Consolidation, acquisition and private equity activity in the franchising sector is gathering pace in Australia says,
Bruce McFarlane, Head of
Franchising & Distribution at commercial law firm, Hall & Wilcox.
Speaking after the Franchising Council of Australia's Victorian State Conference on Wednesday 12 May 2010, Mr McFarlane said now is the time for astute franchisors to capitalise on their investment.
"Since the GFC, we have seen an increase in overseas investment in Australia and in the last 18 months we have also seen Australian listed companies making acquisitions of several established franchise systems."
"For example, Dymocks purchased an 80% stake in Healthy Habits, Retail Food Group acquired both the Big Dad's Pies and DCM Coffee & Donuts franchise systems and Franchised Food Company purchased Cold Rock Ice Creamery."
On the private equity front, US based private equity firm The Riverside Group recently purchased a controlling stake in the Boost Investment Group (owners of Boost Juice Bars and Salsa's Fresh Mex Grill). Hall & Wilcox advised Boost Juice founders, Jeff and Janine Allis, on the deal.
Critical to a franchisor's ability to maximise return on investment is ensuring that their franchise system is in good shape, both financially and legally, Mr McFarlane explained.
"Ensuring that your franchise documentation, procedures and systems are compliant with legal requirements will result in a more attractive proposition for potential purchasers and investors, as it offers greater transparency and lower risk.
"As a business owner, you never really know when the goose with the golden egg will appear - be prepared!"
Hall & Wilcox has been involved in a number of significant
private equity transactions in the middle market including acting for sellers, international buyers and management teams.
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