Acquisitions Anonymous - #1 for business buying, selling and operating - Two Men and a Truck Franchises - e16

Episode Date: February 1, 2021

We go deep into a couple of franchises of Two Men and Truck for sale with a strategic acquirer, Nathan Bocock (not on Twitter).-----* 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.-----Past guests on Acquanon include Nick Huber, Brent Beshore, Aaron Rubin, Mike Botkin, Ari Ozick, Mitchell Baldridge, Xavier Helgelsen, Mike Loftus, Steve Divitkos, Dzmitry Miranovich, Morgan Tate and more.-----Additional episodes you might enjoy:#62 Two Landscaping Businesses for Sale - Mike Loftus CEO of Connor's Landscaping#66 Analyzing Software Businesses for Sale with Steve Divitkos, experienced industry CEO#42 $900k Moving and Storage Company / $500k Rural Mini-Storage#61 Two Manufacturing Businesses for Sale - Brent Beshore - Founder and CEO at Permanent Equity#24 $5mm pool services and lifeguard staffing co / $2mm septic services business -  featuring baller @WilsonCompanies as a special guest!#45 $800k/yr cleaning business in Midland, TX / a $565k/yr window cleaning business in San Antonio, TX #48 Two Landscaping Businesses for Sale - Mike Botkin of Benchmark Group--- Support this podcast: https://anchor.fm/dealtalk/supportSubscribe 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]

All right, everybody, it is Friday. That means we're recording another episode of Acquisitions Anonymous. I'm Michael Girdley. I'm here with Mills and Bill, like every week. But we also have a special guest. So this is going to be a pretty fun episode, I can tell already. So Mills maybe kick us off a little bit and tell us about our guests. Sure.

So we're joined today by a friend of mine here in South Carolina, Nathan Bocock. Nathan is one of the largest franchisees for two men in a truck. And we thought it. be fun to have him on the podcast to kind of bring a very specific strategic acquireer perspective. I don't know if you've ever, for you guys or anybody else who's listening, if you've ever bid on a company or submitted an I-O-I or an LOI and then just gotten blown out of the water when a strategic comes in. If you've ever had that happen, hopefully Nathan can kind of share some of the kind of behind

the scenes of why that's the case, why us non-strategics can't compete, in some cases at least. So, Nathan, welcome. Thanks for joining us, man. Thank you. Yeah. This is exciting. Glad to be on. Will you give us just kind of some high-level kind of details or an overview on your organization and what it looks like? So we run a portfolio of two-minute truck franchises, which is made up of 16 locations and six states, mainly in the southeast region of the country. And we roughly have about 200 trucks on the road every day. and we do about $30 million in revenue with that brand. We have a couple other brands that we run to,

and we use a company called Gray Fox Strategic to support the ongoing operations of those kind of three companies that we run every day. And that's a company that you own, right? Correct. Yes. All right, good. So I guess just very high level, what kind of advantages do you have,

if you're looking at a two-minute truck location, what kind of firepower do you have that a mom and pop or a solo owner doesn't necessarily bring to the table. So I think, I mean, moving specifically or just labor-based business, you know, in general, I think they're hard businesses to run. They're really high touch. And there's a lot of variables that can happen every day through employees or customers or just the fact that you have risk with trucks on the road.

And it really takes an army, I think. They say it takes a village to raise a child sometimes. It takes an army to work on a business like this. and so I think what it allows us to do is it allows the operator who's in the business every day to focus on actually serving the customers well and getting the moves done well and it takes all the back office things off their plate, whether it be making sure that we got ads up for hiring new drivers because we need to be interviewing people every day to make sure that we keep our capacity up or is it doing payroll or is it the digital marketing piece? It could be any of

those things. Gotcha. Yeah. So you're spreading those functions out. kind of over a bigger base of revenue and being able to extract yourself a little bit more than a mom and popper. What do most operators get wrong in two men in a truck and in labor-based businesses that you're familiar with? I would say it would be the cost of good sold piece of the income statement. I mean, that's what makes her breaks a service business. And typically to go even more granular, it would be the direct labor. You know, what's it cost to run the labor on a job? And just the ongoing measurement of that and knowing where you stand, you know, you really got to come at it from two angles. One is pricing, right? So pricing means a ton, but, you know, because your pricing has got to be set based on what the labor market is allowing you to do and what you can pay your folks. So if you want to pay people a good wage, which we want to do and we want to try to advance their careers, our pricing has to reflect that. So I would say the real maker break is in the cost of goods sold. And then the other piece is just realizing truly what your capital expense is going to be as you grow.

