Games 2 U on Shark Tank Update
|Stuart and David Pitkoff|
Inventors of the Games2U Franchise Opportunity
The Pitkoff's came into the Shark Tank seeking a $500k investment for a 10% stake in the kids mobile party business putting the initial valuation at a cool $5 million. What makes this business so unique is the fact they create all their unique games in-house inside their Fun Factory. Not just any cheesy games that you might expect for a kids birthday Party but fully functioning 7' tall robots, 4 D Movie Theatre's and walk-in video game centers. So far the Games2U has 140 franchisees in 28 States across the country and put on over 2000 parties each month.
Robert Herjevic seems almost mesmerized by the U-Bot Robot and asks if he could get inside of it. He immediately points the arm at Kevin O'Leary and proceeds to start shooting Nerf Balls at a high rate of speed. A very cool life sized toy I must say but all I could keep thinking was this one toy must cost a small fortune all by itself. The robot, along with most games used for their parties, was all designed and made by the Games2U engineer's with several having patents on their ideas.
Jeff Foxworthy wants to know how much would it cost to have the Games2U throw a party at someones house. A typical party event cost's $300-$400 and last for approx. 1 1/2 hours. The more lucrative way for the franchisees to make money is throwing corporate events parties that run as high as a few thousand per event.
Kevin O'Leary seems impressed and wants to know about the sales numbers to justify the $5 million valuation. David explains they did over $3 million in gross sales last year and on track to make $5 million this year alone. These are just the corporate sales an do not include the 140 franchisees sales which would send this number much much higher. It costs approximately $150k to become a franchisee of the Games2U business with a 6% royalty on all sales or a minimum of $1000 per month.
Out of the $3 million in sales last year, the Brothers had a net profit of $125,000.00. O'Leary looks a little stunned when he says "you want me to pay you $5 million for that"? Daymond John wants to know why they would come to the Shark Tank with what looks like a rather high valuation considering how much profit was generated. They ask what he thinks is reasonable and John replies "we'll my time alone to work on this project is worth the whole company". Daymond goes on to say that if he has to shell out a half a million bucks for only 10% of the company and then go to work promoting it, it simply does not work for him and proceeds to go out. In fact four of the 5 sharks go out rather quickly based mostly on the valuation. Kevin O'Leary on the other hand still sees some money to be made and offers them the $500k they are looking for but wants a 51% controlling interest in the mobile game industry now putting the valuation right at a million bucks. The Pitkoff Brothers leave the shark Tank to consider Kevin's offer and decide to counter with a 25% stake or a $2 million valuation. O'Leary sticks to his offer which ultimately leads to no deal for the Games2U franchise.
|Fully Setup Franchise Opportunity|
Mobile Games that come to your party
Now here is the part that makes very little sense and most likely why the Pitkoff Brothers did not even come close to making a deal with any of the Sharks. The entire numbers were based on the valuation using just the corporates sales numbers and not the overall sales being generated as a company. What happened to the 140 franchisees all paying a minimum of $1000 per month? I know it's just a few million extra per year being generated from this over sight but isn't that where the real growth of the company will ultimately come from? The profit from the franchisees alone is generating 10 times the revenue that corporate made and yet it was completely left out of the negotiations and not factored into the valuation. There must of been a very good reason and maybe someone that reads this would like to enlighten us on why this critical piece of the puzzle was completely left out.
Games2U after the Shark Tank Update
David and Stuart may of not made a deal with the Sharks but it did get a lot of interest from potential franchisees all across the world. During their Featured update during season 4, episode 405, they were up to 165 locations around the country and already starting to develop markets in 7 other countries around the world. They have continued to develop more unique games for their parties including the Candy Cannon and the U Launcher that can send a water balloon soaring over 90 yards.
No doubt about it, these Games2U parties look like a lot of fun that will continue to draw crowds for many years to come. The fact that they did not make a deal with the Sharks but the producers still brought them back as the featured product update speaks volumes in how successful this business model has become since their appearance on the Shark Tank.
It sure looks like a great way to make money and have a great time in the process.
What more could you ask for?
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