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Real Estate Meets Franchising for Diversified Success with Cliff Nonnenmacher

• Ed Mathews

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Ed Mathews:

Greetings and salutations real estate undergrounders. It is Ed Mathews with the Real Estate Underground. Today is a unique show because, yeah, we're going to be talking about real estate, but we're also going to be talking about other asset classes, something that I used to do back in the early 2000s like a million years ago and I happened to meet our guest, Cliff Nonnenmacher from Franocity. And so, Cliff, first off, welcome to the show.

Cliff Nonnenmacher:

I'm excited to have you on the show. Thank you so much, Ed. I'm excited to be here.

Ed Mathews:

Yeah, man, and so with this conversation we're going to be talking about a couple of different things. Obviously, Cliff is a real estate investor. He's got property in the Palm Beach area, if I'm not mistaken, down in Florida.

Cliff Nonnenmacher:

Palm Beach County and Utah

Ed Mathews:

Palm Beach County and Utah which is where he's calling me from right now. Let's start with, for those folks who haven't discovered Franocity or your background, why don't we talk about you first? Who are you and what do you do today?

Cliff Nonnenmacher:

Absolutely. My journey starts at a very young age. I have been self-employed literally my entire life. I did have a job, but I viewed the job more as being entrepreneurial. I was an investment banker with Solomon Smith Barney and spent several years there, managed around 250 million. So I was there from up to 2003 and I left getting involved in franchising. That's actually how I left the firm. It was for no other reason. I just needed to really go back out on my own. The firms are managed by lawyers and the drill. They're putting buy ratings on things they can't even spell Buy ratings At the time. Just to give you an understanding of why I left, think about the buy ratings on Enron and Williams Co, WorldCom, Bernie Ebbers.

Cliff Nonnenmacher:

These were crazy stories back then on top of just boss issues, branch manager issues on top of other things. So it's OK, I need to go back out on my own. Those are my roots. So I've done just about everything you could possibly do to be entrepreneurial as a young person. And then I got involved in franchising and that was at that moment where I started to create wealth for myself and my family. And it's okay. I truly, but of course I'm biased right.

Cliff Nonnenmacher:

Everyone is that's in an industry. I think that franchising is one of the fastest paths to create wealth without having to be super entrepreneurial, that you need to create an idea. Super entrepreneurial that you need to create an idea. So you have a lot of people on the show. Some of these people are founders and innovators, disruptors you had Nick Huber on. These are highly entrepreneurial people that have created wealth through execution and creation of ideas, where a franchisee can create insane wealth. Never create or invent anything. Think about it. All I'm doing is executing off of an idea that someone else created, and I'm executing hopefully flawlessly in order to do that and that's why I love franchising it can take an average middle manager, an average person with a desire to be self-employed, buy a model that aligns with their investment objectives, execute it, create wealth and scale it. That's what I love about it.

Ed Mathews:

Yeah, quite frankly, one of, if not the wealthiest person I know I'm not sure he may actually be the wealthiest person was a Subway franchisee, and I know they're struggling these days, but he owns, I don't know, 40 or 50 of them and he's done very well for himself over the years. And it used to be when I was in my teens and 20s. One of the things that they would talk about is do you want to be an instant millionaire? Great, go buy a McDonald's franchise and you're instantly a millionaire. And it's not that simple, but it is that straightforward.

Cliff Nonnenmacher:

That's right. Yeah, I'm not a huge fan of, let's say, the McDonald's model, but I hear you right that there's a business where just follow the model. It's a license to print money. Just follow the model. Do not go in there and start making unnecessary changes. No one wants to add hot dogs to the menu. For those who do, you are not a fit for franchising. Anyone that wants to take a business model like Chick-fil-A or McDonald's or any license to print money model and immediately implement changes, that's when you know you're not a fit for franchising. When you start thinking like that, definitely.

Ed Mathews:

And you made a point. I had Nick Huber on the show and one of the things that I admire about Nick and the folks that he hangs with, he's always talking about boring businesses and service-oriented businesses that look at his portfolio. He's in storage, he's in staffing, he's in search engine optimization. These are all boring businesses. There are no laser light shows and I think franchising, when done right, it fits that model in that you know you're not there to think outside the box, you're not there to have to create a brand or a product. You just have to get the playbook, understand the playbook and then execute. That's it. It's so true.

Cliff Nonnenmacher:

And there's a lot to be said for tried and true. Everyone wants to do something unique and different and something that's not in the market. I love when I'm speaking to investors like I want to own a sushi restaurant in my area and then we have a conversation about the competitive landscape and they're like, oh, no one's doing it here. There is a group of people who get excited about that and there's another camp of people who are terrified of that statement. What do you mean? No one is eating sushi. That means you have zero pent up demand. You're excited about a marketplace with zero pent up demand. I'm more excited about a market where it's like there's a lot of sushi consuming. There's a lot of this. There's a lot of people having their windows clean. There's a lot of discretionary spending and income. Like that's when we have, let's say, proof of concept. But it is amazing to me how many people will get excited about ideas that don't even exist in their marketplace. But yeah, there's a lot to be said for that.

