Welcome to Upper Market

Coca-Cola never patented its recipe.

A patent gives you a head start on building a monopoly, and in return you publish your secret sauce, for everyone to copy the day time runs out.

Coke did the opposite. It told no one, locked the formula away, and has kept the monopoly for over a hundred years and counting.

Secrets beat moats - as long as they’re kept.

You want your business to be "defensible" the first job is to find out exactly what's defending it, and how long you can expect it to last.

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Buying a franchise is buying a business with training wheels, where your professional minder takes a cut. For the right buyer it's a genuinely smart way in. Just go in knowing exactly what you're renting and what you're giving up.

There’s value to it. A franchise hands you a recognised brand, proven systems, supplier buying power, marketing and a support network - so you skip the hardest, riskiest part of building a business from scratch. Customers already trust the name, the playbook already exists, and someone's on the phone when it gets hard.

For a first-time owner especially, that scaffolding can be the difference between a smooth start and an expensive education.

Here's what you give up for it. You don't fully own the business - you own the right to operate it, under someone else's rules, for a set term. You pay ongoing royalties and marketing levies, usually a percentage of revenue, whether you had a good year or not - so a slice of every dollar of sales leaves before it reaches your profit. You're locked into their suppliers, their standards and their decisions - if head office changes the model or fumbles the brand nationally, you wear it locally and can't opt out. And you can't freely change or sell the business: most franchise deeds control who you can sell to and take a cut when you do.

So when you look at a franchised business, read the franchise deed as carefully as the accounts - because it is half the deal. How long is the term, and what happens at renewal? What exactly are the fees - royalty, marketing, and any others - and what do they take off the top? What are you required to spend, refit or upgrade at head office's direction? And critically: is the SDE quoted before or after the franchise fees? A number that looks like owner's earnings but hasn't had the royalties removed is overstating what you'll actually keep.

In a franchise you don't own the business - you rent the right to run it, and pay a share of every dollar for the privilege.

A franchise can be a brilliant, de-risked way to buy a job or a first business - proven, supported, and easier to fund. Just value it on the profit after the fees, price in the loss of control, and make sure the co-pilot is actually flying, not just charging for the seat.

Short Summary:

$378k of SDE on $1.85m of revenue, 150 recurring service customers, 10,000 records in the database, and a freshly-renewed 10-year franchise deed. Asking $1.395m plus stock - around 3.7x. An established East Auckland pool-and-spa business where the brand, the systems and the buying power come from head office - and so does a cut of every sale.

This is a proven retail-and-service operation inside a major franchise network: recognised brand, established systems, a capable team and a loyal local base, with recurring pool-valet income already in place. For the right buyer it's a de-risked way in. The things to weigh are the franchise itself, the retail-heavy revenue mix, and whether 3.7x is fair once the fees come out.

It runs product sales, water testing, scheduled pool-valet services, repairs and equipment upgrades from a prominent East Auckland site, split roughly 60% retail and 40% service. FY26 revenue was $1,846,450 with normalised SDE of $377,753. There are more than 10,000 customer records and about 150 recurring pool-valet customers, a team of a full-time office manager, five part-time retail assistants and three full-time technicians, and a newly renewed 10-year franchise deed bringing brand, marketing, systems, supplier relationships and local support.

What I'd Want to Understand:

First is whether the SDE is before or after franchise fees (this is the whole deal). SDE of $378k needs to be after the royalties and marketing levies the franchise takes off the top - if those fees haven't been deducted, the real owner's earnings are lower than they look. I'd want the fee structure in full, confirm the $378k is net of it, and note the SDE also includes the owner's own labour, so a hands-off buyer subtracts a manager on top.

Second is the franchise deed itself, because it's half the deal. The deed was just renewed for 10 years, which is a genuine plus - but I'd read it closely: the fees, the required spend and refits head office can mandate, the brand standards, the supplier lock-in, and crucially the rules on who I can sell to and what the franchisor takes when I exit. You're buying the right to operate under someone else's system, and that system's terms decide a lot of your economics and your freedom.

Third is the revenue mix, because retail and service aren't equal. It's 60% retail - competitive, lower-margin and increasingly exposed to online and big-box pricing - and 40% recurring service, which is the stickier, higher-quality half. I'd want the margin on each, how defensible the retail is against online competition, and whether the real value (and the growth) sits in expanding that 40% recurring service rather than the shopfront.

Fourth is the database and the team. 10,000 records but only ~150 on recurring valet is the headline opportunity - a big reactivation and service-conversion pool - but I'd want to know how live those records are and how the team is placed to work them. And since it's an owner-involved operation, I'd confirm what the owner does day-to-day and how much the capable team can already run without them.

Growth Angle: The upside is sitting in the database: 10,000 customer records against just 150 recurring valet clients is a large, warm base to convert into scheduled, recurring service - the stickiest, best revenue in the business - through the reactivation the franchise systems are built to support. Add equipment-upgrade sales into that base, lean on head-office marketing and buying power, and there's a clear path to shift the mix toward higher-quality recurring income. It's a grow-what-you-have story, backed by franchise scaffolding.

