S2 E1: How to Build a Franchise Empire Without Burning Out
Erik Van Horn has owned six franchise brands, built 43 locations, and made some great sales. Now he works three days a week on things he loves. Find out his secret on this season’s premiere.
As a veteran in the world of franchising, Erik knows how important it is to prioritize your time on things you enjoy doing, even more than making money. But he’s done both and is ready to share the secret sauce.
The Wolf dives into a conversation with Erik about the process of building multiple Liberty Tax franchises across Austin, how he built, grew, and sold Sola Salon studios in California, and why 15 to 20 hours a week is the work/life balance he loves.
You’ll also hear how Erik got into business through a gardening job and the realities of being a multi-brand owner.
And if you’ve enjoyed listening to Franchise Empires, I’d be so grateful if you could drop me a 5-star review on Rate My Podcast. Thank you so much!
Follow Erik:
LinkedIn: linkedin.com/in/evanhorn
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Episode Transcription
Erik Van Horn:
And it was fun. I eventually sold those, bought an area development called Area Rep now. So I bought the Austin Market for Liberty Tax and I grew that from four locations when we bought it to 42, when we sold it nine years later.
The Wolf of Franchises:
Welcome to Franchise Empires. We’re aspiring entrepreneurs learn exactly what it takes to become a successful franchise owner from one location to 10 and beyond. I’m the wolf of franchises.
Hey everyone. Today in the show we have Eric Vanhorn. Eric is a franchise industry veteran who’s been doing different things for about 20 years now. He’s owned six brands across different industries in markets that are usually outside of where he lives. He built Liberty tacks to 42 franchise locations in Austin, and also with the help of some partners grew Sola Salon Studios in Southern California to a private equity exit. Now, he does a couple different things with mastermind groups in the franchise world, but he specifically tells us about how he values his time now over the money, and he schedules his life that way. And towards the end of the episode, he even gives us specifically his work week schedule, which I found pretty unbelievable. So I hope you enjoy my conversation with Eric.
Narrator:
The Wolf of franchises is the CEO of Wolf Pack Franchising as well as a creator at Workweek Media. All opinions expressed by the Wolf and podcast guests are solely their own opinions and do not reflect the opinion of Pack franchising or workweek. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The Wolf Week and Wolf Pack franchising may maintain positions in the franchises discussed on this podcast.
The Wolf of Franchises:
So I guess just a good place to start would be what were you doing before you got into franchises and I guess how long ago was that?
Erik Van Horn:
Yeah, so gosh, this was about 20 years ago. I was not ready to go to law school, went to orientation, and that’s when I realized a straight C student is going to have a very hard time going to law school. And then I read the firm. And so when you read a book like the firm, it’s absolutely true and they worked a ton of hours. And so I thought, man, if I going to hate school and I have to work a ton of hours, this is not going to be a good thing for me. So I bought a truck, a lawnmower shovel, started planting flowers and mowing grass. And long story short, I was doing this for a lady in Chesapeake, Virginia, actually. She was in Norfolk, Virginia, and she bought a house 20 years ago down by the beach. And I said, what are you going to do with it? She’s like, we want to sell it. And I left that job with her signing over a house, a mortgage to me, paying zero money down, and I partnered with my parents on it. They gave me the $5,000 for a closing cost, and that’s all she wanted. Within a month or two, I had sold my 50% of that to my parents and had made more money than I had in my entire life up to that point. And I rolled that into my first brand. So that’s how I got started.
The Wolf of Franchises:
Wow. I mean, we talk a lot about financing on the show. That’s got to be the most unique way to finance your first franchise that I’ve heard so far.
Erik Van Horn:
I learned the value of disconnecting people. There’s somebody that wanted to sell something and I didn’t have the money to buy it, but it wasn’t a no for me. I thought, who do I know that can help me with this? And my parents originally said no, because they’re like, they said, it sounds too good to be true. And I was getting my real estate license at the time, and my broker, Gary said, I don’t know how Eric found this or how this happened, but if you don’t do it, I will. So I had two people ready to partner with me on that. And I think it’s important to note too, this lady and her husband, they knew exactly what they were doing. It wasn’t like taking advantage of anybody or kind of getting a deal was they said, Eric, our real estate agent is going to be so mad when he finds out that we did this because he has been, we’ve wanted to sell this, but he won’t sell it because he makes every money every month renting this thing out for us. And she said, you seem like a nice young man and we want to do this. So that’s how I get my seed money.
The Wolf of Franchises:
Damn, that is, that’s incredibly nice and generous to ’em. So are you still in touch with her today or
Erik Van Horn:
I’m not. I’m sure they’ve passed away. Oh, okay. Do have the option contract that I gave her with a hundred dollars. So I kept that just as a reminder of how everything got started for me.
