The 5-Step Test That Can Save You From Buying the Wrong Business | Entrepreneurship | How We Profit | E3 | Part 2

**Hala Taha** (0:03)
Hey, Young and Profitors, when I think back to the early days of YAP Media, I was way too scrappy. I'm talking about working out of coffee shops, bouncing between public Wi-Fi networks, and hotspotting from my phone just to get through on a client call without the connection dropping. But looking back, it was actually adding a lot of unnecessary stress, because you realize pretty quickly your business is only as strong as your connection. It's how you run meetings, serve clients, and keep everything moving.
That's exactly why I wish I had AT&T Business back then. They're built for small business owners who need their Internet to work without second-guessing it.
Once you've had that kind of reliability, you get real peace of mind. You can show up fully, close deals, serve your clients, and focus on growing your business without any of the stress. You need a provider that is as serious about your success as you are, like AT&T Business. Built to work, get AT&T Business at business.att.com.

**SPEAKER_2** (1:00)
And we're live on match day as Doug reaches for a Buffalo wing. He's got it. Oh, and he's gone for a can of Pepsi too.

**Alex Smereczniak** (1:08)
What a finish.

**Hala Taha** (1:09)
There's no doubt about it. It just tastes better.

**SPEAKER_2** (1:12)
Match days deserve Pepsi.

**Alex Smereczniak** (1:15)
Franchise businesses trade at like 1 to 3X higher multiple than an independent business.

**Hala Taha** (1:20)
Oh, wow.

**Alex Smereczniak** (1:21)
You got five businesses with 600K in revenue. You're a $3 million business now with 20% margins, 600K a year in cash flow. Pretty good life.

**Hala Taha** (1:30)
If you've ever thought, I want to own a business, but I don't want to start from scratch, this episode is especially for you. You're listening to part two of my conversation with Alex Smereczniak, co-founder and CEO of Franzy.

**Alex Smereczniak** (1:43)
I used to hate it. I love franchising. I think it's such a clear de-risked path to wealth creation. It's the most overlooked path to wealth in America that doesn't get talked about.

**Hala Taha** (1:53)
Let's talk about how profitable a Marketplace business like this is.

**Alex Smereczniak** (1:57)
When we first started, we did just under half a million in revenue in our first 11 months. Now, this is our second year. We will 7x the revenue we did last year. So our gross margin is about 80-83 percent. So it's like a software business.

**Hala Taha** (2:09)
That's really good. Out of all these categories, which are the most interesting and profitable for people to really look at?

**Alex Smereczniak** (2:16)
I mean, you weren't afraid of risk. Food does so well. They print money. For the more risk-averse person, I love.

**Hala Taha** (2:25)
Okay. So I want to keep talking to you about Franzy. I want to understand who your customer is and how you're marketing to them.

**Alex Smereczniak** (2:33)
Yeah. So our customer, there's like three ICPs for ideal customer personas. It's the corporate escapee, the person who definitely has all the skills you need to be successful in entrepreneurship, but doesn't know where to start. They've gotten comfortable, they have a good income, but finally something happened. It was kids are older, they just can't stand their boss anymore, they don't see a path forward the way they used to, and they're ready to go do their own thing. Like that group loves Franzy, they love the data, they love the support that we provide. The second group is what I'd call like hackers or like serial entrepreneurs. They're the ones we just talked about. They own short-term rentals, maybe they were doing drop shipping when that was hot.
They've got their hands in a couple of different things. Maybe they're own core business and they want to add other things to it. So they'll come to us as like, hey, I want to add some of these concepts and this concept. This is what I already do. Is there any that are complementary to what I already do? I have these rentals or is there like a home services repair franchise I can layer on that would also benefit my core business? So we get that. And then the third bucket is your like professional franchisees. They're the ones that this is all they do.
They have 30 units already, 40 units, 50 units. And they might be what are called mumboes, multi-unit, multi-brand operators. So they own 20 Dave's Hot Chickens, they own 10 Jersey Mikes.

**Hala Taha** (3:51)
So interesting.

**Alex Smereczniak** (3:52)
And they crush it. And they're just looking for the next concept. Like, hey, Franzy, do you guys have any, you know, I don't have a taco concept. Are there any like up-and-coming ones that I can get into quickly before other people grab the territory? So some of this is like a land grab and you got to get the right brand early enough. Others, it's being good at identifying maybe diamonds in the rough, or it was a bad operator who's selling, or their kids don't want it, and you're looking for the right thing. It's more hunting.