I was just reading that MD address. I am not as excited about it...

I was just reading that MD address. I am not as excited about it as other HC posters. Some issues I think:

1. why not just run the company as a cash cow and make $15m a year, isn't this good enough? Why the need to expand and take over China. They also hint at international expansion, why would they do this, isn't China big enough? Why not run it for 3 years as is, and turn the $30m cash into $75m cash? That would be the best way to get the share price up. No need to rush and take over the world might find there is no money in the bank in 3 years and they have 1000 stores making no money.

2. acquisitions - why would they seek to acquire anything? They have a good business that is capable of expanding as they are doing. Why acquire? That would probably be a big mistake and would potentially lead to a big write off. People that sell their business lose all the incentive to keep working the day they get their cheque even if they are escrowed in.

3. Buying franchisees out. Why are they doing this? Franchisees if they are real franchisees in the true sense of the word, work far harder than employees. Your returns are better, and you do not have the lease risk on the balance sheet.

A few points in that letter that I think are not great.