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Zx2guy19

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You literally hit every question I was going to ask.

 

1. You seem successful now, Why not keep your current situation until you make "fuck you" money?

2. I can't imagine a daycare NOT having insane margins. My GF is a preschool teacher in a well known daycare. Knowing what the licensed teachers (not just aides) make and what the daycare charges, add to that what kind of overhead are they looking at, the profit margins have be good.

3. While you seem intelligent in several areas, you're going to have to hire a really talented admin for your daycare who knows that specific business model through and through. A back round in HR will help a lot with your employee interaction but anything past that?

 

Personally I consider franchise owners as self-employed. Maybe not entrepreneurs but small business owners. You still took as much financial risk as anyone else who started from the ground up without a franchise license.

 

Is the apartment complex a build out or would you be purchasing a preexisting complex that's just for sale?

 

I don't stay doing what I'm doing because I'm borderline miserable. And making the move to what I really want to do only gets harder as I get older and have kids.

 

The daycare's approximately net income is 250k a year. You are REQUIRED to hire a director to run the day to day. It's not even an option.

 

I'd be buying an existing complex- I have no desire (or funds, knowledge, etc.) to build new.

 

It's not important how/what (regarding if a franchise owner is a true business owner).

 

The side of the meter you want is the feeling of "Oh shit, I need to make it happen as I am the decider of my own destiny" where your stomach lump stays large until your bank account starts to get large.

 

If you are taking RISKS to try and MAKE ALOT OF MONEY then you are doing the right thing.

 

This will sound dumb...but I don't need to make a ton of money. I'd be happy making the EXACT money I do now without having to work a corporate job. That's tough though.

 

IMO owning a franchise is the WORST of both worlds.

 

 

The only people I know who "happily" own franchises, own portfolios full of them. They are mega rich and each one is merely an investment. None of the individual franchises make them "loads" of money, but they also don't require 24/7 oversight or intervention and they still outpace normal market returns.

 

Franchises still have a lot of the corporate problems that most entrepreneurs are trying to escape.

 

Do the math on how much the franchise will cost you over the next 30 years.

 

In that "cost" you should include:

- up front franchise fee

- annual franchise fees

- additional franchise fees assessed on gross receipts

- additional costs incurred from having to source X supplies or advertising from franchise instead of on the open market.

 

Once you have that total (in the millions) ask yourself if whatever they are bringing to the table (name recognition, discounts on supplies, etc) justifies the heavy price tag.

 

This isn't a huge franchise. 13 in Cincinnati, 3 in Columbus. What they bring to the table is the support of opening...at the end of the day, day cares are extremely tough to open because of all the licenses, etc. They help coordinate and maintain all of those. Could I do it myself? Sure, probably. But it takes a lot of the questions out and I'm not an expert on day cares...they are.

 

I am going to get more information on Friday, but please, keep the questions coming so I'm fully prepared to ask.

 

Brad, I appraise commercial real estate. If you have specific questions on apartments etc I may be able to help. I may have missed it but somewhere you said small property. Assuming you are not doing new, the MF market is very strong. Demand and absorption has started to slow but that's not surprising considering the thousands of new units saturating the market.

 

Even if you take the plunge on the apts, you may not have to quit your job. (I know you want to.) But you may still have time for a life outside. Management companies charge somewhere in the 3% to 6% range and they get to to the dirty work like repairs, background checks etc.

 

On the daycare side it all depends on the lease. Who (rhetorical) is the franchisee? How much expierience do they have? What is tenant vs LL responsible for? Term? Etc. Cap rates or GRM's can be all over the place. But once again, on a net lease and new building, there shouldn't be a lot of day to day issues once it's up and running. Good luck. Let me know if I can help.

 

I really appreciate that!

 

I don't want to share the franchisee just yet because I don't have a ton of knowledge. This whole thing could be a big cluster fuck Friday and I'll walk. They have been in business over 20 years with 15 locations in Ohio (just coming into Columbus). I am going to get all the other info shortly, but to your point, there shouldn't a ton of issues from the start since it's all a new build.

