Acquisitions Anonymous - #1 for business buying, selling and operating - Is Buying a Taco Bell Franchise Worth It? Full Breakdown!

Episode Date: January 21, 2025

Ever wondered if buying a Taco Bell franchise is worth it? We break it down in today's episode!Link to the listing: https://www.bizquest.com/business-for-sale/taco-bell-kfc-pizza-hut-1-28mm-ebitda-southeast-u-s/BW2303660/This episode is sponsored by:Capital Pad: Simplify your deal sourcing with Capital Pad. Find the right opportunities and manage your pipeline seamlessly. Learn more at capitalpad.com.Viso Business Capital: Get the right SBA loan for your acquisition. Sign up for a free live Q&A session at visocap.net and click "Zoom Signup."In this episode, we dive into a business listing for a group of Taco Bell franchises located in the Southeast. From late-night cravings to business evaluations, we explore the operational details, profitability factors, and unique challenges of owning a fast-food franchise. Tune in as we analyze whether this opportunity is a great deal—or just nacho average investment!Key Highlights:- A nostalgic introduction to Taco Bell's appeal.- Breakdown of financial metrics for evaluating franchise opportunities.- Unique challenges of operating in the fast-food industry.- The "second-day taste" phenomenon and customer loyalty.- Practical tips for evaluating franchise investments.Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Is this something you should buy? Like, what are the pros and cons of this? I think you have to grow to a certain size chain if you're going to get wealthy off of this. But Taco Bell has this unfair advantage where some of those things actually taste better the second day they've been sitting around, like refried beans. So when I was a kid, by the way, Michael here, everybody as a teenager would have the place that they would go late night. after partying. And today on this episode, we're going to talk about that place. And it was the same for me and for Heather. We didn't talk about it to say for Bill. But this was that place. And this is the first time we've ever done an episode like this. And it is Taco Bell franchises

in the Southeast. So we dig into it and discuss whether it's a good deal or a bad deal. And it's the first time we ever saw something like this. When I saw it, I brought it. So here's the episode. I hope you enjoy it. Hey, everyone. It's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called CapitalPad. And it is the thing that I wish, existed when I started my journey of operating and investing in small businesses. So Capital Pad is a marketplace for acquisition entrepreneurs that is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest

in acquisition deals. So if you want to back somebody buying a small business, Capital Pad is a place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing, too, from the investor side is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front in black and white. Basically, CapitalPad professionalizes investing in small businesses, and the returns can be

really, really good. I'm so stoked that they exist. It's founded by my friend Travis. who is a phenomenal entrepreneur in his own right. So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com

and tell them that Acquisitions Anonymous sent you. Hello, Michael. Happy snowpocalypse to you on the East Coast. Yeah, yeah. Are you surviving? We are, it's coming. It's barren down on us. We're recording this here at like 10 a.m.

East Coast time. It's supposed to start snowing around. two or three. And we get it once a year in North Carolina, so people are excited. That's awesome. Do they still have ski resorts in North Carolina or they all shut down? There's one. Yeah, we have one. They blow snow and it's mostly ice. But we have one. Nice. Is it worth going? I'm sorry, Heather, you didn't get the memo. It's plaid shirt day on Acquisition Anonymous today. I have so many of them. I'm sorry. I missed out. Oops. Yep. Are you, Heather, is it cold in California or is like 50 degrees or something?

It has been cooler, but you know, it's the main story here is the wind and the, the, uh, smoke. It's really bad. Yeah. Yeah. Really bad. Are you anywhere near the fires at all? Uh, I mean, technically near, but it's not happening in my area. So I'm in Orange County. No fires have happened here, but we are getting all the smoke and I mean, I have a, I have an air filter right next to me right now because I was sneezing so much yesterday. And of course, we have friends who are affected. One of them probably lost their home in the Palisades and others who have been evacuated. And the weird story is they're screwing up the emergency notification system about evacuations and they keep sending them to everybody. I got one. Like to you, everybody in the state.

