Profitable West Michigan Sub Shop Franchise Resale
The owner of several successful franchised sub shops, all from one franchisor that has 300(+) shops operating across 15 states, has relocated to be closer to his shops in another market. His move, which has triggered the sale of this single Grand Rapids (MI) location, could be your opportunity.
The Grand Rapids store has operated successfully for 10 years in a newer, fully leased strip mall. The shop, with 1900 square feet, occupies the end cap closest to the entrance off a major city street. There is ample parking at the door. The sub shop is located literally one minute from both a large suburban high school and an interchange on a major freeway. It doesn’t get any better than this.
Growing each year, the business had $570,000 in revenues in 2018, $620,000 in 2020, and a forecasted store record of $700,000 in 2021. And SDE (seller’s discretionary earnings – the cash flow available to pay the buyer and service debt) has kept pace with revenues. SDE has ranged from $113,000 in 2018 to $170,000 in 2020.
The franchisor has laser focus on food quality and franchisee support. In fact there is only a single company owned unit in the entire system. Fortunately for Praxis Business Brokers, the Grand Rapids store is conveniently located near our main office, and as such we frequently bring in subs for lunch meetings. I am pleased to report that we have always been pleased with our sub lunches.
The franchise fee for development of new stores is $25,000 with a lesser amount (which will generously be paid by the seller) for franchise resales. This shop is the only Grand Rapids location, and the seller and franchisor alike feel the Grand Rapids territory can easily handle several more stores which should appeal to a growth minded buyer.
The business has been closed for instore dining since the onset of Covid-19. When restrictions end, the shop will return to its historical seating for 54 diners. Despite the lack of instore dining for the past year (+), the shop, aided by embracing Grub Hub as third-party delivery has continued its record revenue levels. The store’s location is in a vibrant commercial area with nearby middle class housing developments, both of which bode well for future revenue streams.
The business is being offered for $424,000 which represents a 2.95x SDE and includes (a) all fixed assets ($145,000 on a cost basis), (b) approximately $10,000 of inventory, (c) the franchise transfer fee, (d) comprehensive training by the franchisor, (e) store specific training by the seller, and (f) a mid-five figure seller note.
For a buyer who recognizes value, this business, if purchased by the end of September (2021) qualifies for two SBA forgiveness programs (three months of debt payments and all closing costs) which will result in cash savings to the buyer of approximately $25,000 in the first three months post close.
To learn more about this attractive, cash-flowing sub shop, please contact Mike Greengard ([email protected] businessbrokers.com)