The Drawbacks: You're buying the right to run it, not the business outright - ongoing fees come off every dollar, you're bound by the deed's rules and head office's decisions, and you can't freely sell. The revenue is 60% competitive retail exposed to online pricing, and at ~3.7x on an owner-operator SDE that still has the owner's labour in it, it's not cheap. Strong platform, but price it on earnings after fees and after paying for the owner's job.

Final Thought: An established, systemised, franchise-backed pool business with a recurring service base and a big database is a genuinely de-risked way to buy a solid local operation - the brand and playbook are done for you. The deal comes down to reading the franchise deed as carefully as the accounts, confirming the $378k is after fees, and deciding whether the real prize - converting 10,000 records into recurring service - is worth 3.7x. Get the fee-adjusted number right, and it's a fair price for a proven, supported business you grow from the database out.

If you want more details on any of these businesses or would like an introduction to the sellers, just reply to this email.

A three-year average EBITDAP of about $720k, asset-light, with contracted maintenance revenue that's growing on purpose - and a genuine industry tailwind behind it. Asking $1.8m, around 2.5x. An owner-operated commercial and industrial refrigeration business that does the whole job in-house.

This is the dominant refrigeration provider in its location, built on direct, long-standing B2B relationships rather than competing for tenders. It designs, builds, installs and services its own systems, it's deliberately moving clients onto annual maintenance agreements, and it's positioned for the industry's shift to natural refrigerants. There's a lot to like. The main thing to unpick is the word "owner-operated."

It designs, manufactures, installs and maintains commercial and industrial refrigeration systems entirely in-house - fully vertically integrated - for a loyal base of direct B2B clients, and it's the major provider in its area. The three-year average normalised EBITDAP is about $720k, and the operation is asset-light with a small fixed-asset base and no identified capex needed. Crucially, it's growing its contracted, recurring revenue by moving clients onto annual maintenance agreements, and it's well placed for the sector-wide switch to natural refrigerants - rising synthetic-refrigerant costs are pushing clients to CO2 systems, which the business already designs and installs.

What I'd Want to Understand:

First is the "owner-operated" reality, because EBITDAP adds the owner's pay back. The "P" is proprietor's earnings - so $720k assumes the owner in the business. I'd want to know exactly what they do: technical design, key client relationships, quoting, hands-on service? Refrigeration is specialised, licensed trade work, so if the owner is a key technician or the relationship-holder, replacing them is expensive and the real hands-off number is lower. What it costs to replace them is the number that matters.

Second is the recurring maintenance revenue - how much, how contracted? The best thing here is the shift to annual maintenance agreements: contracted, recurring, sticky income on essential equipment that can't be allowed to fail. So I'd want the split between contracted maintenance and one-off project work, how many clients are actually on agreements versus still ad-hoc, the contract terms, and the trend. The more of that $720k is genuinely contracted, the better the business.

Third is the CO2 tailwind - real and durable, or a one-off bump? "Positioned for the shift to natural refrigerants" is a genuine driver: regulation and cost are pushing clients off synthetic refrigerants, and the business already has CO2 capability competitors may lack. I'd want to understand how much of the pipeline this conversion represents, how long the tailwind lasts, and whether the technical edge is real and held by the team, not just the owner.

Fourth is client concentration and the skilled team. "Major provider in its location" and "direct relationships, no tenders" is a strong, defensible position - but I'd want the revenue share of the top few clients, and a hard look at the technicians. Refrigeration runs on licensed, scarce trades; the team that installs and services the systems is the capacity to earn, and their retention is the standing risk in any trade like this.

Growth Angle: The levers are unusually clean: keep converting ad-hoc clients onto contracted maintenance agreements to grow the recurring, defensible base; ride the CO2 conversion wave with capability competitors are scrambling to build; and, because it's asset-light with no looming capex, extra work drops through efficiently. For a trade buyer it's a strong bolt-on - essential-service recurring revenue, a real technical edge, and a tailwind that does some of the selling for you.

The Drawbacks: It's owner-operated, so the true hands-off earnings depend on replacing the proprietor's role - possibly a skilled technical one - well. It runs on scarce licensed refrigeration trades whose retention is critical. And while asset-light is a genuine plus, a specialised trade in one location has a natural ceiling and rides commercial and industrial investment to some degree. Strong business; the value hinges on how much of $720k survives paying for what the owner does.

Final Thought: An asset-light, vertically integrated, market-leading refrigeration business with growing contracted revenue and a real regulatory tailwind is a genuinely strong little operation - essential service, sticky income, a technical edge, and no capex hole to fund. The deal comes down to two reads: how much of that $720k is the business versus the owner's own labour, and how much of the revenue is truly contracted. Get those, keep the technicians, and 2.5x looks like a fair price for a business the market is quietly pushing more work toward.

If you want more details on any of these businesses or would like an introduction to the sellers, just reply to this email.