Franchising
The most counterintuitive fact about wealth in America is where it actually comes from. More millionaires have been created through franchising than through every NFL player who has ever lived. This matters because it reveals something important about how money really works: the boring path is usually the better one.
Franchising represents 8% of US GDP. There are over 4,000 franchise brands operating in the country. Most people think of McDonald’s and Subway when they hear the word franchise, and they assume you need $3 million to participate. This misconception keeps the opportunity hidden in plain sight.
The Economics That Make It Work
The standard franchise arrangement takes 6% of revenue and none of your profits. This is worth understanding because it explains why franchisees tolerate the fee structure. Shaan Puri and Sam Parr have hosted franchise experts who break down why these numbers work in the operator’s favor.
A real estate investor would be thrilled with a 12-16% internal rate of return. A franchisee, by contrast, gets upset if they are not making 25% or more (The ‘Boring’ Business Model Making Regular People Millionaires). The gap between those two numbers explains why franchising attracts serious operators.
Franchises trade at 1-2x higher EBITDA multiples than independent businesses. The reason is straightforward: when a concept has been replicated across thousands of units, the risk profile changes. A buyer is not betting on an unproven idea. They are buying into a system that has already demonstrated it works at scale.
Chick-fil-A: The Exception That Proves the Rule
Chick-fil-A operates differently from almost every other franchise. The franchise fee is just $15,000, which sounds impossibly low until you understand the trade-off.
Alex, founder of the franchise marketplace Frenzy, explained the arrangement on the podcast: “Chick-fil-A is a little bit of a pseudo franchise. It’s 15k for the franchise fee, but then Chick-fil-A actually buys the site. They pay for all the buildout, but they’re taking a 15% royalty instead of 6% which is standard. Then they take 50% of your profits as well, which no other franchisor does. You’re effectively with Chick-fil-A buying yourself a high-paying job.” (The ‘Boring’ Business Model Making Regular People Millionaires)
This is not a criticism. The Chick-fil-A model produces excellent outcomes for the right operator. But understanding the structure helps clarify what you are actually buying into.
The People Building Empires
Cal Gulapali is a former investment banker who now owns 120 franchise locations across 8 brands. His portfolio includes Orange Theory, Marcos Pizza, Restore Hyper Wellness, European Wax Center, and Pop-Up Bagels. His system generates over $500 million per year in revenue (The ‘Boring’ Business Model Making Regular People Millionaires).
Flynn Group is the largest franchisee in America. They generated $6.3 billion in revenue last year as a franchisee alone. That figure exceeds the revenue of parent brands like KFC or Domino’s. The franchisee became bigger than the franchisor.
Garnett Station Partners was founded by two best friends who are only 38 years old. They have raised $3.5 billion for franchise roll-ups, buying gyms, funeral homes, and car washes. The Wall Street Journal called them “private equity’s newest young stars.”
On the other side of the table sits Roark Capital, a private equity firm with $37 billion under management. They own the franchisors themselves: Driven Brands, Inspire Brands (Arby’s, Buffalo Wild Wings), Jimmy John’s, and Dunkin’. Their playbook is to buy the franchisor and collect the 6% royalty stream indefinitely.
Car Dealerships: The Local Monopoly Play
Car dealership franchises operate on different economics than food or fitness franchises. You get a territory. You might become the only dealer for that brand in that area. And the manufacturer will often finance the purchase for you.
John Elway Chevrolet does 50-100 million per year in revenue from a single location ([How Nick Saban's Side Hustle Might Make Him a Billionaire](https://youtube.com/watch?v=EPISODE_ID&t=431)). Elway eventually sold to AutoNation for 87 million.
Terry Taylor owns 120 dealerships and became a billionaire through franchise ownership. Most people have never heard of him.
Nick Saban, the football coach, is now building a dealership empire through a partnership for Mercedes franchises. He is following a playbook that has already created multiple billionaires.
Hunt Brothers Pizza: The Model Nobody Talks About
Hunt Brothers Pizza is the largest pizza chain you have probably never heard of. They operate 9,000 locations in gas stations and convenience stores.