It's expensive to grow in a business like a like two men in a truck or anything where your, you know, your assets like your trucks are, you know, it could be $100,000 a piece. So just understanding your cost of those and how important it is to maintain them properly so that you don't have to replace them in five years. I would say those are kind of the two main things. Yeah. All right. That's good.

We may come back to some of that. All right. You brought two deals today to two men in a truck deal. So start with whichever one you want and kind of give us the high level overview and then we'll just kind of rapid-fire questions at you. Yeah, that sounds good. So the first one is in, it's a southeast market that's got a lot of growth right now. And a lot of that's driven by industry moving into that area. So this location has been around for a long time.

I don't know exactly how long, maybe 15 years or more that has been there. they were doing roughly three million dollars in top line, and the EBIT is pretty low for this deal, and it progressively got worse after 2016. I think some of that was the ownership kind of pulling back and doing less. So, you know, and I don't know everything you want to hear about it, but I'll just kind of walk through the high level. The seller owns the real estate and wants to lease it back. I'm not interested in selling the real estate. the real estate's tight and we're kind of limited on truck parking, which is a big deal. So in two

minute a truck, if you're going to build a building or buy building, parking is a huge factor. Parking sometimes can be more important than the building itself, you know, because if you can't park your trucks, it's not an option. So you got limited real estate there. There's no storage at that location. So they've been in business 15 years and have never broken in the storage market. There was no asking price on this business. So this is one of the classic make-and-offer deals. that I'm sure we all love on this podcast. Looks like they, you know, they're probably running 12 to 15 trucks a day to hit the revenue that they're looking at.

Nathan, how many round trips can a typical truck do a day? Is that, do they do one per day or do they typically do two? It really depends. You know, we try, we try to run our trucks for eight hours if possible at minimum. So sometimes that's stacking two or three jobs on top of each other. in high in areas where you've got high density service where you don't have to drive a lot and it's more apartment style moves you can do three moves in a day right you get out in the suburbs and you're doing a 4,000 square foot house you know you're only doing that one job yeah okay thank you

what's what's a general metric that you think about is it you know revenue per truck per day revenue per truck per month like what are the we i could make up stuff but what are the things that you really key in on yeah so the old kind of rule of thumb was if you could get $20,000 a month out of your truck that you're doing pretty well. I think now with just the cost of overhead and the way things have gone on the market and some inflation and things like that, you know, I'm pushing more to get $25,000 a month out of a truck. All right. So on this deal, it was doing $3 million in revenue, 12 to 15 trucks. And their EBITDA, you said, was, was the play?

Yeah. Yeah, so 16, it was 184. And 17, it was negative 13,000. And then in 2018, it was $1,700. If you look at one of these franchises and it's well run, what would be a good benchmark for kind of the, say, you're happy with that EBITA margin and that sort of thing? Yeah.

I would say, you know, in a mature market like this one that we're talking about at $3 million, EBDA should, EBTA should easily be $500,000, up to $600,000. So this location wasn't performing. Did the current franchisee own it for the entire 15 years? Was he kind of the first one in and he had held it? Or had it changed hands? I think so. I think he had helped it the entire time.

But that kind of predates me and the brand. But I'm fairly certain. So when you're approaching something like this, is it on the market being shot by a broker? or is it just you're kind of one of the biggest than the network and so you're getting a phone call? Yeah, these deals, they typically trade in-house within the brand. Honestly, I think they're worth more in-house, especially to the larger groups, to the points you mentioned earlier about strategic, you know, buys. Some have sold outside of the system, but most of them go, you know,

they try to get the deal done within the system first, right? Because you could have, you could put together this deal and the buyer might, be all on board and ready to pay for it, and the franchisor might not approve them for whatever reason. So to save that to start in the family. Okay. All right. So on this one, did you make a run at it? What happened? And how did it go? Yep, we made a run. We threw our number out there and threw it in the mix. I think there were seven other groups looking at this deal, just like we were. And what we did, So our offer on this business was based on some adbacks. We thought we could put in there for the ownership that was currently taking money out of the business but wasn't really doing much and maybe scaling back the staff.

