Global Franchise 10.3

case. Like all things, there’s a massive learning curve to running an effective franchise system – even for Wharton MBAs. Q: What kind of franchise brands are genuinely well-positioned to benefit from consolidation?What do they typically have in place before any deal activity begins? A: There are many levels to the PE ladder (credit to Alicia Miller for that phrase), so all brands have the ability to benefit from an investment, in theory. However, finding the right partner for your stage of growth is the key indicator here, which most do not know how to do. Which is why I always recommend having a sounding board of some kind – a board of directors, deal advisory firm, or investment banking firm – to help you through any process. For some brands, they’re looking for stability because they cannot do it alone. Others believe the only way they can get to the next inflection point is to bring in capital. And for the lucky few, they’re earning what they deserve for a “job well done.” All brands have a good reason, but timing it correctly and finding the right dancing partner is key. Q: For franchisors watching this wave from the sidelines, what risks or second-order effects are being underestimated right now? A: Choosing the wrong partner can be catastrophic to your brand’s long-term prospects. Many brands are growing like a weed and joining up with the first capital partner that bats their eyelashes at them. Being disciplined around who you choose not only matters for your franchise brand, but for your franchise partners too. Q: Looking two to three years ahead, where do you think this period of consolidation will realistically leave the franchise sector? A: I think the franchise sector will naturally become more professionalized, which is sorely needed. The gulf between a “good” and “decent” executive will become larger. Expectations of growth will change, with smart growth – growth in AUVs and unit count simultaneously – being prioritized. But my biggest prediction: the barrier to entry into becoming a franchisor will become higher. Is that good for franchising? I’m not sure. But I do believe we will see this. “Many brands are joining up with the first capital partner that bats their eyelashes at them. Being disciplined around who you choose not only matters for your franchise, but for your partners too” 51 GLOBAL-FRANCHISE.COM Ins ight