owners, franchise partners of ours, franchisors, and their franchise development teams will look for is, “Is this person going to be coachable.” Ego is not your amigo. If they are coming in there and they have a little bit of an attitude or superiority complex where they think they know everything, that is fine. You are telling me to do it this way. I know what is better. I’m going to do it that way.
That is someone that is probably not good for franchising. Maybe they will do well starting something on their own even. Having that level of ego is not going to be your friend. There are some telltale signs throughout the process as you are working with them and as the franchisor is talking to them. I had a client that I was working with that. I don’t think they signed the FDD receipt for a month. It took prying out of them to get them to do something simple.
For those of you that don’t know, the FDD receipt is not signing the agreement or not agreeing to anything. It is acknowledging that the franchisor gave you the franchise disclosure document. For whatever reason, it was like pulling teeth to get that out. There were other things along the way that led me to believe in the franchisor. I don’t think you are going to be the right fit for this franchise and for any franchise because these are basic things.
If you can’t follow the discovery process as you are learning about the franchise, and you can’t even do that and follow simple directions, or you are not willing to follow simple directions, when it comes time to operate the business and listen to the franchisor who has already done this, there is going to be some issues. That is a huge red flag if they don’t seem to have coachability, they seem to have an ego, and they are tied to one particular industry, but their financial wherewithal isn’t there, and they are not fully wrapping their head around something.
There is someone I’m working with who is thinking, “This specific type of business is the only thing I want. I’m not open-minded at all.” She probably couldn’t even tell you what it was about. She likes the industry. It seems like a fun business. You have to think like a business person. People that think like business people will go through the process the way I previously described, where I’m thinking about the attributes of the business, not necessarily the business itself, at least at first. Yes, you have to be in a viable industry. You need to love the franchise door and the opportunity, but do the attributes of that type of business make sense for what you are trying to accomplish? If you are not thinking that way, you are the type of person that shouldn’t be moving forward now or maybe even ever.
There are all these different things, but on the flip side, coachability. If they have leadership skills that are critical either to lead your customer, if you are a one-man show, and you are leading the customer through the process and helping them make a decision, or you are leading it and building a team and culture. Something an old mentor of mine said to me, “Managers are a dime a dozen. You could find someone to manage. Leaders pull, and managers push.” True leaders are able to get the best out of people. They are able to build teams and inspire people. They don’t require all these little cliche sayings, but it is true.
You don’t have to be the most charismatic person, but do you treat people right? Are you the person that is going to be yelling at your team if they make a mistake? Do you give them a little bit of grace, and you are going to mentor and coach them, and you want them to be able to make decisions? You are able to delegate. You are comfortable with delegating. You are at least willing to learn.
Having some level of sales skills is important. I don’t think you need to be Mr. Joe, the closer, who is going to knock down your door and make 100 cold calls a day, but you do need to be the number one promoter of your business. You need to be out there in the community, networking and letting people know what you do. You need to be able to be excited about it. Tell people about it at cocktail parties. You need to be the number one promoter and get excited. If that person is here, I’m here to write a check and collect a check, and your heart is not in it, and I or the franchisor can feel it, you are not a good fit. The person that does have those things, and I’m sure other things I haven’t mentioned as well, is a person that should move forward.
You said many great nuggets there, but you talked about coachability ins many different ways. If you go back to the sound bite of me talking about building an asset that has value, the caveat I gave there is the closer you fit and execute the business plan, the particular roadmap blueprint, and a lot of skills and attributes that franchise owners bring to a franchise system. That is a skill.
Coming into a new culture, a new way, a new life, and a new family. These are a lot of learning curves. You have to adapt to all those different things. What is probably the most beneficial part of a franchise is that you are in business with other business owners that have mastered a particular way of doing business. That is where all the failures and figuring out the business that takes many years and lost resources.
I talk about the best business owners, whether they are franchise owners or not, who have humility. Humility transfers into coachability. This sense of genius comes into a franchise, and you put your genius hat on. All of a sudden, you are going to be that X-factor. That is a formula that will set you back. The quicker you can do the complete opposite exercise, with a lot of humility, and get to a point where you are on the stage at the annual conference, you can start contributing to the way in which that franchise does business. You even get more involved by joining the franchise advisory council or different committees within the franchise. You have to bleed the ins and outs of that business.
Christian, we are talking about business and franchise ownership. We were talking about a part of this wishlist is the economy and how business is going to do in different economic changes. That goes into operating a business beyond the people skills and blueprint, specifically the economy. Why are you passionate about studying the economy? Why is that important to business ownership?
One of the biggest reasons I’m passionate about it is because, having been in the financial world, I know how ugly the financial world is, which is one reason I didn’t necessarily want to stay there. There is a lot of misleading. There is regulation around it, but there are still ways that people mislead. I don’t like being lied to. I know other people don’t like being lied to. Integrity is important to me.
