Urlithani
Vyemm Raider
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- 3,332
Title. I am a business advisor for a franchise company, and one of my clients is selling. I have been with the company since 2006, and have been training new franchisees on store operations for the last five years or so.
Anyway, the sale was a surprise to me and has been going super fast since then. I found out about 12 days ago and told the salesperson I was interested. The franchisee said they were happy to hear I was going to buy it. I told him I was always going to buy one about 7-10 years from now, so my financial situation wasnt the best right now. I asked him if he would carry some of the note. He said, "I'll carry the note with interest, stretch it out over 15 years to lower the payments, and you can pay it off early with no penalty."
Of course I still have no money for starting operating capital and was looking at my 401k, but he told me not to touch it. Instead, he offered to write me a 20k check and put it on the note with the payments if I couldn't find the money. I went to my in-laws to make a deal. My family is poor and my wife wrecked our credit and we just got out of Chapter 11 2 months ago.
The next day I went to visit another client and help them out with staffing issues (big shock in this market, right?). I told them it was still under wraps but I would no longer be their franchise consultant and will soon be a franchisee instead. They were excited, but I told them I just had to get initial starting capital for cash flow. He said, "doesnt he have an X machine? We really need some of that. I'll give you $30k and you can pay me back in production over time." So we worked it out where he can use the machine at my shop 4 days a month max to make what he needs, and I get 30k up front for operating expenses. Even better, I got to tell my in-laws they don't have to round up the money. (My father in law seemed upset because we get along really well; I think he thought it would be a great bonding family business thing, but I know from experience family and business is a bad mix. Everything goes smooth... until it doesn't. Also I won't have the pressure of family counting on me to succeed to pay their money back).
I have $1200 in my bank account and thought i had no shot, but everything is falling into place real quick. The attorneys are still drafting this up though, but if all goes well it seems too good to be true. I got a business listed for 250k dropped to 205k (he dropped the price because he got an offer doing consultation for a friend on the side. He became an absentee owner and the sales are slipping, so he wants to sell it faster because it will continue to get worse without him. This is when I found out about it).
Pros:
- I've been in the industry for 8 years, and with the franchisor as an employee for 16.
- I know almost 200 franchisees by name, know 50 of them well, and 15-20 could be called friends. I have no shortage of people to call if I don't know what to do.
- Prices on many materials in the store have not been raised in almost 2 years. This is the perfect time since everyone expects price increases to happen.
- I have visited 45 states and 4 countries in my career. The shop is 5 minutes from my house.
- The 3 full time staff members already know and are excited because we worked well together in the past when I came to help out. 99% they are staying on.
Cons:
- Net profit is below average, but raising prices and an owner fully involved will help.
- sales were almost 500k last year, but I need to get to 650k this year to break even and pay all the Bills at home.
- The first year or two will be rough. I expect 60-70 hour weeks to build sales up to pay off the note as fast as possible.
- Holes in my business game are management and organization. Also the admin side of it. I'll get an accountant to set it up and a bookkeeper for the financial side.
As long as the contract is written as discussed, we are signing by the 28th of this month (deadline before I have to sign a new franchise agreement with updated terms...usually more royalties or restrictions). Also Spring is when the sales really start to take off in the industry, so I want to get in while the earnings are high.
The store did almost 500k last year, 24% cost of goods (no price increases), payroll is 33% of revenue (sales dropped from 600k 2 years ago once the owner stepped away from the business, had to hire another employee to cover his absence).
So yeah, I havent even taken over and i have been waking up in the middle of the night, either from thinking about things that keep a business owner up at night, or that I'll have a 6 figure earning potential. Despite everything I already know about the industry, all my connections, and knowing how difficult small business ownership is, it's a whole different feeling from thinking you know and actually knowing once you're in that seat. Excited and scared at the same time.
Anyway, the sale was a surprise to me and has been going super fast since then. I found out about 12 days ago and told the salesperson I was interested. The franchisee said they were happy to hear I was going to buy it. I told him I was always going to buy one about 7-10 years from now, so my financial situation wasnt the best right now. I asked him if he would carry some of the note. He said, "I'll carry the note with interest, stretch it out over 15 years to lower the payments, and you can pay it off early with no penalty."
Of course I still have no money for starting operating capital and was looking at my 401k, but he told me not to touch it. Instead, he offered to write me a 20k check and put it on the note with the payments if I couldn't find the money. I went to my in-laws to make a deal. My family is poor and my wife wrecked our credit and we just got out of Chapter 11 2 months ago.
The next day I went to visit another client and help them out with staffing issues (big shock in this market, right?). I told them it was still under wraps but I would no longer be their franchise consultant and will soon be a franchisee instead. They were excited, but I told them I just had to get initial starting capital for cash flow. He said, "doesnt he have an X machine? We really need some of that. I'll give you $30k and you can pay me back in production over time." So we worked it out where he can use the machine at my shop 4 days a month max to make what he needs, and I get 30k up front for operating expenses. Even better, I got to tell my in-laws they don't have to round up the money. (My father in law seemed upset because we get along really well; I think he thought it would be a great bonding family business thing, but I know from experience family and business is a bad mix. Everything goes smooth... until it doesn't. Also I won't have the pressure of family counting on me to succeed to pay their money back).
I have $1200 in my bank account and thought i had no shot, but everything is falling into place real quick. The attorneys are still drafting this up though, but if all goes well it seems too good to be true. I got a business listed for 250k dropped to 205k (he dropped the price because he got an offer doing consultation for a friend on the side. He became an absentee owner and the sales are slipping, so he wants to sell it faster because it will continue to get worse without him. This is when I found out about it).
Pros:
- I've been in the industry for 8 years, and with the franchisor as an employee for 16.
- I know almost 200 franchisees by name, know 50 of them well, and 15-20 could be called friends. I have no shortage of people to call if I don't know what to do.
- Prices on many materials in the store have not been raised in almost 2 years. This is the perfect time since everyone expects price increases to happen.
- I have visited 45 states and 4 countries in my career. The shop is 5 minutes from my house.
- The 3 full time staff members already know and are excited because we worked well together in the past when I came to help out. 99% they are staying on.
Cons:
- Net profit is below average, but raising prices and an owner fully involved will help.
- sales were almost 500k last year, but I need to get to 650k this year to break even and pay all the Bills at home.
- The first year or two will be rough. I expect 60-70 hour weeks to build sales up to pay off the note as fast as possible.
- Holes in my business game are management and organization. Also the admin side of it. I'll get an accountant to set it up and a bookkeeper for the financial side.
As long as the contract is written as discussed, we are signing by the 28th of this month (deadline before I have to sign a new franchise agreement with updated terms...usually more royalties or restrictions). Also Spring is when the sales really start to take off in the industry, so I want to get in while the earnings are high.
The store did almost 500k last year, 24% cost of goods (no price increases), payroll is 33% of revenue (sales dropped from 600k 2 years ago once the owner stepped away from the business, had to hire another employee to cover his absence).
So yeah, I havent even taken over and i have been waking up in the middle of the night, either from thinking about things that keep a business owner up at night, or that I'll have a 6 figure earning potential. Despite everything I already know about the industry, all my connections, and knowing how difficult small business ownership is, it's a whole different feeling from thinking you know and actually knowing once you're in that seat. Excited and scared at the same time.
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