Ed Mathews:

Absolutely. And the other thing that I'm always interested in is I pay attention to brands and how they place themselves, and I know they're not franchises. Every time I drive by a CVS. Within a Five Iron, there's a Walgreens, and wherever there is a Starbucks within a driver, there's either a BMW dealership or some luxury auto dealership. And the reason being is that these folks are doing market research. They understand the traffic patterns, they understand the demographics of the human beings that are living there, they understand what those human beings are looking for and where they fit in the economic strata and

Cliff Nonnenmacher:

We have a ton of companies in franchising that you can spend an ungodly

Cliff Nonnenmacher:

amount of money to determine.

Cliff Nonnenmacher:

is this a sustainable marketplace for this idea? Right, define sustainability. And if sustainability for brand A is, you need to operate in an area where within a one, three, five mile radius you have 30,000 households making 175,000 a year in household income. Okay, you just define the sustainability for that brand. That that what I just said, does not work. Just anywhere in America. That is a significant household income. So that's a brand where it's really challenging to scale and it must scale only in those markets. So, yeah, you have to identify those areas. Yeah, go ahead.

Cliff Nonnenmacher:

No, I was just going to say everyone always says you go to the mall and you have 15 jewelry stores and people may. Or you go down a road and there are 17 different car dealerships, or you go on a street corner intersection and there's four, as you said, pharmacies. Right, they want it that way. It's economies of agglomeration. Like the guy the jeweler in the mall did not say to the Westfield landlord I want to be the only jewelry store in this mall. I want a use clause. No, they beg for 15 more jewelry stores. This needs to be the destination for the engagement ring, for jewelry. I need a piece of jewelry. Where do I go? Go to the mall, there's a bunch of places there Go. It's like where do I go to buy a car? Go to this street, there's 15 dealerships. They love that. Again, it's an economic turn.

Cliff Nonnenmacher:

economies of agglomeration designed that way yeah exactly that's right, exactly,

Ed Mathews:

and that goes for franchises physical franchises that actually have brick and mortar operations, but there are also online franchises as well, right home investors in my world? That's right Right.

Cliff Nonnenmacher:

I mean, look,

Cliff Nonnenmacher:

we're a huge fan. Everyone always thinks they're going to work with a franchise consultant, they're going to try and recommend the most expensive brands out there. It's actually quite the opposite. I'm all about asymmetrical investing. I like low investments, as little cash upfront as possible, as much leverage as I can obtain. I like businesses that are very short ramp to break even. I like businesses with a high margin, which now you did one statement alone. You just eliminated a huge swath of brands that are razor thin margin like food. Food's out gone, just in that one statement. I like as few employees as possible. I like highly scalable.

Cliff Nonnenmacher:

Brick and mortar is not highly scalable, right? You want to own one, let's just say 600 grand. A second Dunkin dunk in 600 grand, a third one. That's not easy to scale versus non-brick and mortar. Which is how do we scale? Get a tech lease another vehicle, get a tech lease another vehicle and continue to scale. That's why when you drive down the street in Connecticut you see a HVAC van and it'll say, like vehicle number 103. You're like what? Yeah, it's that really simple. There's nothing more deceptive than the obvious. It is actually simple to scale non-brick-and-mortar brands because the cash investment is really small. You just need to be a lead machine, a marketing machine to keep those vehicles on the road and to have enough business to justify, obviously, the spend.

Cliff Nonnenmacher:

Again, I understand the playbook I love non-brick-and-mortar brands.

Ed Mathews:

Yeah, understand the playbook, execute the playbook right. And because the royalty that you spend on a monthly, quarterly, annual basis back to the franchisor is, you know, a huge portion of that is going to their branding and their advertising and helping you elevate your brand. They're doing it on a regional or national or worldwide basis, but rise and tide floats all boats and that's the whole concept, right.

Cliff Nonnenmacher:

There a lot of people, that's That's very you You say that a lot of people look at a brand and they focus on the brand. Right, they just focus on can I do this? Is this something I want to do? Does it work in my market? It's. Can I make? Can I replace my income that I've been accustomed to? Can I create wealth, whatever the investment objectives are? Can I make seven figures? Can I make six figures?

Cliff Nonnenmacher:

comes to us from a different place. What they never calculate never is what you just said. It's the leveraging of collective intelligence. When you join a brand, no one ever gets on the phone with me and says this brand has 300 units. Right, that means I could reach out to 300 people wearing the same logo on their chest and ask them for the answers to the test. Everyone focuses on the franchisor. They never focus on the fact that right there in your backyard in Connecticut is one of the number one operators of a brand, and I could reach out to that person for a cup of coffee and say, hey, we're in the same family of brands. Do you mind if I take you to lunch or a cup of coffee?

