Scotty Milas' All Things Considered Franchising Podcast w/ Beck Miller Director of Franchising at LaundroLab

February 18, 2024 00:23:21
Scotty Milas' All Things Considered Franchising Podcast w/ Beck Miller Director of Franchising at LaundroLab
All Things Considered Franchising Podcast
Scotty Milas' All Things Considered Franchising Podcast w/ Beck Miller Director of Franchising at LaundroLab

Feb 18 2024 | 00:23:21

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Show Notes

All Things Considered Franchising Podcast

In this episode, Scotty Milas interviews Beck Miller, the Director of Franchise Development at LaundroLab. After working in an unfulfilling job, Beck took a risk and joined an upstart laundry company, which eventually led to his role at LaundroLab. With his operational experience and understanding of the laundromat business, Beck can provide valuable insights and support to potential franchisees.

Scotty and Beck discuss the changing landscape of the laundromat industry and the unique opportunities it presents for entrepreneurs. Beck shares his background in economics and how he transitioned into franchising. He explains the business model of LaundroLab and how it differs from traditional laundromats. They also discuss the qualifications and financial requirements for potential franchisees and the support and training provided by LaundroLab. Beck tells Scotty, "Our support team creates training videos, has a full call line, all of those kinds of things to continue making that operation as easy as possible and saving you money on the back end."

Beck also highlights the role of technology in the industry and the benefits it brings to franchisees. He explains to Scotty how technology plays a significant role in the laundromat industry, enabling efficient operations and better customer experiences. He mentions that LaundroLab utilizes a mobile app for payments and tracking and advanced backend systems for auditing and control.

Overall, this episode provides valuable insights into the laundromat business and the opportunities available for investors. Regarding investors, Beck best sums it up like this, "Being able to talk about the day to day, talk about the unit economics of the business at a detailed level, especially with an emerging brand, it really helps candidates make an educated decision."

Key Takeaways:

Scotty Milas can be reached at [email protected] and at (860)751-9126.

Beck Miller can be reached at linkedin.com/in/beckmiller

#allthingsconsideredfranchising #scottymilas #businessownership #franchiseopportunities #beckmiller #laundrolab #technology #industrytransformation #franchiseepotential

