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OT: Franchises

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Old 02-24-2004, 07:43 PM
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Default OT: Franchises

I read the land lease thread, and so I thought I'd post this here.

I recently was informed of a local fast food franchise business is for sale.

Can anyone offer any advice?
1. Can franchises be sold to another person without qualifying as if you got a franchise on your own?
2. What is the value of something like this? I've heard 25% COGS, but is that true?
3. What type of sales are needed to "make anything"? $250k? $500k? $1MM? $2MM?
4. What is a good price to pay? 1.5 X gross profits? 2.5 x net? Or something else?
5. What are the issues with owning one? employee theft of cash? Turnover? (I know an excellent manager at a competing franchise, which could be "lured over")
6. I own another business that consumes a lot of my time. Can these be run with good management and minimal management by an owner?

These may be in depth questions, but I was amazed at the info in the land lease thread, so I thought I'd post this for interpretation and discussion.
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Old 02-25-2004, 12:07 AM
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I have done some research on this topic. It all depends on the specific franchise that you are looking at. Read the fine print in the franchise agreement to get all the details, as they are all different. Usually the franchise must approve any sales involving the franchise. As far as making money, unless it is an established location with reliable employees and management that is willing to stay on, you will need to spend considerable time to get it off the ground. It is very easy to turn a successful location into the ground with poor management. There are many successful people who have made good money buying these unsuccessful locations and turned them around. I would suggest PMing Too Old, he is a Burger King franchisee.
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Old 02-25-2004, 12:57 AM
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Too old will have some great advice

I looked into a Papa Johns but they offered me a store in BFE while they kept the good locations for corporate...But if it is a successful business and the owner is just tired of the BS then you may have found a great new venture.
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