Mehr Franchises verkaufen, ohne aktiv zu verkaufen

0:00We run restaurants. So, we sell to consumers, and we also franchising our restaurant group right now. >> What kind of restaurants? >> Um American barbecue. >> Okay. >> Um slow smoke meats. >> Can you go to the mic just so they can hear you? >> Yeah, with a little bit of um theatrical uh experience as part of it. >> Okay. >> Um we do about 9 million right now. >> How many locations? >> Uh right now, four. >> Are you own them all, or are they Which ones are corporate? >> Well, actually, four four that are ours, one franchise with two more signed up.

0:26They're >> Okay, so you got five. Is the the one franchise you opened? >> Yes. >> Okay. >> That's right. So, that was our test case. >> Cool. >> Um we like to grow to about 100 million. >> Okay. >> Um that's the plan. >> System-wide or corporate? >> Uh system-wide. >> Okay. >> Yeah. And uh what's stopping me? Well, we essentially, in my opinion, have two businesses. We need to increase the demand for our own uh from customers for our venues and all the franchise venues. >> Mhm.

0:51>> And we need to sell more franchises. Right now, we're selling them, but the way we see it, it's um it's a change of lifestyle. Somebody wants to get into a business. So, I don't see how we can sell a franchise. It can only be bought. So, we can >> What was the last part? If you >> We It can only be purchased. It can't be sold as far as I'm concerned because of such a change to lifestyle of the of the person. >> be sold, it can only be bought? >> Yeah, so we need to be in front of them, right? The the way I see it is we need to put ourselves in front of them, but we can't push them into a sale. We can't do any any strategic selling to them because they're changing their lifestyle. So, they have to be able to do it themselves.

1:28>> I don't disagree with that, but okay. >> The Thank you. Um >> Yeah. >> So, um >> I mean, you sell them on transforming their lifestyle. >> The the issue is that they they need to be the right people, and they need to try to put in the right effort to to make it work, right? Otherwise, it's never never going to work. >> And it's I don't think we should get people We should sell people who would suck. I think we should sell people who would be good.

1:53>> Mhm. Absolutely. I I agree. >> Okay, so you have a demand issue. I will I will say this. Um I think that somebody to zoom all the way out. Um I have looked at a lot of brick and I come from this world. So, like I'm very familiar with the franchise world. Um the Basically, every single problem in franchising can get solved with one core thing, which is the North Star metric, which is unit economics. You got to fix the restaurant.

2:18If you came in this room and said, "My restaurant costs $100,000 to open and it'll make you $500,000 in profit year one, you will not have a problem selling restaurants." >> I can't promise that. Not not because they can't make it. I can't promise it because I'm not allowed. >> You have an FDD and so you can say what the unit economics are for the franchises that are open. But, my point is that not that you can't promise that. The point is that you would say you state the facts and tell the truth.

2:45These are the five locations we have. These are the metrics. We need to improve the metrics of the locations. That's what I'm saying. It's like you're having trouble selling the franchise cuz the franchise offer is not compelling. Like that's the core issue. And I don't know what the reason for like why you want to do the franchise versus like be Mr. Panda and own 20 of them and then you're like good to go. All right? Because if you've done the So, I'm sure you hopefully you've done the math on this, but like if you do a hundred million top line, what's going to be your your franchise fee?

3:13>> Um >> Like your royal like your royalty on top line. >> So, seven seven percent. >> Okay. So, that franchise would be seven million dollars top line. Let's assume you ran 40% net margins at the franchise or level. So, you run 2.8 million dollars EBITDA. And let's say that you've sold, you know, a zillion more locations. So, if you're, you know, crushing [snorts] it, you know, like they'll give you 15 times. More realistically, maybe you get 12. So, you get 12 on 2.8, call it three, $36 million exit. You're not going to exit the entire thing. They're going to make you roll 30% or more. And so, you've got 0.7 * 36,

3:44>> [snorts] >> call it 20-ish, you know, 22, 23, whatever, million dollars. That's when we we do this thing all the way and now you've 100 open locations. And so, the question is, so you have 9 million top line right now, right? What's the profit on the nine? >> About 1.2. >> Okay. So, to me, I think to myself like, is it more likely that you could just go from four to 20 instead of opening 100, you open 20, you improve the profitability from, you know, 1.2 on four to maybe two on four, right? So, you're making 500,000 per, and you have 20, you're making 10 million dollars bottom line, and then you get an eight on that, you get 80 million.

4:29And so, I I'm only saying because like, the system-wide revenue of a hundred million dollar uh revenue goal is actually very small franchise. And so, the the zooming all the way back out though, we have to fix we have to fix the restaurant. Because what's making it not attractive for you to continue to scale as corporate is making it not attractive for them to buy in as a franchisee.

4:56It's fixable though. It's just I wouldn't try and like, for whatever reason you have the goal of doing it, I think you will achieve it if you take 24 months and just think, I'm going to go down to the penny and figure out a way to make this thing significantly more profitable. If Panda Express can run 27% net margins with the infrastructure that it has to open 3,000 stores and all of that corporate overhead, you should be able to run that.

5:20And so, I think it like, that's the that's the actual answer. >> Okay. >> Rather than here's like the three-step tips to whatever. I think that's the actual like, that's the real real. >> Okay. Thank you. >> ways it's good news though, right? At least you know what to do. >> [laughter] >> Absolutely. Thank you. >> Thanks, I appreciate you. If you're a business owner and you are not growing as fast as you like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling road map, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly, where they got stuck and how they got past it. And so, we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page, you can just book a call with my team and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas and we'll do this in person live.