Chance to buy a restaurant franchise(Zero Degree). Yay or Nay.

[Metalcat]

You need a marriage counsellor, not the advice of strangers on the internet about a potential business venture.

This is 110% a relationship/communication issue.

[Sibley]

Your wife hates her current job. Tell her to put in her 2 weeks notice on Monday. Takes care of that problem, well after the 2 weeks notice period at least.

Otherwise, agreed with Frankies Girl.

[Villanelle]

I was thinking "Hell No" until this part:

I was in the McDonalds business for yrs and GM for >5 yrs so I know how to run a quick service restaurant. Like I was saying, I'm 50/50. I have never had a small business before. My wife have had many small businesses but only in her native country which is why she loves the idea.

After that part I was thining "Okay, but why?" It seems like you'll be devoting a lot of hours to something that will probably have fairly small returns relative to your overall net worth.

Agreed 100%.
Mostly for my wife's sake. She wants to quit her job and this is what she dreams of. Running a small business.

What is it that excites your wife about the potential to run THIS small business? If she's started small businesses before, what is stopping her from doing so again now on her own? And what killed her past businesses? Just the relocation of moving to a new country, or something else that might impact the chances of a new business' success? For the money you'd be paying your friend for this franchise, it sounds like she could try starting 50 projects of her own and seeing what sticks.

Others mention that your own experience in the food industry may be a plus, but it seems like only your wife is super excited about this franchise idea. You say you might even take your old job back, leaving only your wife to manage it. Therefore I don't really think your experience should be a deciding factor. If this is your wife's dream, would she be prepared to handle this operation on her own? If the only way she is willing to be a small business owner is by purchasing a business from someone else, that to me is a red flag that her heart may not be 100% in this dream.

This is much easier to get into than starting one on her own.
We would just need to take over. Employees already in place. She has she has $10k worth of inventory so we just need to jump in and streamline it in any capacity that we can.
Operation is super simple. This is like a 1 compare to running a McDonalds if it was a 10.
She only quit her business because I married her and she came to the US with me. She told me last night this was "her childhood dream" to have a business in America. How can I argue that ?? LOL

First, you can argue whether this is the right business for her.  Again, I think that requires digging in to what it is about owning and running a business appeals to her.  She's reacting emotionally.  But is what she really wants is to be able to problem solve and adapt to be profitable, for example, then it doesn't seem like a franchise is right for her.  She's got stars in her eyes: "I want a business, and here's one for sale!" so you can talk with her about what it is, specifically, she wants and make sure this covers that.  For starters.

Also, since it seems like both of you are willing to buy a business without regard for making sure it is truly profitable, I think you would be very, very wise to set specific metrics and reactions.  If it isn't at least breaking even in 6 months, you sell, even if for a loss.  If it isn't making at leas $x by 12 or 18 months, you sell.  If it isn't making at least $Y by 24 months, you sell, and if it ever loses more than $z in any 6 month period, you sell.  Something like that.  Because given how emotional it sounds like she's being about buying a business, it stands to reason she'd be even more emotional about a decision to sell, so having a specific agreement in place before hand, and making sure she's really imagined those scenarios and thinks she is prepared to follow through, seems key.  Otherwise, if you can't "say no to her dream" now, how much harder is it going to be when she's invested in that dream but it is hemorrhaging cash?

You can buy a "good husband" and still not sign off on this idea.  You can support her owning a business but believe that this specific business is not the right one.  To determine that, you need to really look at the actual numbers, not photos of a line out the door for a few days, and you need to determine what *specifically* it is about owning a business that your wife wants. 

In your shoes, I'd tell my spouse that if he really wants to own a business, I could get on board.  But he would need to be willing to put in the effort to find a truly profitable business (which means searching and then digging into books, and also doing research he he didn't know how to assess a business) and to understand the hours and tasks that would be required of him.  If he was unable to do that, then he doesn't have the knowledge to run a business.  And if he was unwilling to do that, then clearly he doesn't want it very much. 

[Frankies Girl]

And I also suspect some of the wife's reluctance to quit without having something else lined up stems from her feelings of self worth and how she defines/sees herself. She may feel quitting is wiping away her identity. She'll be unemployed/stay at home wife and maybe that has bad connotations for her. She wants to quit TO something - and not just "lets travel for a few years" -she needs something that makes her feel good/strong about herself, and she's latched onto "owner of restaurant" as having enough prestige maybe to do this.

So one of the other things to ponder/work on: she needs to figure out that she is of great value no matter what title/position she holds. The fact that the marriage has had some rocky points means she may be unsure about taking strength from that (and her husband) and doesn't want to feel like a failure or trapped into no job.

People and emotional stuff are so so fraught. It's easy to armchair diagnose, but I guess there is something to be said for being out of a situation sometimes. Mostly just hope OP and his wife can work things out so they're both happy and my personal opinion is that this restaurant venture is not the right path, but may be a catalyst to dig down deeper into what they both want. 


And "arguing" with a childhood dream: when I was a child I wanted to be a magical fairy briefly, and my sibling wanted to be a wild west native american indian. Neither is a good star to set your sights on going forward. I do not discount the dreams of children, but there is no way a child's dream was "owning a business" that is going to cause them excess work, mess, frustration and lose money. Children don't dream about the actual details and just glom onto things that translate as they age and grow. What you parse from the kid brain dream is that she wanted to be independent, in control of her life, and well respected. So work on that part.

[former player]

And I also suspect some of the wife's reluctance to quit without having something else lined up stems from her feelings of self worth and how she defines/sees herself. She may feel quitting is wiping away her identity. She'll be unemployed/stay at home wife and maybe that has bad connotations for her. She wants to quit TO something - and not just "lets travel for a few years" -she needs something that makes her feel good/strong about herself, and she's latched onto "owner of restaurant" as having enough prestige maybe to do this.

So one of the other things to ponder/work on: she needs to figure out that she is of great value no matter what title/position she holds. The fact that the marriage has had some rocky points means she may be unsure about taking strength from that (and her husband) and doesn't want to feel like a failure or trapped into no job.

People and emotional stuff are so so fraught. It's easy to armchair diagnose, but I guess there is something to be said for being out of a situation sometimes. Mostly just hope OP and his wife can work things out so they're both happy and my personal opinion is that this restaurant venture is not the right path, but may be a catalyst to dig down deeper into what they both want. 


