In many cases, it’s the franchisor investing in its franchisees, which can ultimately bolster the brand overall. However, a K9 Resorts franchisee is flipping the script.
In late March, a K9 Resorts ownership group developing 11 locations in Los Angeles, invested $10 million in the luxury pet boarding and daycare brand. Phil Nisbet, a partner in the group, said the organization made the investment to help take the concept to the next level.
Nisbet and his friend Bryan Brewer founded the group, Partners Pacific Resorts, in January 2023. Feeling the time was right to go into business together, the two took the franchising route, with Nisbet having experience owning Jersey Mike’s and Wingstop stores.
For the new venture, though, they decided to look outside the food sector and came across K9 Resorts.
Nisbet and Brewer were interested by the positive feedback and brought in additional business partners for the venture, including Vanessa Kerzer, the former owner and board member of Atlantis Bahamas and One & Only Hotels. The group signed a franchise agreement in February 2023.
Just over a year later, Nisbet said they saw potential with the franchisor and the pet daycare category.
“The pet industry is growing and this is a premier brand,” Nisbet said. “They’re also the only national luxury brand for pet accommodations. It’s a simple business model and they’ve had good results for their units they have today.”
K9 Resorts has 33 locations open, with 26 of them franchised. Launched in 2005 and franchising since 2011, K9 Resorts previously received an investment in 2016 from the firm Navigator Partners, helping it reach the status of a national brand with developments on both coasts.
Jason Parker, co-founder of K9 Resorts, said the investment from Partners Pacific is further confirmation of the company’s success.
“For me, it validates the brand and what we’ve been able to accomplish over nearly two decades,” Parker said. “Additionally, from a franchising perspective, it validates the unit-level economics. One thing that my brother and I learned very long ago was in order to have a successful franchise, you need a few things.
“You need something that’s unique, a model where you’re in a strong category and operations where the franchisees can make money,” Parker said. “We pride ourselves on that, in having solid unit-level economics.”
For the 2022 calendar year, Parker said the average EBITDA for franchisees operating for 12 months was $552,627 and average unit sales were about $1.8 million.
“That is a significant amount and I think it goes back to why they made this investment,” Parker said.
K9 lists the initial investment between $1.3 to $2.5 million.
More than $8 million from the investment is earmarked for opening more company-owned resorts. Parker said that allocation shows the brand’s willingness to put its “money where its mouth is.”
“There are some franchisors out there that don’t own any company-owned locations,” Parker said. “But we have a pretty strong percentage of our units that are company-owned, and I think it shows franchise owners that we believe in the model.”
The remaining funds from the investment will be used to hire additional team members to assist the growing system of franchisees. Nisbet said support from the franchisor team has already been great, and helped in the decision to invest.
Nisbet said the brand has supported Partners Pacific through lease negotiations, site searches, marketing and more. The partnership combined with the category’s potential made the investment a no brainer, Nisbet said.
Coinciding with the investment, Nisbet is on the brand’s board of directors.
“When talking about the future of the brand with the founders, we discussed how it’s possible to have more than 400 resorts someday,” Nisbet said. “That would be close to about $1 billion in system-wide sales, and we’re really excited about it, and we were interested in investing in the franchisor because of the success they’ve had and acceleration of growth.
“It’s not a cash flow type of investment,” Nisbet added. “Building up a franchise and adding new resorts takes a long time, so it doesn’t produce a ton of cash flow in the early days. This is more of a long-term growth investment.”