The Wolf of Franchises:
I love that. That’s awesome. And what brand was it that you started with?
Erik Van Horn:
It was Liberty Tax. And so they were based in, so I grew up in South Dakota in the Black Hills. I was living in Virginia Beach at the time, and Liberty Tax was founded. That’s where corporate, the corporate headquarters was. So I found myself with this money and I had friends that were looking at buying a franchise and some of ’em owned Liberty Tax. So I thought, man, here’s a brand that’s established. And I liked the founder, I liked what it was about. And I ended up buying in Kansas City, Missouri because I didn’t, everything was sold out in Virginia Beach really in most of Virginia. So there was a group that was going into the Kansas City market for the first time, and that’s where h and r block headquarters is. So we were going to compete with the big, big 800 pound gorilla h and r block.
And so we went into that market. I had a few locations in one in Lee Summit and then a couple in some Walmarts. And we had about probably 15 to 20 locations as a franchise or that went into that market. So we went from zero to about 20 franchises and they all open up January 1st basically because that’s when the tax season starts. So that’s where I started to learn the importance of Gorilla marketing, neighborhood marketing and branding. And it was fun. I eventually sold those, bought an area development called Area Rep now. So I bought the Austin Market for Liberty Tax, and I grew that from four locations when we bought it to 42 when we sold it nine years later.
The Wolf of Franchises:
Damn. Okay. And Liberty Tax, right? It’s brick and mortar storefronts for those, correct?
Erik Van Horn:
Yeah, it’s all brick and mortar. Here’s the thing about that brand, it’s a hard business. The tax business was a hard business. A lot of us in the tax business that did well went on to own other franchises and a lot of people did very well in different brands. Some of ’em went on to become franchisors. A lot of ’em are my good friends today, but it’s brick and mortar. It is. Most of the successful franchisees in that business we’re not CPAs, we’re not accountants, they weren’t bookkeepers. They were either good at operations or good at marketing, and I was good at marketing. And so that’s a marketing business.
The Wolf of Franchises:
Interesting man. And why a franchise in general? You get that really nice offer from the woman in Norfolk. Why not just get a day job or start your own business? What was the thought there to even look at franchises?
Erik Van Horn:
I think it was just the safety of it because I had friends that were in it and I knew they were helping other people. And then I had somebody at the corporate office that could just tell me what I should be doing so I didn’t have to reinvent the wheel. I could listen to them and just do what they say. And I was doing real estate at the same time. So I was starting the tax business in real estate at the same time. And I was starting to flip homes. I was buying houses that were about ready to go into foreclosure and I would get ’em, fix ’em up and sell ’em. And I was doing really well with that for just a small little mom and pop type business. I did six houses as all I had friends that did way more I, and then I was going, then I was selling real estate.
So I had really three things going for me, franchise, the real estate flipping business and the real estate sales business. And I ended up just going deeper into the franchise business. And I think because I started all three of ’em around the same time, but I expanded the franchise rapidly when we paid a lot of money. When I say it was my parents and I were partnered at that time in the area development in Austin. So that kind of put me, I invested a lot of money into it, meaning I took out a big promissory note and because I didn’t have a whole lot of money at the time and I took out a promissory note, went all in there and I had to make it work. And I had a lot of friends in the business at Liberty and was just having a lot of fun doing it. And I was grinding at the time, but it was that’s how I got my start.
The Wolf of Franchises:
Damn. Okay. And when you went to Kansas City and Austin, are you still living in that house in Virginia or did you move to these markets to build it out?
Erik Van Horn:
I was living in Virginia and I would go to Kansas City during the three month tax season, and then I would go to Austin during that three month tax season as well. And to be clear, when you’re an area rep, you don’t necessarily own the locations. I did. I owned a dozen locations over my time with Liberty, but most of those 42 locations in Austin, Texas were franchisees. So I bought it when there was four locations, four franchisees there. And then over that time I was in my mid twenties and I was selling franchises for Liberty Tax Corporate, and then I was selling them in my area rep area. And so I sold a bunch of franchises and then I was a young guy supporting them and helping them be successful. And so that’s really where I started to learn. I was kind of like a franchisor without the risk and with a lot of the responsibility, but I was kind of in between a franchisee and a franchisor.
The Wolf of Franchises:
Yeah, no, that’s super interesting. And for people who don’t know, the area rep area development structure is pretty much like a sub franchisee folks. So meaning Eric was underneath the Liberty tax franchisor, but within the Austin area, he’s selling franchises, meaning he’ll oversee those franchisees that he sold to. And I’m imagining Eric, you got to cut a smaller cut of the royalty was.
Erik Van Horn:
So the royalties were, it was a 14% royalty in the tax business. And that’s pretty common in the tax business, very uncommon. Other places, yeah, so we would get 7% and then we would get half of the franchise fee. So it was a 50 50 split on the franchise fee and the royalties.