And "arguing" with a childhood dream: when I was a child I wanted to be a magical fairy briefly, and my sibling wanted to be a wild west native american indian. Neither is a good star to set your sights on going forward. I do not discount the dreams of children, but there is no way a child's dream was "owning a business" that is going to cause them excess work, mess, frustration and lose money. Children don't dream about the actual details and just glom onto things that translate as they age and grow. What you parse from the kid brain dream is that she wanted to be independent, in control of her life, and well respected. So work on that part.

I wonder whether there is also something about her admiring the woman who is selling and wanting to be/emulate her?  That might partly explain why she is keen to jump on this particular opportunity rather than take a more considered approach to what business might be best for her and either more financially rewarding or less financially risky.

[trygeek]

Yays you have the experience you can do the job I have no doubt about that. I would probably hire you to do the job.


Nays: Do you really want to buy a job. My thought on buying a franchinse have always been only buy one if I don't have to work there otherwise I'm only buying a job. see above you can answer this question better than me are you just buying a job?

Now that I think of it there must be a few laid off McD or some other franchise store managers looking for jobs right now that you could hire to do day to day?

[Jack0Life]

You need a marriage counsellor, not the advice of strangers on the internet about a potential business venture.

This is 110% a relationship/communication issue.

Why would you say that ?? It's an absurd answer.
I have stated many times over that I'm asking from a financial point of view.
Giving consideration to your spouse in a business idea that do have a good chance in succeeding yet you came to a conclusion that "This is 110% a relationship/communication issue"

[Jack0Life]

Yays you have the experience you can do the job I have no doubt about that. I would probably hire you to do the job.


Nays: Do you really want to buy a job. My thought on buying a franchinse have always been only buy one if I don't have to work there otherwise I'm only buying a job. see above you can answer this question better than me are you just buying a job?

Now that I think of it there must be a few laid off McD or some other franchise store managers looking for jobs right now that you could hire to do day to day?

I'm not worried about finding another job. I'm pretty sure I'll get recalled to my old job before the end of the year. It's not the issue.
My buddy has close to 30 McDonald's which was why I was in that business in the first place so if I ever want to get back into that business I easily can.

[Metalcat]

You need a marriage counsellor, not the advice of strangers on the internet about a potential business venture.

This is 110% a relationship/communication issue.

Why would you say that ?? It's an absurd answer.
I have stated many times over that I'm asking from a financial point of view.
Giving consideration to your spouse in a business idea that do have a good chance in succeeding yet you came to a conclusion that "This is 110% a relationship/communication issue"

Dude, it's not an insult. It's a fact.

You don't really want to do this, your wife does.
You already know the numbers, and you know the business better than probably anyone here who is answering.

It's not really a question of whether or not it's a decent business investment. It might be, it might not be, Covid makes everything unpredictable.

The question is whether or not this is the right move for your marriage. That's why it's a marriage/communication issue.

Again, it's not an insult, this is a marriage issue. You wouldn't be contemplating buying this business otherwise. When I say that you need a marriage counsellor, that's also not an insult. I firmly recommend counselling for couples tackling decisions where preferences are oppositional.

[YttriumNitrate]

Restaurants are where nest eggs go to die. There are dozens of horror stories you can read in papers or online. Friend isn't selling at a nearly 200k loss out if the goodness of her heart. Unless you have personal experience running a restaurant, run away screaming. If you have extensive personal experience managing a restaurant, approach with extreme caution.

NAY.  Especially during COVID.

For what it's worth, I'm guessing that 2022 and the second half of 2021 are going to be the best 18 months in my lifetime for many restaurants. The combination of pent up demand and decreased competition could make for some eye popping earnings.

[MustachioedPistachio]

@Jack0Life, your wife reminds me a lot of...well, me. Minus the non-native part, I too had dreams of owning and running my own business as a child. I acted on it throughout my youth: sold gum, snacks, and drinks at school; bought and installed a gumball machine at the deli I worked at part-time during high school; coke machine at the church; mulching and yard work around the neighborhood; unwise and risky side hustles during college; MLM schemes *cringe*. If it had to do with business, I was all over it.

Finally, after a degree in business and a stint in corporate, I managed to start my own, proper business. It was a hotel investment and management firm with a partner whose family had extensive exposure and experience in the industry. It was an awesome, caffeine-fueled dream-come-true. Until about a year in. Ultimately, the "grind" got the better of me, and the payback period from market and site selection to distributable cashflow was something like 33% of the entirety of my life at the time. I sold out my partnership shares, but I did not sell out on my dream.

Now, I own two quick service franchised delis with my brother. I got a full-time job after about a year from acquisition. My brother continues operating because, unfortunately, he has no better alternatives. I would sell both yesterday if it were just up to me, for the reasons that you and many posters have already listed.

I tell you my story because I realize I conflated the rewards of running a business with those of investing and earning money uncorrelated to my time and responsibility; moreover, the goalposts of what my ideal life looks like shifted drastically since adolescence and even early 20s.

From reading the thread, it seems your wife has never run a business in the US. I wholeheartedly urge you to support her in making this dream come to fruition - but not with this, or any, restaurant, especially a franchise. I go further to steer you and her away from any business that requires material upfront capital and employees until she is able to dip her toe in the water of business ownership as a sole proprietor.

If this proposition is already inciting marital friction in your mind...then see Malcat's and Frankies Girls poignant posts.

[obstinate]

Restaurants are where nest eggs go to die. There are dozens of horror stories you can read in papers or online. Friend isn't selling at a nearly 200k loss out if the goodness of her heart.

Unless you have personal experience running a restaurant, run away screaming. If you have extensive personal experience managing a restaurant, approach with extreme caution.

Totally understand why she's selling it for nearly a $200k loss.
As to your question, I was GM for Mcdonalds for >5 yrs but that was in 2005.
Whenever I make a business decision, I always relate to a worst case scenario.
Even in a pandemic year, it barely made a loss. The potential is there.
I love the products there. The food, drinks are top notch quality and very good word of mouth from people who have visited the restaurant.
I think it can make a profit this year but yeah that's with me putting a lot of effort into the restaurant.
If things return to normal(let's say 2022), I can be mostly hands-off and the store can generate $50k-$75k income for me.