Everybody. Yeah. They just did another one this morning. That's really great. Right. Well, I'm sorry for everybody experiencing that brutal. Yeah. Horrible. Well, on that We do have a deal that does make people happy, which is Taco Bell KFC and Pizza Hut.

You know, I ran across this, and it was the first time out of 370 episodes that we've done this kind of mainstream franchise. So when I saw it, I was like, man, we need to talk about it. Because we've never seen a McDonald's. We've never seen, I think maybe we saw Duncan once,

but like we've never seen an orange theory like the the super desirable like franchises they never show up on these listing sites so that that totally piqued my my interest here and why I pulled it up and brought it in the court we'll be at pinnacle if there is a chilies for sale that will all the universe will explode and pigs will fly if we can do a chilies for sale on this spot so interestingly enough I was I was digging into why chilies is doing so well you know their sales were up 15 percent it's because they've seen started to do a lot of the in-and-out burger style stuff where there's like a hidden menu and all these kind of off-menu stuff. So supposedly they have like this spicy cheese mozzarella thing

that all the Gen Z folks are growing crazy for, which is why that people are going in and buying this thing like nuts. And that is a huge percentage, huge, huge chunk of why their Q4 is going so well is Gen Z is finding Chili's to be cool. I never, if I went into a Chili's, I would expect to be the youngest person there for sure yeah i think mine i would be but apparently not apparently it's crawling with jens ears is chilies is the new golf course so all right let me read you this is cool i love this one let me read you this taco bell kfc p's hot so uh from biz quest it is listed as a hot listing hether does that improve their chances of getting funded if it says hot listing on there yes totally makes a big difference when a lender looks at it is this a hot listing is on

the list, yep. Taco Bell KFC Pizza Hut, 1.28 million plus in EBDA in the southeastern U.S. Asking price is $9.9 million. It cash flows $1.3 approximately million dollars, and it says seller's discretionary earnings. So it sounds like the seller works in the business. Gross revenue for whatever this is, whether it's one store or multiple, I guess we'll find out, is $8.3 million, and inventory is $35,000. That is not included in the asking. price. So I assume here the inventory is stuff like the food cost and all that kind of stuff. I would think, yeah. All right. So Taco Bell here is the cool, a cool seven and a half times ask, by the way. Yeah, yeah. Cool. It is a business description, the largest and most successful Mexican

inspired concept in the world. It is extra, it's an extraordinary opportunity to enter the ultra successful Taco Bell franchise system. Sales continue to rise. these long-standing successful Taco Bell KFC Pizza Hut Express stores. All drive-through locations for our freestanding. This is the first time these great locations have been offered for sale, and the current owner has been operating successfully for almost 25 years. These stores are ripe for more growth and continue success for a new owner. Taco Bell is the largest Mexican-inspired concept in the world.

This business is a time test and improving QSR franchise with consistent performance. Multi-unit, well-established, and highly profitable. The sale will consist of five open and operational stores with $1.3 million. in EBITA. The current owner has assembled and developed a strong leadership team at each location that manages all aspects of the five stores day-to-day operations. Each store also employs a general manager, assistant managers, multiple shift leads, and a fully trained crew. The strong store-level leadership will allow for an easy transition of ownership. There's some stuff here about the Taco Bell history. I'm not going to read that.

It's been here for 61 years, franchise of the year, all that kind of stuff. I'm going to skip all that. If you're interested in additional information, complete the confidentiality form to be provided by the broker and on receipt of the completed confidentiality form, we will contact you and provide you with specific data for this business opportunity. It's been around for 25 years, 95 employees. It's a franchise yes. And here it talks a little bit more about the location, strong markets and high profile stores. These Taco Bell locations serve customers from multiple medical centers and hospitals along with schools, car dealerships, universities, businesses, and residential communities. They are all prominent drive-thrus with four that are freestanding. They are in

high traffic centers with excellent visibility and access plus strong co-tenancy and regional draws. The owner is proactive in upgrading new equipment and has kept immaculate books and records. And it talks a bit about the other stuff here, community, growth in the communities, all that kind of stuff. And the owner is retiring. And here it's an interesting thing, Bill, the buyer must be approved by the franchisor. You must personally attend and satisfactory to complete the franchisors training program, ensuring you're ready to own and operate these already successful Taco Bell, Taco Bell KFC, and Taco Bell Pizza Hut Express franchises. So, Bill, what do you think?