Cliff Nonnenmacher:

I have some questions. What's working on marketing? How are you compensating your managers? How are you retaining your staff? What are you experiencing through COVID? What are you experiencing with the supply chain disruption? How are you hedging inflation? Where are you finding people in the tightest labor market in history? I heard a statistic the other day that was like 1.5 million women are on OnlyFans and if you think about that statement between ages of 18 and, let's say, 25, you're talking about 10% of this age group. Where is the labor market? What happened to these young people that were supposed to? It's a challenge. So to get out there and to press the flesh with people in your business and to just get the answer to the test, I think is super powerful and you just can't do that hanging your own shingle. I'm sorry, you can't do it.

Cliff Nonnenmacher:

Yeah, and I saw that same, that same article, or that news. It was eye-popping. The other part of that was even more disturbing, which is that those 1.5 or 1.8 million ladies have 82 million customers, which represents about 50% of the American male population between the ages of 18 and 60, which is-.

Cliff Nonnenmacher:

I was blown away by it.

Ed Mathews:

I was blown away by it. But then what?

Cliff Nonnenmacher:

it does, Ed, is it starts to create the framework for why we're in the labor market. We're in. It really does. Just think of the mass exodus of workers that are standing in front of a computer, selling their time, body, whatever they're doing, to an audience. And it's yeah, I normally would have worked retail. I normally would have worked at express. I used to work in the mall. I've heard people. I used to be a police officer. Now I do only think about it. This is a. And then you have the men. These are mainly females, as we had this conversation. And then you talk about where are the guys, where are the 18 year old first-time workers to enter the fast food space or the quick service restaurant space? Oh yeah, they're making TikTok videos, they're making YouTube videos, they're podcasting and they're actually happy making 30 grand a year.

Ed Mathews:

You know man living at home and the breakouts. This gig economy is real right, and the fact is that there are also. So I follow a lot of folks on Twitter that are in this space and there are a lot of 18 to 35-year-olds who are making very good money six figures plus as solopreneurs selling products. Right, that's exactly right. And they're the people out there saying I use ChatGPT to create products and I turn around and sell them. I don't think they're making money, but the people who are actually thoughtful the Matt Grays, the Dan Coes, the Justin Welches these guys are A they're brilliant and B they're adding huge value to other entrepreneurs, and those entrepreneurs are willing to pay for their products.

Ed Mathews:

That's right, and that's how we know those names, because I bought their products right, that's right.

Cliff Nonnenmacher:

yeah, I'm on some of those newsletters

Ed Mathews:

and so, franchising, I want to make sure that we're crystal clear on one point. I want to make sure that we provide clarification around. There's two elements to a franchisor relationship, primarily, right. There is the franchisee, who is the person who owns the franchise, and then there is the franchisor or franchisor, depending on the language you use who is actually the entity or the person or group who own the brand, own the original locations or business and are now in the process of allowing other entrepreneurs or other business owners to buy into their model. And so, for Franocity, you guys focus on the former, not the latter.

Ed Mathews:

Right, you guys are focused on people who are interested in buying into a franchise, not necessarily the folks that are looking to franchise their business, yeah?

Cliff Nonnenmacher:

Yes, exactly. I'm focused, I'm la ser-focused on who wants to purchase or investigate franchising as an investment vehicle, and I thought it would be a good idea to be on your show and say, hey, you have this massive audience that loves tangibles, they love real estate, they love scaling, growing, creating wealth. There's also a lot of realtors that are listening into the show because they have a love and affinity to real estate. That I also thought, man, they're touching the homeowners, they're touching the buyers, they're touching the sellers. There's a lot of things that they could do to diversify their investments. And you wouldn't believe how many realtors I'm speaking to right now. It is absolutely insane. Yeah, because, look, I love real estate, I love real estate investing. It's a highly cyclical space. It's no different than contracting, and a lot of these folks now are starting to feel some pain.

Cliff Nonnenmacher:

lot of the mortgage brokers are just dead. They're absolutely dead.

Cliff Nonnenmacher:

The number of mortgage brokers you bet and they need to create that hedge. It doesn't always rain, it's not always good times, you're not always getting a 20%, 30% return on your assets. It's just not normal. So I thought that there's a ton, there are a ton of opportunities and I'll just share one statement I make with realtors and I'm like that's really thought-provoking. I tell them I go do you realize that every home inspection report, like literally every home Home inspection report that's done in your world, includes drywall repair as a line item in there, or roofing, which is number one.

Cliff Nonnenmacher:

Roofing is absolutely number one in home inspection report? In a handyman business, you could be in the HVAC business, you could be in roofing, flooring, siding, junk removal. Every house that a real is trying to sell, there's air on it. It's like you're landscaping. There's a boat on cinder blocks or a car or we need to clean this up a little bit. There are so many opportunities for real estate investors and realtors in franchising and here's the key. This is where a lot of people get this disconnect. No one wants you doing the work. So don't think I don't want, I don't know anything about roofing good, because no one wants you to be a roofer If you're a realtor and you're somewhere in America and you know that in every inspection report, roofing is number one hands down as an issue.

Cliff Nonnenmacher:

There's always something going on with a roof in a transaction of real estate. Even if it's just cracked tiles or some shingles missing or aging, you don't have to be in the roofing business. That's the beauty of franchising. No one expects you to do the work. They want you to have your business acumen. You hire people that love it. No one wants you trimming trees, no one wants you fixing drywall.

