30 Midas Franchise Acquisitions - Top M&A Entrepreneurs: Brian Beers

Welcome to the top M&A entrepreneurs. This episode is brought to you by the Dealflow System. If you like this episode, please subscribe down below. Today, my guest is Brian Beers. Brian is an entrepreneur, podcast host of Business with Beers. And he's also the president of Prenland Automotive Group, which owns, operates 24 Midas franchises. We're gonna talk about that, ups, pros, cons of that. So welcome, Brian. Awesome. And it's now, uh, 29 as of today. So 29. Congratulations. You better update your LinkedIn. That was, uh, I know you're right. OK, so it's almost 30. It's almost actually 30. So, uh, I'll just wait till then. So I, I, I, I was gonna ask you like how did you get into this, but I read your story that uh your family started it quite a few years ago, and you took over president and you're on an acquisition tear. So tell me how you guys got into that yourself. I mean, did you just go to them, these Midas franchises, your parents drag you or what? Yeah, so I guess my, my dad got into it in 1976, uh, he got into it cause his uncle or his cousin was in it up in Boston area in the early 1970s or late 1960s, so pretty early in the, you know, franchising world back then, completely different business model, but my dad was 22 years old, uh, and his, him and his dad, uh, who's like a school teacher and a football coach, and they started with one location and just You know, he was an entrepreneur and, and grew it to 6, throughout Philadelphia area and um did it for 30-something years and, you know, it was a great, uh, you know, great, great life for us and our family. And um I went to college, I studied business, I came back in 2010 and decided, um, you know, I was gonna join the family business and at that point, my dad, uh, You know, business wasn't doing too good, 08, 09, you know, it was, it was rough for a lot of people and they were tired and they were thinking about selling the business and just, you know, holding on to the real estate and just kinda getting out of it. And, uh, so I come in, I breathe all this new life, new ideas. I, um, go to all these conferences, I meet people, I learn all these new ideas, cause I knew nothing about business. I knew nothing about cars. Um, I still don't know that much about cars, but I can, uh, I, that's OK. Uh, it's not my job. And, um, So I started learning these best practices from these guys around the country who became my friends and started implementing the things in 2016, uh, my brother who had joined the business, um, decided we were gonna start expanding, so we kind of went off on our own, we bought a couple two stores, um, still ran everything as like one company, but, you know, we separated ownership, and then, um, yeah, we started and then we bought another one, another two, and I opened a couple, and then we bought 7, and then 4, and then 5, and then, you know, these some larger groups and, um. Anyway, uh, and a lot of it's been recent. We went from 12 to almost 30 now in like, uh, the last 16 months. So that's fantastic, yep, um, so anyway, a lot of it is kind of like you, you gotta really figure out, put the systems in place, but when, once we have it, it, it becomes, you know, this is what's nice about a franchise system, even being a franchisee, is it's easy to then duplicate out, uh, you know, what we did in Philadelphia into New Jersey and then do it again in this other market. So, so the franchise is in place, but what, what is it that you do? That allows the franchise to thrive. Sure, yeah, yeah, great question. So, you know, a lot of, uh, success, you know, we're in the people business, so you know we fix cars, but we're in the people business. So it's communicating, right? Like customer comes in with a problem, you come in, you got a noise, whatever, we gotta be able to understand what that is and then make sure our technician is finding the right problem. We're solving the right problem. We're communicating. And so, that's a lot of what we focus on is, is hiring really good people and we try to create a culture that is, uh, of people that, you know, kind of aligned with our core values, uh, and that is, is fun. So we're, we're big into, we use Slack, uh, which is like a tech, you know, communication tool between our stores. So guys throughout the day will post up, you know, sales or funny things they find in cars like, like kittens and big balls of stuff out of like air filters and Uh, you know, so we kind of have some fun throughout the day and we just try to keep the guys engaged. We have competitions, uh, we do have trips, uh, incentive trips, and, you know, we just kind of bring energy and just, just, you know, just try to make it fun, I, I think, and so then we are able to energize, like we do these acquisitions and a lot of times we keep the same team in place and we can, we can double the sales at the location with essentially the same group of people. Uh, and a lot of that is cause we're, we're, we're just bringing ideas. We also invest in marketing, and we have a couple of other things I, I'd be happy to tell you about as well that are, you know, a little bit more specific. Yeah, let me get, uh, a little baseline for the economics of a Midas franchise. If I was to go to Biz buy sell and Somewhere in Pennsylvania or Wisconsin and then Midas is there. What, what is the kind of the average sale and profit of a Midas franchise that somebody wants they're distressed seller, not that it's a distressed business, but, uh, you know, they wanna sell. Yeah, so the volumes range, the average volume store does uh over a million dollars, right around a million dollars in revenue. Uh, the range though is, you know, the top quartile does, you know, probably $2 million the bottom quartile does like $500,000. Um, you know, for us, a store that's doing less than 700,000 dollars-ish is losing money, um, you know, based on a lot of it's cause just the, the, the payroll support and all the admin costs and And, um, so anyway, we've, we've bought locations that are losing $10,000 a month. Um, and you know, when you're bigger, we can absorb some of that as we get them going. Um, but on average, you know, they should make 10, 10%. Um, the best locations could make 15%, uh, there's some that could make 20%, like crazy numbers. A lot of it's the rent, you know, if you have really high rent and really high taxes or you have really cheap taxes and cheap rent. Uh, all plays a factor too, but, uh, roughly, roughly a million dollars, roughly 10%, so you can make roughly $100,000 a location if, if you get everything that's including like a general manager running that or in that business unit, right, yeah, yeah, someone running the, the day to day. If someone was an owner operator, um, you know, on that, that unit, there'd probably be another 65 $70,000 that would be the, the owners if they were, you know, also the manager of the unit. Do they have a pretty uh tight range of salary for the owners? Like, you know, 50,000 to 200,000, or is it just like 175,000 or 2125 or something for what the owners, for what the owner the owner operator, uh, yeah, for, so if it's an owner operator like he's running the day, like there's no manager, he's there five days a week or whatever, yeah, he's, he's probably making 100,000, um, you know, some something like that. And what are the franchise