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Using Franchising To Invest In Local Businesses with Kenny Rose, FranShares

March 16, 2022

When most of us think of franchising, major fast-food chains are the businesses that come to mind first. However, you probably didn’t know that many of your local essential service providers are franchises too! Through his company, FranShares, Kenny Rose is giving you an opportunity to invest in these local businesses and, therefore, in your community. Kenny’s approach to entrepreneurship is based on building solid foundations, continuous learning, fair and ethical treatment of his employees, and not cutting corners. 

About the Guest:
Kenny Rose watched his dad build a business from the ground up, and the challenges that he and his family went through during the lean times gave him all the grit and determination that he needed to create his own success. Kenny’s career began as a financial advisor at Merrill Lynch, after which he went on to found his own brokerage. Today, Kenny is the founder and CEO of FranShares, which has recently closed its first fund and has a fast-growing waiting list for the next one! 

In this episode 

  • The career phase that Kenny feels he is currently in, and what his journey up to this point has looked like. (03:01)
  • What drew Kenny to the world of franchising and his approach to building relationships early on. (07:48)
  • Kenny explains what his company, FranShares, does and the benefits of investing with them. (10:04)
  • The two broad categories of franchisees and their differences. (12:05)
  • One of the biggest problems in the franchising industry, and Kenny’s plans to combat this. (15:02)
  • The article which kicked-offed Kenny’s entry into the thought leadership realm. (18:30)
  • How you can contribute to uplifting your local economy by investing with FranShares. (22:28)
  • Approaches that Kenny has adopted with regard to the franchise management side of the FranShares fund. (24:50)
  • The mindset shift will enable franchisees to see greater success. (26:02)
  • Life experiences which have given Kenny the grit to make a push through difficult times. (28:18)
  • Recklessness and pessimism; the combination of qualities that Kenny believes are required to take your business to the next level. (31:05)
  • What success means to Kenny. (34:52)

Highlights 

  • There’s a lot more that goes into building a business than just being an expert in your chosen field. Taking the time to understand the other elements involved is the key to success.
  • Cultivating an environment that promotes staff retention in the long term, even if it is a higher upfront cost, is a far better growth strategy than cutting costs and losing employees as a result.
  • By investing in local franchises, you contribute to uplifting your community, and there is minimal risk involved.
  • Entrepreneurship isn’t an easy journey, but if you have an idea that you genuinely believe will work, don’t let anything or anyone stop you from pursuing it.
Best Advice Kenny Would Give to Someone Who is Transitioning from a 6-7 to 8 Figure Business: 
Although it may be tempting to cut costs wherever you can, paying your employees well will be some of the best money you ever spend.
“When you start slashing paychecks, people walk out the door. When you start increasing them, people stick around. From a shortsighted point of view, people focus on saving money by the hour, but I want to make more money by the year, and I do that by having the best staff in place.” (16:19)
Being fearless enough to push your ideas, and keeping your cards close so that you aren’t taken advantage of, will help you reach great heights as an entrepreneur. “You need to be a combination of reckless and pessimistic.” (31:07)
How Kenny Defines Success for Himself (34:52) 
“I love building, so success is building what I envision. It’s not a dollar amount, it’s a lifestyle.” 
Mentioned in This Episode:
Why it only costs $10k to “Own” a Chick-fil-A franchise: https://thehustle.co/why-it-only-costs-10k-to-own-a-chick-fil-a-franchise/ 

Connect with Kenny:


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Transcript

[00:01:25] A.J. Lawrence: Today’s guest has been a financial advisor, a franchise consultant, he’s written books about and been a bestselling author about buying your own franchise. Don’t own the terminology. So this is how bad I am when it comes to franchises. He’s run and is running a franchise brokerage, helping people fund the right franchises for themselves. His newest company is the one I’m really excited to learn about it’s called FranShares.

[00:01:52] Hi Kenny, thank you so much for coming on the show. I’m really excited to have you here.

[00:01:56] Kenny Rose: Thank you. I’m really happy to be here.

[00:01:59] A.J. Lawrence: Yeah, I was just telling the audience, like you have such an amazing background for what you’re doing now at FranShares that I was just like, it’s a whole area I just know nothing about, and you’re doing such innovative stuff with it. That is the fascinating part about talking with an entrepreneur. So really can’t wait to like dive in. I think, I just wanted to share with everyone. I loved how, like we were chatting on the trends group from the hustle on Facebook and then all of a sudden like, oh, that’s cool. I liked your idea. And then all of a sudden, every time I turned around, it was like you were in the Alts.co, they did a whole breakdown of you. I’ve seen you 5,000 other places, you guys, and now you have this like waitlist thing going on, where you’re blowing up on your waitlist.

[00:02:46] Kenny Rose: Means we’re doing something right. That’s good.

[00:02:50] A.J. Lawrence: Yep, that is good. Given all this and given what you’re building now with FranShares, where do you see yourself as an entrepreneur?