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Episode Transcript

[00:00:06] Speaker A: Hello, everybody, and welcome to another episode of All Things considered. Franchising, powered by Scott Milasfranchisecoach.com. I am your host, Scott. Scotty Milas and all Things considered. Franchising is a podcast dedicated to the entrepreneur people researching and exploring business ownership. People who are interested in possibly entertaining and investing in a franchise also questions Q A on just business ownership in general. Scottmilesfranchisecoach.com is an organization I started many, many years ago to help people research and explore opportunities. We help you build a roadmap, a business model, and then introduce you to the opportunities that potentially fit and help you through the validation process so that you can make a validated decision and not an emotional decision. The services, costs, expertise, education I provide are absolutely at no cost to my clients. I am thrilled to have Beck Miller on the podcast today because Beck Miller is director of franchise development with Laundrolab, one of my favorite brands in my portfolio. It's just one of those brands I wish I could show to everybody. Beck, welcome to the show. [00:01:21] Speaker B: I appreciate you having. [00:01:25] Speaker A: We've, we've worked together on a few projects, and Laundrolab has really positioned itself to kind of take that it's on the Runway, and I would say it's probably halfway down the Runway now. And one of the most unique things about your organization is that your ability not to bring people on the vetting process, to award franchises, but to support them and get them opened. Your philosophy, I think, is more inclined to support our franchisees, get people open versus let's just award people and hope for the best. So let's first take a little bit deeper dive into your background, because it's an interesting background. You graduate with a bachelor's degree in, I believe, economics, and you end up doing an internship at a major financial institution, and then you end up in franchising. So tell us a little bit about how that story or how that developed, because it's unique in a sense, that you went from economics to franchising, although there is a tie in. [00:02:35] Speaker B: Yeah, absolutely. Right after I graduated, I went to go work for a company that's now been acquired by S and P Global, doing financial analysis, financial consulting with publicly traded companies. And I hated it. It was really monotonous and unfulfilling and just not what I wanted to do for 2030 years. And very fortunately, around that same time, saw a good friend from college start up a company, which is our parent company. Right as I was looking for something else, and it was just one of those things where I took a risk and quit what I was doing, moved out to Charlote for no money and joined an upstart laundry company. And so the rest is kind of history. [00:03:18] Speaker A: You know, it's interesting because your background in economics and getting you into the franchising side is kind of unique in the sense, although you started almost similar to how I did in the franchising space, you started on the operations side and eventually started to wear multiple hats and got involved in multiple departments. But talk to us about that experience. Understanding the operational side of a franchise system. A franchise, or versus just jumping into the development side, did it help you understand how franchising works better? Kind of working with potential clients, being able to speak the language, share a little bit about that, because I find that unique, because a lot of people don't come out of operations, they go right into development. [00:04:06] Speaker B: Yeah, absolutely. I think it's a huge benefit. The one thing that can be a detractor is you can accidentally get too in the weeds too quickly in some conversations. So I kind of have to reel myself back sometimes, but I view it as a huge benefit. It's one of those things where being able to talk about the day to day, talk about the unit economics of the business at a detailed level, especially with an emerging brand, it really helps candidates make an educated decision, and whether that's to move forward with us or not, as long as they're making an educated decision, that's best for them, that's what's best for the brand as well. [00:04:40] Speaker A: That's interesting. Lager Lab is an interesting model, and I have to share a secret with you, is that when I was 1819 years old, a very close friend of mine still, I regard him as a brother, had an interest in opening a laundromat. And back in those days, franchising, there were no companies that were doing laundromats as a franchise. It was more independent, but we referred to it as the quarters business. The idea of being able to go into the store and empty into a bucket, all these quarters, the business model has really changed over the years. Maybe you can walk some of our listeners to that is what to expect in the Laundromat business today versus it's just walking into a laundromat, plugging a couple of quarters in and washing and drying your clothes. Maybe explain the business model, and then we can get into more about Laundrolab as a franchise as well. [00:05:38] Speaker B: Yeah, the business model is one that's really historically very antiquated. It's dominated by mom and pops, really small stores. A lot of retired doctors and lawyers came into the space and really just wanted to open it to hide cash from the government. And so what created is this industry. There's 2020, 5000 laundromats that are out there and they've made no reinvestment into the business at all over the last 20 or 30 years. They just have the same