John Jantsch (00:00.941)

Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch and my guest today is Alex Smereczniak. Nailed that, I? He’s a serial entrepreneur and the co-founder and CEO of Fransi, a platform revolutionizing franchise discovery and acquisition. They empower aspiring entrepreneurs with transparency, support, and the tools to find the right franchise opportunity. He’s also the co-founder and former CEO of

Alex Smereczniak (00:10.844)

yeah.

John Jantsch (00:29.901)

to you laundry and Laundro lab where he helped build and scale a successful venture backed laundry delivery service and it’s franchise arm as well. So he continues to serve on both boards of those companies. So Alex, welcome to the duct tape marketing podcast.

Alex Smereczniak (00:45.646)

Thanks, John. I’m excited to be on with you today and look forward to talking to all things franchising and how people can get into the wonderful, wacky world of it.

John Jantsch (00:55.607)

Yeah, you know, it’s interesting franchises. I think a lot of people think McDonald’s White Castle’s, you know, some of the really early like food franchises. But in looking at the model, you know, it’s probably been around since the Middle Ages. You know, when, when some king would say, okay, you over there, you get to collect taxes in this region and you submit some of it back to me and you, you know, you get an exclusive on that region. You know, again, I

half kidding, half not kidding, but I mean, it’s really a model that’s been around for the ages, hasn’t it?

Alex Smereczniak (01:29.12)

It has been around forever and it’s more pervasive and I think our everyday lives and most people realize to your point, think McDonald’s, Subway, you don’t think about the moving company that helped you move is probably a franchise or the painting company. It is 8 % of our country’s GDP is produced from the franchise industry and it spans food, hotels, home services, fitness.

John Jantsch (01:35.351)

Yeah. Yeah.

Right, right, Yeah.

Alex Smereczniak (01:54.618)

Coffee, mean you entertainment you name it. There’s probably a franchise model around it

John Jantsch (01:59.917)

Well, yeah, I was going to say the models become so successful that there’s probably not a service where somebody hasn’t at least tried, you know, to get it going. Right. I mean, because I think a lot of people, you know, see the successful model. so, so let’s go there for a minute. You know, is there an inherent advantage, theoretically to a franchise as opposed to somebody just kind of figuring it out on their own.

Alex Smereczniak (02:24.058)

Yeah, so I actually, you know, I’ve done a lot of research on franchising as a whole and two metrics that have jumped out to me before is that, you know, the two year success rate of a franchise business is about 76%. Oh, sorry, sorry. It’s 92 % for the two year success rate for franchising 85 for the five year success rate. That is opposed to 76 % for the two year success rate for just an independent business.

a whopping 50 % success rate after five years. if you look at the two numbers I just shared, 85 % success for franchise businesses after five years, 50 for independent businesses after five years, that’s the answer right there. A lot of people get into franchising because it’s de-risked. It gives people, I don’t want to say a safety net, but you’re working with a community of other people around you that are also building their businesses with you, and then a corporate parent that

John Jantsch (03:06.285)

Yeah, yeah.

Alex Smereczniak (03:19.352)

has proven the model, has marketing resources, has training resources, has tech resources, et cetera, to isolate you to an extent and be valuable.

John Jantsch (03:28.899)

So when the concept or the model itself was really blowing up, probably in the seventies or eighties or so, there were a lot of issues that had the FTC step in. A lot of people were setting up Ponzi schemes. They were taking a hundred thousand dollars from somebody and then the people no support or nothing, what was promised. How would you say the state of sort of regulating that industry has evolved and is it safer?

certainly than it was 50 years ago.

Alex Smereczniak (03:59.802)

There’s two sides to that coin on the regulation around the brand themselves to prevent snake oil salesmen from saying, hey, this is the get rich quick in this whatever concept. The regulation has done a good job there. So every brand has to have what’s called an FDD. It’s called a franchise disclosure document. And it is a 100 to 200 page onerous legal document that covers bankruptcy, litigation, team experience.

