Matt Perelman and Alex Sloane are the Co-founders and Managing Partners of Garnett Station Partners. We cover the story behind GSP's early days and first successful deal, what they've learned about brand building and innovation in the franchise world, and why building strong relationships is the key to any successful partnership.
Principles & Lessons:
1) The essential role of partnership and trust. A constant theme was the deep, trust-based partnerships that enable growth and consolidation. Alex recounted how Ray Meeks, a longtime Burger King franchisee, “embraced us and our ideas with open arms,” even though they came from very different backgrounds. Matt pointed out how Ray’s support “gave us credibility” with other franchisees. This emphasis on establishing credibility and genuine relationships often made the difference for them, since as Alex noted, “We always need a Ray in each of the platform businesses that we build.” Trust and buy-in from industry insiders consistently emerged as a cornerstone for GSP’s deals.
2) Understanding and aligning incentives between franchisor and franchisee. “There are different incentives,” as Matt explained, because the franchisor wants top-line growth (royalties), while the franchisee targets the bottom line. They’ve learned that “franchisors can do things to effectuate a transaction that’s in everyone’s interests,” such as reducing royalties for a couple of years or offering right-of-first-refusal deals. Alex argued that any franchisee who is angry or mistrustful of the corporate side should “sell and get out today,” because friction makes growth unsustainable. Over the years, they found that if brand and franchisee “aren’t fully aligned,” it is not a viable long-term partnership.
3) Prioritizing downside protection over heroic upside. “Rules one through nine are ‘Don’t lose money,’” Alex said, making it clear that risk mitigation and capital preservation come before seeking big returns. They learned this the hard way on their second deal, the auto services acquisition, which Matt described bluntly: “We couldn’t have made more poor decisions if we tried.” That misstep, though small in monetary terms, reshaped how they approached leverage, roll-ups, and structure, teaching them to “never max out first lien debt capacity” and to keep liquidity available for defensive and opportunistic moves.
4) Effective roll-ups require culture, data, and real synergy. While consolidation strategies can look straightforward on paper, Alex cautioned that roll-ups “are really, really, really, really hard” because you must integrate diverse local cultures, control operational details, and avoid “foolish reliance on adjusted EBITDA and pro forma assumptions.” They learned that proper consolidation demands a unifying tech stack, well-chosen leadership with operational experience, and cultural sensitivity so that “you don’t blow yourself up” by alienating teams or losing local know-how. According to Alex, many fail because “they just view them as numbers on a page.”
5) Keeping turnover low is a powerful force in multi-unit businesses. Labor was cited repeatedly as the largest controllable cost. Matt highlighted that in fast food, “industry average is north of 100% turnover,” and retraining can cost thousands per lost employee. By improving scheduling, giving bonuses, and measuring the right KPIs, they reduce churn and boost throughput. “Labor is the most important part of these businesses,” Alex emphasized, because dissatisfied or short-staffed teams degrade margins, lose repeat customers, and hurt growth. Conversely, motivated managers create a “virtuous cycle” of service quality and store-level profits.
6) Leveraging real estate creatively. A key to higher returns is their sophisticated approach to leases and property ownership. While many operators see rent as a fixed cost, Alex views it as “just a contract” that can be renegotiated based on traffic patterns, location advantages, or expansions. Matt added that sale-leasebacks or new builds can create “arbitrage” because the landlord’s valuation multiple is often higher than the operating company’s. By controlling the development phase, GSP can “buy land for X and then sell that piece of land into a sale-leaseback,” de-risking their equity and returning capital to investors.
7) Conservatism in leverage and structure unlocks opportunity in downturns. They stressed that “liquidity in downside scenarios is always worth more” than maximum financing in normal markets. In March 2020, they faced a portfolio “100% foot-traffic dependent,” yet still avoided covenant breaches or rescue capital. Matt recalled, “We didn’t lose a single company,” largely due to the large liquidity buffers and prudent debt usage they had put in place. This allowed them to go on the offense, such as by buying distressed debt of a Pizza Hut and Wendy’s operator in bankruptcy, a move that became “probably our best debt investment ever.”
8) Culture, alignment, and honesty with partners—and with each other—drive strong outcomes. The transcript showed how founding partners who “sit next to each other” and “fight all day long” can generate robust decisions if the arguments are constructive and aligned to a common goal. “We do everything together,” said Alex, noting that disagreements serve as a rigorous filter. Similarly, they maintain close ties with CEOs and founders who join their portfolio, giving them fair deals and transparent expectations. Matt said, “When you buy a business from us, you’re going to do well with it,” underscoring how relationships and a genuine commitment to mutual gain help GSP scale businesses successfully and exit profitably.
Transcript