Posted on May 13, 2011
Franchise Fridays for May 13, 2011: Top Franchise and Small Business News of the Week
McDonald’s is planning its biggest makeover ever, giving its stores a sober new look that the McDonald's franchise hopes will revamp the famous restaurant chain's image, taking it from economical and kiddie to comfortable and adult friendly. McDonald’s undertaking will cost some $1 billion, as the chain switches out fiberglass tables and red interiors for wooden tables, leather chairs, and other high-quality accents.
McDonald’s is taking a big risk, as the modern décor may not jive with the sensibilities of its heartland demographic. However, if the gamble works out, it will blow out the system's more timid competitors, most of whom refuse to reinvest in their own business during the economic recession.
The restaurant facelift is the latest in a series of aggressive moves by the ubiquitous burger chain. McDonald’s introduced new menu items in an effort to steal market share from the Dunkin Donuts franchise, Starbucks, and others, offering coffee (which proved to be successful), smoothies, and salads. With its roll-out of modern-looking restaurants, McDonald’s hopes to build on that success by cultivating a more profitable customer following.
Read more about McDonald’s new look.
The Hertz franchise has made a $2.24 billion bid for rival car rental franchise Dollar Thrifty Automotive Group. The bid marks a significant increase from the $1.5 billion offer Hertz made last year for the same business. Hertz’s cash-and-stock offer of $72 per share represents a 26% premium from Dollar Thrifty’s 90-day average stock price. Hertz said it plans to sell its Advantage brand to win over regulators who are concerned about a linkup of rental car businesses breaking anti-trust laws.
Read more about Hertz’s bid for Dollar Thrifty.
Apple American Group LLC, the Applebee’s franchise's largest franchise group at 270 locations, has received an investment from Goldman Sachs Capital Partners and Weston Presidio. Apple American is expected to remain the majority shareholder post investment. This is not the first time Goldman and Apple American have worked together: in 2001, Goldman Sachs helped fund the acquisition of 73 Applebee’s units with a $50 million investment.
Apple American was founded in 1998 and had $557 million in sales in 2010 with 269 units and 16,000 employees.
Read more about GS investing in Applebee’s.
The Pizza Hut franchise announced that on May 12, 15% of all sales from participating units will go to the United Way, to assist victims impacted by recent tornado activity. Every Pizza Hut in Alabama will participate in the fundraiser to aid victims of the deadly tornadoes that have affected the South.
Read more about the Pizza Hut tornado relief fundraiser.
The Wendy's franchise is looking to sell off its Arby's roast beef sandwich chain, after experiencing disappointing results in the wake of the two brands' 2008 merger. Given the Arby's concept's recent performance woes, traditional buyers for the asset may be hard to come by, so a sale of the brand to franchisees is a possibility. While the success of the divestiture process remains to be seen, Wendy's sale of Arby's is expected to garner close to $500 million, according to an Oppenheimer analyst.
Read more about developments surrounding Wendy's sale of the Arby’s brand.
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