Aug 13, 2026 · 38 min · 15 segments
Dave Ramsey has some strong opinions about franchising—and some of his concerns are absolutely valid. But is he telling the whole story? In this episode of Franchise Unfiltered, we break down Dave…
yeah so valid points here right and this is something i have people ask me from time to time hey i'm thinking about franchising my business where where should i start or what advice do you have and it's one thing i always point out to people your role as the the founder of the company changes dramatically when you make that decision to franchise you know in in this case they're talking about an indoor playground business and dave says you're no longer in the in-ground uh indoor playground business anymore you're in the franchise or business true um and and that dynamic that he talks about the franchisor to franchisee kind of love-hate relationship that exists too right but i i usually compare that in a healthy franchise system with franchise partners that are doing the right things and everyone's trying to succeed, right? So everyone's kind of rowing in the same direction.
I kind of compare it to most marriages or long-term relationships, right? If you really love the person that you're with,
yes,
The person, you know, my wife would tell you there's, you know, God knows how many things I do that drive her nuts on a regular basis.
So I think in a lot of ways, in a healthy franchisor, franchisee relationship, there's always gonna be a little bit of that friction, but um you know the the bigger goal the bigger picture is still there and everyone's still kind of you know working towards the same um end goal but it is something to consider and again I think more than anything it's just as the founder your role changes pretty dramatically um the the whole you know resentment of you know franchisee once they've kind of learned the business and they've they've gotten themselves established and they've started to be successful that can be a valid point right i mean one thing i always coach people to to try to get a sense of when they're looking at different franchises is you know what is the value exchange between the franchisor and the franchisee As Dave points out, I don't know if I played that clip or not, but you pay an initial franchise fee to join the franchise system, and then you're going to pay an ongoing royalty that's a percentage of your gross revenue the beginning the franchisors value to you is um training support you know helping you learn the business quicker helping you avoid mistakes that um you you would very likely make if you didn't have that guidance and support um brand name trademarks all of that know most franchisees will get to a point in their business and that's kind of the goal if you think about it where they don't need a ton of support from the franchise or at least in terms of here's how to operate the business so um that's something to be aware of the fees the royalties are always going to be there so you need to understand okay what's the upfront value that I can expect to get as a franchisee, but also what is the long-term value.
And good franchises find ways to continue to add value to their franchisees no matter how successful they are, no matter how established they are in their business.
And that value exchange can look different depending on the type of business that you're in.
But common examples, one of the biggest benefits to a franchise and them scaling their business is as an entire organization, they have buying power, right? So whatever the business is, whether it's a food business, know some sort of a business we owned an insulation franchise right as that franchise system got bigger and bigger we had leverage with the manufacturers and distributors of the insulation products that we were selling so the franchisor was able to help negotiate on behalf of the franchisees to to get better pricing for us and in a lot of ways that can offset the ongoing fees that you're going to have as a franchisee the royalties um the franchise my wife and I still own, that we've owned for eight years now, where we do custom shelving, the franchisor owns the manufacturing side of that business, we sell that product exclusively, no one else other than Shelf Genie franchisees are able to sell the product that we sell, and our cost of goods are substantially lower, and I would argue on a higher quality product than if we were in that same business independently and had to source products from a third party so um in that example we're eight years in we don't need a ton of coaching or support from the franchise or in terms of how to run the business but they provide a high quality product at a reasonable price that i'm the only one in my local market that has the ability to sell it And the cost, the savings on the cost of goods alone, in this particular example, more than offsets the royalty that we pay.
So that's another example of just how the franchisor can continue to add value to franchisees long-term.
Yes, there's friction, there's things they do that I wish they would do better, or there's things I wish they would focus more on.
There's always gonna be some of that, but it's never to the point where we're like, man, we should try to get out of our franchise agreement and just go do this on our own.
something else that doesn't come up that that kind of ties into this that or at least that dave doesn't bring up here in another way that good franchise systems will continue to add value to their franchisees it's it's the peer network it's the the community it's the franchisee to franchisee relationships this doesn't get talked about nearly enough you know when we look at the the pros or the benefits to going the franchise route My wife who primarily runs our franchise business, she's got three or four good friends that are franchisees in different parts of the country within the same franchise system and they talk on a regular basis, right? And it's very, very helpful to have other people that are in the exact same business as you so they understand the challenges that you have they understand uh some of the headaches that can come with the businesses they're you know they're out there trying different things and when they come across something that's working well for them they can come back and share that sometimes it's nice to just have someone to vent to right someone that you can vent to that really understands what you're dealing with And they're not competitors, right? So that's a huge value add long term that can come with franchising.