Interesting. So I first have to admit that until five years ago, I had never had Taco Bell in my whole life, but Taco Bell is my wife's favorite fast food restaurant. So now I eat a Taco Bell like two or three times a month if I had to guess because there's one right by our house. I hope it is one of these that we were talking about in the listing. So I have recently become a Taco Bell connoisseur. I've married into Taco Bell connoisseurship. What's interesting about Taco Bell, and you might have kind of breeze through it or noticed it.

They say Taco Bell KFC Pizza Hut. So these brands are part of a public franchisor called Young. Yum brands. And so they have started doing this thing where they are co-locating Yum is some of their brands. So it seems like, and it's not exactly obvious how many, if there's five stores in this listing, some of them are just a Taco Bell. Some of them are a Taco Bell and a KFC in the same building. And some of them are a Taco Bell and a Pizza Hut in the same building. It seems like, from what I said. So you are actually, while Taco Bell may be the anchor. here, you're also selling pizza and chicken. Super interesting. Yeah, the version at our house is

Chick-fil-A. Oh, yeah. Also a big fan. So, okay, so I have a funny Taco Bell story before I, before we go on. So let's hear it. When I first got married, we went to Fort Lauderdale because that's where my in-laws lived. And we would like hang out and you go on like Fort Lauderdale. I'd know if you've been there, but there's like a canal system and you kind of go on these boat tours and There's these enormous houses. And, you know, being a business and wealth nerd, like one of the things I would be super interested in it is like, where did, where did these people make money to buy $14 million homes in like 2005, like, which is a lot of money still?

And but back then, it was like, you know, the equivalent of $25 million now. So, you know, you go along the intercoastal and all these waterways, you're on the boat, and you're trying to figure out who owns stuff. And we're on a tour and we're going, they're kind of talking about the homes and the intercoast and all this stuff. And there's this is a huge brown house. And it's kind of done like a. a mission style and it's like kind of like what you know taco bells used to look like and then

I look at the top of it and there's like the Taco Bell top and there's like a bell on this house like a real expensive bell and I asked the guide you know how what's going on here like how did these people make money and they're like oh that's the guy to start a Taco Bell he like loved it so much you put a bell on his own retirement house so well I when I was growing up in Southern California we would go to Taco Bells for like the late night sort of food after being out. And it was the old brick little buildings with little arches and it was just a counter and a couple of outside tables. That's what Taco Bell always was back in the day. But these obviously became a very, very successful franchise as it moved to other parts of the country.

I have looked at McDonald's as a lender before. I worked for a bank that that served the corporate, corporate McDonald's. And, you know, they all were passed down in their family. I think a lot of people know that. You know, McDonald's franchises never come up for sale because there's always a family member next generation that's taking over because they're so successful and so stable. I would think that Taco Bell would be in sort of the same situation that not very many of these ever trade, especially something kind of, this is maybe on the small side if it's only

five stores. Like you said, they didn't really tell us exactly how many, but it seems like it's only five stores. That would be a pretty small franchisee. So it's just interesting that it's this small and that is trading at all, not going to a family member. Or a affiliate or adjacent franchisee as well, right? Right. Exactly. Like I'm kind of surprised that you're even allowed to high hire this guy, Jeff Percy at Atlantic business brokerage. Like, is this even an authorized posting? I would think you would have to go straight to young brands corporate and offer these for sale via an internal memo, right, to all existing franchisees first.

