I Lost $100K Trying to Save a Failing Franchise
The one thing to remember
In a distressed franchise, the cheapest-looking option is often to sell now, because waiting for a higher price can burn far more cash than the discount you refused.
What happened
Eric Vonhorn describes a franchise ownership situation where he and his partners were trying to manage locations from out of state. They had a chance to sell early for a very low price, but held on because they hoped to turn the business around and sell for more. Over the next year they spent well over six figures keeping it afloat, then ultimately handed it off for little or no money. The account is used to explain how he now thinks about buying distressed franchise locations, especially risk control, employees, leases, culture, and prepaid revenue obligations.
Who's telling it: Eric Vonhorn, a franchise investor/operator describing his own failed franchise ownership and sale This is mainly Eric Vonhorn’s first-person account as an owner/seller and later buyer; the former partners, employees, franchisor, landlord, and buyer of the failed locations are not heard from.
Timeline
- Operations
The owners operated franchise locations while living out of state, even though the business needed local hands-on leadership.
- Exit
A potential buyer could have bought the locations for “pennies on the dollar,” but the owners rejected that outcome because they wanted more.
- Operations
The owners spent more than six figures over the next year trying to keep the business afloat.
- Exit
They eventually let someone take over the business and appear to have received little or no money.
- Thesis
Years later, the narrator uses the experience to shape his approach as a buyer of distressed franchise locations, focusing on risk rather than only price.
stage where a mistake was made
What went wrong 7 issues
Remote ownership failed
The owners tried to manage the franchise from out of state. The narrator says the business needed someone local with an owner mindset, and the lack of that local ownership was a large part of why it kept losing money.
Mistake made at Operations → showed up at Operations
“we were out of state trying to manage uh from a distance in a business that needed someone local there”
Warning signs
- None of the business partners lived in the state, even though the business needed local hands-on management.
How to prevent it
- Before buying/opening, the buyer group should have assigned a local operating partner with clear authority, equity incentives, and required on-site hours.
- During diligence, the buyer group should have tested whether the franchise model could run remotely by interviewing comparable franchisees and reviewing manager turnover/performance requirements.
No local owner mindset
The franchise needed local leadership acting like an owner. The group expected a hire to increase customers and revenue, but the narrator implies the structure did not create enough owner-level accountability.
Mistake made at Operations → showed up at Operations
“needed somebody that was in the business locally with an owner mindset and with an owner mindset they probably should have some equity”
Warning signs
- The narrator believed a hired person could build revenue, but also recognized that equity is what creates a real owner mindset.
How to prevent it
- Before operations began, the owners should have hired or promoted a local operator with equity or a bonus plan tied to cash flow, retention, and sale-readiness.
- At the first signs of underperformance, the owners should have replaced the remote-management model with an on-site owner/operator instead of only hoping a hire would rebuild revenue.
Rejected distressed exit
The owners rejected an early chance to sell for “pennies on the dollar” because they wanted more. That decision kept them exposed to another year of losses.
Mistake made at Exit → showed up at Operations
“No, we want more than pennies on the dollar”
Warning signs
- A buyer was available earlier, but only at a very low price, which signaled the asset was already distressed.
How to prevent it
- When an offer arrives for a failing location, the owners should compare the offer against a written 12-month cash burn forecast and a realistic turnaround probability.
- The ownership group should set a minimum acceptable sale price and a maximum additional-loss limit before rejecting any distressed offer.
Kept funding losses
After delaying a sale, the group spent more than six figures trying to keep the franchise alive. The narrator later describes that money as wasted.
Mistake made at Operations → showed up at Operations
“we spent over six figures over the next year trying to keep that thing afloat”
Warning signs
- The business was already sinking, yet the owners continued to fund it for another year.
How to prevent it
- Before putting in more rescue capital, the owners should require a 90-day turnaround budget with specific revenue, cost, and customer targets.
- The owners should stop funding the business automatically once the stop-loss limit is reached and either sell, close, or bring in a properly incentivized local operator.