[00:02:58] Kenny Rose: You know, it’s funny you say that because it’s a very transition phase right now. I’d always tell people, they’re like, oh, you’re doing great. I’m like, I’m not there yet. What do you mean? And it started years ago when I was running my own brokerage. I’m like, ah, you know, I’m building still. And they’re like, yeah, but you like, you support yourself all this. So I’m like, yeah, but like, that’s not where I see it. This is just a beginning.

[00:03:20] And then I started FranShares and got this like venture capital funding. People are like, oh man, you must be so excited. I’m like, why? I’m just getting started. I haven’t done anything yet. I just got some fuel to go do it. And you know, people have to remind me, it’s like, no, that’s a huge accomplishment. I’m like, okay. Yes, you’re right. But I’m still just getting started. This hasn’t launched yet. Like we’re about to launch. And so that’s a really good question. And I feel like it’s something that like, it’s like falling in love. You just know when you’re there. Until then, you keep living life.

[00:03:50] A.J. Lawrence: So you find yourself in a transition. Are there things you want to be able to do as an entrepreneur that you’re just beginning to see? Or, you know, FranShares is really cool and I can’t wait to dive into it, but like for yourself, are you seeing now that this is going on and you’re getting this taste? What are you seeing yourself as an entrepreneur going on and yes, with FranShares, but then for yourself overall.

[00:04:14] Kenny Rose: For one thing, I just love continuously building my skillset around me. That was one of the reasons I went and started my own brokerage before I went and built FranShares. I was like, I need to really learn how to run a business. You can be an expert in your field, but that doesn’t mean you’re an expert in building a business.

[00:04:29] And so, as I built my brokerage, it was like learning how to build a website, learning how to do marketing. You’re doing sales, and accounting. You’re doing all these different parts of it. It’s things that you don’t think about the time, but I was hoping it would turn into this is that like, when you are ready to start the big one, you know what you’re doing, you know these different areas.

[00:04:49] So like, and I brought on my head of growth was my first hire. And I’m like, yeah, so X, Y, and Z is what I want to do. You know, starting initiatives and these are tools I think we could use for. And he’s like, why do you know all of this? Because normally, CEOs don’t always prioritize marketing, let alone know the things that you should do.

[00:05:06] And I’m like, I’m a student of the craft. So I like being a student of the craft in every area around the business. So as an entrepreneur, I want to continuously build that up and, you know, it’s just like when I’m meeting people. I love asking about what they do, not as like judging who they are, but I like learning about different industries.

[00:05:23] Someone says they’re nuclear engineer, it’s like, oh yeah, I’ve met four of those before. And so then you start talking, it’s like, wow, how do you know about this? And so I like learning.

[00:05:31] A.J. Lawrence: You’re curious. Yeah, I like that. And definitely being curious is an amazing power to sort of develop as an entrepreneur, that I think a lot of us get kind of blinkered, whatever the term is, just so focused on things that we forget to be curious about the whole broad picture.

[00:05:51] Kenny Rose: Mm-hmm.

[00:05:51] A.J. Lawrence: Now that you’ve transitioned from brokerage to FranShares, you’ve raised money, you’ve been building this, do you see things changing though? Of like what you have to do as an entrepreneur?

[00:06:03] Kenny Rose: There’s definitely a lot of changes. I mean, honestly, I kind of laugh to myself when you’re like, man, you’ve got such a great background and all these things that lead to FranShares. I’m like, man people used to just say you have a weird background and so it’s like, your life definitely changes because people like then see what you’re at now and what you’re doing. And now, now that it’s like gaining a lot of momentum, people realize it more and I get tons of outreach. I’m like, man, I’ve been beaten down doors for 10 years. It’s a very big change that it, you know, the shoes on the other foot there. Did that answer your question? What was the original question?

[00:06:36] A.J. Lawrence: No, but it is cool. I was kinda saying did your role change but I think you are coming up with a good point. Hindsight, it’s very easy to go wow look, of course he did that. But it does seem from the peanut gallery that there’s a logic to your madness to get there, but I understand. For you, this was your life and all the complexities that kind of led to this.

[00:07:02] Kenny Rose: Yeah, so honestly it was a change I saw coming down the road eventually. Like that’s why I got into franchising. I was advisor at Merrill Lynch and I didn’t really care for the industry. And someone introduced me to franchising and I was like, like right off the bat, I was like, wow, I don’t know that much about the industry.

[00:07:19] And I’m college educated. Like you would think I should know more than, you know, I thought it was fast food like everyone else. So that’s why I was like, that’s a big opportunity. And so I really dove into the franchise world. And for years, people were like, that’s – like I get it, but like, what are you doing? And I’m like, it’s gonna make sense later. I promise you.

[00:07:37] A.J. Lawrence: So how far back did you just think you were gonna do something big in franchises or did you have this concept in mind?

[00:07:44] Kenny Rose: I had this rough concept in mind about six years ago. I heard about Fundrise and they had a Series A raise and they were pretty early still, but they were crushing it.