John Jantsch (04:10.147)

Right, right.

John Jantsch (04:22.221)

Yes.

Alex Smereczniak (04:27.29)

investment costs, audited financials. mean, it has everything in it and every brand is required to have that. So I, you know, when we got into franchising, was happy to find that the other side of that coin where there still needs to be more regulation is how franchises are sold and bought today. And so a lot of people can go to a McDonald’s and fill out the contact form. They can find something, you know, from a neighbor who might be franchising a concept word of mouth.

A lot of people work through business brokers, franchise brokers, and this part is still very much the Wild West, meaning, if you think about buying a house, your real estate agent had to get licensure, they had to go through training and courses, and they also disclose to you what their commission is going to be. There is zero of that for business brokers, not just in franchising. Any business broker doesn’t need to be licensed. You and I could go be business brokers today.

John Jantsch (04:56.312)

Yeah.

John Jantsch (05:18.263)

Yeah, yeah.

Alex Smereczniak (05:18.99)

And we also don’t have to disclose what percent fee we’re taking and how we’re making money. So there’s also this kind of misalignment to a degree that’s happening there, but that’s changing. Regulation is coming there as well that I think will protect your average consumer and business buyer here in the near future.

John Jantsch (05:35.799)

What would you say you, you started a couple other businesses you franchised or at least participated in franchising those other, did you learn a lot along the way that you’ve now brought to Frenzy?

Alex Smereczniak (05:48.27)

Yeah, honestly, if I hadn’t had the experience previously building a franchise or essentially being my own franchisee running multiple laundromats, I wouldn’t have even had the idea for Franzi. was getting into the franchise world that made me realize, Hey, there’s a big gap here and there’s not a lot of alignment between the brand, brokers, prospects, et cetera. There’s not a good database or set of tools for people to find the right concept for themselves. so.

Part the reason I transitioned out of my last business was to be able to go start this one. It was just a huge gap. It’s kind of like what Zillow did for the real estate market before you had to go through a real estate agent. wasn’t a way to shop online or look at your dream home or your vacation home. And with Frenzy, we’re trying to do exactly that. Be the Zillow for franchising where you can go on your computer at work or go on your computer late at night and say, I’m in Atlanta. I’ve got a hundred K to invest.

What can I afford? Here’s my operational experience. Here are my goals for my family and myself. What are the top five or 10 brands recommended for me based on this information? And that’s exactly what we’ve built with Franzi is you go in, you enter that information and we recommend brands for you. You can deny them or approve them and go further down the conversation with them. And then we facilitate that introduction along with a number of other tools that first time or any business buyer needs.

entity formation, lending, finding the right CPA, etc. We help with all those pieces as well.

John Jantsch (07:13.72)

Yeah.

John Jantsch (07:19.271)

Would you say that there is, and maybe you don’t have enough experience to answer this question, but would you say there’s a distinct different profile of a buyer of a franchise as opposed to somebody who’s just going to go out there and start a business?

Alex Smereczniak (07:32.154)

It’s kind of a cop out answer, but it depends. I just talked to a number of entrepreneurship through acquisition folks. It’s a big trend right now where people are either getting a sponsor to back them to go buy an established business where it’s someone retiring that wants to sell. But some of those ETA folks are looking at buying up the family that owns five Jimmy Johns and wants to sell.

John Jantsch (07:41.677)

Yeah, yeah.

John Jantsch (07:55.191)

Yeah, sure.

Alex Smereczniak (07:57.018)

So you had an ETA person, they’re looking at both independent businesses and franchises as a potential solution. You also have within franchising the large private equity groups that own 50 Jimmy Johns and 20 McDonald’s and they’re massive. But you also have the vice president of a bank who’s in his forties and hates his job and wants to leave and go be his own boss. And he also becomes a McDonald’s franchisee. so your ideal customer profiles, your ICPs vary pretty widely.