The Wolf of Franchises:
And what was your just takeaway, you owned a few locations, I think you said so, right? So did you prefer just being the area rep and finding franchisees to bring underneath you and consult?
Erik Van Horn:
Yeah, I really started to enjoy the area rep model. I went on to own two area rep models in two different brands. But I love that because you can leverage off of, as a business owner, as a franchisee, you’re leveraging off of your employees, which is fantastic. So your employees are now working for you and they’re earning revenue and you’re paying them and you’re making money off of all of these employees. But as an area rep now you take it another step and you are leveraging franchisees. So they’re business owners and you’re able to grow it into a much larger area, like 42 locations and you’re getting a cut off of everything. So I like it. It was the ultimate leverage as a business owner for me. But what it also was is it got to be more passive income, not true passive income, but pretty passive because once franchisees are up and going and they’re working, they don’t need a whole lot of help from you as the area rep or even a franchisor.
And I started to learn, get these franchisees up and going and I’m making money and I’m working less and less as I’m making more and more money. So I like that aspect of area development. Here’s a downside to it though. If you’re a great franchisee and you want to be an area rep or an area developer, now you are only as good as your franchisees. And some of these franchisees aren’t very good. So you can look at it and me like, man, I can do so much better than them, but it doesn’t matter because you’re not them. So that’s probably the downside, especially if people are really big into micromanaging and they really get impacted by that. So the key is any franchise organization, you want to have really good franchisees because that’s how you have ultimate leverage and that’s how you build a great brand or that’s how you build a great area, what we had in Austin.
The Wolf of Franchises:
Yeah, it’s a super interesting model. I think it makes sense, especially from the franchise horse perspective. Cause you can just grow quicker if you have a solid area rep who’s going to bring in more franchisees and it takes some work off their hands so that they’re not having to find every single franchisee themself. But it definitely, I don’t know I I’ve seen issues. Maybe we could talk about it later on in the conversation.
Erik Van Horn:
Yeah, I’m always up for talking about the issues because everything has a downside to it, right? Yeah, I mean everything is not great always. There’s always downsides to it. So there’s definitely downsides to the area rep program. So we can definitely talk about that whenever you want. But I know we got all kinds of cool things to talk about.
The Wolf of Franchises:
Well, yeah, so you get to 42 locations in Austin for Liberty Tax. And what was your next move and what were you thinking at that point when you jumped into brand number two?
Erik Van Horn:
So I sold that, moved back home to Spearfish, South Dakota, town of 10,000 people in the Black Hills. And I did that because, well, I was a hundred days of a hundred degrees in Austin and I was kind of a baby with the heat, so I had to get out of there. And we had a new baby, Sophia was like months old and we had no family around us. So we came back where I grew up and grandma and grandpa were here and had family around and it was just a slower pace of life. And I figured one of the things I learned at Liberty is working on your business, Michael Gerber, the EMyth. And I really was forced to do that because I didn’t know taxes and I never learned taxes. And I also got used to owning in different markets where I didn’t live.
And so I was very comfortable in not knowing the widget or the thing that whatever the business was, I was comfortable not being in market and I was comfortable having partners and hiring key people. So all those things I thought I can live wherever I want and I can choose my businesses wisely. And so that’s what I did. And I thought, where could I have more businesses that give me room to expand and to grow into as I continue to add more and more franchises to my portfolio? And that was Southern California because I had business partners there, I had grandparents there at the time and I still have family there. So I’m like, you know what? That’s a good place to do it because you’ll never run out of opportunity in southern California. Nobody sells out completely of territories that quickly there. And so that was a market that I focus on.
In the meantime, I was also a franchise consultant, so I was helping people find franchises and my main reason for doing that was to find my next brand. So I wanted to find my next brand. And then I had a bunch of friends that always wanted to know what the next brand was. And so I was just helping friends find other brands and then that turned into a really big business at some point, but that’s another story for another day. And I bought into a home care company. I bought into an eyelash company both as regional developers all in southern California, exited both of those and then bought solo salon studios in Southern California as well with three other partners. So there’s four of us total. And we built out 12 of those or 10 or 12 of ’em in a five year period. And that was coming out of the recession.
We did that. They eventually sold that to private equity. So all of that was in Southern California. And then I learned it’s not fun making a bunch of money in Southern California or California period because of all the taxes. So even though I lived here, I had to pay taxes there. I’m like, this is no fun. So my strategy started to change after that. But yeah, Southern California was it for me because I wanted room to grow. If I have multiple brands, I want to be able to, and it happened. So in Sola we had Orange County in the home care business, we had everything south of LA county in the eyelash area rep business, we had LA County. So it worked out really well. Yeah, I have all these different brands in Southern California and they each had kind of their strategic, my plan worked out doing different brands in southern California and ended up having multiple brands in different parts of Southern California. So it worked out really well.