[00:07:56] They were only ones doing it, they were trailblazing the space. I started learning all about them and the laws that made it happen. And I was just like, I’m gonna do this for franchising. And that’s when I moved out of California and came to Chicago and started my brokerage, cuz again, I want to build the skillset and the credibility to eventually build this business.

[00:08:15] And funny enough, like I’ve been playing this for years. I wanna say like three years ago, maybe four, I started doing LinkedIn messages and connection request. People had angel investor on their profile and, it was just like networking. I’m not good at it, nor do I like hard selling.

[00:08:32] And so I was just reaching out and being like, Hey, I saw you’re an angel investor in LA or San Diego and I’m in the franchise world. It might come up down the road, just a good resource to have. And so then couple years later, I’m reaching out and I had already raised like a couple hundred thousand.

[00:08:45] And so I’m reaching out to these same people and it wasn’t me reaching out to cold nowhere. It was like, oh, we’ve been connected for a couple years. So yeah, that’s why I’m a relationship builder cause you never know what could happen in the future. And that was just like a really good use case of it.

[00:08:59] A.J. Lawrence: No, that is really cool. And I think that is, I like that you went through that and went into that thing because I remember looking at Fundrise and actually talking to, I have a miracle of how many good companies that I haven’t invested in that have gone on to do amazing things. And I have that Cedar, a couple of them. And there was like, yeah, maybe. And then all of a sudden it’s-

[00:09:23] Kenny Rose: Hey, hindsight’s 2020, but not losing anything. That’s priceless.

[00:09:28] A.J. Lawrence: There is always that, but no, it is really fascinating that you had this and you saw that. Normally I would really want to kind of get a little bit deeper into you as an entrepreneur, but I am also, and I think the audience will be fascinated about what you’re doing with FranShares and what makes it so unique because you did bring up Fundrise and the cool stuff they’re doing. So if you could maybe share a bit and let’s talk about some of the cool things that are going on with this.

[00:09:57] Kenny Rose: Yeah, I appreciate it. So what FranShares is it’s a new way to invest in something that you’ve always known about. Everyone’s familiar with franchises. You typically think about ’em in fast food, but frankly it’s everywhere. It’s the companies that wash your windows, that fix your cars, that cut your hair.

[00:10:14] I mean, every essential service is usually a franchise. You just might not even know it. So what FranShares does allows you to invest in a portfolio of these franchises that produce these everyday services. And when you invest into a fund, you can get diversified across different geographies and different industries and different brands.

[00:10:31] And they’re all supported by the franchise model and they have this track record of what their other locations have done. Franchising itself’s regulated by the Federal Trade Commission so you’ve got that along with SCC regulation for investing. And so to me, it’s a great way to really understand your investment and have some predictability with it.

[00:10:51] So FranShares is a great way to earn passive income, but also diversify your portfolio hedge against inflation. And in uneasy times when you’re not sure about like how the stock market’s gonna react or who’s gonna tweet what about crypto, it’s Hey, you know what, maybe just the guy who cuts hair down the street is a safer investment.

[00:11:11] So that’s what FranShares does. It lets you invest into everyday franchises and it’s for everyone for as little as $500 or as much as 500,000.

[00:11:19] A.J. Lawrence: As long as you can get on the wait list, flipping behind you right there. I’ve been watching it. The numbers are just clicking away there. That’s really cool as an investor, but what I found, and yes, it’s something I do wanna invest so I’m gonna get way behind on that list afterwards. But there’s some interesting things that I even, you know, of the type of people you’re investing in. But before we get into that or some of the special types of investments you’re looking to go, who are the typical people that the investors are funding? And I know you’re starting with a broad fund and then you’re gonna get really microspecific over time, but who are the types of people?

[00:11:56] Yeah. So this is actually different than most people think because when you look at franchisees, you know, there’s really two main groups: there’s successful ones and not successful ones.

[00:12:06] And so there’s a problem with both of these. The successful ones they’ve got the money. You got a bunch of stores, you’re like, Hey, bank’s gonna fund me. Eventually, there’s like the super mega franchisees that have hundreds of locations and we’ll be doing plenty of stuff with them here soon. They’ve already been reaching out to us.

[00:12:21] But then on the other side, you’ve got the not successful franchisees. And then you have to figure out what are they doing wrong? How do we fix this? Then you gotta hope they actually do fix it. And then even if all that goes right at the end of the day, you’re diluting an owner in their own business.

[00:12:36] So instead what we do, we actually are the franchisee ourselves. And we operate this a lot, like a REIT, you know, a real estate investment trust. And so the REIT, they hire property management companies to run the day to day stuff. Well in franchising, those exist for that too. They’re franchise management companies.

[00:12:53] So like we think about like private equity owns tons of large franchisees, same thing with like celebrities and athletes, you know, like Shaq owns hundreds of locations. Shaq does very little, he cuts the ribbons. He’s great at that, but you know, he has a team in place and so we do that same thing.