I don't know that to be true, but that would not surprise me. That would make sense. He has a bunch of, I clicked on his listings. He's got a handful of different franchise concept for sale. More crumbles in addition here. And tropical smoothie cafe and other things like that. So, I mean, this guy, I'm not, I'm not trying to impugn the business broker here. What I'm wondering is whether this is either a seller that just kind of rogue hired this guy,

or if this has been through the internal marketplace, if you will, to young brands, other franchisees and literally all of them passed on it. Right. Which I would think if that's the case, you know, it may be the sales of the stores are too small. and maybe the location is a little too remote, too rural or something, that could be the situation. There didn't give us much in the way of specifics on exactly where it is. They just southeast. Yeah.

Yeah. Yeah, you're right, Heather. It could not make sense as a Bolton because it's so rural or something. So it kind of needs to be standalone and maybe nobody wanted to buy it, which doesn't make it bad, but maybe that's why it leaked through. Right. Maybe you need a local buyer more than. Yeah.

Yeah. The broker's located in the Baltimore suburbs. That's where his office is. but he has listings in New York for some of these franchise concepts and then one in South Carolina. So, I mean, what do you guys think about this as an investment? So, like, if you buy this, assuming you negotiate a price, I'm not sure if it goes for seven and a half times, although I don't know what the market multiple on talking about franchises is. I bet there's a ton of comps. Like, the broker might know.

Like, this might be what they trade for. I don't know. Assuming you get this deal done, the first thing you're doing is you're going to talk. the next semester of Taco Bell franchisee school, right, for however long that takes. Probably at corporate, there's a probably very rigorous training program. And like, you are not, I don't think, going to own this absentee. Oh, no. And you really can't know if you can close it until you go through the training program.

I mean, corporate has to approve you. You could, I mean, there's a scenario where you could show up for the training and they could say, no, this person should not own this. and the deal's off. Yeah. But I mean, and the reality of it is like you are going to go in here and they're going to make you make tacos. Like they're going to teach you how to work at these restaurants.

I have a friend who he and I did investment banking together way back when we were little kids, basically. Then he went to go work in private equity. And the private equity group owned Jimmy Johns. So this is a guy who's an investment banker and they worked in private equity. Like this is a relatively fancy dude, right? And Jimmy Johns was expanding to a southern state, one of the southern states. There were no Jimmy Johns in the whole state.

And he raises his hand and he goes, I want to leave my Cush private equity job. I want to buy the rights to Jimmy Johns in this entire state. I'm going to move there and open a ton of Jimmy Johns in this state, which he had never been to and was deep in the southeast. he did moves there opens his first jimmy johns is required to work in the first store for a year he's up at five a m shopping tomatoes literally um delivering sandwiches he now has like 40 of them uh and has absolutely murdered it murdered it i mean he's made so much money uh but you have to start like these can be great businesses especially in the right geographies you know and if you run it well But like, this is not a sit back in your home office and be a Taco Bell guy.

Like, you are running an on the ground taco restaurant. Hi, Heather here. When I'm not breaking down deals with these guys, I'm helping people get the right SBA loans for their business acquisitions. Because when you're buying a business, the best financing isn't one size fits all. There's the best rate, fastest to close, the specific loan structure that you need, or a little of all of those things. That's why my company, Vizzo Business Capital, works with over 30 different lenders to find you the best funding. in less time and with less friction so you can focus on the deal. Sign up for a free live Q&A session on SBA loans at VisoCAP.net, then click Zoom sign up in the top right corner. That's V-I-S-O-C-A-P.net

And click Zoom sign up. Yep. So supposedly Taco Bell has a significant unfair advantage for all the fast food concepts. And like I was watching some videos about why people love Taco Bell and why the profits keep going up and also the sales keep going up. So first and foremost, it's in this niche where, like, Americans love this Americanized, like Mexican food. Like, we just eat it up, literally and figuratively. But the second reason is Taco Bell has, like, this enormous unfair advantage compared to other food concepts.

