Dealmakers' Summit: Connecting Capital to Franchising

The biggest problem in franchising is no secret—finding the financial means to grow a business is challenging in today’s economy. Lenders are still tight-fisted with their funds, leaving many franchisors and multi-unit franchisees struggling to raise the capital needed to grow. In order to help the industry as a whole, Susan Black-Beth decided she was going to do something about it. Black-Beth, COO of Super Wash, Inc. and a well-known name in the franchising community, started researching private equity as a possible future for her own company when she found some surprising numbers. “Ultimately I figured out there’s a ton of money out there, about $425 billion in equity ready to be invested,” Black-Beth says. “There are also 400 funds raising their next round of capital.” The problem then is not that there isn’t any money, it’s how the franchising community gets access to it. “The path between money and people who want money is neither short nor efficient,” Black-Beth says. The answer came to Black-Beth in an epiphany: what would happen if she put the people with money and the people looking for money in the same room together? With that thought, the idea of Dealmakers' Summit was born. “All my research since October 2011 showed that there really isn’t an event like this that would cross all the verticals of franchising,” Black-Beth says. “It gets done for hotels and restaurants, but we’ve never seen it done for franchising.” Dealmakers' Summit, to be held at Hotel Sofitel in Chicago August 28-29, will put 20-25 franchise brands and multi-unit franchisees in front of a larger group of private equity firms for a chance to show off their concept and secure the funding they need to move to the next level. Presenters will be pre-qualified to ensure a good fit and maximize the number of deals closed during the two-day conference. Black-Beth says brands interested in presenting should be generating between $1 million to $10 million EBITDA (earnings before the deduction of interest, tax, depreciation and amortization). “We really wanted folks who were further along the than the startup phase,” says Black-Beth. “But if you get up to $8-10 million, you’re really getting to a size where you’re going to hire an investment banker. We’re trying to hit the sweet spot in the middle of that.” The hotel will be rearranged to better suit the event, with eight guest rooms turned into secure conference rooms. Boefly*, an online marketplace that connects small business borrowers with lenders, is also providing a secure online document system that will allow PE groups to confidentially view a brand’s due diligence documents like FDDs and tax returns. Though the event will begin with concurrent educational seminars for franchisors and PE groups, Black-Beth says attendees should come expecting to make a deal, not learn about private equity. “It’s about getting money to exchange hands. That’s what we really want to do, get money into franchising. Some multi-unit franchisees out there are amazingly smart, gifted visionaries and are looking for ways to flex some capital muscle.” Black-Beth also stresses the important of relationships and has planned the Summit’s evening event to foster a sense of networking. Working with Hotel Sofitel Executive Chef Greg Biggers and Pastry Chef Patrick Fahy, the Summit will recreate a miniature “Taste of Chicago.” “An evening meal is 10 rounds of eight to 10 people per table and talking to the same two people for two hours. That’s not what we want,” Black-Beth says. “We want people mingling and talking and making those connections and building relationships. A deal might not get done today. It might not get done two years from now, but if it happens it may be because they met someone here. “ Registration is currently open for franchisors, multi-unit franchisees and PE groups. Interested parties should inquire online at http://www.dealmakersummit.com/register.html. Black-Beth also encourages connecting through social networks on Twitter, Facebook and LinkedIn.   --Brian Diggelmann