Probably my biggest worry is that minimum wage will go up to $15/hr.
Florida already passed a bill to increase minimum wages but that's $1 each year until it hit $15 in 2026 but Biden is trying to make the $15 minimum right away. It this were to occur, we would take a huge hit. Labor would go up 50% instantly.

I worked the line at fast food as a teen but I don't know what the role of gm is. Do they handle the financials? Profit/loss/accounting/capital spending? You'd be on the hook for all that as an owner.

[Chris Pascale]

Regarding the Opportunity:

You have the money, and your wife wants to do it, so why not? You have the power to shut it down, or sell to get the money back, and so long as it doesn't become your identity that won't be hard. If it makes dollars, then it makes sense. If not, it doesn't.

Regarding the Work:

Are you the GM mentoring her to independently running the joint? Are you pulling 2-3 shifts a week? Lastly, you mentioned someone is running the place, but for only $24,000 a year?

Regarding Some of Your Replies:

You say you just want the financial perspective, but you'll come back with non-monetary dreams and goals when people answer with Nay-finance-type-stuff. Except for the person who said "go for it; you know what you're getting into." To him, you said thanks for looking at what I really posted.

[MoseyingAlong]

- If owner did put in $300k and netted $50k for doing almost nothing (granted at peak) that is a 16.7% passive return, that's pretty good. 

From the OP, it doesn't sound like the owner had a positive return.  The business cost 300k and she has made 50k profit in the first year of operation.  If she's selling for 130k, I think that means she'll be losing 120k total on this venture.
  Sorry, I'm comparing apples to oranges.  Tooqk4u22, yes your math is correct, but this kind of math doesn't seem appropriate for a sinking ship scenario

@Jack0Life --- where does your 120k offer come from?  Is it because its less than what the owner wants?  If she originally offered to sell at 140k, would you have thought 130k is the magic number to counteroffer?

Originally I heard rumors that they wanted to sell to family members for $100k. We joked that if nobody wants it, I'll take it.
Then she went out and got a realtor which will cost 12% to sell the business but priced it at $150k.
She then heard that we were interested and she said she has 1 week to get out of the realtor contract for $1000.
We talked to her and it was offered to us for $130k. I told my wife I would give her the green light if we can negotiate it down to $120k. I won't budge from my $120k price. There is also a $5k franchise transfer fee.

This still doesn't answer where you got $120K.
Is it a multiple of income, profit?
Just a number you don't think the current owner will go for so there's the "no" that you didn't say?

I suggest your wife do some math and figure out what she thinks is a reasonable price to pay.
This will involve her thinking thru the projected income and expenses. Since she had businesses before, that part should not be new to her.
It will also help her/you develop a robust list of questions to ask the seller and to ask for documents to back up the answers.

Maybe I've missed it but I just see WAGs. What are your numbers based on?

[FL_MM]

I love that shopping center. But its a high crime area. We won’t go there after dark. No tourists.
There are probably 4-5 other restaurants in the center and they don’t ever seem too busy. Many people may avoid it because of the neighborhood.
I’d say it’s a risky proposition. But if you do decide to do it, best of luck!

[UnleashHell]

Before I start my reply let me tell you my wife comes from a family of restaurant owners that everything they touch turns to gold.  I'm talking single locations that have been in business over 40 years and net over 5 million a year.  With that said no way in hell I'd own a restaurant.  My FIL works 6 days a week 12-14hr days and for the past 40 years has taken one week off a year and he owns the place.  His brother owns 8 different restaurants and it's even worse!!!  He will tell you the worst thing about owning a restaurant is the employees.  They will steal you blind.  If they aren't stealing money out of the register they are giving food away free and most the time they are doing both.  My FIL pays his employees very well and gives out nice bonuses and they still rob him blind.  My wife's family has hinted that they want me to take over the family business.  No way in hell I'm giving up my cush job where I work 15 days a month that comes with 6 weeks paid time off awesome health benefits and a great pension to be a slave owner to a restaurant.  No amount of money is worth it.

I hear ya brother.
Been married for almost 10 yrs now and I keep having to hear her business ideas shooting off from times to times. I know she's into it. I'm 100% against running a business. I'd rather work and leave my stress at work.
I was GM for Mcdonald's for a while so I know about the constant worries that are involves. I don't miss it.
It's like my wife has an itch that won't go away. If i don't let her scratch that itch, it won't ever go away.
I'm looking at this as a minimum risk investment so if she really want to scratch that itch, I'll give her the green light. Even if it goes sour, I still think I can transfer the store for little loss. All the equipment inside the store were bought new.
We are meeting her at the store later on today for a tour.

my folks owned places in the food industry. Have to agree with Duke 03 and the comments there. Its a hard business on the mind and body.


130k for your wife to see if she can make it successful?
I mean - depends how you are financially. Its not chump change but its not massive either.
I guess if its wildly successful she'll be happy
if she has to be hands on then you'll never see her!
if it fails it might be because you didn't try hard enough.

Plenty of upside and downside to it here. Maybe you need to see if your wife really wants to go into that industry or if another small business would be suitable.
Good luck.

[partgypsy]

If you are ok with a potential 130k loss to save your marriage, go for it. Tho I would estimate more like a 70k loss bc you can sell the franchise for something regardless.

[rantk81]

Owning/operating/working-at any restaurant -- is a hard pass from me.

[fuzzy math]

How old are you both? Is she physically up for hard labor on her feet all day? Will you be lonely if you FIRE and she's gone 60 hours a week and you can't travel?

I've always been tempted by the idea of a franchise, I'm very gun shy though.

[KarefulKactus15]

+2 for Frankies girl.

I see whats happened here. Your wife is miserable and this is the opportunity that presented itself. Were you guys actively shopping for a business because you decided that is something you want to do? If not, back up and go to that step. This isn't about this business, its about your wife's dreams and desires. Fair enough, but her dreams don't need to be 100% tied to this business. That needs to be decoupled or some bad decisions are going to be made.
So since weve determined owning a business is a dream of your wife's (And hopefully she has enough introspection to be sure thats what she wants?) , have you guys considered all your options? You say she has previous experience in her home area, can that not be replicated here? I imagine start up cost are cheaper and she has the knowledge for that type of work?


Now for this business specifically.

