90-store BK franchisee declares bankruptcy
Are you listening Joe and Chris????????!!!!!!!!!!!!!!!!!!!!!
Two thoughts: * This has got to do great damage to the value of a used Burger King franchise. With half as many BKs as MCD in the USA having 90 stores hit the market in a fire-sale should hurt the marketability of all their stores. * In a franchise system where the average franchisee operator has 6 or 7 locations the corporate guys can step in and repackage things before there's a bankruptcy. Apparently, since their franchisees have so many stores,RBI doesn't have the resources to help out..
BK Corporate will blame it on operations, wonder what their OSAT score was...LOLBut simple math tells anyone the debt the franchisor let them take on was not sustainable. BK AUV on the high side is about $1.5mm this means the franchisor was generating $135mm in revenue and was probably lucky to pull down 5% in EBITDA or about $6.8mm their annual debt payments were probably at least around $4.2mm that does not leave much for operations (G&A). Then their is the $14mm in unsecured debt not sure if lease contracts from vendors or what but could also be concessions on property rents as they (the franchisee) own much of their real estate, especially in the east and southeast.Many BK Franchisees are in much better shape than a lot of McD's O/O's as in these areas they own many of their real estate sites, along with the buildings for many years. They have something of an asset to still sell and can re-brand.
just watch. joe and Chris will cite this as proof that "McDonalds Franchisees are doing fine" in spite of the fact that many are near bankruptcy
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