John Jantsch (08:08.098)

Yeah.

John Jantsch (08:16.504)

Yeah.

Alex Smereczniak (08:26.99)

they fall pretty solidly into three buckets. It’s your private equity groups, it’s your nine to five veteran that wants to get out, or it’s your family that’s built up a nice business and they’re adding their sixth, seventh, eighth location.

John Jantsch (08:32.301)

Yeah.

John Jantsch (08:43.427)

I guess the part of that question was, know, somebody learns how to be a plumber and they start a plumbing business. lot of franchisees owners, mean, they don’t know a thing about the actual business. Like they’ve never run a restaurant, right? You know, they’ve never run a gym, but they like the idea of not really needing to know that because the system’s figured out. I mean, is that a fair statement?

Alex Smereczniak (09:06.714)

Yeah, I franchising is a lot more accessible. It goes back to the success rates I mentioned earlier. There’s a reason it’s almost double. You know, the success rate is almost double for those getting into franchises versus going at it alone. You have training wheels essentially in franchising, but eventually when you start going from one unit to two to two to five, five to 10 training wheels are off and you’re, booking it downhill. You got some momentum behind you and you know what you’re doing at that point, but

John Jantsch (09:30.413)

Hehehe

Alex Smereczniak (09:33.55)

You had to cut your teeth at some point, just like anything. You got to learn those first year or two and get yourself in the business.

John Jantsch (09:39.693)

So talk a little bit about, and again, maybe you haven’t owned enough franchises to have this opinion, but talk a little bit about the profitability or the ability to really make money in a franchise. One of the knocks you sometimes hear, whether it’s true or not, is that there are people owning a couple of subways and not making as much as they would in a regular job, for example. Is that?

Is that a true statement? You really need to actually be able to scale this thing to a certain point or is that more the nature of picking the right franchise?

Alex Smereczniak (10:16.888)

Yeah, so think it depends on a number of things. Your individual goal, if it’s a retail business, the location you decide on in the market around it, how competitive is it? How much of a need is this? A lot of it depends on the operator. You could have the best business in the world, but if you’re not there at all, you only show up once a month and you’re not checking in on things, it’s going to be run poorly. So like any other business, the franchise still requires thoughtfulness around the location, being a good operator, et cetera.

to be more pointed. There is a franchise for just about every kind of goal and need. There’s one that you can be a basically buy yourself a job, get a bucket and a mop. A lot of people don’t realize UPS is a franchise where you franchise the route, but you are the delivery driver. And some people like that because they’re buying themselves a job, but they also have the freedom and the flexibility of being an owner, even though they might only be profited.

John Jantsch (10:57.95)

yeah. Yeah.

Alex Smereczniak (11:12.356)

profiting 40 to 100K a year. That’s fine. They just like that they report to themselves essentially.

John Jantsch (11:17.823)

Yeah, plus they don’t have to depend on dozens of teenagers actually running the store,

Alex Smereczniak (11:22.618)

So you’ve got, you’ve got things from the delivery driver to, you know, a commercial cleaning business all the way up to you’re building a $4 million sky zone, you know, in indoor trampoline park and the EBITDA, the profit is substantially higher, you know, half a million plus. There is such, that’s what’s so great about franchising is it’s so accessible and there’s something at each end of the spectrum and each range, each risk tolerance, each goal.

John Jantsch (11:36.673)

Right.

John Jantsch (11:51.915)

Are there, are there some, hot kind of categories right now?

Alex Smereczniak (11:57.946)

Yeah. So home services is really big right now because it’s, really accessible. You don’t need to build this multimillion dollar location. You also don’t have to be as right about the location because you have this huge territory. And so if you’re doing gutter cleaning or window cleaning, or, um, there was an interesting one I saw the other day, you know, it’s, it’s a Christmas decorations or the franchise for, and so it’s, you have some of these things that are more accessible, less upfront costs and investment.

