Finding Franchising Success with Jon Ostenson

Brought to you by Salim Omar and the Straight Talk about Small Business Success podcast.

Who is Jon Ostenson?

Jon Ostenson is an expert in the fast growing world of non-food franchising. With a background as an Inc. 500 franchisor, a multi-brand franchisee,  franchise investor, author, and consultant, Ostenson has a passion for educating and supporting others as they explore business opportunities. He is the top 1% national franchise broker investor, author and international speaker specializing in this area. Due to his experiences, Ostenson is uniquely positioned to educate others on franchising and franchise selection.

Background

Similar to other entrepreneurs, Ostenson had been in the corporate world for a number of years. Six years ago, he stepped away from the public company sphere to lead a private company—a ShelfGenie franchise system. He designed and installed custom shelves for kitchens and pantries. This opportunity gave him the platform to support owners across North America. This was a pivotal moment for Ostenson. It was the eye-opener he needed in order to take the leap into franchising.

"I always associated franchising with fast food as so many do. I realized there are a lot of other avenues out there that are more desirable to the majority from a capital investment standpoint of not having inventory or large teams," says Ostenson.

Ostenson has invested in franchises. This allows him to spend 90% of his time working with hundreds of franchise brands that he represents and helps play matchmaker.

Main Niches in the Non-Food Franchise Industry

"More and more people are questioning the path that they're on. They are saying maybe now it's the time to jump into business ownership. A lot of times they don't know where to start and about half of our clients are looking to go full time. The other half are looking for semi-absentee or executive models. 

"Both models have their pros and cons," says Ostenson. 

For non-food categories—home and property services, automotive, health and wellness, kids, pets, and the aging population are popular franchises. 

These businesses are somewhat recession-resistant and popular because people will always spend on what they love.

Pros and Cons of Starting a Franchise Versus Starting a Company from Scratch?

Cons-

• Being too entrepreneurial

According to Ostenson some of his clients are too entrepreneurial. They don't want to stay within the lines.

"A lot of our clients are existing business owners and they're looking to diversify or maybe buy a business that compliments their current portfolio. They loved the idea of not having to recreate the wheel and start from scratch."

Pros- 

• You have a guide or playbook from day one.

"You're not questioning product-market fit. It's been proven out and you've just got to execute against that playbook. You've got a coach on the sidelines and support." 

• Exit plan

Your franchise will have an exit plan.

"The value when you go to resale is seen out there in the market."



• Transparency 

"You're able to review Item 19 of the FDD, the franchise disclosure document- every franchise system has one. You are able to see the historical averages of other owners in the system. You're able to do what we call validation-talking to other owners before you buy to hear about their experience. You get a lot of really good data inputs to help set you up for success," says Ostenson.

Can Franchises be run as Passive or Semi-Passive Businesses?

Ostenson recommends setting up a general manager from day one. "It comes down to having the right person leading the business in the day to day operations," he says.

Why are Real Estate Investors a Great Fit for Franchising?

The Financials of Franchising- What are the Cost, Revenues, and the Profit Potential?

According to Ostenson 75% of the deals that he does fall between 125,000 to 300,000 from an investment standpoint, with the median being 150 to 200.

"This is an all-in investment, that includes your franchise fee, any vehicles or equipment, or potentially a small retail build-out. This estimate would include working capital for three months," says Ostenson.

How can Individuals Select the Right Franchise?

Ostenson says, "You can use Google and do your own research. I caution that in doing that, you're only going to see the best foot forward from different franchise systems. You'll see all their marketing materials. You won't understand what's going on behind the scenes. The best way is to consult with a professional.

What is the Question We Should Have Asked You?

"Which direction is franchising moving toward?" answers Ostenson.

"We are seeing more interest than ever before. It is competitive out there. Good opportunities are going really fast in good markets. I'm constantly fighting to get my clients at the front of the line-to get them on the radar of great opportunities sooner than later. I don't see it slowing down. It's an exciting time to be in franchising, '' says Ostenson.

Final Words of Wisdom from Jon Ostenson

"As an American entrepreneur, I am encouraged. You hear a lot of negative news out there, but small businesses are alive and well and entrepreneurship is what drives our country. I'm encouraged by what I see every day," he concludes.

You can reach Jon Ostenson through his website at FranBridgeConsulting.com or via LinkedIn.

Closing Statement

Straight Talk CPAs is an accounting firm that services clients across  North America. The firm provides businesses with virtual accounting, tax planning and preparation and CFO services.