Discover more from The Wolf Report
🍟 Week 19: Fitness Machine Technicians
A niche service franchise + Jack in the Box is making moves
Welcome to The Wolf Report, a 2x/week email covering up & coming franchises & small business entrepreneur’s. If you’re reading this but haven’t subscribed, you can do so here:
To franchise fans,
Good morning and hope you’re ready to attack the week ahead. If you celebrate Christmas, you only have 18 days left to procrastinate buying presents for your friends and family.
Historically I’ve been the person who conveniently has “errands” to run on December 24th, and those “errands” require me to spend 6 hours at the Mall scrambling to find gifts. Let’s agree to both not be that person this year 🤝 (trust me, it ain’t fun).
Headlines: Another acquisition
Breakdown: Fitness Machine Technicians
Twitter Watch: A twitter thread about writing threads
Let’s get to it!
Jack in the Box Acquires Del Taco for $575M
The Dirty Deetz
Jack in the Box, the fast food giant that serves everything from burgers to egg-rolls, is acquiring Del Taco in a deal that values them at about 7.6x EBITDA.
Del Taco operates roughly 600 restaurants across 16 states, including 297 corporate units and 306 franchises. The two brands combined will have more than 2,800 locations across 25 states.
This is the first time Jack will operate another brand since 2017, when it divested the 700 unit franchise Qdoba for a cool $305M.
The Wolf’s Take
Franchise M&A has been hot in 2021, especially amongst food concepts, where we’ve seen Panera, Burger King, & Fat Brands all making moves. I think we’ll see this trend continue of large brands gobbling up smaller brands.
I’ve seen it first hand when working with brands - once you start achieving scale, opportunities start popping up for the founders, whether it’s from PE firms or other big brands.
In franchising, you either die a hero, or live long enough to see yourself get acquired!
Blaze Pizza Is Heading to Miami
9 Units will be built in Miami starting in Spring 2022
Steve Young Acquires 42 Planet Fitness Locations
The former NFL quarterback made a majority investment in PF Atlantic Holdings
Breakdown: Fitness Machine Technicians
Founded in 2002; franchising since 2012
Based in Pennsylvania; 45 units open as of 2021
FMT is a service based franchise that specializes in the maintenance and repair of equipment for commercial and home exercise facilities
Fees + Investment
Royalty: 6% of gross sales
Brand Fund: 1% of gross sales
Franchise Fee: $45,000
Initial Investment: $71,450 - $118,490
The below table illustrates the performance for the previous 2 fiscal years for FMT’s affiliate, Powersmith Inc.
The Wolf’s Take 🍟
I love niche businesses, so I was pretty pumped to discover FMT over the weekend. I was even more pumped when I saw the numbers for their affiliate location 🤑.
Anytime a franchise is showing an EBITDA higher than the initial investment, it’s a signal to explore further. FMT was able to do this during covid, and while revenue did take a hit in 2020, it’s good to see the business was still operational.
My main question, as with every service based franchise, is regarding territory. In FMT’s documents they state the typical territory they award contains 800,000 - 1,000,000 people. I’d be curious to know the size of the territory that their affiliate location operates in to achieve $165k -$349k in EBITDA.
Even if it’s a larger territory than 1M people, that doesn’t mean you can’t operate in one that size, it just means you’ll have to pay multiple franchise fees (after your initial fee of $45k, any subsequent territory increase comes at a $25k fee).
FMT is a classic example of people finding riches in the niches - and with only 45 franchisees + a boom in at-home fitness equipment in the last year, the timing may be right to look at this franchise!
Twitter Watch 👀
For the month of November, I tried an experiment where I posted a twitter thread everyday for 30 days straight.
Audience building on Twitter is a subject that is of genuine interest to me, as it seems every week someone new is going viral with a thread.
My primary goal of course is to just to continue sharing my learnings of the franchise world, but I wanted to give some insight to others with the above thread on what I learned during the 30 days.
Follow @franchisewolf and give it a read!
The Wolf Of Everything Else
Toys R Us is back from the dead, LFG
Beyoncé and Adele created Alter Ego’s to gain confidence
Mr. Beast could make Beast Burger the next big franchise if he wanted to
“Most people try to maximize the number of times they’re right. The real question is how much you make when you’re right” - Bill Miller
That’s it for this edition of The Wolf Report. Feel free to reply with any questions or feedback, or leave a comment. If someone sent this your way and you haven’t subscribed yet, you can also do that below. Thanks and see you next week!
NOTICE REGARDING FRANCHISE INFORMATION
The Wolf of Franchises does NOT guarantee the financial performance of any franchise mentioned. The decision to purchase a licensed affiliate or franchise must be based on your own independent research. The Wolf of Franchises is not liable for any representation made by an affiliate, associate, marketing material, or Franchise Disclosure Document of a franchise with respect to real estate, financial, operations, or marketing performance of the business being acquired.
This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for informational purposes only, and any financial data is based upon information provided by franchises in their respective Franchise Disclosure Document. The offer of a franchise can only be made through the delivery of a franchise disclosure document, from a certified seller of the brand, which The Wolf of Franchises makes no claim to be. Do not consider any information here as a guarantee of financial performance. The Wolf of Franchises has no affiliation or relationship of any kind with any of the brands covered in this newsletter, but simply provides data that is publicly available online or in Franchise Disclosure Documents.
All data from Franchise Disclosure Document’s is based on past performance, and if you were to purchase a franchise covered in the Wolf of Franchises newsletter, there is absolutely no guarantee that your business will perform similarly to existing owners of said franchise.