fees that you pay to Midas? Yeah, so we pay 10, 10% on an ongoing basis of sales, and half of that goes to, you know, them like to run their business and profit. The other half goes to a marketing fund. That is then, you know, distributed across multiple layers, like part of it goes to a national fund for TV and, and stuff you'll see. Some of it goes to website, some of it goes to like digital marketing, SEO, all that just for bigger buys, better price on bigger buys. Yeah, and it's something we don't have to think about. It's kind of the benefit of being a franchisee is like marketing is totally done by somebody else. Like, we'll vote on promotions, you know, we kind of vote on the direction and, and, you know, what we want to see on a national basis for sure. Um, but then we don't like they have the buying power, you know, there, there's a multi-million dollar budget that they can get much better deals on buys than, uh, you know, we would. Yeah. Do you own the real estate or does the Midas own the real estate? I, everybody remembers that, uh. That, uh, video about Ray Kroc and McDonald's you're not in the McDonald's, you're not in the fries business, hamburger business, you're in the real estate business, yeah, so, uh, it's changed over the years. Uh, they own, uh, they owned a lot of it. They followed that model before and then when they finan they ran into some financial trouble years ago before I had joined, uh. Um, and so they sold off a ton of real estate into like a REIT, uh, to raise a bunch of capital and so there's a kind of a combination where Midas directly owns some properties, this REIT owns some properties, but you know, it's, it's not them, it's like this independent, uh, you know, group, uh, some are third-party landlords that Midas has a head lease with and then they Sublease it to us and, and sometimes mark it up and then there's others that were direct with the landlord and then there's some that we own directly um so you could have any flavor that you want, but you know we, we try to buy as many as we can we own 7 of the properties so yeah, well, what kind of multiple does a Midas store do a million dollars with let's say 10, 15% EBITA? Sure, so like you can buy them, we can buy them at, you know, on average, I mean if someone's on biz by sell, it's gonna be 2.5 to 3 times earnings. So, you know, it really depends on what your role you're buying in it. Like, like, if, if I was gonna sell just one, like I'd say, all right, makes 1,000,000, I'd add back the manager's salary, I add back, you know, all the things, maybe it's 150, and then I'd, you know, say times 3 and it's worth 450. But that assumes that the, the buyer is also gonna run the business, but like, and be the manager, right? Cause you're doing an ad back for that salary. If I was buying it myself, like when I go to buy one, I'm looking at what's the profit to the owner, you know, with the manager in place and everything. And I'm gonna pay off that number because you know we're not gonna run, I'm not gonna run the store like I'm gonna hire somebody so, um, that's kind of our approach, yeah, yeah, sure, and that's how we scale. I mean that's the scale of it, so, um. So and then sometimes I can buy them for asset value like a location that's losing money, a location that's losing $10,000 a month, uh, you know, we're, we're not paying on a negative multiple. Yeah, so what's it worth of the company 150, $150 because it would cost us $200 plus these days to if we had to outfit a new like a whole store with like lifts and tire equipment and racking and all the stuff. Uh, easily 180 to $200. And so if I can buy for 15,000, and I have $600,000 of sale, and I got a team in place, and I've got, you know, brand recognition, and I can go in there and You know, do our thing. Some of those stores we can get, uh, yeah, we can get up pretty, pretty quickly. Uh, we could double the sales in a couple of months, and some we can't. Some take time. What was going on with that store that, that was losing money? What, what was happening? Uh, so in a couple, it's, it's, uh, there's a couple different ones. It's all people, right? So it's one of the ones was, uh, you know, it was just a carousel of managers, of bad manager after bad manager, and so it hurt the reputation. And it was hard to, it's hard to hire and retain good technicians if there's this bad manager, you know, who's constantly changing every 3 months. And so, uh, it's just, so then, you know, we go in and even for us, it took 33 different people in the store until we found a guy that fit with the team and is now like, you know, we're getting that store profitable. Uh, there's other ones that are purely just understaffed, like they're, they're really good locations and, you know, we bought this location. It had like 2 employees in it, 3 employees, something like that, and it should have what's the uh optic, uh, it's a ratio, but it should have like 66 and 2, so and a manager and a tech, and so like. And they're working 6 days a week or whatever and there's, there's only so many cars they can process, right? And then half the lights are out in the building, so it's really dark inside and it's dingy and so we go in there and we fix the lights and we paint the inside and we hire 4 more people and, you know, magically, you know, there's a sales and profits up here. Yeah, it's sometimes like the simplest thing we think it's like this big, we come up with these big crazy plans, but it's just like we just need nice people in the store who say yes to customers. And then we run our process, which is like, we say yes, we look at the car, we inspect it, we present the findings, we offer payment plans, and, you know, we, we get the sales, so. Yeah, I, I, I was just rewatching some of the hotel hell with the chef Ramsey and every hotel that goes it's, it's always the ego of the person, individual. Yeah, fixing that. Um, what's the kind of economics of how many bays, average bays, and how many cars you have to turn over to get the cash flow? Like in a restaurant, he goes, hey man, we gotta bring in this many people, and they could usually sit around for an hour, uh, and the average ticket is this. Yeah, automotive is funny cause it's like, I mean, our average tickets like 250 to 300, something in that range. And so, you know, if we can get, you know, we can do 80 to 100 cars a week, you know, we're we're hitting the numbers, you know, we wanna hit. Our goals, our goal is $25,000 a week per store, which would be 100 cars at, you know, 250. Uh, we hit, you know, some of my stores do well above that, we're doing, you know, 40,000 a week, other stores are doing 10, but, um, You know, in terms of what they can process, I mean, it's, it's amazing. I, I mean, I've visited stores, um, that, you know, I, I know the owners of, and they're doing like $100,000 a week in sales out of the same bays, right, uh, $75,000 a week at the same six bays. So what's the best process going on there? Yeah, so it's teamwork. It's like they just have more people, but then they're working together in teams. So like two guys will pull a car and, you know, they'll both work together to take the tires off like they, they work in more a team-based, uh, with a high sense of urgency. Yeah, I, I've watched the guys at Discount Tire do that. I mean. Same thing, it's all team, but they, it's the same square footage, right? It's