Fully describe the business's activities?
This 3 yr old Franchise branch provides water/damp proofing, painting, roofing, & renovation services mainly to the Dolphin Coast, and has had a steady turnover over the last 2 years at just over R2.2m pa, with a Discretionary Net Profit around R603 000 pa (incl the owners benefits). This Report is based on the 2020 MAâs, with every possible expense covered, inclusive of additional costs to ensure a true picture for the purchaser. For the past 2 yrs and for the next 3 yrs, the businessâs major client in respect of one main residential project is worth some 65% of turnover, while another client on 2 projects provide some 25% of turnover & other ad hoc clients the other 10%. The 3 main projects will proceed for another 3 years, so the opportunity is to take this Franchise Opportunity forward with further growth, off an excellent base. Most Franchisors sell opportunities to establish a franchise with no existing income vs this already profitable branch being sold by this Franchisor, enabling a purchaser to, at a very reasonable cost, immediately earn an income.
How does the business operate on a daily basis?
Staff arrive either at the storage unit or site, with the driver then using the 1-ton Nissan from the storage unit to deliver staff/materials where required. Staff are very capable, however the Franchisor/manager do check-up on work instructions/progress. The Franchisor/manager will also liaise with existing clients, develop further business opportunities, manage the administrative & financial aspects of the business. Business hours are normally 7h30-17h30, Mon- Fri.
How are the clients attracted to the business?
The present 2 clients provide most of the turnover of the present business, due to the manner in which this Branch was quickly built up, with minimal Franchisor involvement, to get it to a sustainable base & ready for sale to a Franchisee. However, in future, the Franchisee may decide on their market focus & route to market etc; while this Report includes a Marketing Budget equal to 2% of turnover that can be used in agreement with the Franchisor for direct marketing expenditure. In addition, the Franchisor website, direct leads, & referrals will certainly enable growth in the burgeoning North Coast market.
Is the business VAT Registered?
Yes the Franchisor CC, which is selling the one Branch, is VAT registered; so the purchaser will receive the "business as a going concern" into their own VAT registered Sole Prop/CC/PTY.
Are there up-to-date Management Accounts available?
Yes monthly in arrears. This Report was drawn up from 2020 MA's, with a low R100 000 insertion for the month of May 2020 when closed due to Covid, so that one can understand the true picture going forward in a non-Covid shutdown period. Royalties are 7% for Franchisor leads/projects & 5% for other turnover achieved. Marketing contributions are 2% of turnover & spent on that particular Franchisee only.
What is the total staff complement?
8 staff plus other labour when required +- 2 to 3 Manager R15 000 pm Driver/ labourer R4 000 pm Skilled waterproofers R7 700 pm & Semi skilled R5 500 pm All with service between 1-3 yrs
How involved is the Owner in running the business?
The Franchisor was reasonably involved from a strategy/financial level, with less hands-on involvement. The New Franchisee can obviously focus on new business development to grow the business on the existing base created by the Franchisor.
The Branch is presently run from home (realistically only accounting side) with a storage/office unit utilised to house the vehicle & tools/products, with some R24 000 pa (market related) allocated thereto within this Report.
What are the main assets of the business?
The assets consist of a: Nissan NP 300, tools, product, consumables, etc (full list available) â some existing & others new. They are worth some R200 000; noting that the vehicle was bought new 3 yrs ago for R180 000, with some R130 000 finance outstanding covered within the expenses of this Report).
Franchisor that has been in existence for 10 years Franchisee branch established 3 yrs ago by the Franchisor & which has a steady income/profits of R2.2m and R600k pa, driven by 3 large projects that have another 3 yrs plus to run Support of the Franchisor, existing staff, it's website, & Brand in the market
Needs an owner operator rather than the over busy Franchisor - to grow it further
The North Coast is a huge developing market, allowing for further business opportunities - large, small, ad hoc residential, commercial & industrial !
That if this branch doesn't grow it's market share to the benefit of it's owner & the Franchisor, that others will take up the growth opportunities.
What is the reason for the sale?
The Franchisor has built the Franchisee Branch up to a level that has steady Turnover & Profits, with it being the right time to sell off to a Franchisee, who has the time to expand the business with other large projects & smaller residential/commercial opportunities, which abound in the burgeoning north coast.
What is the price plus stock and the profit?
The Sale Price for the Franchisee Branch (3 yrs) is R1.05m incl R20 000 stock, with an existing stable turnover of some R2.2m pa, producing a Discretionary Net Profit of R603 000 pa, which is literally guaranteed from 3 on-going projects (3 more years), and with a growing market in the area, allowing for further business opportunities that have to date not been driven by the Franchisor, who has many other aspects to focus on.
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