And then the pricing was really off. Like the pricing was really low for kind of state pricing for where this is. And so what we did is we actually offered to buy 75% of the business. And one of the partners wanted to get out and one of the other partners is involved in a number. another market. And so we thought could we do a strategic play with him where he could stay in and stay involved and we could grow the value of his shares over time that he didn't end up, they ended up selling out completely and he didn't stay in with the new buyer. But we offered to buy 75% of this company for $590,000. And the offer we made was, hey, you know, $250,000 form

of cash at close. And then there was a seller's note back for the remaining balance. And I think we said there was a balloon payment at the end of three years, maybe as interest only until then. Okay. Just to buy some time, I just knew we had a ton of trucks to replace, right? So there were 15 trucks in the sale, 12, I think, of the trucks, or nine of the trucks had clear title. All of them had like well over 200,000 miles. Some of them close to 400,000 miles. So those trucks are basically worthless to us.

So I was to with the interest only piece, you know, I was just trying to generate enough cash flow so that we could support some debt service and getting new equipment, getting it up to snuff. Yeah. Yeah. Is that, I mean, so, you know, I look at that and I'm thinking, okay, you know, three years ago, let's say they made $180,000 and they've basically been flat or negative since then. Yeah. To me, as an outsider, I'm like, that's a lot of money to pay for no earnings. So somewhere in your brain, you're going, okay, I can grow the earnings. does that actually look like when you try and, one, pro forma, but two, when you're actually, if you did take possession of this asset, what are you doing to justify the $590,000? Yeah, yeah. And that's, and then we can definitely talk about it too more on the second deal, because there's some examples of that. But I think for us, we are literally buying a revenue stream, right? We're buying a brand that's known in the market and we're buying a revenue stream.

I could already tell you when I look at their direct labor numbers, their direct labor is 10 percentage points higher than what we run on average, right? So you apply that to the top line. I mean, that's a lot of jack right there, just on that one thing. So, you know, it would be total process improvement all the way across the board, pricing improvement. We would have to see what the staff could do. To be fair, we really try to hang on to people in acquisitions. We did seven acquisitions in 2019 and we hung on, I would say, to 80% of the folks that we took on. And a lot of times the reason the things aren't going well is just they just don't know the right thing to do, right? So if they have a good attitude and they're willing to work hard and buy into what we believe,

then we can help them grow. So those are the, yeah, I mean, it's all the above. It was, it would be replacing trucks. It would be increasing pricing. It would be managing labor a lot better. Yeah. What's a typical way? win ratio on bids because, I mean, I haven't hired a mover, but I'm just thinking you, you, do people usually go out and get multiple bids? They do. I think the, what's the win ratio that you would want to see, like, it's telling you, okay, our pricing's healthy?

Yeah, I want to see us close about 75% of what we look at. Okay. That's higher than I want to. That's very, yeah, which is very high, right? But that's, you know, when you, when you have a brand like two men in a truck that's got a really good reputation. You know, everyone kind of knows you. And so they're calling us for a reason, right? They're not, they're not just calling us as the second or third alternative mover. They're calling us specifically. Yeah. Yeah. Okay. All right. So you offered $590,000 to buy 75%

of the business, $250,000 cash you closed, the remainder in a note. And what happened? We heard nothing. You've been there before? Yeah. Crickets for all. while until through the Great Vine, I heard who ended up buying this location. He's actually a friend of mine, and I'm happy for him. And he's a great operator. So we didn't hear anything for six months. And then I heard he ended up closing this deal. Whoa. So like no follow up from you you got. You just send him the offer. This was your typical. The CPA was running the M&A piece here, the investment banking side. So yeah. So, uh, We just, yeah, we didn't hear, we didn't hear word.

Rumor has it, though, that this business went for over a million dollars. Wow. Michael, any questions from you on deal number one? Yeah. Well, I mean, it's interesting. A little over a million sounds like it went for about two times, two times EBIT or two times NOI, depending on, but if I remember that 500K number, right?

Well, that's what it should be. Yeah. Yeah. Yeah. Yeah. Performa. Pro forma. So, yeah, pretty, pretty cool.

