Burger King, Tim Hortons in Final Talks to Buy Popeyes: Note to Franchisees

After considerable anticipation of an acquisition over the last week, press reports now say that Restaurant Brands Inc (RBI), owner of Burger King and Tim Hortons brands, stated today that it has reached a deal to purchase Popeyes.

This would mark one of the largest quick service restaurant acquisitions in history and would set out RBI as the second largest competitor to YUM Brands (YUM and YUM C).

Some clues of this were evident as early as last week when RBI noted it was amending its debt agreements, and its debt to EBITDA ratio had fallen, potentially allowing for more borrowing.

Without a doubt, the value to this combination will be the potential to expand Popeyes throughout world markets.

Unless they are shareholders, Popeyes franchisees do not get a vote. At this point, the main interest of RBI and Popeyes executives and boards of directors are to maximize shareholder value, win shareholder approvals, gain favorable ratings on their debt by rating agencies and manage regulatory issues. All other factors are secondary.

We all know that franchise owners provide the vital CAPEX, labor and economic effort to make franchisors successful. Although it is franchisees' money that builds a franchisor. after all franchise owners' royalties and fees that they are obligated to give are bankable income for the franchisor, yet in a fast paced merger and acquisition setting, it is money for buying ownership in the franchisor that talks. The large institutional shareholders have the votes. 

That is why, in my opinion, it is so important for franchisees of any publicly traded company to:

1. Own stock. That enables voting rights and information to be provided to the shareholders

2. Establish and build an independent franchisee association that tracks information and shares best practices and information that is answerable to its members

3. Proactively think and plan for the future of the brand and franchisees