The Big Are Getting Bigger
Entrepreneur|October - November 2021
Major acquisitions. Consolidations. Conglomerates. What’s going on in franchising? The answer says a lot about where the industry is heading—and what growth means going forward.
By Nate Hopper

Eric Monroe had decided: He would not expand his business. He was fed up.

Monroe owned a Martinizing Dry Cleaning franchise in Fort Worth, Texas, which was supposed to free him from the frustrations of being an employee. He previously worked in corporate regional sales, but in 2017 he decided to make the switch to franchise ownership. He knew he’d need lots of support, which Martinizing promised. After a short honeymoon, though, that support stopped. “The only person I consistently heard from was the lady who collected my weekly franchise royalty,” Monroe says. But this past April, that all changed— because Martinizing and several of its sister companies were bought by a competitor.

The buyer was Lapels Dry Cleaning. When the deal closed on April 5, it went from having about 100 locations to more than 500. It suddenly possessed an array of brands that spanned from traditional retail storefronts and plants to pickup and delivery to locker-based services: Martinizing, 1-800-DryClean, Pressed4time, Dry Cleaning Station, and Bizziebox. They now all existed under one franchisor entity, called Clean Franchise Brands.

This form of franchise consolidation seems to have grown more popular in recent years, though the trend spans decades. There have been the stalwarts in the traditional multi-brand franchisor spaces, like hotels and food service. Yum! Brands, for instance, traces its history back to PepsiCo’s purchases in the late ’70s of Pizza Hut and Taco Bell and, in 1986, KFC. There are newcomers as well, like Inspire Brands, which was founded in 2018 when Arby’s bought Buffalo Wild Wings and Rusty Taco (and then bought Dunkin’ Brands in 2020, with plenty of acquisitions in between). But starting in the ’90s, consolidation began in more and more nontraditional markets too, according to Mark Siebert, CEO of the iFranchise Group, a franchise consultancy. This has been exemplified by what is now known as Neighborly, which started as a stand-alone carpet dyeing and cleaning brand in 1981 and now is a holding company for 28 brands, amounting to more than 4,800 franchises in nine countries. Nowadays, brand conglomeration is seemingly everywhere: in workout classes, hair salons, real estate, and, of course, dry cleaning.

What is causing this steady rise of mega-franchisors? To understand that is to understand what drives the franchise industry today—including a shift in how it is financed, how big companies grow, and what franchisees want.

For Monroe, this sprawling consolidation reached him just in time. The Monday after he’d gotten the news, communication with the Clean Franchise Brands team opened up—and the support he had been missing arrived in abundance. And he would need it. Within weeks, a freak accident broke both of his legs. He came to rely largely on the phone, and he called Clean Franchise Brands headquarters for advice so often that he began apologizing for it. “But every single time I do that,” he says, “they stop me midsentence and say, ‘Eric, that’s exactly what we’re here for.’ ”

AN INDIVIDUAL franchise may have dozens or hundreds of locations, and a conglomerate may have many thousands, but the basic value proposition remains the same: It is a systematic alternative to the messiness of individual business ownership.

“I [first] opened a restaurant when I was 18 years old,” says Kevin Dubois, CEO of Clean Franchise Brands. “I think what happens a lot of times in small businesses is you have those visions of being very strategic. And then it’s very easy to open the doors and get stuck in running the business.”

Franchising, in theory, should be less sticky. Franchise brands find what works, and they repeat it. When a franchisee buys into the system, they effectively buy access to that know-how. In turn, an economy of scale kicks in: Ingredients and materials become cheaper when purchased across an entire system, and efficiencies become easier to find—say, by using the same point-of-sale tech across hundreds of pizza shops. And if you just keep expanding a franchisor’s centralized functions across a conglomerate’s worth of brands, you can find that they can be tweaked to apply to several brands in a similar space, even if they do slightly different things. Digital marketing practices and search engine optimization, for instance, have applications across a respectable spectrum; a flooring company might find a customer similarly to how a carpeting one would.

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