Yeah, no, it's super interesting. I mean, I think it shows how, as I listen to you talk, like your ability to understand this business so much better than a third party buying in, it's just, it's not even fair. Like, I wouldn't try to compete with you to buy one of these. Like, it's just next. That is the first thing I'm thinking, like, okay, this is not someone I want to fight against in a deal.

Like, you're going to do so much better than I ever possibly could. It would be the same if we were. trying to buy a fireworks store in Texas, though. You guys want to buy a fireworks company? No, I'm just kidding. It's not for sale. Everything. This is the joke.

Everything I got got out for sale. I got a 2017 Subaru outside. Like, let's make a deal. Everything's on the market. But you know what I mean? Like, you have forgotten more about running a fireworks business than either of us will ever know. And so it, I mean, it cuts both ways.

But that's, yeah, that's interesting. Yeah. It's expensive for me to know these things about mine businesses. All right, so second deal. Second deal. Okay. So this deal is about, gosh, less than half the size in top line. This is another kind of Southeast franchise that was a lot newer than the one we talked about before.

So this one would have been started in 2013 or 14. Is it a red flag that they want to sell, that they wanted to sell, you know, like in five this year's, are you going, oh, okay, there's blood in the water, or is this kind of normal? I think this, going back to what Michael said a minute ago, where it's like being outside of being in the system and not being a mover and buying one of these things, this is what happened. Like, this is the result of getting into something maybe you don't know. Yeah. So revenue in 17, 1.2 million with an EBITDA of 68,000, revenue in 18 of 1,000.

EBDA of 86, revenue in 19 of 103 again with EBITA of 45. The difference in this one is there's no owner's comp in these numbers at all. So you add owners comp back in, you look at net income on this business. It was negative all three of those years. Yeah. Yeah. So it's lower in revenue. I would say lower in profitability because there's no owner.

comp in it. What's the composition of the of the assets? So assets, um, were definitely better. There were less assets from a truck perspective, but the ones that were there were going to last a whole lot longer, right? And in the first deal, the only trucks that were really in good shape were all leases. So in this second deal, all the assets are owned by the seller. Okay. And within the system, I mean, are you able to just, if you're sitting down with a seller, are you able to say, hey, is there like an internal system that franchisees used to track revenue and like different kind of metrics? Or is everybody, some people use QuickBooks, some people use Sage, some people use this CRM, or is it all kind of streamlined? Yeah. So as is pretty typical in franchising,

everybody's on the same accounting platform, which is QuickBooks Enterprise. It's a hosted QuickBooks environment. Now, I don't obviously have access to other franchisees books, but what happens is they extrapolate that data onto our kind of company intranet, and you can see reporting and benchmarks and things like that. Yeah. So, I mean, I'm just thinking you could, if you're sitting down with a seller, you can say, hey, run me this, this and this report that maybe you're not just the income statement, the balance sheet, and you're able to get some really good data on number of calls, number of calls converted, you know, average, you know, ticket size, things like that that you're already thinking about for your business and you can just ask them kind of pro to pro.

Yes, so some of that is really good data. Some of it's garbage in, garbage out, right? It depends how diligent they are about saying, like, for example, let's talk about customer acquisition. Like, how did you hear about us? Well, if their staff is not, you know, if they're selecting the first thing because they don't want to scroll down to find the one that really happened, you know what I mean? And they pick Saul truck every time. Then like, you know, you don't know how their marketing's really working. But from a, from the standpoint of average revenue per move in a zip code or or or data like that, we have really good information. Okay.

All right. So on this one, what did you do? And how did it come about? So we had a year prior, we did an acquisition of two markets that were adjacent to this one. We had a feeling that we could even do better if we had this third market down there. We didn't necessarily pursue this deal. I got a phone call actually from the seller, which is very, it was just kind of out of nowhere. We kind of knew that things were struggling over there.

And then when the seller called, we just explored the opportunity. Dumb question, maybe. And this is coming from a franchise noob. Like, how is the franchisor okay letting somebody just kind of wallow in a market like this and perform so poorly? Or do they just have no choice, right? Two minute a truck corporation is just like, okay, well, as long as you're paying your franchise fees, we're fine. But this clearly is an opportunity for lost for them, right? Because this is not not a high performing location, either top line or bottom line.