Cliff Nonnenmacher:

So that's why I thought this would be a great audience and I'm happy to be here, because I think that's a huge opportunity for realtors to create a hedge against a light real estate market, because, even if it's a light buyer seller two-sided market that the issues with homes will exist regardless of a transaction. Like, you don't need to sell or buy a house to know that you have issues within it. You have to fix them. Look at water, fire, mold and biohazard, look at flooding, look at Servpro, look at ServiceMaster, look at Paul Davis. This is random acts of catastrophe having nothing to do with a real estate transaction. So we can unpack a lot of brands, whether it's staging or whether it's everything that I just mentioned, where realtors and real estate investors can create a nice hedge and, in addition to that, they could use residential property management services to manage their existing portfolios.

Ed Mathews:

Yeah, the fact is that if you really think about it and you break it down and this is actually one of the really interesting you bring up this point and it's something that really resonates with me because I'm always looking for ways to diversify. It's been slow going as a real estate investor. I haven't bought anything and I think the first property I'm going to buy in about 18 months is in about two weeks, and I've been selling into this. I haven't been buying out of it.

Ed Mathews:

And the fact is that one of the ways that, like a lot of flippers that I know, a lot of rehabbers that I know, a lot of realtors that I know have diversified and kept the juices flowing, is invariably, when I go into a wreck of a house and we go in, we make it clean and safe and then we make it beautiful. Right, and by the time we make it beautiful, I get knocked on the door by at least one of the neighbors that says, hey, I need a roof, can you do that for me? And when I'm busy I say no. When I am not busy, I say sure, let me take a look at it, and we're more than happy to take a look at it. Why not create a business around that? I do it opportunistically, just in the interest of keeping my guys busy and keeping cash flowing. But we owned a captive roofer or a captive windows and siding or staging or drywall or flooring or whatever franchise. You got me thinking here, Cliff.

Cliff Nonnenmacher:

You look at, look at like when you talk about barriers to entry, like roofing is a skill, it's a let's call it a higher level. You got to be able to go up there. It's a heavy lift, it's a big investment. There's a lot of risk to, let's just say, roofing. So what's? What's something the opposite of that, just the lowest barrier to entry business just picking up junk. You look at 800 Got Junk. They're doing 750 million a year in revenue at a Canadian brand yeah, we had him on our show. Brian Scudamore is an absolute beast, right. And you look at the average revenue of his brand it's like 2 million a year. And then we have competitors in franchising that we represent. We represent 600 brands. So we have a massive superset of brands and we're working with a client to introduce them.

Cliff Nonnenmacher:

Some of my other junk removal brands, again, low barrier to entry, de-skilled, just easy, simple, unskilled labor. A million five a year hauling junk, solid 15, 20% margin all day long. You're like that's simple, it's simple, it's highly scalable. And, of course, we are the number one consumers on the planet. We buy shit we don't need every single day. And what do we do with it? We store it in a storage unit. Like how about that? And then when we're tired of all this stuff that's in our attic, in our basement, in our storage unit, we end up calling someone and pay them a premium to haul it away that we've just spent several hundred dollars on. If you look at this loop, this cycle that we're in, it's crazy Consume, never use pay to store it, forget you stored it, forget you own it, pay someone to haul it. So just things like that are just so simple and make money.

Ed Mathews:

Absolutely. o you mentioned your show, so your podcast tell us a little bit about that.

Cliff Nonnenmacher:

Yeah, pursuit of profit is the name of the show. It streams on all the normal streaming services the Spotify, is right, the Apple. The show primarily is to interview founders of brands only. So we just want to interview founders. If you're a franchisee and, to your point, not a franchisor, right? So if you're a franchisee you have to be doing like five plus X the average operator. So we had you mentioned staffing with Nick like we had a staffing franchisee on zero industry experience, doing 70 million a year. Right, we had a residential property management guy on recently out of a market that you and I would never want to operate in, a market like Iowa, guy was doing 13 million a year. The average revenue for their franchisees is maybe 700 grand. So you look at that and go, wow, so if we do bring a franchisee on, they're just killing it, absolutely killing it. And again, they're five plus 10, x in what the averages are doing.

Cliff Nonnenmacher:

But I would say 90% of the guests on the show are going to be founders of Franchise Concepts and we just interview and take a deep dive into how they got in this business. Right, unit economics, how many locations, how to scale it, what's the investment, how do you acquire customers. What's your cost to acquire a customer? Just getting a little more granular into the conversation about each business and most people don't like things at Hello, right, they just don't. Most people. If you said to someone like we used to be really big into dry cleaning back in the day and now I have no interest in that, take a closer look at it and then all of a sudden they're starting to see the millionaire next door. I don't know if you read that book by Tom Stanley, right, it's open up your checkbook.

Cliff Nonnenmacher:

That's where all your money's going. Look at your. What was one of the famous quotes in that book. Today's millionaire doesn't know a Rembrandt from a Rembrandt, but they know all about the cost of dry cleaning fluid. It's like those, as you said, sweaty startups, the tried and trues, the businesses that are local with feet on the street.