The Wolf of Franchises:
These franchises, I mean you’re doing three at once, I’m assuming they knew, and I guess you had partners in some of the different brands, but sometimes it’s a concern for a lot of new franchisees is that do they think, oh, a franchisor’s never going to let me buy another brand or work on two brands at once? Did you run into any issues or how did you
Erik Van Horn:
Yeah, good. No one’s ever asked me that before. So love the question. That’s an important one. One brand could care less, they just didn’t care. And the third brand, they never care because they want you as a franchisee. So the next brand that you buy is always ready to do it. But that’s an important thing. You need to be careful what you sign because sometimes one of those brands made me ask permission for anything if I was going to do anything. And they could absolutely say no. And they tried to say no at different times. And so it was not a fun experience having a brand telling me I couldn’t open up another brand in a different market in a completely different industry. And the reason was because they wanted me to be solely focused on that brand and they knew it and me going into it that I wasn’t going to be that I was a multi-brand franchisee, but still they tried to pull that card. So you don’t want to give brands leverage if you can avoid it.
The Wolf of Franchises:
Agreed. And I also just think it varies from brand to brand. So I’m not paying any broad strokes here, but I think it would on the whole, it’d probably behoove brands to just enter into agreements accepting the reality that, cause I’ve seen brands that say you can only own one location of ours because they want every, and Chick-fil-A is probably the prime example of that, but they’re a totally different beast. So I’m not including them in this conversation, but brands will just say, we want our the undivided attention of every franchisee on one location, which that, sure, that works out great for you as a franchisor, but realistically, I mean one location of majority of brands isn’t going to give you a life-changing outcome. You’re almost, in my opinion, for a lot of franchises, you’re buying a job at that point. The multi-unit aspect is when franchising becomes super attractive. So I almost feel like brands would be hurting themselves if they’re not just openly saying, yeah, we’ll let you do multi-unit a way to do it and grow intelligently. But the limitations I think can hurt a Azure in the end.
Erik Van Horn:
Yeah, a hundred percent. And I think Caleb, you can leave it alone. Someone’s trying to cast to my TV now and it’s never happened before. I’m like, what? So I’m advising a brand right now, a brand that I have equity in or equity in some different shape form. And they were talking to me about that, what is a good strategy? And their competitor actually says, they started out by saying just one franchisee, one location. They’re very strict on that now they’re starting to open it up and it’s a great brand. The competitor to the brand that I have equity in is a fantastic brand doing very well, but they really did, I think they could have been way further ahead and made it way easier on themselves if they allowed multi-unit ownership right away because they’ve got a really lot of really good franchisees now they’re starting to do that. So my advice to this franchisor that an equity partner in is set it up for multi-unit ownership, especially if you have good franchisees and there’s ways to, if they’re not a good franchisee, then they’re going to sell out to somebody else, but letting good franchisees grow with the brand or else they’re going to want to grow with somebody else. And that’s why you see a lot of multi-brand ownership because some of these franchisee franchisors don’t really cater to helping franchisees build Empire Empires.
The Wolf of Franchises:
I completely agree. And all the big successful owners I’ve met a lot of times. And yeah, I just think if you’re going to get into franchising and depends on the person, some people I’ve met owners of say one Mathnasium who they just love working with kids, they love teaching and they’re fine owning one, it provides enough income for them to live their passion business and that’s great. Me, I’m more financially driven and I think if you are financially driven, like multi ownership’s got to be the way to go If you’re going to get into franchises,
Erik Van Horn:
Not only, it’s a good point, financially driven also if you want to experience leverage and lifestyle, I love lifestyle and if you just have one location of something, you don’t really have economies of scale. And I became a huge fan of economies a scale once I got into, I started with multi-unit right away and so I got to experience economies of scale and I love that. And I continued, that was my strategy all the way through as I built out different brands as a franchisee, how do I sola? I get to the point where we can hire district operational manager so we don’t have to be doing things as partners anymore. And we opened up one location in Mission Viejo, California at the Kaleidoscope Center, that was location number one. We had an okay manager that wasn’t really fit to be a district operational manager.
And then we had another one that was getting ready to start in Huntington Beach under construction. And then we had a third one that was lease signed in Irvine, California. So we had those three ready to go in less than a year and we hired our district operational manager as our third location was being built. And it was the best thing that we did because he was able to, he did all the lease negotiation, all the financing, all the hiring, all the firing, all the contracts, he did everything for us and he did it better than we could do it as owners that were halfway in our business. And that way we could focus on the things that we were really good at and help him and support him so he could do his job even better. So I’m a big fan of getting to three, generically speaking, get to three locations right away, have a district operational person that can manage kind of like you as the owner so you can pull back and be a little bit more strategic in the business.