So they do care about the success of the franchises. And I would say more so than just the royalty dollars, which is, yes, that's how they make money. And they do care about that. Right. But they obviously don't want a bunch of turnover with franchisees. I wouldn't say they let this happen. There are franchise agreements. and there's minimum performance standards, right?

So there is protection for the franchisee. It's not a complete dictatorship, right? Where the franchisor can just come and grab it from you. They have to monitor those trend lines. And, you know, at some point, there is kind of a, hey, it's time to do something different letter. Maybe that'll come from the franchisoror, but I think they try to help. Some people you just can't help. Okay, got it, got it, got it.

Okay. I'll re-between lines. Well, funny. And we'll talk about this, but you can help this person. So we'll talk about this. All right. So what happened? So the business is doing between $1.2 and $1.3 million stop line and EBIT does kind of $40 to $80,000, just give or take. So it's pretty low. Yep. So I really liked the seller a lot. She had had a former professional career in Michigan and she moved to the south to do this. And I really like her. And she's now my business partner because we ended up actually transacting on this deal. So when she called and we talked, you know, her heart was, hey, like, I love this business.

I love our customers. I love our employees. Like, I just think that either I'm obviously doing things wrong and I probably just need a different method, right, of how to do this. So that's kind of where this start is a very transparent discussion. And in a nutshell, what we did was she wound down her previous company. We formed a new entity. I have a separate fleet company that owns our truck assets. We bought her trucks.

We actually bought them for $200,000 at time of closing. It was an asset purchase of those trucks. And then what we said is we'll pay $200,000 in goodwill that's earned in the new entity over the next four years. So $50,000 a year guaranteed up to $200,000. So that was basically sort of a valuation of $400,000-ish. but she came back as a 50% partner in the new venture. Okay.

And does she want to stick around indefinitely? She wants to keep, is she working and an owner? Yes, yes. So our typical situation is we have a market manager in a location that does not have equity in the company. This one is different because she is an owner, but she also fills that market manager role. Gotcha. Gotcha. Okay.

All right. So you acquire the business. she's got kind of a, you know, $200,000 cash at clothes in exchange for the equipment and another $200,000 that comes almost as a preff, the first $50,000 a year is going to go towards her. And then everything after that is a split, just a 50-50 split. That's right. Okay. And then what did it look like?

What have you guys done since then and how involved have you and your management company been? What's happened? So we've been incredibly involved. from the sales workflow to how we run operations, to how we price, to our marketing strategy, to the way we do payroll, to the way we handle customer care, to the way we maintain our trucks and do safety. I mean, every single place we could touch this business we have and kind of brought it into the way we do things.

So we took this over in 2019, started this new venture with her. That was in fourth quarter of 19, so 19 doesn't even really count. We really started kind of January 1st. So we added a little bit more than $100,000 to the top line. And we took EBITDA from being $45,000 in 19 to $261,000 in 2020, which also that was after she was paid her salary, so the owner's comp, and after we had our paid our management feedback to Greyfox.

Okay. All right. So pretty significant. So the revenue at the top line goes from 1.3 to 1.4 is, and then EBITDA is, you know, multiplied times five or six, when you take into account the additional kind of expenses and fees that are already coming out. And how did that happen if you had to kind of pinpoint a few areas? Was it just price increase, cost decrease?

Yeah, big cost decrease, right? So you can only price what the market will allow you to price. So I don't think there was any magic there. I think from the way we handled our customers, there were some hurdles in the customer acquisition process before where, let's say, like, they required a deposit before, or there were maybe too many questions on the front end. And it was just too difficult for the customer to convert. We took a lot of those hurdles out of the way. And so we were just able to start booking more customers and booking them faster, which meant that we could instead of spending 12 minutes on the phone

with a customer. We could spend eight minutes on the phone with a customer. We could get to more customers less went to voicemail, which is kind of the black hole of death. And so, you know, we just talked to more customers and we converted more. So that was a big one. Pricing was a little bit of it. I would say the main thing was, like I said before, and the cost of goods sold. A lot of it had to do with labor and manage in labor properly. Yeah. Yeah. Michael, what kind of questions do you have? Yeah. And I'm really curious, as you distill down how your partnership is working now with the seller, it sounds like you brought something that she was missing beforehand and it really unlocked that ability. And maybe this is a hard question for you to answer because she's your

