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. 6 weeks away from the big White House showdown, which still has most private equity firms and strategic buyers feeling gun-shy (despite having a historic amount of dry powder).<\/p>\n
And then seemingly out of nowhere, the historically apolitical Federal Reserve did a jumbo interest rate<\/a> cut. Jerome Powell, Federal Reserve Chair, normally is quite<\/em> transparent before making a drastic change in policy. This time, both Main Street and Wall Street were left guessing until it was announced: 50 basis point cut, enough to typically stimulate a stifled economy. For many, they were just excited to see rates drop closer to equilibrium again. But for more conspiratorial\/suspicious pundits, the Fed was wading into political waters dangerously close to the election. Will this rate cut have immediate benefits? Or will this bolster the saying of \u201cLet\u2019s Thrive In 2025\u201d even more? I expect it will be the latter, but it sure would be interesting to see if this unlocks some deals at the goal line!<\/p>\n With that, let\u2019s dive into September\u2019s franchise deals. Some buzzy ones this time around, including one close to my heart in the \u201cMiscellaneous\u201d section. Additionally, the trend of \u201cnostalgic restaurant brands filing for bankruptcy\u201d has continued, with a couple of franchisors falling victim too.<\/p>\n Show Me The Money:<\/strong><\/p>\n \u00a0<\/u><\/strong><\/p>\n Beauty\/Health\/Wellness:<\/u><\/strong><\/p>\n After Long-Rumored Flirtation With PE Investment, VIO Med Spa Finally Takes The Plunge With Freeman Spigoli\u2019s Majority Investment:<\/strong><\/a> With PE\u2019s obsession with medical spas, it was only a matter of time until one of the franchise industry\u2019s largest examples received a sizable investment. After holding court for 18 months, Raymond James has helped VIO find their match: Freeman Spigoli, a well-known firm currently invested in industry giants like Batteries Plus and Propelled Brands. It is not known whether this is the beginning of a beauty-focused \u201cshared service\u201d platform or if this is a singular investment, but I believe the lack of \u201croyalty-sustainable\u201d beauty assets will make this the only investment for FS. Not a bad one to nab though, let\u2019s just hope the FDA keeps the products\/services the medical spa space specializes in as compliant to their guidelines\u2026wouldn\u2019t be a fun situation to deal with for any investors in the category.<\/p>\n Commercial & Home Services:<\/u><\/strong><\/p>\n In Bid To Be First-To-Market In Burgeoning Industry, Daisy Closes $7M Round & Acquires Biggest Competitor, SaaviHome<\/strong><\/a>: <\/strong>Venture capital is not a common avenue for franchisors, let\u2019s start there. In recent years, brands inventing new categories have gone the venture route to get their innovative ideas off the ground, even if the market may not believe the categories is \u201cfranchiseable\u201d. In Daisy\u2019s situation, I think the venture gamble will pay off in the long run considering the management team (Hagan Kappler is a former ServiceMaster Brands exec) and the space (smart home installation will become commonplace when the price for the products drops over time). And to solidify their place as the \u201cfirst-market entrant\u201d, they acquired their biggest franchise competitor, SaaviHome, just for good measure. Excited to see where this brand goes, feel like this is an industry that will have a ton of copycats for before long!<\/p>\n Food & Beverage<\/u><\/strong><\/p>\n A Value Investor No More: Sycamore Partners Nabs Rapidly-Growing Acai Bowl Leader, Playa Bowls:<\/strong><\/a> Historically known as a value investor, Sycamore Partner has surprised industry insiders with their acquisition of Goddard School<\/a> in 2022 and now their most recent move, diving into the \u201chealthy-for-you\u201d industry with Playa Bowls for a reportedly \u201csizable\u201d multiple. The jury is out on this space\u2019s viability as it matures, some aren\u2019t sure if the transition from \u201cacai bowl to healthful cuisine\u201d will be as seamless as it was for the \u201csmoothie to healthful cuisine\u201d transition brands like Tropical Smoothie Caf\u00e9 made, but time will tell here. One thing I know for sure: Sycamore Partners sure hopes it does.