Cliff Nonnenmacher:

And, by the way, Ed, I truly believe this with AI and now quantum computing coming out now, there's a lot being thrown at us in a very short period of time. I really believe, for the first time in history, you have AI going to annihilate white collar jobs, going to annihilate white collar jobs and I think the plumbers, I think the tradesmen the pendulum is going to swing violently in the opposite direction, where you're going to see the blue collar guys making an ungodly amount of money. I think your average plumber is going to start making two to 50. I think your average HVAC guy is going to kill it. I think that we have shit on the trades in this country. For two decades and we told our children to go to college that come out and can't even spell. They can't write a paragraph. I mean, I'm blown away by some of the letters I get from college grads and they're sitting in debt for $150,000, $200,000. It's insane.

Cliff Nonnenmacher:

And now you're starting to see that pendulum swing the other way. Where it's? I'm going to vocational school, I'm going to trade school. I'm going to learn how to use my hands. I'm going to learn how to capitalize with my feet on the street zero risk of AI, zero risk of Amazon, and I'm going to create wealth for my family and I think you're going to see that big time. And franchising fits perfectly in that trend of be careful, because AI is going to take your job. I told my son to become a lawyer. I told him pivot, unless you're going to be a trial attorney with your feet in a courtroom, don't do it.

Cliff Nonnenmacher:

I use chat GPT to evict a tenant. Come on, it gave me the Florida law, step-by-step and strides. I told it you're a Florida attorney and you're an eviction attorney. Give me the step-by-step instructions on how to evict a tenant under the laws of the state of Florida, step-by-step, come on. Yeah, be terrible. Accounting dead, law dead.

Cliff Nonnenmacher:

A lot's going to change.

Ed Mathews:

Shop for sales

Ed Mathews:

, consulting, marketing, right, and the fact is that you look at my old jobs in sales and marketing in the tech world. Those shops they used to be multiple hundreds of thousands of dollars a year jobs. They're all going away and I've had more than one founder that I've known over the years cut their marketing staff from 10, 12, 15, 20 people down to three or four, like that, like literally overnight because of AI. And we're at the dawn of it. We haven't even started yet.

Cliff Nonnenmacher:

I totally agree with you. Ed, I feel like I'm at the tip of the spear for this conversation because I am the guy getting the phone call and the lead and I'm saying what brings you to us? What? What made you go on the internet at one and I'm looking at it, right, it's 1am, 3am Like. What made you do that? Nate? There's, the stories are all the same. I fear for my position. I'm seeing people in my department being terminated. They're being terminated because of ai, like being a wordsmith. I always admired a wordsmith because I'm not a wordsmith, right, and it's man, I love that. Look how well, well-written that is, right. Look at that marketing brochure. Look at the content, look at the creative, look at the copy. I don't need those people anymore. I go and I use AI for all that stuff.

Ed Mathews:

Now you don't need five of those people.

Ed Mathews:

You need one. You need one. You've got. You've transitioned, like copy editing, right. You've transitioned from five people banging out content for social media and whatever else to one person who's just editing and making it human as opposed to creating, and I think that's only going to get better. All right, so thank you for that and I'm grateful. We're going way long, but I don't care, because this is a good conversation. So I'd love to get into the final five and because I'm always interested in business leaders and entrepreneurs and what makes them tick and how their brains work, so I'd like to ask you to finish this sentence. My purpose is what's that mean to you?

Cliff Nonnenmacher:

My purpose is.

Cliff Nonnenmacher:

My purpose has always been to create wealth, but not for the reasons that people create wealth. It's to me, wealth is freedom, and it's freedom from a broken system, right, it's freedom of health. It's just. It gives me the ability to live my life my way, and I just I've always been that way. When I say always, I'm talking like eight, nine, 10. I've always wanted to be self-employed. My purpose is literally to just live my life my own way. I do not like to live within these rules or within a box. That's just. I just I view wealth as absolute freedom and I like to give, I like to mentor and help other people, like our podcast and like attending shows like yours. I want to empower other people to live freely as well and to and to be able to enjoy just the fruits of the efforts of being an entrepreneur.

Ed Mathews:

Yeah, time freedom is one of the most valuable things you can have.

Cliff Nonnenmacher:

Time is the only commodity you cannot recycle. It's gone, that's it. You're never getting it back. And I'm amazed at how many people really just don't value their time and binge watch Netflix and just lose 7,000 brain cells. Like I just don't get it. There's so much and that's one of the best quotes I ever read in my life. If you think becoming a millionaire in America is difficult, you haven't tried, and that is the reality for a lot of people. They want what you have. That is the reality for a lot of people. They want what you have. They want what others have. They're just not willing to exert the energy to do it and use their time wisely.