equipment they had when they opened. They put the bare minimum into it. And so it's created this opportunity combined with more sophisticated investors coming into the space, advancements in technology and just this market that hasn't been disrupted ever, really is kind of the beginning of a real upward trend from an industry standpoint that we're excited to be at the forefront of. [00:06:26] Speaker A: That's interesting, because the stereotype of the business, the laundromat business, is that it goes into a low income, low middle income area because people don't have their own washers and dryers, or they're renting, or they're in an apartment complex where there is no facilities to wash and fold. So you have to go out, spend an hour, 2 hours washing. But the industry philosophy has really changed because it's not so much the low income middle income areas or people that don't have a washer and dryer, it's the entrepreneur now, the white collar, let's use the term yuppie in New York City that really just doesn't want to spend 2 hours at a laundromat washing their clothes. So it's drop off or pick it up, get it redelived, washed and folded. Am I missing something there? Because the basis of the Business has changed. It's expanded its clientele, and of course it always being a need versus a want. People need clean clothes, right? [00:07:33] Speaker B: Yeah, absolutely. And when we go and we build stores, we focus on situating the brick and mortar unit in those areas where they are lower income. They are communities where they don't have washers and dryers. That's going to do two things. One, that's really good downside protection from a revenue standpoint for you. Those customers are recession resistant, proven to be pandemic resistant. That is really good nondiscretionary income. And you get a lot of tax advantages. There's opportunity zones, there's local municipality tax breaks for building in these lower income areas and investing in those communities. And then we can go out and acquire those higher income customers that the time savings are worth more than the money to them via the drop off, wash, dry, fold, and the pickup and delivery accounts and things like that to maximize the utility of the four walls. [00:08:18] Speaker A: Interesting. All right, so the model has changed a little bit. The need is still there. The service end of it has expanded from pickup to delivery. Any other type of work? I mean, when we think of laundromats, we think of residential. Are you involved? Are your franchisees getting involved in commercial, maybe tablecloths, hospitals, any other industries that you're branching out to or seeing your franchisees branch out to for additional revenue sources? [00:08:49] Speaker B: Yeah. There's a sizable b to b opportunity for these groups that are small, one, two, three location businesses, gyms, spas, salons, Airbnbs, things like that. A lot of these groups are too big to use an at home washer and dryer that only holds ten to 20 pounds of clothes, but they're also not big enough for a Centos or an Alsco or one of those. So they fall into this middle ground that really doesn't have a good marketplace for it. And the Laundrolabs are perfect to bridge that gap for those. [00:09:22] Speaker A: Interesting, interesting. Let's take a little right turn here and just talk about the franchisee you mentioned, or you used the word, and correct me if I'm wrong here, investor. It would seem to me that if we're talking a million, million and a half, maybe approaching $2 million investment, you're not seeing a lot of people who are looking to work eight to five or eight to eight. This is that investor model, that semi absentee. Maybe it borders on the passive side. Tell us a little bit about what you're seeing or who you're seeing that is calling up and saying, I'm interested. The people that are investing in Laundrolab, tell us a little bit about more of the characteristics of what you're seeing as an investor. [00:10:07] Speaker B: Right. Yeah. Most of our franchisees fall into one of three categories. The first one, we call them the entrepreneurial executives. They've had that really successful nine to five career. They've built up a really strong nest egg, and they want to build something that they have equity in because they've worked for someone else for their whole career, and they want to own their own business and start to get something that they can roll up and sell or pass down to their children, whatever it may be there. We then have the group in the middle that are kind of like the budding franchisees. They own a small business. They own one or two other franchise brands, usually in food service, and they're looking to diversify out of food service into another business. And then the multi unit group, we have several of those that are large mcdonald's franchisees, we have large planet fitness franchisees. And they're just adding on to those are the groups that come in and buy ten licenses and want to just build out with their operations team. [00:11:00] Speaker A: In those three categories. What can one expect as a franchisee? And I realize that there's a learning curve here, a build up curve, I should say not so much a learning curve, because Laundrolab does provide an extensive training and support structure to franchisees. But when we look at the number of hours, I mean, you are a seven day a week operation. Correct. So what can one expect as a franchisee for the hours that they're going to be putting in as a business owner? There's this whole mystique today about semi absentee and passive. It's kind of like I want to write the check and have the franchise or run the business for me. It's a great thought, but it just doesn't want to happen that way. So what are we