John Jantsch (12:20.671)

Okay, yeah.

Alex Smereczniak (12:27.242)

but still can generate pretty substantial revenues and profit to the point where it could replace a lot of people’s annual salaries. And now again, it’s your thing, it’s your business, you have more flexibility and freedom and more fulfilling.

John Jantsch (12:34.232)

Yeah.

John Jantsch (12:41.175)

Yeah, it’s interesting too, in home services, you know, used to be you’d call a remodeler or handyman and they’d come out and look at what you needed. But now it’s like, my garage door, I need that fixed. You know, here’s somebody that puts in 75 garage doors, you know, every week, you know, I’m going to call them. And so it’s, you see the, especially the home services getting really, really nichey, don’t you?

Alex Smereczniak (13:01.402)

Yeah, that’s one of my favorite ones. You actually just mentioned is there’s a concept called the garage Kings. It’s a franchise and Damon, Damon John, the guy from shark tank actually use them unintentionally and did his own Instagram reel of it because he just was so blown away by the quality of the service. But to your point, it’s cause garage Kings only does garage. They epoxy, epoxy the floors. put up shelving and storage.

John Jantsch (13:10.115)

Sure.

Alex Smereczniak (13:24.856)

And it’s a phenomenal business. You don’t need a ton of equipment and the average territory does over a million dollars a year in revenue and it’s a franchise.

John Jantsch (13:31.543)

Yeah. So talk a little bit about kind of your approach and what, you know, if somebody’s out there looking, thinking I want to do this, you know, what role do you fill for that person that’s kind of, cause just as we’ve talked about, I mean, it’s, know, the, if you just went out there and typed in franchise, you know, it’s going to be like, okay, let’s start with 6 billion, you know, ideas. So, so kind of where do you, where do you fit in the search?

Alex Smereczniak (13:56.282)

Yeah.

Yep. we’re, we’re, uh, you know, the way that we describe ourselves as reeducation. So if you’re a first timer franchising one-on-one, what is an FDD? What is a franchise disclosure document? What are the terms I should be familiar with? And then what should I be thinking about as far as affordability, time commitment, what’s available? You know, those key buckets. We also are a resource for people that are buying their 10th business or that private equity group that I mentioned that might be looking for the right concept to go buy 20 of.

And so we do, we have tools for kind of each one of those buckets, but let’s follow that person through the journey of, don’t know what I’m doing, know, what the hell I’m doing. So we help with the education and getting people comfortable. Once you come to Franzy, we also start to help you get pre-qualified with lenders that we’ve partnered with. So right away, you know, just like buying a house or buying a car, lot of these, a lot of these sites tell you that now. And so it helps refine your search immediately. There’s 4,000 brands in the United States. Well, once you fill out your pre-qual,

John Jantsch (14:47.585)

Yeah, here’s what I can afford. Yeah, yeah.

Alex Smereczniak (14:57.486)

Well, now here’s a thousand that you can financially afford. All right. What areas are you looking in? All right. Here’s 300 that are available. You see where this is going to goes from 4,000 to a thousand to 300. And then we start to ask a lot of questions about what’s your, what are your family’s goals? What’s your risk tolerance? What’s your operational experience? And then what are your hobbies and interests so that we actually, you know, we find a business that resonates with you and that you like. By the time we do all of that and we’re using AI to do this, there’s also coaching with franchise experts on our team that you can speak with.

By the time you have those conversations and you fill out these surveys, we’ve got it down to a pretty high degree of confidence that here’s this five brand recommendation for you. One of these five brands is going to be a perfect fit. And if it’s not, we’ve got another couple hundred that we’ve narrowed it down to that we can continue to feed and teach our model to make sure that this is the absolute best business for John from those four factors I mentioned. It satisfies his risk tolerance. We know he can afford it. We know it’s available in his area.

and it fits his goals and his interests.