So everybody else is dealing with, like, either fresh beef, right, fresh buns, fresh lettuce. Like, there's all this spoilage that happens at these other, like, McDonald's, for example, that you have to deal with. So it makes it much harder to run those things. With Taco Bell, like the funny thing about Mexican and Mexican-inspired cuisine, it's like the same six ingredients, just recombinated into a bunch of different stuff. Right. It's like tortillas, like which turn into tortilla chips, hardshel, like all this kind of,

but you have tortillas, you have queso, which is cheese, you have chicken, you have pork, you have ground beef, you have cut up tomatoes and lettuce, right? And it's like all of those things like recombinated into cassidia. into tacos, into burritos. It's amazing. It's amazing the number of ways they can recombinate these things. Yeah. So Taco Bell has this unfair advantage, which is if you look at like,

we haven't talked about beans and rice. If you look at all those things, like your typical place, if you cook something and you have it prepared, like a hamburger, and you let it sit overnight in the refrigerator, and you try to warm it up against it tastes even more rubbery than it did from the start. But Taco Bell has this unfair advantage where some of those things actually taste better the second day they've been sitting around, like refried beans, like it's true, you know, which is basically just normal beans, pureed, and you add a bunch of butter to them. And it just

turns out great. But like, so Taco Bell has this huge advantage versus all the other concepts that their food waste is like totally minimal because they can keep using stuff and they don't have to go through the problems at McDonald's or a Wendy's or somebody like that has. Their cost of goods is also phenomenally low. You know, like a burger, for example, like you're going to at least taste the texture of the meat. The, you know the crunch wrap supreme the ground up sauced up you know hiding under cheese and sour cream meat you know doesn't matter no uh this reminds me something not to go off topic have you heard of this concept called cabbo bobs no um there's so let me pull this up there is one uh near me and

uh it i we we went um we went the other night to go pick up my my my I was mountain biking with my buddies. And we had to go pick up his daughters at this place, Cabo Bobbs. And it was right around the corner. Here they're located. They have 4.6 stars, 1,100 reviews. It was a Tuesday night, Heather. And they had like 75 teenagers and young adults eating there.

And they were just like, they were like streaming in. And basically it was like a slightly hipper version of like Chipotle. Like they were just like doing Chipotle like much, much better with kind of like an island twist to it. And like I somebody probably a couple years ago came to me and was like, hey, do you want to invest in this company? And like I think they're franchising stuff, but like they're just killing it. And I don't know if this is a good podcast content, but if like I wanted to do a QSR or a fast food concept, like these guys were whatever they're doing is totally working. And they're just here. Is it only in Texas?

Right now it looks like they only are, yeah. Only Texas, huh. It would be something California would probably like. Cabo Bobbs. I'll have to go next time I'm visiting San Antonio. Yeah, there's only one. It's right by my house. It's full of teenagers.

So is QSR franchising, like, is this a good business? Is this something, if you're a searcher, and, you know, assume you don't mind making tacos, like, I've known people to get very rich. Many people have known people to get very rich being franchisees of these now. big national QSR brands, right? I mean, McDonald's has made more millionaires than probably any other business except for Amazon. Is this something you should buy? Like, what are the pros and cons of this? I think you have to grow to a certain size chain if you're going to get wealthy off of this. You know, like I said, this may be being only five stores is a pretty small chain for a brand like

this. So I think the folks that are really killing it are kind of like your friend. They had the, They bought a whole territory. They were able to expand to 40 stores or whatever it is. I think once you get above like 12 to 15, now you've got some scale. You know, they've got some fixed costs that they can sort of spread. They've got some operating leverage. And you really know what you're doing at that point as well. I think that's what it takes.

It takes looking at one of these opportunities and saying, can I get to 10 stores? Then can I get to 15? Then can I get to 20? And if there's not a path to that, you know, then you're buying. something that has cash flow of a million two or a million three like this is. So I think that that may be why we're seeing this here. Maybe this one doesn't have great growth prospects because of where it is. The other thing that's tough about the price is you pay 10 million bucks for this. Your debt service is going to eat up a lot of that 1.3 million of cash flow. Yes. Yeah. Or you're putting in a ton of equity.