My Official vote is NAY - And im going to support my positions:
1.) You havent provided enough information to make an informed decision properly. Thats automatically a no.
2.) Do you know the proper business pricing numbers? Have you calculated it? https://businessreferenceguide.com/   - Buy a 1 month sub for 23$ and educate yourself on proper pricing, current pain points and things specifically to check for.  Make yourself a nice excel sheet and plug in all the information.  Calculate current pricing based on current numbers and make another tab for future performance that you estimate.
3.) You are spending 120k to buy something that is going to have a negative ROI under Covid by my math.
4.) What is the ROI, The actual ROI of your 120k?  -  Does this ROI beat the ROI of your other business or stock or whatever investments options like real estate or something?

We dont even have the facts required to tell you if this is a bad deal or not. That alone tells me it probably is.

For my emotional and non factually supported answers:
1.) When I was in college we all had to give a speech in speaking class. An older guy in my class did his on why you should never buy into a franchise. (He lost his ass on a dunkin donuts) He thoroughly explained the numbers and how tight profit margins are in food industry and how the franchise fees are the difference of not making it.
2.) Food Business has the HIGHEST owner time requirements and the LOWEST profit margins on average. Dont compare this to a michelin star restaurant cause its not one.

3.) I started a business last year for a $4,000 investment with a partner. ROI is on track for 150%, growing exponentially so its kinda hard to pin down.   So spending 120k seems insane to me. But I'm biased.
4.) I bought another existing business this year for $15,000 kind of in a slump like the business you are buying. But from the day I bought it its already kicking off cash at 35% yearly ROI, so it beats that same cash tied in stocks. I have a plan that if successful ( i think it will be =D ) will build it to 140% ROI. I say this because the business you are looking at has what appears to be a negative ROI.

You are financially in a very different situation from me, as I'm playing with much smaller numbers, but Id be terrified to throw 120k at anything since business failure % is so high.  Even your knowledgeable friend has failed at this business in my eyes by having to sell for a 200k+ loss. 

I'm divorced now, so maybe not the best consultant on relationships - But Id want to see my wife try out a smaller amount of $ and see how that goes.  If you offered for her to quit her job it sounds like you dont need her income and she could take that time to start something and make sure its what she really wants?   

[Captain FIRE]

No.  In addition to all of the other reasons, I would add that your wife wants to own a business, but the business requires your expertise rather than hers.  She should find a business that fits her skill set instead.

[Gronnie]

Dude, it's not an insult. It's a fact.

You don't really want to do this, your wife does.
You already know the numbers, and you know the business better than probably anyone here who is answering.

It's not really a question of whether or not it's a decent business investment. It might be, it might not be, Covid makes everything unpredictable.

The question is whether or not this is the right move for your marriage. That's why it's a marriage/communication issue.

Of course that's the question here.  The financial consequences of this decision IS the major consideration for him.  He's trying to figure out if this will be a good investment while also considering what his wife wants -- that's someone who is doing the right thing and doesn't need "counseling".  The two aren't mutually exclusive.  Most decisions in marriage involve these two considerations.  He's getting a lot of really good feedback on here, and I think it was a good idea to create the thread.

Again, it's not an insult

Telling some random person on the internet they need a counselor IS insulting and extremely presumptuous I might add.

Why are you stigmatizing counseling, equating suggesting it with an insult? Doesn't seem very "woke" to me.

[Frankies Girl]

As I'm not sure which location in Orlando I looked through the reviews on both. They got good reviews for the first year, and now are starting to head downhill when the real work starts. Both getting lots of negative reviews for a variety of reasons: poor service, mixed up orders that aren't made good, bad food, cleanliness, refusal to adhere to mask regulations WHILE preparing food, and turning away customers (locking the doors 30+ minutes before closing and being rude to customers about getting ready to close) and all of that screams lazy/bad management and staff so you'll need to clean house on ALL the employees including the poorly paid managers and hire /train at a higher rate of pay if you want to get something other than bored teens.

And in the food business - it is a KILLER stigma to have even a hint of insect infestation and since one of those locations was tagged with that, that is HUGE. You can't get reviews removed, and even if the location was the one that wasn't infested and/or it was completely irradiated and you stay on top of it... anyone that looks for that franchise name is going to see that review or hear about it on social media.

And there's a lazy talking head corporate bot "owner" that is doing blanket "we're sorry you say you had a bad experience, but it's not our fault because we're awesome so it must be totally a lie" canned responses on many of the complaints. Yuck.

For every posted review online, you have to figure there's 10+ other people that also had a bad experience but just didn't feel compelled to share it officially. But they are still former customers that are bad mouthing the place to their friends/family/social circle. If you haven't pulled actual financials and gone over them with a fine tooth comb (unlikely considering how the "friend" selling the place has put in an emergency decision time limit) then you're still using emotions to make a financial decision.

Sounds like a terrible business/franchise and if someone bought into this and literally started with new stuff, simple products that should have translated okay even to the pandemic carryout/pickup and yet still couldn't make this work well... the bloom is off the rose since it's not fun any more and real work needs to be done to keep it from folding, so they're looking to offload a sinking ship as quickly as possible.

Sorry to mix metaphors but if you looked at this as a business investment, it's still a hard no.

[Frankies Girl]

Why are you stigmatizing counseling, equating suggesting it with an insult? Doesn't seem very "woke" to me.

Guess I'm not "woke" then.  Whatever that means (that term is absurd btw).  I'm not stigmatizing anything.  Telling someone they need counseling without knowing their situation is what's insulting, not counseling itself.   I don't like the superior presumptuous attitude.

It isn't presumptuous. OP has stated they've had serious enough marriage difficulties that divorce was mentioned, wife is pushing for this as a purely emotional decision and OP has stated they feel they have been heavy handed in the past with decisions to the point where they are very concerned that wife will be angry if they don't do this despite all info so far (and there's not lots other than really biased "glowing" reports from seller) not really supporting this decision.

It's not a pure bad/good investment. It's tangled up with their relationship and how they communicate and power imbalances and all sorts of murky emotional stuff. There were plenty of purely business point of view statements that were posted but the OP countered with more and more relationship issues as the thread progressed to the point where it was becoming clear that the relationship part was entangled too deeply for the OP to just make a purely logical argument to his wife on why this is a bad investment for them and her being cool with it.