I see a lot of bad advice flying around coming out of the mouths of people that I know that they know they don’t know what they are talking about, but they are sharing information that, at the end of the day, helps them sell more of whatever they are selling. I can think of many professionals, especially right now in the market cycle, that are doing this.
I’m not hating on anybody because I have friends in all of these different industries. There are great professionals in each of these categories that help people. I can think of a lot of realtors making unfounded, what I would call, in many cases, dangerous claims. I would think of financial advisors doing the same people on crypto with the whole FTX scandal.
I don’t want people to get hurt. I’m not telling people what to or what not to do, where to put money, where not to put money, what businesses to invest in, and what not businesses to invest in. As a consultant and as a business advisor, I want to give people the resources, the knowledge, and the education. They can make an informed decision based on themselves, their situation, and what makes the most sense.
That is why I’m passionate about studying the economy. I will preface this by saying, “No, I’m not a classically formally trained economist.” It is a good thing because most of the ones that get things wrong. We can talk about some resources that are good for people to turn to learn about the economy and get educated.
With business ownership, at the end of the day, you should only focus on what you can control. You can’t control the economy, what the Federal government’s doing, what the Fed is doing, and what the monetary policy ends up being. That is beyond our control. I’m not saying, “Get your panties up in a bunch and get all frustrated about what is going on.” Be aware of what is happening.
There are always these leading indicators where you can see a little bit of what is coming down the pike. It doesn’t take a rocket scientist or a genius to see that a recession is coming. We can argue about the depth of the recession, how bad or how mild it is going to be, but it is coming. In my opinion, it is already here. In terms of business ownership, it is less about trying to change the fact that this is the economic landscape that we are marching into. How do I weather that storm? I want people that have it in their hearts to start a business. I don’t want them to shy away from starting a business because there are going to be some challenges ahead.
There are going to be challenges regardless of where you fall. In the corporate world, there are going to be lots of layoffs. There already are. Look at tech. I could name off and rattle off company after company. There are going to be challenges regardless. Choose your challenge. The best thing you can do is to take your life into your own hands.
At least with the business, there are risks and challenges, but if you take things into your own hands and you are a competent person with good skillsets and a good network, and you are a good person, you can succeed in an economy like what we are heading into if you are going in with your eyes wide open. You are not wearing rose-colored glasses. You understand the economic landscape. You are educating yourself. If you are not already in business, you are choosing a business that is more likely to fare better during a recession than one that isn’t.
Who would think to get out of Corporate America? For so long, you have had these reservations and these thoughts in the back of your mind about the bureaucracy and the nuances of corporate life. On the other side, you could be thinking about business ownership and the realities of what entrepreneurship provides you time, independence, freedom, an annuity, and a lifestyle that could level up unintended there for your quality of life. Working with a matchmaker like yourself and navigating having a tour guide as you build this wishlist and the economy is a critical part of that. What is the state of the economy? Where are we headed in 2023, as we are in Q4 of 2022? Where are we now? Where are we going?
I try not to be a complete economic market prognosticator because I don’t know what is going to happen. Most people don’t. Anyone that says they do is probably lying or selling something. I do think that there are people that can look at a lot of the leading indicators and that have an understanding of the history of where markets have been in the past and the economy as a whole. They are looking at the relevant similarities and dissimilarities to other time periods.
Where are we at right now? We have over $31 trillion of national debt. We have inflation. It was 7.7%. That is, if we accept the official number and the way that the consumer price index, which is the general measure of inflation, the way that is calculated in my mind and almost objectively, it is falsified, misleading, and disingenuous. Inflation is probably closer to 16% plus.
Historically, if we look back at the late ‘70s and early ‘80s, the last time we had peak inflation like this. When we calculated CPI the way that was more trustworthy, inflation was over 14%. What did Chairman Volcker, who was the Chairman of the Fed at the time, do to tamp down on inflation? He raised the Federal fund rates by over 20%, which is why mortgage rates were high at the time.
What that did was, yes, there was a lot of pain involved. That naturally did plunge us into recession. The economy did slow. Lending was drying up a little bit. There were jobs and layoffs because companies didn’t have as many resources. It sucked liquidity out of the economy. That is what needed to happen to get the inflation fired to stop roaring.
When you think about where we are now, let’s assume that the inflation number is 7.7%, which I don’t think it is. Let’s take them at their word and take it at face value. The Federal funds, if I’m not mistaken, at the time of this recording, are around 3.75% or 3.25%, but the idea is the same. If inflation is 7.7%, and we are at a 3.75% Federal funds rate, we have a long way to go. The real interest rate needs to be above the inflation rate. The interest rate does need to go up to tamp down inflation.