[00:13:08] And so when we establish these teams, you actually get better operators than if you’re investing in these one-offs. Cause that’s a lot of stuff to do on one persons shoulders and normally, people scale up over years to eventually have like, you know, they got growing pains like, oh, I need an HR person. Oh, now I need an accounting person.

[00:13:24] Well, if you come in with the right team already in place and spread that across the different locations, so you can justify the cost. You’re starting with a more solid foundation. Because honestly, like the franchisees are the make or break. So instead of like trying to see, Hey, does this person transition from a fortune 500 to this franchise bring in an existing team or build our own team of people who come from the franchises?

[00:13:46] And so you just start with a much better foundation there. So that’s what we do in a growth fund, the one that we’re about to launch. But then, you know, in the future we’ll have ones that are like income funds. We’ve already had some, you wouldn’t believe the names that have reached out already for like largest franchisees and many big name systems that are like, Hey, we’re looking to do 50 more locations or acquire this guy for 60 of his locations.

[00:14:07] And that’s when they wanna start dealing with private equity and we operate a lot like that. Like we’re public investment, but we operate like a private equity going into franchising. And frankly, we’re a lot easier to deal with.

[00:14:18] Mm-hmm okay. Then that makes a lot of sense then of what I found really interesting.

[00:14:26] Yes. I am completely interested in, you know, as an investor to dive in and kind of go under the hood and learn more about what this could mean for me as investor. But the thing that really stuck out to me most was then this program you guys are going to develop. And now I see some of the logic of how that would happen.

[00:14:47] Could you kind of talk about the identification of employees of these franchises and what you’re hoping to do down the road?

[00:14:55] Kenny Rose: So I’ve seen over the years, one of the biggest problems in franchising is the turnover of staff. And that’s usually gonna be the biggest problem with any franchise. And so you think about it from like a corporation standpoint, how do you reduce employee turnover and there’s multitude of ways, but some of the big ones that I definitely plan to get going is, for one like stock options, the people who work these things, they have no incentive. There’s no ladder.

[00:15:17] Why would I keep working here when I can go get another job for nearly the same money elsewhere? So with us, we wanna do a couple different things. For one is that I want them to be able to, just like you earn equity into a tech company. You know, you’ve got a one year cliff for your vest. Well, you know, why can’t we do the same with minimum wage?

[00:15:33] It might not be as high as like someone who’s coming in as in a startup, but I think they should earn into the fund that they are working as a part of, and also to the company itself, like I want to give franchise equity to these people and have them be incentivized to grow with us and knock this out of the park. And so that’s gonna keep people around longer because they’re being treated better than they have been before. I think that a lot of franchisees do it backwards. They’re like, where can I cut costs to increase my profitability?

[00:16:02] I see it as where do I spend on the best employees who are going to increase my profitability and reduce my headaches? When you start slashing paychecks, people walk out the door. When you start increasing them people stick around. And so like in a short sided point of view, it’s like, oh, well I’m saving money by the hour. Well, I wanna make more money by the year. And that’s having the best staff in place. That’s how you build any company.

[00:16:23] People don’t think about this on a franchise level. But additionally, besides that, I wanted to think about how I build this for people to scale over time. And this whole thing actually came up. Right before I was talking, actually before I even got the company formed I believe, Juneteenth was coming around.

[00:16:40] And this is like after protests had been happening and it’s a really big thing. And the first time many people are really acknowledging Juneteenth. And so I called my friend Carlton, we talk about racial issues all the time. He’s a guy who worked his way up from nothing and got a full ride to a major Ivy League university.

[00:16:59] And so we start chatting and I was like, Hey, you know, I posted the black square but to me, that’s not actually inciting change. Posting an angry story, or I view like, that’s not doing anything. That’s gonna fade in 24 hours. That’s people are doing. I’m like, what are your words disappear in a day?

[00:17:16] And that means nothing to me. It’s like when companies do like the gay pride logo during gay pride month. I’m like, great, you changed your colors what’d you actually do though? I think that’s a very short sided thing so I asked him, Mike, I posted the square, but how do I make real change? And he said, invest a hundred dollars in a black owned bank.

[00:17:32] And I was like, oh, that’s actually a great idea. That’s actually contributing. And so I just started rolling with this more and more. And I was like, how can you benefit people who are in minimum wage positions who are normally minorities and underserved and can’t create generational wealth? So I started thinking about the franchise world and how this has been done and comes down to the story of Chick-fil-A actually. A.J., you know, how much a Chick-fil-A cost?

[00:17:54] A.J. Lawrence: It’s funny, cuz I did see re- so before I saw the reference to this, no, I did not. Little bit like that.

[00:18:00] Kenny Rose: Okay, I appreciate you not cheating

[00:18:02] A.J. Lawrence: In a recent review of you.

[00:18:04] Kenny Rose: Yeah. Did you read that story in the hustle about it?

[00:18:06] A.J. Lawrence: No, I didn’t see the one in the hustle. I saw the one in Alts.co.