John Jantsch (15:58.819)

I’m curious, what’s the, and it probably varies a little bit, but what’s the process from, okay, you’ve given me those five brands to like somebody actually starting a business once they decide. mean, is that a year long process?

Alex Smereczniak (16:12.418)

It depends on the type of business. So with Franzy as an example, let’s say we get to the five and you’re excited about three of them. So we’ll introduce you to those three. have relationships with all these brands. you start to go through their process and build a rapport with them. They’re interviewing you to make sure you’d be a good franchisee as part of their system and vice versa. You’re interviewing them to make sure that this is a 10 year commitment you want to make and an investment of time and money that you want to make. And so let’s say.

You narrow it down to one, you love it, you’re married to this idea, you want to become a franchisee and they feel the same way. You sign a franchise agreement. Well, sorry, let me back up a second. As soon as you start matching with a brand and you have that first conversation, the average sales cycle is 90 to 120 days. There’s a lot of calls back and forth. You eventually fly to the headquarters to see a day in the life and meet the team. That’s 60 to 90 days.

John Jantsch (16:55.971)

Yeah. Yeah. Yeah. Yeah.

Alex Smereczniak (17:03.63)

From there, if it’s a retail business, can definitely expect 12-ish months because you have to find a site, do build out. There’s a lot more to a retail business. If it’s a home services business, which is why they’re so hot right now, is you can get a truck and do some training and you’re locked and loaded in two months, baby. Let’s go.

John Jantsch (17:09.133)

Yeah, yeah, yeah, yeah.

John Jantsch (17:15.329)

Yeah, yeah, yeah, get a get a truck and get it wrapped. Yeah, yeah, yeah, yeah, yeah, yeah. As and I’m sure you’ve seen all these and so you advise some people, but I’m guessing you probably only work with reputable folks. But are there some red flags that somebody should that you would tell people, hey, if they’re telling you this?

Alex Smereczniak (17:39.514)

Yeah, anyone that’s promising you’re going to get rich. Be very wary of that because again, at end of the day, you’re running a business. It’s still your business and no one can guarantee that you’re going to be successful. Even yourself. I mean, you have to get the right side. You got to be a good operator. All the things we mentioned. So look for people promising things. You got to be careful of that. Look for stores closing. And so we have tons of data over the last five, five years on Franzy. So if you see a trend of, hey, they opened 300 stores and then 50 shut down and they only opened a net new, you know, 10 over that.

John Jantsch (17:42.497)

Yeah, right. Right.

John Jantsch (17:47.555)

Yeah.

John Jantsch (18:00.748)

right, yeah yeah.

Alex Smereczniak (18:09.53)

What’s going on here? You know, that’s the question you should be asking. Any litigation, the obvious one is litigation or bankruptcy. And then checking the item 19 is critical. That’s where the audited financials are in the FDD. If you see, you know, if a business is doing well, they’re going to want to brag about it, right? They’re going to want to show the financials and look at our stores, make a ton of money. And so could you, if they’re hiding it or they’re doing weird adjustments and, adjusted

John Jantsch (18:14.902)

Yeah.

John Jantsch (18:24.493)

Huh.

John Jantsch (18:33.677)

Yeah.

Alex Smereczniak (18:38.774)

EBITDA and adjusted revenue and goofy things like that. That’s a flag to at least press on and double click on.

John Jantsch (18:39.98)

Yeah. Yeah.

John Jantsch (18:47.139)

So how does the process with you? mean, is it fairly much an online tool? I know you have a couple like the Fit Score and the Connect Tool. Is that all something you just go to your website, create an account, and kind of start doing on their own?

Alex Smereczniak (19:03.822)

Yeah, so the whole goal of Franzy is going to make this really accessible to anyone. And so you create an account, free to do, it’s free for anyone using our site all the way through. We make money if an individual buys a franchise, then the franchisor pays us kind of like a real estate agent. But we’ll help you through finding the right fit, which is part of AI powered, part of the product we’ve built. We help you with pre-qualification.

