Tag Archives: Multi-Unit

Some Multi-Unit Franchisees are Public Companies

While most of the private equity and public offering activity of franchise companies focuses on franchise brands and systems, every now and then a large, multi-unit franchisee will go public or seek private equity financing. Public company franchisees may trade at lower multiples than those of franchisors because the franchisees do not control the brand. But publicly-traded multi-unit franchisees can nevertheless be significant companies in their own right. Publicly-traded franchisees include the following companies: Carrols Restaurant Group trades on Nasdaq.  It owns and operates approximately 675 Burger King franchises.  Burger King, the franchisor, has an ownership interest of approximately 28% in the …

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Franchisor IPOs Were Strong in 2014

While private equity activity continued in strength in 2014, franchisors also launched initial public offerings (IPOs) in the last year. Recent IPOs of franchise companies include the following: Habit Restaurants Inc. – This franchisor of the fast casual Habit Burger Grill restaurants raised about $90 million in a Nasdaq IPO in November 2014. The Joint Corp. – This franchisor of chiropractic clinics raised more than $17 million in its Nasdaq IPO November 2014. El Pollo Loco Holdings Inc. – This Mexican chicken fast casual restaurant franchisor raised $107 million in its Nasdaq IPO in July 2014. The company did a …

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Why Subfranchising is Rare in the U.S.

Subfranchising is one of three multi-unit franchise structures that the North American Securities Administrators Association, Inc. (NASAA) addressed in their Multi-Unit Commentary, which was the subject of an earlier post.  The other two types of multi-unit franchise offerings discussed in that post are area development and area representative. Of the three multi-unit approaches, the subfranchise is by far the least commonly used in the U.S.  And with good reason. In subfranchising, the franchisor appoints a master franchisee who has the right and obligation to sell subfranchises within a defined territory.  The agreement between the franchisor and the master franchisee is called …

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How to Disclose Multi-Unit Franchise Offerings

Multi-unit franchising is a good way to grow a franchise system quickly.  We now have guidance on how franchisors should present multi-unit franchise offerings. The North American Securities Administrators Association, Inc. (NASAA) adopted a Multi-Unit Commentary September 16, 2014.  Its message was this:  Starting in early 2015, registration states will not accept a combined franchise disclosure document (FDD) that includes both the single unit offering and the area representative offering.  The area representative offering must be disclosed in a separate document from the unit offering, and the two must be registered separately.  States that require franchise registration will no longer accept …

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