Franchise Brands Announces Aquisition of Metro Rod Limited for £28 million
£28 million acquisition of Metro Rod Limited (“Acquisition”)
A transformational step in Franchise Brands’ buy and build strategy
Franchise Brands plc, a multi-brand international franchisor, today announces its proposed Acquisition of Metro Rod Limited, a leading provider of drain clearance and maintenance services, for a total consideration of £28 million.
The deal represents Franchise Brands’ second acquisition since its IPO in August 2016 and is in line with its strategy to acquire franchise businesses that could benefit from the Company’s central services, such as marketing, and the extensive franchising expertise of its leadership team and Board.
Founded in 1983, Metro Rod is a leading provider of drain clearance and maintenance services delivered 24/7/365 on a largely reactive basis. The services are predominantly provided by 40 franchisees with geographical coverage across the majority of the UK. We believe Metro Rod is one of only five companies in the drainage sector operating on a national basis. It serves national business customers across the facilities management, retail, water utilities, social housing, hospitality and insurance sectors, as well as local businesses and other customers in the private and public sectors. In its last financial year, it completed over 130,000 jobs and its system sales were approximately £32 million.
Colin Davis, Metro Rod’s Managing Director since 2013, will continue to manage Metro Rod following completion of the Acquisition, whilst being able to draw on the significant experience of Franchise Brands’ Board and management team in developing franchise businesses.
Franchise Brands believes that there is substantial scope to accelerate Metro Rod’s development as part of a group focused entirely on the development and growth of franchise businesses. These include providing additional sales and marketing support to help franchisees develop their local accounts, increasing the number of national accounts in certain sectors, developing its recently launched Metro Plumb business and, longer term, extending the “Metro” brand into other B2B sectors.
Following the Acquisition, Franchise Brands will have over 450 franchisees in 11 countries across its portfolio of high quality franchise brands which include ChipsAway, Ovenclean and Barking Mad.
Stephen Hemsley, Executive Chairman, Franchise Brands, said:
“We are delighted to announce the proposed Acquisition of Metro Rod, which represents a transformational step for Franchise Brands in line with our strategy to acquire franchise businesses that could benefit from our central services, such as marketing and extensive franchising experience.
“Metro Rod is a market leading business with an experienced management team, a mature and stable franchise network and high customer retention rates. We look forward to working with Colin and his team to expand the existing business’s customer base and develop its newly launched Metro Plumb business.”
Colin Davis, Managing Director, Metro Rod, commented:
“We welcome the opportunity to become part of Franchise Brands whose team’s strong track record in growing franchise businesses and substantial marketing expertise will enable us to build on our success so far.
“We are excited about developing the clear growth opportunities we see for Metro Rod and Metro Plumb as part of a larger, publicly listed group with large ambitions and a clear focus on developing its portfolio of high quality franchise brands.”
For further information, please contact:
Franchise Brands plc (www.franchisebrands.co.uk) +44 (0) 800 012 6462
Stephen Hemsley, Executive Chairman
Julia Choudhury, Corporate Development Director
Metro Rod Ltd (www.metrorod.co.uk) +44 (0) 7770 346946
Colin Davis, Managing Director
MHP Communications (PR) +44 (0) 20 3128 8100
Katie Hunt / Hannah Winter
Further information on Metro Rod:
Founded in 1983, Metro Rod is a leading provider of drain clearance and maintenance services delivered 24/7/365 on a largely reactive basis. The services are predominantly provided by 40 franchisees with geographical coverage across the majority of the UK.
Metro Rod serves national business customers across multiple sectors including facilities management, retail, water utilities, social housing, hospitality and insurance, as well as local businesses and other customers in the private and public sectors. Domestic customers form only a small part of Metro Rod’s business.
The service is provided by regional Franchisees, who on average have been with Metro Rod for 11 years, with extensive support from a large head office team of around 140 people based in Macclesfield.
Metro Rod’s drain clearance and maintenance services include high pressure water jetting, CCTV surveys, drain or sewer lining, excavation, electro mechanical cleaning and fat and grease management.
Metro Plumb was launched by Metro Rod in February 2016 and provides cold water plumbing services, primarily to Metro Rod’s national business customers. All Metro Rod Franchisees were given the opportunity to purchase Metro Plumb franchises covering their respective territories and 30 of the existing 40 Metro Rod Franchisees have done so.
Kemac was established in 1993 and is a company owned operation. It built its reputation on providing services to the water utilities market and more recently, by providing plumbing services. Kemac provides plumbing related services to Thames Water and services to other water companies. Kemac also operates six Metro Plumb territories, predominantly in and near the Greater London area.
Metro Rod benefits from a mature and stable franchise network of 40 franchisees who provide geographical coverage across the majority of the UK. The franchisees are management franchisees who in turn have over 300 engineers across the Metro Rod network who provide the services. On average, franchisees have eight engineers and operate seven vans.
Metro Rod, as the brand owner, licenses the brand and intellectual property to the franchisee on an initial five year term, which is renewable thereafter. The average length of tenure of a franchisee is approximately 11 years (the longest tenure is currently 23 years).
Since 2001, Metro Rod has been part of a group of companies which in 2011 was renamed the Enserve Group. The Enserve Group is a private group of businesses providing infrastructure support services to the utilities sector. The Enserve Group has been under private equity ownership since 2010, most recently by funds managed or advised by Rubicon Partners and Grovepoint Capital.
Further information on Franchise Brands:
Franchise Brands is a group of international multi-brand franchisors with a combined network currently of over 400 franchisees in 11 countries, but predominantly in the UK. Prior to the acquisition of Metro Rod, the Group’s main three brands were ChipsAway, a mobile car paintwork repair specialist with over 220 franchisees, Ovenclean, a mobile domestic oven cleaning business with over 100 franchisees, and Barking Mad, a leading franchise provider of dog sitting services in the UK with over 70 franchisees.
Founded in September 2008 by Stephen Hemsley (Executive Chairman) and Nigel Wray (Non-Executive Director), the Group’s principal shareholders, Franchise Brands has a highly experienced management team and Board with extensive expertise in franchising (gained through their notable involvement with Domino’s Pizza), operating and growing profitable businesses and investigating acquisition targets.
Franchise Brands has developed a highly professional central services platform including marketing, franchise recruitment and support services such as IT, which enables it to support the acquisition of some new franchise brands without significantly increasing its central overhead.
The Board has a clear strategy to build the Group by the selective, earnings enhancing acquisition of high quality franchise businesses that can benefit from its central services, whilst addressing the same B2B and B2C market as its existing brands. Selective acquisitions are intended to supplement organic growth derived from increasing the size of the franchise networks of the existing brands – ChipsAway, Ovenclean and Barking Mad – and increasing system sales by supporting franchisees who wish to grow their businesses.
Franchise Brands was admitted to AIM in August 2016 (ticker code: FRAN.L).