Buffalo Wild Wings Franchisee Association Supports Company Over Activist

The Buffalo Wild Wings franchisee association has recently noted its support of current brand management over the vision of Marcato, the San Francisco based activist investor, who is battling the company for board seats via a proxy battle later this year. The franchise group, Franchise Business Services Chair and Vice Chair noted the Association's preference against Maracto's 'uncertain and short term vision', and noted they felt the company was listening and responding appropriately. The Association represents 90% of the franchisee base.

http://www.startribune.com/franchisee-group-backs-buffalo-wild-wings-management-in-tussle-with-activist/416069924/

Marcato is an activist fund that buys into companies, typically to jump the stock price. Marcato's CEO is Mick McGuire, who came out of Bill Ackman's Pershing Square activist buyout shop. Ackman has pursued restauants for a decade, and holds stock in Restaurant Brands International, the 3G backed Buger King, Tim Horton's and now Popeye's brand owner.

Among the favorite of activist tactics is that of so called 'financial engineering', where assets are sold off. The problem of course is that those tactics are short term oriented related to the stock, while franchisees are in it for the long term and to make profit. Some activists view franchising merely as a form of outsourcing. They are often in and then out of company boards, hence the concern about their short term focus.

This is a great example of the value of franchisee associations, who can come on line publicly and make their position known at critical points.