Real Estate Franchise Strategies: Build a Business That Runs Without You

Tom DuFore (00:00)
So when I get asked questions in this vein, the the thing that always comes to mind is whatever you’re doing and whatever your plan is, just plan on it taking a lot longer than you expect. And that that’s the one thing you might you might catch lightning in a bottle. It’s possible, right? There are always those success stories you read of in magazines and newspaper headlines and such that that catch on. But most mo the they catch headlines because it is the exception.

Cody Crabb (01:59)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’m talking to Tom DuFore. Tom is the owner of Big Sky Franchise Team in Atlanta, where he helps business owners build companies that can scale beyond the owner. Today we’re going to talk about what real estate investors and business owners can learn from some of the most successful real estate franchise organizations. Tom, thanks so much for hopping on today.

Tom DuFore (02:23)
Cody, thanks for having me. Appreciate the opportunity.

Cody Crabb (02:25)
Yeah, so to get started, I’d love to hear your little background, maybe like what how you how you came to get involved in in franchising specifically. And it’s it’s such a specific seems like such a specific niche. I’m just curious how that happened.

Tom DuFore (02:39)
Yes, well it is. You’re exactly right. It is most people in franchising don’t plan on going into franchising. It just kind of ends up happening. And my story is not really all that different. It I just happened I I wanted to get into management consulting right out of college. That that’s what the career path I wanted to go down. And the first career the first serious opportunity I had happened to be at a company that worked that helped businesses and owners franchise their companies. And so that’s how I ended up in this space. Fell in love with it, this idea of helping founders and these entrepreneurs that are living the American dream. It’s beautiful. I’m a big, big fan of the American dream. And you are helping them grow their business, and they grow their business by helping others become entrepreneurs to fulfill their own version of the American dream. So it was this marrying of these concepts. There’s just beautiful to me. And when it works well, it really is a beautiful business. And so that’s that’s how I ended up there. And I eventually ended up launching Big Sky Franchise Team, really out of a out of a having been in franchising for many years, I just saw so many people in franchising over quote, overselling franchising where either missquoting facts or not using any data at all. I said, it just always bothered me because franchising is a beautiful pathway, but it’s not the only pathway. And so having candid open conversations was always important to me. And so that’s eventually what led to the the launch of Big Sky and and the growth that we are and and helping our clients grow through franchising.

Cody Crabb (04:20)
Hmm. So franchising specifically, many real estate professionals, particularly realtors, and but others as well, deal with franchising in in their kind of business models and and b both on the working for a franchise and on the starting franchises type type deal. I’d love to hear, what did those organizations like the like the Keller Williams and the Re/Maxes of the world, what do they do really well that independent real estate businesses could probably take some lessons from?

Tom DuFore (05:38)
Well, I think any franchise, what it provides is a system, whether it’s a startup, because Keller Williams, Re/Max, any of these large franchise systems out there, all of it started at one point with one operating location or one territory. So for the independent out there, there a lot of times I hear independents or small business owners say, “Well, I’m not that big.” It’s like, well, very few of those companies were when they actually ended up franchising. They just had a system that worked. So we look at three big check boxes to say, well, is the business, is there a system there to for a quick self assessment? And you we want to one, make sure that there’s a profitable prototype. Two, take a look to see is do you have potential customers on a national basis? And in real estate, obviously, we we know that to be the case. And three, is this something that you can teach someone else how to run and operate? Can you teach or train someone to run this business? If you can check all three of those boxes, there’s a good chance that the business is franchisable. Now whether you should franchise and and many other questions that follow, those are that that’s a totally different story. But checking checking those boxes is important. And so the these large franchise systems where you can really learn from them is that they have a system and a process in place. And they’re generally unwavering from that. They’re very consistent. So the customers know what to expect. The brokers know what to expect. The agents know what to expect. Everybody knows what the expectation is when you’re wearing that badge on your shirt or the hat that that you’re wearing as as you’re driving around. And so those are some important aspects. And I know I my core business is helping companies franchise, but from the other perspective of someone looking to buy into a franchise for your audience, maybe someone that’s in here says has aspirations of launching their own independent real estate organization. And may maybe you’re an agent right now, you want to get it, get your broker’s license or grow into where wherever you’d like to expand into. Well, franchising could be a viable option. And most franchises in the real estate space that I found typically have some unique attribute, some niche, whether it’s a unique attribute in the types of properties or customers they serve, or a unique attribute in the fees that they charge, residential versus commercial, or some specialty that they they’re focused in on and try to drill in, and you’ve and then all of a sudden you start to find other specialties that go in on that. And even the We Buy Ugly Houses folks, that that come to mind that comes to mind. That that’s a franchise. And I I helped a a startup franchise system grow several years ago that’s doing very well. That’s a a house flipping franchise. And and so while it’s it’s not it it it ha there are so many real estate’s such a big space, right? There are so many different facets and pieces that that you can get involved with.