Overconfidence hid weaknesses
The narrator says ego and overconfidence led him to think he was better at operations, marketing, and sales than he actually was. That made it harder to admit the turnaround plan was not working.
Mistake made at Thesis → showed up at Operations
“I thought I was amazing at everything then I realized it broke”
Warning signs
- The narrator says he believed he knew how to pick brands and run them correctly until the business failed.
How to prevent it
- Before acquiring or operating a turnaround, the lead owner should write down which functions they personally can and cannot run: operations, marketing, sales, staffing, and finance.
- The ownership group should bring in outside operating help or a franchise peer review when performance misses plan for two consecutive reporting periods.
Turnaround plan was wishful
The owners held the business because they believed they could rebuild revenue and later sell for a profit. The transcript does not show a concrete plan, milestones, or proof that the turnaround was working.
Mistake made at Operations → showed up at Operations
“they will get that revenue built up they will get more customers in the door”
Warning signs
- The stated plan was mostly a hope that a new person would bring in more customers and revenue.
How to prevent it
- Before deciding to hold the asset, the owners should require a documented turnaround plan with monthly customer-count, revenue, labor-cost, and cash-flow milestones.
- The owners should review actual results against that plan every month and trigger a sale or shutdown if milestones are missed.
Misread real objective
The narrator focused on improving the sale price instead of minimizing total loss and stress. He later concluded that peace of mind and moving on would have been the better goal.
Mistake made at Exit → showed up at Operations
“I wanted the best price early on when I tried to uh um make the business worth more”
Warning signs
- The narrator later realized he valued getting out and moving on more than squeezing out a higher sale price.
How to prevent it
- When selling a distressed franchise, the seller should decide whether the objective is maximum price or peace of mind before entering negotiations.
- The seller should calculate the non-cash cost of delay—management time, stress, and distraction—alongside the dollar burn rate.
Prevention checklist 0 done
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Thesis
LOI
Due diligence
Closing
Integration
Operations
Transcript 701 lines · 5135 words · auto-generated captions
And that one decision uh cost me well
over six figures.
[Music]
Representing franchise secrets,
Eric Vonhorn.
Hey, franchise secrets. Today you've got
me and I'm going to be talking about
what I am actively doing. It's been a
few weeks in the making. It's actually
been a lot longer in the making um in
terms of an a franchise that my
investment group is about ready to buy
out as a franchisee. When I say it's
been a long time in the making, uh we've
been working on a a number of different
deals and a lot of them have fallen
through. They haven't been the right one
for us and until this one. So, I'm going
to talk about how I found it, how the
the process is going, and and what I see
moving forward in the future. And
hopefully, this will help a lot of you
if you are a franchisee or a franchise
buyer on on how I look at deals um
within franchising. When I say it
started a long time ago, it was a number
of years ago when I was on the other
side, I was a seller and I wasn't I
wasn't selling making a lot of money. I
was actually going to lose a lot of
money if I sold. And and I held off. I
thought, well, we can turn this around.
You know, I didn't live in the state.
None of us business partners lived in
state. We were uh we were out of state
trying to manage uh from a distance in a
business that needed someone local
there. So, when you see me put out a lot
of content about owning franchises, it
all comes from experience. I'm not just
talking about what I see or hear other
people out there talking about or what
franchiseors tell me. It's all about
what I've experienced not probably just
once but multiple times and my friends
have as well. So here I was a part of a
brand that uh that needed somebody that
was in the business locally with an
owner mindset and with an owner mindset
they probably should have some equity
because equity really gives uh gives you
the owner mindset. And so I thought,
well, shoot, we can hire somebody and uh
and they will get that revenue built up.
