Strategically Approaching How To Add Other Brands
There are numerous reasons why franchisees decide to add additional brands to their portfolios. Some do it for diversification of risk, others because they have limited growth opportunities with their existing brand, or maybe it's the allure of a complimentary real estate strategy with the addition of a new concept. Whatever the reason, franchisees need to do everything they can to strategically increase the probability of an efficient and successful process, says Carty Davis.
Davis is founding partner with C Squared Advisors, a boutique investment bank, and he has managed hundreds of financing, merger and acquisition, refranchising, and restructuring transactions over the past 35 years as a lender, investment banker, and financial advisor in the multi-unit franchising space. He encourages franchise owners and management teams to review opportunities to invest in other brands wisely. He says there are many factors and focus points that can help improve the brand approval process and condense overall deal timelines to ensure a buyers' efforts ultimately result in a successful outcome.
Here's one tip he has for zeroing in the focus:
- Have a Limited Focus
As potential buyers review other brands, it is important to stay focused on a limited number of brands. The shotgun approach rarely results in a successful outcome; Be Specific in your search. Buyers that indicate a preference for any deal in a top brand do not separate themselves to franchisors, advisors, banks, or investors. Instead, you're better served getting to really know a select number of brands. Talk to franchisees and manage those introductions through third parties that know the top franchisees; banks, attorneys, and public relations firms all have Tier one clients. A top down and bottom up approach in getting to know a brand and its franchisees can be highly rewarding. Ask questions. How often do acquisition opportunities present themselves? Are there any current opportunities? What is the brand's current remodeling strategy and what are the results? You will develop a series of important patterns and trends by taking such an approach.
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