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Why did I even bother applying to B School?

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Manager
Joined: 21 Feb 2009
Posts: 76
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Kudos [?]: 7 [0], given: 0

Re: Why did I even bother applying to B School? [#permalink]  24 Mar 2009, 17:18
Jerz wrote:
mbafwi - you may want to check out sites like http://franchisepundit.com/

I don't think McDonalds and other 'non-glamorous' franchises net all that much money, and often the financial projections assume the franchisee is also the manager.

http://www.bizben.com/listings/140124.php

I'm not sure if the adjusted net includes an adjustment for managers. However, let's just say conservatively, worst case scenario, that you need 1 manager at each. They'd get paid $35,000 * 9 =$315,000. $1 million net. This is an interesting one, as they have a package deal of 9 of them. They are commanding a 5.7x EBITDA multiple. Generally, businesses in this range go for 4-5x cash flow. Ex: https://www.businessbroker.net/Business ... 51161.aspx Obviously, this is a lot easier said than done. The financial modeling is the easy part -- actually operating them effectively is the challenge. You need a certain personality type to succeed at this -- that's why McDonalds requires their people to start at the bottom. I couldn't do food service personally, but congrats to those who can. Truthfully, I think the reason that MBA's dont bother with ownership of these businesses/franchises is because they tend to own/create bigger things. If you have an MBA from a top 7 school and a solid general management track record, you could conceivably lead an investor-backed leveraged buyout of a much larger business and still hold a sizable equity stake. The kind of people that buy a McDonald's franchise are generally not smart enough (or connected enough) to lead a PE-backed buyout of a$100M or $500M business and grow it -- this requires a lot of the financial and management expertise that they teach you in business school. Current Student Joined: 23 Jan 2009 Posts: 118 Schools: Fuqua Followers: 2 Kudos [?]: 40 [0], given: 0 Re: Why did I even bother applying to B School? [#permalink] 25 Mar 2009, 11:52 DK wrote: The kind of people that buy a McDonald's franchise are generally not smart enough (or connected enough) to lead a PE-backed buyout of a$100M or $500M business and grow it -- this requires a lot of the financial and management expertise that they teach you in business school. Ouch. Having had an extensive career in food service in high school and college, I'd like to posit here that most of the owners and managers of restaurants - particularly the flourishing ones - are *at least* AS smart as any MBA. They usually work harder, too. The idea that MBAs are any smarter than other successful businessmen out there is as popular in B-schools as it is wrong... we just happen to be folks with the information and resources to actually consider taking on$100k or more of debt with a straight face.

Owning a chain of franchised fast food restaurants won't make you rich fast, and nor is it a minimal investment in time. And nor is it beneath anyone here... I hope.
Current Student
Joined: 09 Nov 2008
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Location: Evanston, IL
Schools: Kellogg '11 (MMM)
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Re: Why did I even bother applying to B School? [#permalink]  25 Mar 2009, 12:32
This thread is going downhill... and fast.
Director
Joined: 10 Jun 2006
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Re: Why did I even bother applying to B School? [#permalink]  25 Mar 2009, 12:33
DK wrote:
If you have an MBA from a top 7 school and a solid general management track record, you could conceivably lead an investor-backed leveraged buyout of a much larger business and still hold a sizable equity stake.

The kind of people that buy a McDonald's franchise are generally not smart enough (or connected enough) to lead a PE-backed buyout of a $100M or$500M business and grow it -- this requires a lot of the financial and management expertise that they teach you in business school.

I would argue that the overwhelming majority of MBAs would not have the wherewithal to put this together either.
Re: Why did I even bother applying to B School?   [#permalink] 25 Mar 2009, 12:33

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