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Monday, December 26, 2005

Ultimate Franchise Systems, Inc.

This one deserves its own entry:

UFSM (sec), 585 franchised restaurants and 40 weight loss clinics in the US. The only one I recognize is Piccadilly Restaurants and these guys only own 1% of it.
How about this for the fastest loss of money. They bought Obee's on June 16, 2004 for $610K plus $912K of assumed liabilities resulting in $1.3 million in goodwill. I might consider buying Nathan's Hot Dogs or some other rock solid brand for that kind of goodwill ratio, but who the hell is Obee's? They're a sub shop. Not Subway, not Quizno's. Obee's own website says "No Experience Necessary" to open a franchise. Their "About Us" web page has nothing but an "under construction" animated gif. So does the store locator. What a joke. Ok anyway, so how long did it take for all that goodwill to become worthless?

14 days!

That's right, fourteen days. The 10-K says, "The goodwill associated with this transaction was deemed to be impaired and was expensed during the quarter ended June 30, 2004."

How could anyone invest in a business where they pay $610,377 to buy a business for $1,319,154 more than its [negative] book value only to declare the value as worthless 14 days later?
not interested

Not a good move either way you look at it, to be honest it never sounded like one of the restaurants in Piccadilly and I didn't think it amount to much. That said I'd never seen their website until today, what a shambles.
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