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FINANCE 5 Key Lessons to an Effective Franchise Acquisition Acquisitions are critical to the evolution of most businesses. BY PETER HOLT, CFE I have been active in the franchise community managing franchise systems in both domestic and international markets for nearly 30 years. Most recently, I was president and CEO of Tasti D-Lite and Planet Smoothie. I was with the company for eight years; initially as COO and for the past three years as president and CEO. Among my responsibilities, I led the successful acquisition of Planet Smoothie by Tasti D Lite in 2011 and subsequently in June, I managed the acquisition of Planet Smoothie and Tasti D Lite by Kahala Brands. If there is a common theme to my career beyond franchising, it is experience with acquisitions. Virtually every company I have worked for has acquired additional companies or has been acquired during my tenure. I have been an active participant (if not leading the process) in 12 major completed acquisitions and dozens more that ultimately did not result in agreement. From these diverse experiences I have learned the following lessons: 1. ASK THE CORRECT QUESTIONS IN THE DUE DILIGENCE PROCESS. Before you drill down on the financial and legal review, focus on the essential question of why the company is being offered for sale. Is the purpose to buy out the founder or investors? Is it to raise additional capital for expansion or other key initiatives? Or, is it to address issues with the franchise model due to market condition changes? There are myriad other potential reasons. Understanding the “why” of the sale goes a long way in tailoring the due diligence to ensure you are gaining the specific and key information necessary to make good decisions. (Continued on page 56) 54 FRANCHISING WORLD NOVEMBER 2015
Promote your franchising opportunity every Wednesday to 3.3 million readers* in Franchising Today. Promote your franchising opportunity every Wednesday to 3.3 The million first Wednesday readers* in of Franchising every month, the Today. Franchising Today section includes thought-provoking information written about the most current industry The first Wednesday trends. of every month, the Franchising Today section includes thought-provoking information written about the most current Our Ask Victoria? Column provides our readers the opportunity to industry trends. interact with Franchise Experts in a Q & A format. Call today and start expanding Our Ask Victoria? Column provides our readers the opportunity to your franchise system with qualified, savvy business interact with Franchise Experts in a Q & A format. Call today and start executives and investors, many with sales and marketing expertise. expanding your franchise system with qualified, savvy business *Source: executives 2013 and investors, Mendelson many Affluent with sales Survery and marketing expertise. *Source: 2013 Mendelson Affluent Survery On select Fridays in 2015, we will On select Fridays in 2013/14, we will publish the following “Special Reports.” publish the following “Special Reports.” • February 6, 2015 • February 7, 2014 Franchisee Satisfaction Franchisee with bonus Satisfaction distribution at with Franchise bonus Expo distribution South: at FES-Houston Houston, TX USA •• June 20, 19, 2014 2015 See Top Franchises for Veterans with with bonus distribution at the International Franchise Expo: IFE-New York City New York City, NY USA • October 24, 2014 • Top November Franchises 13, 2015 for Minorities with Top bonus Franchises distribution for Minorities at the with bonus distribution at the WCFE-Anaheim West Coast Franchise Expo: October Anaheim, 24 CA & 25, USA2014
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