talking about if somebody as an investor coming in their time and the number of employees that you're seeing on average for a Laundrolab facility? [00:11:59] Speaker B: Yeah. So the core Laundrolab model only needs one employee there from open to closed. Most of our stores are 15 to 16 hours a day, so it's roughly two eight hour shifts. So depending on how you structure your employees part time, full time, you really need a headcount of around five ish. So it's a low headcount, low skill business, easy to hire and train for. You do have churn that comes with that because it's not the higher paid, super skilled labor. So there is churn, but it's easy to replace. Typically when a store opens, the first few months of opening are going to be more hands on. So whether you hire in a general manager to do that work for you or you have an operating partner, we would expect probably close to 20 hours a week at that point in time. Once that scales down, though, when your business is ramped up, it's more like kind of plateaued. 10 hours or less is what we shoot for, for that role at that point. [00:12:51] Speaker A: Okay. All right, let's talk about some qualifications, people that may be interested or listening audience. As a reminder, we're talking with Zach Miller, who's director of franchise development for Laundrolab, probably one of the fastest growing organizations in this category. Superb operational support. Development really kind of has their hands and their fingers on the pulse of what it takes to help build a successful organization and making franchisees, or helping franchisees be successful. I'm your host, Scotty Milas, of all things considered, franchising. So tell us a little bit about the qualifications. Again, I mentioned in my opening that this is a big boy, big girl investment level. You mentioned you're seeing the planet fitness, the mcdonald's franchisees. Typically, these franchisees have a pretty good net worth, and they have a pretty good liquidity. What are your qualifications? Where are you seeing if somebody's interested? Where should they really be? Financially? [00:13:54] Speaker B: Yeah. Our bare minimum for one license. We want to see 1 million in net worth and roughly 500,000 in liquidity. Most franchisees that are building out are putting 25% of the total project down. And when you're looking at, like you said, one point two, one point five million dollars, you need to have good liquidity there for not only the initial project, but also the working capital to make sure you're getting to break even and you're comfortable there. That is just for one license, though, right? When we get into these multi unit conversations, those do tear up. Okay. [00:14:25] Speaker A: Now, as far as if somebody in the back of mind is saying, hey, look, I got that 1 million net worth. I got a half a million dollars liquidity. One of the things that comes to mind for a lot of people who are investigating is financing SBA. I know there's a lot of equipment associated with the laundry lab. So is there equipment financing, whether it's leasing or purchasing? Can you explain any of that to our audience at this point? [00:14:52] Speaker B: Yeah, we have really advantageous financing through our manufacturer. So we use Electrolux equipment. Electrolux's north american distribution arm is a company called Laundrilux. So through Laundrilux, they have direct financing. They'll finance all of the equipment, and we get a pretty steep discount on the equipment, and they'll finance up to 90% of the MSRP of the equipment. So that'll actually give our candidates an extra two to $300,000 for construction and whatever else they may need. It'll get them up to probably about 65% to 70% loan to value on the total project, with way less paperwork than the SBA. And they typically lend at prime plus 1.25%. So about 2% less than the SBA as well. [00:15:35] Speaker A: Right. Interesting. So let me kind of put you on the spot a little bit, Becca. I mean, again, I'm just kind of trying to thinking like our audience is listening to know, obviously, it's a need, not a want. People need clean clothes they need to be able to wash, know, maybe their washer and dryer broke, you know, whatever the circumstances may be. But one of the thoughts, and I can just picture somebody driving in their car right now, listening to this podcast and saying to themselves, heck, what do I need Laundrolab for? I can do this myself, but from what I've learned about your business model and the things that go into opening a laundromat, and you mentioned mom and pops, there are a lot of I's to dot and t's across, not only on the build outside, but the location. So talk to us about the support levels, why somebody would go to a laundro lab versus doing this on their own. [00:16:34] Speaker B: Yeah, it's a great question. There's a lot of nuance to the industry that's not really clear if you're just looking at it at surface level. We've spent a lot of time, money and effort on our territory mapping, so we understand all of the data behind who the customer is, which is really hard to do in a traditionally cash business. Understanding who the customer is, where they're located, things that benefit the business, complementary businesses, all of that kind of stuff. We have a full in house real estate and data science team to assist with everything on not only finding the site, but also negotiating it and putting the power of the franchise or behind the deal. The steep discounts on the equipment, the architects and engineers that really know what they're doing, because there are several things that can get really expensive really quickly if you don't do them the right way on the build out and then the ongoing operations and maintenance. There's a lot of