Ed Mathews:

Yeah, there's an exercise I take the folks that I mentor through in terms of time management. We talk about 60 hours a week working. You go out every night after work for an hour or two. You go out and you go tailgating on Saturdays and tailgating on Sundays. You watch your football games, go out to dinner on Saturday night and Friday night, and all that and you sleep eight hours a night. And here's the thing 168 hours in a week you do all those things, which is a full life. You still have about 25 hours a week to do something with right and most people binge, watch Netflix and video games and whatever else they're doing.

Cliff Nonnenmacher:

Do doom scroll on social media and just don't get angry, you don't have time, right, that's. I completely agree with you. Like I just kill all that stuff. I can't stand social media. Yeah, right, okay.

Ed Mathews:

So awesome. Let me ask you about mentors. Guys like you don't get where you are without having people who've been very generous with their time and expertise. So what's the best advice you ever got and who gave it to you?

Cliff Nonnenmacher:

I've had quite a few mentors I had. My main mentors were when I entered excuse me, I grew up next to what I refer to as the Brady bunch. They were pioneers in the plastics industry. Their father, they were wealthy people. Every single child in that house next door had really empowered me to be an entrepreneur because they were entrepreneurial. Their parents did not pay for them to go to college. They clammed on the Great South Bay and Long Island to put themselves through college and were just entrepreneurial. So they inspired my journey. My father as well. He always tried to do something entrepreneurially.

Cliff Nonnenmacher:

I don't know where I got this advice from, but, boy, I live by it. Never take advice from people that aren't where you want to be. And people people are very interesting. When I wanted to become self-employed and do something, most people spend their time analyzing reasons for failure instead of spending their energy on how to achieve results. So I have learned really young, I wanted to buy a subway in the early 90s which they didn't even have 4,000 locations at the time and no one. You probably wouldn't even known about. You're in Connecticut. You would have known about it because they're out of Milford. But you get my point. They were small. They weren't what they are today.

Cliff Nonnenmacher:

I thought it was a great brand, I thought it was something that I could get behind and my accountant gave me horrible advice and said don't do it. And he gave me a slew of reasons why. I don't even think I was 18 at the time and I wanted to do this deal in Marklewell in Florida, and I realized at that moment fast forward, that when I go to an accountant, I don't really want your opinion, I just want empirical information from you and I'll tell you why. Most accountants aren't wealthy because they're risk adverse. So why am I taking advice from someone that doesn't even embrace risk? They don't embrace chaos. They don't embrace this entrepreneurial world that we live in Like they just want to. They want slow and steady reduce risk.

Cliff Nonnenmacher:

I don't really like taking business advice from lawyers or accountants. I just want to know how is this contract written? Are we managing risk properly? Contractually? Is the language right? Don't do not give me your advice on whether this is a good or bad investment. Leave that to me. You do the other thing. So, thankfully, as a teenager, I learned really quickly how to use the accountants and how to use the lawyers and how to get what I need from them, the skill sets that I don't have. But if anyone's listening to this, because you will feel compelled to ask family members and friends and the uncles and the aunts do not take advice from people that are not where you want to be. That's my advice, yeah.

Ed Mathews:

The only thing I'll add to that is that I work with accountants. First off, you have to speak real estate in order to be an accountant for my company, right? But the other part of it is that I'm always looking at. I'm always wary of being an entrepreneur, being somebody who's on the creative side of the operator, creative spectrum, right. I'm always worried about confirmation bias and I leverage the expertise and the risk aversion of underwriters and accountants and lawyers to give me the 97 reasons why I'm about to screw up.

Ed Mathews:

But the next set of questions are okay, how do I avoid that? How do I fix that? And if I can get over that, if my accountant, dave Lake, says, okay, here are the 19 reasons why you should not do this deal, okay, let's talk about each one of those and work through them. How would you overcome the risk in all those? And if I get to the point in my headspace where I go, okay, of these 19, 12 of them are no big deal. I've already thought through those. And these last seven? Let's talk through them. Okay, we have a plan for each one of those If they happen now. Now the risk is managed and let's get the deal done. Absolutely Love it, yeah, and I've never been fired by an accountant for doing a deal they recommended against, although every once in a while I get. I told you this would happen and yeah, you did. That's fine and it is what it is. So, speaking of mistakes, what is a mistake that you would love ba ck and how did you recover from it?

Cliff Nonnenmacher:

I don't do well managing, let's say, entry-level employees. I don't do well managing hourly employees. I don't. I do way better managing six figure employees, let's say executives, middle managers, and it was a. And let me tell you something for people that get into franchising listen to what I'm saying. Do that internally.

Cliff Nonnenmacher:

I have people come to me to buy franchises all the time and I have to ask them when's the last time you managed a minimum wage employee? And they're like never. You have how many direct reports? Do you have? 15, 15. What are they making? Oh, they're all making six figures Exactly.

