My Expansion Strategy | 320

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Download my FREE 8-Figure Playbook

This playbook walks through the exact process I used to build from $0 in 2016 to $50M+/year today across multiple franchise brands

Grab it here: https://brianbeers.kit.com/b79cf77012

Let's connect:

Find me on X
Instagram
LinkedIn
YouTube

Transcript

SPEAKER_01 0:00

Welcome back to the Business of Beers Podcast, your daily dose of strategies, tools, and tips to help you build an eight-figure business. Today's episode is a clip from one of my YouTube lives. If you'd like to hear the whole thing, there's a link below in the description. Cheers.

SPEAKER_00 0:16

What direction do I want to grow my grow my business in? And I think this is like the big thing, right? Is from a strategy standpoint. It's like you could go in any direction, and what direction makes sense, right? What direction do you want to grow the business that makes the most amount of sense? And to start, adjacent is the best decision. So if like, for example, let's say I owned this franchise here, and I had four opportunities I was looking at. And this one's 20 minutes away, this one's 35, this one's 45, and this one's like an hour and a half or an hour, whatever. Um, you know, my goal is proximity, right? Proximity is what matters the most. So I would be looking to uh you know acquire this one first, this one second, this one third, and then this would be my fourth and like you know, final like idea. Uh and if you're in if you're in a um a mobile business, so I know like um Sarah, you're in um, you know, a territory-based, right? She's in a plumbing, a plumbing business. Um, you know, they don't have specific locations, but you have territories, and so it would be similar, but like you'd be looking to acquire adjacent territories or ones that seem to have synergies. Um because all these businesses require hands-on work, right, to really get them going, especially in the franchise world, like many of the stores that I've acquired over the years were low-performing stores or under you know, underperforming. And, you know, we bought in stores that were losing, you know, losing money on the day we bought them, and we got really good deals, but but a lot of then the weight becomes on us to be operationally uh strong. And the only way we can actually turn them around is like we're physically in the stores. Like we get there and we, you know, we're we're there uh setting the expectations, setting the pace. Uh you know, you can't expect to to do turnarounds if you're hands off. And the this proximity really matters because if you're if you're you know, if you're if it's an hour and a half between your locations, like it's gonna be, you're just it's gonna be hard to be able to give them the support that they need. And so uh if you're looking to develop a strategy to to roll these franchises up, um then you really want to start from a proximity basis. Um, and then we go from there. So this is this is like the summary of of my personal priority in in my business, where the number one thing that I want to buy in is an existing franchise that's next door to me. Like I will overpay for one that is right next to me because of all the synergies that I'm gonna get and the influence that I already have and the margins. My second one priority is if I can buy uh just any any existing one in the market, right? So back to that map I was looking at, the one that's right next to me, that would be the first, the main one I'd pursue. Otherwise, anyone in the market I'd pursue. Uh then, like order of priorities would be then, yeah, open a new unit in my current market. So I'm in Philadelphia, for example, I'm gonna look to open a new location. Now, what does that one look like? Uh yeah, it could be a retiring mom and pop owner that's looking to get out. Uh, in our case, it could be a competitor that is not renewing a lease or the landlord is not renewing a lease. So, for example, we took over a um like a pet boys that is a competitor of ours who they were not renewing the lease, and we just went in there and and took it over. Same for a Monroe Muffler. Um, you know, now we're in a in talks with some other landlords who it's the reverse. The landlord doesn't want to renew the lease with the tenant, and then so now they're coming to us and we're in negotiation to sign that lease. Um, we've talked to many independent shop owners about selling their um selling the shops and like us taking it over. It's just we could never come to an agreement on on price and terms, uh, but we would. I mean, it just has to meet our criteria. And you know, this is gonna actually, you know, where it's a little bit more unique in my situation because like we we operate a very specific property in that it, you know, it's retail automotive. Like if you were in um, you know, Paulo's in a in a sub a sub uh business, uh, you know, sandwiches. And so like for him, it's like you know, a strip center, that's a good location, right? Like he's gonna be probably looking at more of you know, who are the competitors in the space? What is the the the uh the parking like uh you know in when you know around lunchtime and dinner time? Uh and for him, it might make sense to go find a failed pizza shop off Biz by sale that's in a really good uh spot, like an A plus location for him, and then maybe even quote, buy the business for almost nothing, but buying the business gets access access to that real estate, which is like prime real estate that he couldn't get otherwise. Um and so I think that's all kind of like as you work to develop this strategy, you you you kind of have this order of priority. Um yeah, and then so after that new unit. So if if we can't get a new unit, whether it's a mom and pop or whatever, then we'd be looking to the next order for me is can I buy an existing multi-unit package in a new market? And so for me, this was like I did this in New Jersey, I did this in this Allentown, which is about an hour, hour and a half away. Uh, I would look to do that. Uh we have looked at buying existing multi-units in in uh plane ride away. So we've we've looked at you know, the Midwest, we've looked at Florida, we've looked at uh other other markets. At the end, you know, we've decided, at least at this point, we are not interested in getting on planes because of the