The Wolf of Franchises:
Definitely. No, I mean that’s really smart that you were doing that from day one. I feel like it does take a few people or some people just, it’s kind of time to figure out, oh, this is what I want to do and this is the playbook, but for that to work you need to have relocation to perform to a certain level or else you’re not even going to be able to probably afford that district operational manager.
Erik Van Horn:
Well, here’s how we looked at it. So I’ll get to that question cause I think it’s a really important question. So taking a step back, we were doing too many things in the business and things that we didn’t enjoy, meaning the four of us partners. And so we were having meetings, which we all hated meetings, so we were all visionary. So we were doing meetings, we were hiring people and dealing with issues and doing all the stuff that we hate doing <laugh>. So we looked at each other and we said, Hey, what have we each spent I think $20,000 a year to not have to do any of this stuff anymore? And we looked around, we’re like, of course we would do that with the four of us. It’s a hundred thousand or $80,000, maybe it’s $25,000. And we’re like, yeah, we’ll get offload this for somebody that could do an amazing job at it.
And so it was how do we buy back time? So I spent $25,000 to buy back time. That was one of the things that was one, the reasons that we did it. And then to go to your point, I’ll give you kind of the timeline of how we opened these up and the success or lack of success with them. So location number one was an average location that was textbook average location for solo salons. And we had hired our district manager as that thing was already open. And then we were in construction on the Huntington Beach location, which we thought was going to be the most amazing location. We thought it as franchisees and the founders thought it was going to be the best location out of all of the locations in Southern California. And it turned out to be a dog. It was just a dog for different reasons.
So we were losing money from day number one with that one and a lot of money every month. Then so before that opened, we already had at lease signed with a personal guarantee for the Irvine location. And that one opened up completely full meaning we were making money from day number one, a lot of money from day number one. And looking back, if we hadn’t had that lease signed, we probably would’ve pulled back and be like, wait a second, we have an average location and a below average one, which means we were going to be losing money every month. So we got lucky by having the lease signed on the Irvine, which was the most expensive lease by far out of all of ’em, but it’s the one that made us the most amount of money. So we saw how that worked and then we started to use that as our benchmark.
We need to find more of these locations versus some of these other locations. We learned a lot. So disenfranchising in general, you’ve got franchisees that are underperformers average and over performers and our locations, we had an underperformer, an average and a high performing location. And I think as a getting into business, if you get three locations, you just kind of got to expect that and everything else is equal. It’s it equal ownership, equal management, equal everything. Location was not equal. And as I get into new businesses, I think this probably going to have that same rule. Not everything that I touch is going to turn to gold. Not every location or every market is going to be equal as well. So a lot of lessons learned there, but that’s the story of Sola and hiring a manager and having some good and bad locations.
The Wolf of Franchises:
Yeah, it’s fascinating. I mean I feel like for any entrepreneur, it never goes exactly to plan. But when you were thinking about it with solar, and maybe even more a better question just now, if you’re advising a franchisee, I mean FRA are going to model out their growth and you know, see this in the F DDS a lot, right? Where a brand will show break down the average revenue by top 25%, top 25 to 50%, 50 to 75%, et cetera. Do you think people should plan to be the average at when they’re looking at this versus I think sometimes people go in, they’re like, oh, well the top 25 percent’s doing this. I’m definitely going to be a top operator.
Erik Van Horn:
Well, most people should. Now I’ve got a mastermind group of franchisees that are in my world, and I would say they’re top performers as a whole. And so I’m used to dealing with these top performers, and I think anytime you’re getting ready to buy a business, you cannot think you’re going to be average. If you think I’m going to be average, then you are probably a below average, probably going to be below average at some point. So you can’t go into it. If you’re thinking I’m just going to be an average business owner, then you probably don’t have the confidence, you don’t have the decision making skillset, you just don’t have what it takes to be an owner. I mean, I would think you’ve got to have that thing in you that says, I’m above average like mentality. I’m above average, I’m a winner, and I would have that mindset.
Now with that said, looking at the FTDs, and you do a great job of putting those out in your newsletters and communication. I love seeing that kind of how you package that up. But how I would take that information and I love it when franchisors give item 19 performance information in their FTDs. I think that’s really important. But when I’m buying a new brand, I’ll look at that. Or if I’m a advising franchisors or I’m the franchisor, I know that good franchise prospective franchisees should be asking questions around that. Those numbers are not there for you to just to put into your proforma those numbers are there as a benchmark to make sure that they’re accurate. So whenever I would think about buying a brand, I would look at those numbers and be like, Hey, average Joe franchisee, how are you compared to the average Joe franchisee in the F D D?