[HBFIRE]

It isn't presumptuous. OP has stated they've had serious enough marriage difficulties that divorce was mentioned,

Ah, I didn't see the part about divorce.  Okay, I take back what I wrote and I apologize for not reading this thread more thoroughly.  In that case, I agree with whats been said already.  I wouldn't touch this business with a ten foot pole under those circumstances.  The last thing I'd want to do is complicate my financial situation in a relationship that needs work.  Keep things simple, focus on your relationship and communication.

[Frankies Girl]

It isn't presumptuous. OP has stated they've had serious enough marriage difficulties that divorce was mentioned,

Ah, I didn't see the part about divorce.  Okay, I take back what I wrote.  In that case, I agree with everyone that this business is a bad idea for this reason alone.

No worries. I figured. It's easy to miss some of the statements as there's lots of info flying in this one as it's an interesting proposition and as more details came out, it got even more fraught. Posting a few (red emphasis) to illustrate:

I totally understand the hardship of running a small business especially a restaurant but I would like you know what people think about the situation financially ?? The big positive I see in this situation is that we can get in the business for a relatively small amount. $125k to get into this franchise is very cheap. Look at the fees from their site.
Believe me when I tell you that I absolutely hate running a small business. My entire life philosophy is to work hard, be frugal, save and retire which is what I've done.
My wife is so excited about this opportunity that if I just blew it off without giving it a chance, she might hold grudges for a while.
YES, there is a wife involved. I even told her if she let me make the decision, it would be a NAY for me right away.

She and her husband are very well-0ff. [...] To this day, we still don't know why she got into this in the first place when she clearly doesn't need to.

Does your wife not see that this applies to you and her just as much as it does to your friend and her husband?

LOL, I keep telling her that.
She hates her job and is planning to quit soon. Our plan is to use any money over $1 million to travel and enjoy ourselves. But she got this weird itch and I can't just blow her off.
I told her, why wouldn't she want to just take sometime off and unwind yourselves but she sees this as a great opportunity.
When we first discussed this, I keep throwing out the negatives and she kept defending it. I realized then that she's really into it and I can't ignore her wants.
We been close to divorce because I would tell her NO NO NO a lot without putting thoughts into it whenever she brings up something. I'm trying to be a good husband now. LOL

[afox]

Just a question about the minimum wage hike...if minimum wages went up for all restaurant owners wouldn't all restaurants raise their prices to cover the increased costs? Seems like the prices as a whole would rise but competition among restaurant would be the same? Or is the fear that customers would choose to eat at home more if restaurant prices were higher? This is not a loaded question, I haven't researched the issue enough to have an opinion here, just trying to understand the worry among restaurant owners...

[HBFIRE]

Just a question about the minimum wage hike...if minimum wages went up for all restaurant owners wouldn't all restaurants raise their prices to cover the increased costs? Seems like the prices as a whole would rise but competition among restaurant would be the same? Or is the fear that customers would choose to eat at home more if restaurant prices were higher? This is not a loaded question, I haven't researched the issue enough to have an opinion here, just trying to understand the worry among restaurant owners...

Yes, but the restaurants that are better able to leverage technology with lower employment are going to be the real winners with an increased min wage.  Many fast food chains have made huge moves in this department, and I think cashier workers will likely become extinct.  If this franchise doesn't have a technological edge, it's going to be rough.  I predict many smaller players are going to get crushed.  Especially in the fast food service world.  The sad part in all of this is that min wage workers will end up getting hurt the most as restaurants figure out how to do more with lower employment.

[Villanelle]

OP, is there any circumstance under which you'd actually say, "no, not this business at this time"?  If not, then why are we even discussing it?  If so, that what would that circumstance be?  You don't even seem interested in actually doing the work to see what the business is worth, you've come up with some randome $120k number based on nothing having to do with the actual financials, and when people have advised you on how to look into the financials and actually do a proper valuation of the business, you don't seem interested.

So it seems like you are going to say yes because you you are afraid to say no or to explore middle ground (like saying yes if she can find a business to buy at a price that makes sense).  If that's the case, then there's no reason to discuss it, right?

[beekayworld]

Just a question about the minimum wage hike...if minimum wages went up for all restaurant owners wouldn't all restaurants raise their prices to cover the increased costs? Seems like the prices as a whole would rise but competition among restaurant would be the same?

Yes, but the restaurants that are better able to leverage technology with lower employment are going to be the real winners with an increased min wage.  Many fast food chains have made huge moves in this department, and I think cashier workers will likely become extinct.  If this franchise doesn't have a technological edge, it's going to be rough.

That's what I was thinking. A local McDonald's has an ordering kiosk inside. This is an "employee" that won't steal from the till, close up early, or be rude to customers. It doesn't take breaks, call in sick (well, it might be broken sometimes..so not sure how that compares), can work 24 hours a day, 7 days a week with no vacations.

Another benefit is that people order more than they would if ordering from a human.  I've never felt judged by a human taking my order, but I can see where some people might be reluctant to order two desserts or such when ordering from a person.

Higher minimum wages means the time to recoup the cost of the kiosk is shortened.

[Bloop Bloop Reloaded]

If there is one industry I would always avoid, it's restaurants. Other than high-end restaurants (which require name recognition and serious cheffing ability), most restaurants run on razor-thin margins. It's a shit industry and not worth investing in.

Food is simply underpriced in society. Here in Melbourne you can't get a haircut for under $25-$30 but you can get a delicious meal for $13 (which is 2/3 of an hour @ minimum wage). Great for consumers, horrible for owners.

[wageslave23]

Let's say you buy it for $120k.  Realistically, she probably gets sick of it after 2-3 yrs and you resell it for 70k.  50k to get this out of her system and then you should be able to have the upper hand on all future money decisions.  I'd probably be willing to part with 5% of our NW in order to have complete control of our investments  and have "remember the restaurant " in my back pocket for the rest of our lives :)  JK!  Sorta but not really.

It would have been better if you had given in earlier in your relationship, so that you didn't have as much money to let her try and possibly fail with, but that's Monday morning quarterbacking.

[Metalcat]

Dude, it's not an insult. It's a fact.

You don't really want to do this, your wife does.
You already know the numbers, and you know the business better than probably anyone here who is answering.

