Agree on Business Points Early to Speed Deals, Operator at RFDC Says
Mark Peterson started with one restaurant 32 years ago, with his sister as business partner. Now their company, Peterson Burge Enterprises in Kingman, Arizona, operates 90 Taco Bells and 60 Pizza Huts in the southwestern United States.
They’ve grown organically and through acquisitions, so he is well positioned to share how to get a deal done, and he did so on a panel discussion today at the Restaurant Finance & Development Conference in Las Vegas.
“Make decisions quickly on the business side,” he advises, and enshrine the points of agreement in the letter of intent. This helps to avoid attorneys for both sides haggling endlessly over details.
Chris Kelleher of Auspex Capital and moderator of the panel, asked whether Peterson was “a one-page guy or a 12-page guy” when it comes to letters of intent. “I lean more toward the 12-page guy. I like to get most of the business points locked in as early as possible,” he says. “Having a letter of intent done, you’ve already come to a meeting of the minds on key points.”
Kelleher pointed out that when buying units from a franchisor, often times most elements of the transaction are marked as non-negotiable. But Peterson said there’s a way around that rule: “I take a little bit different tone with that and see what they’re trying to accomplish,” he said, referring to the franchisor.
“For example, they want to grow the brand, and you can get something out of that,” he said. For another example, a franchisor “will have certain standards they want the restaurants to be in, and I’ve had success getting some credits and concessions toward upgrading” restaurants when some units don’t make the mark.
Rich Malekzadeh, a Papa John’s franchisee based in Carson, California, and another panelist, put the same idea a different way: “You take the stance, you make a bigger pie and everybody gets to eat,” he said.
Malekzadeh, president of PJ Management Services, operates 65 Papa John’s stores in Southern California and Cleveland. The Restaurant Finance & Development Conference runs through Nov. 12 and is presented by the Restaurant Finance Monitor, Franchise Times’ sister publication.