Buy a franchise for $600k and it’s instantly worth $1M.
How?
A fancy private equity term called “multiple arbitrage”
Most people don’t know how this works so let’s simplify it
There are 5 individual franchises with different owners
- Each makes $200k profit per year
- Each worth $600k (3.0X profit)
- Total value $3M ($600k each x 5 locations)
You buy the first one using SBA or seller financing
- $120k down (20%)
- 9% interest, 6-year am
- $100k/year payment
- $200k profit – $100k debt = $100k cash flow to me
Or start it from scratch. It doesn’t really matter. The main thing is getting your foot in the door of a great brand.
The best deals happen franchisee to franchisee.
I work to increase the sales, margins, & cut expenses
- Increase cash flow to $150k
- I live off $50k/year salary
- I use $100k remaining to buy the 2nd location
I rinse & repeat until I own all 5 locations
The combined profit is $1M/year
I put a manager in place to take over my operational responsibilities
Now my company is worth a lot more
The portfolio is worth 5X the profit
Remember how I bought them for 3X profit?
A larger multi-unit company with infrastructure is worth more than small, individual locations, which are heavily owner-dependent.
My total cost was $3M but now they are worth $5M. I created $2M in value by “rolling up” these franchises.
This is why I keep acquiring.
Every additional location not only increases the overall cash flow but also increases the value of ALL my locations.
Want to learn more about this strategy?
I’m doing a LIVE workshop next Friday, August 22nd at 3pm EST diving into the EXACT franchise acquisition playbook I’ve used to acquire 30+ franchises over the last 9 years
👉 Click here to register here for free 👈
Cheers!
Brian