They will get more customers in the
door. We will start making money and so
we can sell for a profit. And uh fast
forward a year from that original
conversation when we had somebody that
could have bought it for pennies on the
dollar. We're like, "No, we want more
than pennies on the dollar." And that
one decision uh cost me well over six
figures because we spent over six
figures over the next year trying to
keep that thing afloat. And it was money
that was just wasted. Like we literally
lost six figures by waiting and holding
on to an asset that uh that was sinking
and it wasn't sink and it was sinking a
large part because of us. Now, I could
blame all kinds of other people, but
here I am uh losing money and I'm the
franchise guy and I talked openly about
this because I believe, you know,
challenges um really, you know, help you
become more successful in the future.
People that have scars, I trust people
that have scars in the in from past bad
deals, past failures, past things that
um that that they've learned from. I'm
not don't want a lot of those, but I
respect people that have that have been
through it. And so, um, we sold that
thing for like I don't think we got any
money out of it. I think we just were
like, "Hey, you take it over." And, uh,
and we walked away from that. Lost a lot
of money. The $100,000 plus was just a
little bit of the money that we lost. We
lost a lot of money in that. And um and
I can comfortably say that because I've
made a lot more money in franchising. Uh
and I knew that we were going to be
making more money again. I told my
business partner then I said, "We are on
the losing end of this deal now, but
let's learn from it because we will be a
buyer at some point." Well, fast forward
a few years. We've uh we're looking for
uh certain uh uh purchase options now
and we put the word out there with
neighboring franchises, other franchises
that we are a buyer. And then a deal
came up and it was a very similar deal
to the deal that we sold early on. So,
it's a deal where we're basically taking
over a couple locations and um these
locations aren't really even losing any
money, but the but the but the seller
needs to get out of it for various
different reasons. And so, here we are.
We are the buyers of this thing. And so,
um I want to kind of break it down for
everyone, but I wanted to give you that
context that I've been on both sides of
this. So, kind of first of all, the
mindset of a distressed seller. uh you
want to negotiate uh with them. You want
to know how to spot that distressed
seller and and how to win and how to
structure something as a win-win. And
when I say negotiate it, you really um
need to they need to be in the right
mindset. Not just a distressed seller,
but they need to be a distressed seller
in the mindset of I need to get rid of
this thing so I don't lose another
$100,000. I was not in the right mindset
a a year earlier from when I sold my
locations. Um, and so the time that I
was in the right mindset, I'm like, I've
lost a lot of money already. I just lost
$100,000 because I didn't sell it
sooner. I was in the right mindset. Most
sellers have no idea what buyers are
actually looking for. And I know this
because I used to be one of them. So,
there's pressure that can uh that that
can get to you. You're burned out. You
have operational chaos. you have a
manager that just quits. These are all
kinds of things that can happen and
those are you need to understand um
those levers that you can pull when
you're getting ready to uh negotiate
with them. So, as a buyer, you can see
you got to look when buyers are hiding
something. Are they hiding employees
that are about ready to quit? Are they
hiding um um members or uh members that
uh uh member shift that is that is
completely shifting and the momentum's
going the wrong way or do they just want
out and you want somebody that just
wants out and they understand that you
are getting a good deal but they also
understand you are taking on risk as
well. So there's things that buyers
never say out loud because I've been the
buyer. I've been the buyer in the past
and here I am at being a buyer talking
to you you all but buyers there's things
that they just don't want to say out
loud like is this seller reliable post
close when this closes are they going to
be there to help in that transition
because it's really nice to have
somebody helping in a transition or are
they going to spook the people too early
and uh blow something up or they hiding
financial landmines um and then can I
just replace them like Were they
involved in the business and they leave?
Like is everybody else going to leave
because that owner was the nice person
or they were involved and they had you
know certain people that were there
because of them. So if they are gone
like what happens to the employee what
hap employees what happens to the
culture. So you really need to focus on
risk control as a buyer. So I'm going
talk a bit about how I structure these
types of things. And I always start out
with an LOI, letter of intent. And um
and so there's certain things that you
want in in the clause you want in that
letter of intent. And just a side note,
inside the franchise secrets Facebook
group, I'm going to start giving away
some of the custom GPTs for chat GPT
that I've created. And I have one that
is on uh an existing business buyer. And
I've used that GPT. have trained that
GPT to help in in creation of the LOI. I
have another one that is just reviewing
leases. I have a bunch of leases
uploaded to it to train it on leases.
