Franchise Cash Flow: How Real Estate Investors Can Build Wealth Beyond Rental Properties

Adam Goldman (00:00)

So what I would say is interesting is I think AI is a double-edged sword, right? Meaning ⁓ people are talking about it. I think there’s a lot of hype in the AI industry, but I think just like anything else in the past. And one of my ⁓ things that I’m thinking about is we have different inflection points in my career. One of them was when the internet came out, right? There were certain businesses like Amazon. And then when you have internet 2.0, like when we’re talking about things such as

geo-location, that’s what, when Uber came into play, right? This is another inflection point.

Scott Bursey (02:06)

the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey. Today we’re talking about scaling, diversification, and building real wealth outside of traditional property deals. My guest today, Adam Goldman, a franchise coach, is bringing a special kind of fuel, the kind that ignites proven business models and turns them into passive income streams. He helps successful investors understand that the best real estate investment might actually be

the land your business sits on. But first you need the right business. Get ready to unlock the high octane advice because Adam Goldman is in the studio. Adam, welcome to the show.

Adam Goldman (02:48)

Thank you so much, Scott.

Scott Bursey (02:51)

It is just awesome having you here, sir. And what really caught my attention about you was the way that you’ve been able to bridge the gap between investment strategy and scalable business ownership through franchising. For our listeners who may not be familiar with your journey, please tell us how did your career begin and what is your main focus now?

Adam Goldman (03:12)

Well, look, I’ve never really fit into the traditional corporate America path, right? So even when I graduated from undergrad and back in the day, couldn’t go, I got recruited, I went to University of Illinois and got recruited for companies like Archer Daniels Midland or Ford or, and I just couldn’t really, nothing really resonated with me. I actually even went abroad for about seven years just because I didn’t find a corporate path that really spoke to me.

And so after business school, I sold a business and was figuring out what to do next, started a real estate investment company, which I still own today. I focus on single family residences in Houston, but when I was investing in those, it seemed as if these people with bigger pockets were going into my market at that same time. So in 2008, I found that my deals were really drying up and really didn’t know what to do next.

kind of spoke with a friend of a friend in the franchising world. And this person kind of, I thought it was just McDonald’s and French fries. And they kind of told me about a new path that I didn’t even know about. Gave me three different options, decided to invest in an office cleaning master franchise in Houston, Texas. And that business is really interesting in the fact that what I did was I was a connector in that I found different office buildings for my

franchisees to clean and also was managing them and their accounts and billing the accounts as well and built that business up and had an offer that I couldn’t refuse. And since that time, I’ve actually been coaching people that are looking to invest in franchising as a franchise coaching consultant.

Scott Bursey (05:47)

What a wonderful journey. That is really awesome. And this conversation is going to be pure gold. I can already tell. And Adam, if you could help us understand, where’s the clearest system strength in franchising today?

Adam Goldman (06:02)

So look, I think that the best things in franchising is the system. And what I mean by that is, yes, you have brand names, right? ⁓ That’s important, no question about that. look, if you kind of look under the hood for different franchise brands and kind of the best example, although I kind of want to get away from flipping hamburgers, is hamburger you and McDonald’s. It’s not necessarily about the fact that, my gosh, McDonald’s hamburgers are better, but they’ve just really perfected this model.

Meaning you have a set amount of space and everything from the experience when you walk in, even the app, it’s all about the system that really maximizes profits, right? And so the same sort of methodology with a good franchise brand allows my candidates to make more money than they otherwise would, to make less mistakes than they would if they were to start something on their own. So the magic of franchising, again, it really is in the systems that…

great franchise brands have in place.

Scott Bursey (07:04)

That structural support is exactly what our pros look for. Predictability breeds profit at them.

Adam Goldman (07:12)

Amen to that. Amen to that. And look, it’s not only predictability, but it’s literally a situation where you can kind of figure out, you don’t have to reinvent the wheel. I have very sophisticated people in my pipeline and my candidates and ⁓ the very smart ones are like, look, Adam, I realize that I’m gonna have to pay royalty fees and franchise fees, but I really truly believe that this is gonna be a good investment for me.

Scott Bursey (07:40)

And let’s go under the hood with this. Interested to know, what is the single biggest weakness most new franchise owners overlook in your view?

