From Small Business to Franchise: How To Make It Happen

Shaan Puri

Alright, this is **1 Question Friday**, where we answer a grand total of **1 question** from a listener. One lucky listener gets to ask a question, and me and Sam are going to give our raw, off-the-cuff answer. We haven't seen the question before; Jonathan has it. These are tips, and they are just the tips, as I like to say. We try not to go too deep. Alright, Jonathan, you want to hit us with a question?

Listener

Hey guys, my name is Brian, and I'm calling about ghost kitchens. I first learned about ghost kitchens on your podcast, so thanks for that! I developed a model to implement a couple of ghost kitchen concepts into my restaurant. I had great success, lifting my margins over 450% in just 6 months with one of the concepts. Now, I'm looking to scale the business by offering licensing agreements for operators in other markets to use these concepts, including the branding, recipes, etc. It's very simple: you find an operator that wants a new revenue stream and wants to do a ghost kitchen, and they can start slinging product within a matter of weeks. I've researched the model that much larger companies are using, where they leverage celebrities to sell these concepts. My model's better; it's cheaper, and the recipes are second to none in the space. Assuming you didn't have the following in the platform that you do, how would you go about selling this idea to restaurant operators across the nation? Where would you start? Sidebar: I love what you guys do on the podcast! Sam, I just signed up for Copy That, and I can't wait to get started.

Sam Parr

good man

Shaan Puri

so what's his name by the way

Sam Parr

We're gonna call him Joe. No, it was... yeah, I don't remember. So, thanks.

Shaan Puri

For the question, Ryan, yeah, two weeks in a row we have one question, and we do not know the guy's name again.

Sam Parr

What it sounded smart. It sounded like he's got his game plan together. But, let's recap: the business is... what? Alright?

Shaan Puri

So, here’s what I understood: he owns a restaurant and then he added in a ghost kitchen. This means he created a ghost brand. What that means is, if you go on DoorDash, Uber Eats, or one of these delivery apps, you can order from a restaurant, but there’s no physical restaurant for that brand. It’s just a virtual brand. For example, let’s say my normal restaurant is "Sean's Pizza." I could also have a ghost brand called "Silly Sandwiches." If I get an order from "Silly Sandwiches," my restaurant crew will just package it up as a "Silly Sandwich" order, and it’ll be ready to go. So, I’m kind of running multiple restaurants out of one restaurant. That’s the idea.

Sam Parr

and why does the restaurant owner wanna do that with them versus on their own

Shaan Puri

So, what he said was, I don't know if he created that ghost brand or if he added that ghost brand, but he said it improved his restaurant margins to **450%**. So, he **fourxed** his restaurant's margin. Let's say our normal restaurant has... I mean, it sounds a little unbelievable, right? Like, let's say he had, I don't know, **6%** margins before. You know, don't do public math, but he's saying that he basically **fourxed** his margins. I'm not sure exactly what he's talking about here.

Sam Parr

That's cool, but you know what business would be way better? Do you remember Alex Hermozzi's business?

Shaan Puri

that's exactly gym launch

Sam Parr

gym launch

Shaan Puri

exactly what I was gonna recommend

Sam Parr

go ahead

Shaan Puri

Well, I think he... well, maybe you weren't going to say this, but I was going to say, "Go listen to that episode." His model was that he had a gym and he thought, "Alright, how do I get my gym to be more profitable?" Then he figured out a sales method to attract customers. If he opened up a gym, he developed a sales method that would get him a bunch of customers paying high prices, making a lot of money. One day, his friend at a mastermind said, "Yo, you need to not do this. You don't need to open up 50 gyms doing this. You need to go teach other gyms how to do this." He realized that his product wasn't the gym itself; it was a sales process to make any gym more profitable. So, that's what he did. He created Gym Launch, which would basically advertise, "Hey, are you a gym owner? I can help you make an extra $100,000 a year guaranteed using my sales method to get you more customers paying higher prices." They would say, "Alright, cool," and then he would fly out to that gym. He would spend the next couple of weeks implementing that process so they would have more revenue and more customers coming in using his method. He would teach them, "Hey, here's how you do it. Here's your offer, here's your Facebook ads when they come in, here's your sales script. Then you sign them up for a free trial, then here's how you close them. Then here's how you upsell them protein powders and other stuff. Here's how you upsell them training packages." That's the sales process, and he built a multimillion-dollar business doing that. If you did that for restaurants to teach them how to do this, that sounds like a business.

Sam Parr

100% no brainer. That's what I would do. Except, you said that Alex would fly out there eventually. He wasn't actually flying out there eventually. It's basically... it's not fair to call it a course, but that was part of it. He would teach you stuff, but then also he would be like, "Here's the Facebook ads. I've already made them for you. You can use my Facebook ads that I already made. Here's the drip email sequence. Here's the script that we use. Here's everything." Then he would say, "Oh, by the way, if you don't want to do this and you just want me to run the ads, fine. Pay us and we'll do it." And here's how you sell protein. You want to sell protein? By the way, the protein that sells best, we just went and bought it, so we already own it.