Kicks out a two soon to be 300 point
checklist that rates them. Um, and so it
really really helps me when I'm
negotiating leases uh as I get involved
in new locations or I'm acquiring uh
existing leases and like for instance
this one, one of them is a pretty solid
lease. One of them is not so much. So we
have to really run it through that
custom GBT make sure that we are able to
uh stomach the things some of those
things that we don't like about that
lease. But um some of the other things
that you want to think about in that LOI
is employee transition. What happens if
um the if you are I don't I'm not a fan
of of buying out the the entity of the
the of the existing franchisee. I don't
want to buy their LLC or CC corp,
whatever it is. I don't want that. I
don't want to inherit liabilities. I
want to have a new LLC created for this
new location and I want to have
employees sign new employment contracts
with me and and if the seller has normal
employment contracts with them, I'm okay
taking on uh the existing employees that
we want to take on. Having those
employees at the same pay rate, but
they're under my entity and they're
under my employment agreement. It just
saves a lot of headache. So, just think
about something like that. And um
typically uh like they will fire or
terminate the employees not because of
anything that they did wrong, but
because they're terminating that
agreement, they're getting hired under
the new agreement. Just like think about
it this way, like
uh with the landlord, they are well,
that's not a good example because the
typically the seller has to stay on the
lease as a personal guarantor. Um but we
are signing a new lease and or
utilities. The seller sells to us. The
electric electric company now um we have
a contract with them. The old uh seller,
the old owner gets off of that just like
that. That's how it happens with
employees as well. So, you just need to
be think through employees and not just
how to make it as easy as a transition
as possible, but you need to be thinking
legally how does that work? Are there
unintended consequences? And I think
that's something that you always need to
ask yourself like, oh, this makes sense.
I want it done this way um because it's
easy or it's simple or because it's good
for employee transition or it's good for
whatever the thing is good for. But you
need to ask yourself, what could the
unintended consequences be? And there's
usually unintended consequences of this.
So, I'm always a fan of hiring an
attorney, making sure that you have your
eyes dotted and tees crossed getting
advice from them. But back to the LOI.
Another thing that you want to think
about with the LOI is the revenue. I've
seen people get burned or maybe they
have large benefits. Um, somebody does.
Uh, let's say they are selling packages.
If it's a um there's a a $1,000 package
and it's they get uh you know 20
massages or 100 massages, whatever that
package is. So they sell it and let's
say they've sold 10 of those. So they've
they have $10,000 of income that went to
that store owner and now the existing
the new owner has to fulfill all of that
and does not get any of that income. So,
they have expenses related to the income
that came in to the seller um in the
past. And so, I've I've heard, you know,
horror stories about this. are like, I
had no idea that they had a special at
the beginning of the year, the January 1
special where, you know, Cyber Monday or
whatever it is that um they collected
all this revenue for the special thing,
but it was delivered throughout the year
and now the new owner has to deliver and
it costs them all kinds of money to
deliver on the product or the service
that the that the seller collected all
of that revenue. So, you need to be
thinking about that. One thing they
might want to do is uh is proration. You
know, if we deliver the service as the
buy as this as the buyer, we get a piece
of that revenue
lease assignments cover that in the LOI.
Talk about that. And you might not have
the full conclusion of what's going to
happen because uh a lot of that depends
on the landlord. the landlord will will
give you uh a thumbs up if they will let
you have the lease assigned to you and
they'll give you a thumbs up or thumbs
down if uh they're going to let the
seller off of that personal guarantee.
Um there's a lot of things that that can
be done about that, but you just need to
be aware of that. You don't try to you
need to have deep conversations with the
landlord to understand the different
expenses associated with that. You need
to review that lease. There's usually
assignment fees and and whatnot. You
need to figure out figure out who's
paying for what? You figure out the
deposits, who's who gets the do the does
the seller get the deposit back and if
so when. Uh all of those kinds of
things. And then also indemnification.
