Location: Port St. Lucie, FL
The attached spreadsheet model is for the Pinch A Penny Pool Patio Spa located at the Westport Shopping Plaza in Port St. Lucie, Florida. The store is currently listed for sale at $299,000 on bizbuysell.com; this price does not include the building where the store is currently located. The attached spreadsheet model includes a pro forma income statement and balance sheet for the store, including the purchase of a building. The cost of the land and building that are included in the spreadsheet model is $850,000. The spreadsheet also includes an analysis of forecasted free cash flows from the store, an analysis that includes the possibility of bankruptcy, and an analysis which includes an option to purchase another store for the franchise in future years. Any assumptions made on the spreadsheet are based on market research of the Port St. Lucie, Florida area. The model allows flexibility and adjustments to be made for the inputs of each forecasted analysis.
In the model, we have included a growth of gross profit of 2% for each of the ten years forecasted as well as typical costs you would see in the pool retail industry. We have also included a mortgage loan to finance the land and building that would be necessary to run the store. Based on these assumptions, we have forecasted an internal rate of return of 7.87% and a weighted average cost of capital of 7.51%. The net present value for Pinch A Penny Pool Patio Spa with these included inputs is forecasted to be $864,663.
It is our conclusion that, with the included forecast, the asking price of this franchise opportunity is listed at a higher price than it should. The forecast shows positive signs of profitability, but since no building is included, the additional cost of land and building to operate the store increases the weighted average cost of capital dramatically. If a buyer was able to find a store for less than the forecasted $850,000, then the purchase of this franchise opportunity would be more appealing.