Are you grossing a million dollars like it says? Is that, and depending on the answer that you get, you dive deeper into that. So if they think they’re an average franchisee or a top performer, you just need to make sure that those line up to your expectations. A lot of times in the item 19 in the franchise disclosure document, the franchisor has access to all kinds of information that you don’t as a franchisee or a buyer, franchisees know how accurate or inaccurate that is. So I take that information, I ask franchisees about it to get their perspective of it, and if it lines up to what the majority of franchisees think, then I know it’s pretty accurate because I’ve known franchisors that give very accurate information in that item 19. Yeah, when I say accurate, all franchisors give accurate information, but you’re dealing with numbers and how it’s sliced and diced different ways. You don’t really know how they did that. So when I think of accurate, I want to make sure that my expectations line up with the data that’s shown, and if that’s the case, then that’s a good thing. If that’s not the case and they’re like, wait a second, they say that’s average in the item 19 and that’s their most top performing location, that’s why it looks so amazing, then you have to take a step back. What else may not be completely accurate as I see it?
The Wolf of Franchises:
Absolutely. Yeah. I think to me for perspective buyers, the FTD can provide some signal, but you really got to dive in to verify it, and your best resource is always going to be the franchisee. So I love how you said that you kind of use the FTD as the benchmark and then you just feel it out and compare it to see if existing owners are matching what you’re seeing. So it’s super important that really whole stage of due diligence the validation stage,
Erik Van Horn:
A hundred percent, it’s the best stage if you don’t dive into the validation stage and validation is numbers is item 19, financial performance, but also item seven to ask the franchisees, is this accurate? Especially today’s world with inflation and all of that, you really want to, it’s not saying if the franchisor was misleading with that, but how much has this adjusted for inflation or supply chain issues or whatever that thing might be. So that’s why it’s important to talk to franchisees that have just opened. You’re not going to get financial information out of them, but you’ll absolutely get item seven. If it says 300,000 to open up, but they just spent $400,000 because the data was 11 months old in the franchise disclosure document, then you just need to know that. So it’s all about just validating your expectations with franchisees because sometimes we are too negative. We think, oh, this is going to be way more expensive, or I’m not going to make as much money, so you might be too negative and you’re going to be surprised the other way, or you’re too positive and the glass is completely full all the time and you’re going to get a dose of reality. But I think that’s why validation’s important for the naysayers and the people that are always glass half full.
The Wolf of Franchises:
Completely agree. Yeah, it really does go both ways. I’ve heard people who too are overly bullish and then they kind of come back down to earth after validation. And the flip side, people who are pleasantly surprised and wow, this is a lot better than I thought it was. So I love that you brought that up. So after this acquisition where the three brands, the Salon studios, they got acquired by pe, what happened next? Because I think there’s still, you got into two more franchises since then, is that right?
Erik Van Horn:
Yeah, there’s more. So since then I sold those to private equity. So the same private equity company that bought Sola bought our locations because they wanted to expand in that southern California market, and it was good timing for us to get out and it was a win-win situation for everybody, and it was a really good exit. And solas a great brand, so it’s one of my favorite brands that I’ve ever owned was Sola. I still friends with the founders and a really good experience there. So I had an exit, paid a bunch of money in taxes, which is never any fun. <laugh> also learned things that I could have done differently to save even more money in taxes as I’ve gotten more into passive investing. But that’s another story. What I did after that, I continued to do franchise consulting and I was did that working about 10 hours a week doing franchise consulting, helping people buy franchises.
And I don’t do that by the way anymore. That’s not something that I do. But I enjoyed that, kept me active in the franchising world, bought some other brands, but then I really wanted to get more into the franchisor side of things. So I helped start, me and two other guys started a franchisor. I took an early exit out of that because it was becoming just too much work for me on how their vision was more than what I wanted to do. I was more lifestyle focused and they’re more building an empire, and I get it. I mean, there was a time when I wanted to build an empire and there was times when I wanted to be more lifestyle focused. So I took an early exit out of that and I thought, you know what? I’m designing because I could have had life changing money, like absolute life changing money.
And then I thought, what would I change about my life if I had a few extra zeros? I thought, man, there’s nothing that I would change about my life and I’d have a jet have a couple more houses and things like that. But the trade-off for me personally at the time would’ve been, I would’ve missed five birthdays. I would’ve missed five summers with my girls. And I’m like, that’s not worth it to me. So I started to design what I wanted the next five to 10 years to look like. That’s when I doubled down into masterminds. I got the franchisee mastermind where I helped franchisees here from amazing people to help them grow and scale, and I got 40 different brands represented in that mastermind. Then I started a mastermind for franchisors. So merging brands and some established brands that really need help with franchise development because I mean, brands don’t know what to do.