Shaan Puri

you wanna be get on a subscription and we'll

Sam Parr

Just send it to you, and here's how you sell it. We'll just go ahead and do all that for you anyway. So, I would 100% do that. On that pod, we asked, "Alex, what's a good market for gym launch?" We actually didn't have that many good answers. The answer is this: the restaurant business. Yeah, this is the answer.

Shaan Puri

This is a great example. Lucky for our buddy here, Ryan, we're calling him for a second. There's a pretty great blueprint to follow, right? He was very public about how he did it. He's now exited the business, and by the way, this is what his business does now: it invests in other people doing this model. He's like, "Dude, I already know how to do this. I can scale it up." Now, you have to be at some scale before he'll do it, but he gives away the free content on how he structured Gym Launch to be able to do this. So, I think what you should do is something like "Restaurant Launch" or the ghost kitchen process—the ghost kitchen system. Basically, if you're an independent restaurant, and trust me, it's tough. Foot traffic is tough with COVID; it's tough... blah, blah, blah. Everyone's ordering delivery. Here's how you can increase your margins. Here's how I did it. You kind of open up your financials and say, "Look, I was making $32,000 a quarter doing it this way. Now I make $58,000, and that extra bit is from my ghost kitchen concept. Here's how I do it." Basically, they can either pay you for the course on how they can do it, or you hit them with the Alex Hormozi approach where you're like, "If this sounds too complicated, I can also do it for you. If you qualify, I'll do it for you." What he did was risk-free. He's like, "Here's my offer for you: you pay me nothing. I only get money once I've increased your sales by over $30,000." So, once you've made that much more money off this, then I get to take my cut of 30% of whatever the total is that we get. I'm so confident that I'm going to be able to raise your sales that I'll do that for you. I'll take the risk on that. How does that sound? And they're all like, "Yeah, you're going to fly out here, you're going to implement your process. It's worked for you, and you're saying that I only pay you once I'm making all this extra money." That's a pretty damn good offer. So, you could do a similar thing for the restaurant business.

Sam Parr

I saw a guy the other day do a sales process where he was trying to sell a service, just like this. Let's just say the restaurant owner was like, "I don't know if I want to do that." The seller responded, "That's fine, but how about this: you implement what I say, and if it works, I get a split of the revenue." The restaurant owner replied, "Great! I'm 100% through that. What's the split?" Then the seller said, "Well, how about 50/50?" The buyer responded, "I don't know, man. That's a lot." The seller insisted, "But it's 50/50; it's free money for you. I'm doing all the work." The buyer then asked, "What if it blows up? You're going to get a lot of money." The seller acknowledged, "You know, I think you're right." The buyer continued, "It might blow up, but I'll tell you what, you might be right. Fine, we'll go back to the original deal. You're only going to pay $5,000." The guy agreed, "Okay, fine." It was like the best sales sequence; it totally worked! I was like, "Oh my god, that's beautiful." Yeah, I would totally do this business as well. I think that's way better. I would continue running the main thing just so you're in the know and getting results that you could post to social media. But that's what I would do too. Is that the answer? Just a tip?

Hubspot

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Shaan Puri

Alright, how you said that none jumped out when you were talking to Alex. Are there any other industries that jump out now that this could work for?

Sam Parr

Probably physical therapists. I would imagine doctors' offices and physical therapists. I think real estate brokers.

Shaan Puri

Real estate brokers are essentially running their own little small businesses. Sometimes they are part of a brokerage, and sometimes they have their own brokerage. There's a whole process to basically say, "Hey, you should leave Coldwell Banker. They're taking half of your commission." I spun out my own brokerage, and here's how I did it and how much more I make. I will help you leave this big brokerage firm. I'll set up your website, your back office, your legal structure, and your marketing package. I'll show you exactly how this all works. Instead of Coldwell Banker taking half of your commission, I will take 5% of your commission to do this. So, I think selling a sales system is a pretty good business to be in, in general.

Sam Parr

Yeah, I mean, it's very, very high margin. I think that a lot of course businesses top out at a certain level. I think when you're selling a sales cycle or a sales product like this, I don't think you're... I think the cap is way higher.

Shaan Puri

By the way, now that Alex Hormozi is not doing Gym Launch, you could also just do Gym Launch again. You know, now that he's checked out, you could do another thing. You could have always competed with him, but he put a playbook out there. He exited the company; it's still running. But you could just do it again. You could literally recycle his business. I think this is so underrated—just recycling business ideas once the person has exited. When they've let their foot off the gas or they've expanded and moved up market, it's like they just leave you an exact playbook on what to do. More often than not, that timing will still work.

Sam Parr

Dude, we had a couple at the hustle. We had a few companies that would just copy and paste our content and create a new newsletter. Some of them got traction.

Shaan Puri

yeah edit that out I don't want people doing that now

Sam Parr

Well, it doesn't work in the end. It's a very short-term thing, you know? But alright, that's it. You got the tip.