Alex Smereczniak

More millionaires made from franchising than every NFL player ever

Franchise operator Alex Smereczniak claims franchising has minted more millionaires than all NFL players combined, and that private equity and family offices are increasingly rolling up large franchisees.

“There are more millionaires generated from franchising than all combined players ever in the NFL. And there's a number of private equity family offices starting to get further and further into franchising, and they're buying both large franchisees or they're doing roll-ups.”

The college laundry hustle: $30K to $280K with one orientation booth

Alex grew Wake Forest laundry service Wake Wash from $30K to ~$280K in one school year by getting a booth at orientation week and selling worried parents (not broke students) the premier laundry service for their kids.

“And so the big thing that changed it for us that allowed us to go from, you know, call it $30,000 in revenue when we first bought it to just under $300,000 a school year in revenue was get a booth at orientation week. And for whatever reason, Wake gave us a booth next to where you got your meal plan, where you got your parking pass, where you got your keys to your dorm, like all the, like, marquee things you need to do. And we went full ShamWow guy.”

Steal thisSell the worried parent, not the broke student; plant your booth next to the unavoidable orientation-day must-dos.

Chick-fil-A is a pseudo-franchise: $15K fee but 15% royalty + 50% of profits

Unlike standard franchises that take a ~6% royalty and 0% of profits, Chick-fil-A charges only a $15K franchise fee but pays for the site and buildout, then takes a 15% royalty plus 50% of profits — effectively selling a high-paying job.

“Chick-fil-A is a little bit of a pseudo-franchise. It's $15K for the franchise fee, but then Chick-fil-A actually built— you know, buys the site, they pay for all the build-out. But they're taking a 15% royalty instead of 6%, which is standard. So 6% on your revenue is standard. Chick-fil-A is taking 15%, but then they take 50% of your profits as well, which no other franchisor does. They take 0% of your profits. So you're effectively with Chick-fil-A buying yourself a high-paying job.”

Ex-banker bought 2 Orange Theory after asking the owner what he made

Cal Gulapalli, a former investment banker, got curious at his own Orange Theory, asked the owner his financials, learned he made ~$400-500K per location across 3 gyms (~$1M+/yr), and immediately bought two locations — kicking off a franchise empire.

“he's a curious guy. He asked, you know, the manager, you know, is the owner around or can I get in touch with him? Gets in touch with the owner, asks the owner, how much money are you making? The owner was forthright, shared his financials, and I think he was making $400,000 or $500,000 for that, you know, profit from that one location. Kyle's like, you make that from one gym? And he's like, yeah, I own 3 of them. He's like, so you're making over $1 million a year off of 3 locations. And so he goes and buys 2 Orange Theory, like, immediately.”

Steal thisWhen a local business impresses you, just ask the owner what they make — many will tell you, and that's your deal flow.

Cal: 120 franchises, 8 brands, half a billion in revenue in 7 years

Cal Gulapalli used PE, family office, and independent investor money while keeping 30-60% equity as the operating partner, scaling to 120 locations across 8 brands (Marco's Pizza, Restore Hyper Wellness, European Wax Center, Pop-Up Bagels) doing over $500M/yr in 7 years.

“a lot of the times he owns 30 to 60% of the equity in these kind of like sub-deals that he's doing. So he's using private equity, family office, independent investors, but he's the operator and owning 30 to 60% of a system that likely does over half a billion a year in revenue across all of his, you know, his units in 7 years.”

Franchisees demand 25%+ cash-on-cash IRR vs real estate's 12-16%

Alex's benchmark: real estate investors celebrate 12-16% IRR, but a franchisee is unhappy below 25% cash-on-cash — and franchises also trade at 1-2x higher EBITDA multiples than independent businesses because the brand de-risks them for banks and buyers.

“a real estate investor would be jumping up and down about 12 to 16% IRR. A franchisee is upset if they're not north of 25% IRR.”

Steal thisUnderwrite franchise deals to a 25%+ cash-on-cash floor, then count the higher exit multiple as upside.

Average Dave's Hot Chicken: $3M+ revenue, ~$600K profit

Alex's unit economics for Dave's Hot Chicken: $650K-$1.8M to build, average revenue over $3M with roughly 20% cash-flow margin, or about $600K in profit per location.

“the average revenue of a Dave's Hot Chicken is over $3 million with You know, 20-ish percent, you know, cash flow margin. So we're talking about $600K in profit.”

Unstaffed indoor golf sims: $300K revenue, 55% margins, no labor

Alex is building 5 Another Nine indoor golf simulator franchises — fully unattended (no employees, no food and bev), each doing just under $300K revenue at 55% margins (~$150K profit), targeting ~$750K passive income across 5 as a side hustle.

“One unit on average is doing just under $300K a year in revenue, which might not sound like a lot, but they have 55% margins because there's no labor, there's no food and bev. It's just the build-out costs and rent essentially. You don't need high occupancy to get to a meaningful amount of profit. So we're expecting each one to do $150K in profit after all expenses. You get to 5 of those, you know, generate $750K in relatively passive income”

Steal thisChase unstaffed, no-perishable formats (golf sims, fob-in gyms) where 24/7 access and zero labor drive 50%+ margins.

