Private Equity In Franchising

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In a previously published article in Entrepreneur, iFranchise Group CEO Mark Siebert cited the remarkably high levels of investment activity taking place in the franchise marketplace, with private equity firms buying franchise companies at a record pace, and at record high valuations.

Before the pandemic, there was already a noticeable uptick in PE (Private Equity) involvement in the franchising sector, as revealed by research conducted by FRANData. The data showed that the count of franchise brands acquired by PE firms increased significantly, surging from 24 to 60. Furthermore, a substantial 87,488 franchised businesses were part of PE-led M&A (Mergers and Acquisitions) deals, and approximately 64% of brands that had been franchising for a decade or longer were acquired by PE firms. Importantly, these trends have persisted over the past several years.

Increasingly, franchisor companies are turning to private equity firms and other strategic investors as a means of realizing liquidity once it is time to exit their franchised business. 

iFranchise Group can help franchise companies prepare themselves for intelligent, sustainable growth and optimized operations. Eventually, these franchisors can become prime candidates for private equity acquisition.

Here is a compilation of some of the franchising enterprises that iFranchise Group consultants have collaborated with over the years, resulting in their successful acquisition by private equity firms:

• 101 Mobility: acquired by The Cortec Group
• 16 Handles: acquired by Danny Duncan and (franchisees) Neil Hershman
• Abra Auto Parts: acquired by Roark Capital
• Amazing Lash: acquired by WellBiz Brands owned by KSL Capital Partners
• Archadeck Outdoor Living: acquired by Empower Brands which is owned by MidOcean Partners
• Auntie Anne’s: sold to Focus Brands, owned by Roark Capital
• Ben Franklin Plumbing: acquired by Authority Brands which is owned by APAX Brands
• Big Blue Swim Schools: acquired by Level 5 Capital Partners
• Buffalo Wild Wings: acquired by Roark Capital
• Carrows: acquired by Zensho of Japan
• CARSTAR: acquired by Roark Capital
• Checkers/Rally’s: acquired by Oak Hill Capital Partners
• Clockwork: acquired by Authority Brands which is owned by APAX Brands
• Concrete Craft:  acquired by Home Franchise Concepts
• Culvers: acquired by Roark Capital
• Delta Disaster: acquired by Harris Research
• Doctors Express: acquired by American Family Care
• Drybar: acquired by Roark Capital, then by Wellbiz
• Dunkin’:  acquired by Roark Capital
• Fannie May Candies: acquired by Ferrero
• Fitness Together: acquired by WellBiz Brands owned by KSL Capital Partners
• Fogo de Chão: acquired by Bain Capital
• FRSTeam: acquired by LYNX franchising, owned by MidOcean Partners, now known as Empower Brands
• Fuzzy’s Tacos: acquired by NRD Capital, then by Dine Brands
• Harris Research, the parent company of Chem-Dry/NHance: was acquired by Nautic Partners, Baird Partners, and Belfor
• i9 Sports: acquired by LNC Partners, then by Roark Capital
• Line-X: acquired by Graham Partners, then Clearlake Capital
• Massage Envy: acquired by Roark Capital
• McAlister’s Deli: acquired by Roark Capital
• Mooyah Burgers: acquired by Balmoran Funds and Gala Capital
• Mosquito Shield: acquired Five Star Franchising, owned by Princeton Capital
• Mr. Sparky: acquired by Authority Brands which is owned by APAX Brands
• Newks: acquired by Sentinel Capital
• Nick the Greek: acquired by YTG Enterprises
• Nothing Bundt Cakes: acquired by Roark Capital
• Office Evolution: acquired by UFG
• One Hour Heating and Air Conditioning: acquired by Authority Brands which is owned by APAX Brands
• Oreck: acquired by the manufacturer of Hoover and Dirt Devil
• Payless Shoe Source: acquired by Blum Capital and Golden Gate
• Pinkberry: acquired by Kahala Brands
• Praxair: acquired by Linde
• Primrose School: acquired by Roark Capital
• Schlotzsky’s Deli: acquired by Roark Capital
• Senior Helpers: acquired by Altaris Capital Partners, then by Advocate Aurora
• ShelfGenie: acquired by Neighborly, which was later acquired by KKR
• Sonic: owned by Roark Capital
• Successories: acquired by TWS Partnership
• Tasti D-Lite: acquired by Kahala Brands
• Two Men and a Truck: acquired by ServiceMaster Brands
• TV America: acquired by the Tribune Companies
• Waxing the City: acquired by Self Esteem Brands which is owned by Roark Capital
• White Hen Pantry: acquired by 7-Eleven
• Woofie’s: acquired by Authority Brands which is owned by APAX Brands
• WoodSpring Suites: acquired by Choice Hotels

Here are additional iFranchise Group clients that conducted acquisitions of other brands:

• Riverside Capital / Threshold Brands: acquired Clintar, Greenguard, MaidPro, Heating + Plumbing Paramedics, Men In Kilts, Grasons
• Advantage Performance Group sold BTS Group AB
• Denny’s acquires Keke’s Breakfast Cafe
• LINE-X (with Graham Partners) acquired Ground Effects Ltd. (GFX); LINE-X acquired Ultimate Linings to form a new parent corporation called IXS Coatings
• Pet Supplies Plus acquired Wag N’ Wash

Merger and Acquisition Due Diligence Experience

The senior team at iFranchise Group possesses extensive expertise in performing thorough assessments for the acquisition of franchisors. Mark Siebert co-authored a White Paper entitled “Buying And Selling Franchise Companies – Charting A Course For Smooth Sailing” which was showcased at an event held by the American Bar Association.

Over the course of their careers, iFranchise Group consultants have participated in a range of due diligence engagements, including the following:

• Archadeck acquisition of Outdoor Lighting Perspectives
• Rothchild Group attempted the acquisition of Avis-Rent-A-Car
• NexCen Brands, Inc. (NASDAQ: NEXC) acquisition of Athlete’s Foot
• Mason Wells attempted the acquisition of Batteries Plus
• Franchisee attempted acquisition of Burger King
• Nautic Partners acquisition of Chem-Dry/N-Hance (Harris Research)
• Sale of Concrete Craft franchisor to Home Franchise Concepts
• Due diligence was conducted for Dunkin Donuts for the acquisition of a manufacturer
• Souper Salad and Sun Capital Partners acquisition of Grandy’s
• RFE Investments’ acquisition of Great Clips
• American Capital Partners’ acquisition of Hollywood Tans
• Acquisition of a division of ITT by the Olsten Company
• Graham Partners’ acquisition of LINE-X
• Adia Services’ acquisition of Nursefinders and several smaller companies
• Major Investor (confidential) investment in Old Country Buffet
• Investor (confidential) attempted acquisition of Payless Shoe Source
• Clearview Capital’s acquisition of Primrose Schools
• Rockport Capital Partners attempted the acquisition of a confidential target company
• ShelfGenie attempted the acquisition of a Canadian franchisor

If you’re seeking guidance on preparing your franchise system for private equity investment or other M&A activities, look no further.  iFranchise Group’s expert consultants specialize in helping franchisors optimize their brands and systems for compelling investor appeal.