the same lifts. It's the same like air guns. It's, yeah, maybe they can do a couple of things faster and they have multiple tire changers and multiple, right? It's a speed game, um, especially in the tire business, that's, you know, whoever's the fastest wins, right, and discount tire, you know, you can get in and out and whatever 45 minutes, that's all, right? That's all they do, and they're really good at it. Us, like, you know, we do brakes and suspension, diag and exhaust and we do tires and, and oil changes and So that's one of the downfalls I think to, to, you know, Midas is like. As a brand, we've, we've, we're trying to be like everything to everyone, where it's like, oh, there's quick oil changes, oh, we can do full service tire this and engine, you know, I have guys that can do engines and transmissions and, and then we want to sell tires and we have good pricings on it, but like, and it's, you know, at discounts like success is like they're, they're so narrowed and they're on one thing and they're really good at it. And so, um, you know, it's one of the things I'm, you know, I'm on the committees and I'm on this stuff with Midas too is we're really trying to get focused in on. You know, being, having like that target niche and then being really good at it, so. Yeah, well, how do you purchase if you see a couple minus stores, I'm sure they come up with biz by sell quite frequently. How do you purchase like what's your cap stack look like? It's percent down, seller financing, uh, owner financing, yeah, so I've never bought one off Biz by sale. Uh, the beauty of being in a franchise system is that, uh, everything's for sale and none of it's public. So, you know, I, I create relationships in your network of Midas, they're like, hey. So and so from, uh, even I, I wants out. That's happened, but more often than not, I, I approach them, uh, I create relationships, you know, with the franchise system, you have the contact information of everybody, you know what their sales are, uh, so I, I'll just call them up and tell them, listen, hey, we're looking to expand in the next 6 to 12 months. If you're interested in selling your stores, you know, please make me the first call. I've done that multiple times. That's how we've acquired almost every one of our stores, to be honest. Um, and so that's like, that's if someone wants to grow within a franchise system, it's very easy because you, you have the book, you have the contact information, you know what their sales are, you know if they're older, I mean, all these guys are older, I knew like retirement was on the horizon. Uh, and then my goal is just to establish a relationship with them and to be, to be known, which is easy, to be liked, and I, and I get liked because I, I help them with things. So like, you know, I'll say, hey, here's this, you know, compensation plan we've been working with techs, or here's like this advertising plan we've been doing, like, And I would share information. You're doing a podcast and a podcast, a little bit of celebrity authority. That's right, yeah. And, and, and I've hosted things like this from, from, from Midas corporate. Like I've, like during COVID, I, you know, hosted a Zoom thing with like 75 franchisees just to get on and, uh, talk about best practices, or I'd, or I'd interview a top performing franchisee who was like a friend of mine, and I would ask him a series of questions. It's like you're asking me of like, you know, how'd you get into it and how do you manage your guys and how do you do this and how do you do that. So then you become like this, you know, this figure of status and cause you're now you're known like nationwide, they, they all trust you cause they see you, and then, you know, they like you cause you, you seem like a good person and, you know, reputation gets around if you screw people over or you're not a good operator or you cheat your employees, like, you know, God, people talk, everyone would know that. So, So once you like can get into a system and you start establishing yourself and, and you can take advantage of, of the, the infrastructure that's already in place, you go to conferences, you participate in committees, you get together regional guys, maybe you host a Zoom call like I've done, uh, then, you know, you start calling these guys up and You know, some deals, they, they say, yeah, I've been waiting for you to call me, and we want, we do it. Other, other ones, they, uh, say, hey, you know, I'm not ready now, but like my daughter's going off to college in like a year, and I, I just wanna get that, I want her in, and then I'll be ready, I'll talk to you. And then sometimes they sell, uh, you know, if hell freezed over, I'd still keep the one location and then they sell them all, and like, It's, it's funny, but, um, so yeah, and, and then, so that was your kind of first question, how we find them. So I, I create relationships, um, now we're looking outside of the area of, of Philadelphia, New Jersey, is kind of my, my region, and so, you know, we're looking at other markets and I'll like, I'll just get the big list and I'll just go through and say, all right, I need, I need like 5 locations to get started, like cause I, I put a district manager in place, right? I can't go 1 location in Texas or something. Uh, I need 5, and so I can pretty easily then go through the whole list and say, all right, who's got 3 and 2 or who's got 5, but if it's all, uh, if one franchise group like myself owns all the ones in, you know, Ohio, like, I'm not even gonna look in Ohio cause there's no chance that I can buy any of those locations, right? Cause it's, it's all entangled in another large group. And so, Uh, then I would just call them up and or email them and say, hey, I'm looking to, you know, expand across the country, and, you know, if you have any interest, you know, we should talk and say, yeah, so if you find, let's say if you find 5 ready to sell, motivated seller in taxes, how, what's the capital stack look like? How do you, so the way I've, we've acquired almost all these since is owner financing. And so I've never, I've only gone to the bank once, uh, how much owner financing almost every, almost every deal, uh, we paid a couple of cash, like, you know, if it's like $1,500,000 or $1,200,000 we just pay those in cash, but losing $10,000 a month, it's like, here, here's, yeah, yeah, even though I've. Owner-financed. I've owner financed those too. But, um, yeah, so I, I mean, the call goes like this, I've, I've done it 100 times where it's we'll, we'll just tell them this is how we buy it, right? So we'll take your, your P&L, we'll add back, you know, all your owner expenses to get what the, you know, seller discretionary earnings or just what cash flow to the owner or whatever you wanna call it. And then we'll, we'll take that number, we multiply it by, let's say like 2.5 to 3 times, and then from there, we, we structure it, and we, we structure it based on like 3 numbers, which is down payment, monthly payment, and number of months. And so I find a single store, it's making $1,000,000 I'll say, all right, it's, let's say 25,000. And I would then put, say, hey, we'll give you, I don't know, I just make, I usually just make up numbers, but like $30,000 down, let's say, right? Uh, so 25,000, and then I got minus 3000, so I got $2200 and then I'll say, hey, we'll, and we'll