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When it involves portfolio diversification, like most food franchisees, I have traditionally looked to the holy trinity of restaurant franchise investments: burgers, chicken and pizza. Further diversification has meant seeking to sandwich chains, desserts or other emerging segments in foodservice, like when we developed the largest halal chain in the Middle East, The Halal Guys.
But with the restaurant industry facing serious headwinds today, food franchisees looking for generational wealth face a dilemma. The costs associated with opening and running a restaurant are astronomical—and getting tougher. Everything is costlier: equipment, salaries, ingredients, rent. But even with all-time highs in salaries, restaurants are struggling to rent and retain employees.
That’s why entrepreneurs like me are starting to take a position in non-food categories as well, which are cheaper to launch, require significantly fewer employees and, most significantly, offer a higher return on investment.
Entering the non-food franchise market
To be clear, I’m not giving up on food. I’ve spent 30 years building brands like Five Guys, QDOBA, and The Halal Guys into national players. As an early franchise partner at Five Guys, we made thousands and thousands growing and selling our franchises. It’s a great business. But eventually it dawned on me that diversifying beyond food is perhaps a good idea.
On FransmartWe are in business to assist people change into wealthy through franchising. My passion—and fiduciary responsibility—is to grow our balance sheet as much as possible. Traditional brands are not enough in today’s world, with once-thriving concepts like Rubio and Red Lobster recently filed to bankruptcy.
Greg Flynn, the world’s largest restaurant franchisee, recently rebranded his company after becoming a Planet Fitness franchisee — Flynn Restaurant Group is now Flynn Group LP. Flynn believes Planet Fitness might be a great growth channel for his company because it requires fewer employees than restaurants.
“It’s less intense,” he told me when I interviewed him on my show in April. “Smart Franchising with Fransmart” podcast.
Discovering GLO30
Advising customers to go beyond food, I also put some effort into it. For the first time since I became a Five Guys franchisee 15 years ago, I’m now a GLO30 franchisee.
Based in Washington, DC, and founded by Dr. Arleen K. Lamb, GLO30 is a skincare studio that bridges the gap between salons and medical spas. It offers medically-assisted facials that mix medicine with customized, seasonal, AI-powered treatments, in addition to at-home skincare with the power of a pharmacy.
A patented AI-powered system called GLOria scans each guest’s face upon arrival and creates a personalized treatment for the beautician to perform. Patented maintenance products are also sold on-site. Its primary revenue stream is tied to the company’s subscription service. Members return every 30 days for a treatment, which is able to likely change each time, creating a reliable revenue stream. Clients build relationships with their providers—greater than 65% of GLO30’s original membership groups remain in the program.
Fransmart is currently working with Dr. Lamba and her team to assist them achieve their goal of expanding the GLO30 network to 1,000 locations inside 10 years.
Worried about running a non-food business?
I didn’t know much about skincare, but I did know about the research and market trends. Health and self-care is one of the fastest-growing retail segments in the U.S. Already a $1.5 trillion global market, it stays highly fragmented. Despite this, it has change into a coveted tenant for high streets and malls as owners cater to customers’ health and wellness needs. Services like facials can’t be offered online, so corporations like Massage Envy and Club Pilates have quickly expanded.
And I know something about ROI. The incredible ROI of the GLO30 is not found in the restaurant industry.
When it involves learning the business, I’m in the same boat as any other franchisee. I do not have to know chemicals or the way to operate equipment. I’ll hire the right managers, find the right locations, follow the playbook, and reinvest the profits in recent stores. So if your goal is financial independence and building wealth through investing in a franchise, it is time to contemplate options beyond food.
Blitzscaling for success
My GLO30 partners and I exploit a different investment strategy called blitzscaling. Instead of opening many stores at once, we open one store at a time and use the profits to purchase more GLO30. This involves reinvesting profits in more stores, compounding the profits. They invest until the stores are self-funding, allowing us to either realize a profit or sell.
Restaurants, on the other hand, typically take longer to succeed in that time with continued reinvestment. Non-food franchises like GLO30 offer higher returns. So, while I’ll all the time be passionate about food franchises, Fransmart is paving the way for entrepreneurs to earn generational wealth by investing in emerging retail brands that are on the verge of exponential growth.
We prove it’s possible, and we have fun doing it.