It's not really a question of whether or not it's a decent business investment. It might be, it might not be, Covid makes everything unpredictable.

The question is whether or not this is the right move for your marriage. That's why it's a marriage/communication issue.

Of course that's the question here.  The financial consequences of this decision IS the major consideration for him.  He's trying to figure out if this will be a good investment while also considering what his wife wants -- that's someone who is doing the right thing and doesn't need "counseling".  The two aren't mutually exclusive.  Most decisions in marriage involve these two considerations.  He's getting a lot of really good feedback on here, and I think it was a good idea to create the thread.

Again, it's not an insult

Telling some random person on the internet they need a counselor IS insulting and extremely presumptuous I might add.

Why are you stigmatizing counseling, equating suggesting it with an insult? Doesn't seem very "woke" to me.

Yeah, I suggest counselling to fucking everyone. It's literally not an insult from me. As someone trained in counselling, that would be an insult to myself as well.

When a person comes here and says that they and their spouse have had conflicts *of this nature* that have nearly caused divorce, and explains a situation that they do not want to get into, but the wife does. That's a marriage issue, and very, very much the kind of marriage issue that would benefit from professional guidance and mediation.

OF COURSE the finances of the situation matter, but they are absolutely and totally meaningless in the face of the marital/communication issue at hand.

Should they buy this business???
What matters more is them deciding together whether or not to buy a restaurant franchise. That needs to be decided on first, it takes full and absolute precedent in the decision making.

It's not that I'm saying that the finances don't matter, I'm saying they don't matter compared to the couple being on the same page.

OP and his partner have all the expertise they need to figure out if this is a good financial move for them. No one here can offer much compared to their already profound, specific subject matter knowledge, combined with that of the proper professionals whom they would hire for their due diligence.

And with covid, the outcome is all one big question mark anyway. So OP is already aware that they could lose money on this.

The finances of this aren't going to be the basis of the decision. The basis of the decision will be about whether or not this is what his wife needs to be happy and whether or not he agrees to it.

That's a marital issue. And it's one that no couple should feel any shame seeking professional guidance on, the same way they shouldn't feel shame seeking professional legal or accounting advice.

[Bloop Bloop Reloaded]

Yeah, there should be no stigma against counselling. A few years ago I sought the services of a psychologist for an issue related to work (I get free counselling from my professional association). Now I've resolved that issue, but I continue to see the psychologist simply for emotional intelligence coaching and general discussion of feelings, motivation, etc. I would encourage everyone to see a psychologist at least monthly, if you can afford it. Saying no to counselling is like saying no to skin cancer checks or GP visits.

[Metalcat]

Yeah, there should be no stigma against counselling. A few years ago I sought the services of a psychologist for an issue related to work (I get free counselling from my professional association). Now I've resolved that issue, but I continue to see the psychologist simply for emotional intelligence coaching and general discussion of feelings, motivation, etc. I would encourage everyone to see a psychologist at least monthly, if you can afford it. Saying no to counselling is like saying no to skin cancer checks or GP visits.

It's not the first time I've been called "rude" here for recommending counselling, and it won't be the last.

[Adventine]

Let's say you buy it for $120k.  Realistically, she probably gets sick of it after 2-3 yrs and you resell it for 70k.  50k to get this out of her system and then you should be able to have the upper hand on all future money decisions.  I'd probably be willing to part with 5% of our NW in order to have complete control of our investments  and have "remember the restaurant " in my back pocket for the rest of our lives :)  JK!  Sorta but not really.

It would have been better if you had given in earlier in your relationship, so that you didn't have as much money to let her try and possibly fail with, but that's Monday morning quarterbacking.

While I don't find this comment amusing at all, it touches on the fundamental issue that has become more and more apparent with OP's replies in this thread:

There is a power struggle going on between the OP and his wife. The decision whether or not to purchase this business has become a bargaining chip in their relationship.

It's an emotional decision disguised as a business decision.

[KarefulKactus15]

Let's say you buy it for $120k.  Realistically, she probably gets sick of it after 2-3 yrs and you resell it for 70k.  50k to get this out of her system and then you should be able to have the upper hand on all future money decisions.  I'd probably be willing to part with 5% of our NW in order to have complete control of our investments  and have "remember the restaurant " in my back pocket for the rest of our lives :)  JK!  Sorta but not really.

It would have been better if you had given in earlier in your relationship, so that you didn't have as much money to let her try and possibly fail with, but that's Monday morning quarterbacking.

I think this was meant to be funny but I had never any luck with "remember x, y, z decision".  In my experience it makes no difference if it' becomes an emotional decision like xyz decision before it.

[Metalcat]

Let's say you buy it for $120k.  Realistically, she probably gets sick of it after 2-3 yrs and you resell it for 70k.  50k to get this out of her system and then you should be able to have the upper hand on all future money decisions.  I'd probably be willing to part with 5% of our NW in order to have complete control of our investments  and have "remember the restaurant " in my back pocket for the rest of our lives :)  JK!  Sorta but not really.

It would have been better if you had given in earlier in your relationship, so that you didn't have as much money to let her try and possibly fail with, but that's Monday morning quarterbacking.

I think this was meant to be funny but I had never any luck with "remember x, y, z decision".  In my experience it makes no difference if it' becomes an emotional decision like xyz decision before it.

I don't think that was the point.

I read it as a very tongue in cheek way of saying that had OP found a way earlier in the relationship to make his wife feel respected in her decisions, they may have developed more of a healthy dynamic for dealing with decisions instead of ending up here where he feels stuck between buying a restaurant franchise or potentially losing his wife.

Relationships don't get to that state easily. There was a long path to this point.

[trygeek]

Okay I think you will buy this business it may not be the best idea but I think you have the skill to run it. I believe the upside is large  if the country opens up in the fall. But the downside is still only say 50,000 or so, or you may even sell it for much more if the income goes up.

[jrhampt]

Restaurants are where nest eggs go to die. There are dozens of horror stories you can read in papers or online. Friend isn't selling at a nearly 200k loss out if the goodness of her heart. Unless you have personal experience running a restaurant, run away screaming. If you have extensive personal experience managing a restaurant, approach with extreme caution.

NAY.  Especially during COVID.

For what it's worth, I'm guessing that 2022 and the second half of 2021 are going to be the best 18 months in my lifetime for many restaurants. The combination of pent up demand and decreased competition could make for some eye popping earnings.