Here is where I’m unsure, and this is where I won’t say I know what is going to happen because we are in a rock and a hard place. This isn’t just us. This is Japan, the UK, and Germany. Everyone has this fiat money system with nothing backed by anything hard or real, and this credit crisis and liquidity crisis globally because we have $31 trillion in debt.
What is different about now versus the late ‘70s and early ‘80s? A lot of that debt at the time was longer-term debt. It doesn’t mature. We don’t have to pay. The debt doesn’t come due yet. Most of the government debt we have is short-term debt. If you think about a credit card, I could have $5,000 in credit card debt, but I only have to make a certain monthly payment. If interest rates go up as they are, our ability to service debt as a nation and pay that is going to be expensive.
There is a certain point where we are not able to pay it. We don’t want to default on that debt, and the Fed knows that. I do think the Fed will continue to raise rates, but there is a point where they are going to say in terms of not defaulting on our debt as a nation, there is only so far that they can go. That is where I’m going to rock in a hard place.
To get inflation down, we need to raise rates more, but we can’t raise rates more because there is this massive national debt that we have to contend with. What we will end with, in my opinion, is some level of stagflation where you still have high inflation, but the economy has a low degree, and we do have a recession. That is likely to be the case. I don’t pretend to know, but that is the way I see it.
That could be good or bad news. You said, “Focus on what you can control.” There are many business opportunities that are recession, inflation, and pandemic resistant. That allows you to find a business that lines up with your wishlist and has a proven blueprint where you can focus on controlling what you can control, which is the execution.
Thinking back on 2020, the world is shutting down, and there is a pandemic. Can you imagine that as a business owner? What we did at LIME was we leaned in on the community at LIME and insulated ourselves from the narratives on social media and the news. We protected our headspace so we could execute.
I say that because that is a great example I can personally relate to give some confidence. To your point, whether you are in Corporate America or business ownership, there are economic implications that are going to affect the way that we do business that is going to affect the world that we are working in. Regardless, we are not going to be able to escape the fact that there is a recession going on. Christian, from your standpoint as a business owner, how does that affect me as a business owner? What are some things that I can do as a business owner to protect myself?
Anyone reading what I said might think, “That sounds like a crappy situation and gloomy.” I don’t mean for it to be, but the data is the data. That is where I come in, saying, “Don’t lie to yourself. Understand where we are at.” I would argue being a natural optimist. I’m a realist, but I still do look on the bright side of things. I think there are going to be a ton of opportunities that open up.
The unfortunate reality is people that shouldn’t have been in business in the first place, in my opinion, a lot of people that were propped up by this cheap money that we had available to us, all this free-flowing credit that didn’t run their businesses the right way. There will be people. I don’t wish this upon them, but the reality is there will be people that go out of business. A lot of your would-be competitors that didn’t run their business the right way, a lot of them will go out of business. That creates opportunities. There are less competition and saturation. There are also marketing opportunities.
One of the first things people pull back on during that hard economic times is advertising and marketing. If your dollar is going a millimeter now, it might go a mile during a recession because everyone is pulling back on marketing. They are cutting costs. Get lean in areas where it makes sense to get lean. Cameron Herold, a former COO of 1-800-GOT-JUNK, has fantastic advice on how to get lean.
Don’t get lean in terms of marketing. If you need to pull back a little bit, maybe, but in my opinion, you should almost put down the throttle and do more if you can because your dollar is going to go that much further. At least don’t pull back and try to stay the same in terms of how much marketing you are doing. With fewer marketing dollars out there buying advertising, it is simple supply and demand. Your dollar is going to go further.
In any case, there are opportunities to be had. This is one reason I like you guys at LIME, like we were talking about even before we started recording. First of all, painting, like you mentioned. Residences and commercials are everywhere. On every wall, there is a coating for everything. You also deal with the upper third of home values in any market. You have multiple revenue streams. You are going after a demographic that isn’t as affected by difficult economic times as most people are. Their incomes are a little bit more stable.
It might shrink a little bit. They might have some tough times, but usually, those people aren’t hurting as much during the recession as other people. That insulates you guys as a business opportunity and has multiple revenue streams. It is not one service you are offering. You have many to fall back on and offer the customer. Looking at businesses like LIME, and not to plug you guys, there are businesses like this out there in a good position to succeed.
My case for franchising right now would be, in this economic environment, do you want to be the lone wolf charging ahead by yourself? Do you want to have a team that is with you and behind you and a network of other franchisees all across the nation that you can collaborate with and share ideas with best business practices?
This is the time to get smart. You can’t get smart being alone again. This comes back to having humility and not having this massive ego. If you want to do it all on your own, good luck. Those are a lot of the people that are going to be blindsided by what is coming, but the people that are humble and smart are going to join franchise systems where there are great franchisees to network and collaborate with.