And this is all kind of good stuff that
you should uh talk to your attorney
about. I'm a fan of getting a lot of
this out in the LOI, getting it open
before you really start racking up
attorney bills. So, uh, so the more that
you can do in the LOI, just you and the
and the and the buyer or the buyer and
the seller just talking about like what
they really want, what their intentions
are, the um the better. But if you've
never bought a a business or sold a
business, you might be at a disadvantage
depending how um how that other uh party
is, like if they're taking advantage of
you and that's their MO or if they're
just trying to find a win-win uh
solution to this. And I think they're
they're probably more people than you
realize that are really just looking for
win-win situations where the buyer is
not trying to take advantage of the
seller. They're wanting a good deal, a
fair deal, but they also understand the
risks that come with it. Or they
understand the amount of money that
they're going to pay for it because it
comes with a predictable multiple based
off of the income that you're coming in
come that's coming into the business if
it's not a distressed situation. Um, so
I've had, you know, different different
people that have acquired a lot of
businesses. David Chuck is one of them.
He's a friend. we were buddies way back
when in the tax business and he's buying
um multiple different brands um as a
franchisee and I don't know how many
locations he has but I bet it's north of
a hundred by now but he can't do that
without having a good reputation with uh
with sellers. So he has to have a good
reputation with sellers and I did an
episode with him and he's spoken to the
mastermind multiple times. So you think
about uh you and then I've had somebody
on that was with Anytime Fitness and
they are growing through acquisition.
Same thing. And I've had private off you
know off- camerara conversations with
them and and it's you know what they're
saying on camera is what they say off
camera and uh and that's not always
true. So to go um with it's not always
true with everybody uh because some
people will say one thing in p in
private and something different in
public. Um, so but that's just something
to be aware of. You want to strive for
that uh win-win situation and do your
research. Whether you're the buyer or
the seller, just do your do your
research. And it's never been easier to
do research, especially with me starting
to give away some of these custom GPTs
uh that I that I've built. I've been
giving a lot of them away to mastermind
members already, and I'm going to start
creating some for the general public.
All right. So, uh again, back to
employees just for a little bit. But I
want to I want to make sure that we hit
on this. Do not do not buy a business
and just keep the employees as is.
That's how you inherit lawsuits. That's
how you inherit trouble. That's where uh
that's where like if the seller didn't
fire anyone and I had to decide who I'd
rehire, it gets real uncomfortable
really fast because now it's your
problem as the as the as well, I guess
it's everybody's problem. But it's just
a big mess if that's not decided upfront
and how it's handled and it could become
your problem as the buyer of the
business. So you need to pay attention
to employees. Um, so we uh we kind of do
a hybrid structure with that. Um, that
way it gives the seller some flexibility
and it gives us some flexibility as a as
a buyer um to make sure nobody gets in
trouble legally that employees aren't
left in the dark and they're left in
limbo. Um but we do some type of hybrid
between uh between those two things of
uh of making the buyer forcing the buyer
to terminate them and um and then like
um hiring anybody that we want.
Attention franchiseors and franchises.
There are two really important resources
that I want to share with you that will
help you avoid costly mistakes and
increase your enterprise value. The
first is our free Facebook group. It's a
community that has over 4,000 franchises
and franchiseors in it. When somebody
asks a question, they get honest and
authentic answers from multiple
perspectives. You can join the group for
free over at franchisesecs.com/fas.
The second resource I want to share with
you is if you're a franchiseor and
you're frustrated that you're not
awarding as many franchises as you
thought you would, this is the reason I
created the franchiseor mastermind. If
you want access to the information, the
techniques that the best franchise sales
organizations are using to award
franchises and you want what mature
brands have with their playbook of
having happy, successful franchises that
grow the right way, then you might want
to check out the franchise or
mastermind. The reason why people join
is they want access to my rolodex, my
connections. They want the playbook to
achieve both short-term and long-term
success. They want to increase
enterprise value in their brand. links
will be in the show notes or at
scalablefranchise.com.