[00:18:09] Kenny Rose: Oh, okay. That also might have been like a lot of these were based on me normally. Like in the hustle I saw that they, you know. It’s one of my big things of how I really got into like the thought leadership of all this was, I started writing on Quora. I was solopreneur running my own brokerage, I was like, let’s go write on Quora. It’s neatly one of the most used websites in the world, they have 300 million active monthly users.

[00:18:32] And so I just started answering questions on there. And my one about how much Chick-fil-A cost took off, they ended up sending it to over 40 million people in their daily digest. And eventually I read in the hustle not long after that they were doing a story on it. They were looking for some sources and so I reached out.

[00:18:47] And I’m like, Hey, by the way, I wrote a Quora answer about this that was pretty popular and would love to chat with you about it. And then they ended up reaching out to me and I hop on a call with Zachary, the writer, and he’s just like, this is crazy. I actually had your answer open another tab. You’re like the person I wanted to talk to, I was like, oh, perfect. So that story from the hustle is based on what I said.

[00:19:05] It’s like the reason a Chick-fil-A only costs $10,000 is that Chick-fil-A also identified this problem. And they saw that like the people who come from the corporate world who then go and run a franchise, yeah, they’re savvy business people but that’s different than running, especially a food franchise. Like there’s plenty franchise they can transition to, that they will do great in, but food is especially a tough area too. So they said the people who run these the best are the ones who started from minimum wage and worked their way up.

[00:19:31] So that’s why you have to work in a Chick-fil-A first. And, usually people who start at like minimum wage, $10,000 as much to them as it is to a million dollars to someone like you. And so they still have significant buy-in to them and it keeps them incentivized and motivated, but also like they’re the people who get in the shot they never would’ve had a chance they’re wildest dreams for. And so they work for it.

[00:19:52] Maybe ever seen PR about how happy and nice their franchisees are? They were given an opportunity that no one else did. And so I wanna do that same thing here and spread this out to the other brands within our ecosystem, cuz it’s both doing something good for everyone, as well as reducing employee turnover, as well as increasing returns for our investors.

[00:20:12] I think it’s just a cyclical thing that eventually people will see as a no brainer.

[00:20:17] A.J. Lawrence: Yeah. I love it. I’ve been in the digital space since the early 90s and I got, I always joke, I was a paper millionaire until sort of the dot.com bomb in the early knots. And I literally, after 9/11 went and spent a few years in microfinance and I worked up in east Harlem doing unbanked, you know, undocumented and doing, helping some microlending programs try and set up up there. And it was incredible seeing just how much value some of the small local businesses that weren’t even close to the value of some of the franchises you’re talking about we’re generating in the community. And then I found out I was gonna be a parent. So yeah, I kind of went back.

[00:21:09] Kenny Rose: I mean, if there ever was a reason, that’s good.

[00:21:12] A.J. Lawrence: Yeah, kind of the small things in life. Oh, I have to pay for things, you know, because microfinances, you know, working not for profit is a great thing and you feel really good, but you don’t have much money, but back to it was just that impact.

[00:21:29] And since then, I’ve been on the board of different community development funds and all this. So I love this type of program because it does tie two things together. You’re not just saying, oh, Hey, we’re just gonna make a donation and hope things go well. You’re developing businesses in the community, in communities that need that type of support that will bring ongoing impact. A dollar spent in a community-owned business is 10 times a dollar spent in a distant, whatever the terminology is I’m massacring everything today, is only like a buck 50 back into the community.

[00:22:08] Kenny Rose: Oh wow. And I think people are gonna start to see this more and more, especially as we, you know, we’re gonna be rolling out more community funds in the future.

[00:22:15] So like I’m based in Chicago, we’ll have a Chicago fund. So like where I actually go to get my haircut, get my oil changed, go work out, like, I wanna own those things. I want to contribute to my own businesses. And I think as that becomes a greater thing in the community, but from FranShares, I think people, you know, franchising often has a bad rep because people just think of it as like, oh, you know, they go straight to Ronald McDonald.

[00:22:37] And I’m just like, man, it’s such a bigger world than that. And I’m excited to show it to people and like bring it outta the shadows. Cuz people have been making money there in a long time and it’s just it hasn’t really been disrupted in a lot of ways.

[00:22:49] A.J. Lawrence: No, I mean, and I think as someone who got very, you know, as I jokingly always say my biggest investment thing was after I sold my agency, I bought back in 12 and 13, I bought a ton of Bitcoin and promptly forgot and didn’t forget my password, thank God. My passcodes, and you know, all that, but I promptly forgot I had spent tens of thousands of dollars on it back then and kind of just, I had this 20 year, like, oh yeah, this is gonna be cool for my kids. You know, it was cyber punk stuff. It was, you know, like, oh yeah, 2050, this is gonna be cool. And then all of a sudden it was like, oh wait, cuz I would’ve sold the first time it hit a thousand bucks. So it was just really lucky that I kind of remembered in 17, when I did.

[00:23:35] But this is so different as an investment because this is like, you’re investing in the main street where there’s still, you know, people are still gonna spend money. If you guys are hit, if franchises in general are hit significantly beyond just a general economic cycle, everyone, it has to be something truly major for it to really displace, but like, it is such a great diversification. What’s nice is you don’t have to be truly involved other than this support of the company.