The model works differently than traditional franchises. You buy the equipment for 540M/Yr](https://youtube.com/watch?v=EPISODE_ID&t=150)).
Each location runs on about 50-100 square feet of space. Locations average around 540 million or more per year in total.
Sam Parr called it “the Dollar General of pizza.” That is not an insult. It is a description of a business model that serves an underserved market profitably.
The Hidden Gems at Lower Price Points
Not every franchise requires millions in capital. Another Nine, an indoor golf franchise, costs 800,000 to start. You need about $50,000 liquid and can finance the rest through an SBA loan.
What makes the model interesting is the labor structure. The facilities run 24/7 with fob access via phone. There are no employees during operating hours. The business runs 55% profit margins. Five units could generate $750,000 in largely passive income (The ‘Boring’ Business Model Making Regular People Millionaires).
Waterloo Turf, an artificial turf installation franchise, starts at 150,000. Average locations do 270,000 in profit. No retail location is required. The artificial turf industry is a $4 billion market with no national brand.
Goldfish Swim School has built a 2 million in revenue. They have over 300 locations. It is hidden in plain sight in strip malls across America.
How to Evaluate a Franchise
The franchise industry has problems with information asymmetry. Alex from Frenzy was blunt about it: “It is the Wild West in franchising. There’s no licensure to become a franchise broker. You don’t have to disclose commissions. Brokers can charge a 40-60% commission on the franchise fee.” (The ‘Boring’ Business Model Making Regular People Millionaires)
Every brand is required to have a Franchise Disclosure Document (FDD). The document you want to examine closely is Item 20, which shows how many units have shut down.
The best validation method is direct. Cold call existing franchisees and ask them one question: “Would you do this again knowing what you know now?” Ask whether the 6% royalty is worth the support they receive. If a brand will not share revenue and profit data, that is a red flag.
Be cautious of brokers who only show you 15-20 brands. They are showing you the brands they have commission agreements with, not necessarily the brands that fit your situation.
The Blue-Collar Renaissance
There is a new category emerging that Shaan Puri described on the show: “cool blue-collar franchises. So like cool branding, cool merch, it looks almost like a fashion brand.” (3 Simple Businesses That Make Millions)
Pink’s Cleaners is an example. They took a service business and gave it branding that appeals to younger operators and customers. The business model is the same as traditional dry cleaning. The positioning is entirely different.
Garage Kings does garage epoxy and custom shelving. Locations generate 500,000 in cash flow. Home services franchises like this have an advantage: they are not trend-dependent. People will always need their garages fixed.
The Structure for Scale
Building a 100-plus location franchise portfolio requires specific organizational design. The successful multi-unit operators use a consistent structure:
Each brand has a Chief Operating Officer. Below them are multiple district managers. At the location level, General Managers run daily operations. The franchise playbooks handle training and employee turnover.
This structure explains how someone like Cal Gulapali can operate 120 locations across 8 different brands. You are not managing locations. You are managing managers who manage locations.
What This Means
Franchising is not glamorous. It does not make headlines. The work is operational, not creative. You are executing someone else’s playbook, not inventing your own.
That is precisely why it works. The playbook has been tested across thousands of units. The risks have been identified and mitigated. The training systems exist. The supply chains function.
The returns that franchising generates (25% or more IRR) exceed what most professional investors achieve. The barrier to entry ($50,000 liquid for some models) is lower than most people assume. The path from operator to empire (see: Flynn Group, Cal Gulapali, Terry Taylor) is well documented.
The boring business model keeps making regular people millionaires. It will probably keep doing so.
Related Topics
Key Episodes
- The ‘Boring’ Business Model Making Regular People Millionaires - Primary franchising deep dive with Alex from Frenzy
- How Nick Saban’s Side Hustle Might Make Him a Billionaire - Car dealership franchise economics
- This Gas Station Pizza Business Makes $540M/Yr - Hunt Brothers Pizza model
- $1M+/yr Local Businesses Hidden in Plain Sight - Goldfish Swim School and similar franchises