<\/p>\n Modern Restaurant Concepts Sells Namesake Brand, Modern Market, To Original Franchise Group, Thrive Restaurant Group:<\/strong><\/a> Not much is known about this one, but it seems that Modern Restaurant Concepts backer, Butterfly Equity, had enough of their platform\u2019s namesake brand. Feelers were put out, the original franchisee was interested, and that\u2019s how the cookie crumbles. The healthful cuisine category has been a roller-coaster (as I discussed above), so I\u2019m curious to see if Modern Market continues to franchise (especially since they only started doing so in 2022). Seems to be a win-win for all, as Butterfly Equity has the more-scaled Qdoba to handle and Thrive Restaurant Group gets to add themselves to the list of multi-unit operators buying sub-scale brands (see Guillermo Perales<\/a>, Tabbassum Mumtaz<\/a>, Anand Gala<\/a> and many more).<\/p>\n \u00a0<\/u><\/strong><\/p>\n Miscellaneous:<\/u><\/strong><\/p>\n International Franchise Association Makes Speculation A Reality With Acquisition of Franchise Update Media:<\/strong><\/a> Under current President & CEO, Matt Haller, the International Franchise Association has made it their mission to raises more funds for their PAC (FranPAC) and to improve their bottom-line by getting rid of what I perceive as \u201cextraneous products and services\u201d. Now that Haller has successfully done both at this point in his regime, the trade organization has used their new-found cash position to simultaneously get back into two businesses they were once heavily subscribed in (the media business and the conference business) in a HUGE way with their acquisition of Franchise Update Media. While having the quarterly magazine will be a solid cash flow addition, IFA did this deal for one reason in this author\u2019s opinion: the Multi-Unit Franchise Conference, the cash-cow of FUM. As one of the most valuable conferences in the industry, IFA is now in a position to make a major impact with franchisees, long a part of the franchise model they\u2019ve lacked penetration into relative to other parts of the industry. Not to mention, it certainly doesn\u2019t hurt to have a franchise development and a marketing conference under their control again!<\/p>\n \u00a0<\/u><\/strong><\/p>\n Specialty Retail:<\/u><\/strong><\/p>\n After Signaling To The Market They Were Ready To Consolidate Their Category, Twist Brands Makes Good On Word With Acquisition Of Long-Time Rival, Pinot\u2019s Palette<\/strong><\/a>: <\/strong>When the paint-and-sip category was created in the early 2000\u2019s, many would have never predicted any brand would reach an apex of 400 units. And yet, Painting With A Twist managed to do it. As the category reached maturity, the industry-leader became more nimble with their acquisition of Color Me Mine and the distribution companies associated. Now, they\u2019ve pulled the other lever in the \u201cprivate equity playbook\u201d: attack the areas where you haven\u2019t grown through acquisition of the weaker. In this case: a struggling Pinot\u2019s Palette, which was a fierce rival to Painting With A Twist in their hey-day, officially becomes part of the Twist Brands family. Seeing this, I believe Twist Brands isn\u2019t done here, they will continue to search in the \u201cDIY\u201d space to capitalize on the numerous struggling peers in the category.<\/p>\n Bad, Bad News:<\/strong><\/p>\n As Predicted, Parent of Publicly-Traded Owner Of BurgerFi & Anthony\u2019s Coal-Fired Pizza Most Certainly Doesn\u2019t Survive 2024, Files For Bankruptcy:<\/strong><\/a> Guess I may be a fortune-teller! After predicting this in the last week of August, BurgerFi was delisted, attempted to sell their assets\u00a0 to service their debt (and failed) and filed for bankruptcy\u2026all within two weeks. At this stage, the management team (alongside their new Chief Restructuring Officer) is looking to sell of the assets as we speak, except with bankruptcy protecting them. Now for the fun part: who will be taking a flyer on both of these brands!<\/p>\n