[00:24:08] So yeah, I love this. You said like your first hire was a head of growth and you’ve been doing it, but now that you are looking to kind of take that transition to running the franchises, how are you building this capability? Are you pulling in people who have already done this? Like you said, there are management firms for franchises and stuff like that.

[00:24:30] Kenny Rose: So it’s, we’re actually doing both approaches with this first fund. So we already have one that’s a franchise management company. They already run over 10% of that franchisees’ total location so they know it inside and out and they handle everything and basically like, they went through and cleared out the smash Berger operating team and created their own management company. And so these guys absolutely crush it.

[00:24:52] And then on the other side, it’s in the waste management space, which is an industry people also didn’t know was franchised, and they’re going to kick themselves for not knowing that after they see what we were doing. And for a business like that, this is what on the brokerage side I’ve helped people with for years is, you know, one of these service businesses that don’t require the super high upfront costs or a ton of employees or inventory, or even a storefront.

[00:25:15] With something like this, it requires two to four employees per location. It’s like one or two sales people and one or two drivers. And so when you’re looking at building out an infrastructure, that’s a much easier company to do it for.

[00:25:27] So when people see how it works, they’ll be like, oh yeah, you could find a nice and wide sales manager for something like that. And especially because the other franchisees in that system most often do not spend on these things. They’re like, and this is a common error in franchising, they’re going to market and they’re like, well, why would I pay this guy 80,000 when I can find a guy who’ll do it for 50?

[00:25:47] Cause they’re thinking of it out of their personal pocket. And they’re like, oh, I can save 30 grand, that’ll be great for my kid going to college later. Versus they don’t see it as, well, if I spend 30 more grand, that guy I got for that is going to help me make 50 more.

[00:26:01] And so that’s what we wanna do. It’s like, overhire to build the right foundation, cuz that is the most critical error people do when starting a franchise. It’s cutting corners when they absolutely should not. You follow systems for a reason.

[00:26:15] A.J. Lawrence: No, I like that because I think looking, you know, waste management, the capital investment, and once again, I don’t know franchise or the parent company or how, you know, if it’s leveraged and all that, but like being able to bring, spread those costs across a broader will. Yeah. All right. All right. Yeah, just take my damn money.

[00:26:40] Kenny Rose: Hey, tell the SEC to hurry up. We’re getting there.

[00:26:44] A.J. Lawrence: Yeah, I know you gotta go through that dance. I’m investing a few companies that are trying to do different variations of this, and it is like, Okay. You know, mm-hmm, we’re talking to SEC. They’re super smart people, but slow. But I’m not doing it cause I would’ve just banged myself out of any consideration for saying that. But that’s me. That’s not Kenny. That is me saying it.

[00:27:09] Kenny Rose: Hey, trust me. I’m on their side cuz you know, especially when like new asset classes are coming out, it’s like, how do you trust and verify these things? So I see the SEC as my best friend in that case, but also like. It worries me how few people actually like research their investments.

[00:27:24] Like you hear about all these different scams, especially like crypto and T and stuff. And it’s like, that’s kind of what SECs for, is to make sure you don’t get like, everyone says like, oh, they’re crushing things until you get robbed. And then it’s like, oh, that’s what they’re for. So SEC, I appreciate you.

[00:27:40] A.J. Lawrence: Good. What do you think helped you? Cause you talked that you had this method to your madness. So you had this vision going for quite a while, but what do you think helped you the most in your entrepreneurial journey to get here?

[00:27:54] Kenny Rose: I’d say a couple things. For one, I was fortunate enough to like watch my dad be an entrepreneur.

[00:28:00] I watched him build amazing big businesses. And lose it all and build it up again and lose it all. And so like, we’ve been through the bad stuff. Like I’ve lived in horrible places like the living room was my room. There was time we call it these days where you got two fingers cause we used plastic wear till it was down to two prongs.

[00:28:20] And then, you know, I watched my dad go from like that and raising two kids. And basically he lived in a one or two bedroom place and like a retirement home basically. And then he went from there to built a solar company that was the number one in San Diego. And I think number eight in the country or the state, you know, he was doing 20 or 30 million a year in sales. And so like, you see that and you’re like the mind’s a powerful tool, like I can go do that. And also like, he kind of raised me of like things aren’t given in my family, you go earn them.

[00:28:49] And so as I went to go start my own business, I went through very lean years too. And it’s just like, you have to go through failure and learning and just honestly bad times to appreciate it enough and learn the grit. And also just cuz like people wanna start a business and just think you make money right away.

[00:29:06] It’s like, no, it’s building a business for a reason. Like you don’t build a house and it’s like, oh, I opened up the concrete bag and look foundations there. No, you’ve got to put everything into it and lay it out and pat it down, like there’s a lot of steps to it and you need to be patient and learn. And so like I watched patience and I learned patience and so I applied it to building this.