additional uh complication that it that it adds. Uh and just our belief that we can we can build in the markets that we're already in without having to add that to our lives. Uh but that would be my next preference. Uh and then it would be can I buy the real estate that we currently own? So, you know, all of our buildings are triple net leases, which means you know, we're responsible for paying all the expenses. And um, if we can buy them, great. Unfortunately, you know, most of the landlords like don't want to sell, they have no like reason unless they want to redeploy the capital. And then other than that, you know, I'm I'm a big fan of just like keeping it simple and putting in the index funds. But the next way I'm gonna look to grow as we as we think through like, all right, I'm in this market, I want to add more locations, I want to build it up. Uh depend depend this one, this one is specific to like it kind of depends on the concept. Like this wouldn't work in in all the brands. Um, but it's but it's running what's what would be known as like a hub and spoke strategy. Uh so in the auto repair business, for example, you know, we could have a massive store right here. So say I have like a 10-base store, it's it's huge. Uh we have tons of inventory, I can have like all the best like mechanics and tools and everything there. Uh and then I could look to acquire smaller stores, maybe these are only like three bay shops or four bays, like you know, less than half the size, but are in very good areas that the big stores are not available. Like a lot of our business is is access to real estate. Like like people don't go very far to get the cars fixed. Even for like making sandwiches, like people aren't gonna drive out of their way to get a sandwich. It's it's people pay for convenience, right? And so um for me, it's like can I open up smaller stores here and you know max out whatever we can do in revenue, but it then any overflow, we can we can shoot over to the hub store, right? Um do I know, do it do any existing Midas owners come to you? Let's see if I can just like I'm gonna do this. Uh John asked, do they do the any owners come to you to check first before selling with a broker? Um so I've only of all the stores I've ever acquired, only one store was listed with a broker. Uh one one out of, you know, well, 35. Um and they went to a broker. That was the that was the the second store, the third store that I bought in 2017. And so they went, he came to me first. He actually did come to me. I gave him a price. He didn't like the price. Uh, he went to a broker, listed it with a broker, but then he had this time to move. His his whole family, they were moving to another state. Uh, he had hit a hard deadline, like literally he had to sell the business. And he just got really nervous at the end that, like, you know, he would move and like the deal would fall through at the end, and then like what would happen if he's down there and the whole thing, like, and you know, he was willing to accept a lower price uh for me. I bought that for one time. The store's making about 120 grand. I think I bought it for about 120 grand. Um, and at the end he was happy with it all. I mean, we're still friends today, so it's it's all good. Um, but yeah, a lot of times they do they they don't go the brokers. Um, because you if you think about it, like the brokers are going to take 10, 10% or more. Um, if they're really big deals, I mean there there are some if they get into the the really, really big side, they can go outside. But most franchises, most of the deals get done internally, franchisee to franchisee. They never hit the market, they never hit the brokers. And this is what makes it hard for other people to break into these things. It's because, I mean, even in the mic, like in the mice business, like here, for example, this this is these are the the red dots are my stores, uh, the blue dot, the blue stars are uh areas that I want stores in. Uh most of these there are not existing franchises currently. But if someone pops up, like there's a guy over here, there's this, there's a store up here, there's a store up here, like if any of those people want to sell, like I am gonna buy it. And I'm probably willing to overpay for it because I know I'm gonna have so many, I just have so many more synergies. And so um, so if you're looking to break in John, like a couple like if so, if I was starting from zero today, like and I said, Hey, I want to get into and I want to run this same play as as um as I'm doing, you you you're not gonna be able to work with any brokers, most likely. It's it's gonna be a manual process. Like, I would first go out and find a brand that has a lot of units. Um, this map here, all these different colors, was was 2016. So, like like when I was starting this whole thing, uh, these were all the different owners. So, like these different color groups are all the different owners. So, like I bought these are the first two stores I bought in 2017, and then I bought a single store here, single store here. Um, uh we opened up one from scratch. This was a package of seven, and then a package of three, and then this was a package of five and two, and like one here and one there and six, and but but like this is our footprint today. These are all my stores today, but in 2016 it was highly fragmented. There was I want I want to say there was I mean at least 12 owners here that we've consolidated into into one. Um so if you were looking to replicate this, you would want to find a brand that has a lot of owners and a lot of fragmented ownership, which means you have a lot of different owners. Because think about it like the other way, like if uh where's my like this is the whatever, it's the same map. I just changed the logos to Midas. But um like if if you looked at the map and I owned all of these, like, or another franchisee, like they are not gonna sell one store, two stores, or even if I decided, hey, I hate whatever this store, I'm gonna sell it. You you really don't have any other opportunities to acquire because you're competing against like a large player who has all the connections and has the resources and and all that stuff, right? So you would want to find a brand that looked like like 2016 Midas, where it's lots of locations and they're highly fragmented. They're owned by tons of different people.