Exit Strategy Insights For Multi-Unit Non-Food Franchisees And Growing Franchisors With M&A Advisor, Brian Alas

by | Sep 25, 2023 | Podcast

FM 3 | Exit Strategy


When is it time to transition out of the game and focus on being a franchisee or even further your growth as a franchisor? During this episode, we take a deep dive into all things exit strategy with Brian Alas, Managing Director at Boxwood Partners. Boxwood is a mid-market mergers and acquisition firm with a keen focus on franchising. Brian shares sell-side insights and from-the-trenches perspectives, helping multi-unit franchisees and growing franchise systems sell to institutional investors. From operating a franchise system and thresholds for exits to next-level strategic growth for franchisors, Brian gives us a show full of great insights that you don’t want to miss. So tune in and learn more tools for success in the franchising world.

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Exit Strategy Insights For Multi-Unit Non-Food Franchisees And Growing Franchisors With M&A Advisor, Brian Alas

We are joined by Brian Alas with Boxwood Partners. He brings an interesting perspective. He’s a broker on a much bigger scale than I am and doing much bigger deals than I will ever do. Brian, welcome.

Thanks, Dru. I appreciate you having me on. I’m looking forward to the discussion here.

We were jamming before this, and you’ve got an interesting vantage point with what you guys do, but I’d love to kick it over to you and maybe introduce Boxwood yourself, how you got into franchising, and how you got to this point where you’re doing a bunch of deals that everybody’s paying attention to.

Boxwoods is a lower-middle market M&A advisory firm that has carved out a nice niche within the franchising network. I’ve been at Boxwood for several years. I have been here from the ground up. We cut our teeth in franchising with a frozen yogurt business back in the day called sweetFrog. Down the Charlotte area, we had a bunch of locations back in the day. We went to sell that business. For one reason or another, I ended up owning and operating it. We’ll leave it at that.

I learned franchising from the ground up. Everything from Item 19, the FDD, managing franchisee and vendor relationships, across the board with Pat, my colleague, and grew into a love of franchising. We started going to all the conferences and getting into the network. What we realized was we understand this business. We’re still primarily an investment bank and M&A advisory firm, even though we’re doing that on the side.

Our franchising kicked off with the deal in your neck of the woods called AdvantaClean, which you hold near and dear to your heart from your previous life. We have been on a stretch ever since. We’ve done over 40 franchise deals in the last several years, including franchisee, franchisor, and the franchise services side. I have seen it from a lot of different perspectives. We’ve seen a lot of different industries, but I have been doing this for a while and looking forward to the next wave of the next big thing.

You guys operated a franchise system, sweetFrog.

We tried to, at least.

That gave you guys a good perspective in terms of what it takes to operate a franchise system in general. You dovetail into what you guys are doing now.

My colleague Pat was an operator in a previous life. He was the CEO of a publicly traded company in London for a number of years before coming to the banking side. We bring the operating experience and the expertise in the deal front where we can understand what the secret sauce of the brand is. What makes them tick? Why is this going to be attractive to investors, sustainability, and trends? That allows us to be a little bit more savvy on some of the positioning and seeing what a concept could be maybe earlier than some others.

You guys do both franchisors. You sell franchise systems. You also do large multi-unit operators.

There has been a big shift in the market over the last couple of years. It’s been table stakes within the restaurant and fitness world that multi-unit private equity deals happen. What we’re seeing is a switch to the home and commercial services side of things. We’re working with a number of franchisees within Neighborly, Authority Brands, and Hand and Stone in particular.

We’re starting to see a shift within the franchisee investing universe that everyone for a long time said, “It’s Young Brands, Fitness World, and Planet Fitness of the world.” There is no reason, now that these systems are starting to mature, that you can invest in Neighborly, Authority Brands, and some of these bigger home and commercial service platforms.

There’s a shift into the non-food franchise world you’re seeing that’s getting bigger.

It is like what we saw during COVID. We saw a massive shift within the non-food into service franchises or businesses around the 2020 timeframe. We’ve been on a run with a lot of those ever since. You’re starting to see these are great brands and businesses. We love the underlying model. We don’t have to buy the franchisor to be part of a Precision Garage Door or a Monster Tree Service. Private equity is coming around to that. These are solid underlying businesses, and I want to be a part of them.

