Successfully adding a new brand to a platform company takes more than inking an acquisition agreement, as it requires analysis before and strategic alignment after.
During a Franchise Times Dealmakers webinar, a trio familiar with business acquisitions shared how they approach brands and what they do after the deal is done. Moderated by Franchise Times reporter Joe Halpern, the webinar featured Authority Brands Chief of Staff Elliot Rosenbaum, Empower Brands CEO Scott Zide and Craveworthy Brands CEO Gregg Majewski.
When Authority Brands considers new companies to add, Rosenbaum said there are three things they want to see. The first is the brand’s recession resiliency.
Authority Brands Chief of Staff Elliot Rosenbaum
“We take a deep dive on that, understanding how that acquisition might look in the case of a recession,” Rosenbaum said. “Second, the unit economics are huge, we want to put successful dots on the map, not just dots on the map. The third thing we look for is levers for growth. We look at white spaces and revenue lines that we can implement that are a win-win for everyone.”
Authority Brands acquired The Junkluggers in 2022. Rosenbaum said the company checked those boxes and had a unique aspect in the form of a second-hand store called the Remix Market that resells items they collect.
Empower Brands, brought four companies into its portfolio in 2023: Bumble Roofing, Canopy Lawn Care, Koala Insulation and Wallaby Windows. Zide said the four were integrated for different reasons.
“With Canopy and Bumble, those are what we call incubation brands,” Zide said. “Those that were starting from scratch and came to us through relationships. They were at a point on their journey that they were thinking about franchising and were seeking out a partner who had experience and expertise.”
The other two, Zide said, were brought in through a more traditional approach. The deals took three to four months and Zide said Empower added the brands because they were a cultural and strategic fit.
Empower Brands CEO Scott Zide
While good fits are important to Craveworthy Brands, Majewski said it’s important to take a risk sometimes, too. A recent example, Majewski said, was the acquisition of Dirty Dough.
“They were a brand shooting for the moon,” Majewski said. “They have 411 stores sold and 55 open by the time we got our hands on it, with 75 under construction. Their unit economics were also not good and franchisees were struggling. They had all the problems of a first-time franchisor that grew to 55 in the first year. It was a complete mess.”
But that was exciting for Craveworthy, Majewski said.
“We knew if we put what we know into this, and put in systems and procedures in place, the same formulas that are so successful in the industry, we could turn the unit economics around quickly and get costs in line,” he said. “Sometimes it’s more about the opportunity of where you can go and the win you can have with a big gamble.”
In the first month, Majewski said sales increased 25 percent across the brand and food costs were lowered.
After a brand is bought, Majewski said the next phase is bringing in the parent company’s culture.
“We want to take the DNA of those brands and the identity of those brands and have them survive and keep that going,” Majewski said. “But we also want to install the culture of Craveworthy on down. We’re people motivated to do right by our staff and our team, and we install that passion and desire. We’re most interested in building the brand and where we can take it than keeping the initial theme in place at times.”
Craveworthy Brands CEO Gregg Majewski
Majewski said Craveworthy takes over the franchising operations from the brands it acquires and rewrites their FDDs and other documents.
“We don’t want it done at the individual brands, we want it at the parent,” Majewski said. “That way, if we can’t sell, say, DFW for one of our brands, we can still pivot and offer one of our other brands.”
Zide said Empower takes a different approach to its integration than Craveworthy, as it makes a dedicated effort to retain elements of the brand, including keeping personnel.
“It’s been very important for us as we’ve brought companies into the portfolio that the founder has stayed with the business,” Zide said. “I think there’s a few obvious reasons that’s important. They bring the passion for the brand and the vision for the business.
“Institutional knowledge is there from day one,” said Zide. “They’ve seen the highs, lows, everything. They also have the franchise relationships and as Empower gets involved and that brand joins our family, it does take time. Having the founder there is helpful in building bridges to the franchisees.”