And the only way you want to put in a ton of equity is if you can grow. So yeah, I think, that's a conundrum. They may be asking the multiple that a Taco Bell in a more, you know, in a bigger metro area might be getting. And they're asking for it here in this little small rule. I'm making that up. I don't know where this is, but that that could be the problem here with valuation. Yeah. Do you guys follow there's an account on Twitter that I really like called McFranchisee. Have you, have you followed this one? No. It's pretty cool. It's an anonymous McDonald's franchisor, franchisee. And one of the things that guy does is he goes in and when franchises are struggling, he like comes in and consults with them like on the side. So he owns McDonald's

franchises. He's very deep in there. But if somebody's underperforming, like they hire him to come in and help with like the turnaround and stuff. And he writes about it. And then he writes about it. Yeah. Everything's a content funnel to something. Yeah. That's what that's that's what I've That's what I've convinced of in life now that I've spent five years really heavy on the internet. But one of the things he talks about is the reason these franchise concepts work is the owners, you know, it's not passive income. Like they are creating systems. They're in their hustling.

They're, you know, in the, you know, you just look at, for example, the types of employees that you're having in a place like this. Like, there is going to be drama every single day. Like, absolutely that stuff. And he says that the people. that get themselves in trouble with, you know, with running a franchise system like this that should be going well is the ones that are not like super hands on worrying about the details inside of the franchises. And, you know, like it can't, you know, I think it's, I think this is a great thing to own Bill, but I don't think people should go in expecting themselves to be passive, right?

They have to be very hands on to make something like this really be successful. Yeah. Speaking of hands on, the diligence item I would have is the way you build an organization like this is you have a couple locations, you are functionally the general manager, right? You're, you're bopping, you hope to have a GM in place at each of the restaurants. You know, at this point, they've got five, so you can't be in five places at once. So I would hope to see that they've got a GM in place at each of the restaurants. That's kind of table stakes. But the owner is probably acting as what you would call, what you would call like area

manager. So what I would really love is if the owner had an area manager in place who the general, the restaurant GMs were reporting to and was just a passive owner, that would be very different. But I would be willing to bet this guy is functioning as area manager. And then you have to build the next layer of management on top as you continue to build this out. You need a higher area managers. If you have 10, you might need two area managers, right? And the area managers will then report to a regional manager.

If you start to get really big, I will ultimately report to you, the owner. So I'd be diligently the level of management that's in place because the people is going to be the whole ballgame here, the management talent, your ability to retain them. How long tenured are they? Are they going to stick around? That's the whole ballgame because you are not far. You're not many quits from making tacos here. My worry and suspicion is these are potentially a bunch of Taco Bell combos that are maybe not in very desirable neighborhoods. could be that too yeah the broker the brokers in baltimore we've seen the urban decline happening in

baltimore um you know the the county and area out out beyond the town is relatively good by the way all of my knowledge of baltimore comes from watching the series the wire so you just take that's everyone that's what everybody knows about baltimore just take how else would you know about baltimore uh take that with a grain assault uh so but uh sorry um but i don't don't consider Baltimore the southeast. So I don't think this is there. Yeah, I kind of agree, Heather. I don't know. Where does it become mid-Atlantic? And wait, do you lose to Southern Virginia? That is my opinion. Yes. Yeah, North Carolina is the Southeast for sure. Virginia, lower Virginia is the southeast. Upper Virginia is Mid-Atlantic. Right. I was born in Northern Virginia, so that's why I know that.

And that's where the accents are all mixed up. Nobody knows how to talk. Yes. Be more. So where does the South end? Is it Richmond? Well, it depends who you ask, right? If you look at the Mason-Dixon line, that is north of Maryland, right? So if you're just kind of like the historical definition of the South and you look in Mason-Dixon line, Maryland, West Virginia, Kentucky, that's the South. I think in practice, the South is further south than that.