They are just getting started. It’s a whole new world. And then you’ve got the franchise sales organizations, the FSOs, and it’s like, how does a brand that’s just getting started compete with an fso, you’ll get demolished if you go toe to toe with that brand. So I’m kind of in the middle of that, helping brands with franchise development and bringing on amazing speakers and helping them. I’m starting to take equity in different brands as an advisor, and that’s been a lot of fun. And then I have a passive investing mastermind where I help people, like I was saying earlier, with amazing tax strategies and just off market passive investing deals. So all of those things kind of still a bit in the franchisee world, more in the franchiser or world and in passive investing, which is really where all of us want to get to.
Anyway, I look back to Rich Dad, poor dad, Robert Kiosaki. He was on my podcast, by the way. He was a wild, wild interview like this grandpa that just could care less about what you think about him, and he just lets it rip. But back in the day, he had the cash flow quadrant that said, you know, go from an employee to basically to investor, and there’s four different quadrants. And early on I wanted to be an investor, meaning I wanted my passive income to be more than my lifestyle, more than my active income, more than my expenses, and then eventually more than my lifestyle. And I started to realize over the years, I had mistakenly assumed that businesses were passive income. And I think I told that lie to myself, and then I realized, no, if I stop doing this thing, whatever the thing was, if it was sola or whatever, then my income stops. And so I really started to dive into passive investing and then got partnered up with a good buddy of mine who’s amazing at that. As much as I know about franchising, he knows about passive investing. And so that’s when we started that mastermind to really help people get to the passive investment opportunities, making more money there than they do with their expenses or their lifestyle. So I’m still in the franchise world, but I’m doing some other things too.
The Wolf of Franchises:
Yeah, man, that’s super fascinating and I think especially you touched on the lifestyle aspect of this whole thing. I bring that up, I’ve mentioned it as a, it’s a benefit, and I’ve met franchisees who they’ll build up their empire to 10, 15, 20 locations, whatever it is. And usually a couple things happen though. They’re hire, they’ll have someone in place like a COO or someone just basically to step in and run the whole thing. And they’re still managing KPIs and working with that coo, but for the most part, they’re pretty removed. And maybe it’s 10, 20 hours a week they’re working and they’re still collecting a very, I’ve met people who are making seven figures a year and only putting in 10 to 15 hours a week. Obviously it took them five, 10, maybe even 15 or 20 years to get there, but it’s possible. Or they’ll, they’ll just sell and they get a massive payday and that gives them a lot of breathing room and maybe they do other things, kind of like some more passive investing you’re talking about. But I do want to just hear from you, man, I, so you live in South Dakota, I’ve never met anyone from South Dakota until you <laugh>, you’ve got the Zore Mastermind, you’ve got the Z mastermind, and you got this other real estate or passive investment group, it sounds like. What’s a typical week for you look like? I mean, what do you do in South Dakota? Walk me through the Eric Vanhorn life.
Erik Van Horn:
Yeah, I always gave away an hour of my time to a charity. And so I was talking to somebody yesterday, he was asking me some of the same stuff and he just asked me that exact same thing. And so I’m like, Hey, let me just show you my calendar. And he was blown away because he knows everything that I’m doing. I just talked, and it sounds like I’m doing all kinds of stuff all the time, but I said, Hey, I’ll just show you. Because he really wanted, he’s like, I want the authentic Eric. And I’m like, that’s what you get all the time, but let me show you my calendar. And I then, I didn’t know what my calendar was going to look like, but it was a pretty average week. Mondays just pickleball. I play pickleball on Monday mornings or I go mountain biking and it’s all with the retired people and my dad. And then Mondays are usually just, I rarely have phone calls. I do things that I want to do, and it’s just kind of a day to get ready for the week. Most people, Sunday is my Monday.
The Wolf of Franchises:
I love the sound of that. That’s great.
Erik Van Horn:
And then on Tuesdays, Wednesdays and Thursdays are workdays for me. I usually have masterminds on Tuesdays, Wednesdays, and Thursdays, two weeks a month. And so they’re filled up. My content is on Wednesdays, and so I do podcasts. And today, I mean, it’s a Wednesday and we’re doing a podcast. So I have a handful of podcasts or content creation on Wednesdays, but my, and then Fridays are family days. Those are blocked off for family, and that’s pretty true most of the time because sc, this is my average schedule and everything changes at different times, but during the week on Tuesdays, Wednesdays and Thursdays, my days typically starts my workday at 10 and ends between two and three. Yesterday I started at 10 and I was done at one, and I went out on a date with my wife, and then they went to my wife and the girls went to gymnastics, and I went for a mountain bike ride.
