Global Franchise 9.1

INS IGHT or expert guidance on maximizing private capital for business expansion, look no further than consultant Alicia Miller. As the founder and MD of Emergent Growth Advisors, Alicia offers unrivaled expertise in franchising and private capital, drawing from her experience as both an investor in brands and multi-unit franchise operators, as well as her background as a former multi-unit operator. Now Alicia has written an invaluable book, Big Money in Franchising: Scaling Your Enterprise in the Era of Private Equity , shedding light on recent events like the monumental $9.5 billion Subway acquisition by Roark Capital, unravelling the intricacies of how to leverage private capital for business growth, and empowering readers with the information needed to build enterprise value and climb the private equity profit ladder. “I wanted to demystify how private equity operates in the context of franchising,” Alicia told Global Franchise . “Both franchising and private equity are often misunderstood and the mash up of the two even more so! I hope the book helps franchise stakeholders to make more informed choices.” We caught up with Alicia for a fascinating conversation around PE growth playbooks, recent international case studies, and the latest investment trends shaking up the franchise scene. GF: What has been the impact of private equity on franchising? AM: More big money players are entering franchising with a mandate to deploy capital, which is creating incredible new liquidity options for founders of good systems. Valuations have been driven higher by this flurry of activity. Another positive development is the entrance of PE investors at the unit level buying out franchisees. This activity is expanding and accelerating, creating exciting new liquidity options for franchisees as well. In some large systems, PE owns the majority of franchised units. This sets up a very interesting relationship dynamic with the franchisor, especially if the franchisor itself is also backed by private equity! PE capital and strategic assistance is exactly what many brands and multi-unit operators need to accelerate growth. With the right support these brands can go further, faster, than they would have on their own. Tropical Smoothie Café and Wingstop are two examples of brands that experienced blow-out success under their PE sponsors. Wingstop went public and continues to expand while TSC is rumored to be preparing for an initial public offering (IPO). Flynn Group, the largest franchisee in the world with more than 2,600 units is also PE-backed. Flynn recently announced its sixth recapitalization, bringing in new PE sponsors to help it continue its growth across new brands and markets. However, numerous other businesses find themselves excluded from the process. The reality is that most brands will never catch the eye of a PE investor. Private equity F “If there are any major flaws in your model, you’re unlikely to attract a PE buyer” 42 GLOBAL FRANCHISE | ISSUE 9.1 Growth in the fast lane Alicia Miller offers actionable insights for founders and franchisees eager to tap into the vast power of private equity