I think there's because Mid-Atlantic is certainly a thing. And in no world is Maryland in the South. Yeah. Is Texas in the South? Texas is in Texas. Texas is its own planet. That's the correct answer. Yeah, I think the South ends at Louisiana, right?

And it kind of goes from a Louisiana and it sweeps up to Virginia. And Texas is in Texas. And by the way, Florida is in Florida also. It is not in the South. You're sure. Wait, so does the South kind of extend into parts of Florida? Like is Tallahassee and Jacksonville? Are those like South?

Borderline. Probably not. I don't know. The DMZ? Yeah, that's the DMZ. But border. I mean, it's still pretty Florida. It's its own thing.

Florida has its, it's its own thing in so many ways, right? Yeah. Just like Texas is its own thing. Florida is so weird. When I go there, I'm like, this is so weird. Just like, it's like going to Orange County, right, Heather? I think Orange County is normal and Florida is weird. That's my opinion.

And everywhere else is weird, right? It's not that Orange County's weird. It's everywhere. You guys are weird ones. So who should buy this? Somebody who has worked in QSR before and wants to upgrade to Taco Bell. Yeah. And can be local, can move to wherever this is and be very, very hands-on in the stores or as the area manager, as you said, Bill.

And I don't know if they'll last. you, but like if you owned some, you know, five or six units of a different brand, like a non-competitive brand, like a burger chain or something in this market and both your burger franchisor and Taco Bell Young Brands franchisor would let you, that would be a great combination, right? Because you're already running QSR in these markets and you get a lot of scale. I mean, that'd be awesome. I agree. So this, let's talk about like structuring a deal for this.

So this is too big for SBA. Well, the price, the asking price is. I don't know that they're getting that. Yeah. If it was a little south of there, the cash flow of $1,000,3, is right on the border of being too big. If the multiple is a little bit lower, you might be able to squeeze it into an SBA, $5 million plus what we call a Perry Pesu, that companion additional loan. A few banks do those. So like it's maybe, but you'd have to, you'd have to see the price.

come down a bit to do that. And does SBA lend, they lend on franchisees all the time, right? This is very normal. Yeah, very normal. Startup, I mean, there are actually SBA loans for startup franchise development, as well as trading existing franchises. The more I've dug into it, Bill, like the more I realize the SBA program we talk about a lot for helping people buy HVAC businesses and stuff like that, it is a franchise subsidy.

Yeah, a 7A program just generally. It is a subsidy for the franchise. It subsidizes a lot of things in this country. You know, it is the only real program for commercial owner occupied real estate of a certain size for franchise startups, for franchise trading, for buying small businesses. It subsidizes a lot of things. The more I am in business and in and around small business and the more stuff I see, I am more and more convinced that the SBA 7A program, or the SBA loan programs generally, are one of the crown jewels of the American economy. I mean, I think it is like completely under the radar. It seems like a very unsexy thing that you would do. But if I were starting a country,

one of the first things I would do is some sort of government loan guarantee program like the SBA loan program. I mean, it is the engine to your point. As you said, it powers so much. I mean, it is, it's like the government back mortgage securities, but for small business. Yeah. I mean, I think FedEx is one of their, you know, they funded the startup of FedEx. And there's a few other companies that became huge. And just the taxes that come off of all the businesses that are assisted, like pays for it like some huge multiple. So it's not really, I know some people go, well, are we really, it's not a giveaway. And even the cost of the defaulted loans, that's all paid for by the tax, the increase in taxes and all the benefits to the economy. So yes, I agree with you. It is one of the best government.

programs I have ever seen and been involved with. It's truly amazing. And I would say even if it were a giveaway, it would still be worth, like, this is the place you want to do your giveaway dollars because they flywheel so much. All these businesses scale. They employ people. The businesses play taxes. The people pay taxes.