pay you $3000 a month for the next, whatever, 75 months. And so someone would take that up. They say 75 times 3 is whatever 1225 plus the 30. So in total I'm gonna pay them inclusive of principal and interest 255,000. And so then for how many years, whatever number, whatever I choose, like I just pick, I just pick a number, right? I've done, uh, 13 years, I've done 8 years, I've done, you know, 4 years I've done. You know, random numbers like 88 months, like it, cause, cause I'm going based off of the three numbers, the down payment, the monthly payment, and the number of months. And, and then we back later we back into the principal and the interest rates and all that stuff for the loans. But, um, what's interesting is if you start it that way, then that's how they negotiate back and then they'll say, well, I want like, you know, $5,000,000 down or $1,000,000 down, or, uh, you know, I want $4000 a month, or, oh, I only want $2000 a month, but I want it over 10 years, like, uh, but, but then we, we negotiate around those three numbers, which is money out of my pocket and money into their pocket. And then later we get into. Well, all right, we, we agree in that in terms. We set the interest rate by setting the interest rate, you can back into like what the principal should be, uh, and then you can, you structure the, the note. What do you, what interest rate do you look at? We make up numbers, so like 63, 6, yeah, 85, I think 6.5 is my highest. I think 2.3917. Like we just make up a number that gets the payment to what we need it to be. Uh, you know, and our goal is that the interest rate as low as possible, which makes more principal, and then of the principal we want as much of that into the asset value because you depreciate right out of the cash flow of the business. So yeah, but and then we can depreciate the assets, uh, versus if it's goodwill, we can't depreciate it, right? It's amortized over 10 years and so the seller wants the opposite. You gotta meet somewhere in the middle, but, um, but yeah, we normally are in the like market, market rate interest, um, but it, it, it doesn't matter as much because we've already determined what the, we already determined what the payment is. So the interest is just kind of like a more for an accounting purpose than anything else. Yeah, they can deduct it, yeah, um, but it, but it simplifies the conversation rather than upfront negotiating the value, the down payment, the, and the interest rate. So you're not going for any financing aside from seller financing outside. Yeah, and so, um, does the franchise offer that and say, hey, we want you to buy this. They offer what? Uh, financing, like, we, we, we want you to buy these franchises cause they're not performing well, yeah, they've, they've brought me deals, sure, um, they don't finance it, but like, they, they'll, if they hear somebody wants to sell and it's in our territory, even if it's not, if it's a larger group, uh, they bring us deals because we're the easy button, like, they know we can get the deals done, they know we're good people, they know we take care of our employees and we grow sales and like. You know, that's, that's like, you know, once you become the easy button, it's, you get more work, you get more deals to, to do, um, as long as you can execute. Well, what, what do you wanna keep doing? I mean, you've already added 4 since the last time you updated your linked. So where's the goal? What's the goal, like 50, 100, or just keep going till you're having fun? Yeah, we're, I'm trying to figure that out now. The, um. You know, we want to grow within our markets. So if, if, if there's any opportunities that are in our current footprint right within Philadelphia, New Jersey, or in this market called Allentown, which is an hour north, um, we will buy it because we don't, we already have district managers. Like I have 5 district managers that oversee roughly 6 have the operations people have the operations. I could easily, each one of those could easily take on another store, right? So that's 5 more. That's 35 stores. Uh, and then if we had to fill in, you know, then you get into this little hairy, this gray area where, you know, if you have too many stores for a district manager, it starts, they start to, you know, get spread thin, and they can't spend as much time like doing more of the hands-on the work to help develop people, and they spend more time just like putting out fires and dealing with like low value stuff. And so, uh, there's other major brands like Monroe, I believe, like a single district manager might have 15 to 20 stores, and we've interviewed these guys and they tell us like they spent all day in the car driving between all these crazy locations, and they, they don't actually like get like real work done to see progress cause they're just like, just dealing with all the crap, um. And so then, so it's kind of like this stair step growth thing where if we get to say we get to 35 here in Philly, whatever, then we say we want to add another 3 or another 5, it's like we're kind of then teetering on higher, we'll probably need to bring another district manager in, right, and pay him whatever 80, 800, whatever they get paid, and then, but then it's like, well now we need to grow more, right? Now we got this extra capacity, we need to now add not just 5 more, we need to add 7 more. Right, and then it, it kind of continues down that path. Um, so that's, that's, uh, that's one thing that we're, we're like, any deal that comes along that's in our area, we're gonna do. That makes sense because it seems like a like a, a domino effect that you gotta make decisions on, yep, uh, and then, and then if it's like, like I was mentioning, if we can go into a market and buy 5 or, or, you know, 5 to 7 within a, you know, 3 month time frame, like pretty quick, they don't have to be the same day, but if it's like a 3 and a 4 or a 1 in a 4 or whatever it is, um, we would, we would do that. So, and these are new companies under a holding company, right, uh. Yeah, yeah, I mean, we're all the M brand. I mean, we have our own Prenlin Automotive Group and then we have separate entities, so like legally they're, they're owned by different, you know, EINs, uh, but, but we operate them all as like one, you know, one company. Right. And all the operations payroll goes into just one office. Yeah, we have one headquartered office. Uh, we actually only have 2 people physically here. Uh, I mean, you're just barely bigger than Berkshire Hathaway. That's right. And, uh, and we've got, uh, 6 people in the Philippines that work for us full time. There are, you know, our employees, uh, real remote employees. What do they do? Uh, they do, uh, HR, they do accounts payable, they do accounts receivable, they do. You know, accounting, I mean accounting stuff saved quite a bit of stuff, yeah, so you can hire extremely talented, you know, reliable, trustworthy person for roughly $7 an hour. Um, that's like an all-in cost, like $1200 a month, uh, for a full-time employee, and then there's no like payroll taxes, no health insurance. We, we give them like paid time off and stuff, and they get holidays off like they're, you know, they're our employees, um. But yeah, they're, they're great and so then we, uh, and it's easy then to scale because then if we got like 5 more locations for us it's AP it's we have a lot of bill