Adam Goldman (07:49)

What I would say is the biggest weakness that franchise owners overlook is that they try and do too much on their own. It’s related to this strength of the system. Sometimes people think that they know better than the system. When you’re buying a system and you’re paying for royalty fees and franchise fees, ⁓ it’s really important, especially at the beginning, to follow the model.

And a weakness is if you’re not following that model, right? Because these people have spent time and energy, not only the head office, but other franchisees, they’ve kind of perfected this model. And so I think it’s really, really important for new franchisees to follow that model because it’ll mean you’ll have better success as a franchisee.

Scott Bursey (08:40)

Adam, it’s so easy to get caught up in the excitement, but neglecting the system is a recipe for disaster.

Adam Goldman (08:48)

Amen to that.

Scott Bursey (08:50)

Absolutely, yes. I’m interested to know what new trend presents the best opportunity for growth right now.

Adam Goldman (08:58)

So what I would say is interesting is I think AI is a double-edged sword, right? Meaning ⁓ people are talking about it. I think there’s a lot of hype in the AI industry, but I think just like anything else in the past. And one of my ⁓ things that I’m thinking about is we have different inflection points in my career. One of them was when the internet came out, right? There were certain businesses like Amazon. And then when you have internet 2.0, like when we’re talking about things such as

geo-location, that’s what, when Uber came into play, right? This is another inflection point.

And what I’m finding, Scott, is smart franchise brands are incorporating AI in a situation where their franchisees are actually in a better situation. I have one service brand that is really, really good and smart at AI. We’re talking about bots and just kind of literally a situation where someone calls in or even online says, want an appointment.

And because of AI, the company is literally able to have someone in the account or the franchisee without doing anything. It’s like seamless. They literally have to show up and provide the service. That’s where AI can really become very useful. Things such as coming up with scripts when it comes to proposals, follow up with different prospects of your business. That’s smart AI. And frankly, if you’re not on the AI and bandwagon, you have to be because your competitors are already on it right now.

Scott Bursey (11:01)

Diversification is key in today’s market. Smart investors need to look outside traditional real estate. I couldn’t agree with you more. And implementing it correctly is so critical too, Adam.

Adam Goldman (11:15)

So yes, yes, and look, Scott, let’s talk about this too. I mean, like, let’s talk about real estate investment and franchising. So I have people, there’s certain franchise brands that are specifically designed for a situation where you buy raw land, you build it out, and then you would go ahead and ⁓ sell this going concern business at a multiple, and then you become the leaseholder. That’s one strategy.

I have other situations where literally you have such a great business, you can buy the dirt, run this. I also have realtor’s or not realtor’s, real estate investors that own buildings, that don’t know what to do about tenants. buy a franchise in order to fill that space. And I think most importantly, if you look at real estate in general, one of the things about real estate is if you buy right, that’s awesome, right? But it’s really hard to time the market. And I know that there are situations now with insurance costs going up, especially in the

commercial real estate space. I also know that it’s a situation too where we have high interest rates. It’s still a higher interest rate environment. So to be able to diversify in a franchise business that has cash flow, that could be very appealing for some investors.

Scott Bursey (12:28)

You just gave our listeners the blueprint that is some serious horsepower right there. And Adam, if you could give us the play by play on what regulatory or economic threat is most concerning to new franchises.

Adam Goldman (12:45)

Look, I don’t think it’s necessarily the specifics. It’s not the same in every single state, right? But I don’t think that every state is the same when it comes to franchise investing. talked to a candidate in California and he said, Hey, tell me about all your California placements. And there aren’t many, frankly, in the past five years or in Chicago, nothing against Chicago or nothing against San Francisco, right? I love San Francisco, but look,

let’s call a spade a spade. Certain areas are more ⁓ conducive to business ownership, less red tape than other places, right? And when we talk about that, if you have the capability to invest in a place that is low regulation, think Florida or Texas versus Cook County, I think that there’s a difference in those places and I’m not afraid to say it.

Scott Bursey (13:40)

Absolutely, spot on. I couldn’t agree with you more. And Adam, what specific operational resource gives a franchise owner an immediate edge in your view?