business partner still. But it sounds like there was before you, there was almost an incomplete team there and you've unlocked so much value just by bringing accountability or systems based stuff? Or how do you kind of think about that in a positive way? So it was what I recognized in her from the beginning. She was always a self-starter and super motivated and a really hard worker. And she's a positive influence around the office. So she had a ton of great traits, right? It was just the playbook that like had to change. And we knew she could execute and implement. She just had to know what rules to play by. And I guess once we unlock that for her, she was off to the races. And then she started seeing the impact. I mean, she could start seeing

immediately within the first quarter. And then she started probably to understand the income statement better than she ever had before. She understood how to job cost. She understood why we did the pricing the way we did. I don't know. It's been really, it's been really cool to watch. Yeah. Well, maybe a dumb question, you know, the first deal that we talked about that you didn't get to do, that, you know, a friend of yours won. And then this one, which there's a big disparity in terms of kind of EV at transaction time. How should I think about one of these things is not like the other? You know, you see what I'm saying? Like, is it because this one was smaller? It was because other people didn't want to do what you've ended up bring the work you're going to do. How do you think about that?

I would say, yeah, there weren't near as many roadblocks and getting this deal done, right? When you're contacted by the seller and they're wanting to get a deal done, like, that helps so much. And when your other markets are right beside them and you can offer support, like, that's a huge deal. This other one was just, I mean, the chances of getting that deal were probably pretty low. And it didn't, because that was going to go to the highest bidder. Yeah. That was, there was no strategic play because they weren't staying in the business, you know. Yeah, so there was a level of kind of qualitative and unique values that you could bring that other folks couldn't.

So totally make sense. Did you guys bake in, Nathan, kind of an off-ramp for her or for you in terms of ownership? So there's not necessarily a predefined off-ramp for her, although, like, we have those conversations. You know, she's, I think she's, you know, would love to retire, you know, in the next five to eight years. And part of this was saving her retirement. I mean, she used a 401K to fund her business from the get-go, and she depleted that. And she had worked hard for that. And so, you know, it's kind of our mission here to not only indemnify her,

but to improve the situation that she had before, right? So I didn't want to give, I didn't want to put a timetable on it. You know, I wanted it kind of organically happen, you know, over time and kind of helped her out. Yeah, that's awesome. These kind of franchise, you know, system-wide benchmarks are fascinating in terms of the numbers that the franchisor is tracking and that sort of thing. How do you, just as a multi-unit operator, how do you think about those personally? I mean, are you okay with there being a relative distribution of those that matches kind of franchise wide? Are you holding yourselves to a, we're going to be top quartile and everything type view?

How do you think about those vis-a-vis you being a top-tier operator, which it seems like you are. You look like one today with your very nice sweater on, by the way. I've got you full. I really pay no attention to those metrics. Interesting. I probably should, right? But I'm just so focused on what we're doing that I just don't pay a ton of attention. And markets are so different, right?

Like, we operate in Houston, Texas. Like, that market cannot be any different than what we do. in South Carolina, just from the type of customer, the pricing, how hard it is to get around, like so many different things. So there's a story behind every single number. Sometimes we say nothing's real like in these numbers, you know? So I don't know. I don't look at them a ton. I know some franchisees do. So then what are you doing to drive operational excellence and quantify that? Because clearly you can't be flying to Houston every week to check and see how things are going. So do have your own internal metrics that you run? Is that? We do. We do. Yeah. So we,

we do budget forecasting and we measured a budget every month. We have benchmarks for certain class codes that we want to hit on the P&O every month. And we have incentive and profit sharing tied to those kind of things. So yeah, we monitor it close. Yeah, super interesting. Do those, this profit sharing for you guys, does it kind of go as deep as the, I think, did you say territory manager or general manager per location or does it go deeper? Yeah, it definitely goes deeper. You know, people define profit sharing kind of in different ways. I believe in incentive plans big time. I love incentivizing people. Obviously, we want to hire folks for their character, and we don't want them to have to be incentivized to do a good job, but we love rewarding people, right?