Is it like they’ve been searching for different places to deploy capital and have woken up to the underlying fundamentals with a lot of these home service businesses or businesses in the beauty space? You start peeling back the onion, and you’re like, “This is an enduring space. It is a good business. It is not going anywhere.” Some franchisees have been able to put together a size business that is attractive to investors.

One of the deals we announced was Trades Holding Company, which is a Mr. Rooter and Mr. Electric franchisee up in Columbus, Ohio, Columbus, Cleveland, and Toledo. They were operating both brands in three different locations and built a sizable business. They got down to the underlying blocking and tackling and had a good recurring essential break-fix, recession resistant, all the things that private equity loves.

It was a franchisee. That did not deter any interest from private equity in the business. It was a great size management team, and the numbers spoke for themselves. It was a fantastic opportunity for private equity to get into the system. I had a family office out of Missouri. I ended up picking that business up for the same characteristics we talked about.

I get a ton of quests. I work with folks on the tip of the spear, like a lot of folks getting into franchising. A lot of folks have big ambitions where they want to roll something up and scale something to a large business. Is there, from the franchisee’s perspective, who wants to scale something and try to exit to a family office or investors? Are there certain size thresholds or any thresholds that people typically need to aspire to start thinking about that level of exit?

There’s something out there for everyone. There are private equity groups and independent sponsors that’ll do something as low as $1 million of EBITDA, which sounds daunting to a new franchise, I’m sure who’s reading this. That is a daunting like, “That’s a lot of territory and time to get to that.” We’re representing concepts that are anywhere from $4.5 million of EBITDA all the way up to $14 million in our franchisee investments.

Franchisees, not franchisors.

Not franchisors. It depends on the service vertical. If you think about Mr. Rooter and Mr. Electric, those are larger average tickets. They have multiple locations and a big team. It employed 250-plus people in the Ohio region. There are some good sizes out there. Depending on what your goal is and what you want to accomplish, there’s a private equity or family office fit for almost all franchisees. It’s just you got to go find it again.

Depending on your goal and what you want to accomplish, there is a private equity or family office fit for almost all franchisees. Share on X

It all depends on your end goal. Do you want to be a franchisee who owns the state of Virginia, my home state, in a certain concept? Is it right to bring on private equity sooner so that way you can have expansion capital go out and acquire other franchisees or buy the territory rights to a Western part of the state? There’s a solution out there for everyone, but that magic number is probably $3 million of EBITDA. It is where you get the most interest. That’s not to say that you couldn’t find it below that.

I have a random question. I’m a franchisee running a business and spitting off $3 million in EBITDA. I want to exit, get a family off, get you guys involved, and you help me find a family office. Were there any quirky things that happened with the franchisor approving a family office that has more of an investor mindset to come in and be the actual franchisee in the system?

Yes, the franchisors have been incredibly accommodating and commercial about how to effectively make this happen. What’s interesting for us is that we’re in the early innings on the services-based side. Planet Fitness and Young Brands have it down to a science, but it started with one franchisee, a private equity group, and some guardrails.

If you’re a franchisor and you have private equity coming into your system for the first time, you want to have some protections and discussions about what you can and cannot do. This is going to sound simple, but make sure that the rest of the portfolio of that private equity group isn’t competing with your franchisees. What’s the definition of competitive? How do you set them up for success? What is available passive growth?

We’ve had a lot of conversations with the franchisors up front alongside their franchisees. Everyone has been accommodating, but every situation is different and unique. The franchisors are excited. Who doesn’t want to see your franchisees and top-tier franchisees exceeding to the point where they’re attracting private equity investment? They’re not going to stand in the way of that.

That’s a little bit like the art of the deal, which is the value that you guys provide to come in and quarterback the whole thing.

There are a lot of stakeholders.

It’s like herding cats with a bunch of egos. Is it open the discussions early with the franchise company like, “This is what I’m trying to do? I’m working with Boxwood. They’re my partners. They have a track record in franchising.” I can’t imagine you want to lay this on the franchisor at the last minute of the deal, like, “I’m selling a family office in California.”

I’m not going to bring up and speak it well than anyone, but there was one that screwed the pooch for the whole industry. The banker they had hired went out with the wrong royalty rate, assuming that the franchisor was going to grandfather in a concept. This royalty rate was historical and legacy to one of the early franchisees that got all the way to the end of the deal and almost blew it up.