pay, right, because we buy a lot of parts and so, um, you know, we just, we just bring on another person for, you know, 1100 hours, 1200 hours, whatever it is a month, and then that's our incremental cost on the, on the office side versus if we were in a physical office at a certain point we'd physically outgrow the office, right, and then people are gonna have to work remote or we're gonna need a bigger office space. And at the end of the day if people can work work remote here in the US, why can't they do it in the Philippines for exactly, you know, a fraction of the programmers are curious, so if you were to buy one store or one minus and it's doing a 10%, uh, EBITA, uh, what's it doing to and the multiples maybe 1 or 2, something like that. Now you've got almost 30, let's say around $30 million in revenue, uh, what's it doing to the multiple, uh. You know, for the bigger fish out there like private equity going, hey, uh, we love it. You're doing, yeah, I've, I've, I've heard, uh, like in the 7 range, 78, you know, I haven't, we haven't really gone down that route yet, um, even for us, a lot of it's been, you know, recent, you know, obviously recent growth, but, uh, you know, there are conversations we're gonna have in the future is, is that could be one way to we could grow is we, we, we partner up and then we go and You know, got some money behind us to go and instead of, yeah, you're too young, right? No, but you can do plat they have, they have this thing called a platform, right? So they're like we sell a portion of it and then we have this backing in cash and then we can use that cash instead of like doing this bootstrapped growth, you know, we can go to the other guys who have 10 locations or 15 locations and just write them a check or the private equity company can write them a check, right, that we're buying them at 3 or 4, but now because it's part of this like bigger company now it's worth 7, Right, that's, that's the model. I don't know if we would do it, but that's what I've been pitched. Yeah, so, but, uh, I, I think you're pretty accurate on that. Now. You work with your brother still, yeah, yeah, and he's older, younger, yeah, he's, uh, 4 years older than me, 4 years older. And what does he do for the, the business? You're, yeah, he, he's like the, you know, I'm with the more outgoing person I have the podcast, you know, on this. He, he's, uh, he's in the office, you know, he's the, uh, like he's the numbers guy, the tech guy. You know, he kind of, he oversees our office, um, and a lot of the operations and daily like tasks, and he's very good with, uh, that and a lot of our technology, we've built a number of things, uh, custom software, custom reporting, things that we can pull data out of our sales and, and trends and identify patterns and stuff that Other guys don't do because they, you know, they'd have to build it out, um, and if you had to hire somebody, it would cost, it would cost hundreds of thousands, so, um, and he does it for fun, so, oh, that's cool. Um, do you guys have a board of directors? Is that your family? No, it's me and Chris. Yeah, it's just you and Chris. Are your parents still alive? Yeah, yeah, yeah, yeah, and we, we, we, we had bought them out, uh, a couple years ago and owner finance. You're like, you son, you have quadrupled the size of our business. Yep, yep, they're, they're, they're obviously proud, and they, they still work. My dad like his hands on, like he loves now, he's always loved like the hands on stuff, so he. Like, even today, he's up at one of our stores, like helping to renovate it. And so, he like, we're, you know, redoing the racking, we're painting, we're like, it's one of the new stores. We're like, you know, he, he loves like working with his hands, he's very creative and he's very, he's very like good at, so, you know, sometimes it's just simple things of rerunning these lines or building in these um shelving or whatever these things that just make the store like a little bit more efficient, uh, for the guys, um. He loves that stuff. So that's, um, so anyway, he spends half his time in Florida. He'll come back here for two weeks or something, and then he'll like want to do a project, we'll renovate a waiting room or like redo one of these stores, and then uh he'll go back down to Florida or go golfing, and, uh, that's, that's his hobby then. Yeah, do you pay him? Does he pay? Yeah, yeah, no, no, he's paid. Yeah, so have you purchased any kind of, uh, acquisitions outside of franchise? I'm what I'm trying to understand is like what what you see is pro cons of buying a franchise, not buying a franchise. Yeah, I mean, I, uh, so no, we've bought two other franchises that have both failed, um, mainly because of, you know, I, I try to view it as like diversity, like, oh, I'm diversifying my, you know, income, and these different things, but at the end of the day, I never, I couldn't focus on them cause I was so busy. I thought I could just like buy this thing and put a manager in place and it would run just as good as Armida shops. Uh, and it didn't because I, you know, I couldn't dedicate the time that was necessary to get a brand new, both of them were brand new like green territories, green locations up and going, which is a lot different too than buying an existing thing that has cash flow systems and teams in place, and we just gotta like, you know, massage it, right, versus like building from zero on day one. And so, um, I just didn't have the time, the, the energy to focus, and so both of those just became a distraction and You know, we, um, you know, moved on. So, um, but yeah, some of the, some of the benefits I'd say is I mean, it's speed to scale, like is the big one. Like, if, if, if you wanna grow and you wanna make like money, like, you can, you can grow really fast within a franchise system, you know, and you don't need a ton of money to get started. Because you're buying now, you're buying, you know, 4 or 5 at a time. Yeah, and I'll buy one at a time. I, I'm just, I'm working on this one now to just to buy one, but like, and also we're willing to deal with like all the, the, the BS stuff that goes through with some, some of these, some of these purchases, like. This one I'm buying, it's taken me 3 years. It's back and forth with this dude to to buy a single store, and it's, you know, it's cost me more than buy the 7 or the 10 at a time. Yeah, why is he, why is that, uh, yeah, it's it's lots of lots of stuff, but, um. But, but even that, like, I'm willing to deal with that versus like the private equity guy or the big guy, they don't want, right? They want the nice, clean, big purchase. Like I'm willing to get there and do the dirty work and deal with the, deal with all the crap, you know, we take over these stores, the guys are getting paid cash and we gotta like get them on payroll, and then they don't want to be on payroll, so then we got to get new employees and like, right, there's all these little things, you know, as you go and you buy up these, especially the, the individual operators. You know, they're, they're doing more things that are a little off, you know, off the books when, you know, bigger companies, we can't do that, we don't wanna do that. Um, but yeah, so speed to scales, I think like a big one, you have a, you have a built-in community is the other great benefit, like, You know, day one you