Today I started at nine because you and I had this scheduled. And so I started early and then I’m going to like four today, but most of the time it’s 10 to two is pretty typical. I get a lot of people that want my time, they want to pick my brain, and I’ve just gotten a lot better at saying no to a lot of that stuff. And I say no, by saying, yes, I’ll, if it’s an opportunity for me to create content, then I’ll like, Hey, let’s do that and let’s create some content or let’s have a webinar around it. But most of the time, that’s why I did these masterminds. People wanted to pick my brain on passive investing on a franchise or a franchise sales or as a franchisee. And my masterminds are really inexpensive for what you get. And so I’m, my people that are in my mastermind get my time, and that’s kind of how I keep my schedule pretty open because it’s my time and I have a value on my time.
I start to look at it and see what it’s really worth, what’s it worth with this mastermind and that mastermind. And it’s a high hourly rate when I really stop to think about it. So if I’m selling up my time because somebody just wants it, then I’m taking it, then I’m not doing the highest and best use of my time from an hourly rate perspective. Or the other way to I think about that is I’m stealing that from an hour with my kids. If I’m giving you an hour, I’m taking away that time with my kids or my wife. And so that’s just kind of how I view time.
The Wolf of Franchises:
Damn, that’s an incredible schedule. And so you don’t work weekends, I take it?
Erik Van Horn:
No,
The Wolf of Franchises:
No. Oh my God. God, man, you have the life. Damn.
Erik Van Horn:
But I could have a lot more money, but I value time. And what’s interesting, when you start to do that, your time becomes more valuable. Now I’ve got my man, Caleb, he does so much for me. We hired Stacy. Stacy does a lot of different things for me, different investments. I wired a bunch of money out yesterday and they needed a W nine and they needed this, that, and the other. So I just email Stacy and my banker or my wealth advisor, I’m like, can you please do this? And they take care of everything. So I just have taken a lot off my plate that I used to have on my plate I used to do because it was easy to do. But I’ve really gotten a lot more strategic with how I spend my time. And I’m not crazy about it. It’s no big deal to do a nine o’clock podcast with you. I’m very flexible with how this works, but that’s pretty typical for me.
The Wolf of Franchises:
No, it’s awesome, man. And I think you just make a really good point about the value of time, and there’s just concept of being a time billionaire that I seek it thrown around on Twitter all the time. And the ultimate example being used is for a younger person or even middle-aged person, would you trade spots with Warren Buffet, who’s obviously worth tens of billions of dollars, probably over a hundred billion, I don’t even know. But the point is, is like 99% of people are going to say no because they don’t want to be 95 years old. So time is truly your ultimate asset. It’s even more valuable than money in a way. And I love that you seem to be doing a really good job at protecting your time and setting those boundaries, which is awesome, man. It’s refreshing to see a lot of time we focus on the money, but what’s the point of it all if you can’t enjoy yourself and with your family?
Erik Van Horn:
Exactly. And then the other thing on top of that is the things that I do, do I enjoy. I enjoy creating content. I enjoy meeting people like you. I enjoy doing podcasts. I enjoy putting together passive investment deals and helping people do that. So I not only do the thing, the work that I do is work that I thoroughly enjoy. I was in Austin, Texas a week ago, and it just had the best business trip ever because I was doing it with friends and hanging out with friends and getting business done. It was just like amazing things kept happening. And so I thought, man, this is the life I’ve got my time. I get to do business with the people that I choose to do business with and thoroughly enjoy hanging out with. But it wasn’t always that way. I put in the hours I had the grind, but this is the way that I really wanted my life to be designed to be like. And it’s absolutely happened.
The Wolf of Franchises:
That’s amazing, man. I’m jealous. I aspire to be like you when I’m older, so that’s sick, man. Well, look this has been an awesome conversation. Thanks for coming on. I know it, it’s outside your working hours as I just found out. But seriously, man, appreciate it. It was great to chat. And where can folks who maybe want to follow your journey or check out some of the resources that you have available for them, where should they go?
Erik Van Horn:
Yeah, there’s a couple places if you want to get into the Franchise Secrets podcast, let’s go to franchise secrets.com. If you’re interested in investing, go to tribe of investors.com, tribe of investors. And then I have a new website coming out called Scalable Franchise, and that’ll probably have a lot of good information on it as well. And then I have a Facebook group really active Facebook group for people that are on Facebook, just go to franchise secrets group.com and we’ll get you in there. But man, this has been so much fun. You did a great job. You asked me questions that nobody else has asked me, so this has been a lot of fun.
The Wolf of Franchises:
Definitely, man. Yeah, it was great. And we’ll plug those resources in the show notes for anyone listening. So can check that all up. Eric’s great resources there. All right, man, well, thanks again. And yeah, we’ll talk soon.
Erik Van Horn:
Thank you. See ya.
The Wolf of Franchises:
Thanks for listening to Franchise Empires. We’re coming to you soon with actionable insights to take the next step on your franchise journey. So make sure to subscribe on Apple, Spotify, Google, or wherever you listen.