Cliff Nonnenmacher:

And now you want to buy a franchise managing 10, 15, $20 an hour people. You don't. You don't know what that's and you may not actually enjoy it. You may not be good at it. I suck at it and I was bad at it to the point that I had to shutter this business. And how did I recover from it? Thankfully, we have tax benefits as entrepreneurs, so I recovered from it by keeping that entity open, using that entity with these capital losses and then purchase another investment that was highly profitable, and I use all those losses to offset my gains. So it was a massive turnaround in terms of using tax efficiencies and tax code to make up for my mistake, but that would be the financial makeup. How did I make up for it? Going forward, know yourself, know your limitations, know what you're capable of right, hire the skill sets you don't have. And that was a major wake-up call for me and my business partner, Justin, who I co-founded the firm with Franocity. We vowed that day we're not doing that again.

Ed Mathews:

Smart. Yeah, know thyself is real important, right? One of the things that I had I learned from a book really was eos there's that I mentioned earlier, the creative versus the operator, and I always envisioned myself being good at everything and turns out yeah, can I do bookkeeping? Sure I can. Am I good at it? Yeah, I'm good enough at it, but hate it. I hate it with the white passion of a thousand burning suns. I just so why not bring in people to do that for me? You got to know what you're good at. You got to know what you enjoy. You got to know what you're going to excel at, because the things you don't human nature is things you don't excel at. The things you don't enjoy, you will procrastinate and not do, and that's a problem, right?

Cliff Nonnenmacher:

I completely agree with you and I think that the worst advice that we have all been given I think everyone listening, including yourself, can say I have been given that advice if you want something done right, you have to do it yourself is the absolute worst advice you could ever be given as a human being, unless you want to be poor.

Ed Mathews:

Amen, yeah, it's a recipe for disaster and totally, totally I think it was actually designed?

Cliff Nonnenmacher:

I think it was designed actually to keep the 1% and the 99% in check. I think that advice was given. It's just no different than don't count your chickens before they hatch. Law of attraction thoughts become things right. That was all meant to suppress. I think it's the most suppressive advice you could ever give another human being. Are those two things?

Ed Mathews:

Or it was created by an accountant or an attorney, right? So I'm always curious about how execs like yourself, leaders like yourself, sharpen that saw, and so I'm curious about the books you're reading these days what's on your nightstand, virtual or otherwise, and who are you paying attention to?

Cliff Nonnenmacher:

So, right now, because we're writing a book. So we're working with Forbes. Right now we're writing a book. Our book is going to be released, maybe first, second quarter of next year. Its title is Beyond the Brand. So we're going to have a discussion beyond the franchise brand.

Cliff Nonnenmacher:

So lately I've been reading a lot of franchise wealth created books. I don't even want to plug them. I honestly believe that they're just poorly written. They're really not that valuable written. They're really not that valuable.

Cliff Nonnenmacher:

However, as books that I now I'm starting to read because of a Delta flight, James Clear Atomic Habits I don't know this guy to me right, I think he's one of the best communicators.

Cliff Nonnenmacher:

He's one of the most masterful people to take complex issues and just simplify them in little sound bites and short clips. So this Atomic Habits and, of course, I want to read the four-hour work week, which I know is an older book. But speaking of time, I want my time back and I think that I'm more productive than the average human being. I think I do more in a day than an average person will do in, let's say, two or three. I'm highly productive. I'm laser focused. I have very few distractions. I don't deal, like you said, doom scrolling on social media. All of my time goes into productivity, so I really want to embrace something like that and spend more time on the things that I love, whether it be my family or just my passions or my ability to just recharge and regroup and maintain thought clarity and just maintain good health and that takes time as well.

Ed Mathews:

Yeah yeah, a buddy of mine actually a guy who was on this show, Andrew Freed that put me on to a similar book called the buy your time back, Dan Martell. And if you're looking at those types of books that I just started it literally two days ago we're recording on January 2nd here, so this is a holiday reading time, and so once I got through the New Year's, I picked up a book and this is the first one that I'm reading and I'm about five chapters into it. It's opened my eyes on several levels. So good book. So let's talk about success. What does success mean to you?

Cliff Nonnenmacher:

What does success mean to you? Yeah, I think it would be my same answer. Just success to me is just living your life under your own terms. And I go into when I say that, just like modern medicine which I'm not for, I think that modern medicine does not really help people. I think it keeps you sick. So, just the ability to have capital to say I'm going to hire experts Look at Huberman, look at Asprey, look at Ramsey, look at all these guys, atiyah, that have done just amazing things, their podcasts and their information flow and what you can learn from them and then to be able to hire them and say, okay, this is me and my body, my blood panel, right, my workup, what would you do?

Cliff Nonnenmacher:

Where are my deficiencies? How could I be healthier? And that's what I'm doing right now, and I think it takes capital to do that. The average person can't do it. I'm sorry. They're stuck in that system that I refer to as broken, where it's look, what's the matter? Oh, what's the matter? I have low, this high, that it's all prescriptions, that's all they give a shit about.

Cliff Nonnenmacher:

So when you talk about what's my definition of success, it's literally defined as the ability to live my life my way. And if I don't like what I'm seeing or I don't like the way the system is designed, I wanna be able to have the means to say I'm flipping the script on this and I'm gonna live my life my way, like I'm not on any meds. But had I listened to modern medicine, they probably would have put me on three, four prescriptions. I'm 53 years old, not zero. Do I have deficiencies? Yeah, but we identify them. I actually just have my blood panel done from last year. I was B12 deficient, I was D deficient. Right, I needed this. I needed that resolved under alternative means.

