Seen some for sale . 30k says makes 65k to owner operator. 3 years left of franchise agreement plus 5 Year option. After the three years can you just rebrand it and keep the fit out?
Baskin Robbins Franchise 30k Deal or No Deal?
OzBozo on 13/07/2020 - 17:05
Last edited 13/07/2020 - 18:02 by 1 other user
Last edited 13/07/2020 - 18:02 by 1 other user
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Have you seen the financials? 65k revenue?
And buying an ice-cream shop in the age of Covid?
Baskin robins
If you can't spell it, you probably shouldn't drop $30k on it
Lots of wealthy people out there who can't spell.
$65k and you have to actually do the work? Sounds crap.
i bet its also 7 days 12h shifts.
Make that on JobSeeker alone.
Maybe you could run it with a employee on jobkeeper. When is job keeper cut off?
You realise that jobkeeper is only for existing employees to prevent people like you taking advantage of it, right?
Yeahthe financials must be pretty bad for it to be only 30k. But the fit out would be worth like 100k . Who owns the fit out you think? You or Baskin robbins?
Not you.
You have to check out the particular franchise agreement in fine detail. A lot of them have an awful lot of add-ons that must be taken as well, the franchise fee is just the starting point. Such as an extra $100K for the fit-out and they dictate the location ie. westfields shopping centre at top rent. you then need working capital for expenses, wages, marketing etc. You are paying Baskin Robbins for their intellectual property (name & reputation etc), marketing, training and support. All else would be up to you. Otherwise everyone would buy a franchise and employ a young person to do all the work for them. You would need to work long hours, along with at least another employee, so good luck with fair work, super guarantee, workers comp etc etc etc.
If you are going to buy one go there and sit there all day and basically audit the place to see if the numbers are true. Don't trust anyone. Once it is sold to you there is no recourse, even if you can afford big money for a lawyer there is no guarantee the lawyers won't make more than you even if you win.
If you remember the Retail Food Group scandal. I would be very careful.
If you still want to go ahead I'd suggest you find a franchise group that doesn't own any company stores (Nando's have been accused of taking back good franchises as company stores) and ones that need you more than you need them. You'd want to get in at the ground level and gives you a couple of good years before they saturate the market and start looking to milk (or take) your store.
30k to buy a job thats only paying 65k a year?
Sounds like Uni…
$65k revenue or $65k profit? Is that number based on owner also working 7 days a week, 20 hours a day with other family members helping out as well for free. Does not sound like a profitable business if market wages for employees would be required.
I think 65 profit. But before taxes
So, ask yourself - would you work full time for $45k a year? plus the stress of managing employees and running a business.
Pre-Covid or during?
You can't think that mate, you have to know. If it's $65K revenue it ain't worth dropping $30K in. It's not even at the threshold to register for GST.
That said, I can fondly recall my first love and I sitting in a Baskin and Robbins sharing a banana sundae. Fond memories and it would make for a very catchy marketing campaign right about now…
Even taxi drivers don't have to get their family to help out!
So.. https://www.bsale.com.au/businesses/for_sale/226080/qld-bask…
Potential return to an owner operator is $65,000 EBITDA
Also.. all reasonable offers considered. You could probably take the lease off their hands and take the business for free.
The word "potential" rings alarm bells.
I think you also have to pay 10k for training.
Yeah not a great business. But better than doing nothing
Sounds like a lot of work and stress for maybe making 65k (yes my username checks out).
If you've ever read through a franchise agreement you'll know that they they benefit one entity (hint; it ain't you).
Franchises are in the business of selling franchises.
So 65k profit? you're taxed 14k, So you take home 51k.
then you've got to pay this guy 10k/year for his franchise.
So now your post tax income is 41k. on how many hours work?
assuming you work 48 weeks a year, 5 days a week, thats $170/day
[41000/48/5]
so at 8 hours a day, $21.25 (post tax) an hour.
Or you work at coles at the checkout, get paid about the same, clock off at the end of the day, and have limited financial risk.
After the three years can you just rebrand it and keep the fit out?
It would entirely depend on the contract wouldnt it? is the refridgerators owned or rented? Your contract might have a non compete.
I'd guess the shopping centre would have a 'make good' clause on their stores too
$30K sounds like the current owner just wants out.
If you are genuinely interested you can probably offer $1 and see how it goes.
What’s stopping the owner from just handing the keys back?
Shop lease
Yes, and probably franchise agreement too. Possibly also factoring in unpaid employee entitlements (super, leave) or other creditors.
