Pro tip: If you’re afraid to take the risk, write down in excruciating detail what you’re actua

0:00We are Vietnamese Coffee Company. We own one flagship cafe, two hybrid model franchises. >> Hey. >> We're doing 2.1 million in the cafe. The two franchises we make about 60 to 70k net. >> Are they like super small, like little >> They're hybrid models as in we're plugging in our cafe into their food service. >> Oh, you're selling to existing stores. Got it. >> Their revenue is 700k. >> Got it. >> And about to launch D2C coffee subscription.

0:26>> Why? >> We sell retail, like why not bring it online? Subscription model sounds >> I I it would mean the world to me if you didn't. >> [laughter] >> Yeah. >> For your own sake. >> Yeah. >> I'll be fine. So, they do 700k top line, the hybrid model, right? What's their bottom line? >> They're probably netting about 20%. >> After your 8% or before? >> After 8%. >> Okay, got it. They're making like $200,000 a year or somewhere in there. >> Yeah. >> Okay, what does it cost to open those? >> Under 50k.

0:52>> And then the franchise fee is >> 40-50k. >> Okay, so 100k all in. >> Yeah. >> Bro, I like the business. >> Mhm. >> Why do you hate this business? It's a good business. >> No, I don't hate the business. >> Well, you hate it because you're trying to start another one. Your offer is do pay 100k, make 200k profit over and over and over over again. That's pretty good deal. >> Mhm. >> Let's pull the timeline all the way out. Do you want to exit this at some point? >> Yeah. >> Okay, great. What do you want to exit for? >> 100 million. Right now we're kind of in that position to think about what kind of model we want to choose to scale, like self-owned versus franchise.

1:24>> Great question. Love this. You starting yourself is you're trying to build more of the $2.1 million locations, correct? >> Yeah. >> What's the margin on that? >> 400. >> So, you can make 60 on the hybrid or you make 400 on your own store. This is a math problem. So, if you want to exit for 100 million and you've got your coffee stores, let's say you get an 8x multiple, means you're going to need $12 million in profit. $12 million in profit, you're going to need 30 stores of your 400k profit assuming all of them perform like your flagship. Probably won't. So, let's assume it's 40 stores.

1:52Option one. Option two, one moment. Let's say we have $60,000 per location. Let's say that because it's a franchise you're going to get a 12x. Let's call it 40% margins. So, you'll need 333 stores open to do that. So, does opening 40 stores on your own sound harder than opening 330 stores with other people who are partners without fronting capital? >> Uh maybe we'll do a hybrid model of both.

2:19Why not, right? >> No. >> I see it all the time. >> Most of the time it's because the franchisor couldn't make up their mind. When I have these decisions that I do this on a lot, I write when I make the decision, I write out a letter to myself of the exact reasoning of why I'm making the decision so that I don't have to retrace the path over and over again cuz otherwise you waste so many cycles in your mind about oh you know what? And then you have one bad day here and you're like I should have done the hybrid thing. You're going to have bad days here and you would have had bad days over here. Put your blinders on.

2:48There's a reason that horse races have them. Keeps you focused on the goal and then go all in.