I own three Subway franchises "Eat Fresh" and am working with my family on our third Daycare Location as well.

You would use (2) if you want to invest actively in rehabs, wholesaling, new home construction, property management business (or in a profit-sharing arrangement on rehabs and construction, even if your role is passive), or any other type of active business such as a Subway franchise.

Cap rates of 6-12% seem to float around.Then, as far as buying a business, it is common to buy in multiples of earnings, ie. 2x-5x earnings, or more or less depending on the industry.Now, I was once looking to buy a convenience store (franchise) and it seemed as if I'd be buying around 2.5 times earnings, so higher than a 6-12% cap rate, but obviously that makes sense because it is much more work than a semi-passive apartment complex with a manager, or something along those lines.

I am working out the details of partnering with the owner of most of dominos franchises in my area as he has plenty of money if he will act as the money arm I believe with the experience around me and a site like this at my finger tips I will have a good shot at successfully managing the complex otherwise i'll take some from the bottom line and have it properly managed.

One downside in California is the $800 per year franchise fee.  

Many franchise owners and NOT owner/operators, since that is literally impossible when you own 10 franchise operations in 3 states... you just can't be an O/O.

I have another schedule (C, D, E - cannot remember which one) and a Texas franchise tax return.

I could argue the same for a fix and 'flip' auto dealership vs. a franchised auto dealership.

Interview some local brokers as well as the franchises.

If it says that, then you should go to the following site and contact the Franchise Tax Board: https://www.ftb.ca.gov/businesses/faq/728.shtml