Cody Crabb (08:31)
No, I think that’s great. I think looking at it it’s interesting because, regardless of franchising, you actually the the check boxes you mentioned are a pretty good framework for whatever business in general. So I find that that kind of interesting. I do want to ask you though, so a franchising model, like who who would be a good fit to start looking at fran a franchise model like—I c i any any old business is not gonna be a good fit for this. So i specifically in real estate and real estate investing, what what would what makes a good franchisable business like what stage? Like what what what should you be looking at in your business?

Tom DuFore (09:06)
Yeah. So first off, those three check boxes. That’s where I always start. Because if you don’t have a profitable prototype, if you’re not willing to train someone on how to do it, and generally real estate, that’s like an automatic check mark, nationally, right? So let’s just assume you’ve got that third one already checked. But if if you don’t if the business isn’t profitable and you’re not willing to train or teach someone, franchising’s not going to be for you. It’s just not something you’re gonna get frustrated with it quickly. And we want a profitable prototype. It and I know we it’s it it’s a summary to capture a lot of things. Generally, if you have a profitable prototype, it means you’ve been operating for a few years. You’ve figured out some processes and systems that work on serving the customer. And or if if you’re an investor, if you’ve figured out an investment strategy or a program that works for you on whether it’s flipping or buying or setting up rental properties, whatever it is that that you’re doing and going through. So having that system in place. And then the the to to to take the next step for someone to be thinking about is well, do I really want to grow my business? How how interested am I growing beyond what I’m doing today? And if it it first most small business owners and most owners in general, that they’re I don’t want to say complacent, but but content is really maybe a better phrase with modest growth, slow to modest growth. And that that’s okay. There’s nothing wrong with that. But if you’re an owner that’s looking around saying, I really want to make a bigger impact. I really want to see my brand spread out regionally or nationally, and you’re really interested in doing something like that, franchising becomes a solution for you. It may not be, it’s not your only solution, but it’s one, it’s one to consider. So that that’s something that I like to look at. How ambitious are you on impact or income you’d like to generate, so things of that nature. And then in in the real estate space in particular, there are shows like yours and and programs like yours that you produce. And some people eventually start coaching programs and training programs, which are all well and good. They’re great. They help people in the real estate business. And I think of my client in the house flipping business. There are lots of house flipping programs in place to help teach someone how to do that. But his is a franchise. Well, why would I buy a franchise? Why would someone buy a franchise versus going through one of these coaching programs? And one of the fundamental differences between a coaching program and the franchise is the the franchise system has a built prebuilt interest in the success of the people coming through their program because of the royalty or the residuals that come through it. A coaching program it it it it’s it’s a someone’s paying the fees and whether the person implements the program or not, or how successful or not they are, the coach is still getting paid. And and there’s nothing wrong with that, by the way. I’m a consultant. I mean, that’s my line of work as well. But the it there that there’s just this tie it long-term relational tie-in between the two. And so if if you’re if it really the questions to start think of is how much do you care about someone else using your brand and your system? Get paid for the fee. So if you want everyone flying the same flag and using the same brand name, and you want someone following your system as close to pop as to it as possible, well then, and you want to get paid for that, which I’m assuming you probably do, that’s what starts to fall in the franchise category. But if you care less about your brand, you’re like, well, I don’t really care what they call their real estate program or their business that they’re getting into, or well then franchising might not be it it might not be the solution. Maybe it is the coaching program. So so that’s how we start sorting out if franchising might be a fit for someone.

Cody Crabb (13:32)
I think something that something you kind of alluded to is if you have a particular niche that is maybe a little bit, not not weird, but like just not very common, it makes sense that like it might if you you’re doing the research for a lot of people. So it seems like that would really attract a decent amount. So like if you’re doing a general, vanilla type thing that is easily repeatable by lots of people, then yeah, but if you’re doing something really niche in the industry, I mean I could really see that being successful. Are there any kind of examples that you can think of of in in real estate that kind of fit that criteria?