There’s an open line of communication. Transparency is key. There are certain franchisors, not to name names, that have a couple of investment banks almost on call. If you reach out and say, “I need some help with this,” they’re like, “Here are three resources and three references. Make your own decision. We know all these guys. Trust them.” There’s a misconception that franchisors are not going to play nice in the sandbox and don’t want that to happen. It’s the exact opposite if you do it the right way.

It helps increase the value of the enterprise, not for the franchisor, but it sets a comp for other franchisees who are aspiring to build larger businesses.

The franchisors of the world typically aren’t operating. That’s not their bread and butter. Their bread and butter is being a franchisor. Having some sophisticated investors or capital in the system to be sometimes the acquirer of choice in a given region is important for the health of their franchise network. They have a lot more reasons to be supportive of this than not.

You mentioned something interesting, like a good source or they focus on becoming a great source, which is completely different element than operating the businesses that they’re franchising. For a young emerging franchise brand that might be using the cashflow of their corporate units to fund the franchise piece of it, do you have any words of wisdom for young brands that are on a certain trajectory and growing healthily to think about when it might be time to transition out of the game and operating their businesses and focus on being a franchisor exclusively?

It’s hard to say. Every brand is different. Of almost all the brands we’ve represented over the last couple of years, 80% have had corporately owned units spanning from a single territory and single location up to 15 or 20 in multi-unit stuff. We’ve seen those corporate store portfolios. They’re not a negative. That gives you a lot more credibility with your franchisee base because you’re on the front lines. You know how to operate these things. You’ve been there before.

When you make that switch entirely up to the brand itself, we typically see that the franchise or side comes to light in and around 10 or 20 locations. You start to see the shift because it’s exponential from there. You’re seeing it go from 20 to 100 units. It takes a lot less time to go from one corporate location to three. If you have the right friend dev function and hire guys like yourself to facilitate that, there’s exponential growth. You have a path to what we consider to be a royalty sufficient where you’re running it all without dipping in the friend dev funds or leaning on the corporate location to provide that cashflow.

For a young emerging brand, that royalty self-sufficiency point is the major inflection point to strive for. It is the first major mountaintop to get to.

In the brand data survey a couple of years ago, less than 10% of brands got to 100 units.

It’s 16%. I was looking at it.

It might have been a little higher now, but in everyone’s head, you get to 600 units, whether your average unit volume is $450,000 or $5 million. That’s a huge milestone in the growth of a franchise business. Typically, you’re going to get to royalty sufficient at that point in time.

For whatever reason, the magic number that gets thrown around is that 100-unit mark. You guys have been doing deals for how long in the franchise space?

We’ve been doing deals in the franchise space for 8 or 9 years in 2023. We’ve had a good run for several years, and knock on wood. Hopefully, it continues.

What was it that awoke this investor money, private equity family offices, to the world of franchising?

There’s always been one concept per sector. If you think about Young Brands, it’s table stakes for us. Several years ago, it wasn’t. Planet Fitness took off and, arguably, the next big thing within franchising that not only has been successful but has had a tremendous amount of success. You see it a lot in restaurants and fitness, but in the services side, we’re still in that infancy.

For us, it was at the same underlying characteristics of why you like franchise brands to exist in a lot of different business models. People are starting to realize that. Arguably, the service-based businesses are easier to scale. A lot of multi-unit franchisees don’t have to worry about real estate, and it’s an investment in people, trucks, and equipment that is a lot easier to bring that owner-operated in the system versus sophisticated capital that we’re not building boxes for $1.5 million on a Planet Fitness to get something off the ground. This could be you and a truck and two other employees and starting to build your empire one service call at a time.

FM 3 | Exit Strategy

Exit Strategy: Arguably, service-based businesses are easier to scale.


People think I’m crazy when I say, “There’s this lower investment, non-brick and mortar based businesses that can scale to be bigger than Planet Fitness or Orange Theory franchisees.” They scale a hell of a lot more efficiently because you don’t have to deal with the whole real estate piece. They look at me like I’m crazy. I’m glad you’re talking about some of the examples of not-sexy-looking businesses. You’re like, “I don’t have a background in electricity, being an electrician or plumbing.” That’s not what it takes to scale something. It’s the business fundamentals of people, marketing, advertising, and leadership.

Look no further than one of our more recent clients in the stretch zone. Albeit it’s a real estate-based business. You need less than 1,500 square feet to put together five tables. It is a variable-cost business model and has low build-out costs with assisted stretching. It’s a great concept. It’s part of what we think is a new health and wellness trend.

