
Themes from this podcast: ▶ State of franchise brands in the US ▶ Private Equity's Value in Franchising ▶ When is the best time to attract PE investment ▶ Best way for brands to prep for PE, and things to avoid ▶ Reg flags PE looks for in Franchise brands ▶ PE's on the franchise development pipeline ▶ PE's interest in unglamorous industries ▶PE's role in enhancing value through platforming

Looking Ahead to 2025, Remember Franchise Ownership is Personal

"Election jitters" can negatively impact the franchise development process. If your franchise sales have stalled, or you're suddenly hearing "We're going to wait" from prospective franchisees, here are tips to reboot growth.

The founder of Emergent Growth Advisors, shares how private equity is reshaping the franchise landscape by driving unprecedented success and innovation. With rising competition and heightened expectations, PE-backed franchises are unlocking new levels of profitability and expansion. Listen in on how this investment surge is not only transforming brands but also creating exciting opportunities for franchisees and vendors alike.

European point of view from recent private equity conference at covered by Financial Times, but themes mirror much of the squeeze we're seeing here in the US: 1) Drop in small PE funds; 2) Flight to large funds (mega-funds heading toward record fundraising year); 3) Increasing investor pressure to create exits & return funds; 4) Longer holds have been necessary recently to drive ROI; 5) Tougher for small generalist PE firms, specialists doing fine; 6) PE firms globally are sitting on record 28,000 unsold businesses (source: Bain) ***** Franchise spin: 1) Coming into 2025 it's setting up to be an active trading year; 2) Good exit may outweigh optimal exit for some PE-to-PE trades; 3) Extreme pressure to hit growth business case; 4) Great operators & franchisees have negotiating power in recruiting discussions; 5) High quality franchise businesses still sought after acquisition targets; 6) When does the "music stop" on PE-to-PE retrades? At some point, there may be no logical PE buyer and some assets may need to find a long hold family office to get an exit if IPO or reverse SPAC aren't options...

Playa Bowls was just acquired by Sycamore. Surprise? No. Playa brought in several new investors in July 2021. At that point the company was valued at $67.8M and had >100 units. It continued to grow, adding 150 units. It's the PE Profit Ladder at work. Now it's time to bring in an investor with deep retail experience to drive the next wave of expansion. A 3-year hold for Tamarix Equity Partners, almost to the month.

New FTC franchise guidance will primarily impact systems with broken or non-existent change management processes. But the entire franchise "neighborhood" can be tainted by association when a few systems don't handle change well. Their mess reflects poorly on the franchise model & attracts regulator attention.

The influx of Private Equity capital in franchising has accelerated the growth of many franchisors and multi-unit franchisees. This wide-ranging interview with Dr. Gosser covers multi-unit operators, PE history in franchising, the PE power dynamic, and how PE transforms brands - including pros and cons of PE investment in franchising.

This in-depth interview focuses on private equity's impact especially on emerging brands and how brands can set themselves up for growth, success, ....and potentially a PE transaction down the road.
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PE Profit Ladder® Market Watch Newsletter
PRIVATE EQUITY’S IMPACT ON FRANCHISING
EMERGING BRANDS
TRENDS
BUILDING SMART
PROSPECTIVE FRANCHISEES
TURNAROUNDS & CASE STUDIES