Adam Goldman (13:52)

It’s the system, right? So again, it goes back to the system. ⁓ Look, there’s a book out called the E-Myth, been around for a long, long time. And the whole idea behind this that says that if you’re creating a system on the fly, you have to wear many different caps. If you’re buying into a model, right? And not reinventing the wheel, you’re in a situation where you actually have all these things in place from day one. I mean, for me, from my experience as a office cleaning master franchisee, I knew

I was supposed to hire that office manager on day one. On day two, I had this list of how to bid different accounts. Day three, I knew about who to hire for my telemarketing division. It was great to have that playbook and that support.

Scott Bursey (14:38)

Tell us a little bit about your coaching and your coaching philosophies, things of that nature please.

Adam Goldman (14:44)

Sure, sure. So I offer a free matchmaking service. And what I mean by that is that I have brands that are pre-screened in 75 different industries that I connect potential investors with. My role is not to say, hey, you should invest in this specific business. I have a strategy where I’m providing a personalized service. And what I mean by that is that every person’s different. Everyone’s resources are

I’m not here to kind of throw a dart at a dartboard and say, hey, you should really buy this really trendy franchise that’s amazing. I’m here to get to know someone. So the way I do that is I first have them fill out a survey, ⁓ and then we have a more in-depth chat. And then I actually write this model for this person where I’m not even worried about brand, but I’m just more focused on ideal business characteristics. Maybe someone loves white collar employees. Maybe someone doesn’t want any employees at all.

And then I figure out these three brands based on territory availability and based on different models that would fit them the best. And then I go ahead and connect them and together we investigate these three brands. And as I mentioned, my service is always free, meaning for potential franchisees, if we make a successful match, it’s the franchise brand that pays us.

Scott Bursey (16:44)

That’s a game changer right there. That’s awesome. And that’s really a good philosophy. If someone’s listening to this and they’re thinking, this is someone I’d want to partner with or learn from, what do you want them to know about your business first, Adam?

Adam Goldman (16:59)

So the most important thing is literally I’m here to make good matches, right? And to get to know people. If someone’s not a fit for franchising, I promise to let them know. Even the people that go through my process that decide not to invest, what they tell me is that they’re more educated afterwards, which is really a win for me. I’m here to educate first. And if they decide to invest and it’s a good fit, that’s a bonus.

Scott Bursey (17:26)

And I couldn’t agree with you more on that either. That’s a huge distinction. Adam, now it’s time for the money question. This is where you bring the high octane fuel. For a successful real estate pro looking to deploy significant capital and scale rapidly, what is the single most critical, non-obvious piece of due diligence they must perform before committing to a franchise system in your view?

Adam Goldman (17:52)

It is all about the due diligence and specifically talking to existing franchisees, but not in your home market. I am tired of all the times that my candidates speak to someone in their home market and say, hey, how’s the business? And next thing they know, the person in the territory next to them decides to expand. So look, if you’re in Dallas, talk to someone in Houston that’s like you, that’s successful and see what they have to say about the business.

That’s really the secret sauce. That’s one of the most interesting things about franchising in that people that are in other markets besides yours are brothers and sisters in arms. They’re here to kind of help you and guide you and even in the process of exploring different franchises to kind of give you insight about how good or bad the brand is.

Scott Bursey (18:40)

And you’ve given us so much value already Adam. Is there any golden nugget or advice you’d to leave with our listeners here today?

Adam Goldman (18:50)

So one thing that people don’t realize is that we have a lot of real estate related franchises. Both for people that are, so we have certain businesses that are real estate, like meaning it’s a situation where you sublease a building. You sign a lease and the next thing you know, you go ahead and sublease that out. That’s one category of franchises that doesn’t have any ⁓ actual employees. The other thing is we have many things related to the real estate industry, things such as property management.

or other businesses that are really real estate focused or even services where you are a provider to real estate agents. Look, I love real estate as an investor myself and I just think it’s really cool that there are franchises in that industry as well.

Scott Bursey (19:36)

Adam, you have delivered a clinic for our listeners here today. If our listeners want to follow your journey or collaborate with you, what’s the best way for them to reach you?

Adam Goldman (19:46)

Best way to reach out is franchiseadam.com. Very simple, book a free 15 minute chat and let’s see if I’m a good fit for you.