With reference to the article inaccurately headlined “Famous Brands endangers family-run business” published in Business Report’s Business Watch on March 26, I would like to draw your attention to a number of blatant mistakes that need to be corrected and brought to the attention of your readers.
Throughout the article, the journalist positions Famous Brands as a company that stifles small business creativity and growth by “clipping the wings” of family businesses and depriving them of the “family’s pride and joy”. This is fallacious, as illustrated by the following facts.
We do not “wait for businesses to flourish and then pounce on them” as the article states. To the contrary, more frequently entrepreneurs approach, and often implore, us to invest in their idea or brand based on our track record of building brands and developing start-up businesses. For every one joint venture partnership we conclude, I personally must turn down 10 others.
Famous Brands prides itself on growing and empowering entrepreneurs. We serve as the catalyst for them to realise their dreams and the growth ambitions of the business, for example:
n We pay them handsomely upfront for a share of their business so there is a lucrative earn-out early in the relationship;
n The extensive skills and expertise that we vend into the joint venture business could not be afforded by the entrepreneurs, so there is immediate value enhancement to their business;
n We insist that they stay on as partners so that they remain part of the dream and help to unlock value that they could never achieve without the group’s support. Thus parting with an equity share in their business is not where “life ends”, as your article states. In truth it only begins at that point;
n And finally, if and when the partners elect to exit, the potential earn-out for them is likely to be far in excess of their wildest dreams based on growth of the business over the period.
Most importantly, it needs to be remembered that we are not in the business of hostile takeovers. Each of the entrepreneurs with whom we partner is a willing and proactive seller. Our business model thrives because we partner with people who recognise the value we can add to their lives. Most other start-up models in our industry are more likely to fail and/or not realise the “one man” entrepreneur’s dream.
I have confined my comments to correcting the mistakes in this article, but it goes without saying that there are a range of other benefits which the group provides through its acquisition strategy, including creating large-scale employment and skills development in an environment where this is sorely lacking.
For example, for every new restaurant that we open, including via these joint venture partnerships, we create on average 15 new jobs.
Kevin Hedderwick
Group Chief Executive
Famous Brands