The Pipeline – ‘I Love Rock and Roll’
Glenn Fleischman and Alan Goodstadt are successful businessmen, not professional musicians. Both claim to have had thriving careers in telecommunications and investment banking, respectively, before agreeing to franchise six Bach to Rock music schools in metro New York and Fairfield County, Connecticut.
Despite liking the business model and the chance to be the first franchisees of a young company, the 40-something partners insisted they were “diligent and cautious” before signing the agreement. They toured the six company Bach to Rocks (B2R, for short), all in suburban Washington, D.C., and with their lawyers carefully examined each franchise document.
Goodstadt added he was familiar with franchising (and the attendant risks), having done M&A work in the heavily franchised retail industry.
The FDD’s Item 19, incidentally, is relatively sparse. A chart titled “Comparative Metrics– 2011 & 2012” shows that combined EBITDA for five of the units climbed 12 percent, to $1.56 million last year. Sales per unit averaged $764,550 in 2012. The Bethesda, Maryland-based franchisor opened its first B2R in July 2007.
The partners requested changes. “It was important to be in a relationship where there’s the ability to change the status quo. If, for example, we identified a new opportunity or initiative that fit the model, new ideas could be put on the table for discussion,” Fleischman added.
He and Goodstadt opened their first unit in January in Port Washington, New York, an affluent bedroom community on Long Island. The median household income is $116,000 and median price for a house is above $700,000, according to the Census Bureau. A second B2R may open later this year.
The partners, who funded the first unit themselves, are looking for equity partners to finance growth. The franchisor estimates the total investment for one unit ranges from $390,400 to $557,400.
Demographics are critical to B2R because no one needs to be schooled in music. Therefore high levels of wealth and education, along with a preponderance of school-aged children, have an impact on registration. Fees for lessons run about $168 a month.
“We’re looking for communities that put a value on the arts,” Fleischman explained.
You can witness the artistic efforts of B2R students on the franchisor’s YouTube channel, where dozens of young performers strum guitars, sing, tickle the ivories and thrash about in battles of the bands. Their teachers, who often praise their students on the videos, are professional musicians, often between gigs or teaching before evening performances. Fleischman acknowledged the Port Washington school’s proximity to Manhattan (some 20 miles from Penn Station via the Long Island Railroad) gave the franchise a decided advantage when it comes to hiring teachers.
The partners, who do not teach classes, claim to be “passionate” amateur guitarists and music fans nonetheless. They jam, however, with other adults during fee-based jam sessions at the school.
“We are definitely into rock,” Goodstadt declared. No reason to doubt him. His company’s website (amplifiedcapitalpartners.com) features the image of a stage with a drum kit and Marshall speakers.
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