So we take the incentive structure all the way down to the mover that's on the truck that is not even eligible to drive it. Yeah, love it. All right, kind of taking a step back, Nathan, and Michael hit on this briefly. But if you kind of kind of had to assess the pros and the cons of multi-unit. I think from us guys who are not multi-unit operators, we're looking at it going, why wouldn't you do this on your own, right? If you're having to give so much of the top line, or if you're having to be beholden to the system,

obviously for you, I mean, the pros outweigh the cons because you're still doing it. But kind of talk to us about that. Do you mean, are you saying kind of like, you know, French, you know, two-man-truck versus Nathan's moving company? Yeah, yeah, exactly. I think that's just like this theoretical question that kind of hangs out there in the balance of if you could do it on your own, you know the unit economics, you know how much you pay as a royalty,

and you also, I think, know probably the benefits that you get. But what are kind of the pros and the cons for folks who are not in your shoes? Yeah, so I know it now, right? Like, I know it after doing it for over a decade. I would say I've got to give a lot of credit to the brand of two men in a truck that has helped us get to where we are. I think that if I took Nathan's moving company to Houston, I would go bankrupt trying to market the thing. I couldn't even afford to have a radio ad or anything in a major market like that. So it would just be really, I just think we can create a lot more volume faster with a well-respected brand like Two Min in a Truck versus Nathan Mills and Michael's, you know,

moving service. So I would say that's kind of it. You know, but you learn over time. I think there's probably other businesses that we will do that won't be franchised, right? But I think for a moving concept, for me, two minute a truck is a great option. Yeah. What about cons? What are the downsides to multi-unit that you've seen? Well, every time we buy another location to put more trucks on the road, we just have more risk. You know, these things are flying down the interstate at 70 miles an hour full of somebody's prize possessions. So, we have a ton of risk because we have a ton of trucks. And it's just, you know, once you create something like this, like you got to be,

you got to be in the game to want to run it and manage it or it'll just eat you alive, right? So I don't know if I would really call those cons. I guess they're just kind of comes with the territory. And that's a con of business, right? I mean, if you were just doing it as Nathan's moving business and you got the $30 million, you'd still have those risks. Yeah. I've tried really hard over the years not to make paying a.

royalty of con in my mind. I just think that's a really slippery slope of negativity that, you know, if you sign up to do a franchise, like, you know what you're signing up for, right? I mean, that's a brand, it's brand licensing. So I've just kind of never gone down that path. I think maybe that's helped me. Stay optimistic on the whole thing. Well, I think where we did an examination of a franchise model for Orange Theory, one of our

early episodes. And I think, I think where it started to feel yucky. was, and Yucky is a technical term, was where they had all of these hidden potential costs, you know, top to bottom. For example, I think the equivalent would be in the two-minute in a truck space, do they make you buy only their moving boxes, right? And so many of these franchise models,

once you start to add everything up, it's a miracle some of these franchises break even. After you look at what they're paying. So like Orange Theory makes you buy, for example, a resale of software they don't even make. It's like an off-the-shelf thing. You've got to buy it from them and they mark it up. So I think there's, it sounds like at least hearing you talk about it,

two-minute a truck sounds like much more of a partnership than a extortion racket than some of these franchise officially are. Yeah, yeah. So it's royalty plus-plus for us in two-minute trucks. So you got your royalty, then you got an ad fee, and then you have a tech fee. Yeah. They actually do have their own proprietary software that they build in house, which is interesting.

I don't think their pricing reflects to them trying to sell it at retail cost, right? I don't know because I don't see their financials, but I've heard some real horror stories on some of the brands, you know, with having to buy from certain suppliers at certain rates. When the franchisor quits paying attention to unity economics, or if they never paid attention to unit economics, like it's not going to last. Yeah, super cool. Well, Nathan, this was awesome. Mills, thanks for setting this up. like nays, it was great to hear from me to totally open my mind in terms of how this stuff works and how you think about stuff. It's been awesome.

Well, thank you guys. Yeah, this is fun. Cool. And again, hey, I apologize publicly. I'm sorry for being late to the meeting. This is a great recording, though. So totally, totally good. So thanks for sticking around and texting me like, where are you?

I was like, I'm sorry. So you guys are awesome. So great job. Appreciate it. Thanks, Jason. Enjoyed a lot. Thank you all.