Multi-Brand Franchisors and the Investment Community
In January, Mary Vinnedge of FranchiseWire posed the question: “Are umbrella franchisors the next big thing?” Her article not only affirmed it, but also gave credit to private equity companies for the popularity of umbrella companies and a flurry of acquisitions as the evidence. In fact, investors have been on a buying spree for some time and the rate of acceleration only seems to be growing to the benefit of all stakeholders.
On February 4, Mike Bidwell, CEO of Neighborly, shared news that his organization, now the world’s largest community of home service brands, had reached 5,000 franchise locations. For those keeping count, that includes 29 home service brands across nine countries serving 10 million customers. At the same time, Neighborly has become a quintessential example that with the right culture, the right capital and the right c-suite, tremendous gains can be realized at a rate of speed never before imagined.
In February, Catherine Monson passed the gavel after two years of service as Chair of the International Franchise Association, the world’s oldest and largest organization representing franchising worldwide. During that same tenure, she evolved her own business and went from CEO of FASTGSIGNS, the world’s leading sign, graphics and communications franchise, to CEO of Propelled Brands – a multi-brand entity that now includes FASTSIGNS, NerdsToGo, My Salon Suite and Salon Plaza franchise networks. Propelled quickly advanced to more than 1,000 franchise locations across its multiple concepts and isn’t done expanding.
Likewise, as the world comes out of the pandemic, so does one of the fastest-growing parent companies serving the continuum of care for seniors called Best Life Brands. What began with the acquisition of ComForCare and At Your Side home care now includes sister companies CarePatrol, Blue Moon Estate Sales, and the 2021 launch of Boost Home Healthcare. Best Life Brands CEO J.J. Sorrenti told Home Health Care News, “we want to continue to add brands to the portfolio so that we can serve a senior as they become a senior and help them through the end of life.” There is seemingly no end in sight to demand either as a “silver tsunami” sweeps the country with more than 46 million adults over the age of 65 and growing.
Home services. Business services. Senior care. The list goes on and on. Multi-brand franchisors are getting bigger. And so is the investment community behind much of their growth. Vinnedge said “umbrella franchises have their benefits. One overall plus may be that they have the backing of deep-pocket investors who lend stability and staying power when times are tough because of a sluggish economy, weather disasters and the current grind of the pandemic.”
Additionally, investors aren’t only interested in scaling existing brands with a bigger footprint. More of them are shopping to acquire entire franchise networks and add them to the right parent organization. The duplication of proven systems for a franchise opportunity to be replicated at the grassroots level is now playing out across umbrella companies and the shared services of supporting, enhancing and expanding like-minded franchise brands under one roof.
According to Bidwell, the mission is to add value to the ecosystem. And the recent Neighborly partnership with KKR through its North American private equity fund is furthering that along. “Our objective is to assemble a broad menu of service offerings as quickly as it is practical,” Bidwell said in his article “Growing a Global Brand: Navigating Mergers & Acquisitions.”
“In the early days of Neighborly, we started many of our franchise brands from the ground up, but today, that process is too slow to meet our current ambitions,” he said. “Now, we prefer to nicely reward a founder for their years of sweat equity by acquiring their business at a market rate and growing the business from there.” In Neighborly’s quest to “Own the Home,” those ambitions are being met to the tune of more than $3 billion in annual systemwide sales and climbing. And umbrella companies are helping that kind of bottom line too.
“The umbrella companies may be able to be more cost-effective because of cost-sharing for services such as accounting, legal, and human resources,” Vinnedge said.
Red-hot examples include Stellar Brands, Authority Brands, Focus Brands and too many more to list here. Meanwhile, the common thread for any and all is the hot capital investment scene and the desire to continue shopping.
What one franchisor can achieve with one brand, umbrella companies can elevate for many. And they are proving to be experts with franchise development, marketing and operational prowess across three, five, 10 brands or more with increasing speed, efficiency and support to carry those networks forward in bigger increments each year.
At Best Life Brands, part of The Riverside Company’s portfolio, service brands now include
in-home care, in-home nursing care, senior placement services to assisted living settings or nursing homes, and estate sales, not to mention serious interest in what comes next to complement that business spectrum. The result is now a dominant player in the support and quality of life of an aging population at Best Life Brands and a record-setting 100+ franchise territories awarded across its roster last year.
Sorrenti celebrated the milestone year, saying, “Our growth during 2021 underscores the growing needs of the senior population, but also the value we bring as a multi-brand service organization with franchisees across the U.S. and Canada. We will continue investing in our people and our brands while pursuing new ways to expand and enhance our senior care capabilities.” With more than 10,000 new people reaching the age of 65 each day, expansion cannot come soon enough.
“There are not very many businesses that you can sit here today and look 20 years out and know the demographic is going to get bigger,” he added.
Answering that kind of demand in uniform fashion with speedy execution is where the franchising industry, regardless of economic swings, continues to shine. According to the 2022 Franchising Economic Outlook from the International Franchise Association released on Feb. 16, franchise growth will expand by 2.2% to reach a total of 792,014 establishments, 17,000 more than in 2021. And they will offer stronger careers over independent operators, adding an estimated 257,000 jobs with excellent pay and benefits reaching 8.5 million workers in 2022. Altogether, the outlook shows franchising leading the economic recovery in the U.S. which, when combined with a wave of capital investments, paints a bright picture for franchising overall, not to mention the growing interests of multi-brand umbrella companies accelerating that performance.
[NOTE TO READERS: BizCom Associates supports Neighborly, Best Life Brands, Stellar Brands, and Propelled Brands with a combined 41 brands across those umbrella companies.]