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C Squared and Sport Clips partner walks the talk


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Carty Davis, right, is co-founder of C Squared Advisors and an area developer for Sport Clips, with business partner and brother-in-law Matt Lewis. Davis says he uses lessons learned as an operator when advising C Squared clients.

When Carty Davis works with clients of C Squared Advisors, the investment banker and franchise advisory firm he co-founded in August 2016, he’s not spouting abstract theories. Rather, he’s employing practical know-how based on decades in the restaurant business—and especially 15 years in the barbershop.

Davis has been an area developer for nearly 15 years at Sport Clips, the men’s hair care chain. These days his brother-in-law Matt Lewis is the hands-on operator and Davis provides strategic advice, especially about how larger franchisees in the system can structure their finances and smaller franchisees who want out can attract buyers. They have 63 Sport Clips units under their wing, six of which they personally own, all in North Carolina.

Davis was a financial adviser and a lender to the restaurant industry, and then a partner with franchise advisory firm The Cypress Group for 16 years before breaking away and starting his own firm, C Squared, with business partner Jim Christopherson. Christopherson also has skin in the trenches, having served as CFO of a Wendy’s franchisee that grew from 75 to 177 units in about 20 months. Davis is sure his experience at Sport Clips and his partner’s at Wendy’s has sharpened their skills.

“It helps a lot. I’m a better adviser as brands look at their franchise systems, as they try to manage consolidation, as they try to make their systems more efficient,” he says, pointing out he got into hair care rather than restaurants to avoid conflicts of interest. “If I’m a Burger King franchisee I’m going to have a hard time advising Wendy’s franchisees, for example.”

Wendy’s, in fact, has been a significant player in Davis’s world, because he played a key role in that brand’s refranchising effort—selling corporate stores to franchisees—of 350 Wendy’s stores while at Cypress. “We just made a decision to part ways. It was time to do my own thing,” he says about leaving.

Chuck Morneau is CFO of Belmont Capital, a large family office in Boston, and a fan of Davis from the time when Belmont was trying to sell two groups of Wendy’s franchised stores, one in Texas and one in New Hampshire. Morneau said he got recommendations, interviewed possible advisers and then hired Cypress to represent Belmont after talking to Davis.

“When you’re selling a franchise you have three parties, the buyer, the seller and the franchisor. Going in, one of my big reservations in hiring you guys,” Morneau said, meaning Cypress, “is you’ve done so much work for Wendy’s. I want to make sure the loyalty on this deal runs my way, not Wendy’s way.”

Davis came through. “He did a spectacular job for us in Texas, on getting a very good price and working through quite a few issues with Wendy’s on the whole sale,” Morneau said, but Davis really impressed him after leaving Cypress before the second part of the transaction was done.

“New Hampshire had just gone on the market. He knew he was getting no money, because my fee was going to Cypress,” Morneau said about Davis. “But he was there all the time because he had made the commitment. I think he was on a safari in Africa, and he’d call me up and see if things were all right and could he help. I found, that type of adviser is hard to find. He went above and beyond.”

Gordon Logan, founder and CEO of Sport Clips, is another fan of Davis and his brother-in-law Matt Lewis. “Carty’s been very helpful to a lot of our franchisees as far as giving them advice in structuring their financing. He’s been a great resource for us, too, when questions come up,” Logan said. “We have some franchisees that have over 50 stores, and that obviously takes quite a bit of financial acumen, to put those programs together.”

Davis believes the consolidation wave that’s in full force in restaurant franchising is coming in other sectors, too, including hair care, education and healthcare.

“We’re starting to see franchisors in non-restaurant concepts take a greater role in managing their franchise system, in helping strategically grow their system,” Davis says.

“Healthcare, education—almost any system that has gotten up to several hundred units is where you start to look at your system strategically instead of from a growth standpoint.”

He’ll keep advising his C Squared clients what he strives to put into practice at his Sport Clips operation. “Being disciplined. Not chasing the short-term solution, the short-term money, is usually where people make mistakes,” he says. “The consolidation wave is coming, and that’s really the key: to manage it, not react to it.”

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