The franchising sector can expect to see more mergers and acquisitions as smaller franchises struggle to remain profitable, an expert says, after Kleenit acquired competitor Graffiti Gone.
Jason Gehrke, director of the Franchise Advisory Centre, says when a franchisor makes the decision to enter a new geographical market, it is often more viable to undertake an acquisition.
However, he says the success of the acquisition will ultimately be determined by the level of due diligence undertaken by the franchisor looking to expand.
“A lot of that due diligence would need to centre around the ownership of the IP behind the segments being acquired,” Gehrke says.