Ed Mathews:

If you will Good for you. That's great. So when you're not talking about real estate and franchising, what do you like to do for fun?

Cliff Nonnenmacher:

Right now I happen to be in one of our properties out in Park City, Utah, which I love the skiing out here, so I love skiing. I also reside in southeast Florida, Boca Del Rey. I'm a huge boater, I suck at golf and I really golf is a huge time commitment. I just don't have it. But I think my greatest passions right now are just the winter sports and investing.

Cliff Nonnenmacher:

I have a 16-year-old who, at a very young age, became interested in investing, so we spend a lot of time together looking at charts and graphs because I like that kind of technician component of investing Because he's so young. We're really into crypto, so we do a ton of analysis on cryptocurrency and have a nice portfolio there. We're huge on uranium and energy. Due to everything that's going on in the world today, the grid isn't designed for all these ideas. I'm sorry, I didn't want to listen. If you want to make an investment in energy and it better not be fossil fuel, because that is not the future, and I don't have a problem with fossil fuel, it's just you can't take every car and just plug it into an outlet. It's just not going to work. So I love, I'm very passionate about investing as a former investment banker, but I love doing it on my own. So those are the things I love to do. I love my family. I'm very close to them. We spend a lot of time with each other. Those are my passions.

Ed Mathews:

Yeah, good passions to have. Yeah, the Hubbard and Peake is real right. At some point we're going to dip a straw into the earth and come up empty and figuring out what that next stage is. There's a reason why ExxonMobil and all those other BP are all investing in alternative energies fusion, fission, wind solar.

Ed Mathews:

It's. There's a reason for that, and that is that we're. Everybody knows that the gravy train, the oil petroleum gravy train, is at some point going to come to an end and it's probably maybe not in our lifetime, but good chance it's in our kids' lifetime.

Cliff Nonnenmacher:

I agree with you. By then the technology will be there, I think. Quantum computing I'm still wrapping my head around. I didn't even really fully comprehend a semi-processor from intel or nvidia. Now I'm supposed to digest quantum computing at the atom level and the ability to process information. This is going to be interesting and it will solve a lot of future and modern day problems.

Ed Mathews:

So it's going to add a ton of complexities right, yeah, without a doubt, right.

Ed Mathews:

I saw an explanation that made a lot of sense to me. It was basically think about computers that we grew up with. If you ask them to solve a maze, they will try each path, one at a time, serially, and until they find the solution. Quantum physics, in an instant tries all paths and solves that puzzle in a matter a matter of, in this case, nanoseconds. Now make that. That, then place that in highly complex areas medical research, energy research, like you were talking about earlier. It's, it's a, it's a huge opportunity and it's it's equally terrifying and equally exciting.

Ed Mathews:

In my and mainly because I saw the terminator movies and so, had I not, I'd probably be going headfirst into it, but I know it. I know that Schwarzenegger and the unbeatable terminator is a possibility, so tread lightly out there. OpenAI and all those other. Yeah, obviously you have a book coming out. Congratulations on that. I can't wait to read it. Uh, you have your podcast. If folks want to learn more about you, or Franocity or any of the other things you're working on, what's the best way to do that?

Cliff Nonnenmacher:

Pursuit of Profit. That's the name of our podcast. They can reach out to me immediately, just hide behind the computer a little bit and dip their toe. If they wanted to just go to a website and request information, it's franocity. com, f-r-a-n-o-c-i-t-y. com, and they can request some information. They can reach out to me directly. And, yeah, next year we'll have our book coming out called Beyond the Brand. Takes a deep dive into franchising and risk, which plays a huge role. Most people don't make decisions because they have no confidence in themselves. They're literally paralyzed in fear, and we have a culture right now that is afraid of making big decisions and risk. Everyone's taken this safe way. It's really frightening. If you really think about it. We have done something to society where they just don't want to take risks. I think those are the best ways to reach out to us. Visit our website. We love to chat with you. By the way, I didn't mention this.

Cliff Nonnenmacher:

What we do is free. I always refer to ourselves as being compensated like realtors. It's the best analogy I could give someone. We're paid by the seller, which means we're paid by the franchisor, so we work for the investor, the buyer, your listener, literally 100% for free. There's never a time that we ask for money. It's not a sales funnel. This is a due diligence cycle when they work with us that takes three, four months to complete. So there's a ton of due diligence involved in evaluating brands when they're working with us. But I just want everyone to know that we do work for you for free. We're paid by the seller at the seller's expense. You're not paying directly, you're not paying indirectly. You are not paying for us at all. Nobody believes free in any song.

Ed Mathews:

You got to go on and on about it. Excellent, I'm glad you mentioned that. Cliff, thank you so much for joining us today. It's honestly, man, I learned something every time we talk and I'm grateful for your time today. And hey, when the book comes out, I want to have you back on the show.

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Ed Mathews - Clark St Capital

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