You could say Guy Falzarano, founder of child education franchise Lightbridge Academy, made it in June when two firms invested in his franchise. But others benefitted as well, including the two 30-something investors who are making their first deal in franchising, his hand-picked successor and franchisees.
Falzarano’s story is part of a Franchise Times digital series this month featuring founder success stories.
The move allows him to cede the day-to-day CEO role to Gigi Schweikert, formerly president, and fulfill a promise to her. “In December she gave up the COO position, and she was a little hurt by that. I said, ‘Be patient. I have other plans for you.’ She’s been ready for this for awhile, and I couldn’t have found a better person,” he said.
“I’m going to serve as chairman of the board so I’ll be involved in strategic planning. I love franchise sales, because as a founder,”he’s “pretty good at that.”Falzarano retains an 18 to 20 percent stake in the franchise, depending on how the final deal works out. He remained patient during a years-long process to find a new investor.
“We started looking at this three years ago, and we were being courted by a number of companies. Finally we decided, primarily they were strategic buyers. We decided not to go with a strategic buyer,”he said. “Private equity was too big for us.”
In June two firms with family office investors, Westerly Group and Elmsley Capital, bought a majority stake. They have deep backgrounds in real estate development, which will be a boon for yet another beneficiary of the deal—franchisees, Falzarano believes.
The franchisor had never developed real estate as part of its own balance sheet, said Brian Burke, principal at Elmsley Capital, but now will do so with his friend from Harvard Business School, Ross Brendel of Westerly. “Ross and I are investing all equity; as of today there’s no debt on the balance sheet on the business,” and they plan to purchase locations. “So franchisees who are ready to go, we can say, ‘Hey, here’s a great location for you to open in the next six months,’” a process that now can drag on for a year or two.
Falzarano started Lightbridge Academy in 1997, without any intent to franchise. “I worked for the phone company for 25 years, left the phone company and wanted to scratch my entrepreneurial itch,” he said. A marketing company he launched with three friends “crashed and burned in three years. I had a wife, three kids and no way to support them. My wife was working as a part-time teacher assistant. Why don’t we start a little preschool?” she suggested.
“I knew nothing about this industry. That was the best thing that happened to me, because I knew nothing so I needed to learn everything,” he said.
Lightbridge Academy has 57 open centers, with another seven or eight that will open by the end of the year, bringing the count to 65. “Next year we’ll be 78. So our goal is to get to 150 in five years. We think that’s achievable,” he said.
Asked about any concerns, he replied immediately. “I’m stoic, and I believe in the stoic philosophy. Worry doesn’t serve any purpose. I look at obstacles in my path,” and look for a way to get over or around them, he said.