Found a unique franchise deal. Thoughts on pricing?

searcher profile

January 23, 2025

by a searcher from University of Oxford in Orange County, CA, USA

Found one franchise location in wellness space (IV therapy, ozone therapy, hormone therapy, etc.) in high discretionary income location. It is the only location in state (California).

Previous owner of franchise location spent no money on marketing, didnt follow franchise playbook, and left the country before opening the location. He/she tried running it remotely for 6 months but failed after only 8k in sales. Franchise took back location and now they are eager to find a buyer - willing to make a deal to transact fast.

Lease was signed for 10 years - starting at about $4350/month. Based on other franchises, I would expect monthly expenses, including rent, to be about $7k and another $9k for labor. Average location in franchise makes about $430k/year top line and about 20-25% net profit. Largest locations in franchise is just short of $1m. Some locations can expect about $300k in revenue in their first year.

It would be a buying the bare bones of the business at a discount. A list of 61 clients.

Asking price is $70K

Worth it? How would you negotiate with the franchise to get best deal possible for win/win? Maybe as little down as possible...

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Reply by a searcher
from University of Notre Dame in Charlotte, NC 28277, USA
I would verify those numbers with actual, current franchisees if you have not yet done so already - the data in FDDs is not audited for accuracy (as specified on the front/cover page) and there are some franchisors who knowingly provide inaccurate numbers to prospective franchisees. If you call and talk to 5-10 franchisees who say "yes, those numbers sound right" or consistent with their experience then I'd start getting excited as it sounds like you might have significant leverage to negotiate with the franchisor. Unfortunately, too often when looking at franchises, I've called 5-10 franchisees who laugh and say "no, I've never heard of any franchisees achieving those numbers in this system" in which case it's easy to walk away and never look back.
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