🍟 Week 23: Turning iPhone accessories into cash
Plus: a MASSIVE OrangeTheory deal just went down
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:
Good morning and HAPPY NEW YEAR!
Today is the first working day of the year, which means if you technically didn’t stick to your resolutions over the weekend, you can start fresh today and it still counts 😉.
For today’s rundown, we have:
Headlines: 112 OrangeTheory’s were acquired
Franchise of the Week (new section!): McDonald’s
Breakdown: Zagg - a retail franchise selling mobile device accessories
Twitter Watch: Revisiting the top 10 franchises of 2021
As a reminder, the starting point for the criteria I look for in the brands I feature is always quality unit economics. “Quality” means at a minimum:
Average revenue per location that is 3x the initial investment, OR
Average net income/EBITDA per location that’s 1/3 of the initial investment
Outside of that, if the business happens to be in a very niche industry or an industry with massive tailwinds (i.e. pets, drive-thru coffee, home services, etc. ) then I’m even more inclined to include it.
Let’s dive in 👇
Level 5 Capital Purchases 112 OrangeTheory’s
The Scoop 🏃
L5 Fitness, the franchisee platform of Atlanta-based private equity firm Level 5 Capital, acquired 112 OrangeTheory Fitness studios for an undisclosed amount.
Prior to the purchase, Level 5 had 22 OrangeTheory franchises in Michigan, in addition to owning locations of CorePower Yoga, Restore Hyper Wellness, and a Series B investment in HeyDay.
The Wolf’s Take 🍟
OrangeTheory might be the best franchise to have owned in the last decade. After being founded in 2010, it already has 1,300+ locations worldwide.
When a franchise gets to that kind of scale, you can expect consolidation to occur - be it from large franchisees buying up smaller ones, or PE coming in and taking over a number of locations. I'd guess many franchisees just got a nice payday.
New Franchise Sankranti Wants to be the Chipotle of Indian Food 🌯
Indian cuisine is yet to have it’s moment in the U.S., but that could be changing
From Pakistan to Owning All of Yum! Brands 🍕🌮🍗
Shawn Sherrif moved to the US at age 18, and has risen from employee to star owner
Franchise of the Week
Units Open: 39,396
Investment Range: $1.3M - $2.3M
Average Revenue per Location: $2.9M
Did you know?
McDonald’s franchisees give out a “Gold Card” to special VIP’s. Having the Gold Card means free food for life. Holders of this card include Bill Gates, Warren Buffet, and actor Rob Lowe (as if they can’t afford the food 🤣).
Is there a brand you’re curious to know the financials of? Submit an idea via the button below and I may include it in a future newsletter!
Founded in 2004; franchising since 2012
Based in Utah; 97 locations open as of 2021
A retail franchise that sells accessories for smart phones and other devices (iPads, Nintendo switches, AirPods, Apple watches, etc.)
Fees + Investment
Royalty: 5% of gross sales
Brand Fund: 1% of gross sales
Franchise Fee: $15,000
Initial Investment: $49,000 - $88,000
The below tables represent information from 97 franchisees in 2020 that were open for at least 1 full month
The Wolf’s Take 🍟
Zagg appears to be a very high margin business, and when you extrapolate the revenue on an annualized basis, it’s conceivably doing $282,900 per year in revenue off of at most an $88k investment.
This is impressive performance through covid, especially considering that many locations function as mall carts / kiosks. With 80.63% of the world’s population owning a smart phone (per Statista), Zagg operates in a recession-resistant niche with a massive customer base.
Twitter Watch 👀
If you missed the “Top 10 Franchises of 2021” newsletter last week, you can read it above on Twitter or click here.
The Wolf Of Everything Else 🌎
A primer on the Gen-Z metaverse of Roblox 🔮
Robinhood is launching a beta crypto wallet 📈
Hedge funds got WORKED by the S&P 500 in 2021 📉
99 happy news stories you may have missed from last year 🙂
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!
This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.
All Content in this email is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the email constitutes professional and/or financial advice, nor does any information in the email constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content in this email before making any decisions based on such information or other Content.