M&A continues to remain a popular mechanism for growth in the restaurant franchising space. The industry is always anticipating the next big move to shake things up, but what often is not discussed is how to navigate an acquisition as an employee. Throughout my career, I have experienced being acquired (four times!), as well as acquiring other companies. I took some time to reflect on what I think are the top three tips I would give to a co-worker or friend, wherever your seat may be at the table:
1. Be An Open Book
Transparency regarding where the business stands is paramount. My first acquisition came when MaggieMoo’s Ice Cream & Treatery (now Marble Slab Creamery) was purchased into a multi-brand franchising portfolio. I made it a point to be candid about both the company’s strengths and weaknesses. My focus was on setting the brand up for success, which seemed to be a key ingredient to my tenure at the company post-acquisition. When you are being acquired, the new company is looking to see a return on their investment, which includes identifying opportunistic areas that can be leveraged to create synergies, drive growth, and improve the business model. Pinpointing these areas illustrates that you can be a critical thinker about the business. On the flip side, the acquirer should be as open as possible with the overall vision of the brand post-acquisition. This will help the employees see a path of how to contribute effectively to the acquisition thesis.
2. Embrace Your Entrepreneurial Mindset
Acquisitions are catalysts for change and a period of uncertainty as the company undergoes integration. People who embrace an entrepreneurial attitude tend to thrive during the transitional times that are ahead. Entrepreneurs are self-motivated, they are not paralyzed by change, and can keep their heads down and continue to move the business forward. Employees who embrace this mindset often are able to think positively, looking at the new acquisition as value creation not only for the brand, but also for their own career. Being flexible, embracing new perspectives to the business, and learning from the individuals coming into the business is important to developing yourself and your position in the next iteration of the company. You have to step away from how things were always done with the company and look at it from a critical outsider’s perspective. Are there processes, programs and franchise support areas that can be improved? If so, this is the time to speak up and share a new perspective.
More recently, when Global Franchise Group was acquired by FAT Brands, I was in a unique position, as this was my first time being acquired by a restaurant franchisor. There was a significant advantage to this latest acquisition, as we were immediately folded into an organization that had a deep understanding of the brands on an operational level. It also meant that I had to lead my team in taking a step back and turning a critical eye on everything we were doing to support the franchisees and drive the business. We identified and eliminated programs, processes, and ways of work that were just activities because “we always did it that way.” This allowed us to focus more time creating and reinforcing business functions that generated productive results.
3. Understand Your Brand’s Audience
In the franchising world, there are two audiences to understand, your end consumer, the person buying the ice cream, cookies and pizza; and the franchisee consumer, the one paying royalties. FAT Brands CEO Andy Wiederhorn always underscores to our team that the franchisee is our core customer. Anyone who is acquiring a company or being acquired should start with the franchisee. This includes sending out a franchise survey to generate quantitative results, making phone calls to a diverse group of franchisees, and meeting with advisory councils and/or leadership of franchise associations. It is important to understand first and foremost what is important to your franchisees, as they are your best development partners to generate new growth. I watched first-hand Andy analyzing how important a technology upgrade was to the Round Table Pizza franchisees and, in turn, directly investing funds to help develop a new technology platform.
From a consumer standpoint, you need to be armed with quantitative facts about their perception of the business. It is important to get an honest scorecard of what attributes are important to the consumer, where the brand stands on these attributes versus the competition, and what makes up the consumer value equation for your brand category. This is not about being the lowest priced concept; it is about having the best frictionless user experience. Remember what I said about presenting opportunities earlier in this article? There is nothing better to present than quantified consumer identified changes to move the business.
And, with any transaction, communication is key. Even if you cannot provide 100 percent visibility in everything that is going to happen, communicating just that message helps. At the same time, as an employee, communicating what is important to your career development and what areas of the business you are most passionate about helps the acquiror find the best place for you in the new company. If you are clear in communicating your needs, then, be an entrepreneur and trust the process. You will find that no matter where your path leads, it is always to another open door.
Jenn Johnston serves as president, Quick-Service Restaurant Division for global restaurant franchising company, FAT Brands Inc., and is responsible for managing multiple strategic brand teams that oversee marketing, operations, research and development, training, communications, and customer service activities for Round Table Pizza, Great American Cookies, Marble Slab Creamery, Pretzelmaker and Hot Dog on a Stick.