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New business formation marries two small fast food chains

A business phenomenon seen recently in Oregon and elsewhere is the merging together of fast-food restaurants for the purpose of combining delivery and service functions. Such business unions attempt to increase each company’s bottom line by reducing ultimate costs through a sharing of various resources. It’s also a way for new business formation to occur, which often requires substantial legal services by business law attorneys to get the new structure organized and operating.

For example, in one state recently, a chain called Mama Fu’s is planning to purchase a pizza restaurant chain with the intention of combining their delivery services and sharing technology resources. The model being chosen will not change each chain’s basic menu. Whether their existing locations will add each other’s menus is unclear at this time.

However, in the future, the chains announced that they will build next to each other. Mama Fu’s has been rapidly expanding, with 24 locations in three states, whereas Austin Pizza has 14 locations in Austin but has not expanded into other areas. Such a merger is a fluid transformation that is flexible and subject to changes as the new company begins to find its moorings and its branding style.

An experienced business law attorney is essential to the smooth transformation and the creation of new legal structures going forward. Accountants and financial planners will work alongside legal experts in designing the legal and tax structure of the new company. Provisions for continuing growth must be put in place. Whether future stores will be franchised is a consideration that may be discussed and decided at this early business formation stage of the young company. Oregon has a variety of young restaurant chains that may be growing in a similar fashion under a current economy that is generally healthy.

Source: bizjournals.com, “Pass the pizza and egg rolls: Mama Fu’s to buy Austin’s Pizza in restaurant merger“, Will Anderson, April 16, 2018

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