join, you're now part of this like country club where everybody knows you can, you know, has the ability to know each other. Uh, I could call up any franchisee in the country, and he would probably talk to me about his business. He'd probably tell me what his payroll is and how he's doing, his cost of goods and like, what's working, what's not working. And so, you know, the, the value of that is like turning decades into days of, of knowledge and experience and For me that's, that's huge, you know, I think, uh, I'd rather have the friends and the support system to help me grow, you know, faster versus if I was on my own. So you would say that 10% off the top is definitely worth it. There's no regrets sending that check out. Yeah, I mean, it's, it's like. Uh, it, it really, yes, so I have no regrets cause it's like, if I was beers, tire and Auto, uh, there would be no way I'd be at the size I was today, A, for a couple of reasons. One's real estate, like, you know, franchises just like McDonald's, they want to control this real estate, and for us, we, we need a certain size store, 4000 square foot bigger, we gotta be on a major road, we don't wanna be like by a Taco Bell or a KFC or You know, something like that, and there's just, there's just, there's just, there's not that many that exist, right? So it'd be really hard for us to get real estate control when all the other major brands already own it if I was an independent operator, right? So then I would need to go out and like buy a parcel and probably develop a property and probably spend $2 to $3 million to build out something that's risky, right? So like, You know, real estate controls, it's already controlled, so like, you're in there, right? And that's, and that's for us. If I was like a subway franchisee and I could go into any 1200 square feet in any strip mall that made sense, right? It's a little bit different. Um. But uh for, for me, like, and I wanna focus on operations, like for the marketing, like I have an opinion of marketing, I have, I have things, but like, I don't wanna deal with like all that. I wanna focus on how do we drive more sales, like, how do we, how do we increase our, our leads, how do we increase our conversion rate, how do we increase our process. How do we hire better people? How do we retain them? How do we create culture, right? Like all the things are running the business. That's what I enjoy. And so when you're in a franchise, it's like 90% of your job and like the 10% is, is the marketing, right, because someone, there's a whole another team. That's all they do. They create. I was just curious, does, does the individual stores spend on marketing, or does that come from the market development funds from Midas corporate? Well, so it's, there's two parts we pay the, you know, the 10% half goes in. So you could say 5% goes to marketing, that you get a direct benefit. The other 5% goes to the support system, which you get some benefit from. Uh, we do put up an additional, I think it's 1.25% of our sales. We get some match on that from Midas, some, some like they, they match 30% of whatever we put in, and then I control 100% of that budget. And so I've got. You know, whatever it is, 40,000 to $500,000 a year in this budget that I then can choose how we spend it, and for me it's direct mail. Uh, we direct mail works best for, uh Midas versus SEO or yeah, so Midas spends a lot of their, they spend a lot of their money on SEO and all that. So they're already covering that base, so I view it as, you know, 80% or 85% of our customers come from the, the zip code that we live in and like one more. So it's very local to a store. So like I can have locations 10 minutes apart and they don't cannibalize each other at all because it's, it's extremely local. Um, you have to use their marketing approved pieces, uh, yeah, their pieces, but I, I found actually I found the, the suppliers in every door direct mail route, so it's mail, mail route based. But then there's all this data that I can do to see, you know, who do we mail, this is like the custom, the custom stuff, who do we mail to, you know, how much we spend, and then I can pull our point of sale data to see what customers came in, and then I can match the addresses, and then I know like how many customers came in, what my ROI was, how many of them were new, how many of them are returning, and I can then determine, all right, we're getting a 10 to 1 or 15 to 1 or 20 to 1 on the, on the spend. You know, specifically to the route, um, that it was mailed to, yeah, did you say 15 to 1 to $20 to 1, some of them, yeah, some of the route I can do it. I can do it based on each route because I, I know the route. I know the addresses, I know all that stuff, right? I can, how many do you usually usually send out at a time? 5, 5000 dollars a month, like and it costs $1500 and it can generate, let's say 100 to 1, so it can generate $15,000 in sales, uh, from that, right? So, um. But anyway, so some of that is like also what's You know, helped some of our growth is, you know, we have this data behind us, we figure this stuff out, and then we go, you know, we go heavier on it. So while other guys are spreading all their money around all these different places, I'm like all in on this thing because I know that it, I know that it works for me at least. Yeah, 15 to 1 return. Keep doing it. Yeah, that's right. Yeah. Can you keep doing it or can you only do it once a month? Uh, I can do it as often as I want. We actually do it, this company that does it, they do it, we send out weekly, so we'll do 5000 mailers and then they get mailed out like 1200 a week. Um, and so then that's how they, so you can then spread, spread it out versus like we used to do drops, like, uh, you know, 10 a year or whatever, but then it would, um, we'd have this huge boost in business, but then it would be like tail off and it was like a drug, like when's the next drop coming? And then uh we drop and then boom, we hit it, and then, um, so, but now, but then, but then there's also lost opportunity too, cause like if all these people are calling the stores can only do so much versus now this like, uh, you know, this trickle out seems to be uh easier on that, so. Yeah, I got it. You can only take so many customers, you can't do a rush. What, what do you do, you know, let's say a Midas is here in Tucson and it was a high demographic concentrated area for, you know, 1015 years, but the population moved out. I mean, how do you analyze a business? Mm, it's a good question. Uh, so mine, I mean, I, so I, I, uh, you know. Mine are, I have drastically different locations. I have locations in the city where people get shot like on a regular basis. I've, I have a store paying extra for hazardous duty. No, they, they, uh, no, uh, and the store does really well too. It's one of the best stores like these people like, you know, and low income areas have cars that they don't get new cars. They have used cars and they get them fixed, uh, because they have to, right, uh. And so some of our lower, you know, you know, income demographic areas do, do pretty well. We have a location, I have a location by Villanova, which, you know, if you listen to a basketball fan, you know, like it's a super high income area. We're around the corner from a Maserati dealership and like, uh, but even that we get, we get some new cars, right, but then we