Papa Johns Buys U.K. Stores, Plus More Bold Deals

Papa Johns International acquired a portfolio of 91 restaurants in the United Kingdom that were previously operated by the M25 division of Drake Food Service International, the largest international franchisee for the pizza brand, with more than 400 stores. Financial terms of the transaction were not disclosed. DFSI will continue to hold its master franchise rights for Papa Johns in Spain, Portugal, Chile and Central America. The new corporate-owned restaurant portfolio consists of 91 locations across London and other parts of the U.K. Papa Johns said it sees opportunities to implement operating model enhancements including revenue management capabilities, product and technological innovation and operational efficiencies, to improve sales and restaurant-level profitability.

The move comes as Papa Johns faces challenges in the U.K., which with more than 500 stores is the brand’s largest market outside of North America. In its annual 10-K filing with the U.S. Securities and Exchange Commission, Papa Johns noted macroeconomic conditions in the U.K. have declined amid ongoing inflation, rising interest rates and the recent energy crisis, and the company “has experienced increasing declines in sales and profitability in the UK market.” DFSI is also facing a lawsuit related to its acquisition of 61 restaurants that are part of the portfolio purchased by Papa Johns, as  Raheel Choudhary, a British entrepreneur and director of HRC Pizza Group, said DFSI failed to purchase the remaining 40 percent of shares in his company as part of the deal.

Area 15 Ventures acquired the remaining equity in Daddy’s Chicken Shack to gain full ownership of the brand and its 160 locations in development. The Castle Rock, Colorado-based private equity group is owned by the Liniger family and invests in a dozen businesses, ranging from restaurant brands to motorcycle companies. This announcement comes just one month after Area 15 Ventures acquired Port of Subs, a 50-year-old legacy sandwich brand based in Nevada. Daddy’s Chicken Shack was founded in 2018 by Pace Webb and Chris Georgalas in Pasadena, California, and began franchising in 2021. Dave Liniger, co-founder of RE/MAX and Area 15 Ventures, will serve as brand chairperson and plans to open his first new location in Scottsdale, Arizona later this month. Liniger’s son, Dave Liniger Jr., now serves as the president of Daddy’s. There are currently 13 Daddy’s Chicken Shack locations listed on the brand’s website, with three in Florida and two each in Colorado and Texas. There are locations also in Los Angeles, Atlanta and Phoenix.

FAT Brands is pursuing an initial public offering of its Twin Peaks restaurant business. The transaction is intended to unlock value for FAT Brands’ shareholders by creating a separate publicly traded company and help facilitate continued strong growth of the restaurant chain and market segment, according to a press release. Los Angeles-based Twin Peaks, a sports bar franchise, opened its 100th location, in the Indianapolis suburb of Greenwood, on June 2 and is scheduled to open its first Rio Grande, Texas, location later this month in the border city of McAllen.

Since the acquisition by FAT Brands in October 2021, Twin Peaks’ footprint continues to grow both in unit count and geographically, now operating in 26 states and two countries. The brand is slated to open 18 to 20 new lodges in 2023 and expects to end the year with approximately 115 lodges, an almost 40 percent increase in unit count since the acquisition. Twin Peaks has a committed development pipeline for an additional 109 franchise locations over the next several years, doubling its unit count to more than 200 lodges and increase the mix of franchised locations from 70 percent today to more than 80 percent. The planned unit growth is expected to increase systemwide sales to approximately $1 billion.

Taco Bell franchisee Shamrock TBC bought six existing midwestern Taco Bell locations from MMC Enterprises. Unbridled Capital was the sell-side adviser on the transaction. Jeff Firari leads MMC and Dan McGue leads Shamrock. This is Unbridled’s third Taco Bell deal of the year. The adviser has 15 other deals in its pipeline. Shamrock is based in Hindsdale, Illinois, and owns more than 24 Taco Bell stores in the Chicago area. MMC is based in Beaver Dam, Wisconsin.

