The Entrepreneur’s Source Franchise Analysis
The Entrepreneur’s Source is an industry resource and franchise brokers’ group that has been operating for 35+ years. It partners with 250 franchises. That said, they market themselves as an alternative to franchise brokers and consultants and call themselves “career ownership coaches” that help you get to “career 2.0.” The Entrepreneur’s Source (TES) is a franchised business that provides coaching, placement, and franchising services to individuals, businesses, franchise prospects, and franchisors.
The Entrepreneur's Source
“The demand for Career Ownership Coaching is rapidly increasing across North America. Today, 40% of the nation’s workforce is leaving the traditional job market and taking control of their destiny through business ownership. Even in a strong job market, mid- to high-range paying jobs are not outpacing the cost of living and don’t provide long-term stability.
Entrepreneurs today have overwhelmingly chosen to pursue an alternative career path over traditional employment. As a result, 97% of self-sufficient entrepreneurs say they would never go back to traditional employment. Experience is not a reflection of what can be achieved. We believe a person’s past skill set and experience level shouldn’t limit their access to the future they deserve”.
It is led by Founder and Managing Member, Terry Powell, CFE, and CEO (Chief Executive Officer), Marissa Frois. The CFO (Chief Financial Officer) is Mike Dylag.
It currently has 113 franchised locations.
How is The Entrepreneur's Source Franchise Positioned in the Professional Business Services Industry?
The Professional Business industry comprises organizations engaged in supplying workers to businesses. The individuals are usually employees of the agency. However, there is no supervision of the business and employees by the agency. More than three million temporary and contract employees work for America’s staffing companies during an average week. During the course of a year, America’s staffing companies hire nearly 15 million temporary and contract employees.
How Much is a The Entrepreneur's Source Franchise?
The Professional Business industry comprises organizations engaged in supplying workers to businesses. The individuals are usually employees of the agency. However, there is no supervision of the business and employees by the agency. More than three million temporary and contract employees work for America’s staffing companies during an average week. During the course of a year, America’s staffing companies hire nearly 15 million temporary and contract employees.
The initial The Entrepreneur’s Source Franchise Fee is $75,000. You have to pay this upfront fee when opening a The Entrepreneur’s Source franchise.
The Entrepreneur's Source Franchise Cost
The total investment necessary to begin the operation of a The Entrepreneur’s Source franchise is $117,600 to $125,900 for a single unit. This includes $100,900 to $101,100 that must be paid to the franchisor or affiliate. The total investment necessary to begin the operation of 3 – 5 franchised businesses is $262,600 to $400,900. This includes $245,000 to $375,000 that must be paid to the franchisor or its affiliates.
The following costs are part of the upfront costs included in the initial investment for The Entrepreneur’s Source. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a The Entrepreneur’s Source franchise in 2022.
Estimated Initial Investment for a Single Unit
| Type of expediture | Amount | To Whom Payment Is To Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $75,000 | $75,000 | Us |
| Training Fee | $25,000 | $25,000 | Us |
| Executive Suite / Office – 6 months | $0 | $1,000 | 3rd parties |
| Travel and Living Expenses | $2,500 | $3,500 | Airlines, Hotels, Restaurants |
| Insurance Premiums – Annual | $1,050 | $1,500 | Insurance Company |
| Equipment | $150 | $2,500 | Approved Suppliers |
| Initial Marketing | $1,000 | $2,000 | Approved Suppliers |
| MST Fees and Brand Building Investments | $5,400 | $5,400 | Us |
| Additional Funds – 6 months | $7,500 | $10,000 | 3rd parties |
| Total Estimated Initial Investment | $117,600 | $125,900 | |
Estimated Initial Investment for Multi-Unit
| Type of expediture | Amount | To Whom Payment Is To Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee (3 or 5 units) | $180,000 | $275,000 | Us |
| Initial Training Fee (3 or 5 units) | $40,000 | $75,000 | Us |
| Initial Investment for Your Initial Franchised Business | $42,600 | $50,900 | See Chart 7(A) above |
| Total | $262,600 | $400,900 | |
Owning a The Entrepreneur's Source Franchise Requires Ongoing Fees
Placement Fee Share: 25% of Placement Fees collected.
Brand Building Investment: $750 per month.
Marketing Minimum: $300 per month.
How much do The Entrepreneur's Source franchise owners make?
