This article is based on its 2022 FDD.
Ubreakifix is an electronics repair shop, offering repairing services for a wide range of products from mobile phones to gaming consoles. Founded in 2009 in Florida by Justin Wetherill after he broke his brand new iPhone 3G, Ubreakifix has over 600 stores as of 2021. In September of 2021, Ubreakifix stopped offering franchises under that name and new franchises are offered under the name Asurion.
This segment of the industry is different from the information technology industry that offers mainly software and is one where human capital is the main offering. As this industry is very specialized, normal prices or sales multiples are not a thing. Sales multiples go from 0.5 to 8, depending on the scalability and profitability of the model. EBITDA multiples for multiple units typically tend to be above par. 5x to 8x is normal for good deals. This is a very cutthroat industry with standard profit margins in the single digits.
The estimated total investment necessary to begin the operation of a Ubreakifix Franchise ranges from $118,350 to $369,555. The following costs are part of the upfront costs included in the initial investment for a Ubreakifix. 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 Ubreakifix franchise in 2022.
|Type of Expenditure||Amount of Expenditure||Method of Payment|
|Initial Franchise Fee||25,000 – 40,000||Us|
|Initial Training Fee||0 – 12,500||Us|
|Initial Inventory of Parts and Accessories||4,000 – 57,000||Our affiliates or approved suppliers|
|Initial Equipment, Tools, Supplies, and POS Hardware||9,650 – 22,000||Our affiliates or approved suppliers|
|Furniture and Fixtures||10,000 – 25,405||Approved suppliers|
|Interior Signage||1,000 – 4,000||Approved suppliers|
|External Signane||5,000 – 20,000||Vendors|
|Wages, Travel and Living Expenses During Training||15,000 – 23,000||Airlines, Hotels and Vendors|
|Wages, Travel and Living Expenses During Site Review||0 – 1,000||Us|
|Legal and Accounting||1,500 – 11,000||Vendors|
|Business Licenses and Permits||700 – 1500||Government|
|First 3 Months Marketing||0 – 8,000||Vendors|
|Insurance||3,000 – 7,000||Vendors|
|Store Rent – 3 Months||0 – 20,000||Landlord|
|Mobile Unit Lease Payments – 3 Months||0 – 3,150||Vendors|
|Store Security Deposits||0 – 15,000||Landolord and Government|
|Construction and Leasehold Improvements||25,000 – 62,000||Contractors|
|Additional Funds – 3 Months||18,500 – 37,000||Employees and Vendors|
|Total||118,350 – 369,555|
Prospective franchisees will need approximately $150,000. Financing can be secured through third-party lending sources via Ubreakifix.
Royalty: 7% of Non-Recommerce Revenue; and 4% of Recommerce Revenue (Recommerce Revenue means Gross Sales during each Accounting Period from the sale of pre-owned mobile and other electronic devices)
Marketing Fee: Up to 2% of Gross Sale
Ubreakifix does not make any representations about how much franchise owners make or provide system-wide figures for their business, but the estimated profit margin in this industry is 5%. According to estimates and modeling, franchised locations might make around $577,000 a year.
Based on the median sales above, at an average of a 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 5% profit margin which would elongate getting a return on your investment.
To assign a valuation multiple for Ubreakifix 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 $1 Million Net Sales
Over $5 Million Net Sales
When you go to sell an Ubreakifix franchise based on the median multiple of .79 and net sales of $577,000, it will sell for $455,830. This is significantly higher than the midpoint investment of $243,952.
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.
|Other revenues, net||18,594||37,011||264,715|
|Cost of revenues|
|Selling, general, and administrative expenses||59,386,163||26,922,591||30,527,000|
|Operating income (loss)||(24,397,768)||1,581,664||(11,853,467)|
|Income (loss) before income taxes||(24,397,768)||1,581,664||(11,865,369)|
|Income tax expense (benefit)||(12,851,780)||416,330||(3,376,595)|
|Net income (loss)||(11,545,988)||1,165,334||(8,44,774)|
|Other comprehensive income|
|Foreign currency translation adjustments||(211,627)||281,488||–|
|Comprehensive income (loss)||(11,757,615)||1,446,822||8,488,774|
Erratic behavior is seen in the financials of this company. They ran a loss of $834 million in 2019, before going to a profit of $1.1 million in 2020, and dropping down to a loss of $11.5 million in 2021. It is probable that the company is going through financial turmoil and its financials remain to be proved.
|Outlet Type||Year||Outlets at the Start of the Year||Oulets at the End of the Year||Net Change|
|Company and Affiliate-Owned||2019||18||23||+5|
Over the last three years, the company has been in decline. Franchised units have been decreasing and a net of 17 units opened between 2019 and 2021 with 44 and 97 franchised locations closing in 2020 and 2021 respectively. This is an indicator that these stores may not be performing well. Or their franchise term is up and they are not renewing it. However, company-owned units have gone from 18 in 2019 to 361 in 2021, a 20x increase.
That said, the franchisor is acquiring franchised locations from franchisees at a very high rate. In 2021, Ubreakifix acquired 171 locations from the 554 existing locations at the start of the year. That translates to a 30.8% reacquisition rate which is much higher than the industry standard of <5%. This is potentially a warning sign and the franchisor might be reacquiring franchises after the owners have established the business in their area. We recommend you talk to current and previous owners of Ubreakifix franchises to learn more about the causes behind this.
Ubreakifix offers a piece of the concentrated technology repair industry but their financials remain to be proven, and a lot of franchised locations closing might not be a good sign. We recommend speaking to 3 to 5 current owners before deciding on this business.
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