It spins the GDP flywheel. Like, this is the leverage point is funding, growing businesses. And it's just, it's a phenomenally well-designed program. Ask searchers who are. searching in Europe or Canada, the difference without the program. And it's huge. Yeah. Yeah. I have people like they want that do consulting with me and they're like, I'm in Canada and I'm like, good luck, man. Like, you don't have the SBA. Like, it's going to be tough. Absolutely. It's interesting. I mean, Canada, I know there's a lot of jokes right now about Canada becoming the

51st state and stuff. And they would get SBA loans. That would be good. They would get SBA loans. It would transform their economy. Maybe it doesn't change their mind. But so many times, like, I don't think folks in Canada appreciate economically. Now, there's lots of reasons not to emerge the countries. But economically, I don't think they realize how much stuff is just so much easier here. Like, everything from SBA to the taxes to, like, just the nightmare of, like, if somebody wants to is in Canada and wants to buy a U.S. business, like, you know, it's just so much harder.

economically, I think it would be amazing for Canada. From a pride standpoint, I don't think they'd be so excited about it. No. There you go. No. All right. So back to these Taco Bells. This is also a weird, like, my mind goes also to the size of this, right?

Like, to your point, Bill, like, it's not, it's too small to be like a big portfolio that could trade a super high multiple, right? To an institutional or to a big established player at the other end of the, the spectrum like it's a little too big for searchers to get access to like cheap funding. So I don't know. It makes me wonder why they haven't split up the portfolio or agree to sell them off like one at a time. Well, I think they're probably worth more together, even than, I mean, then subscale, right? I mean, if they're 1.3 million in EBITDA and there's five of them, your, you're 250K each. Like, that's a small business.

I definitely want to own five before I want to own one. I think in general, a Taco Bell franchise in a good location is a license to print money. Absolutely. And that's why I think they're asking seven and a half times. It's way more stable than Bob's HVAC business or whatever. So there is a lot to like about this. I think it comes down to where is it? How long has it been there?

Can I staff it and do I want to live near there? And are there other locations that I can grow? and can I come to a price and a deal structure that doesn't strap me too much on the cash flow. If you can do those things, I love buying blue chip franchises like this. Yeah. I like it too. Thumbs up. Thumbs up for me.

Yep. Thumbs up for Taco Bell. It's delicious. If you guys have not been to Taco Bell, the CrunchRap Supreme is a true innovation in American fast food. It is very good. I don't know. I live in Southern California. We have so many good hole in the wall of Mexican places that Taco Bell, like maybe the last place.

I realize that I am on the phone with two people from two states who are contractually required to look down their nose at Taco Bell. That is no good. It's somewhat popular here. And we actually had our own version of Taco Bell here called Taco Cabana, which was Tex-Mex Taco Bell, like legit like Tex-Mex, which is basically if you want to think about it, it's the same recipes, except they throw in enchiladas and like Chalupas and. Fahitas like much more kind of Tex-Mexy type stuff. And then they like put in like a ton of lard and everything. And when I was a kid, like it was a huge chain. Like it was like the equivalent of fast food, you know,

Tex-Mex and super popular. And then over time it got bought by some jerks in Dallas who ruined the quality. And the thing went to hell. And now it's owned by some dude out of California. But, but yeah, it's interesting. Taco Bell still actually works in, in our type places. Chipotle works. all that kind of stuff. There's plenty of Americans without much taste.

Super interested in talking about. So when I come visit, Michael, I'll still have a place to eat is what you're telling me. No, it's Bill. You get calories there. Yeah. All right. Let's wrap it up. Thanks for listening to this episode of Acquisitions Anonymous. If you dig franchising, there is an episode we had the wolf of franchises on. I forget however long ago. But go on our website, ACQU and on.com and find our interview with. franchises. We've also had a couple other franchising episodes. If you are into that, there's actually a fair bit of franchising content in our back catalog. And you will love it. So go find it on our website, acqueunan.com. Thanks for listening. See you next time.