The Red Rooster, Oporto and Chicken Treat franchises have been bought by Asian private equity group PAG Asia Capital.
The franchises are operated by Craveable Brands and comprise more than 580 stores across Australia alongside an international network of stores in New Zealand, Singapore and Sri Lanka.
The franchise group was scrutinised by the Senate inquiry into the Franchising Code of Conductlast year with many Red Rooster, Oporto and Chicken Treats store owners claiming they had been pushed to the verge of bankruptcy by high costs and operating restrictions forced on them by Craveable.
Well-placed sources said PAG paid about $500 million for Craveable which turns over more than $800 million in sales annually across its network.
PAG Asia Capital is an Asia-focused private equity firm with $30 billion under management. It owns The Cheesecake Shop franchise in Australia.
PAG Asia Capital partner Lincoln Pan said the Craveable purchase is part of the firm’s expansion strategy.
“The franchising space is one we know well,” Mr Pan said. “We think it is a very well run business in the food and beverage and franchise space and think it is synergistic with The Cheesecake Shop.”
Mr Pan defended Craveable’s treatment of franchisees.
“The entire sector is under scrutiny given the actions of some lesser franchise networks in Australia,” he said. “If you look at the investment [Craveable chief executive] Brett Houldin and his management have made in transparency and operations, we think this is very well run. We think Craveable is at average if not above average for this industry.”
Craveable’s management will remain in place and Mr Houldin said PAG would bring a wealth of experience and international connections.
“The transaction will begin a new and exciting chapter for us that will see us further grow Craveable from the solid platform already established,” he said.
Archer Capital managing partner Peter Gold said the sale was a good result for the business despite a failed attempt at an inital public offering two years ago.
“It’s a good outcome for the brands and the franchisees in terms of having a financial sponsor who has a new medium-term plan to grow the business, whether that is expansion internationally or to grow locally,” he said.