This may be true, for the restaurants that survive until then.  But in order to take advantage of that pent-up demand and decreased competition ***due to dying off of the competition*** you have to be one of the ones that doesn't die.  Probably another 6 months you have to make it through, so I think it's a gamble. 

[Chris Pascale]

Let's say you buy it for $120k.  Realistically, she probably gets sick of it after 2-3 yrs and you resell it for 70k.  50k to get this out of her system and then you should be able to have the upper hand on all future money decisions.  I'd probably be willing to part with 5% of our NW in order to have complete control of our investments  and have "remember the restaurant " in my back pocket for the rest of our lives :)  JK!  Sorta but not really.

It would have been better if you had given in earlier in your relationship, so that you didn't have as much money to let her try and possibly fail with, but that's Monday morning quarterbacking.

While I don't find this comment amusing at all, it touches on the fundamental issue that has become more and more apparent with OP's replies in this thread:

There is a power struggle going on between the OP and his wife. The decision whether or not to purchase this business has become a bargaining chip in their relationship.

It's an emotional decision disguised as a business decision.

Exactly what I saw.

[wageslave23]

Let's say you buy it for $120k.  Realistically, she probably gets sick of it after 2-3 yrs and you resell it for 70k.  50k to get this out of her system and then you should be able to have the upper hand on all future money decisions.  I'd probably be willing to part with 5% of our NW in order to have complete control of our investments  and have "remember the restaurant " in my back pocket for the rest of our lives :)  JK!  Sorta but not really.

It would have been better if you had given in earlier in your relationship, so that you didn't have as much money to let her try and possibly fail with, but that's Monday morning quarterbacking.

I think this was meant to be funny but I had never any luck with "remember x, y, z decision".  In my experience it makes no difference if it' becomes an emotional decision like xyz decision before it.

I was mostly joking.  No, "I told you so" and "remember when..." are never a healthy way to communicate.

The restaurant seems like a bad idea, not necessarily from a financial perspective.  No one knows that for sure, but the dollar amounts in this case are probably going to be relatively insignificant anyways.  That was my point.  And they would be even less significant if she had tried running a business in the US before with a start up or smaller business. 

If this is her life long dream, then the small profit or small loss dont really matter and you should go for it from a financial perspective.  Its the time, work, and stress involved that you need to evaluate.  I think that's why posters keep straying from the original question.

[simonsez]

Restaurants are where nest eggs go to die. There are dozens of horror stories you can read in papers or online. Friend isn't selling at a nearly 200k loss out if the goodness of her heart. Unless you have personal experience running a restaurant, run away screaming. If you have extensive personal experience managing a restaurant, approach with extreme caution.

NAY.  Especially during COVID.

For what it's worth, I'm guessing that 2022 and the second half of 2021 are going to be the best 18 months in my lifetime for many restaurants. The combination of pent up demand and decreased competition could make for some eye popping earnings.

Man, maybe but maybe not!  I admit I used to spend too much on going out to eat and that with the pandemic my household has been more reliant on home cooking (as well as bartending).  While I do look forward to sitting down in a restaurant on occasion as a nice treat, I would guess my "sit-down restaurant consumption" will be lower post-pandemic than pre-pandemic.  I agree that carryout business will likely do fine for awhile but I think the toothpaste is out of the tube somewhat on the sitting down at a restaurant to eat with the proliferation of carryout and delivery services as well as our "new normal" with regard to strangers and germs.  I'm extroverted and not a germophobe and I have no problem saying it would be quite an adjustment to go out and sit down near unmasked strangers indoors and not think about some negative impact that could occur.  There's a part of me saying I'd rather just cook something awesome at home in my clean kitchen for cheaper.  And if I want to be around other people, we'll invite parents or friends over for a dinner party.  To be fair, wife and I are DINKs so we have more time than we know what to do with usually.  We usually have chickpeas or cashews soaking or meat marinating or some other process that takes awhile.  Slow food prep is not always an option for other households. 

My guess is that acclimatization to post-pandemic life will be gradual and I wouldn't expect a sudden demand jump for restaurants - I think it will be slow and steady increases.  But, I think your point about decreased competition is a big one.  We shall see!

[Villanelle]

Restaurants are where nest eggs go to die. There are dozens of horror stories you can read in papers or online. Friend isn't selling at a nearly 200k loss out if the goodness of her heart. Unless you have personal experience running a restaurant, run away screaming. If you have extensive personal experience managing a restaurant, approach with extreme caution.

NAY.  Especially during COVID.

For what it's worth, I'm guessing that 2022 and the second half of 2021 are going to be the best 18 months in my lifetime for many restaurants. The combination of pent up demand and decreased competition could make for some eye popping earnings.

Man, maybe but maybe not!  I admit I used to spend too much on going out to eat and that with the pandemic my household has been more reliant on home cooking (as well as bartending).  While I do look forward to sitting down in a restaurant on occasion as a nice treat, I would guess my "sit-down restaurant consumption" will be lower post-pandemic than pre-pandemic.  I agree that carryout business will likely do fine for awhile but I think the toothpaste is out of the tube somewhat on the sitting down at a restaurant to eat with the proliferation of carryout and delivery services as well as our "new normal" with regard to strangers and germs.  I'm extroverted and not a germophobe and I have no problem saying it would be quite an adjustment to go out and sit down near unmasked strangers indoors and not think about some negative impact that could occur.  There's a part of me saying I'd rather just cook something awesome at home in my clean kitchen for cheaper.  And if I want to be around other people, we'll invite parents or friends over for a dinner party.  To be fair, wife and I are DINKs so we have more time than we know what to do with usually.  We usually have chickpeas or cashews soaking or meat marinating or some other process that takes awhile.  Slow food prep is not always an option for other households. 

My guess is that acclimatization to post-pandemic life will be gradual and I wouldn't expect a sudden demand jump for restaurants - I think it will be slow and steady increases.  But, I think your point about decreased competition is a big one.  We shall see!

I also think that the biggest increase will be sit-down restaurants.  That's what people have been missing.  If they want fast food, they can still get that via a drive-through or pick-up.  I'd also think that style restaurant would have been the least affected by the pandemic, and this place seems to be up that alley.  If that theory holds, then if it is least affected by Covid, the numbers will bounce back less than they will for nicer dining.