[00:29:26] A.J. Lawrence: Very, very cool. Now someone who’s going through it themselves and we jokingly said earlier, overnight success is really tons of time put in the grinder for years and years, doing the work to get to where that success happens.

[00:29:42] But let’s not even get to success, but someone who actually has built something and they’re all of a sudden making money. And, usually it’s this half a million to like low seven figure business where it’s like, you can kind of do it by force of will. If you’re lucky and you have a lot of will, you can do it.

[00:30:01] But then things start changing because you have something, but the complexity, your day to day existence may be better off. But the complexity in keeping this going, to ensure that it’s going long term, increases almost through the roof. So you have this huge angst going through this multiple times with businesses. What advice would you give to someone there?

[00:30:26] Kenny Rose: So as they’re in that like I’m doing it, but I need to keep it stage?

[00:30:31] A.J. Lawrence: Yeah, I’m selling left right center, da, da, da, or I’m coding left right center. And then all of a sudden it’s like, oh, if you wanna keep going, you’re not gonna be able to keep doing that.

[00:30:43] Kenny Rose: Yeah. So it’s funny. There’s two very different ways I view it. It’s like, you need to be a combination of reckless and pessimistic. Watching my dad grow that solar business from nothing, you start off like hanging door hangers. And one of the days, someone opened the door and saw it and they worked for Fox news and they’re like, oh, let’s bring him on the morning show and start talking to ’em.

[00:31:06] And like, it’s kind of like a gimick thing they want him to start paying for. But like, he got so many calls. He’s like, well, I need to really invest in marketing. And so he went nuts. He would spend hundreds and hundreds of thousands of dollars on marketing. Like he was a sponsor for the San Diego chargers, the pod raise, one of the biggest San Diego Tribune sponsors. And so like other would see, this is like your nut job, stop spending so much money, but he saw it as, well, people can’t buy from me if they don’t know about me and it worked.

[00:31:34] And so it was just like as long as you have the right value prop, it’s that sometimes you need to be careless or reckless to go get your message out there. But it’s double-edged cuz you have to know that it’s the right thing. It has to be right.

[00:31:45] But then on the other side you gotta be pessimistic as well. We received like almost a million and a half in funding, but I still fight everyone on price. I don’t care how much money we have is that, you know, when you start getting reckless in, I guess, things that are maintaining or growing, like besides marketing it’s that you don’t let anyone take you for a ride. Don’t believe everything you hear. People tend to be more wandering eye the bigger they get. It’s like, oh, it’s this side and the other it’s like. No, someone’s, they’re usually trying to get you. Find out what their angle is and find out what’s going on.

[00:32:14] A.J. Lawrence: I like that because yeah, it definitely is a situation where too much, too little. I always say, it’s that Goldilocks. You have to have both sides. You know, you have to be able to go far for it because there’s no way you think it’s gonna work except you know it’s going to work. Yeah. But you have to go for it.

[00:32:35] Kenny Rose: And people will call you crazy and give you looks and say what’s going on here.

[00:32:38] Like I remember when I started my brokerage, I’d been working in a tech sales role like when I first moved to Chicago. It was a horrible company. I don’t even include in my LinkedIn anymore because I did not like the way they did business. But I remember I quit. And like the next week, my roommate who had also worked there was like going off to work and he just looks at me.

[00:32:56] He’s like, are you eating ramen? And I just said proudly, yeah, of course. He’s like, why? I’m like, well, I quit my job and I just started a business. I don’t know how long it’s gonna be till I start producing. So you gotta be willing to sacrifice. Cause I don’t think people will think of that. They’re just like, oh, it’s gonna come later.

[00:33:11] Well, yes, you have to believe that. But also have to be realistic.

[00:33:15] A.J. Lawrence: My ramen was peanut butter and jellys.

[00:33:19] Kenny Rose: Ramens cheaper, I could tell you. I’ve ran the back.

[00:33:24] A.J. Lawrence: Yeah, I think it’s somewhat generational because ramen kind of came in more as I was like late teenager university.

[00:33:33] Kenny Rose: Oh man. Yeah. You buy in bulk, you get that down to like 15, 20 cents a pack. It’s tough to beat that. May have shaved a couple years off my life, but I’ll enjoy them later.

[00:33:43] A.J. Lawrence: Actually, I love them raw when they were deep frying ’em before they started to air baking ’em when they deep fry.

[00:33:52] Kenny Rose: That’s funny. That’s not the first time I’ve heard that.

[00:33:56] A.J. Lawrence: Cuisine entrepreneurism. No, I love that. You have this incredible vision, obviously. I’ve been watching your way, you know, the clicker behind you. You have an electricity that you are pushing forward here. You know, you are defining a lot of what people will call success in an entrepreneur, but how do you go about looking at what success is for you and how you want to create success over the long term for yourself? Not for the company, but for yourself.

[00:34:27] Kenny Rose: To be honest, I love building. So success is building what I envision and like get to create. It’s funny, I’m quoting the departed, but I think he was quoting something else but Jack Nicholson says, I’m an artist, you know, it’s like artists like to draw.