The table below shows the average yearly Annual Income generated by all TES Businesses open for 1 year or more, for each of the last three calendar years. We have not subtracted the Placement Fee Share from the Annual Income.
| Number of Franchised TES Businesses | TES Businesses (open 1+ year) | Median Annual Income Per TES Business (open 1+ year) | TES Business (open 1+ year) Highest Annual Income | TES Business (open 1+ year) Lowest Annual Income | |
|---|---|---|---|---|---|
| 2021 | 134 | $111,291 | $95,000 | $454,876 | $0 |
| 2020 | 119 | $120,114 | $97,500 | $524,941 | $0 |
| 2019 | 124 | $101,591 | $71,918 | $721,976 | $0 |
2020 The Entrepreneur's Source Median Franchise Sales: $97,500
| Initial Investment | Profit margin of average franchise sales | Estimated Profits | Time to recoup investment |
|---|---|---|---|
| $121,750 | 10% | $9,750 | 12.5 years |
| 12.5% | $12,187 | 10 years | |
| 15% | $14,625 | 9 years |
Based on the median sales provided by The Entrepreneur’s Source’s franchise locations for 2020, at an average of a 12.5% profit margin it will take around 10 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 12.5% profit margin which would elongate getting a return on your investment.
2021 The Entrepreneur's Source Median Franchise Sales: $95,000
| Initial Investment | Profit margin of average franchise sales | Estimated Profits | Time to recoup investment |
|---|---|---|---|
| $121,750 | 60% | $57,000 | 3.5 years |
| 70% | $66,500 | 3.25years | |
| 80% | $76,000 | 3 years |
Based on the median sales provided by The Entrepreneur’s Source’s franchise locations for 2021, at an average of a 70% profit margin it will take around 3.25 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 70% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Professional Business Services; the extent of market penetration and brand awareness that The Entrepreneur's Source stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is The Entrepreneur's Source Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for The Entrepreneur’s Source franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.55
When you go to sell a The Entrepreneur’s Source franchise based on the median multiple of .55 and net sales averaging between 2020 and 2021 of $96,250, it would sell for $52,937. This is significantly lower than the midpoint investment of $121,750.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
The Entrepreneur's Source (Franchisor) Income Statement Key Insights:
TES FRANCHISING, LLC STATEMENTS OF INCOME AND MEMBER’S EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
| 2021 | 2020 | |
|---|---|---|
| Revenues | $16,482,488 | $15,313,034 |
| Cost ofRevenues | 12,224,251 | 11,552,507 |
| Gross Profit | 4,258,237 | 3,760,527 |
| Operating Expenses: | ||
| Payroll and payroll related taxes | 2,005,771 | 1,889,424 |
| Outside services | 346,307 | 331,658 |
| Training | 215,897 | 92,935 |
| Insurance and benefits | 213,739 | 119,783 |
| Rents and leases | 150,673 | 144,355 |
| Legal and professional fees | 129,549 | 141,472 |
| Office expenses | 125,200 | 84,176 |
| Computer and technology | 116,481 | 147,092 |
| Retirement plan expense | 78,846 | 65,027 |
| Advertising | 72,054 | 71,368 |
| Telephone and utilities | 58,127 | 45,438 |
| Travel, meals and entertainment | 55,986 | 127,948 |
| Depreciation | 31,425 | 37,983 |
| Taxes and licenses | 28,148 | 42,981 |
| Bad debt expense | 27,625 | 7,294 |
| Repairs and maintenance | 24,139 | 17,947 |
| Bank charges | 21,459 | 20,681 |
| Contributions and donations | 12,550 | – |
| Total operating donations | 3,713,976 | 3,387,562 |
| Income from Operations | 544,261 | 372,965 |
| Other Income (Expense): | ||
| Interest income | 532 | 5,250 |
| PPP loan forgiveness | 350,737 | – |
| Interest expense | (8,232) | (22,998) |
| Loss on disposal of property | (4,770) | (45,529) |
| Total other income (expense) | 338,267 | (63,277) |
| Net income | 882,528 | 309,688 |
The Entrepreneur’s Source is a very profitable business for the franchisor with retained earnings of $309,688 in 2021. Compared to $882,528 in 2020, they saw a decrease of over 50% from 2020 to 2021. This is a not a good indication of high growth as a company overall.
How many of The Entrepreneur's Source units have opened and closed?
How many [brand] units have opened and closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 114 | 124 | +10 |
| 2020 | 124 | 119 | -5 | |
| 2021 | 119 | 133 | +14 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets (United States) | 2019 | 114 | 124 | +10 |
| 2020 | 124 | 119 | -5 | |
| 2021 | 119 | 133 | +14 |
Over the last three years, the company has been expanding. Franchising units have increased. Over the last three years, franchises have opened at a rate of 6.33 units a year. Between 2019 and 2021, the company grew from 114 to 133 units.
Conclusion
The Entrepreneur’s Source is a reputable source when searching for new franchises. However, how much their career switching course works is not yet determined. While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Professional Business Services Industry.