I also think a recovery is going to be gradual.  Current math suggests that it will be 2022 before every adult is vaccinated (and then there are kids, who at the moment have no approved vaccine, but are likely to be included in the types of groups dining at fast food or fast casual places).  So are they going to be dining in?  Will they be legally allowed to with no restrictions?  All of this suggests both a very gradual recovery, and possible also signs that a restaurant like this may see less of a bounce in the numbers that other types. 

[HBFIRE]

Current math suggests that it will be 2022 before every adult is vaccinated

Fortunately we don't need that, herd immunity is the goal.  Estimates are that ~ 20-25% of the country has already been infected, so we essentially need to vaccinate another 50-60% (ignoring overlap).  This should be achievable by summer.  I couldn't imagine restaurants requiring vaccinations  -- after all, they don't require them for other diseases that require vaccination.  Once herd immunity is reached, it should become like anything else we vaccinate against.

[Villanelle]

Current math suggests that it will be 2022 before every adult is vaccinated

Fortunately we don't need that, herd immunity is the goal.  Estimates are that ~ 20-25% of the country has already been infected, so we essentially need to vaccinate another 50-60% (ignoring overlap).  This should be achievable by summer.  I couldn't imagine restaurants requiring vaccinations  -- after all, they don't require them for other diseases that require vaccination.  Once herd immunity is reached, it should become like anything else we vaccinate against.

Estimates on herd immunity vary widely, but most seem to fall in the 60-80% range.  But that's 60-80% of all people, not just adults.  Vaccinating every adult still leaves every child unvaccinated, so nearly every adult is going to need to have this in order for us to get to the 60-80% numbers I've seen cited as necessary for herd immunity.  The minors and those who can't be vaccinated will make up that ~30% we can have unvaccinated and still hopefully have herd immunity. (Approximately 24% of the US population is under age 18.) So yeah, unfortunately nearly every adult will need to be vaccinated in order to hit herd immunity.

Also, I wasn't suggested restaurants will require vaccination.  i was suggesting that we may be subjected to state (or federal) limits on how many people can be in a restuarant at a time, what spacing is required, or other regulations that limit capacity. 

[BudgetSlasher]

She and her husband are very well-0ff. [...] To this day, we still don't know why she got into this in the first place when she clearly doesn't need to.

Does your wife not see that this applies to you and her just as much as it does to your friend and her husband?

LOL, I keep telling her that.
She hates her job and is planning to quit soon. Our plan is to use any money over $1 million to travel and enjoy ourselves. But she got this weird itch and I can't just blow her off.
I told her, why wouldn't she want to just take sometime off and unwind yourselves but she sees this as a great opportunity.
When we first discussed this, I keep throwing out the negatives and she kept defending it. I realized then that she's really into it and I can't ignore her wants.
We been close to divorce because I would tell her NO NO NO a lot without putting thoughts into it whenever she brings up something. I'm trying to be a good husband now. LOL

Part 1:

My life has taught me, a good husband does not take on long term projects that he does not want to as a means to make his wife happy.

You saying, "I have previously run a restaurant in 2005 and I hated the experience and never want to do it again" is not saying "NO NO NO a lot without putting thoughts into it". It is saying you do not want to be miserable.

If she can purchase and run the restaurant without your assistance, then that is a discussion of the family finances just the same as leaving your jobs and traveling, or her leaving her job without a new one lined up.

I do not know what you have said "NO NO NO" to before, but her (seemingly) going further and requiring your service to work in that business, over your objections, is a relationship issue.

Part 2:

It appears something has changed and we, and I presume you by extension, do not know why. As I read your posts there was an original plan to quit and travel for an extended period of time. If this was an agreed plan, I would find out what changed. Plans change, but there should be a reason why. After all you said YES YES YES to that plan.

Part 3:

I might have overlooked it, but I cannot follow the money. Why is no one else interested at this price? How does the 50-75k compare to your earnings if recalled or hired into a similar position? I thought businesses like this make money for the owner if at all, at the sale; how long are you thinking of being in this?

[HBFIRE]

so nearly every adult is going to need to have this in order for us to get to the 60-80% numbers I've seen cited as necessary for herd immunity. 

Every adult won't get vaccinated.   We'll be lucky to hit 80%.  Clinical trials are being done on children, and I suspect there will be a vaccine rollout for them as well.    Under 16 makes up ~ 20% of the population ( believe the vaccines are currently authorized for 16+).   Assuming 25% of the country has been infected, and then add another 10%+ by summer will be infected, we're actually not too far off.  Israel will be the fastest case study to give us an idea, and the data is coming in fast.

[Captain FIRE]

so nearly every adult is going to need to have this in order for us to get to the 60-80% numbers I've seen cited as necessary for herd immunity. 

Every adult won't get vaccinated.   We'll be lucky to hit 80%.  Clinical trials are being done on children, and I suspect there will be a vaccine rollout for them as well.    Under 16 makes up ~ 20% of the population.   Assuming 25% of the country has been infected, and then add another 10%+ by summer will be infected, we're actually not too far off.

Not to mention, regardless of what percent vaccinations/infections (which expire btw, so that’s only valid for a few months), I’m not keen to take my unvaccinated children out unnecessarily, particularly considering one is too young to wear a mask. Just because people can dine out doesn’t mean they will dine out right away.  We probably aren’t the only ones to wait for everyone in our family to get vaccinated before we go to restaurants again.

[martyconlonontherun]

LOL. When i sit down and have lunch with my wife today, I have to tell her it's all been NAY. Not one YAY yet.

BTW my friend had already hired a realtor to put the business up for sale @ $150k. There's a 12% realtor fee.
She can get out of the contract for $1000 within 1 week. She's offering this to us at $130k. I won't buy it it $130k. If my wife is really dead set on buying it, I would offer $120k and I don't even know if she would take that. There is a $5K franchise transfer fee too.

Seems kind of a weird stance based on your net worth. Like this is a decision that will have a huge impact on your life and you go from "Nope" to "ok lets do it" over 10k (which is <1% of your net worth). You come across where you have trouble passing a "good deal" when really it isn't worth the hassle you put yourself through to come out ahead(<-thats me 90% of the time). I would think something like this there would be a bigger barrier holding you back but still considering it.