things in laundromats that can be intimidating. Right when a machine goes out of order and your first instinct may be to call your technician. That technician is probably going to be $100 an hour with a four hour minimum. And it may be something that you could have really easily done yourself, you just didn't know how. Our support team creates training videos, have a full call line, all of those kinds of things to just continue making that operation as easy as possible and saving you money on the back end. [00:17:53] Speaker A: Right. Interesting. I mentioned to this early in our conversation that back many moons ago, and I'm dating myself, this was referenced as a quarters business. It was just bags of quarters going to the bank. But that technology, or technology has played an integral part in this industry kind of resurfacing. I think this industry has just kind of come out of its shell through technology which has enabled more services, can you talk about the technology, the back end of all this, and how that helps franchisees grow their business, in a sense, that versus if it was the traditional quarters business, the walk in traffic, so to speak. [00:18:38] Speaker B: Yeah, the technology is the thing that's made it able to scale. Traditionally. It's been a business that's really hard to scale because there haven't been those economies of scale with all the cash that you mentioned. So all of our stores are what we call hybrid stores. We are of the mindset that it's a little bit too early to force customers to use an app because there are some customers who are unbanked or underbanked or don't trust using a debit or credit card on their phone, whatever it may be. So we still accept quarters in our stores, but we try to push everybody to the app. Our average app utilization is about 55 60% across the whole network, which is great. Our highest store is about 80%. So we've seen really good adoption for that that we're pleased with. But the back end technology tracks every quarter that goes into the machine, every app dollar that gets spent, the float that comes in on the back end, every dollar that goes into your coin changer, every piece of revenue within the store is tracked and auditable. So it creates good controls for you as an owner to be able to understand that there's no fraud, waste and abuse from any of your staff and making sure that if a dollar comes in, it's going to make it to the interesting. [00:19:45] Speaker A: Interesting. We've been talking to Beck Miller, director of franchising at Laundrolab. Beck, interesting model. I'm always fascinated with it. Really kind of a outside category. This isn't a typical subway McDonald's. I mean, people have to think outside the box on this. Anything else you'd like to share about Laundrylab, maybe tell us about if somebody's interested. Best way to get in contact with you. Obviously people can reach out to me and learn more about it. And I know initially last year you put franchise growth or development on hold because you had gotten to a point where, hey, I got to get people opened 2024. You're slowly opening the door again. So anything else you want to share about the development? How do people learn more about Laundrolab to that extent? [00:20:37] Speaker B: Yeah, absolutely. I appreciate the time. So you can check out our [email protected], that's laundrolab franchise.com. If you want to learn more there, you can also reach out to me directly at Beck. [email protected]. It's really exciting. We're a young, emerging brand. We've got eleven stores open now, should open about 20 more this year. We have availability in almost every major market. So if you're interested, feel free to reach out directly. And I'd love to chat with you. [00:21:08] Speaker A: The 13 registration states, just off a quick question. Are you in certain registration states or have you stayed away? What's your plan there? [00:21:17] Speaker B: Yeah, so we're in most of them. That being said, it's renewal season. We're at a bad time for that question. So we're going to have to reapply at a lot of them. But yes, we operate via the exemption in Illinois and California. We are fully registered in New York. The only states that we're actively not awarding licenses in right now is Maryland, Virginia, the Dakotas and good, good, good. [00:21:42] Speaker A: Yeah, I call the renewal season the golf season for franchise development people because it gives people time to go out because legally you're not supposed to be talking about a franchise if you're not registered. So, Beck, I appreciate you spending some time with us. Again, a fascinating brand, kind of that big boy, big girl investment. But the validation on the brand is very strong, the support levels, and it's something that someone should really consider if they're looking for that semi absentee, eventually kind of passive, scalable type business. But again, it does take some shekels to get involved in this business, as they say. But it's a great model. Beck, I want to thank you again for joining me on all things considered franchising. I'm your host, Scotty Milas. Anybody who wants to get a hold of me can email me at [email protected] you can also call me at 860-751-9126 visit theallthingsconideredfranchising.com website for all of our podcasts. We are now approaching fast approaching over close to 70 podcasts. So we're very proud of that. And we'll continue to provide podcasts and information on business opportunities. Beck, thanks again. I hope to get you back in another 612 months to give us an update. [00:23:08] Speaker B: Yeah, looking forward to it. Thanks for having me. [00:23:11] Speaker A: All right, this is Scotty Mila signing off. Until next time.

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