Riverside Buys Frenchies Fashionable Nail Care, Marking PE Agency’s fiftieth Franchise Funding | Franchise Information

When Man and Stephanie Coffey opened their first Frenchies Fashionable Nail Care location in 2014, their “complete intention was to create a nationwide model,” mentioned Man Coffey. Frenchies is now positioned to attain that objective with its sale to The Riverside Firm, continued Coffey of the non-public fairness agency he mentioned has “a extremely good observe report of profitable.”

With its acquisition of 24-unit Frenchies, The Riverside Firm added a second model to its newly fashioned private care providers platform. Frenchies joins Bishops, a salon idea offering haircut, colour and styling providers, which Riverside bought in June.

“On the core, we’re underwriting the macro development that everybody is spending extra {dollars} to make themselves look higher and really feel higher,” mentioned Grant Marcks, a accomplice on Riverside’s origination crew, as he described the thesis of making a multi-brand franchisor platform. “What we actually like about Frenchies is it has that clear really feel. A extra skilled really feel. And that additionally attracts the next high quality technician.

“It’s a cleaner, higher worth proposition for the buyer,” added Alan Peyrat, senior accomplice on the deal, which was made out of Riverside’s micro-cap fund that focuses on management buyouts of North American-based corporations with as much as $10 million in EBITDA during the last 12 months. Frenchies “actually stands out. It’s a significantly better client expertise.”

The deal is Riverside’s 50^th acquisition within the franchise area. Its present portfolio additionally contains Threshold Manufacturers (MaidPro, FlyFoe, Males in Kilts, Pestmaster, USA Insulation and others) and Evive Manufacturers (Govt Dwelling Care, Assisted Dwelling Locators, Grasons Co.).

Former multi-unit Anytime Health franchisees, the Coffeys opened their first Frenchies in Littleton, Colorado, as a way to, as Coffey put it, “show or disprove our thesis that individuals pays extra for nail providers than they’re used to” if the result’s a greater expertise and nail technicians are paid a livable wage. “And we proved it out.”

Frenchies positions itself as an alternative choice to a typical nail salon expertise that makes use of acrylic nails and harsh chemical compounds, and the place there’s a scarcity of customer support. Its places are open and ethereal, “and tremendous clear,” mentioned Coffey. “Our tagline is, ‘We love clear.’ And that’s been rather well obtained, even earlier than COVID.”

By 2019, Frenchies had agreements signed for 100 places, however the pandemic largely derailed these plans and the corporate paused franchise growth till about two months in the past. It as a substitute spent that point creating its personal product line, which Coffey mentioned has lowered provide prices for franchisees, and analyzing the drivers of the enterprise to see the place enhancements could possibly be made. It made changes to pricing, analyzed the service instances and made strides in boosting the common ticket by encouraging extra providers.

The common ticket is now $80, and Espresso mentioned high line gross sales for the third quarter have been up 14 p.c over the identical interval final 12 months. “Our unit economics are in a extremely great spot,” he mentioned. At many studios, 30 to 40 p.c of month-to-month income comes from memberships, which he added “takes a few of the variability out of the equation for house owners” and permits franchisees to give attention to different areas of the enterprise.

Submit-pandemic, Coffey mentioned demand went by way of the roof. “However we questioned if it was a sugar rush, if it was simply pent-up demand,” he mentioned. “However it’s been sustained. It wasn’t a sugar rush.”

After contemplating a lot of non-public fairness companies and different non-public capital sources during the last couple of years, Coffey mentioned after assembly the Riverside crew he felt they have been aligned on the route of the model. “We simply mentioned, this feels actually good,” he mentioned of his and Stephanie’s resolution to maneuver ahead with a sale.

Coffey will turn into model president of Frenchies, and the 2 have an possession stake within the new platform after rolling over a portion of their proceeds from the transaction.

Riverside plans to assist Frenchies by investing in franchise gross sales and advertising, whereas additionally driving development with current franchisees and trying to broaden into new markets.

“COVID very legitimately made it troublesome on the nail salon enterprise,” mentioned Peyrat, and he and the Riverside crew spoke at size with current franchisees and people who exited the system to get the total image and decide the chance for a renewed growth push.

“It’s a standout proposition” for franchisees, Peyrat continued. “Frenchies delivers on each layers, for the buyer and the franchisee.”

Coffey famous the fact of the acquisition, which closed November 8, remains to be sinking in. “I haven’t labored for anyone since 1998,” he joked. “We’re at all times going to be the founders, however our job was to develop it and now to ship on the guarantees we’ve made to our crew. We’ve constructed the muse … and now we get to be a part of the following stage.”