yeah so valid points here right and this is something i have people ask me from time to time hey i'm thinking about franchising my business where where should i start or what advice do you have and it's one thing i always point out to people your role as the the founder of the company changes dramatically when you make that decision to franchise you know in in this case they're talking about an indoor playground business and dave says you're no longer in the in-ground uh indoor playground business anymore you're in the franchise or business true um and and that dynamic that he talks about the franchisor to franchisee kind of love-hate relationship that exists too right but i i usually compare that in a healthy franchise system with franchise partners that are doing the right things and everyone's trying to succeed, right? So everyone's kind of rowing in the same direction.
I kind of compare it to most marriages or long-term relationships, right? If you really love the person that you're with,
yes,
The person, you know, my wife would tell you there's, you know, God knows how many things I do that drive her nuts on a regular basis.
So I think in a lot of ways, in a healthy franchisor, franchisee relationship, there's always gonna be a little bit of that friction, but um you know the the bigger goal the bigger picture is still there and everyone's still kind of you know working towards the same um end goal but it is something to consider and again I think more than anything it's just as the founder your role changes pretty dramatically um the the whole you know resentment of you know franchisee once they've kind of learned the business and they've they've gotten themselves established and they've started to be successful that can be a valid point right i mean one thing i always coach people to to try to get a sense of when they're looking at different franchises is you know what is the value exchange between the franchisor and the franchisee As Dave points out, I don't know if I played that clip or not, but you pay an initial franchise fee to join the franchise system, and then you're going to pay an ongoing royalty that's a percentage of your gross revenue the beginning the franchisors value to you is um training support you know helping you learn the business quicker helping you avoid mistakes that um you you would very likely make if you didn't have that guidance and support um brand name trademarks all of that know most franchisees will get to a point in their business and that's kind of the goal if you think about it where they don't need a ton of support from the franchise or at least in terms of here's how to operate the business so um that's something to be aware of the fees the royalties are always going to be there so you need to understand okay what's the upfront value that I can expect to get as a franchisee, but also what is the long-term value.
And good franchises find ways to continue to add value to their franchisees no matter how successful they are, no matter how established they are in their business.
And that value exchange can look different depending on the type of business that you're in.
But common examples, one of the biggest benefits to a franchise and them scaling their business is as an entire organization, they have buying power, right? So whatever the business is, whether it's a food business, know some sort of a business we owned an insulation franchise right as that franchise system got bigger and bigger we had leverage with the manufacturers and distributors of the insulation products that we were selling so the franchisor was able to help negotiate on behalf of the franchisees to to get better pricing for us and in a lot of ways that can offset the ongoing fees that you're going to have as a franchisee the royalties um the franchise my wife and I still own, that we've owned for eight years now, where we do custom shelving, the franchisor owns the manufacturing side of that business, we sell that product exclusively, no one else other than Shelf Genie franchisees are able to sell the product that we sell, and our cost of goods are substantially lower, and I would argue on a higher quality product than if we were in that same business independently and had to source products from a third party so um in that example we're eight years in we don't need a ton of coaching or support from the franchise or in terms of how to run the business but they provide a high quality product at a reasonable price that i'm the only one in my local market that has the ability to sell it And the cost, the savings on the cost of goods alone, in this particular example, more than offsets the royalty that we pay.
So that's another example of just how the franchisor can continue to add value to franchisees long-term.
Yes, there's friction, there's things they do that I wish they would do better, or there's things I wish they would focus more on.
There's always gonna be some of that, but it's never to the point where we're like, man, we should try to get out of our franchise agreement and just go do this on our own.
something else that doesn't come up that that kind of ties into this that or at least that dave doesn't bring up here in another way that good franchise systems will continue to add value to their franchisees it's it's the peer network it's the the community it's the franchisee to franchisee relationships this doesn't get talked about nearly enough you know when we look at the the pros or the benefits to going the franchise route My wife who primarily runs our franchise business, she's got three or four good friends that are franchisees in different parts of the country within the same franchise system and they talk on a regular basis, right? And it's very, very helpful to have other people that are in the exact same business as you so they understand the challenges that you have they understand uh some of the headaches that can come with the businesses they're you know they're out there trying different things and when they come across something that's working well for them they can come back and share that sometimes it's nice to just have someone to vent to right someone that you can vent to that really understands what you're dealing with And they're not competitors, right? So that's a huge value add long term that can come with franchising.
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