You need to make sure that the culture
is right. You need to understand what
the culture really is. Um what we've
done is we've heard from the from the
seller what he thinks the culture is
like and then we did some secret
shopping. We went in we we've done
things on the phone just learning to uh
come in as a as a possible customer.
we've been in and um to as a real
customer we wanted to and just looking
around and just being aware of that and
you can really start to understand the
culture of the business and the
employees just by just by you know being
a customer. So I would always suggest uh
suggest that um because one of the worst
things is if you have to do a full reset
of culture and um and and it it gets
real tough. It's a It's a real It's one
thing to turn around a business with
that's losing money. It's a much harder
if you have to turn around a business
that's losing money because they they're
not marketing as much and whatnot. The
real the real problem is culture and
employees and bad employees. That
becomes much more difficult. I like
businesses that the problem is a revenue
and a profitability problem because
maybe they have too many employees
working because that's typically what
owners that are not active actively
involved are overhire and have too many
people working or they are not marketing
enough or marketing with the within the
right channels. So those are so those
are the levers that I like to pull
versus um versus seeing it as a cultural
thing that I have to deal with.
So, um I think you and in general,
moving on to a different subject is when
you are dealing with LOI and you're
dealing with expenses and revenue, you
just really want to do something that's
fair and you might just want to prorrate
the expenses and the revenue. Um maybe
if it's a membership model, prorate it
by usage by the month. Um and then just
verify everything. I would look at, you
know, if it's a membership model and and
yet they've sold like uh packages where
they're not a member, but they've bought
expensive packages to come in and use
the product or the service at different
times. You want to understand um how
many they've sold, what was the what was
the amount of revenue collected, and uh
what kind of services still need to be
provided. Uh that's important. All
right,
let's see. um
from a turnaround like there's always
going to be some type of turnaround
after you acquire. I don't care if you
know if if uh if you don't think that
there is, there's probably going to be
something that needs to get turned
around. People, it's just, you know,
once you take it over, you need to
evaluate, spend time with them, evaluate
the team. Don't be afraid to let people
go, but don't you need to really
understand um who it is that needs to be
let go and why. And you need to you just
really need to dig in there. And maybe
there's some customer surveys that you
need to do. Um and maybe that can even
be done beforehand. Customer surveys
we've done. Um remember we've done
customer surveys in the past or uh
before or after. But customer surveys
help to kind of see uh what the
customers say about the employees or the
culture and you start to understand is
it a management thing or is it an a
front level employee type thing like
where's the breakdown? Where's the team
uh uh breaking down who needs to be
replaced? You need to understand the the
ops playbooks, the scorecards. You need
to have accountability loops. You need
to understand um everything that they
use as a process from uh meetings to
like sales sales meetings, marketing. Uh
you need to understand all of their all
of their playbooks um and to see if it
aligns with yours. And then you really
need to put your and this is talking to
somebody that already has an existing
playbook in place that is you're going
in there to put your proven playbook in
place, but you need to do it the right
way. Um, so you just need to be thinking
about what you're going to do once you
take it over. There's some things that
made uh that made me a better buyer,
things that I've learned over the years.
So, I used to be the seller just trying
to get out. I just wanted to get out of
it. And now, you know, I'm the buyer
that has the leverage. Like, I did not
have the leverage as the seller. Now, as
the buyer, I have the leverage. And
usually the buyer does have the leverage
in this type of situation. Um, but what
uh selling my business taught me taught
me about empathy and ego and exit
strategy. Um, I had no ego when I first
lost money in franchising. I thought I
was a, you know, before that I thought I
was the smartest franchising guy ever. I
thought I knew how to pick the best
brands, run them the right way, do
everything right until something didn't
work. And so the thing that I thought it
was me, I thought I was amazing at
everything, then I realized it broke.
