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When it comes to diversifying my portfolio, like most food franchisees, I have traditionally turned to the holy trinity of restaurant franchise investments: burgers, chicken and pizza. Diversifying further meant focusing on sandwich, dessert chains or other emerging segments in foodservice, such as when we grew the largest halal chain in the Middle East, The Halal Guys.
But with the major headwinds facing the restaurant industry today, franchises seeking multigenerational prosperity face a dilemma. The costs of opening and running a restaurant are astronomical these days—and getting increasingly difficult. Everything is more expensive: equipment, wages, ingredients, rent. Yet even with wages at an all-time high, restaurants are struggling to hire and retain employees.
That’s why entrepreneurs like me are starting to invest in non-food categories that have lower launch costs, require far less staff and, most importantly, offer a higher return on investment.
Related: Thinking about purchasing a franchise? Start now to find your personal list of franchises that fit your lifestyle, interests and budget.
Entry into non-food franchises
To be clear, I’m not giving up on food. I’ve spent 30 years building brands like Five Guys, QDOBA and The Halal Guys into national players. As one of Five Guys’ first franchisees, we’ve made millions by growing and selling our franchises. It’s a great business. But eventually it dawned on me that diversifying beyond food might be a good idea.
At Fransmart, we help people get rich through franchising. My passion – and fiduciary responsibility – is to make the bottom line as big as possible. Traditional brands aren’t doing well these days, and once-thriving concepts like Rubio’s and Red Lobster have recently filed for bankruptcy.
Greg Flynn, the world’s largest restaurant franchisee, recently renamed his company after becoming a franchisee of Planet Fitness – Flynn Restaurant Group is now called Flynn Group LP. Flynn believes Planet Fitness will be a great growth channel for his company because it requires fewer employees than restaurants.
“It’s less intense,” he told me when I interviewed him on my podcast “Smart Franchising with Fransmart” in April.
Discover GLO30
When I advise my clients to venture outside of food, I get involved myself too. For the first time since I became a Five Guys franchisee 15 years ago, I am now a GLO30 franchisee.
Washington, DC-based GLO30, founded by Dr. Arleen K. Lamba, is a skincare studio that bridges the gap between facial spas and medical spas, offering medically assisted facials that combine medical science with customized, seasonally adjusted, AI-powered treatments, as well as at-home skincare products from the pharmacy.
A proprietary AI-based system called GLOria scans each guest’s face upon arrival and creates a personalized treatment for the esthetician. Proprietary grooming products are also sold on-site. The main source of revenue is tied to the company’s subscription model. Members come back every 30 days for a treatment that will likely be different each time, creating a reliable revenue stream. Customers build relationships with their service providers – more than 65% of GLO30’s original member groups are still part of the program.
Today, Fransmart is working with Dr. Lamba and her team to help them achieve their goal of expanding GLO30 to 1,000 locations in 10 years.
Related: Find out which brands have been on the Franchise 500 list the longest and earned a place in our new Hall of Fame.
Are you worried about running a non-food business?
I didn’t know much about skincare, but I know research and market trends. Health and personal care is one of the fastest-growing retail segments in the U.S. Although the global market is already worth $1.5 trillion, it is still highly fragmented. Despite this, it has become a desirable tenant for main streets and shopping centers as landlords cater to shoppers’ health and wellness needs. Services like facials can’t be offered online, which is why companies like Massage Envy and Club Pilates have grown rapidly.
And I know about ROI. The incredible ROI of GLO30 is not found in the hospitality industry.
As far as learning the business goes, I’m in the same position as any other franchisee. I don’t need to know the chemicals or how to operate the equipment. I’ll hire the right managers, find the right locations, play by the rules, and reinvest my profits in new businesses. So if your goal is financial independence and you want to build wealth by investing in a franchise, it’s time to consider your options outside of the food space.
Blitzscaling for success
My GLO30 partners and I use a different investment strategy called Blitzscaling. Instead of opening multiple trades at once, we open one trade at a time and use the profits to buy more GLO30s, reinvesting the profits in more trades, compounding returns. They invest until the trades can fund themselves, allowing us to take profits or sell.
In contrast, restaurants with continuous reinvestment typically take longer to reach this point. Non-food franchises like GLO30 offer higher returns. While I will always be passionate about food franchises, Fransmart is paving the way for entrepreneurs to earn generational wealth by investing in emerging retail brands that are on the verge of exponential growth.
We prove that it is possible and have a little fun while doing it.
Related: Fast food workers in California now earn a $20 minimum wage – here’s how it affects franchising
