Acquiring MindsSeptember 13, 2022

Opening Up to Franchises to Buy a Great Business

with Doug Johns · Mr. Rooter

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LenderHawk analysis. Not affiliated with or endorsed by Acquiring Minds.

The Deal

Business

Mr. Rooter

Industry

franchise (type unspecified)

State

Multiple (EBITDA)

4.5x

Year

2021

Revenue at Purchase

$9.0M

Deal Source

bizbuysell

Financing Structure

SBA 7(a)

Buyer Equity

Seller Note

Strategic Rationale

Desire for a mature, offline, recession-resilient business with scale and a management team already in place.

Post-Acquisition Performance

Expanded geographically by opening a new branch; business does nearly $2 million in EBITDA with 50 employees.

Key Takeaways

1Overcoming initial bias against franchise businesses by systematically evaluating franchisor health, franchisee constraints, and peer network benefits can unlock larger acquisition opportunities.
2Personal face-to-face meetings with sellers significantly outweigh higher financial offers when sellers prioritize stewardship of their team and legacy over incremental proceeds.
3Larger acquired businesses provide structural advantages through existing management layers and systems, allowing owner focus on strategic growth levers rather than operational execution.

Matched SBA Loan Records

SBA loan filings we matched to this deal

United Midwest Savings Bank National Association85%

$350KP + 2.75%FY2025

Bank Five Nine85%

$295KP + 2.75%FY2012

United Midwest Savings Bank National Association85%

$350KP + 2.75%FY2025

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The Deal

Business

Mr. Rooter

Industry

franchise (type unspecified)

State

Multiple (EBITDA)

4.5x

Year

2021

Revenue at Purchase

$9.0M

Deal Source

bizbuysell

Financing Structure

SBA 7(a)

Buyer Equity

Seller Note

Strategic Rationale

Desire for a mature, offline, recession-resilient business with scale and a management team already in place.

Post-Acquisition Performance

Expanded geographically by opening a new branch; business does nearly $2 million in EBITDA with 50 employees.

Key Takeaways

1Overcoming initial bias against franchise businesses by systematically evaluating franchisor health, franchisee constraints, and peer network benefits can unlock larger acquisition opportunities.

2Personal face-to-face meetings with sellers significantly outweigh higher financial offers when sellers prioritize stewardship of their team and legacy over incremental proceeds.

3Larger acquired businesses provide structural advantages through existing management layers and systems, allowing owner focus on strategic growth levers rather than operational execution.