Despite various challenges, FocalPoint expertly negotiated very favorable terms for Snowfox’s owner and was able to drive the transaction towards a successful closing.
- Founded in 2005 and headquartered in Houston, Texas, JFE Franchising, Inc. dba “Snowfox” (the “Company”) is the third largest sushi kiosk franchisor in the U.S. with over 700 full-service sushi bar kiosks across 30 states, primarily in supermarkets and club stores.
- FocalPoint was engaged by the owner of the Company to raise a minority equity investment from a private equity fund to finance a shareholder distribution.
- Following a broad marketing effort targeting private equity funds at first, the process pivoted to include a limited number of strategic parties.
- The final transaction was a merger between Snowfox and a private-equity (Mayfair Equity Partners) backed Japanese restaurant operator named YO! Sushi headquartered in the U.K. that had previously acquired the largest sushi bar kiosk operator in Canada and was beginning to grow in the U.S.
- The transaction entailed a number of challenges stemming from unique industry-specific business practices as well as the combination cash and equity securities deal with a foreign-based counterparty, resulting in a protracted process that took over one year to complete.
- Compared with franchisors in other restaurant sectors, franchise agreements for sushi bar kiosks typically only have a three-year term.
- In addition, Snowfox had relatively high customer concentration and despite significant new unit growth was experiencing flat unit volumes.
- Because the merger partner was U.K.-based, the typical tax deferral on the securities portion of the transaction was not readily available to our client.