Yes, and probably franchise agreement too
Yeah I probably has all these penalties for leaving. Franchises are a scam.
Better off dropping 30k on a uni degree and taking your chances on getting a 65k grad job at the end
Put the 30k on Tesla or Kogan stocks.
AfterPay
Virgin airlines.
Tesla is now bigger than Toyota market cap. Shares are pretty expensive . The thing is with Tesla tho. What’s stopping other companies making electric cars? why do people see a future of all electric cars pretty much being just Tesla’s.
other companies making electric cars
They are, Tesla just gets all the press. Tesla shifted the market from EVs being "save the planet hippy wagons" like the Prius, Leaf etc to luxury /sports vehicles so they essentially created the modern market.
Also helps that Elon Musk has SpaceX and continually opens his trap to say stupid stuff.
You'll never own a Telsa, it'll be Corollas all the way for the rest of us.
The key, in normal operating conditions, is what does the EBITDA (if representative) cover? Does it cover just the return to the owner for risking their $30k (or whatever they pay) capital? Or does it also cover their wages or heaven forbid, family member wages (which are not covered in the wage expense line above the EBITDA line).
You need to determine the distribution of returns. E.g. is the $65k a dead certainty or a long shot, or can you make a lot more with some effort?
We are not in normal operating conditions, so you need to assess what this does to the EBITDA and have a stab at for how long it continues for (impact from these stakeholders customer - demand, landlord, franchisor, Govt, etc.).
EBITDA by default should discount wages.
Obviously.
But can the owner (and possibly family) expect to draw a wage as well if they work in the business or just get compensated from the EBITDA? That is, does the EBITDA require free work from the owner (and possibly family)?
The only ones that make money are the ones that collect your fees every month. Don't do it.
I think there's some bad downsides like… Forced fitout upgrades, 65k for 12 hour days, lots of stress, limited scalability.
A nightfill position at Colesworth pays that for full-time. I don't think you will have much room to go up from there, either :(
No way Dont do it!
The franchise model is beautiful because the franchisee puts in their capital investment. The trick is to get franchisees to believe in it
Run as fast as you can!
I wouldn't be doing it, not for that little reward. $65K EBITDA with all the headaches of owning a business, the 24/7 worry that it entails and also being beholden to a franchisor. You'll be thinking about it all the time and working weekends (because it costs too much to hire people). Don't forget people taking sickies, liability, workers comp - all the headaches. Don't get me wrong, owning a biz is awesome but only if you're being financially rewarded for doing so.
Problem with a franchise is that you're not. just making yourself wealthy - you're making someone else wealthy who generally doesn't give a crap about your wellbeing.
Also look at it like this OP. Location is everything with ice cream shops. If you have one opposite a beach/park in the summertime you'll make good money no matter if you are a franchise player or not. If you really want to get into the ice cream game, why not just start your own? If the store itself passes the eye test then people will go in it.
But as others heret said, if it costs you 30k and you can make 30k EBITDA and it includes someone's wages you can buy it and employ someone to run it and make some money for little time input. But to be honest, if it was set up like that already, the owner wouldn't be selling.
TIL Baskin Robbins still exists in Australia
Nothing comes good out of a franchise for those that buy into one.
McDonald's?
Only if it’s on the M1 north or south.
This mob were in the news earlier this year for ripping off their franchisees.
Steer clear.
https://www.google.com/amp/s/amp.news.com.au/finance/busines…
This is such a common story with franchise operations. The Franchisor just so completely out of touch on the franchisees and just run them into the ground because some other sucker will take a punt. But even saying that:
- In this story the West End store still does 6k of sales on average. And they had an offer of 35k for someone to buy the business?
that is ~300k in sales a year. I'm not sure what the COGS are on this, But you'd have to imagine the margin on ice cream is pretty high. Must be wages and "head office" cost that ruin this thing.
I guess the main thing to watch out for (common on all franchises) is the dreaded capex that you are forced to spend on store revamps every 3 to 5 years. So many horror stories of the franchisor just deciding to change their branding/fit out look to make it look "up to date" but then all the Franchisees are on the hook for 100-200k fit out costs that would actually have little direct bearing on a sales uplift. You have no choice in this and that is the whole problem with the model, no say, no way you can easily exit and any kind of exit will cost you money. Plus the reality is that all the assets in the business are specialist IP owned by the Franchisor and store fits (which have poor secondary market value) just a danger.
Depends on how much ice cream you think you can eat during those three years, I suppose!