This Franchise Cleans Fryer Oil… But Is It Profitable?

**Bill D'Alessandro** (0:00)
Welcome to Acquisitions Anonymous, the internet's number one podcast about small business buying, selling and operating. Today, we dug into a deal that was super interesting. Alex, our friend from Franzy brought it, and it is a business that the other three hosts all liked, and I hated it. So stick around for the whole thing, and you can figure out how we felt about it and why I didn't like it. All right, here's the deal. Hope you have fun.
One of the biggest risks in entrepreneurship through acquisition is buying a business with fragile systems. Unclear demand are a single owner who holds all the knowledge. Franchising approaches that problem differently. You are buying into an established brand with documented systems, unit level data, and repeatable operating playbooks. The hard part is knowing which franchises are actually worth evaluating. That's why Alex Merezniak, former CEO of 2U Laundry, built Franzy. Franzy is a free platform that helps acquisition-minded entrepreneurs explore franchise ownership without broker bias. You answer a few questions and Franzy shows you franchise opportunities that align with your capital, lifestyle, and long-term goals. You also get free coaching from people who have actually built and scaled franchise businesses. If you are exploring ETA and want to understand whether franchising fits your acquisition strategy, visit franzy.com. That's franzy.com. And thanks to them for sponsoring today's episode.
All right. Well, we were just starting to talk about the blood bath that is the drive-thru coffee, Dutch Brothers, 7 Brew Market. So continue on.

**Mills Snell** (1:31)
It's not just a land grab, but it's also just like a brand grab. Like we need to get our name on as many corners as possible and in as many places.

**Bill D'Alessandro** (1:39)
Yeah. What's your perspective on the space, Alex?

**Alex Merezniak** (1:42)
Yeah, I was just telling the group, we work with a lot of the large franchise or brands. And one of the ones that you mentioned, a well-known national chain told us that they're only selling 70 units plus at a time to incoming franchisees at this point. So like they need big whole territory, whole regions or whole states to be bought out now at this point, because just of how big they are and how fast they're trying to get these open and grow.

**Bill D'Alessandro** (2:08)
So why is it 70 and not 50 or 100? Like how do you end up with 70? It's like it's a very oddly precise number that it's like, well, what?

**Alex Merezniak** (2:17)
That's a good question. I don't know if it's how they've market mapped and they've found that the average metro can support.
I don't know that many, could you fit Charlotte and the surrounding two hour drive time 70? My guess is it has to do with drive time because they typically want multi-unit operators like that to have local GMs and district managers that can get to their locations within less than an hour or two. So my guess is it has something to do with the ability to get GMs and district managers into each store on a recurring regular basis without driving more than 90 minutes.

**Mills Snell** (2:52)
Does that create a really active secondary and resale market? If you were an early entrant and you just bought one or two or three, and then you've got these big consolidators, I feel like that's the path I've seen before is that they're like, great, we're going to gobble you up and just get out of our way.

**Alex Merezniak** (3:10)
That's exactly what happens in franchising.
You've heard some, like Hermosy said this before and others have said, why would you franchise? A lot of the reasons people franchise is if the four of us start a coffee shop or a gym or whatever it is, and we have this cult-like following, we have this amazing brand, to scale it nationally because there's physical infrastructure, we either need 20 years or hundreds of millions of dollars in capital to actually go pull that off. Look at Chick-fil-A, they're just now, everyone knows them now, it's famous, it's widely popular, but Chick-fil-A has been doing this since like 1940 something, I mean, it's been forever until they got to this point.
And so people start franchising to accelerate that, you bring other people's capital in, you can start scaling much more rapidly national. So if you think about the evolution of a franchise business as a franchisor, you have initial success independently, you start franchising to accelerate growth, you eventually grow and tap out the whole country. And so how do you grow from there? You start buying them all back from your franchisees, or you see consolidation happening with private equity family offices and you try to buy them back, or the PE family office tries to buy the franchisor at that point. So consolidation is always going to happen in most successful franchise systems and chains.