 

WTF? Do you have any experience in a Daycare business? And how/why would it be so expensive? You could start up like 40 Subways for that LOL

 

I had 5 rentals at one time. I am down to one double. Cash out while the market is high, I think we are about at peak for home values, but if the cash flow is better than 35-40% market cap, just sit back and count money.

 

My recommendation, if you are not liquid with a minimum of 3 years reserved+your investment, just try a non-cor HR job unless you are willing to file BK if it goes belly-up.

 

My company for example is largish (2500+ employees, nation wide branches), but not at all cooperate. We have a "corporate headquarters" but the HR is a joke. Im shocked they get paid to do what they do to work as little as they do. You may love the change of pace coming from a rigid corp job.

 

Good luck in what you chose.

 

JP- the reason it's so expensive is because I own the building. I could buy an existing daycare in Columbus right now for 800k, but I'll lease the building until the end of time. The goal of owning the land and building is that I'll (in theory) have a huge appreciation of the building and land. Especially with the two sites they have identified. That alone is probably $1M of the $2M-3M dollar deal. And to clarify, it's not necessarily a daycare, it's a "learning center", that has computers, etc. They deal with kids all the way up to 12 years old.

 

For the record, I started my career at a "small" company (1k associates). I DID enjoy that more, but I'm losing my passion for HR, not just working for a corporate company. I do think I'd be happier in a sales type role (account manager, etc.) but don't want to make a move, and then a move, and then a move. I want to minimize impact.

 

I know nothing about day cares...that's why I want to go to franchise. They have the knowledge.

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I must have misunderstood (or saw something shiny). I thought you were talking about developing a building and leasing to a franchise. I was thinking more of the investment property with an income stream from the rent, not a business you would be operating.

 

And Clay... I'm not dick sucking. Just trying to be nice 😀

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I know nothing about day cares...that's why I want to go to franchise. They have the knowledge.

 

 

This is my problem with the idea.

 

 

According to this statement, pretty much the only thing you are bringing to the table is "the money". If this particular franchise purchase was going to be as profitable as they make it out... why aren't other franchise owners chomping at the bit for this new opportunity.

 

This is my litmus test on whether to open a new business:

 

1.) Am I the first to offer this sort of business

2.) Can I do this business better than anyone else (ie. smarter, harder working)

3.) Do I have more money than anyone else in this business which allows me to do things my competitors can't

 

If I can't answer yes to one of those three,... I just can't see the point.

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WTF? Do you have any experience in a Daycare business? And how/why would it be so expensive? You could start up like 40 Subways for that LOL

 

 

I had 5 rentals at one time. I am down to one double. Cash out while the market is high, I think we are about at peak for home values, but if the cash flow is better than 35-40% market cap, just sit back and count money.

 

My recommendation, if you are not liquid with a minimum of 3 years reserved+your investment, just try a non-cor HR job unless you are willing to file BK if it goes belly-up.

 

My company for example is largish (2500+ employees, nation wide branches), but not at all cooperate. We have a "corporate headquarters" but the HR is a joke. Im shocked they get paid to do what they do to work as little as they do. You may love the change of pace coming from a rigid corp job.

 

Good luck in what you chose.

 

 

 

Subways stink. You need to own a bunch to see any real return, and it will become a 24/7 JOB.

 

Franchises stink. I know someone who owns a few daycare franchises, it's far from rainbows and unicorns. Is there any exact reason you feel the need to dip into that pond? Unless you really know the business, you're setting yourself up for failure.

 

Tossing money at something doesn't always make it work.

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This will sound dumb...but I don't need to make a ton of money. I'd be happy making the EXACT money I do now without having to work a corporate job. That's tough though.

 

I don't believe "need" plays a part in the desire to have more.

 

If you don't "want" more... then just keep on keepin on.

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Subways stink. You need to own a bunch to see any real return, and it will become a 24/7 JOB.

 

Franchises stink. I know someone who owns a few daycare franchises, it's far from rainbows and unicorns. Is there any exact reason you feel the need to dip into that pond? Unless you really know the business, you're setting yourself up for failure.

 

Tossing money at something doesn't always make it work.

 

I agree. Just using it as one of 4697346 examples of a better way he may be able to spend 3 mil.