One thing we’re going to see from us in the next several months is a lot more in that personal care health and wellness phase. Attitudes, health, and wellness coming out of COVID have changed substantially. People are focusing more on it. The Millennials and Gen Z generations are spending more time and attention on it. It’s one that, on the surface, you would say, “Is that a franchise brand you want to own?” You get into the level economics of owning 7 or 8 stretch zones, and you’re like, “This is a tremendous business model with a great margin profile, and a lot of franchisees are having success.”

The counterpoint to that is that a lot of times when people hear about it not having the perspective that you or I have or being inside the world franchise, I’m like, “That’s a fad. Isn’t that a fad? It doesn’t feel like it’s going to come, go, and be gone.” Stretching has been an interesting example of this space because you’ve got Stretch Zone and Stretch Lab. They’re both in a little bit of an arms race going on there. Stretching wasn’t new. We all knew stretching was good for our bodies. It hadn’t been mainstreamed or commercialized in a way that both Stretch Zone and Stretch Lab have taken it to market.

It’s an awareness thing. It is the same concept with junk. We did Junkluggers, Junk King, and a couple of different other ones that we’re talking about. The junk space is all about awareness. I guarantee that most of the Boomers, no disrespect to that generation, think of it as, “I got to go to the dump now. I got to go pay, lug on all my stuff, borrow John’s truck, load it up, go to the dump, and get rid of all this stuff.” For $300, someone comes to your house and says, “You need that guy. I’ll be done in ten minutes.” It’s an awareness thing there. We’ve seen that. It’s that people didn’t appreciate that that service even existed. Another concept that probably no one ever thought of is duty calls, which is owned by Authority Brands.

Did you guys do that deal?

We did. Jacob, the founder, is based in Charlottesville. He’s not far away from us, but we got ahold of that deal and said, “This is an unbelievable business model.” Rob Weddle and the team at Authority Brands thought the same and said, “We need to own this. This is a great business.”

Pet waste is the political term.

Pet waste in your backyard for $20 a week. You wouldn’t think it is a business model off the top of your head, but if you get into it, you’re like, “This is another great business model that doesn’t require a lot of capital.” It’s one person in a truck and proper training. Honestly, it’s a marketing game. As soon as people find out about it, they’re like, “I’m never getting rid of the service.”

It is recurring revenue.

The whole economy that we’re playing off of now is that do it for me economy. That’s something different than previous generations and at the forefront of a lot of these macro trends.

It seems like the Millennials are becoming a bigger percentage of homeowners out there. They’re a different consumer than you and our parents coming up. Generally, they’re not the DIYers. They’re used to outsourcing.

Our generation is a lot more dual-income households. It’s the opportunity cost of time at that point. What can you do versus what you can’t? This isn’t a sob story like we went through in 2001 and the great financial crisis within a span of ten years in our generation. Most people were underemployed during that time. They didn’t have a job that they wanted to be in. Their careers set back a few years to get into the flow of what they should have been doing. Those are some prime earning years that you’re probably several years behind.

You said most of the Millennial generation hadn’t bought their first home yet. That’s wild to think about in the construct of what’s going to happen over the next 10 or 15 years and why you see companies, even though it’s not a franchise, like Valet Living, which was doing all commercial services for multi-unit and apartments, same services that we would do for the home but you do for the apartment complex. A lot of the franchise orders we’re working with that have national or regional accounts are starting to focus their time and attention on that because you have a lot of Millennials that are still in apartment complexes left and right.

FM 3 | Exit Strategy

Exit Strategy: Most of the millennial generation really hasn’t bought their first home yet. That’s wild to think about in the construct of what’s going to happen over the next 10 or 15 years.


The trash pickup, even taking people’s trash out. Valet living, I hadn’t heard that yet.

It is a much bigger business. It traded a couple of years ago. Trash butler are out there doing their thing. I think the junk business, both Junk King and Junkluggers, had a good national account program. That is because of the flexibility of the franchise model and how much coverage they had across the country. It made total sense.

You’re starting to see some of the restoration businesses we’ve done in the past had good national account programs or even regional, like hospitals and school systems, being on call and preferred providers in a certain region. Those are high cashflow reoccurring revenue streams for your franchisee base. That’s the power of the franchisor at times, being able to leverage that once you have the footprint.