Turf franchise: ride the Vegas no-grass mandate, $1.3M revenue per unit

Alex pitches Waterloo Turf — a $4B industry growing $500M/yr with no national brand — as a regulation-tailwind play (e.g. Vegas banning new lawns). Entry is just $105K-$150K with no retail location, generating ~$1.3M revenue and ~$270K profit per unit.

“the turf industry in the United States is $4 billion today, is going to grow by another half a billion next year. And there's no clear winner. There's no national brand. No one's dominated this.”

Steal thisHunt for trends with a regulatory tailwind and no national franchise brand yet — that's where a low-overhead roll-up can win.

Orange Theory traded at 21x EBITDA — a software multiple on a gym

Alex notes franchise roll-ups exit at 6-10x EBITDA vs 3-5x for an independent shop, and at its height Orange Theory traded for 21x EBITDA because PE treated the recurring-revenue system like a software business.

“Orange Theory at its height was trading for 21x EBITDA. It was insane. I mean, it was like a software business multiple on a gym, but because it was a part of a system, they had some recurring revenue. They, you know, investors and private equity groups rolling them up treated it like a software business.”

Franchise brokers are unlicensed and can charge a 60% commission

Alex's red flag on the industry: there's no licensure to be a franchise broker (unlike real estate), and they can charge a 60% commission on the franchise fee — incentivizing them to say whatever closes the deal.

“there's no licensure to become a franchise broker. You know, like real estate, you have to go get licensed and you're registered in the state. You have to take coursework, you have to disclose your commissions and fees and how you make money. In franchising, it is absolutely insane about what's allowed. So the three of us, boom, we're all franchise brokers in this moment.”

The 90-McDonald's owner paid like an NFL QB with two private planes

Alex describes a franchisee who went from 47 to 90 McDonald's, never sets foot in a store, runs it all through one COO, owns two private planes 'because one's not enough,' and pulls roughly $70M/yr in cash flow.

“I know a guy that owns— when I first met him, he was at 47 McDonald's and he was producing— I want to say it was like $35 or so million a year in cash flow. He's paid like an NFL quarterback. And he told me, he's like, I don't remember the last time I stepped foot inside of McDonald's unless it was one I was looking at buying. But I haven't eaten here. I haven't worked here. I've got one COO who runs the whole thing for me. I've got two private planes because one's not enough, I guess.”

Senior care franchise: 8-12 month waitlists signal massive undersupply

Alex flags senior care as a baby-boomer demand wave where mystery-shopping calls reveal 8-12 month waitlists in most markets. HomeWatch Caregivers runs $120K-$177K total investment for ~$2.5M average yearly revenue.

“we'll call places up and say, hey, my grandmother, my mom, etc. And like, oh, we, you know, we're booked out. We have a list that's 8 months long, 12 months long. And this is in most markets. So there is not enough supply. For the amount of demand there is. And so there's another one that's been around for a while. It's called HomeWatch Caregivers. Total investment, $120K to $177K, $2.5 million average yearly revenue doing senior care.”

Steal thisValidate demand by mystery-calling existing operators — multi-month waitlists in 'most markets' mean go.

Read the FDD's Item 20 to gauge if a franchise system is healthy

Every franchise must file a 200-page FTC-regulated FDD. Alex says read Item 20 — units sold vs opened vs shut down — to spot whether the system is healthy or whether sellers are churning out, then validate by talking to franchisees the brand didn't hand-pick.

“I tell people to go look at the Item 20. It's where they show how many units they've sold, how many are open, and how many stores have shut down, because it's the best way to go see is the system relatively healthy? Are a bunch of people selling? Are they actually opening the units that they've sold, or is there a huge delta?”

Steal thisBefore buying any franchise, pull the FDD and read Item 20 for the sold-vs-open-vs-closed delta.

The 3 questions to ask a franchisee before you buy

Alex's diligence script for a 20-minute franchisee call: (1) Would you do this again knowing what you know now? (2) Is the brand's support actually worth the 6% royalty? (3) How profitable is it — is the juice worth the squeeze versus the stock market or real estate?

“would you do this again knowing everything you know now? And that should be pretty telling”

Steal thisCold-call franchisees the brand didn't list and ask: would you do it again, is the support worth the royalty, and is the juice worth the squeeze?

Flynn Group franchisees out-earned KFC, Domino's, and Popeyes

Alex says the family-run Flynn Group, which owns thousands of franchise locations, did roughly $6.3B in revenue last year — more than the entire parent brands of KFC, Domino's, and Popeyes.

“The Flynn Group did, I think it was $6.3 billion in revenue last year owning franchisees, like their franchisees. And so that was more revenue than KFC, Domino's, Popeyes, like huge brands. This group of franchisees is doing more revenue than the whole parent, the whole franchisor”