 

 

I know nothing about day cares...that's why I want to go to franchise. They have the knowledge.

 

Man, I dont know if your JUST looking at return, but IMO this is a recipe for disaster.

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The only daycare franchise you should consider is Primrose. May be who you're considering because they require a completely new build for every site. When we looked around they were heads above anyone else. We didn't go with them because of location and availability but they still stood out.

 

I will say that while they make good money it seems like hell to run. We've had our kids in 2 different daycares that were both good (moved houses is why we moved daycares) and each one had a revolving door of associates. Because you pay people fairly low for their education level it's easy for them to go elsewhere for a slight raise. There also always seems to be some drama with the staff

 

Take that all with a grain of salt as I'm merely a consumer of the industry and a corporate drone myself.

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The only daycare franchise you should consider is Primrose. May be who you're considering because they require a completely new build for every site. When we looked around they were heads above anyone else. We didn't go with them because of location and availability but they still stood out.

 

I will say that while they make good money it seems like hell to run. We've had our kids in 2 different daycares that were both good (moved houses is why we moved daycares) and each one had a revolving door of associates. Because you pay people fairly low for their education level it's easy for them to go elsewhere for a slight raise. There also always seems to be some drama with the staff

 

Take that all with a grain of salt as I'm merely a consumer of the industry and a corporate drone myself.

Interested to hear your reasoning here? We looked at 7 in the area, came down to Primrose and Goddard, literally next door to each other. We chose Goddard due to curriculum structure and emphasis. Both were within $20/month of each other.

Also, there's already a Primrose in Westerville, I believe.

Which one is it OP??

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There's s a Goddard in new Albany already and one in Westerville. New Albany one is by giant eagle and Westerville one is on Sunbury and county line.

I know it can't be Goddard, OP said there are only two of his franchise in Columbus.

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Interested to hear your reasoning here? We looked at 7 in the area, came down to Primrose and Goddard, literally next door to each other. We chose Goddard due to curriculum structure and emphasis. Both were within $20/month of each other.

Also, there's already a Primrose in Westerville, I believe.

Which one is it OP??

 

Based on our site visits, curriculum, discussions with the potential teachers, their tenure at the facility, and 3 different referrals from parents with children there.

 

Not saying all others are complete crap (some are), but Primrose stood out.

 

Back more on topic, I agree with others that now is a good time in your life to make the move to your own business if you want to. I'd still be concerned about the daycare business if you don't have any experience there. You seem to know about rentals and real estate so it seems more natural to move there.

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My only thought... If the franchise learning center is such a slam dunk why aren't any of the other 15 franchisees racing you to open these 2 new ones? Just something to consider.

 

All 3 in Columbus are through existing Cinci franchisees, and there are only 9 people total. So a third of them are.

 

Franchises stink. I know someone who owns a few daycare franchises, it's far from rainbows and unicorns. Is there any exact reason you feel the need to dip into that pond? Unless you really know the business, you're setting yourself up for failure.

 

Tossing money at something doesn't always make it work.

 

I agree- I certainly haven't written a check just because I like the numbers. I'll make sure I look at this as a whole, from all angles. There's a reason we're meeting Friday.

 

Any chance you could connect me with the person who owns a few?

 

I don't believe "need" plays a part in the desire to have more.

 

If you don't "want" more... then just keep on keepin on.

 

I don't need more...sometimes I don't even want more. I want different. It's that simple. What I make now gives me a great life. But half of how I'm getting it isn't satisfying.

 

I know it can't be Goddard, OP said there are only two of his franchise in Columbus.

 

It is not Goddard. It is All About Kids.

 

Back more on topic, I agree with others that now is a good time in your life to make the move to your own business if you want to. I'd still be concerned about the daycare business if you don't have any experience there. You seem to know about rentals and real estate so it seems more natural to move there.

 

It's still a possibility. I met with an apartment broker last night for dinner and will be exploring my options.

 

 

 

There are other daycare's for sale in Columbus...one that has my interest is 800k, but you don't own the building. It is NOT a franchise...what is everyone's thought on that?