John Jantsch (19:23.426)

Yeah, yeah.

Alex Smereczniak (19:32.014)

We help you with all the data and the research that you need to make a confident decision. And then we also do have expert coaches on our team, people that have owned franchise businesses or that were franchisors that will talk you through any hesitations, questions, concerns that you have to get you familiar with everything you need to be successful. The really cool part about what we do is once we introduce you to brands that we’ve vetted,

John Jantsch (19:48.824)

Nice.

Alex Smereczniak (19:58.21)

We become a virtual coach in your corner. So part of the sales process is you have this overview call, a unit economics call, stuff that’s kind of intimidating if it’s your first time. And even if it’s not, it’s a lot of work and you want a sounding board. So we’ve built all these resources to say, Hey, John, you have an overview call coming up. Here’s what to expect and some pre-read materials to prepare yourself. And also here’s some curated questions we recommend you ask on that call so that you’re making sure you’re addressing your risk, your hesitations and other things.

that you expressed to us during this whole onboarding process. And then you can talk to us as a person as well that whole time whenever you want. A long answer, but soup to nuts, research, coaching, your qualification and matching you with the right fit brand.

John Jantsch (20:36.14)

Awesome.

John Jantsch (20:44.043)

Yeah. Well, and I think one of the real advantages, while obviously you want somebody to move forward because that’s how you get paid, you don’t really care which one they move forward with. So you’re not really pushing one horse or another, you?

Alex Smereczniak (20:56.122)

I’m glad you brought that up because it’s one of the reasons we started this is a lot of folks that have gone through, you brokers, other channels don’t realize they’re being presented only brands that have agreed to pay to play in the background. We have this inventory of thousands. We’re, your point, we’re indifferent. Our success fee is a flat dollar amount versus a percent of the commission. As you can imagine, if one brand has a, you an $80,000 franchise, and one has 40,000 and I’m paid a percentage of that.

John Jantsch (21:23.181)

Right, yeah. Sure. Yeah.

Alex Smereczniak (21:23.706)

People are inherently going to try to push you to the 80, even though it might not be in your best interest. So we cut that out of the model entirely and said, we don’t care if it’s 80 or 40, we get paid X. So we really want to find the right fit for John because ultimately that’s going to cause him to buy the second one, the third one, increase his chance of success, tell his friends to check out Franzy, et cetera. It’s in everyone’s best interest if we all get a line.

John Jantsch (21:44.907)

Awesome. there somewhere, I appreciate you taking a moment to stop by the Duct Tape Marketing Podcast. Is there somewhere you’d send people to connect with you and learn more? know we’ve talked about Franzy, FRNZY.com. Anywhere else you want to send people?

Alex Smereczniak (22:01.166)

No, think Franzy is the best place to get started. then if you can, if my complicated last name shows up, connect with me on LinkedIn. I’m happy to answer anyone’s franchise related questions or help them in any way that I can as they think about becoming an entrepreneur, buying a business, or just curious about franchise things in general.

John Jantsch (22:17.219)

And did I get close on your last name?

Alex Smereczniak (22:20.314)

So you were close on like the actual authentic pronunciation. The Americanized is Smrznak. The Polish version is Smiercznek, which is closer to what you said.

John Jantsch (22:26.467)

Yeah. Yeah. I was trying to get that neck in there, know, part, but I have an Austrian name that has a lot of consonants at the end of it. So I’m very sensitive to trying to get people’s names right. Awesome. Awesome. Well, I appreciate you stopping by the Duct Tape Marketing Podcast. Hopefully we’ll run into you one of these days out there on the road.

Alex Smereczniak (22:45.402)

Well, I appreciate it. You were close.

Alex Smereczniak (22:54.754)

Yep, thanks again, John.