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College Hunks’ first franchisee didn’t have enough cash to pay a franchise fee, but he did have land.
That’s who Nick Friedman, co-founder of moving company College Hunks, credits for sending the company down the rabbit hole of alternative payment systems.
“When he bought the franchise from us in 2007, he didn’t have cash. But he had some land that he ended up getting stuck with during the housing crisis,” recounts Friedman. “He ended up paying the franchise fee with this land in central Florida that we still have to this day.”
The story doesn’t end there. That same franchisee who traded land for a franchise came back 10 years later, wanting to sell the Tampa franchise location. But the franchisee didn’t want to be bought out with cash — he wanted to be bought out with Ethereum.
It was 2017, and by that time Friedman had heard quite a bit about Bitcoin from its bull run. But he knew little about cryptocurrency, and nothing about Ethereum. So the co-founder spent some time researching on the topic. In the end, he agreed to buy the franchise location with Ethereum.
“The way I looked at it was, [the deal] would have been no different than him saying, ‘Pay me in Canadian dollars,’ or ‘Pay me in rupees or yen.’ In that case, we would have exchanged the dollars for whatever the currency was and made the purchase,” Friedman says.
The exchange got Friedman thinking about making cryptocurrency a more permanent fixture of the company. So earlier this year, the Florida-based company made the announcement that it would let new franchisees pay for their franchise fees with cryptocurrencies Bitcoin and Ethereum. Friedman says this opportunity is “another tool in the toolbox for the company’s growth,” as College Hunks projects $200 million in sales this year.
Nowadays, cryptocurrency is also experiencing growth as it becomes more accepted in mainstream culture. Take the Ultimate Fighting Championship, which recently secured a multi-million-dollar sponsorship from cryptocurrency trading platform Crypto.com. Likewise, College Hunks anticipates many possibilities brewing as cryptocurrency becomes more established. As of now, it is allowing franchisees to pay initial licensing franchise fees with crypto. But in the future, Friedman says the company could start accepting royalties or other fees with cryptocurrency. One innovation Friedman is considering is the development of Hunk Coin, a cryptocurrency created to be used by College Hunks employees and franchisees.
“I think that there’s some different use cases that [Hunk Coin] could apply. There could be an opportunity, almost like an employee-stock-option-type component to it, where both franchisees as well as employees could have financial benefits from the success of the brand. But then [a cryptocurrency coin] is also a way to incentivize employee performance and other things,” Friedman says.
Friedman adds that most of the brand’s 150 franchisees have had a positive reaction the integration of cryptocurrency in the business. Another positive effect of the cryptocurrency announcement is the interest from younger investors in the Gen Z and millennial crowd.
Although this interest among a younger demographic is a predictable outcome, Friedman also sees this change as an opportunity for the less-talked about unbanked demographic. He’s noticed this even among some of his frontline employees, who don’t have bank accounts, yet have cryptocurrency on their phones.
“I think there’s [opportunity] for that frontline demographic there. That’s why we kind of kicked around this idea of Hunk Coin. There could be some opportunities for folks that don’t have a significant earning or income and are more of the frontline labor force to be able to utilize the different forms of electronic payments more readily than them going to the bank or going to a check cashing place and having to give up 20% or 10% of their paycheck,” Friedman says.
Before reaping the benefits of cryptocurrency, the company had to consult professional advisors, such as its accountants and attorneys, to make sure it wouldn’t violate any laws or regulations by making this change. The company then had to set up an online wallet, which it did through Coinbase.
Despite any benefits cryptocurrencies provide, there has also been strong opposition to the currency from naysayers like Warren Buffet. Friedman chalks up this apprehension around any new innovation entering culture — like that of the internet, email or social media itself.
The idea is still fairly new, and no one has taken College Hunks on its offer to pay with cryptocurrency yet. But the co-founder says the goal for the company is to see at least 10% of incoming franchisees buying with cryptocurrencies in the next 12 to 18 months. As for other innovations, like a company-specific cryptocurrency, the co-founder plans to go full steam ahead and sees that materializing in the next two to three years. In Friedman’s mind, someone has to lead the way in making cryptocurrency a part of the franchising world, so why can’t College Hunks be that pioneer?
“We talk often about appreciating our heritage but embracing change. Because that’s kind of part of [our company’s] DNA, there’s a lot of trust within our system. Blockchain is fundamentally built on the notion of trust,” Friedman says. “As long as people are smart and don’t get caught up in the exuberance of trying to make a quick buck with it … then I think it certainly could have an application in any business.”