Private equity firm Eagle Merchant Partners invested in Impact Home Services, a major Neighborly franchisee. Impact Home Services operates franchises for Mr. Rooter Plumbing, Precision Door Service and Mr. Electric—each under the Neighborly umbrella—in Georgia. Impact is looking to invest more in independent garage door, electrical and plumbing businesses in the area. Eagle Merchant is focused on investing in founder-owned businesses in the southeastern United States.

The senior management team of Franchise Group has agreed to acquire approximately 64 percent of the company’s stock in a transaction that will take the company private. The management team is led by CEO Brian Kahn along with a consortium of financial partners that includes B. Riley Financial and Irradiant Partners. Franchise Group owns and operates a number of franchised businesses that include The Vitamin Shoppe, Pet Supplies Plus, Wag N’ Wash, American Freight, Badcock Home Furniture & More, Buddy’s Home Furnishings and Sylvan Learning. Franchise Group has more than 3,000 locations, predominantly in the U.S., that are either company-run or operated by franchisees or dealers.

The transaction is valued at $2.6 billion with the deal expected to close in the second half of 2023. However, the deal also includes a 30-day “go shop” period during which the company can solicit alternative proposals from interested parties. If the current deal goes through, Franchise Group will become a private company and will no longer be traded on the NASDAQ. Franchise Group’s management team, including Kahn, is expected to continue to lead the company. Franchise Group was founded and went public on the NASDAQ in 2019 through the merger of Liberty Tax and Buddy’s Home Furnishings. That same year, it acquired The Vitamin Shoppe and Sears Outlet, which it eventually merged into the American Freight business when that company was acquired in 2020.

Franchisees purchased two separate, existing Sylvan Learning Centers in London, Ontario, and Beaverton, Oregon. Kristen Brekelmans, an early childhood educator, purchased the Ontario location because she wanted to get back into working with children. She took some time off from her career when the pandemic hit to stay at home with her daughter. Brekelmans is new to the Sylvan franchise system.

The Oregon unit is Sylvan’s first-ever location. Audra Bohn and Amy Paradis purchased the Beaverton location, making the center their second in the Portland area. Bohn owns another location in the area, and is also the president of Sylvan’s franchise owners association. The duo have been friends for more than two decades.

Charton Management sold its eight Burger King restaurants in southeast Ohio and West Virginia to an unnamed buyer. Charton, led by president Matthew Herridge, is the management company for Delton Restaurants and Delsher Inc, two Burger King groups, and for QMG Venture, which operates Qdoba locations. Brent Elsass and Carty Davis of C Squared Advisors, an independent investment bank, led the sale in partnership with Andrew Lapin at Robbins DiMonte, who served as legal counsel. Pinehurst, North Carolina-based C Squared provides financial and transaction advisory services to franchisors, franchisees and multi-unit operators in restaurant, retail and service industries, advising clients on sell-side, buy-side, refranchising, recapitalization and capital raise transactions.

First Watch Restaurant Group acquired six of its previously franchise-owned restaurants in Omaha, Nebraska. The acquisition was funded with cash on hand. There are more than 480 First Watch restaurants in 29 states. The Bradenton, Florida-based First Watch Restaurant Group is majority owned by the private equity firm Advent International.

Longtime local printing business Downtown Direct in Amherst, Ohio, is being converted to a Minuteman Press shop following the sale to the franchisor. David Routh, a former plant manager at J.H. Routh Packing Co. in Sandusky, Ohio, bought the printing business in his hometown of Amherst from Rick and Liz Hobson, who are retiring after running their shop for 16 years. Rick Hobson, who has worked in the printing business for 30 years, said he and his wife more than tripled annual sales while growing their printing business each year they owned it.

Happy Belly Food Group closed on a franchise acquisition agreement with Pirho Fresh Greek Grill, a Canadian restaurant franchise. Happy Belly plans to grow Pirho through franchising, with 60 stores in the works through signed area development agreements. Happy Belly signed an agreement to open 30 Pirho stores in Ontario. The two companies created a joint venture company as a means for corporate franchise expansion. Happy Belly has 50 percent ownership of the joint venture company, with the rights to acquire the remaining half if it chooses. Happy Belly issued $250,000 worth of stock, for a total of 1.5 million shares. The shares will be insider controlled and reported.

Source: Franchise Times

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