The Pursuit of Profit
The Franocity Team is bullish on home services, healthcare brands, petcare, and the aging of America.
We’ve been doing a ton of due-diligence on emerging brands in these sectors. But we’re not here to broker a deal that earns us a commission from any brand. Our job is to set you up with a business that works right for you, and sometimes that means telling you when you’re about to make a big mistake.
Before you sign an agreement, book a 30-minute call with us. We’ll give you our absolute best advice.
Hi Reader,
If you’re one of the millions of Americans who have tried to buy a house recently, you are painfully aware the U.S. housing market is short by at least 6.5 million affordable homes. A quick look at the economics explains why.
To afford a median-priced house, the average American household needs an annual income of about $115k. Median income per household is about $75k.
That $40k difference is a significant gap — but it’s also an emerging opportunity to invest in businesses that build affordable housing.
And the only franchise brand that seems to be capitalizing is California-based Anchored Tiny Homes. Their business model is for building quality Accessory Dwelling Units (ADUs), which is a technical term for mother-in-law’s house, granny flat, or above-garage apartment.
Questions about how Franocity advises clients to find the right balance between risk and opportunity during a weird, stagflationary, election-year economic environment?
Hit reply now.
Or book a 30-minute consultation so we can talk about opportunities in the health sector or another of our favorites, home services brands.
What intrigues us about Anchored Tiny Homes as an investment opportunity
- Accessory Dwelling Units (ADUs) leverage two economic realities: The affordable housing crisis and The Graying of America. By 2030, one in six Americans will be at retirement age.
- Unlike prefab models, these homes are custom-built on-site to meet specific customer needs and comply with local regulations.
- Comprehensive support includes help with licensing, permitting, contractor assembly, material sourcing, and customer financing.
- Low lead generation costs (about $30 to $35) with high margins and closing rates between 15% to 25%.
- Scalability is a key feature; with an average break-even point of about six months, franchisees are selling approximately one ADU per month.
- Initial investment ranges from $113k to $185k, covering various startup costs.
Significant ADU tax incentives
In response to the shortage of affordable housing, several states have taken steps to address the issue. California, New York, Vermont, and Oregon have enacted legislation that mandates local governments to modify their housing and zoning regulations to allow for the construction of ADUs. States are also providing tax incentives to encourage the development of ADUs. We’ve seen grants of up to $40,000.
Staffing model
The start-up business model requires a sales rep and a construction project manager so the franchisee has a couple of options.
The owner can act as an operator, filling one of the two roles. As an investor, an owner can hire someone in each position.
Anchored Tiny Homes provides back-end support with licensing and permitting, assembling a team of contractors and sub-contractors, sourcing materials, and setting appointments.
Additionally, the brand package offers customer financing, floor plans, and lead generation — including ad placements.
Are you an ideal investor?
This investment opportunity comes with a caveat. Not all states and municipalities are tiny home friendly. And ADU-friendly legislation may not apply to Homeowners Associations.
We also see this as a potentially high-risk investment opportunity, but the potential upsides are high. In the right environment, a handful of sales each month easily generates more than a million dollars in annual revenue.
Understand this: we're not in the business of pushing franchises.
At Franocity, part of our job is to tell you when a franchise investment is or is not right for you — but we won’t know until we spend some time with you. Start the conversation today by replying to this email or booking a 30-minute call.
Talk soon!
The Franocity Team
P. S. Next week we’ll share four lessons learned about fear and failure in entrepreneurship from the CEO of Anchored Tiny Homes.