There are opportunities. I don’t think it is the end of the world. Something I like saying to people is, “Things are never as good as they seem. That is true, but they are also never as bad as they seem.” Understand what is going on, and educate yourself, but understand there are also opportunities. There is always a silver lining in every bad situation. Be prepared, be educated, and look for those opportunities. It will be fine.
If you can focus on the execution, you can get outside of the fear. Fear is the greatest thief. It steals opportunities over days, weeks, months, and even years. It doesn’t say, “I’m fear. I’m affecting your ability to make good decisions to get ahead and execute while others are pulling back to get ahead.” The economy will come around.
If you are able to execute during times when folks are pulling back and when they come back to the table, you are going to have so much time. You are going to have benefited from one of the most powerful laws in existence, which is compounding. It is compounding the results of your efforts and ability to get ahead and not let fear hold you back. As you are talking, I’m thinking about what other points in history we can look back on that are similar to where we’re going in 2023.
Some of the most dangerous words you can say that screws people out of a lot of their own wealth is a four-word death trap, which is, This Time Is Different. There are many different times throughout economic history that we can look back on that were similar in some ways. There is always going to be something different about it.
In 2008, it was a mortgage crisis. In the early 2000s, it was the tech bubble blowing up, the World Trade Center, and the economic pain that was caused. The cause is a little bit different. Maybe there are some underlying differentiators. I would agree that history doesn’t repeat itself directly. It does often rhyme. Understanding these periods is helpful.
To answer your question, the period of time that is most analogous to what we are going through right now is the late ‘70s and early ‘80s because that is the last time we had peak inflation, and that is when the Fed was hiking rates similar to the way that they are doing right now. That is a good period of time to look at in terms of, what did we do then? What are we likely to do now? How did people succeed during that time? What did the landscape of that time look like? Try to anticipate, but don’t hang too much weight on in anticipation because you never know what’s going to happen. Be flexible, be agile, be nimble, and be ready to move and pivot. Stay lean at a time like this so you can do that. That is a great period in history to look at.
The one thing that is different is the fact that we have never had this level of national debt before. That does make the math a little bit trickier in terms of our ability to raise rates. I don’t know entirely, but if there is any economic period to study right now, it is the late ‘70s and early ‘80s when we had all that inflation. Study what the Chairman of the Fed did at the time, Paul Volcker, who is the only Fed Chairman, in my opinion, that had the guts to do what was necessary at that time.
This time is different. I love that quote there. Christian, we have talked about many great things related to franchise ownership, matchmaking, and the economy. They are all important things to consider, especially when you are looking at what for you could be the American dream, getting into business ownership. Clearly, franchising found you. Why do you love franchising so much?
It is because of its ability to help people live the American dream. I believe that what I’m doing and helping people with is helping them to live the American dream. That is not to buy a job. It is to buy a business that impacts people, creates jobs, and changes their communities. A lot of the franchise owners in my community are part of the Chamber of Commerce, the Valley Industry Association, and all the nonprofit communities like I am. I see the impact that they have.
There is this Jersey Mike franchise owner in my area. One of his managers started off making sandwiches when she was out of high school. Now she is his partner and owns her own location. How great is that? It provides opportunities for growth and development. They give money back to local causes, whether it is for cancer, underprivileged youth, or whatever the case is.
The ripple effect of franchising in communities all across the nation and the world is massive. That is why I get excited about it. It has the ability to change people’s lives. Not everybody is going to start a Facebook, Apple, or Microsoft. That is a whole different beast. I’m the type of person where I don’t need to be the idea guy. If you give me a blueprint, which is what I’m paying for in franchising, why would you do anything else other than follow the blueprint if you are paying for that and investing money for that intellectual property?
Franchising gives you the blueprint. You are in business for yourself, but not by yourself. We have all heard that 1,000 times. It is a cliché, but it is a cliché because it is true. You have the ability to get into business. You have a network of peers that you can mentor younger franchisees. You can get advice from franchisees that have been here for a while and that are killing it. Everything in between, you have community, purpose, and the ability to make an impact for yourself, your family, your community, and the world. For that reason, I love franchising because it has the ability to truly change lives.
You can cap that with a theme there in franchising changes lives in many different ways. It changes communities and empowers folks along the way. Christian, it was great having you on the show. I know I most certainly leveled up. I hope our audience leveled up. If anyone is interested in getting in touch with you, how can they do that?
On LinkedIn, you can look me up, Christian Dadulak. You can give me a call at (818) 472-3170.
It is a wealth of knowledge, whether you are trying to build your wishlist or franchise ownership or you are curious about the economy. This was a great show. Please subscribe to the channel. It is how we are able to bring thought leaders on the show like Christian. The more our show grows, the more we can help folks level up. There are many wonderful talking points. Drop some comments and thoughts. What are your opinions on the state of the economy? What are some tips that can help franchise owners? As always, level up.
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