Good franchisors are paying attention to that next level of strategic growth. It is going after leveraging the base that they have in terms of getting the units and the coverage out there and figuring out what accounts they can go after to push the revenue down to the franchisees. We did that at AdvantaClean. It was fun. It was an interesting balance because it’s got to be good work. You start getting negotiated down heavily on margins at that point, but not the zeros get a lot bigger quickly. There’s always the balance of making sure it was good, profitable work for the franchisees. They understood what work it was. It’s not the full-blown high-margin self-generated work you’re getting locally, but some of the accounts that we were able to get open were big.

In certain businesses where there’s seasonality, it’s awesome not to have to work for a lead and get a phone call that was like, “Your job is at 2:00 on a Tuesday once a quarter. I need you to pick up junk at XYZ department store and take down their end caps.” It’s highly predictable recurring work for franchisees that maybe buffers some of that labor and slope yours.

No doubt about it. It’s a work you wouldn’t have otherwise gotten. Somebody is going to do it. We’re switching gears a little bit to the franchisors. What are some of the things that good franchise companies transact have a good transaction? What are they paying attention to? What are their characteristics? What are some of the things that stand out to you as you look back because you’re inside these companies helping and sizing them up before you take them to market? If I’m a young emerging franchisor, what are some of the things I can listen to what you’re about to tell me that’s going to help shape the future of my company?

I heard this from a number of franchisors. It’s treating your franchisees like customers. They are your true customers. That is what it all comes back to because the one thing that investors look for is unit-level economics. Are your franchisees making money? How healthy is the system? The good franchisors have done a good job of focusing all of their strategic decision-making. The true north of the brand is to make your franchisee successful. The franchisors that have done that and have a relentless focus on that are the ones that quite honestly have done the best outside of the proverbial great people.

Treat your franchisees like customers. They are your true customers. Share on X

Up and down our client list, there are management teams that are two people and all the way to eight people, and that senior team doesn’t always look the same, but they all have great people. Everyone comes back to ask, “How are the franchisees doing? Are we giving them the tools for success?” If you’re an emerging door focusing on that, your franchisees as customers are probably the biggest thing that we’ve seen throughout. That’s common ground across all these franchisors.

As you were talking, I was thinking. Part of the beauty of the franchise disclosure document and franchising is you can get some of the same information that you guys get having access to it from the inside when you’re getting ready to help a company transact. If you know how to read an FDD and you know how to validate with existing franchise owners, you can do the same due diligence on a smaller scale that a big private equity company is going to do if they’re trying to buy a whole franchise system.

One of the last things that private equity groups will do before they end up buying a business is they’ll do franchisee validation. They’ll call franchisees. Sometimes, it’s on a no-names basis. Sometimes, it’s straight up and doing those validation calls. That validation is key. I’ll go back to one thing I left out. At the end of the day, the franchisor has the ultimate decision whether or not to let a franchisee into their network.

What they were good at outside of speaking to customers is that the vetting process is important. They have to be aligned with the vision and the goals that you have as an organization and as a franchisor. Some systems will have difficulty with that. Some do it better than others, but that is one thing we overlook. The first step in a great franchise order is great people and great franchisees.

I’ll give one piece of advice on that. A lot of franchisors are like, “I got to find my first franchisee. I got to give away royalty rates and territory.” No, stay who you are and be true to the brand. You have FDD for a reason. If your brand gets to that point, it’s going to be worth everything and more. Treat them like a customer, but don’t give exceptions and cut corners for those first couple of franchisees because they’re always going to come back looking for more.

What’s your take on this question? Young franchise brands, and you get the FSOs. There are some things out there that Young Brands have been able to use to accelerate their growth versus the tried and true way compared to the idea of crawl, walk, and run approach, which would be like, “Start small. Franchise to a couple of people, customers, friends, and family. Work through the kinks because it is going to break when you start to franchise.”

“You don’t know where. You don’t know how it’s going to break. Get a foundation, spend a year, a year and a half helping those first handful of franchisees be successful. You might have one. You might need to exit out gently but get a good foundation to grow on top of.” Compared to the strategy of, “Screw it. We’ve got three corporate locations and two franchises that have been open for three months. Let’s go national.” Any advice for young brands in looking at either two of those approaches?