Tom DuFore (14:50)
Well, I mean, I think of I mean, I know we’ve referenced them a a couple of times with Re/Max, but Re/Max is super r they’re great at high volume and high commissions, right? That’s what they’re kind of known for. And part of their strategy early on in many franchise systems is to convert existing brokers into their network. So like-minded brokers that are already existing out there, real estate groups that are independent, Tom’s real estate agent real estate agency, Cody’s agent real estate agency in whatever city you’re located in, then they convert their name. So if you look at a lot of Keller Williams Re/Maxes, you’ll notice it says Keller Williams, and then some agent name underneath it’s a co-brand. That’s because that was most likely a conversion franchise. That that was someone that was operating independently and converted in. And then there are the brands that are the the names are slipping my mind at this exact moment, but the flat fee pricing for real estate franchises that are out there where you buy in and you you work on it’s a flat commission that gets paid out to the bro or to the agents and they operate under that model. And and the big thing for someone that’s looking to start is it takes to your point a lot of the guesswork out of it. One thing I do want to toss out to your audience in particular, because it the idea of investing for real estate investors, something that’s interesting is that many franchisors have the idea of the McDonald’s real estate play. So McDonald’s is well known for owning the real estate that they put into that that they’re they’re not in the burger hamburger business, they’re in the real estate business, right? Is kind of the idea. And if you saw the movie with about the Ray Kroc story and so on, you you kind of saw that, but there there’s some truth there. A lot of companies end up franchising looking for a bit of a real estate play for building wealth long term. And I’ve seen other situations, and this might be a little kind of inside info for your listeners to know. If if you’re interested in that kind of space, franchisors love the opportunity to speak with private investors who might be interested in acquiring land that their franchisees could put or acquiring property or lands that their franchisees could open facilities with. And so we see this, I’ve seen this play out in the daycare and preschool industries, in restaurant spaces, anything that has a footprint, a physical type location, warehouses. I’ve seen it in warehouse type facilities that that these groups go into. So there are a lot of unique and interesting ways that someone might not have necessarily thought about. You could reach out to a franchise system that has 10, 20, 30 franchises and they’re small enough, you’d be able to talk to the president or the founder pretty quickly to say, “I’m located in this area. I you open one up not far down the road. I have property, or I’d be willing to buy the property and build to suit for your specific needs. And if it works, I’d be interested in rinsing and repeating.” So those are some unique ways also just to I I don’t know how relevant that might be, but just to share that.

Cody Crabb (18:02)
That’s that’s a really good example of in in real estate investing, something that often comes up on this show is just how many ways to do it there are. It there’s just an infinite number of ideas and methods and things. And this is a great example of like you sometimes have to think outside the box a little bit and and that I that’s something that I would never have thought of. Like the fact that if you’re in another business, maybe that’s not the main game. It might be actually there might be something behind that. So you’ve worked with entrepreneurs for a long time now, and and I’d love to hear, what’s one piece of advice, you you you’re talking to a real estate investor or a business owner who’s trying to build something that will actually last and and potentially grow to the size that that we’re talking about here. What is what is something that you would tell them to to implement?

Tom DuFore (18:47)
So when I get asked questions in this vein, the the thing that always comes to mind is whatever you’re doing and whatever your plan is, just plan on it taking a lot longer than you expect. And that that’s the one thing you might you might catch lightning in a bottle. It’s possible, right? There are always those success stories you read of in magazines and newspaper headlines and such that that catch on. But most mo the they catch headlines because it is the exception.

Cody Crabb (19:15)
That’s a really good point. Yeah. The reason that you hear about it is because it’s weird.

Tom DuFore (19:19)
It it’s it is the exception. It’s not the norm. So just go in on with the idea that i it it’s probably gonna take a lot longer than I expect. And if it goes faster, well then you’re pleasantly surprised. So you’re setting a kind of this low expectation. It’s not saying don’t try to do all your best and put your best effort in and work hard and do all of those things that you’re still gonna need to do, but that that’s just one thing that always comes comes to my mind.

Cody Crabb (19:43)
That is a that’s a really great note to end on. I really appreciate that. If somebody wants to learn more about what opportunities they might have in franchising or if if that’s right for them or want to get in touch with you, how can how can people do that?

Tom DuFore (19:56)
Best place to go and we offer a free no obligation consultation. I’d be happy to talk to anyone on your that that that calls that that listens to this, just go to our website bigskyfranchiseteam.com, bigskyfranchiseteam.com. You can schedule a free consultation or reach out to us directly there. We have a wealth of resources, just everything’s right there for you to begin a journey of discovery.

Cody Crabb (20:19)
Awesome. Well, thank you so much. This has been really interesting. I I always appreciate a non a a guest that’s not a hundred percent focused on real estate because that really gets us some interesting perspectives. Really, really appreciate that. And thanks audience for giving us some of your time too. And we’ll catch you on the next episode. Tom, we’ll see you later.