🍟 12/6/2021 – Fitness Machine Technicians (+ a Franchise Acquisition)
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
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!
- FMT Announces First International Franchise
- Fitness Machine Technicians Opens First Location in Minnesota
Disclaimer: 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.