A lot of the people that have a couple of locations and, “Let’s go national. Let’s hire an FSO and go that route early on.” More often than not, this isn’t their first franchisor. There’s a lot of experience within franchising. If you do it once, you typically try to do it again. There are a lot of people who know the game. I’m talking to the audience if this is their first time franchising. A lot of people know the game and have been around this for a long time and know what’s best for them.

Slow and steady for the first zero to twenty units is important. Make sure that your franchisees are making money. The franchisor is building out infrastructure support systems and focusing on digital marketing in terms of getting you ready, but you’re going to know when you’re ready. It all depends on the model. If it’s a multi-site or multi-unit concept, it makes more sense to have a deep relationship within the broker network or even work with an FSO. If it’s an owner-operative business model, it’s a little bit slower growth but it’s more organic and you’re going to have the right people in the system.

I don’t want to say there’s a cookie-cutter answer for everyone, but early on, focus on your current franchisees, and it’ll be apparent when you’re ready to take that next step in growth. No matter if you hire a broker or FSO, you always have internal fund depth. Making sure that is a core strategy and core tenant of your business model is important.

FM 3 | Exit Strategy

Exit Strategy: Early on, focus on your current franchisees. It will be pretty apparent when you’re ready to take that next step and growth.


What does it look like when a company or a franchisee who’s a large multi-unit franchisee is thinking about exiting or a franchise company is thinking about transacting? What does it look like to work with Boxwood? What does your guys’ process look like?

It sounds cliché, but we play a lot of defense to play a lot of offense, but we do a lot of work upfront. There’s a lot of upfront work, whether it be the quality of earnings with an accounting firm or our internal diligence process that we do with a brand before we take it to market. Understanding the underlying data is one thing people don’t appreciate, even at the franchisor level. We’re looking for trends within the franchisee based on sales by store and location. We are making sure we understand what’s driving the revenue growth and economics of the business. We do a lot of work upfront. It can take us as little as a month to two and a half months to get the financials in order.

There are two things we see across franchising, no matter what. One is the data is probably not as good as everyone thinks it is in terms of the things that we need to run our process. From an accounting standpoint, the books are put together, but not in the way that we look at them in terms of whether it be pro forma adjustments or EBITDA adjustments, and right out in the business from a cost perspective.

There’s a lot of work that goes into that upfront. It’s not a negative. For the most part, this is the first time that a founder or family is going through a process. You don’t know what you don’t know. I’m not going to sit here and pretend like we could jump in and run a franchise order tomorrow, either. There’s a lot of work that goes into that upfront to get ready for a process. Once we’re ready to take it to market, we have run processes with as little as five buyers all the way to 250 buyers. It depends on the asset. What’s the goal of the transaction?

Not everyone is looking for the last dollar. A lot of our founders end up rolling over and remaining part of the cap table. More often than not, in a founder-owned business, it’s usually the second-highest price that wins because, at some point, it’s not about the money. It’s about your partner and what the vision for the company is going forward.

FM 3 | Exit Strategy

Exit Strategy: More often than not, it’s usually the second highest price that wins because at some point, it’s not about the money, it’s about your partner and what the vision for the company is going forward.


There’s a lot of work that goes in up front, and we hear us say it on our side, but we trust the process a little bit. I know it’s a hard thing to do for a lot of founder entrepreneurs who have been successful in their own right to trust the guys that box are on the other end of the phone who look like they could be most of their kids, but ready to go through a process and recognizing there’s a lot of context around everything that we do.

You mentioned that the second-highest price usually wins. Why is that?

I would say tie it with the runner. If you had two buyers at $100 and you were expecting $90, you’re going to pick the guys you like versus the guys that stretched to go $200 and $300. I’m not going to take words out of anyone’s mouth. There are a lot of people out there that go for the highest price. At some point in time, if you’re getting into the point where this is a big liquidity event for you and your family and you got people around the table who are good employees who’ve been with you since day one, you want to make sure that everyone is aligned as to who you’re going with and who you’re picking at a partner.

One of the bigger misconceptions is there’s always the highest price, and there’s always a quantitative reason as to why a deal got done. There are a lot of reasons from a qualitative perspective that deals get done. With the press releases that we put out and the soundbites you read in franchise times, you can’t encapsulate or capture what truly was the reason for that deal and why this person, or this investor, is a strategic fit for this buyer in this business.

I’d love to talk examples, but I know you’re not going to give any. I get it.