And there are things that decisions that
I made thinking I was better than I was
at whatever it is, operations,
marketing, sales, whatever it was that I
thought I was better at, I realized that
I wasn't. I wasn't better. And so I just
I started to understand my own my own
weaknesses. Um, and that gave me empathy
as I started to um understand other
people in a similar type situation. And
this happened a long time ago. I've lost
money uh a couple times in franchising.
Uh fortunately, many times more I've
I've done uh really well and a couple of
them I did very well. But I have the
scars and um and so I think it's helped
me understand what uh a seller is going
through when they are selling and
they're getting ready to lose a lot of
money. probably, you know, maybe they
had their their they they, you know,
took a a home equity line out or they
still have loans to pay off or whatever
it is. Like I feel for them, but I also
understand the risk that I'm that I'm
about ready to take over if it doesn't
work, if we're not able to do what I
think we're going to be able to do.
So, I really look for fair deals. I want
something fair for the buyer and the
seller. I don't want a lot of drama. I
just want it pretty simple. And and
again, I hear this from other people
that are in my position that are buying
out existing uh franchises.
So, kind of uh to wrap this up, um if
you are the seller, package your uh
business up like someone is really um
inspecting it. like even if it is
distressed, you need to get it all
ready, the the warts and the the the
bloody the the blood, the mess,
everything, because someone needs to
understand it and and it's okay that
it's a bloody mess, but you need to you
need to have it ready and simple for
them from leases to uh landlord stuff to
the numbers and then tell the story. Um,
and you really need to understand if
you, especially if you're that
distressed buyer, do you want to get the
best price or do you want peace of mind?
I wanted the best price early on when I
tried to uh um make the business worth
more, which ended up costing me a lot
more. What I really realized is I wanted
peace of mind. I wanted out of that
business at a loss and then to move on
to do things that make me money. And um
and if I had done that earlier, the
$100,000 was the easy thing to lose. I
lost uh you know, time, mental energy,
all of that. So, that was the bigger
loss for me. So, as a as a seller, um
just keep that in mind. As a buyer,
your job is to control the risk, not
just the price. Like I said, we're
getting these at an amazing price.
Absolutely amazing price, and they're
solid assets, but I'm always thinking of
risk. And my job as I am uh coaching my
uh my operational partners along is we
need to be thinking about risk. Risk
with the landlord, risk with different
loans, risk with employees, um risk with
customers. There's there's all kinds of
risks that you need to be thinking
about. So, I'm not trying to get a
better price because we're getting a
great price already, but I would even
pay more money to eliminate all this
kind of risk that we could possibly be
taking over. So, that's something to
think about as a as a buyer. Um, you've
got to be mindful of the risk. Now, I
should talk about on on on another
episode of buying like performing
assets, assets that you're buying them,
they maybe paying a 4x multiple because
you have a plan to increase revenue. You
have a plan to uh roll up a number of
them. Maybe it's in a certain market,
maybe it's across the country, maybe
it's a certain amount, and then you can
roll them up, sell them to a buyer that
is a bigger buyer. And that's similar to
what we did uh in one of my brands where
we built 12 locations and then the buyer
for that was a private equity buyer.
They wouldn't have bought us if we had
just a few locations in a in a market
that wasn't attractive to them. So, but
that's a different episode for a
different time. Hope you found this one
helpful. Uh join that Franchise Secrets
Facebook group. I'm going to be putting
some of those custom GPTs in there and
hopefully you find them helpful. Thanks
for listening to the Franchise Secrets
podcast. Links to everything can be
found over at franchisesecs.com.
And if you want my help with anything
from starting your own franchise to
growing your current franchise business,
please visit scalablefranchise.com.
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Deals with the same mistakes
$300K lost
5 major
10:50
I Lost $300K On This Business… Do I Close It?
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5 major
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1 fatal · 5 major
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When a $2.8m Acquisition Is More Like Zero to One | Dave Gilbert Interview
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$5M lost
6 major
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The 7 Year Collapse of an SBA Acquisition | Scott Duncan Interview
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