Welcome back to Franchisor.com\u2019s \u201cFranchise M&A Update\u201d column, your monthly inside scoop for all franchise M&A, industry rumors and bankruptcy stories.<\/p>\n
As Q2 2024 draws to a close, it will be remembered for the buying frenzy in April. May and June slowed down considerably, with many chalking this trend up to the impending election as the reasoning. Here\u2019s a recap of what\u2019s on in the franchise boardrooms in May and June 2024:<\/p>\n
Show Me The Money:<\/strong><\/p>\n Food & Beverage:<\/u><\/strong><\/p>\n Craveworthy Adds 3 Brands In One Week, Adding Sigiri Indian BBQ & Taim & Hot Chicken Takeover Parent, Untamed Brands, To The Platform<\/strong><\/a>: <\/strong>Continuing his rip-roaring pace of brand acquisitions, Gregg Majewski purchased 3 brands in one week to start out the month of May. While many of his brands currently have similar menus, the plan is to merge many of these brands together to increase store count for a unified brand. Yes, Craveworthy Brands has 14 brands right now, but I don\u2019t imagine it will stay that way. Taim and Hot Chicken Takeover will be merging with Soom Soom and Budlong Hot Chicken respectively, making them more nimble competitors against larger category leaders within those segments. As for Sigiri Indian BBQ, I LOVE this acquisition more than anything. The franchise space is dying for an \u201cIndian Chipotle\u201d as Gregg puts it in this article, so don\u2019t be surprised if this is the brand that really makes Craveworthy a household name.<\/p>\n <\/p>\n Twin Peaks Files For IPO<\/strong><\/a>: <\/strong>In an effort to raise capital in light of recent allegations, FAT Brands is finally putting the rumors to rest by filing for an IPO for a combined company of Twin Peaks and Smokey Bones. Long the darling of the FAT Brands portfolio since they acquired the brand in 2021, FAT Brands is capitalizing in a hurry with this move. While the rest of the casual dining segment is struggling, Twin Peaks\u2019 rapid ascent continues through conversions, a tighter menu and a move towards a four-quadrant restaurant (despite the name). How much will this IPO for? Who knows, considering how many franchise IPOs have gone in recent years. But this is certainly a win for FAT Brands, which hasn\u2019t had a lot of those this year.<\/p>\n \u00a0<\/u><\/strong><\/p>\n Beauty, Health & Wellness:<\/u><\/strong><\/p>\n Extraordinary Brands Continues Their Acquisition Spree, Purchases Row House From Publicly-Traded Xponential Fitness:<\/strong><\/a> I told you\u2019d be hearing more about these folks! After about 3 weeks of silence, the Paul Flick-backed Extraordinary Brands strikes again, this time by acquiring Row House from Xponential Fitness. In April, I spoke about Extraordinary Brands looking for an \u201canchor brand\u201d; this seems to be them answering this question. Despite Row House not being top of the priority list for Xponential Fitness vs. other more prominent brands like Club Pilates, StretchLab and Pure Barre; Row House has 70+ open with many in development. That\u2019s a lot of runway for an emerging brand platform! Plus, it gives Extraordinary brands some scale (and some revenue) to make themselves a real, cash-flowing company.<\/p>\n <\/p>\n 100% Chiropractic Purchased By Private Equity Group, Red Iron Group:<\/strong><\/a> Watch out franchise world, I think we have another prolific PE firm on our hands here. Red Iron Group, a PE firm vying for multiple proprietary and banked deals, has made their first transaction, starting with the beauty\/health\/wellness space with 100% Chiropractic. There\u2019s no word on if this will be a franchise platform play or not, but if industry trends are any indication, they likely will be. The chiropractic space has seen quite the revolution since The Joint pioneered \u201cretail chiropractic services\u201d more than a decade ago. This is clearly a play for \u201csecond chair\u201d which I think 100% Chiropractic is uniquely positioned to grab here. Watch for other \u201cmedically-inclined\u201d franchise brands to be the ideal targets for RIG here.<\/p>\n \u00a0<\/u><\/strong><\/p>\n Commercial & Home Services:<\/u><\/strong><\/p>\n Belfor Franchise Group Adds JUNKCO+ To Their Portfolio<\/strong><\/a>: <\/strong>After allegedly missing out on junk removal brands, Junkluggers and Junk King, when they were taken to market in 2022; Belfor Franchise Group finally finds their dance partner in the junk removal space with JUNKCO+. After making splashy acquisitions earlier in their fund cycle, BFG is leaning more towards starting brands from scratch or buying more emerging brands in the space (which is what happened here). This brand should pair well with the 13 other brands owned by Belfor, making it a no-brainer for them. Look for moving to become more prominent for this brand to continue Belfor\u2019s goal of creating an entire home services ecosystem similar to other more established competitors like Neighborly or Authority Brands.<\/p>\n <\/p>\n EverSmith Brands Makes 2nd Big Acquisition Of The Year, Brings Prism Specialties Into Commercial Services Platform:<\/strong><\/a> To the surprise of absolutely no one, a Riverside Company-backed platform has made ANOTHER acquisition. Once considered to be the sleepiest of franchise platform under their ownership, EverSmith Brands, now helmed by recent acquisitionee CEO Ken Hutcheson, has made an entrance into the commercial art, document electronics and textile restoration space with their purchase of Prism Specialties for an undisclosed sum. Though not a household name in franchising (yet), this brand is a fantastic pick-up for a platform that is starting to pick up a ton of steam. I privately predicted the commercial services space would heat up in 2024, so I\u2019m happy to see my bet coming to fruition here.<\/p>\n <\/p>\n Specialty Retail:<\/u><\/strong><\/p>\n Sony Pictures Entertainment Purchases Struggling Theater Franchisor Alamo Drafthouse:<\/strong><\/a> Whaddya know, my two favorite worlds are colliding! In a landmark deal, Sony Pictures Entertainment is getting into the \u201cexhibitor\u201d business with Alamo Drafthouse, which filed for Chapter 11 protection in 2021. Known as a theater that screens more movies than any major exhibitor, this seems like a wonderful way for Sony to put more movies from their indie division, Sony Picture Classics, into theaters. SPE\u2019s CEO has a *bit* of a vendetta against Netflix (who has found Alamo Drafthouse to be a safe haven for their limited theatrical run windows), so I\u2019ll be curious if that relationship continues here. From a franchise-angle, I\u2019d imagine that Sony likely won\u2019t be looking to massively grow this business, there is already a major \u201cover-screening\u201d problem in the USA today.<\/p>\n On The Franchise Trade Block:<\/strong><\/p>\n After 16 Years, Roark Capital Is Finally Ready To Sell Primrose Schools:<\/strong><\/a> After seeing Goddard School go for an eye-popping number last year, Roark Capital has finally been tempted to test the market for Primrose Schools, a portfolio company that\u2019s had a historically long hold. As you look around at the private equity ladder, there aren\u2019t many places to go beyond Roark Capital aside from the biggies like KKR and Blackstone. I\u2019ll be interested to see what the new owner will do with this brand; will it become a strategic platform anchor? Roark Capital resisted putting Primrose with their children\u2019s services platform, Youth Enrichment Brands. Time will tell, but I think that\u2019s the likely outcome here considering early childhood education\u2019s prominence within the children\u2019s services space.<\/p>\n \u00a0<\/strong><\/p>\n