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And to address the lack of experience:

 

1) I am REQUIRED to hire a director to run the day to day operations

 

2) I understand how to run a business. Is it different? ABSOLUTELY. I'm not dumb enough to think that probably even 50% of what I know will translate

 

3) Businesses usually fail for 2 reasons:

1- the product or service they're offering isn't needed (think TV repair)

2- mismanagement of either money or people.

I believe I am able to overcome those- the service is needed, I'll have a line of credit if needed, and I am able to manage people.

 

4) The franchise has a vested interest in my success. The more I make, the more they make. I don't want to depend on them, but I'm sure when I have a question, I can make a few calls.

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FWIW, I'm the director of finance for our church Childrens Center, one of the few 5-star rated NAEYC facilities in NW Columbus...and it's tough to stay compliant with Step Up 2 Quality and still make money over paying wonderful staff to support daily activities.

 

We also have pricing for every grade covered, with ghost-shopped numbers from surrounding facilities. It's a good business but thin on margin.

 

I'm not down on entrepreneurs or franchising, but you seriously need to know good educators that would work FOR YOU. This isn't fast food or an oil-change place: the curriculum and teachers make the facility, and State of Ohio checks yo sheeeeeeit...

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And to address the lack of experience:

 

1) I am REQUIRED to hire a director to run the day to day operations

 

2) I understand how to run a business. Is it different? ABSOLUTELY. I'm not dumb enough to think that probably even 50% of what I know will translate

 

3) Businesses usually fail for 2 reasons:

1- the product or service they're offering isn't needed (think TV repair)

2- mismanagement of either money or people.

I believe I am able to overcome those- the service is needed, I'll have a line of credit if needed, and I am able to manage people.

 

4) The franchise has a vested interest in my success. The more I make, the more they make. I don't want to depend on them, but I'm sure when I have a question, I can make a few calls.

 

You should stick to a business you know the ins and outs of for the time being and diversify later on down the road when you have the money that needs diversified.

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You should stick to a business you know the ins and outs of for the time being and diversify later on down the road when you have the money that needs diversified.

 

Thanks man, I do appreciate the suggestion.

 

To quote Mark Cuban

 

" if the only thing you bring to the table is money, chances are you are the sucker sitting at the table "

 

There are a lot of idiots who think with money they can do whatever they want...I'm being realistic and taking the lack of knowledge in consideration for my decision.

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  • 2 weeks later...

Thanks for following up.

 

The meeting went well, but I decided it wasn't the right move for me. So a day later I went and got a commercial loan for 150k to buy more rentals. Currently in the process of buying 4 more, then will repeat. I've decided I'm all in on real estate.

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Thanks for following up.

 

The meeting went well, but I decided it wasn't the right move for me. So a day later I went and got a commercial loan for 150k to buy more rentals. Currently in the process of buying 4 more, then will repeat. I've decided I'm all in on real estate.

 

Much smarter play.

 

Goodluck mang

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Until the next presidential administration decides that real-estate tax loopholes are un-American, you can't go wrong with R/E. (and I mean that half-jokingly, because neither Dem nor GOP would touch interest deductions or R/E expense write-offs).

 

Stay strong financially - as best as you can - and other opportunities will come up.

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This is my problem with the idea.

 

 

According to this statement, pretty much the only thing you are bringing to the table is "the money". If this particular franchise purchase was going to be as profitable as they make it out... why aren't other franchise owners chomping at the bit for this new opportunity.

 

This is my litmus test on whether to open a new business:

 

1.) Am I the first to offer this sort of business

2.) Can I do this business better than anyone else (ie. smarter, harder working)

3.) Do I have more money than anyone else in this business which allows me to do things my competitors can't

 

If I can't answer yes to one of those three,... I just can't see the point.

 

 

I agree. My neighbor bought in and started a franchised daycare, it didn't pan out too well aka Goddard School. They sold it after two years of frustration.

 

My opinon would be to continue in real estate, but work toward commercial. I own a commercial property which started out as a house(dump) that I rebuilt and updated to commercial in s small village. I have three good tenants, one of they is my wife who is an attorney. My next real estate adventure will be purchasing a house or duplex at OSU.

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