get the like daughter's car and the like, you know, uh, the other ones. But even that traffic's lower, like we don't see as many cars, but generally we, you know, the average is probably a little bit higher cause they're, you know, more expensive cars and more expensive repairs. Um, what's the, what's the cost like to do, do brakes in that high crime rate and the same profile, uh, it's the same, it's the same markup. It's just a question of the parts. Like you drive a Volvo, everything just costs more than if you drive a Honda, and so a lot, a lot of it is just, you know, our, our pricing is a, is, is a cost markup basis. And so, uh, a lot of times it's just they cost more, so we mark them up more. Yeah, well, what's, is there any, are you seeing any trends happening with Uh, fixing, you know, electric cars, Tesla, any changes there, uh, not currently. I mean, I, I think that we are like, a, the media makes you think, is that a fear down the road, um, especially when, uh, Biden just signed a bill for $369 billion to Subsidize electric cars. Yeah, so I've heard, you know, I, I read a lot about this. First of all, that there's a lot of like criticism on that, that it made it too easy to get the credit and that these, these, uh, a lot of cars that were still gas powered or, you know, slightly hybrid, like they have a bigger battery, um, we're able to get that credit, and it's not like full electric, um, like the, the purest one. Um, the, the bigger issue, there's a couple of big issues. Number one is like the US doesn't have the infrastructure to support more than a certain percentage of cars being electric, like the grid can't support it. I, I think I've read it's up to 10% or something like that of, of, of cars could be electric and the, and the, the grid. You wanna watch a state go into a suicide is California if everybody goes to electric and there's no power to support it. Yeah, there's no power or Texas. You get these rolling blackouts right last summer because an electric costs going crazy and so then you can't charge your car and then you can't go to work because you can't charge your car or you can't afford to, right? Like, uh, and so what happened, what needs to happen is they need, they need to, they need to increase the, the, you know, uh, the capacity of the grid. And the only, the most efficient way they can do that is through nuclear and, and, and so then they need, uh, the small, yeah, the micronuclear things, they need like 50 of them or something to get to like, you know, it's like 1 in every state or more. And so then you talk about the years that it would take to develop these things, all the people in the communities who aren't gonna want this. I'm not gonna be on the planet. Right, so all the, all these infrastructure changes to make it actual impactful, you know, yeah, the, the Biden bill is great, and like, yeah, they're all gonna make all these new cars and but they're only gonna sell like 100 of them, you know, a year, like the Ford Lightning is like 100 of them or whatever it is, and maybe it's more than that, but, uh, the bigger problem is this infrastructure, and then it gets to like do, I don't know, I, I mean, in the city, right? We're in the city of Philadelphia, like everyone parks in the street and the side streets and stuff, like, where the hell are they gonna charge their cars? Like, Are they gonna install chargers to telephone poles that people are gonna like break and try to steal and like are they gonna put them in at Target or Walmart and then you gotta like go to Walmart to like charge your car like I don't, I don't, I don't buy that. So anyway, as long as like that's, I don't, I'm a bear on that. But then in terms of our business, listen, they, they, you know, 60% of our business is the wheel well, so brakes, tires, steering, suspension, which every electric car has all those things. Uh, if anything, they're probably gonna have more issues cause they're gonna have a million different sensors. All those sensors are gonna need to get reset. They gotta get recalibrated, even in today's car, you've got, you know, lane departure warning, you've got like, you know, the variable speed control, you've got the backup cameras, right? There's like, there's all these sensors and LDAR and, and all this shit. And so those need to get recalibrated if you get, you know, something replaced, if you're in an accident. And so we, you know, we've got these demos of this, this equipment that's needed. Some of it's inexpensive. It's like a, you know, $1000 thing. Other, other machinery, it's like $500,000 for us to buy the equipment to, to recalibrate these things. And then we get to train our guy. 50,000 dollars around 30 stores, yes, right, yeah. And so, and so, but, but then think to the customer, you know, it's gonna be $500 to reset this sensor, and it's gonna take us like an hour to do it with this guy who's like extremely trained on this machine, right? And so, but, but that's what it's gonna be like, otherwise, you know, you're like steering wheel, like lane departure thing is not gonna work, and then it's a liability for us too, and it's obviously a danger to the customer. And so I think what's gonna happen is there's gonna be this trend, these cars get more technical, they're gonna need higher cost equipment for us to repair it. Labor rates are gonna go up. I mean, we're gonna pay our technicians even, you know, a lot more money. And, you know, there's gonna be plenty of guys who don't want to invest, and so they're gonna shut down, and there's gonna be further consolidation of the bigger players, you know, the bigger brands and the bigger operators within the brands, uh, is, is what's gonna happen. And for us, it actually might become more profitable because, you know, me, you know, if I charge you $500 to recalibrate your thing. Uh, I have no cost of, I have no cost of goods into that, and I, it's just the cost of the labor to the tech, and you're obviously $20 an hour and you're boom, uh, he's gonna be paid way, way more than that, but yes, he'd probably $40 or $50 an hour, but yes, uh, at that point, so yep. Something like that. So, uh, and, and then you hear stories of these batteries being replaced and like, you know, there's a thing on Twitter the other day. It was, you know, $34,000 to replace a battery in a, a Chevy Vault. The sources, the, uh, rare minerals come from people that we're not friends with, yep, yep, in China and stuff, and then. And then, uh, but then there's these guys who can replace, uh, cells in batteries, so they can diagnose like what, what part of the battery is bad, and there's like these individual cells, and they're able to like fix the, the existing battery at a, you know, fraction of the cost of replacing new. And so, there's all these like new services, and I don't, my guys don't know how to do that or anything, but There's these new services that I think, you know, we'll adapt and learn and, you know, we'll figure it out and, you know, I'm not evolution. I got a question, uh, and I don't have a lot of time yet, so I wanna ask you about what's the hardest thing to, uh, assimilate a new, uh, Midas? Is it the culture differences or and where do you bring the culture in if there's, you know, there, it's not friendly? What happens? So if I buy a new location. And yeah there's a kind of a uh let's say unfriendly culture to to what your