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It’s Final! Franchisees Buy Out Franchisor A&W

A poster on the side of a Kentucky A&W Restaurant
The side of a franchised A&W restaurant in Kentucky, photo/bmm

LEXINGTON, Ky. — The sale of Yum Brands' franchising company A&W Restaurants was finalized on Monday, December 19 for an undisclosed amount. The firm was bought by the National A&W Franchisee Association and See Ci Kiong of Indonesia, the chain's largest international franchise owner.

Franchisees have appointed Kevin Bazner to be the brand's new CEO. He was president from 1999 to 2003 of A&W Restaurants, Inc. On Monday, in A&W's first announcement under the new ownership, Bazner congratulated the system's franchise owners. "This collaboration brings together both ownership and management that understands the unique challenges and opportunities of the A&W brand," he wrote. "Together the sole focus is partnering with you to make A&W a truly great brand again."

"We understand that we cannot stand still as a brand and must innovate in order to remain competitive," noted Bazner, who has also led quick service restaurant franchisors Taco Bueno and Smoothie King.

The first task at hand for the CEO, who must straddle a new board of directors from the independent franchisee association and the chain's largest international franchisee, is to strengthen the existing franchising company. The firm has moved from the old Yum Brands office in Louisville to their new one in Lexington, some 75 miles away. A list of existing key franchisor staff was provided in the letter for franchisees to contact for support.

"Our immediate efforts are to successfully transition the business from YUM! while building a strong Support Center team," wrote Bazner. "During these next 60 days we will be focused on ensuring a smooth transition with YUM while preparing for our A&W Convention, in Las Vegas, beginning February 14, 2012."

The A&W Root Beer stand of Lodi, California, named after founders Roy Allen and Frank Wright, is generally considered the beginning of America's first restaurant franchise chain. The company has been franchising since 1921. In the Yum Brands' annual report of 2010, A&W was reported to have 322 domestic franchises and 317 international restaurants.

Experts say that the industry is watching the chain to see how well it works.

"A&W was the trailblazer in starting franchising, and now is blazing a new trail with the franchisees buyout of a significant franchising company," declares industry expert and attorney Peter Silverman of Ohio-based law firm Shumaker, Loop & Kendrick. Having helped Bennigans restaurant owners when their franchisor suddenly liquidated, Silverman is no stranger to franchisees taking matters into their own hands. "The company has crafted a strong management structure to enhance the strengths of the franchise model, while reconciling the tensions," he states about the new A&W. "Other franchisors, franchisee associations, and deal investors will be watching them closely to see if this is a model that works well, and if it can be replicated."

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About BMM

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Staff reporter for Blue MauMau