Multi-Unit Franchisee Magazine Issue II, 2016 | Page 68
BY EDDY GOLDBERG
Consolidation Nation
LARGE FRANCHISEES CONTINUE EXPANDING
I
n the world of multi-unit franchi- people on the money side what they’re
sees, the big keep getting bigger. In seeing, and what they look for in a poour Multi-Brand 50 rankings (page tential franchise acquisition.
60), which we began publishing in
2008, the number of units operated by The multiplier effect
both the top 5 and top 10 franchisees has “We’ve doubled our size twice,” says
climbed steadily since 2010, following a Shoukat Dhanani, president of the Dhapost-recession drop-off when franchi- nani Group in Houston. The first time,
sees retreated from growth and instead in 2012, with about 80 Burger Kings in
focused on operational efficiency and the Houston area, the company acquired
selling or closing under-performing units 101 Burger Kings in the Northeast. In
(see table below).
November 2014, the company doubled
Also during the past decade: many again, acquiring 255 more Burger Kings
franchisors worked hard to refranchise from Heartland Foods. Today his comtheir corporate stores; a generation of pany’s total unit count is up to 651 (490
Guillermo Perales
retiring franchisees with sizable p ortfolios Burger Kings and 161 Popeyes Louisiana
sold them, whole or in part, to other large Kitchens). “We’re still around, and we’re
operators; and to help grease the skids for still sane,” he laughs.
hard to duplicate.” Sun Holdings now
all these asset transfers, bankers relaxed
Guillermo Perales, founder and owner operates 649 units in all.
their underwriting criteria, alternative of Sun Holdings, says last year was an
Greg Flynn, founder and CEO of Flynn
lending sources sprang up, and the cof- extraordinary one for growth at his com- Restaurant Group, also had a good year.
fers of private equity firms (overfilled and pany. He acquired more than 150 stores, He added a third brand, Panera Bread,
searching for investment opportunities) built about 25 new ones, and remodeled becoming the brand’s first new franchisee
expanded their strategic and acquisitional about 30 more. “It was an active year in 10 years. Today with 807 total units in
sights from franchise brands to franchisee where acquisitions and development fell 28 states—498 Applebee’s, 259 Taco Bells,
into place,” he says. “It was a good year, and 50 Paneras—his company is the largorganizations.
And the big kept getest restaurant franchisee
ting bigger.
in the U.S.
According to FRAN“Our approach has been
data, between 2011 and The number of units controlled by the top 5 and top 10 franchisees in to be very focused within
2015 the largest 100 fran- our annual Multi-Brand 50 rankings has continued to rise, following a a smaller number of conchisees added units more post-recession drop-off.
cepts and be geographithan twice as fast as francally diversified We had
Year
Largest
Top 5
Top 5 Avg.
Top 10
Top 10 Avg.
chising as a whole: while
nothing but one concept
2016
1,499
4,839
968
7,273
727
total unit growth among
for 14 years—Applebee’s—
the 100 largest franchisees
and became an expert in
2015
1,400
4,228
846
6,233
623
was 6.1 percent during that
that” says Flynn. And when
2014
1,232
3,931
786
5,781
578
period, for all of franchisit comes to financing, he
2013
1,158
3,651
730
5,409
541
ing it was 2.9 percent (see
adds, “lenders love that
page 66).
we’re geographically di2012
1,155
3,565
713
5,127
513
We asked several of the
versified.”
2011
766
3,092
618
4,722
472
country’s largest franchisees
Only after becoming
2010
676
2,259
452
3,760
376
about their growth stratea “category killer” with
gies—how they did it, how
Applebee’s did he begin
2009
839
2,594
519
4,011
401
they manage it, and how they
exploring other brands.
2008
812
2,707
541
6,740
674
funded it. We also asked two
“We made that decision
Multi-Brand 50, 2008–2016 by Number of Units
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