Here’s a great example. This is highly relevant. It is Princeton Equity Partners. Dave Crisalli, the former Founder of Massage Envy, is an operating partner and advisor to their businesses. When it came to Stretch Zone, it turned out that he had known Jordan from his time at Massage Envy. He said, “I understand this business model inside and out. This is a great fit for us. We’d love to be investors.”

That was a trump card that they had that no one else had. There’s a differentiation part of their deal and their value proposition to Tony and Jordan that I think made an impact on how they viewed valuation and competing offers. That’s not to say that’s going to happen on every deal, but one example is like, “Who can you bring to the table to help us grow?” Dave has some relevant and meaningful multi-unit experience within health and wellness.

That’s fascinating. Yes, it’s not all about the money.

No, there’s a lot more to these deals. Not every $100 million offer is created equal in terms of deal structures, what type of security people are putting into it, and how much rollover they’re requiring. There are a lot of nuances to deals founders and entrepreneurs always fall in love with the headline price. Sometimes, it is way more about the qualitative terms of that price than the actual price itself. We could talk for hours on that, but that’s something where we have a ton of reps and data. The good part is we have buyer behavior. We’ve seen a lot of these buyers and multiple processes over the years and know what they can and cannot do.

Founders and entrepreneurs always fall in love with the headline price. Sometimes, it really is way more about the qualitative terms of that price than the actual price itself. Share on X

You’re seeing the appetite for investor-level money coming into franchising. Is it slowing down, cooling off, continuing to grow?

It is accelerating. We’re seeing a tremendous pipeline of opportunities within our pipeline more broadly. Our counterparts at North Pointer, Harris Williams, and Mazars are seeing a great deal of flow within the franchise space. There is a scarcity of assets at certain size levels. If you get the big franchisors, a lot of them have traded, but there’s a lot of fragmentation, and up-and-coming brands that are called sub $10 million of EBITDA are actively looking for private equity partners to help them grow. We’re stuck in the cross-currents there.

You guys have done a good job putting yourselves in the cross-currents.

I got a call from another private equity firm that’s lost on two franchise deals in the last several days and desperately wants to get into one. We’re trying to find some concepts and get them in the pipeline here.

They want to become a franchisee.


I’m jazzed up by the level of activity you’re starting to see with large multi-unit franchisees bringing in institutional-level money on the non-food side. That is exciting on a number of levels.

The consolidation is going to continue. Think about solo salons. Christina is now owned by TSG. They may buy a couple of personal care franchises at some point. Imagine that if you’re a solo franchisee and they acquire something else, having some white space in your territory to add on 2 or 3 other different types of brands to accelerate your own portfolio. There’s going to be a lot of opportunities like that.

It seems like a foreign concept, but you watch us do it in Neighborly with Mr. Rooter and Mr. Electric. If Neighborly bought another concept that had white space in the Ohio area, all you have to do is one phone call away and you’re business model. There are a lot of interesting opportunities abound within the franchisee world that we’re excited about. It’ll be interesting to see how these things continue to perform. If Young Brands and Planet Fitness are in any indications of how successful franchisees can be, we’re bullish on that.

Brian, thanks for dropping on here and covering a lot of stuff in a short amount of time. For anybody reading, there are a lot of nuggets in here to take away. If somebody wants to get in touch with you, how can they reach out to you?

Feel free to tag me on LinkedIn and shoot me a message. My email is on our website. I’m happy to talk to whoever.

Brian, thank you. I’ll let you roll.

Thanks for having me, Dru. I appreciate it. We’ll talk to you soon.


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About Brian Alas

FM 3 | Exit StrategyBrian Alas is a Managing Director and joined Boxwood as an Associate in 2013. Prior to Boxwood Brian worked for PwC’s Deals practice in New York. During his time with PwC, Brian performed due diligence and advisory services to both private equity and strategic investors in the consumer products, transportation and logistics, industrial products, pharmaceuticals/healthcare, and aerospace/defense industries.

Brian holds an M.B.A. from the Darden School of Business at the University of Virginia. Brian also earned a Masters of Accountancy (M.S.) and a B.S.B.A in Accounting and Finance from the University of Richmond. Brian is also a Certified Public Accountant in the State of New York.

Brian also serves on the Board of Directors of The First Tee of Greater Richmond and is a former member of the Advisory Board of Virginia National Bank, a publicly-traded community bank in Charlottesville, VA.



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