[00:34:41] Like I like to build. I like to come up with ideas and think like, you know. I love, I have a hand in all the, well, most of the creative and like all the social stuff. People are like, man, your social, team’s hilarious. I’m like, that’s just me. Like, I’m just spitballing here. And so like, I like doing that stuff.

[00:34:54] So like success to me is building and having fun. And so just like, I think you said I got a whole box full of ideas and notebooks full of I can’t wait to build. So like eventually my idea of success is like, I want extra hands and people to build with and basically be able to be like, alright, I’ve been saving this one, take this and go build. Here’s, you know, they can have the wine share of the company, but like, I want to have my hand in helping build it and other people execute.

[00:35:19] And it’s just, it’s fun for me, you know? I’ve always enjoyed that. And so it’s like, to me, it’s being able to do that and travel. Like that’s how I view success. It’s not a dollar amount, it’s a lifestyle.

[00:35:30] A.J. Lawrence: Yeah. It’s kinda creating that. Kenny, this was a lot of fun. So for the audience, besides obviously getting on the waitlist, what should the audience do if they wanna learn more about what you’re doing?

[00:35:42] Kenny Rose: Number one thing, yes, go the website, but we actually have a white paper you can download. It also comes to like, if you do join the wait list, it’s on the initial email. Like you don’t even get a referral link on that first email. Like we’re big on education first.

[00:35:55] And so first thing you get is that white paper. Go read the white paper. I actually have still been doing user interviews. So like people would sign up and it’s like, Hey, would you like to chat one-on-one with the CEO for 15 minutes? Like I’m learning from everyone on the wait list.

[00:36:09] And you know, part of that I’d asked them, have you read the white paper yet? It’s amazing how many don’t. I’m like, Hey, you can’t make a good investment if you don’t learn about it. And so like, that’s the biggest thing is go learn about it. Educate yourself. We’re gonna be releasing another one soon cause I want people to really know all about both like the franchise world, as well as how FranShares works ahead of releasing the first fund.

[00:36:28] And then after that you like what you hear, use your referral link when that comes to couple emails later and just tell people about it. You know, honestly, like we don’t charge fees cause we co-invest.

[00:36:37] And so like a big part of that is believing in that people are gonna tell each other about it. Grow just like you saw Reddit verse wall street, you know, it’s FranShares in the world. Let’s go for it.

[00:36:45] A.J. Lawrence: Very cool. Well, everyone will make sure we’ll have links to everything down below in the show notes and definitely in the socials.

[00:36:52] But Kenny, this has been so cool. Thank you for coming.

[00:36:55] Kenny Rose: Glad to be here. Thanks for inviting me.

[00:36:57] A.J. Lawrence: That was really, really interesting. I think in talking with Kenny, we really got into some of the concepts of what it means to be an entrepreneur, without even saying we were talking about that because he’s done so much by diving into the franchise space and truly living it to bring something new out of this.

[00:37:17] I love that he had such a strong vision. So often we see cool things going on in another industry and we’re just like, wow, that’s cool. I know I’ve seen tons of cool companies, but to have that strength of conviction to go, huh, that’s really cool. When he saw Fundrise six plus years ago, that’s when the company, you know, I actually had talks with them to invest in and you know, I did not.

[00:37:42] So, but he had such conviction that it wasn’t even just that they were gonna be successful because they have, but that he could create something out of that concept and using the franchise world to do so is just, and his ability to keep that dream moving as a broker running his brokerage and starting FranShares here, that’s a high level of complexity.

[00:38:11] But really it is this conviction and this is something that when we get these visions of what’s possible, when we have these ideas that this is something that is worthwhile, we have to realize it is worth it to keep pushing when everything pushes back against us. But as he then pointed out when it comes to being in transition, when all of a sudden things get beyond just what you can do by force of will, when it is this kind of growing concept and things get more complex, you have to start expanding.

[00:38:44] We’ve had other guests talk about expanding their vision, really pushing into their belief, but Kenny gave a great thing about being wildly optimistic and incredibly pessimistic and a little paraphrasing there. But the idea that when you see the opportunity, when you’re in that trans to push further and deeper and more into it, as he referenced his father with all the marketing expense early on in this thing where he had been broke.

[00:39:11] So recently into this, all of a sudden he was pushing and pushing and expanding into this growth. And yes, it did work out as he said, but that is an incredibly hard choice to make in the face of reason. But what was nice was this flip side, this pessimism of realizing your resources are finite and realizing you have to be so careful about how you use them and who you use them with, that balancing point.

[00:39:44] All right. Have a wonderful day. Thank you for listening. Goodbye.

[00:39:53] This episode of Beyond 8 Figures is over, but your journey as an entrepreneur continues. So if we can help you with anything, please just let us know. And if you liked this episode, please share it with someone who might learn from it. Until next time, keep growing and find the joy in your journey. This is A.J., and I’ll be talking to you soon. Bye bye.

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