Pet Supplies Plus (PSP) was recently sold by Sentinel Capital Partners, a private equity firm that invests in promising lower mid-market companies, to Franchise Group, Inc. The deal is valued at $700 million. Read more here.
Was it a smart investment? The answer is a resounding YES. Here are a few insights that inform this answer.
High Historical and Projected Success Rate
Pet Supplies Plus has been a stable and successful franchise system over the past decade. They have maintained a very high unit success historically which placed Pet Supplies Plus is in the top quintile among all concepts in franchising. Even though unit revenues and profits were trending downward, there is no indication that franchisees are unhappy or transferring out of the system. The company has a good management team and plenty of financial backing. We think that risk is low and that the next unit(s) will be successful.
Understanding a franchise system, how they operate, the franchisees that comprise the system and each operator’s size and the extent of their franchise holdings is more challenging than you’d think. There are many hurdles to overcome in order to get the full picture. FRANdata approaches this problem from an investigator’s perspective using our experience and knowledge base to piece the puzzle together.
Click here to learn more about our due diligence solutions and reach out to me to start the conversation: rdonde@frandata.com.