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DK
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Why did I even bother applying to B School? 24 Mar 2009, 18:18
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Jerz
mbafwi - you may want to check out sites like https://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.
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https://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.
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Why did I even bother applying to B School? 25 Mar 2009, 12:52
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DK
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.
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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.
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Why did I even bother applying to B School? 25 Mar 2009, 13:32
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This thread is going downhill... and fast.
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IHateTheGMAT
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Why did I even bother applying to B School? 25 Mar 2009, 13:33
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DK
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.
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I would argue that the overwhelming majority of MBAs would not have the wherewithal to put this together either.
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