culture is because you bring your culture and they had a culture with the previous owner yep, so we um You know, listen, we give everybody a chance to, to get on board, you know, we, this is what we're gonna do, you're gonna get on Slack, you know, this is like you're gonna follow this process, right? And a lot of us, and we didn't talk about this at all, but it's like we're big into consumer financing, right? So auto repair is expensive. We have a number of programs that we can help people from good credit to no credit, get, you know, pay us nothing today and get anywhere from 3 months to 6 months to 12 months of interest repayments, right? So, Uh, a credit card, uh, you know, in for good people with good credit, and there's like a no credit needed program, uh, for people with bad credit, and so we're really good at those, we're one of the best in the country at it, and so we, we, but you gotta train it, right? Guys have to understand this is how these programs work, this is how they help the customers, this is how they help us, and, um. So we train that, we train how to answer the phones the way we train the process and at the end of the day, we'll, we'll give them all the training and then, hey, you know, we can tell pretty quickly, like, are they on board? Are they excited? Is this fun? or are they like, oh, this is bullshit, why am I doing this? Like, uh, blah blah blah blah blah. And at that point, I mean, we, you know, we can identify pretty quickly, you know, with 30 locations, we have assistant managers in a lot of stores and we want to promote from within. So then we would just, you know, have somebody in the wings waiting, getting trained, and Uh, you know, we would make that move if, uh, we felt it was right. Oh, everybody's, do you get a lot of applications? Uh, it varies. I mean, we can, you know, for the manager side, you know, we could take someone who has not, who, who's like a non-automotive person, as long as they can like, they're mechanically, like, you know, brain, like they get it, uh, and we can, we can train them because for us, the manager's role is communication. So they gotta be a good communicator, they gotta be able to talk to you, they gotta be able to talk to the techs, the parts suppliers, right? They gotta like. Be a problem solver, um, but they don't fix the cars for the techs. Obviously their job is to fix the cars. They need to be very technical, experienced, have the tools, that kind of thing. Yeah. Is there a, uh, a path for a new hire to assistant manager manager to possibly owning a or running a franchise? I was thinking about how the discount tire does it, you know, they'll hire from within, yeah, yeah. So for Discount tire, yeah, they, it's a profit sharing plan. And, uh, so they manage, you know, they hire him as a tech or whatever, and they can work their way up to a store manager, and eventually they, they get paid as a percentage of the profit of the store and so they're, they're, they feel like an owner. They don't have equity, but they feel like an owner, um, and they act like it too, man. When we see when I go over there, it's just like, hey man, this guy likes working here. Yeah, that's great. Yeah, and he's probably making a lot of money too. He should, should like it, and he's got a good job, right, um. So, yeah, I mean, it's, you know, every franchisee operates differently. There are some guys that have plans that are, that are very similar to that where it's more of a profit sharing plan. Um, you know, we do it more at a high level of based off of, um, you know, more more some high-level things, cause a lot of our costs are fixed, like our You know, our rent is what it is, right? Different things are what they are, and so we can kind of back into some similar performance metrics, but, but make it at a higher level, if that makes sense. Um, but yeah, there's guys, I mean, my, there was a guy who worked for my dad who was a manager who became, became a franchisee and, you know, resigned and went and bought his own store, and, you know, my, my dad, they supported him, and, uh, there was actually 22 of them, 2 of those guys in, in there's in the Philly market too, like, um, and so. That happens, yeah, it's really up to the individual. Yeah. Have you, uh, back to that turnaround, do you like turnarounds if they're losing money, or do you swear off turnarounds, or is just too much energy? No, I've, uh, you know, we, we, we, we'll, we'll buy them, we, you know, all, all day long if we have to, and, you know, it's just a matter of, you know, it's just me putting pressure on my team that like, You know, we can't just sit there and wait for it to get better. Like it's a lot more work to, yeah, yeah, sometimes, or sometimes you just get like a good manager and a good tech, and you just paint the place and like, and that we're there every day because a lot of these stores, like the phones are ringing, like the cars are coming in and it's really up to us of are we following the same process in the same car every single day. It's consistent execution. If we can do that, it, uh, you know, I, I think every single store could do, you know. Let's say, you know, the average is like a million or 1.1 or whatever, you know, we're, we're right around there, uh, but my best stores do 2 million, right? Like every store could get to 2 million. It's, it's not, it's the same four walls, right? It's the same marketing traffic pricing traffic's a little different. Some of them are some, but But they could build it, right. Each one of them could, could build it if they, uh, if we get the right people in the right places doing the right things. And so, can you curious, can you add, uh, new products or services sell, you know, I, well, you look at some of these, uh, Starbucks franchises, you go, Oh, we just made this mocha mocha mocha with goat's milk. Uh, yeah, we've done some, uh, you can package things a little bit differently, right? Maybe we could package a group of services together, um. You know, maybe we can get into, we sell some multi-year alignments so you can buy a one-time, a one-time alignment for a certain price or a 3-year alignment, you know, for that location for a certain price, uh, and so then they pay a one-time thing and for the next 3 years they come back and it's, you know, there's no, there's no cost, um, things, things like that, um. You know, our main thing is, is more innovation around process, I'd say, like, like this financing thing like we're the best in the country at it and so we have a specific way that we offer it, that we talk about it, that we train it, um, everybody has the same product, but I got stores doing 50% of their business through these products, you know, and the system average might be 7% or something like that. So, and it's, it's a lot of it's incremental growth and so. Innovation for us is, is more around process than it is, uh, like, you know, product because we're just kind of excellent, man. That's awesome. Yeah, so, Brian, uh, I wanna thank you so much for, uh, spending time on the top M&A, uh, entrepreneurs podcast. So, uh, this is Brian Beers. He's got a podcast business with Beers. He's president of Prenlin Automotive Group where it's acquired 29 locations. Yep, almost 30. Yeah, awesome. Thank you so much for spending time with me today. Awesome. Well, thanks for having me. It's been fun. Take care. Cheers. Bye.